Holding

Possession of an effective licence for the class of vehicle is mandatory; the driver lacked such a licence, so the insurer is not liable to pay the claim, though it may recover the amount from the vehicle owner.

Summary

The case concerned a claim for compensation under the Motor Vehicles Act, 1988 arising from an accident involving an auto‑rickshaw that was insured as a goods‑carrying public carrier. The insurer, New Indian Assurance Co., argued that it should not be liable because the driver, Salim Amadbhai, held only a licence for a three‑wheeler and not a licence for a transport vehicle as required by Section 10 of the Act. The Motor Accident Claims Tribunal and the Gujarat High Court held the insurer liable and ordered payment of the award. On appeal, the Supreme Court examined the classification of the vehicle under the Central Motor Vehicles Rules and the requirement of an effective licence for the class of vehicle driven. It held that the driver did not possess a valid licence for a transport vehicle, making the insurer not liable under the Act, though it may recover the amount from the vehicle’s owner under its equitable jurisdiction. Consequently, the appeal was allowed, setting aside the lower courts’ orders.

Issues considered

Whether an insurer is liable to pay compensation under the Motor Vehicles Act when the driver of the insured vehicle does not hold a valid licence for the class of vehicle (transport vehicle) driven.

Legislation cited

Constitution of Indias. 142
Motor Vehicles Act, 1988s. 10, s. 14(2)(a), s. 173, s. 3, s. 41(4)
Motor Vehicles Rules, 1989s. 51

Subjects

Motor Vehicles Actinsurance liabilitydriving licence validitytransport vehiclecompensation claimArticle 142Central Motor Vehicles Rulesdriver licence breach

Judgment

[2008] 8 S.C.R. 328

A NEW INDIAN ASSURANCE CO. LTD.
v.
ROSHANBEN RAHEMANSHA FAKIR & ANR.
(Civil Appeal No. 3496 of 2008)
MAY 12, 2008
B
[S.B. SINHA AND LOKESHWAR SINGH PANTA, JJ.]

Motor Vehicles Act, 1988- s. 10- Motor accident - Claim
for compensation - Courts below holding insurance company
c liable to reimburse the claim - On appeal, held: Insurance
Company not liable to pay the claim - Driver of the offending
vehicle was not holding a valid licence - Direction to the In-
surance Company to satisfy the claim and later recover the
same from the owner of the offending vehicle - Motor Vehicles
Rules, 1989 - r. 51 - Notification issued by Central Govern-
0
ment vide S.O. 451 (E) dated 19.6.1992 - Constitution of In- ){ .
dia, 1950-Article 142.
The vehicle in question was insured as a goods car-
rying public carrier. The vehicle caused accident. Claim
E for compensation under Motor Vehicles Act, 1988 was
contested by the appellant-Insurance Company on the
ground that the driver of the vehicle was not having a valid
licence to drive the offending vehicle, as he was holding
a licence for driving a three-wheeler. Claims Tribunal held
F the Insurance Company liable to reimburse the claim. In
appeal, High Court upheld the order of the Tribunal. Hence
the present appeal.
Allowing the appeal, the Court
G HELD: Driver of the offending vehicle was not hold-
ing an effective licence. Possession of an effective licence
is necessary in terms of Section 10 of the Motor Vehicles ~ ·~
Act. The Notification issued by Central Government vide
S.O. 451 (E) dated 19.6.1992 clearly postulates that a three

H 328
NEW INDIAN ASSURANCE CO. LTD. v. 329
ROSHANBEN RAHEMANSHA FAKIR & ANR.
,.I
wheeled vehicle for transport of passengers or goods A
comes within the purview of clause 5 of the table ap-
pended thereto. The licence granted in favour of the driver
goes to show that the same was granted for a vehicle
other than the transport vehicle. It was valid from
13.05.2004 to 12.05.2024. Section 14(2)(a) provides that a B
driving licence issued or renewed under the Act shall, in
;I\ case of a licence to drive a transport vehicle will be effec-
tive for a period of three years whereas in the case of any
other vehicle it can be issued or renewed for a period of
20 years from the date of issuance or renewal. The fact c
that the licence was granted for a period of 20 years, thus,
clearly shows that the driver of the vehicle, was not
granted a valid driving licence for driving a transport ve-
hicle. Hence, the impugned judgment cannot be sus-
tained. In exercise of jurisdiction under Article 142 of the
D
Constitution of India, it is directed that the appellant may
* satisfy the award in favour of the claimants to recover the
same from the owner. [Paras 10, 12 and 15] [334-E, 333-F-
H; 334-A; 336-C-D]
National Insurance Co. Ltd. v. Swaran Singh and Ors. E
""" 2004 (3) SCC 297; National Insurance Company Ltd. v.
Annappa lrappa Nesaria and Ors. 2008 (1) SCALE 642 - re-
lied on .
..-I
National Insurance Company v. Kusum Rai 2006 (4) SCC
.... F
250 - referred to.
CIVILAPPELLATE JURISDICTION: Civil Appeal No. 3496
of 2008
From the final Judgment and Order dated 13.11.2006 of
the High Court of Gujarat at Ahmedabad in First Appeal No. G
;
3441 of 2006
+
Dr. Meera Agarwal and Ramesh Chandra Mishra for the
Appellant.
Sarda Devi for the Respondents. H
330 SUPREME COURT REPORTS [2008) 8 S.C.R.

).
A The Judgment of the Court was delivered by
S.B. SINHA, J. 1. Leave granted.
2. This appeal is directed against a judgment and order
dated 13.11.2006 passed by a Division Bench of the High Court
B of Gujarat at Ahmedabad in First Appeal No.3441 of 2006
whereby and whereunder an appeal preferred by the appellant
herein from a judgment and order dated 5.5.2006 passed by
the Motor Accident Claims Tribunal (Main}, Rajkot in MPCP •
No.1211 of 2005 has been dismissed.
c 3. One Majothee Salim Amadbhai was holder of a licence
of a three wheeler. The licence was not meant to be used to
drive transport vehicle. The vehicle was owned by one
Rashmikant Natvarlal Joshi, Respondent No.2. The Tribunal
correctly noticed the description of the class of vehicle, i.e., an
D Autorikshaw Delivery Van. It was not being used for a private
purpose. It was a commercbl vehicle. Respondent No.2, ad-
mittedly, entered into a contract of insurance in respect of the
said vehicle. Certificate of insurance shows that the vehicle was
a goods carrying public carrier within the meaning of Rule 51 of
E the Central Motor Vehicles Rules, 1989.
4. One of the contentions raised by the appellant was that
the driver of the said vehicle being not holder of a legal, valid
and effective driving licence, it was not liable to reimburse the
claim of the claimants. Learned Tribunal negatived the said plea. ....
F ...
5. On an appeal preferred by the appellant before the High
Court under Section 173 of the Motor Vehicles Act, 1988 the
High Court held as under :
"Section 41 of the Act provides for registration
G of motor vehicles and sub-section (4) thereof
provides as under :
+ ..
'(4) In addition to the other particulars required
to be included in the certificate of registration,
it shall also specify the type of the motor vehicle,
H
NEW INDIAN ASSURANCE CO. LTD. v. 331
ROSHANBEN RAHEMANSHA FAKIR & ANR. [S.B. SINHA, J.]

being a type as the Central Government may, A
having regard to the design, construction and
use of the motor vehicle, by notification in the
official Gazette, specify.'
In exercise of the aforesaid powers, the Central
Government issued notification vide S.0.451(E), dated 8
19th June, 1992 published in the Gazette of India, Extra
Pt.II, Section 3(ii) dated 19th June, 1992 specifying the
types of motor vehicles. Relevant portion of the said
notification reads as under :
c
'In exercise of the power conferred by sub-
section (4) of Section 41 of the Motor Vehicles
Act, 1988 (59 of 1988) and in supersession of
the Notification No.S.0.436(E), dated the 12th
June, 1989 except or respects things done or
0
omitted to be done before such supersession,
the Central Government hereby specifies the
types of Motor Vehicles mentioned in column 2
of the Table below as the type and respect of
Motor vehicles specified in the corresponding E
entry in column 1 thereof for the purposes of
sub-section(4) :
TABLE

Transport Vehicle Non-Transport Vehicle
F
(1) (2)
(i) ... (i) ...
(ii) to (ix) ... (ii) to (iv) ...
(x) Three-wheeled ve- (v) Three-wheeled vehicles G
hicles transport of for personal use.
passenger/goods

We find that the same classification is maintained in the
subsequent notification dated 5th November 2004 H
332 SUPREME COURT REPORTS [2008) 8 S.C.R.

A published in the Gazette of India, Extra-ordinary, Part-II,
Section 3(ii) dated 5th November, 2004 in exercise of the
same powers under sub-section (4) of Section 41 of the
Act. The relevant entries therein read as under :
Transport Vehicle Non-Transport Vehicle
B
(1) (2)
(i) to (iv) (i) to (iii)
(v) Three-wheeled ve- (iv) Three-wheeled vehicles
hicles for transport of for personal use.
c passenger/goods

8. A bare perusal of the above statutory orders would
clearly show that an auto rickshaw being a three wheeled
vehicle will fall in the same category whether it is for
D transporting goods or for transporting passengers. There
is nothing on record to show that the licence in question
was for a three wheeled vehicle for personal use and that
it was not for an auto rickshaw for carrying passengers or
for carrying goods. n
E
6. An appeal preferred by the appellant was dismissed
summarily. Before the High Court, a decision of this Court in
National Insurance Company v. Kusum Rai [(2006) 4 SCC
250] was cited. The High Court opined that the said decision
has no application in the instant case.
F
7. Dr. Meera Agarwal, learned counsel appearing on be-
half of the appellant, would submit that in view of the fact that the
registration certificate as also the policy of insurance having
clearly mentioned that the vehicle in question was a transport
G vehicle and as the driver thereof was not possessing a licence
which was not valid for a transport vehicle, the impugned judg- l ..
ment cannot be sustained.
8. Ms. Sarda Devi, learned counsel appearing on behalf
of the respondent, on the other hand would submit that the driver
H of the vehicle was having an effective driving licence for auto
NEW INDIAN ASSURANCE CO. LTD. v. 333
ROSHANBEN RAHEMANSHA FAKIR & ANR. [S.B. SINHA, J.]
~
rickshaw and it did not matter as to whether it was adapted for A
carrying passengers or goods.
9. Section 3 of the Motor Vehicles Act reads as under:

"Section 3 - Necessity for driving licence.- (1) No
person shall drive a motor vehicle in any public place unless B
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 than1[a motor cab or
motor cycle] hired for his own use or rented under any
scheme made under subsection (2) of section 75] unless c
his driving licence specifically entitles him so to do.

(2) The conditions subject to which sub-section (1) shall
not apply to a person receiving instructions in driving a
motor vehicle shall be such as may be prescribed by the
Central Government." D
,._
10. Section 10 of the Act provides for classes of the driv-
ing licence. Different classes of vehicle have been defined in
different provisions of the Motor Vehicles Act. The 'transport
vehicle' is defined in Section 2(47) of the Act to mean a public
E
service vehicle, a goods carriage, an educational institution bus
or a private service vehicle. We have noticed hereinbefore the
provisions of sub-section (4) of Section 41. We have also no-
ticed the notification issued by the Central Government in this
_. behalf. The said notification clearly postulates that a three
»- wheeled vehicle for transport of passengers or goods comes F
within the purview of clause 5 of the table appended thereto.
The liecence granted in favour of the said Salim Amadbhai goes
to show that the same was granted for a vehicle other than the
transport vehicle. It was valid from 13.05.2004 to 12.05.2024.
Section 14(2)(a) provides that a driving licence issued or re- G
newed under the Act shall, in case of a licence to drive a trans-
,. ~
port vehicle will be effective for a period of three years whereas
in the case of any other vehicle it can be issued or renewed for
a period of 20 years from the date of issuance or renewal. The
fact that the licence was granted for a period of 20 years, thus, H
334 SUPREME COURT REPORTS [2008) 8 S.C.R.

A clearly shows that Salim Amadbhai, driver of the vehicle, was
not granted a valid driving licence for driving a transport ve-
hicle.

11. The same is also borne out from the licence in ques-
tion. The attention of the High Court, however, was not drawn to
B these aspects of the matter.

The learned Tribunal also, in its judgment dated 5.5.2006
noticed the facts in the following terms :

"When they were proceeding on road on foot and reached
C near Fire brigade, a rickshaw bearing No.GRP 5432 with
closed body came in fast speed, rashly and negligently
from behind and dashed with the complainant lkbala and
deceased Mahamadsha as a result of which both of them
fell down, sustained injuries, deceased sustained serious
D injuries on his head and other parts of the body, and during
the course of treatment he succumbed to the injuries."

12. From the discussions made hereinbefore, it is evident
that the driver of the vehicle was not holding an effective licence.
Possession of an effective licence is necessary in terms of
E Section 1Oof the Motor Vehicles Act.
13. In National Insurance Co. Ltd. v. Swaran Singh and
Ors. [(2004) 3 SCC 297], this Court opined :
"89. Section 3 of the Act casts an obligation on a driver to
F hold an effective driving licence for the type of vehicle
which he intends to drive. Section 10 of the Act enables
the Central Government to prescribe forms of driving
licences for various categories of vehicles mentioned in
sub-section (2) of the said section. The various types of
G vehicles described for which a driver may obtain a licence
for one or more of them are: (a) motorcycle without gear, t ..

(b) motorcycle with gear, (c) invalid carriage, (d) light motor
vehicle, (e) transport vehicle, (f) road roller, and (g) motor
vehicle of other specified description. The definition clause
H in Section 2 of the Act defines various categories of
NEW INDIAN ASSURANCE CO. LTD. v. 335
ROSHANBEN RAHEMANSHA FAKIR & ANR. [S.B. SINHA, J.]
.,..
vehicles which are covered in broad types mentioned in A
sub-section (2) of Section 10. They are "goods carriage",
"heavy goods vehicle", "heavy passenger motor vehicle",
"invalid carriage", "light motor vehicle", "maxi-cab",
"medium goods vehicle", "medium passenger motor
vehicle", "motor-cab", "motorcycle", "omnibus", "private B
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 possessing a driving licence for
"motorcycle without gear", [sic may be driving a vehicle]
c
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
.... D
' before the Tribunal, a decision has to be taken whether
tr1e fact of the driver possessing licence for one type of
vehicle but found driving another type of vehicle, was the
main or contributory cause of accident. If on facts, it is
found that the accident was· caused solely because of
some other unforeseen or intervening causes like E
mechanical failures and similar other causes having no
nexus with the driver not possessing requisite type of
_,., licence, the insurer will not be allowed to avoid its liability
,. merely for technical breach of conditions concerning
driving licence. F
The said decision has been considered by this Court in
Kusum Rai (supra).
14. In National Insurance Company Ltd. v. Annappa
lrappa Nesaria and Ors. [(2008) 1 SCALE 642], it was noticed G
that the provisions of the Act have undergone a change. The
" t definition of 'light motor vehicle' would not include a light trans-
port vehicle. In that case, keeping in view the date on which the
accident took place, it ·.vas held :
H
336 SUPREME COURT REPORTS (2008] 8 S.C.R.

....
A "From what has been noticed hereinbefore, it is evident 'k
that transport vehicle has now been substituted for
'medium goods vehicle' and 'heavy goods vehicle'. The
light motor vehicle continued, at the relevant point of time,
to cover both, light passenger carriage vehicle and light
B goods carriage vehicle.
A driver who had a valid licence to drive a light motor
vehicle, therefore, was authorized to drive a light goods •
vehicle as well."

c 15. For the reasons aforementioned, the impugned judg-
ment cannot be sustained. The same is set aside accordingly.
However, in exercise cl our jurisdiction under Article 142 of the
Constitution of India, we direct that the appellant may satisfy the
award in favour of the claimants to recover the same from the
owner. The appeal is allowed with the aforementioned direc-
D
tions. No costs. ~

K.K.T. Appeal allowed.

t ..