Holding

An insurer may raise the defence that the driver lacked the appropriate licence, but must prove that the insured failed to take adequate care to verify the licence’s genuineness.

Summary

The claimant, Kanti Devi, filed a claim before the Motor Accident Claims Tribunal (MACT) for compensation under the Motor Vehicles Act, 1988 for the death of her son in a road accident. The insurer, National Insurance Corporation Ltd., contended that the driver of the vehicle did not hold a licence appropriate for the type of vehicle driven and sought to avoid liability. The MACT awarded compensation, holding the insurer liable but allowing recovery from the vehicle owner (insured). The Delhi High Court dismissed the insurer’s appeal, relying on United India Insurance Co. Ltd. v. Lehru. On appeal, the Supreme Court held that an insurer may raise the defence that the driver lacked the requisite licence, but the insurer must prove that the insured failed to exercise due care in verifying the licence. Since the Swaran Singh judgment was not before the MACT or High Court when earlier orders were passed, the matter was remitted to the MACT for fresh consideration.

Issues considered

Can an insurer raise the defence that the driver did not possess the requisite licence for the type of vehicle involved?
Who bears the burden of proof when such a defence is raised?
Did the High Court err in applying United India Insurance Co. Ltd. v. Lehru without considering the later Swaran Singh judgment?

Legislation cited

Motor Vehicles Act, 1988s. 10, s. 149(2)(a)(ii), s. 166, s. 2, s. 3

Subjects

Motor accident compensationInsurance liabilityDriving licence requirementSection 149Burden of proofMotor Vehicles ActTribunal remand

Judgment

A NATIONAL INSURANCE CORPORATION LTD.
v.
KANTI DEVI AND ORS.
.
MAY 9, 2005

B [ARIJIT PASAYAT AND S.H. KAPADIA, JJ.]

Motor Vehicles Act, 1988-Section 149(2)(a)(ii)-Motor accident-
Death-Claim for compensation-Plea of insurer that driver of the alleged
vehicle did not hold requisite driving licence to drive that type of vehicle-
c Award ofclaim-Liability put on insurer with right to recover it from insured-
Appeal of insurer dismissed by High Court relying on a decision of Supreme
Court-In appeal, held: Jn view of a subsequent judgment of Supreme Court
insurer can take the defence that the driver did not have the requisite driving
licence to drive a particular type of vehicle-Onus is on the insurer to prove
,,D that insured did not take adequate care to verifY genuineness of the licence
held by the driver-Matter remitted to Tribunal as the subsequent decision
was not before the Tribunal or High Court.

Respondent-claimant filed claim petition be~ore Motor Accident
Claim Tribunal seeking compensation for death of her son who died on
E account of vehicular accident. Appellant insurer took the plea that
respondent driver of the vehicle did .not have requisite driving licence to
drive the type of vehicle alleged. Tribunal awarded claim in favour of
respondent-claimant, directing the insurer to satisfy the award, with right
to recover it from the insured. High Court dismissed the appeal of the
insurer in view of decision of United India Insurance Co. Ltd. v. Lehru and
F
Ors., [2003] 3 SCC 338.

In appeal to this Court appellant-insurer contended that reliance on
Lehru 's case by High Court was untenable in view of National Insurance
Co. Ltd. v. Swaran Singh and Ors. [2004] 3 SCC 297.
G
Disposing of the appeal and remitting the case to the Tribunal, the
Court

HELD: 1.1. The insurer can take a defence that the driver did not
have the requisite driving licence to drive a particular type of vehicle. Such
,,,
H 186
NA TJONAL INSURANCE CORPORATION LTD. v. KANT! DEVI 187

defence can be raised and it will be for the insurer to prove that the insured A ~
did not take adequate care and caution to verify genuineness or otherwise
of the licence held by the driver. The effect of the evidence in this regard
has to be considered by the concerned Tribunal. [189-H; 190-A]

1.2. The decision in Swaran Singh 's case was not before either the
MACT or the High Court when the respective orders were passed. B
Therefore, the matter is remitted to the Tribunal for fresh consideration.
The matter shall be decided keeping in view the principle enunciated by
this Court in Swaran Singh's case. [191-B)

National Insurance Co. Ltd v. Swaran Singh and Ors., [2004) 3 SCC C
297, relied on.

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 3197 of2005.

From the Judgment and Order dated 17 .9 .2003 of the Delhi High Court
in F.A.O.No. 551 of 2003.
D
Pijush Sharma and Pramod Dayal for the Appellant.

The Judgment of the Court was delivered by

ARIJIT PASAYAT, J. Leave granted.
E
National Insurance Company Limited (hereinafter referred to as the
'insurer') calls in question legality of the judgment rendered by a learned
Single Judge of the Delhi High Court dismissing the appeal filed by it.

Questioning the award made by the Motor Accident Claims Tribunal,
Karkardooma Courts, Delhi (in short 'MACT'), the appeal was filed before F
the High Court. By the aforesaid award the MACT had held that the respondent
no. I Mrs. Kanti Devi (hereinafter referred to as the- 'claimant') was entitled
to compensation of Rs.2,24,800/- together with 8% interest from the date of
filing of claim petition under Section 166 of the Motor Vehicles Act, 1988
(in short 'the Act') i.e. 30.11:1998 till realization of the award excluding G
r certain periods (i.e. from 30.11.1998 to 1.8.2000 and 10.9.2001 to 4.2.2002).
"
(
The insurer was held liable to compensate the claimant.

-,, Background facts as projected by the claimant in the claim petition
were that her son Pradeep Kumar lost his life on 4.10.1998 on account of
vehicular accident involving Tata Tempo No. DL-l-B-8441 which was H
188 SUPREME COURT REPORTS (2005) SUPP. I S.C.R.

A allegedly being· driven rashly and negligently by Rohani Prasad respondent
no.2 (hereinafter referred to as.the 'driver'). The deceased was aged about 22
years at the time of the accident. The offending vehicle belonged to Devender
Kumar, (respondent 'no.3) (hereinafter referred to as the 'insured'). Before
the Tribunal the driver and the owner did not appear. ·

B Stand of the insurer before the MACT was that the driver did not
possess a valid driving licence, as the driving licence authorised driving ·Of
light l}10tor vehicles (private), while driver was driving a transport veh.icle
(Tata Truck-407). The MACT held that there was nothing to show that the
driving licence was fake and that plying of the vehicle involved amounted to
C breach of conditions of the insurance policy issued by the insurer. It was held
that the insurer was to satisfy the award, with right of recovery from the
insured. This part of observation of the MACT which led to fastening of
liability on the insurer was challenged before the High Court. By the impugned
order the High Court dismissed the appeal holding that in view of the decision
of this Court in United India Insurance Co. Ltd. v. Lehru and Ors., [2003]
D 3 SCC 338 the insurance company cannot escape its liability to pay
compensation to the claimant when it has been given right to recover the
compensation from the insured.

In support of the appeal, learned counsel for the appellant submitted
that the High Court's view is untenable in view of what has been said by a
E three-Judge Bench decision of this Court in National Insurance Co. Ltd. v.
Swaran Singh and Ors., [2004] 3 SCC 297. There is no appearance on behalf
of the respondents in· spite of service of notice.

In Swaran Singh 's case (supra) this Court dealt with scope and ambit
F of Section 149(2)(a)(ii) vis-a-vis proviso appended to sub-section (4) and
sub-section(5) thereof. While dealing with cases where the driver who has
been granted licence for one type of vehicle at the relevant time was dFiving
another type of vehicle. In para 89 it was observed as follows:

"Section 3 of the Act casts an obligation on a driver to hold an
G effective driving licence for the type of vehicle which he intends to
drive. Section IO enables the Central Government to prescribe forms
of driving licences for various categories of vehicles mentioned in
sub-section (2) of tl'le said section. The various types of vehicles ·,
described for which a driver may obtain a licence for one or more of
them are: (a) motorcycle without gear, (b) motorcycle with gear, (c)
H
J
NATION~·L)NSURANCE CORPORATION LT.D v. KANT! DEVI [PASA YAT, J.) 189

invalid carriage, (d) light motor vehicle, (e) transport vehicle, (t) road A
roller, and (g) motor vehicle of other specified description. The
definition clause in Section 2 of the Act defines various categories of
vehicles which are covered in broad types mentioned in sub-section
(2) of Section IO. Tliey are "goods carriage", "heavy goods vehicle",
"heavy passenger motor vehicle", "invalid carriage", "light motor B
vehicle", "maxi-cab", "medium goods vehicle", "medium passenger
motor vehicle", "motor-cab'', "motorcycle", "omnibus", "private
service vehicle", "semi-trailer", "tourist vehicle", "tractor", "trailer"
and "transport vehicle". In claims for compensation for accidents,
various kinds of breaches with regard to the conditions of driving
licences arise for consideration before the Tribunal as a person C
possessing a driving licence for "motorcycle without gear", [sic may
be driving a vehicle] for which he has no licence. Cases may also
arise where a holder of driving licence for "light motor vehicle" is
found to be driving.a "maxi-cab", "motor•cab" or "omnibus" for
which he has no licence. In each case, on evidence led before the
~· Tribunal, a decision .has to be taken whether the fact of the driver D
possessing licence for one type of vehicle but found drivi11g another
type· of vehicle, was the main or contributory cause of accident. JL()!l
facts, it is found that th~ accident was caused solely because -of some '··
other unforeseen or intervening causes like mechanical. faifo~s ~nd
-
r similar other causes having no nexus with the driver not possessing · E
requisite type of licence, the insurer will not be allowed to avoid its
liability merely for technical breach of conditions concerning driving
licence."

In para l 0 l the e,ffect of a driving licence being found fake was
considered. It was noted as followed: F
"The submission of Mr. Salve that in Lehru case, this Court has,
for all intent and purport, taken away the right of an insurer to raise
a defence that the licence is fake does not appear to be correct. Such
defence can certainly be raised but it will be for the insurer to prove
that the insured did not take adequate care and ca~~to verify the . G
genuineness or otherwise of the licence held by the driver."

Obviously, defence can be raised by the insurer about the licence being
fake. B'y analogy, the insurer can also take a defence that the driver did not
have the r~quisite driving licence to drive a particular type of vehicle. Such
defence can be raised and it will be for the insurer to prove that ~e insured H
190 SUPREME COURT REPORTS (2005] SUPP. 1 S.C.R.

A did not take adequate care and caution to verify genuineness or otherwise of
the licence. held by the driver. The effect of the evidence in this regard has
to be considered by the concerned Tribunal.

In the instant case, the High Court aid not go into the relevant questions
at all and relying on Lehru 's case (supra) held that the insurer has to pay the
B amount and recover from the insured. It has to be noted that in Swaran
Singh 's case (supra) the earlier decision in Lehru 's case (supra) was noted.
In para 108 of the judgment it was noted as follows:

"Although, as noticed hereinbefore, there are certain special leave
petitions wherein the persons having the vehicle~ at the time when .
c the accidents took place did not hold any licence at all, in the facts
and circumstances of the case, we do not intend to set aside the said
awards. Such awards may also be satisfied by the petitioners herein
subject to the.ir right to recov.er the same from the owners of the
vehicles in the manner laid dow~ therein. But this order may not be
D considered as a precedent ..

"The essence of Lehru 's case (supra) was delineated in paras 92 and
1"00 as follows:

"92. It may be true as has been contended on behalf of the .
petitioner that a fake or forged licence is as good as no licence but
E
the question herein, as noticed hereinbefore, is whether the insurer
must prove that the owner was guilty of the wilful breach of the
conditions of the insurance policy or the contract of insurance. In
Lehru 's case the matter has been considered in- some detail. We are
in general agreement with the approach of .the Bench but we intend
F to point out that the observations made therein must be understood to
!rnve been made in the light of the requirements of the Jaw in terms
whereof the insurer is to esta~lish wilful breach on the part of the
insured and not for the purpose of its disentitlement from raising any
defence or for the owners to be absolved from any liability whatsoever.
We w-0wl<l be dealing in some detail with this aspect of the Rl{ltter a
G . ·il\·l'''
little 'latfr"
'
·

"100. This Court, however, in Lehru must not be read to mean
that an owner of a vehicle can under no circumstances have any duty
to make any enquiry in this respect. The same, however, would again
H be a question whieh would arise for consideration in each individual
NATIONAL INSURANCE CORPORATION LTD. v. KANT! DEVI [PASAYAT, J.] 191

case." A
The decision in Swaran Singh 's case (supra) was not before either the
MACT or the High Court when the respective orders were passed. Therefore,
we think it proper to remit the matter to the MACT for fresh consideration.
It shall permit the parties to lead such further evidence as they may intend
to lead. The matter shall be decided keeping in view the principle enunciated B
by this Court in Swaran Singh 's case (supra).

Keeping in view long pendency of the matter, the MACT would do
well to dispose of the matter within six months from today.

The appeal is accordingly disposed of with no order as to costs. C
K.K.T . Appeal disposed of.

•