Holding

The insurer is not liable because the vehicle was a transport vehicle and the driver did not have a licence endorsed to drive such a vehicle, so the District Forum's dismissal of the claim stands.

Summary

The complainant, Prabhu Lal, claimed compensation from New India Assurance Co. Ltd. after his Tata 709 vehicle was damaged in a collision with a Roadways bus. The insurer contended that the vehicle was a "transport vehicle" and was being driven by the complainant's brother, Ram Narain, who held only a licence to drive Light Motor Vehicles (LMV) without the required endorsement for transport vehicles. The District Consumer Dispute Redressal Forum dismissed the claim, but the State and National Commissions reversed that decision, ordering the insurer to pay. The Supreme Court examined the definitions in the Motor Vehicles Act, 1988, the necessity of a licence endorsement under Section 3, and the applicability of the earlier Ashok Gangadhar decision. It held that the vehicle was indeed a transport vehicle and the driver lacked a valid licence to operate it, rendering the insurer not liable. Consequently, the Court restored the District Forum’s order and set aside the State and National Commission orders.

Issues considered

The classification of the insured vehicle as a 'transport vehicle' under the Motor Vehicles Act, 1988.
Whether the driver, Ram Narain, possessed a licence endorsed to drive a transport vehicle.
Whether the insurer is liable for the claim when the driver lacked the requisite licence endorsement.
The applicability and distinction of the Ashok Gangadhar Maratha v. Oriental Insurance Co. Ltd. precedent.
Whether the State and National Consumer Dispute Redressal Commissions erred in overturning the District Forum's decision.

Legislation cited

Central Motor Vehicles Rules, 1989s. Rule 16
Consumer Protection Act, 1986s. 12
Motor Vehicles Act, 1988s. 14, s. 147, s. 149, s. 2(47), s. 3, s. 66, s. 94, s. 96

Subjects

Motor Vehicles ActDriving licence endorsementTransport vehicle definitionInsurance liabilityConsumer Protection ActAshok Gangadhar precedentThird party insuranceVehicle classificationLegal interpretation

Judgment

A NEW INDIA ASSURANCE CO. LTD.
v.
PRABHULAL

NOVEMBER 30, 2007
B
[C.K. THAKKER AND TARUN CHATTERJEE, JJ.]

Consumer Protection Act, 1986-s. 12-Vehicle ofcomplainant
got damaged in an accident-Claim towards vehicle and other
c expenses-Held: Documentary evidence by Insurance Company show
that vehicle which met with accident was a 'transport vehicle '-Driver
held licence to drive Light Motor Vehicle only-There was no requisite
endorsement which would entitle him to ply such 'transport vehicle·-
Thus, complainant not entitled to any compensation and Insurance
D company cannot be held liable-Order ofDistrict Forum upheld, and ·~

that of State Commission an affirmed by National Commission set
aside-Motor Vehicles Act, 1988-ss. 147, 2(47), and 3-Central
Motor Vehicle Rules, 1989-Rule 16.

The respondent filed a complaint under s.12 of the Consumer
E Protection Act, 1986 before the District Consumer Dispute
Redressal Forum that his vehicle, TATA 709, was hit by a Roadways
bus and got damaged. He claimed certain amount towards claim of
vehicle, mental agony, survey fees and charges of driving the vehicle
from the place of accident. The Insurance Company contested and
F stated that it did not commit any deficiency in rendering service. The
case oflnsurance Company was that the vehicle was being driven
by 'RN', the brother of complainant who possessed only a licence
to drive light motor vehicle and not heavy motor vehicle and as such
could not have driven the vehicle in question which was 'transport
G vehicle' in the absence of necessary endorsement as required and,
therefore, the Insurance Company could not be held liable. The ,. .•
District Consumer Dispute Redressal Forum held the claim as not
tenable and dismissed the complaint. However, the Consumer
Dispute Redressal Forum of the State allowed the appeal of the
H 724
NEWINDIAASSURANCECO.LTD. v. PRABHULAL 725

claimant and the National Consumer Dispute Redressal Forum
confirmed the order. Aggrieved, the Insurance Company filed the A
instant appeal.

Allowing the appeal, the Court

HELD: 1.1 In the instant case, the District Forum considered
B
the assertion of the complainant and defence of the Insurance
Company in the light of the relevant documentary evidence and
rightly held that it was established that the vehicle which met with
an accident was a 'transport vehicle' as defined under section 2(47)
of the Motor Vehicles Act, 1988; that it was 'RN' who was driving
the vehicle that met with an accident; that RN was having a licence
c
to drive Light Motor Vehicle only and there was no endorsement as
required by Section 3 of the Act read with Rule 16 of the Central
Motor Vehicles Rules, 1989 and Form No.6, and thus, 'RN was not
-i having licence to drive 'transport vehicle'. In view of necessary
.. documents on record, the Insurance Company was right in
D
submitting that *Ashok Gangadhar 's case did not apply to the instant
case and the Insurance Company was not liable.
[Para 33] [739-B, CJ

1.2. Ashok Gangadhar 's case did not lay down that the driver E
holding licence to drive a Light Motor Vehicle need not have an
endorsement to drive transport vehicle and yet he can drive such
vehicle. It was on the peculiar facts of the case, as the Insurance
Company neither pleaded nor proved that the vehicle was transport
vehicle by placing on record the permit issued by the Transport F
Authority that the Insurance Company was held liable.
[Para 32] [738-H; 739-A]

*Ashok Gangadhar Maratha v. Oriental Insurance Co. Ltd.,
[1999] 6 sec 620, distinguished. G
>..
-j 1.3. Section 14 of the Act provides for currency of licence to
drive motor vehicles. Sub-section (2) states that if a licence is issued
or renewed in respect of a transport vehicle, it can be done only for
a period of three years, but, in case of any other vehicle, such
issuance or renewal can be for twenty years provided the person in H
726 SUPREME COURT REPORTS [2007] 12 S.C.R.

A whose favour licence issued or renewed had not attained the age of
50 years. In the instant case, the licence was renewed on November
17, 1995 upto November 16, 2015 i.e. for a period of twenty years
from which it is clear that the licence was in respect of 'a motor
vehicle other than the transport vehicle'. [Para 34) [739-D-G)
B
1.4. The conclusion arrived at by the District Forum cannot be
said to be faulty and it was right in holding that on the basis of the
evidence adduced by the Insurance Company, the complainant was
not entitled to claim any compensation from the Insurance Company
and the Insurance Company cannot be held liable. The State
C Commission or the National Commission could not have interfered
with the decision of the District Forum and hence, the orders of the
State Commission and National Commission are set aside and the
order passed by the District Forum is restored.
[Paras 42, 43 and 46) [743-C-E)
D
Skandia Insurance Co. Ltd. v. Kokilaben Chandravadan & Ors.,
[1987] 2 sec 654, distinguished.
National Insurance Co. Ltd. v. Swaran Singh & Ors., [2004) 3
SCC 297; National Insurance Companyv. Kusum Rai & Ors., [2006]
E 4 SCC 250; New India Assurance Co. Ltd., Shim/av. Suraj Prakash
and Ors., AIR (2000) HP 91; B. V Nagarajuv. Mis. Oriental Insurance
Co. Ltd., [1996) 4 SCC 647 andJitendra Kumarv. Oriental Insurance
Co. Ltd. & Anr., [2003] 6 SCC 420, referred to.
F CIVIL APPELLATE JURISDICTION : Civil Appeal No. 5539 of
2007.
From the Judgment and final Order dated 17 .10.2003 of the
National Consumer Disputes Redressal Commision, New Delhi in
Revision Petition No. 880 of2002.
G
WITH
.•
C.A. Nos. 5540 and 5541 of2007.
Kishore Rawat and M.K. Dua for the Appellant.
H Sangram Singh Solanki, Pankaj Kumar Singh, J.P.N. Gupta, K.L.
NEWINDIAASSURANCECO.LTD. v. PRABHULAL 727
[THAKKER, J.]
Janjani, Jagjit Singh Chhabra, Shekhar G. Devasa, B.V. Pinto and D.K. A
Garg for the Respondent.
The Judgment of the Court was delivered by
C.K. THAKKER, J. I. Leave granted.
B
2. In all these appeals, a common question oflaw has been raised
by the parties. It is, therefore, appropriate if we deal with and decide all
the appeals by a common judgment. In all the three appeals, the claim of
the claimant has been upheld finally by the National Consumer Disputes
Redressal Com.111ission, New Delhi ('National Commission' for short) C
which has been challenged by the Insurance Company in this Court.
3. To appreciate the controversy, it would be appropriate if we
narrate the facts in the first case i.e. New India Assurance Co. Ltd. v.
Prabhu Lal.
D
4. A complaint was filed by the complainant Prabhu Lal under
Section 12 of the Consumer Protection Act, 1986 before the District
Consumer Disputes Redressal Forum, Kota (Rajasthan) ('District Forum'
for short) claiming compensation from the respondent Insurance Company
as also from Tata Finance Limited, Jaipur. The case of the complainant E
was that he purchased a vehicle-Tata 709 with Registration No. RJ-
20G-2828 from Tata Finance Limited, Jaipur. The insurance was taken
from New India Assurance Company effective from October 17, 1997
to October 16, 1998. Premium amount ofRs.8235/- was duly paid. It
was the case of the complainant that on April 17, 1998, the vehicle of F
the complainant was being driven by Mohd. Julfikar to Indore for getting
Chilly. At about 4.30 a.m. in the early morning, the driver of Roadways
Bus No. MP 13-C-3935 drove the bus with very high speed in rash and
negligent manner which resulted in an accident at Yashwant Nagar. Due

.. -I
to said accident, Ram Narain-brother of the complainant who was sitting G
with Mohd. Julfikar, sustained injuries. Mohd. Julfikar immediately ran
away leaving the vehicle but as Ram Narain received seri~us injuries, he
could not come out of the vehicle. The complainant lodged First
Information Report (FIR) No. 131 of 1998 with the Manpur Police
Station, Yashwant Nagar, District Indore under Sections 279 and 337 of H
728 SUPREME COURT REPORTS [2007] 12 S.C.R.

A the Indian Penal Code (IPC) against driver Kalu ofM.P. Roadways Bus.
Vehicle of the complainant was then inspected by Tatas, estimate was
prepared and claim was submitted in the prescribed form by the
complainant to the Insurance Company on June 12, 1998. The amount
of the claim was, however, not paid to the complainant. The complainant,
B therefore, moved the District Forum praying for an award of Rs.
4, 70,000/- towards the claim of vehicle, Rs.15,000/- towards mental
agony, Rs.5,000/- towards driving charges of the vehicle from Indore to
Kota and Rs.25,000/- for survey fee.
C 5. The Insurance Company filed its reply refuting the claim of the
complainant. According to the Company, it had not committed any
deficiency in rendering 'service'. It was also the case of the Company
that it had fulfilled all contractual obligations as to claim. The Company
informed the complainant about its decision on December 21, 1999 stating
that the claim was not allowable and the amount was not payable. The
0
Insurance Company, therefore, prayed for the dismissal of the complaint.
6. According to the District Forum, the main question was whether
the Insurance Company was deficient in rendering service and wrongly
disallowed insurance claim of the complainant. The Forum considered the
E question and heard the parties. According the complainant, at the time of
accident, vehicle was driven by Mohd. Julfikar who was having a licence
to drive Light Motor Vehicle (LMV) as also Heavy Motor Vehicle
(HMV). In spite of it, the Insurance Company disallowed the insurance
claim of the complainant on the ground that the driver was not having valid
F driving licence to drive the vehicle in question. It was also the contention
of the complainant that certain documents produced by the Insurance
Company were not genuine. The complainant was not an educated man
and he knew only how to sign. If the officials of Insurance Company had
obtained signatures of the complainant on certain documents without
G reading over to him and making him properly understood, the complainant
should not suffer. According to the complainant, Insurance Company
wrongly presumed and proceeded on the basis that the vehicle was driven
by Ram Narain at the time of accident, who was having a valid driving
licence to drive only Light Motor Vehicle and negatived the claim. It was,
H therefore, prayed that an award be passed in favour of the complainant.
NEWINDIAASSURANCECO.LTD. v. PRABHULAL 729
'-"---t [THAKKER, J.]
7. The case of the Insurance Company, on the other hand, was that A
the vehicle in question, at the time of accident, was driven by Ram Narain,
brother of the complainant. Admittedly, Ram Narain was possessing
licence to drive Light Motor Vehicle and not Heavy Motor Vehicle. He,
therefore, could not have driven Transport Vehicle in absence of necessary
endorsement as required and the Insurance Company could not be held B
liable. In this connection, Insurance Company relied on the permit issued
by Transport Authority, the Form submitted by the complainant, licence
issued and other documents. The Insurance Company also relied upon
FIR filed at Police Station, Manpur, wherein it was stated that the vehicle
was driven by Ram Narain. Moreover, when the officers of the Insurance c
Company approached the complainant, they were informed by the
complainant that the vehicle was driven by Ram Narain. As an after
thought, only with a view to get the amount of compensation, it was
asserted and a case had been put forward before the Consumer Forum
i that the vehicle was driven by Mohd. Julfikar. It was contended that the
~ D
complainant realized belatedly that iftrue facts would be placed before
the Forum, in view of legal position, he would not be able to get any
amount from the Insurance Company. It was, therefore, asserted that
Mohd. Julfikar was driving the vehicle but it was not true. The Insurance
Company, hence, submitted that there was no deficiency in rendering
E
service by the Company and the claim was liable to be dismissed.
8. The Tata Finance Limited, Jaipur in its reply stated that the
complainant had purchased the vehicle on the basis of Hire Purchase
Agreement and the amount was to be paid in instalments. At the time of
-~
incident, Rs.3,65,026/- were due and payable to the Company. Until the F
full amount was paid, the Financer was to remain owner of the vehicle. It
was also stated that though Tata Finance Company requested the
Insurance Company several times to make payment of the balance hire
purchase amount, it was not done.
;._
-I
9. The District Forum, after considering the rival contentions of the G
parties and referring to the case law on the point, particularly a decision
of this Court in Ashok Gangadhar Maratha v. Oriental Insurance Co.
Ltd.. [1999] 6 SCC 620, held that the complainant was not entitled to
compensation. According to the District Forum, in Ashok Gangadhar, this
H
730 SUPREME COURT REPORTS [2007] 12 S.C.R.

A Court held that ifthe driver was having effective driving licence to ply
Light Motor Vehicle (LMV), he could not have plied Heavy Motor
Vehicle (HMV) or Transport Vehicle. The District Forum observed that
from the evidence on record, it was proved that at the time of accident,
Ram Narain was plying the vehicle in question and not Mohd. Julfikar as
B asserted. Ram Narain was having valid and effective driving licence to
ply Light Motor Vehicle and as such he could not have plied the transport
vehicle. The claim was, therefore, not tenable and accordingly the
complaint was dismissed.
10. Being aggrieved by the order passed by the District Forum, the
C claimant approached the Consumer Disputes Redressal Commission of
Rajasthan, Jaipur ('State Commission' for short). The State Commission
held that the principle laid down in Ashok Gangadhar would apply. But
according to the State Commission, the District Forum was not right in
dismissing the claim observing that the said decision was against the
D complainant. In fact, the point was decided in favour of the complainant
and the complainant-claimant would be entitled to the benefit of the
judgment and the Insurance Company must be held liable. Accordingly,
the appeal was allowed. The order passed by the District Forum was
set aside and the Insurance Company was ordered to pay the amount
E mentioned in the operative part of the judgment along with interest at the
rate of 15% p.a.
11. Aggrieved Insurance Company approached National Fomm
against the order passed by the State Commission but the National
Commission also dismissed the Revision and confirmed the order passed
F by the State Commission. It is this order which is challenged in this Court.
12. On April 23, 2004, notice was issued by the Court. It appears
that meanwhile in other matters, a similar question came up before this
Court and hence all the matters were ordered to be placed for hearing
G together.
13. We have heard learned counsel for the parties.
14. The learned counsel for the appellant-Insurance Company
contended that the State Forum as well as National Forum had committed
H an error oflaw in holding the appellant-Insurance Company liable and
-{
NEWINDIAASSURANCECO.LTD. v. PRABHULAL 731
[THAKKER, J.]
--1
directing it to pay compensation. It was submitted that there was no A
deficiency on the part of the appellant-Company in rendering service to
the complainant and hence Consumer Forum had no jurisdiction to
entertain, deal with and decide the dispute. It was also submitted that it
was clearly established from the relevant documents on record that at the
time of accident, Ram Narain was plying the vehicle and not Mohd. B
Julfikar. Admittedly, Ram Narain was having valid driving licence to ply
Light Motor Vehicle. The vehicle in question was a transport vehicle and
hence it could not have been plied by Ram Narain. In absence of valid
licence to drive the said vehicle, the complainant could not claim
compensation from the Insurance Company and no direction could be c
issued to the Company to pay compensation to the complainant. The
District Forum was, therefore, fully justified in dismissing complaint of the
respondent- complainant and both, State Commission as well as National
Commission - were in error in granting the prayer of the complainant
~ and the orders passed by them are liable to be set aside. It was also D
) submitted by the learned counsel that State Commission as also National
Commission, misunderstood Ashok Gangadhar. It is no doubt true that
in Ashok Gangadhar, the claim of the complainant was upheld by this
Court. But it was because the relevant documentary evidence was not
placed before the Authorities. This Court, therefore, held that since material
E
documents were not produced by the Company, the complainant should
not suffer and in absence of such evidence, the Insurance Company cannot
be absolved ofliability. But the ratio laid down in Ashok Gangadhar
supports the case of the Insurance Company that if necessary documents
are on record and they go to show that the licence issued in favour of the
driver to ply a particular type of vehicle, he could not have plied other F
vehicle and the Insurance Company could not be held liable if there was
breach of that condition. In the case on hand, all the documents were on
record, contention was raised by the Insurance Company from the very
beginning that the vehicle was a transport vehicle, which driven by Ram
Narain who was holding licence to ply only Light Motor Vehicle. Hence, G
~
--1 he could not have plied the vehicle in question, a finding was recorded in
favour of the Insurance Company by the District Forum which had not
been disturbed by the State Commission or by the National Commission
and hence the complaint ought to have been dismissed.
H
732 SUPREME COURT REPORTS [2007] 12 S.C.R.

A 15. The learned counsel for the respondent submitted that it was
the case of the complainant before District Forum that the vehicle was
driven by Mohd. Julfikar who possessed valid licence to ply the vehicle
but as soon as the accidence took place, he fled away since he was scared
that passengers in the bus might not spare him and he might be beaten.
B As Ram Narain sustained several injuries, he could not go away.
Unfortunately, the District Forum dismissed the complaint which
necessitated challenging the decision and the complainant succeeded
before the State Forum and National Forum. As to Ashok Gangadhar,
the counsel submitted that the said decision helps the complainant and
c both the Commissions were right in following it and in directing the
Insurance Company to pay compensation to the complainant. He,
therefore, submitted that the appeal deserves to be dismissed.
16. Before we deal with contentions raised by the parties on merits,
it would be appropriate to examine the relevant provisions of the Motor
D Vehicles Act, 1988 (hereinafter referred to as 'the Act'). By the Act of
1988, the Motor Vehicles Act, 1939 (old Act) had been repealed. The
new Act has been enacted with a view 'to consolidate and amend the
law relating to motor vehicles'. Section 2 is a 'legislative dictionary' and
defines various tenns. Relevant clauses of the said section are Clauses
E (10), (14), (21), (28) and (47) which define 'driving licence', 'goods
carriage', 'light motor vehicle', 'motor vehicle' and 'transport vehicle'
respectively. They read as under:
2. Definitions.- In tlµs Act, unless the context otherwise requires,-
F (10) "driving licence" means the licence issued by a competent
authority under Chapter II authorising the person specified therein
to drive, otherwise than as a learner, a motor vehicle or a motor
vehicle of any specified class or description;
(14) "goods carriage" means any motor vehicle constructed or
G
adapted for use solely for the carriage of goods, or any motor
vehicle not so constructed or adapted when used for the carriage
of goods;
(21) "light motor vehicle" means a transport vehicle or omnibus
H the gross vehicle weight of either of which or a motor car or tractor
NEWINDIAASSURANCECO.LTD. v. PRABHULAL 733
[THAKKER, J.]
or road-roller the unladen weight of any of which, does not exceed A
7,500 kilograms;
(28) "motor vehicle" or "vehicle" means any mechanically propelled
vehicle adapted for use upon roads whether the power of 1 Subs.
& ins. by Act. 580 propulsion is transmitted thereto from an
external or internal source and includes a chassis to which a body B
has not been attached and a trailer; but does not include a vehicle
running upon fixed rails or a vehicle of a special type adapted for
use only in a factory or in any other enclosed premises or a vehicle
having less than four wheels fitted with engine capacity of not
exceeding thirty-five cubic centimetres; C
(47) "transport vehicle" means a public service vehicle, a goods
carriage, an educational institution bus or a private service vehicle;
17. Section 3(1) of the Act requires holding of driving licence which
is material and reads thus; D
>
3. Necessity for driving licence.-{ I) No person shall drive
a motor vehicle in any public place unless he holds an effective
driving licence issued to him authorising him to drive the vehicle;
and no person shall so drive a transport vehicle other than a E
motor cab hired for his own use or rented under any scheme made
under sub- section (2) of section 75 unless his driving licence
specifically entitles him so to do.
(emphasis supplied)
F
18. Section 5 declares that no owner or person in charge of a motor
vehicle shall cause or permit any person which does not satisfy the
provisions of Section 3 to drive the vehicle. Section 10 deals with form
and contents of licences. It enacts that every driving licence (except a
driving licence issued under Section 18 which provides for driving motor G
vehicles belonged to the Central Government) shall be in such form and
shall contain such information as may be prescribed by the Central
Government. It also states that a driving licence shall be expressed as
entitling the driver to drive a motor vehicle of one or more of the types of
motor vehicles specified in sub-section (2). Section 15 provides for H
f-
734 SUPREME COURT REPORTS [2007] 12 S.C.R.

A 'renewal of driving licences'. Section 27 empowers the Central r-
Government to make mies in respect of matters enumerated therein.
Section 66 prohibits an owner of motor vehicle to use or to permit the :>-

use of motor vehicle as a transport vehicle in any public place save in
accordance with the conditions of permit granted by an appropriate
B authority. Whereas Section 147 deals with requirements of policies and
limits ofliability, Section 149 imposes duty on insurers to satisfy judgments
and awards against persons insured in respect of third party risks.
19. The Central Government has framed rules known as the Central
Motor Vehicles Rules, 1989 (hereinafter referred to as 'the Rules').
c
20. Rule 16 of the Rules prescribes the form in which driving licence
is issued. The form provides that the holder of a licence can drive any
vehicle of the description mentioned therein. Where authoriz.ation is granted
to drive transport vehicle, it is expressly so provided by making an
D endorsement to that effect. )<

21. Now, it is the case of the Insurance Company that the vehicle
of the complainant which met with an accident was a 'transport vehicle'.
It was submitted that the insured vehicle was a 'goods carriage' and was
thus a 'transport vehicle'. The vehicle was driven by Ram Narain, who
E was authorized to drive Light Motor Vehicle and not a transport vehicle.
Since the driver had no licence to drive transport vehicle in absence of
necessary endorsement in his licence to that effect, he could not have
driven Tata 709 and when that vehicle met with an accident, Insurance
Company could not be made liable to pay compensation.
F 22. Now, let us consider both these points. As far as vehicle is
concerned, it is clear from the record that it was Tata 709, registration
" -

No.RJ-20G-2828. The permit in respect of the said vehicle is on record
issued by the Transport Authority, Kota. From the registration, it is clear
that it was registered as a truck, a goods carrier and was described as
G public carrier. Load carrying capacity was shown to be 4100.00 Kgs.
The permit was valid up to November 11, 2002.
r
23. The District Forum held that the documents clearly mentioned

H
that the vehicle was a' goods carriage' as defined in Section 2(14) covered
by the category of 'transport vehicle' under Section 2( 47) of the Act. -
NEW INDIA ASSURANCE CO.LTD. v. PRABHU LAL 735
[THAKKER, 1.]
~~.

The State Commission held that since the gross weight of the vehicle was A
only 6800 Kgs and did not exceed permissible limits (7500 Kgs) nor it
was carrying goods at the time of accident, it was a Light Motor Vehicle.
For coming to that conclusion, the State Commission relied uponAshok
Gangadhar.
24. In our considered view, the State Commission was wrong in B
reversing the finding recorded by the District Forum. So far as Ashok
Gangadhar is concerned, we will deal with the said decision little later
but from the documentary evidence on record and particularly, from the
permit issued by the Transport Authority, it is amply clear that the vehicle
was a 'goods carrier' [Section 2(14)]. Ifit is so, obviously, it was a c
'transport vehicle' falling under clause (47) of Section 2 of the Act. The
District Forum was, therefore, right in considering the question ofliability
of the Insurance Company on the basis that Tata 709 which met with an
accident was 'transport vehicle'.
i D
.;, 25. The second question is as to who was driving the vehicle which
collided with M.P. Roadways Bus on April 17, 1998. In this connection,
it may be stated that it was the case of the compliinant that the vehicle
(Tata 709) was driven by Mohd. Julfikar to Indore. Because of rash and
negligent driving by Ka1u, driver of other vehicle i.e. M.P. Roadways bus,
E
there was an accident and Ram Narain, brother of the complainant,
sustained serious injuries. Mohd. Julfikar was having valid licence to drive
Light Motor Vehicle (LMV) as well as Heavy Motor Vehicle (HMV) and
hence the complainant was entitled to compensation from the Insurance
Company.
---j F
26. The contention of the Insurance Company, on the other hand,
was that it conducted an inquiry which revealed that at the time of accident
it was not Mohd. Julfikar who was driving the vehicle, but it was Ram
Narain who was driving it. Ram Narain was having licence to drive Light
Motor Vehicle only and since the vehicle in question was a transport G
I'- _., vehicle, he could not have driven the said vehicle in absence of an
endorsement as required by law and hence the complainant was not
entitled to any amount from the Insurance Company and the Insurance
Company could not be held liable.
H
736 SUPREME COURT REPORTS [2007] 12 S.C.R.

A 27. The District Forum, as observed earlier, considered the assertion
of the complainant and the defence of the Insurance Company as to who
was driving Tata 709 and on the basis of overall evidence adduced before
it, held that it was Ram Narain who was driving the vehicle that met with
an accident. The said Ram Narain was not having licence to drive
B transport vehicle and as such, Insurance Company was not liable. The
District Forum noted that in the FIR lodged in respect of the accident,
Ram Narain was shown to be the driver of the vehicle. Not only that but
the evidence adduced before the District Forum also went to show that
at the time of accident, Ram Narain was the driver of the insured vehicle.
C The argument of the complainant that the officials of the Insurance
Company obtained his signatures on some documents without reading
them over and making the claimant to understand the contents thereof was
negatived. The assertion of the complainant that he was 'illiterate' and
was knowing only how to put his signature was also not believed by the
D District Forum. The said finding of fact has not been set aside either by
the State Commission or by the National Commission. Even otherwise,
from the evidence on record, we are satisfied that it was Ram Narain
who was driving the vehicle at the time of accident. We have, therefore,
to proceed to consider whether the complainant was entitled to claim
E compensation from the Insurance Company in such an eventuality.
28. The argument of the Insurance Company is that at the time of
accident, Ram Narain had no valid and effective licence to drive Tata 709.
Indisputably, Ram Narain was having a licence to drtve Light Motor
Vehicle. The learned counsel for the Insurance Company, referring to
F various provisions of the Act submitted that if a person is having licence
to drive Light Motor Vehicle, he cannot drive a transport vehicle unless
his driving licence specifically entitles him so to do (Section 3). Clauses
(14), (21 ), (28) and (47) of Section 2 make it clear that if a vehicle is
'Light Motor Vehicle', but falls under the category of Transport Vehicle:,
G the driving licence has to be duly endorsed under Section 3 of the Act. If
it is not done, a person holding driving licence to ply Light Motor Vehicle
cannot ply transport vehicle. It is not in dispute that in the instant case,
Ram Narain was having licence to drive Light Motor Vehicle. The licence
was not endorsed as required and hence, he could not have driven Tata
H 709 in absence of requisite endorsement and Insurance Company could
NEWINDIAASSURANCECO.LTD. v. PRABHULAL 737
[THAKKER, J.]
not be held liable. A
29. We find considerable force in the submission of the learned
counsel for the Insurance Company. We also find that the District Forum
considered the question in its proper perspective and held that the vehicle
driven by Ram Narain was covered by the category of transport vehicle
under Clause (47) of Section 2 of the Act. Section 3, therefore, required B
the driver to have an endorsement which would entitle him to ply such
vehicle. It is not even the case of the complainant that there was such
endorsement and Ram Narain was allowed to ply transport vehicle. On
the contrary, the case of the complainant was that it was Mohd. Julfikar
who wa~ driving the vehicle. To us, therefore, the District Forum was right C
in holding that Ram Narain could not have driven the vehicle in question.
30. The learned counsel for the complainant, however, heavily relied·
upon Ashok Gangadhar. In that case, the appellant was the owner of a
truck, Light Motor Vehicle, which was insured with the respondent D
Insurance Company. The vehicle met with an accident and a claim was
lodged by the complainant before the Consumer Commission. It was
contended by the Insurance Company that the truck was a goods carriage
or a transport vehicle and since the driver of the truck was holding a driving
licence issued in Fonn No.6 to drive light motor vehicle only, he was not E
authorized to drive transport vehicle as there was no endorsement on his
driving licence authorizing him to drive such transport vehicle. The
aggrieved complainant approached this Court. Allowing the appeal and
setting aside the order passed by the Commission, this Court held that
---l the driver of the vehicle was holding a valid driving licence for driving a F
Light Motor Vehicle and there was no material on record to show that
he was disqualified from holding an effective valid licence at the time of
accident. In view of those facts, the Court held that the policy did not
insist on the driver to have a licence to drive a transport vehicle by obtaining
a specific endorsement. Considering the definition of'Light Motor Vehicle' G
as given in Clause (21) of Section 2 of the Act, this Court held that such
Light Motor Vehicle (LMV) cannot always mean a light goods carriage.
A Light Motor Vehicle (LMV) can be a non-transport vehicle as well.
The Court proceeded to observe that since there was neither a pleading
nor a permit produced on record, the vehicle remained as a Light Motor
H
738 SUPREME COURT REPORTS [2007] 12 S.C.R.
,- -
A Vehicle. And though it can be said to have been designed to use as a
transport vehicle or a goods carriage, it could not be held on account of
statutol)· prohibition contained in Section 66 of the Act to be a transport
vehicle. It was, therefore, held that the Commission was not right in
rejecting the claim of the claimant. Accordingly this Court set aside the
B order passed by the Commission and directed the Insurance Company
to pay compensation to the complainant.
31. It is no doubt true that in Ashok Gangadhar, in spite of the
fact that the driver was holding valid driving licence to ply Light Motor
Vehicle (LMV), this Court upheld the claim and ordered the Insurance
c Company to pay compensation. But, in our considered opinion, the learned
counsel for the Insurance Company is right in submitting that it was
because of the fact that there was neither pleading nor proof as regards
the permit issued by the Transport Authority. In absence of pleading and
p?'oof, this Court held that, it could not be said that the driver had no
~
D valid licence to ply the vehicle which met with an accident and he could
not be deprived of the compensation. This is clear if one reads paragraph
11 of the judgment, which reads thus:
"11. To reiterate, since a vehicle cannot be used as transport
vehicle on a public road unless there is a permit issued by the
E
Regional Transport Authority for that purpose, and since in
the instant case there is neither a pleading to that effect by
any party nor is there any permit on record, the vehicle in
question would remain a light motor vehicle. The respondent
also does not say that any permit was granted to the appellant for
F plying the vehicle as a transport vehicle under Section 66 of the
Act, Moreover, on the date of accident, the vehicle was not
carrying any goods, and though it could be said to have been
designed to be used as a transport vehicle or goods-carrier, it
cannot be so held on account of the statutory prohibition contained
G in Section 66 of the Act".
(emphasis supplied)
.. "'
32. In our judgment, Ashok Gangadhar did not lay down that the
driver holding licence to drive a Light Motor Vehicle need not have an
H
NEWINDIAASSURANCECO.LTD. v. PRABHULAL 739
[THAKKER, J.]
endorsement to drive transport vehicle and yet he can drive such vehicle. A
It was on the peculiar facts of the case, as the Insurance Company neither
pleaded nor proved that the vehicle was transport vehicle by placing on
record the permit issued by the Transport Authority that the Insurance
Company was held liable.
33. In the present case, all the facts were before the District Forum. B
It considered the assertion of the complainant and defence of the Insurance
Company in the light of the relevant documentary evidence and held that
it was established that the vehicle which met with an accident was a
'transport vehicle'. Ram Narain was having a licence to drive Light Motor
Vehicle only and there was no endorsement as required by Section 3 of C
the Act read with Rule 16 of the Rules and Form No.6. In view of
necessary documents on record, the Insurance Company was right in
submitting that Ashok Gangadhar does not apply to the case on hand and
the Insurance Company was not liable.
D
34. The matter can be looked from another angle also. Section 14
referred to above, provides for currency oflicence to drive motor vehicles.
Sub-section (2) thereof expressly enacts that a driving licence issued or
renewed under the Act shall, "in the case of a licence to drive a transport
vehicle, be effective for a period of three years". It also states that "in the E
case of any other licence, if the person obtaining the licence, either
originally or on renewal thereof, had not attained the. age of fifty years on
the date of issue or, as the case may be, renewal thereof, be effective for
a period of twenty years from the date of such issue or renewal". It is
--I
thus clear that if a licence is issued or renewed in respect of a transport F
vehicle, it can be done only for a period of three years. But, in case of
any other vehicle, such issuance or renewal can be for twenty years
provided the person in whose favour licence issued or renewed had not
attained the age of 50 years. In the present case, the licence was renewed
on November 17, 1995 upto November 16, 2015 i.e. for a period of
._, twenty years. From this fact also, it is clear that the licence was in respect G
of 'a motor vehicle other than the transport vehicle'.
35. The learned counsel for the Insurance Company also referred
to a decision of this Court in National Insurance Company v. Kusum
Rai & Ors., [2006] 4 SCC 250, wherein this Court held that ifthe vehicle H
740 SUPREME COURT REPORTS [2007] 12 S.C.R.

A is a taxi which is being driven by a driver holding licence for driving Light
Motor Vehicle only without there being any endorsement for driving
transport vehicle, the Insurance Company cannot be ordered to pay
compensation.
36. We may also refer to a decision of the High Court ofHimachal
B Pradesh in New India Assurance Co. Ltd., Shim/av. Suraj Prakash
& Ors., AIR (2000) HP 91. There the vehicle involved in an accident
was taxi, a public service vehicle. But the licence issued in favour of the
driver was to ply light motor vehicle and there was no endorsement to
drive transport vehicle. It was, therefore, held by the High Court that the
C Insurance Company cannot be saddled with the liability to pay
compensation to the claimant. There too, the claimant placed reliance on
Ashok Gangadhar. The Court, however, distinguished it observing that
"there was neither any evidence therein nor was there any claim for insurer
that the vehicle concerned therein was having a permit for goods carriage
D or that it had a permit or authori:zation for plying the vehicle as a transport
vehicle". In our considered view, the High Court was right in taking the
above view.
37. The learned counsel for the complainant invited our attention to
E certain decisions of this Court. In Skandia Insurance Co. Ltd. v.
Kokilaben Chandravadan & Ors., [1987] 2 SCC 654, it was held that
if a truck driver leaves the truck with engine in motion after handing over
the truck to cleaner who was not a duly licensed person who drives the
truck which causes an accident, it cannot be contended by the Insurance
F Company that it would not be liable to pay compensation to a third party
who sustains injury because of the accident.
38. The ratio laid down in Skandia Insurance Co. Ltd., in our
considered opinion, does not apply to the case on hand as it was in
respect of 'third party' that the Court held that the Insurance Company
G must pay compensation. This is clear from paragraph 13 of the judgment
in which the Court stated:
"13. In order to divine (sic derive) the intention of the legislature
in the course of interpretation of the relevant provisions there can
scarcely be a better test than that of probing into the motive and
H
NEWINDIAASSURANCECO.LTD. v. PRABHULAL 741
-. ,. [THAKKER, J.]
philosophy of the relevant provisions keeping in mind the goals to A
be achieved by enacting the same. Ordinarily it is not the concern
ofthe legislature whether the owner of the vehicle insures his vehicle
or not. If the vehicle is not insured any legal liability arising on
account of third party risk will have to be borne by the owner of
the vehicle. Why then has the legislature insisted on a person using B
a motor vehicle in a public place to insure against third party risk
by enacting Section 94. Surely the obligation has not been imposed
in order to promote the business of the insurers engaged in the
business of automobile insurance. The provision has been inserted
in order to protect the members of the Community travelling in c
vehicles or using the roads from the risk attendant upon the user
of motor vehicles on the roads. The law may provide for
compensation to victims of the accidents who sustain injuries in the
course of an automobile accident or compensation to the
dependents of the victims in the case of a fatal accident. However, D
such protection would remain a protection on paper unless there
is a guarantee that the compensation awarded by the Courts would
be recoverable from the persons held liable for the consequences
of the accident. A Court can only pass an award or a decree. It
cannot ensure that such an award or decree results in the amount E
awarded being actually recovered, from the person held liable who
may not have the resources. The exercise undertaken by the law
Courts would then be an exercise in futility. And the outcome of
the legal proceedings which by the very nature of things involve
----1 the time cost and money cost invested from the scarce resources
of the Community would make a mockery of the injured victim, F
or the dependents of the deceased victim of the accident, who
themselves are obliged to incur not inconsiderable expenditure of
time, money and energy in litigation. To overcome this ugly situation
the legislature has made it obligatory that no motor vehicle shall
-- be used unless a third party insurance is in force. To use the vehicle G
without the requisite third party insurance being in force is a penal
offence (Section 94 of the Motor Vehicles Act). The legislature
was also faced with another problem. The insurance policy might
provide for liability walled in by conditions which may be specified
H
t
742 SUPREME COURT REPORTS [2007] 12 S.C.R.
., ~

A in the contract of policy. In order to make the protection real, the
legislature has also provided that the judgment obtained shall not
be defeated by the incorporation of exclusion clauses other than
those authorised by Section 96 and by providing that except and
save to the extent permitted by Section 96 it will be the obligation
B of the Insurance Company to satisfy the judgment obtained against
the persons insured against third party risks. (vi de Section 96). In
other words, the legislature has insisted and made it incumbent on
the user of a motor vehicle to be armed with an insurance policy
covering third party risks which is in conformity with the provisions
c enacted by the legislature. It is so provided in order to ensure that
the injured victims of automobile accidents or the dependents of
the victims of fatal accidents are really compensated in terms of
money and not in terms of promise. Such a benign provision
enacted by the legislature having regard to the fact that in the
D modem age the use of motor vehicles notwithstanding the attendant "'
hazards, has become an inescapable fact of life, has to be
interpreted in a meaningful manner which serves rather than defi::ats
the purpose of the legislation. The provision has therefore to be
interpreted in the twilight of the aforesaid perspective".
E 39. Similar is the reasoning and conclusion in B. VNagaraju v. Mis.
Oriental Insurance Co. Ltd., [1996] 4 SCC 647. In that case, there
was breach of condition as to carry passengers in a goods vehicle more
than the number permitted in terms of insurance policy. The Court there
held that the breach of the said provision could not be said to be such a ,._ -
F fundamental character so as to afford ground to the insurer to deny
indemnification unless there were some factors which contributed to the
causing of the accident. The Court held that exclusionary permission in
the insurance policy must be retained so as to serve the main purpose of
the policy which was to indemnify the damage caused to the vehicle.
G ,-
40. In Jitendra Kumar v. Oriental Insurance Co. Ltd. & Anr, )-

[2003] 6 SCC 420, the Court held that ifthe vehicle was damaged due
to accidental fire, the fact that the driver was not holding valid driving
licence at the time of incident would not empower the Insurance Company
to repudiate the claim and it could not be put forward as a ground to
H
NEWINDIAASSURANCECO.LTD. v. PRABHULAL 743
[THAKKER, J.]
deny the liability of the Insurance Company that the driver did not have A
valid licence at the time of accident in question.
41. Finally, a reference was made to National Insurance Co. Ltd.
v. Swaran Singh & Ors., [2004] 3 SCC 297. That case also related to
third party victims of motor vehicle accidents and to us the ratio in Swaran
Singh does not carry the case of the claimant further. B
42. For the aforesaid reasons, in our opinion, the conclusion arrived
at by the District Forum cannot be said to be faulty and it was right in
holding that on the basis of the evidence adduced by the Insurance
Company, the complainant was not entitled to claim any compensation c
from the Insurance Company and Insurance Company cannot be held
liable. The decision could not have been interfered with by the State
Commission or by the National Commission and hence the orders of the
State Commission and National Commission are liable to be set aside by
restoring the order passed by the District Forum. we do accordingly. D
43. The appeal is, therefore, allowed. The orders passed by the State
Commission and National Commission are set aside and the order passed
by the District Forum is restored.
44. In the matter of Nasir Ahmed (SLP No. 7618 of 2005), the E
vehicle was a luxury taxi-passenger carrying commercial vehicle. There
also the driving licence issued in favour of the driver was to ply Light Motor
Vehicle (LMV) and hence the driver could not have driven the vehicle in
question. In that case too, the licence was renewed for a period of twenty
years i.e. from February 5, 2000 to February 4, 2020. Again, there was F
no endorsement as required by Section 3 of the Act. A specific plea was
taken by the Insurance Company but the Authorities held the Insurance
Company liable which could not have been done. The reasoning and
conclusion arrived at by us in the matter of Prabhu Lal (SLP No. 7370
of 2004) would apply to the case of Nasir Ahmed. That appeal is, G
therefore, allowed.
45. In Chandra Prakash Saxena (SLP No. 17794 of 2004), the
vt:hicle involved in accident was a Jeep Commander made by Mahindra
& Mahindra, a passenger carrying commercial vehicle, and in view of the
H
744 SUPREME COURT REPORTS [2007] 12 S.C.R.

A fact that the driver was holding licence to drive Light Motor Vehicle
(LMV), he could not have plied the vehicle in question. For the reasons
recorded hereinabove in the main matter of Prabhu Lal i.e. SLP(C) No.
7370 of2004, the Insurance Company could not have been held liable
and that appeal also deserves to be allowed.
B 46. For the foregoing reasons, all the three appeals are allowed and
the orders passed against the Insurance Company are set aside holding
that the Insurance Company cannot be held liable. There shall, however,
be no order as to costs.
C N.J. Appeal allowed.

\--