Holding

The insurer is not liable for the claim; liability rests on the vehicle owner under Sections 4 and 5 of the Motor Vehicles Act, 1988.

Summary

A fatal road accident occurred on 5 February 1997 when a vehicle owned by the respondent was driven by Karan Arora, a 15‑year‑old who did not possess a valid driving licence. The deceased's family claimed compensation from United India Insurance Company, which denied liability on the ground that the driver was unlicensed and a minor. The Motor Vehicles Tribunal upheld the insurer's position, but the Punjab and Haryana High Court reversed, holding that the insurer was liable because there was no breach of contract by the vehicle owner. The Supreme Court set aside the High Court judgment, observing that Sections 4 and 5 of the Motor Vehicles Act, 1988 impose a statutory duty on the owner not to permit an unlicensed minor to drive, making the insurer not liable and entitling it to recover the paid amount from the owner. Consequently, the appeal was allowed and the tribunal's decision restored.

Issues considered

Whether the insurer is liable to pay compensation when the vehicle was driven by a minor without a valid licence.
Whether a breach of the insurance contract by the vehicle owner is necessary to establish insurer liability.
Whether Sections 3, 4, 5 and 10 of the Motor Vehicles Act, 1988, bar the insurer’s liability in such circumstances.

Legislation cited

Motor Vehicles Act, 1988s. 10, s. 149, s. 3, s. 4, s. 5

Subjects

Motor Vehicles Actinsurance liabilityminor driverbreach of contractstatutory dutythird‑party claimcompensation

Judgment

[2008] 13 S.C.R. 982

•'
A UNITED INDIA INSURANCE CO. LTD.
v.
RAKESH KUMAR ARORA & ORS.
(Civil Appeal No. 5876 of 2008)
SEPTEMBER 24, 2008
B
[S.B. SINHA AND CYRIAC JOSEPH,JJ]

Motor Vehicles Act, 1988:
ss. 3, 4, 5 and 10 - Fatal accident - Claim petition - Driver
c of offending vehicle aged about 15 years - Tribunal holding
Insurer not liable - High Court holding that there was no breach
of contract on the part of insured and thus insurer was liable -
HELD: The vehicle in question was being driven by a person
aged 15 years, who did not have any valid driving licence on
D date of accident - s. 5 imposes a statutory responsibility upon
the owner of a motor vehicle not to cause or permit any per-
son who does not satisfy the provisions of s. 3 or s. 4 to drive
the vehicle - High Court did not advert to itself the provisions
of ss. 3 and 4 of the Act and thus misdirected itself in law -
E The judgment of the High Court is set aside and that of the
Tribunal restored - However, as no stay was granted by the
High Court and the Insurer deposited the entire amount, which
has since been withdrawn by the claimant, the Insurer shall be
entitled to recover the amount from owner of the vehicle. [para
F 15-16, 18 and 21]
National Insurance Co. Ltd. vs. Kaushalaya Devi & Ors.
2008(8) SCR 500=2008(8) SCALE 500 - relied on.
Oriental Insurance Co. Ltd. vs. Prithvi Raj 2008(1) SCR
1180=2008(1) SCALE 727 - referred to.
G
V Mepherson and another vs. Shiv Charan Singh and oth-
ers 1998 ACJ 601; and Skandia Insurance Company Limited
vs. Koki/aben Chandravadan and others 1987 ACJ 411 - cited.

H 982
UNITED INDIA INSURANCE CO. LTD. v. RAKESH 983
) KUMAR ARORA & ORS.

~
Case Law Reference A
• 2008(8) SCR 500 relied on para 12
2008(1)'SCR 1180 referred to para 19
\ CIVILAPPELLATE JURISDICTION: Civil Appeal No. 5876
I
...f ~ of 2008 · · · · B
'
,From the final Judgment and Order dated 20.5.2004 of
~

I the High Court of Punjab and Haryana at Chandigarh in LP.A
No. 1880 of 2000
K.L. Nandram and Debasis Misra for the Appellant.
' i
c
. Sachin Jain, Dr. Kailash Chand, Suraj Rahitesh and
Romeshwar Prasad Goyal for the Respondents,
"' The following Order of the Courtwas delivered

'I 1. Delay condoned. D
2. Substitution allowed.
-i
3. Application for Abatement is set aside.
"
4. Leave granted.
E
5. This appeal is directed against the judgment and order
dated 20.5.2004 passed by a Division Bench of the Punjab and
Haryana High court at Chandigarh whereby and whereunder
the Letters Patent Appeal preferred by the appellant herein from
.... th.e judgment and order dated 9. 10.2000 passed by the learned
F
. Single Judge in the said FA.No. 2627of1998 was dismisseq,
i ·s. One Balwant Singh filed an application claiming a sum
~
of Rs. 10,00,000/- (Rupees Ten Lakhs) by way of compensa-
: · tion for death of his son Virender Singh in an accident which
. took place on 5.2.1997. The owner of the vehicle contested the G
,, said claim. Appellant herein, inter alia, raised a contention be-
· fore the Tribunal that the driver of the vehicle, namely, Karan
~ •· Arora was a minor on the date of the accident and was not hold-
·. ing a valid and effective driving licence and thus it was not Ii-
·able to reimburse the owner of the vehicle.
-< H
'
984 SUPREME COURT REPORTS [2008] 13 S.C.R.

A 7. In view of the aforementioned stand taken by the appel-
lant inter alia the following issue was framed:
Whether the accident resulting in death of Virender Singh
alias Rinku, took place due to rash and negligent driving
of car bearing registration No. HR41/3347 by respondent
8 driver Karan Arora?

8. While determining the said issue the learned Tribunal
opined that the Insurance Company was not liable for payment
of the amount of compensation to the claimants, stating:
c "From the bare perusal of the evidence of respondent
driver Karan Arora appearing as RW1, which has been
reproduced almost in its entirety in para nos. 19 to 22 at
pages 10 to 13 of th is award, it becomes absolutely clear
that he was aged about 15 years, he does not know driving;
D he was born on 7.8.1983 and that he is not having any
driving licence till 25.7.1998, when his statement was
recorded. In these circumstances, I return a firm finding
that respondent driver Karan Arora had no valid/effective
driving licence on the day of the accident i.e. 5.2.1997."
E 9.An appeal under Sec.173 of the MotorVehiclesAct 1988
was filed before the High court which was marked as First Ap-
peal from Order No.2627/1998. A learned single Judge of the
said Court allowed the said appeal, holding:

F "After considering the rival contentions of the parties, I am
of the opinion that the material point for determination is .
whether there was any breach of contract between the
owner of the vehicle and the insurance company. If the
breach is committed on behalf of the vehicle, certainly the
Insurance Company has a case. In order to bring the case
G
within the mischief of "breach" it has to be proved that
there was a willful default on the part of the insured. I have
already stated above that no sane father would like to give
the custody or keys of the vehicle to his minor son aged
14 years much less to the friend of the minor. Had Rakesh
H
UNITED INDIA INSURANCE CO. LTD. v. RAKESH 985
KUMAR ARORA & ORS.

· Kumar Arora parted the possession of the vehicle to his A
son he would have contemplated very easily that by doing
so he would have incited the trouble. The Hon'ble Supreme
Court 1987 while interpreting the expression "Breach''.
came to the conclusion that if it is proved on the record
that the owner of the vehicle had done every thing his B
power to keep, honour, and fulfil the promise, in such a
situation he cannot be held guilty of a deliberate breach.
There is no evidence on the record to indicate that the
owner of the vehicle parted the keys of the vehicle to his
son deliberately or knowingly. If in the absence of the father c
son takes the keys of the vehicle and drives the vehicle for
a fun and caused accident, it cannot be said .that there
was an express or implied consent on the part of the owner.
The judgments which have been relied upon by the learned
.~
counsel for the Insurance Company may not be any
D
assistance to him for the simple reason that in the said
judgments it has proved prima facie that there was a
breach of contract on the part of the insured."
10. A Letters Patent Appeal was preferred thereagainst,
which was entertained. E
11. The Division Bench of the High Court by reason of the
impugned judgment dismissed the said appeal, only relying
upon or on the basis of some precedent, viz. V Mepherson
~
and another vs. Shiv Charan Singh and others 1998 ACJ 601
and Skandia Insurance Company Limited vs. Kokilaben F
Chandravadan and others 1987 ACJ 411.
12. Mr. K.L. Nandram, learned counsel appearing on behalf
of the appellant contended that keeping in view the provisions of
Secs.4 and 5 of the Motor Vehicles Act 1988, the question of any
G
willful default on the part of the owner is wholly irrelevant in this
case as neither a licence could be granted in favour of minor nor in
~ fact the driver of the vehicle was holding a valid licence. Reliance
in this behalf has been placed on National Insurance Co. Ltd. vs.
Kaushalaya Devi & Ors. (2008 (8) SCALE 500.
,/ H
986 SUPREME COURT REPORTS (2008] 13 S.C.R.

A · 13. No body appears on behalf of respondent No.1.
14. The learned counsel appearing on behalf of the pro-
forma respondent-Smt. Kaushalya Devi submitted before us that
she has already received the amount of compensation which
had been deposited by the appellant.
8
15. Section 4 of the Motor Vehicles Act prohibits driving of
a vehicle by any person under the age of eighteen years in any
i)Ublic place. Section 5 of the Act imposes a statutory responsi-
bility upon the owners of the motor vehicles not to cause or per-
C mit any person who does not satisfy the provisions of Sec.3 or
4 to drive the vehicle.
16. The vehicle in question admittedly was being driven
by Karan Arora who was aged about fifteen years. The Tribu-
nal, as noticed hereinbefore, in our opinion, rightly held that Karan
D Arora did not hold any valid licence on the date of accident,
namely 5.2.1997.
17. The learned single Judge as also the Division Bench
of the High Court did not put unto themselves a correct question
of law. They proceeded on a wrong premise that it was for the
E Insurance Company to prove breach of conditions of the con-
tract of insurance.
18. The High Court did not advert to itself the provisions of
Sections 4 and 5 of the Motor Vehicles Act and thus misdirected
F itself in law.
19. This aspect of the matter has been considered by this
Court in Oriental Insurance Co.Ltd. vs. Prithvi Raj (2008 (1)
SCALE 727) wherein upon taking into consideration a large
number of decisions, it was held that the Insurance Company
G was not liable, stating :
"In the instant case, the State Commission has
categorically found that the evidence on record clearly
established that the licensing authority had not issued any
license, as was claimed by the Driver and the respondent.
H
UNITED INDIA INSURANCE CO. LTD . .v. RAKESH 987
KUMAR ARORA ..&. ORS .
. . ......l;~

The evidence of Shri A.V.V.F{ajarr, Jl:l'nior·Assistant of the A
Office of the Jt.
· , Commissioner & Secretary, RTfl., Hydercib~.d who
produced the official records clearly established that no
driving license was issued _to Shri ~avi~der._Kumar or
Ravinder ~ingh in qrd~r to enable and legally permit him B ·
to drive a motor vehicle. There wc;is.n,o cross examination
of the said witness. The National Commission
< ' • •l
also found
- • : ·' ' ' ~

that there was no defect in the finding recorded by the
-State,Commission in this regard." t· '· · • : . ·
...; .. - • , ' .•),_. [.,·' . .; i·_I' --~

. :. 20. Yet again this court in Natiorial·lnsurance Co.Ltd; vs. c·
Kaushalaya Dvi & Ors. 2008 (8) SCALE 500 took the same
view ~tating:
L I -~
" > >
,~ iJ ::.. • ••:::. •I I (

' ·.. ~"The provisions relating to the necessity of having a licence
to drive a vehicle is contained in Section 3,4:.and 10 of the
· ·Act. As various aspects of the said provisions, vis-a-vis, D
· the liability of the Insurance Company to r_eimburse the
, owner in respect of a claim .of a .th!rd P,ar;ty as provided in·
. Section .149 thereof have been .dealt,with in several
. decisions, it is not necessaryfor us to reite'ratethe same
.011ce over again .. Suffi.C?.e. '[t, to n~~fce .• some of the E
precedents operating in the fi~ld. , , . ,, .
In N~tional Insurance Co. Ltd. vs. Swaran Singh & Ors.
[(2004) 3 SCC 297] this Court held: •· .
. - . -.... • . t <.. -- j\

"88, Section 10 of the Act provides for forms and contents F .
of licences to drive. The licence has to be granted in the
prescribed'form. 'Thus, a licence-to drive a light motor
vehicle would entitle the holder.there to drive the vehicle
falling within that class or description. : _ ,
·89.'section 3 of the Act casts an ooligation on driver to G a
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." H
988 SUPREME COURT REPORTS [2008) 13 S.C.R.

A It was furthermore observed:
"90. We have construed and determined the scope of
sub-clause (ii) of sub-section (2) of Section 149 of the Act,
Minor breaches of licence conditions, such as want of
medical fitness certificate, requirement about age of the
B driver and the like not found to have been the direct cause
of the accident, would be treated as minor breaches of
inconsequential deviation in the matter of use of vehicles.
Such minor and inconsequential deviations with regard to
licensing conditions would not constitute sufficient ground
c to deny the benefit of coverage of insurance to the third
parties.
91. On all pleas of breach of licensing conditions taken by
the insurer, it would be open to the Tribunal to adjudicate
the claim and decide inter se liability of insurer and insured;
D
although where such adjudication is likely to entail undue
delay in decision of the claim of the victim, the Tribunal in
its discretion may relegate the insurer to seek its remedy
of reimbursement from the insured in the civil court." The
decision in Swaran Singh, however, was held to be not
E applicable in relation to the owner or a passenger of a
vehicle which is insured."
21. In view of the authoritative pronouncement of this Court
as noticed herein before, the impugned judgment cannot be sus-
F tained. It is set aside accordingly and that of the learned Tribu-
nal is restored. However, keeping in view the admitted fact that
as no stay had been granted by the High Court the appellant
has deposited the entire amount which has since been with-
drawn by the claimant-respondent; we direct that the appellant
G shall be entitled to recover the amount in question from the owner
of the vehicle, namely, respondent No.1.
22. The appeal is allowed accordingly.
23. No costs.
H R.P. Appeal allowed.