# The New India Assurance Co. Ltd v. Jagdish Singh and others

- **Citation:** (2007) 3 ILRA 678
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2007-10-09
- **Case number:** First Appeal From Order No. 594 of 2003
- **Bench:** Pankaj Mithal
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/the-new-india-assurance-co-ltd-v-jagdish-singh-and-others-41068
- **Pages:** 6

## Headnote

Sri A.B.L. Verma
Sri S.K. Johari
Sri K. Shailendra
Sri Atul Kumar Tiwari

Motor
Vehicle
Act,
1988-166Compensation-on
the
date
of
occurrence-the driver possess no valid
licence-as his licence already expiredeven for renewal not applied within 30
days from the date of expiry-heldinsurance
company
not
responsibleexcept the owner of vehicle.

Held: Para 10

In view of the above discussion it is
apparent on record that the licence of
the driver had expired and he was not
possessed of any valid driving licence on
the date of the accident. He had not even
applied for its renewal either within the
30 days of the expiry of the licence or till
the date of the accident. The owner of
the vehicle who was under a legal
obligation to ensure that the vehicle was
not driven by any unlicensed person had
also not taken care to ensure that the
driver
applies
and
get
the
licence
renewed. The purpose for issuing driving
licence for a fixed period and to provide
for its renewal is to enable the licensing
authority
to
verify
the
continued
competence of the persons to drive a
motor vehicle. A person may be rendered
unfit physically or mentally with the
passage of time or otherwise to drive
even though he was competent to do so
earlier. Thus, the non-renewal of his
driving licence coupled with the fact that
he had not even applied for its renewal
gives rise to a legitimate presumption
that he had become incompetent to drive
and was not a person competent to drive
the motor vehicle at the time of accident.
Therefore, on the facts there was a
breach of the conditions of the contract
of the insurance and accordingly the
insurance company i.e. the appellant
Oriental Insurance Company was not
liable for payment of any compensation.
Case law discussed:
J.T. 2003 (2) SC-595
J.T. 2007 (10) SC-122
J.T. 2004 (2) SC-109
J.T. 2004 (3)-343
2006 JT (4) SC-9
2007 (2) TAC-393

## Text

678 INDIAN LAW REPORTS ALLAHABAD SERIES [2007
under Section 25(1) of the Act 1860. The
Act 1860 does not contemplate any appeal
or revision against the order of the
Prescribed
Authority
passed
under
Section 25(1). The right to seek renewal
of the Registration of the Society to make
amendments in the bye-laws etc., can be
affected by the office bearers those
elections are approved by the Prescribed
Authority under Section 25(1) of the Act
of 1860. Therefore, it cannot be disputed
by any stretch of imagination that the
order passed under Section 25(1) of the
Act 1860 in respect of right to be the
office bearers of the Society is final and
conclusive so far as the Act of 1860 is
concerned.

(B) Merely because the order of the
Prescribed Authority being subject to the
orders of the Civil Court would not mean
that the order has not attained finality so
far as the Statute under which order has
been passed. Civil Suits under the
provisions of Civil Procedure Code are
maintainable in respect of civil wrongs,
except when prohibited under Section 9 of
the Civil Procedure Code or by the
provisions of Specific Relief Act or by a
statutory enactment express or implied in
that regard. Therefore, merely because an
order of the Prescribed Authority under
Section 25(1) can be challenged by way
of civil suit, will not mean that the order
has not attained finality so far as the Act
1860 is concerned.

(C)
The
power
of
ensuring
attendance of witnesses and to direct for
discovery/production
of
documents,
though not conferred upon the Prescribed
Authority, suffice are only few of the
indices relevant for deciding as to whether
the authority has exercised judicial
powers of the State or not. They are not
conclusive in themselves. It is settled
legal proposition that even if few of the
indices qua trappings of the Court are
present the authority statutory vested with
a judicial power to decide a dispute
between two persons as a part of states
inherent power it exercises judicial
functions so as to answer the description
of a Tribunal having trappings of the
Court.

24. We are in full agreement with
the judgment and order of the Division
Bench of this Court in the case of Jai
Prakash Agarwal (supra) and that the Full
Bench of this Court has not laid down any
law to the controversy in the case of Sri
Kashi Raj Mahavidyalay, Aurai (supra)
and therefore, hold that the present special
appeal which has been filed under
Chapter VIII Rule 5 of the Allahabad
High Court Rules, 1952 against the
judgment and order of the learned Single
Judge arising out of an order of the
Prescribed Authority under Section 25(1)
of the Societies Registration Act is legally
not maintainable.

25. The Special Appeal is dismissed
as not maintainable. Interim order, if any,
stands vacated.
---------
APPELLATE JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 09.10.2007

BEFORE
THE HON'BLE PANKAJ MITHAL, J.

First Appeal From Order No. 594 of 2003

The New India Assurance Company Ltd.

...Appellant
Versus
Jagdish Singh and others ...Respondents
3 All] The New India Assurance Co. Ltd. V. Jagdish Singh and others
679
Counsel for the Appellant:
Sri Satish Chaturvedi

Counsel for the Respondents:
Sri A.B.L. Verma
Sri S.K. Johari
Sri K. Shailendra
Sri Atul Kumar Tiwari

Motor
Vehicle
Act,
1988-166Compensation-on
the
date
of
occurrence-the driver possess no valid
licence-as his licence already expiredeven for renewal not applied within 30
days from the date of expiry-heldinsurance
company
not
responsibleexcept the owner of vehicle.

Held: Para 10

In view of the above discussion it is
apparent on record that the licence of
the driver had expired and he was not
possessed of any valid driving licence on
the date of the accident. He had not even
applied for its renewal either within the
30 days of the expiry of the licence or till
the date of the accident. The owner of
the vehicle who was under a legal
obligation to ensure that the vehicle was
not driven by any unlicensed person had
also not taken care to ensure that the
driver
applies
and
get
the
licence
renewed. The purpose for issuing driving
licence for a fixed period and to provide
for its renewal is to enable the licensing
authority
to
verify
the
continued
competence of the persons to drive a
motor vehicle. A person may be rendered
unfit physically or mentally with the
passage of time or otherwise to drive
even though he was competent to do so
earlier. Thus, the non-renewal of his
driving licence coupled with the fact that
he had not even applied for its renewal
gives rise to a legitimate presumption
that he had become incompetent to drive
and was not a person competent to drive
the motor vehicle at the time of accident.
Therefore, on the facts there was a
breach of the conditions of the contract
of the insurance and accordingly the
insurance company i.e. the appellant
Oriental Insurance Company was not
liable for payment of any compensation.
Case law discussed:
J.T. 2003 (2) SC-595
J.T. 2007 (10) SC-122
J.T. 2004 (2) SC-109
J.T. 2004 (3)-343
2006 JT (4) SC-9
2007 (2) TAC-393

(Delivered by Hon'ble Pankaj Mithal, J.)

1. This First Appeal From Order
under Section 173 of Motor Vehicles Act,
1988 (hereinafter referred to as an Act) by
the insurance company arises out of the
judgment order and award of the Tribunal
dated 14.1.2003 passed in MACP No.
33/70/93 (Jagdish Singh & another Vs.
Sushil Kumar Shukla & another).

2. A school going six and half year
old boy of class II was crushed to death
by the speeding tempo No. UP-76-9098.
The tempo which was owned by Sushil
Kumar Shukla was insured with New
India Insurance Company Limited. It was
being driven by the driver Raj Kumar @
Raju. On the claim petition being
preferred under Section 166 of the Act by
the parents of the deceased boy, the
Tribunal awarded a sum of Rs.1,00,000/-
with 9% interest from the date of
presentation of the petition till its payment
and the insurance company was held
liable to pay the same.

3. The only point for determination
which has been raised by the learned
counsel for the appellant New India
Insurance Company Limited is that at the
time of the accident the driver of the
tempo was not having a valid licence as
his licence had expired on 24.1.1992 and
as such since the vehicle was being driven
680 INDIAN LAW REPORTS ALLAHABAD SERIES [2007
in violation of the terms and conditions of
the
insurance
policy
the
insurance
company is not liable for the payment of
compensation.

4. It is not in dispute that the
accident took place on 5.2.1993. The
driver of the vehicle was having a licence
to drive tempo but admittedly the validity
of the said licence expired on 24.1.1992.
The driver had not applied for the renewal
of the licence. Therefore, the licence had
lapsed and as such the driver was not
possessed with any licence on the date of
the accident. However, the Tribunal in
spite of recording a finding that the driver
was not having a valid licence on the date
of accident held that as he had been issued
the driving licence, he was a person
competent to drive the vehicle and as such
the insurance company alone is liable to
pay the compensation.

5. The scheme of the Act is
sufficiently clear. Section 3 of the Act
provide that no person shall drive a motor
vehicle in public place unless he holds an
"effective driving licence" issued to him
authorising him to drive the vehicle.
Section 5 of the Act mandates that no
owner or person in-charge of the motor
vehicle shall cause or permit any person
who does not satisfy the conditions of
Section 3 of the Act to drive the vehicle.
In short, it puts an obligation upon the
owner of the motor vehicle to ensure that
no person other than a person having a
valid driving licence drives the vehicle.
Section 15 of the Act provides for the
renewal of the driving licence by the
licensing authority on an application in
this regard. A plain reading of the above
provision demonstrates that on application
of renewal of a driving licence should
normally be made within a period of 30
days of the expiry of the licence. The
licensing authority has no power to suo
motu renew the driving licence except on
an application for renewal. Therefore,
application for renewal of driving licence
is sine quo non for its renewal otherwise
the licence shall lapse. However, where
renewal is applied after 30 days of the
expiry of licence and the application is
granted, the renewal shall have effect
from the date of renewal and not from any
earlier date. Admittedly in the present
case the licence granted to the driver was
valid only up to 24.1.1992. No application
for its renewal was made within a period
of 30 days prescribed and not even till the
date of accident i.e. 5.2.1993. Thus, the
licence of the driver had expired and had
lapsed. He was therefore, not having any
licence to drive the motor vehicle on the
date of the accident.

6. In the case of United India
Insurance Company Ltd. Vs. Lehru
and Others JT 2003 (2) SC 595, it was
observed that where the owner has
satisfied himself that the driver has a
licence and is driving competently there
would
be
no
breach
of
Section
149(2)(a)(ii) of the Act. Once the owner
has checked that the driver possesses a
valid driving licence which on the face of
it is genuine, the owner is not expect to
explore and find out whether the licence
produced by the driver had been issued by
the competent authority or not. Since in
that case the owner had not only
examined the driving licence produced by
the driver but also took driving test of the
driver and has come to the conclusion that
he was competent to drive the vehicle, it
was held that there was no breach of
Section 149(2) (a) (ii) of the Act and the
insurance
company
would
not
be
absolved of its liability to pay the
3 All] The New India Assurance Co. Ltd. V. Jagdish Singh and others
681
compensation. The above principle laid
down had been followed and reiterated by
the Supreme Court in JT 2007(10) SC
122
Lal
Chandra
Vs.
Oriental
Insurance Company Limited.

7. The legal position that emerges
from the above case law is that it is the
duty of the owner of the vehicle to prima
facie satisfy himself that the driver to
whom the vehicle has been entrusted is
possessed of a valid licence and is a
person competent to drive. If he has taken
care of satisfying himself about the above
then the insurer i.e. insurance company
with whom the vehicle is insured, cannot
avoid its liability to pay compensation on
the ground of breach of the conditions of
the policy.

In the instant case, the owner of the
vehicle has not pleaded and adduced any
evidence to the effect that he had
examined the driving licence of the
driver. However, even if it is assumed that
the licence was examined and a driving
licence had been validly issued and he
was competent to drive the motor vehicle,
it cannot be said that the owner of the
vehicle has exercised reasonable care in
entrusting the vehicle to a competent
person who was legally authorised to
drive the vehicle inasmuch had he
examined the licence, it would have been
clear to him that it was valid only up to
5.2.1993. Once this fact had come to the
notice of the owner of the vehicle it was
his incumbent duty to get the licence of
the driver renewed in accordance with law
within time provided. The absence on part
of the driver in applying for the renewal
of the licence and also on part of the
owner of the vehicle to pursue the driver
to apply and to get the licence renewed
demonstrate that both of them were
negligent in discharging their duties and
taking reasonable expected of them under
the Act. In the circumstances the owner
was guilty of allowing the driver to drive
the motor vehicle in contravention of
Section 5 of the Act. This contravention
on his part has undoubtedly resulted in the
breach of the terms and conditions of the
insurance policy.

8. Sri Shailendra Kshitij, learned
counsel appearing for the respondent
No.3, the owner of the vehicle contended
on the basis of the decision of the
Supreme Court reported in JT 2004 (1)
SC 109 National Insurance Company
Ltd., Vs. Swaran Singh & Ors. that the
insurance company cannot be allowed to
avoid its liability towards the insured
unless the said breach is so fundamental
as to have contributed to cause the
accident. In the case of Swaran Singh
(Supra)
the
supreme
Court
while
considering the extent of liability of the
insurance company and the defences
available to it held that compulsory
insurance against the third party risks is a
social welfare legislation. Therefore, the
insurance company is entitled to raise
defence only in terms of Section 149 (2)
(a) (ii) to avoid its liability. The insurance
company is not only supposed to prove
that there is breach of the policy but that
the insured (owner of the vehicle) is also
guilty of negligence and has failed to
exercise reasonable care in the matter of
fulfilling
the
conditions
of
policy
regarding use of the vehicle by duly
licensed driver or one who is not
disqualified to drive at the relevant time.
Thus, insurance company can only avoid
its liability if it is able to prove breach of
the conditions as well as negligence or
failure on part of the owner to exercise
reasonable care to verify the competence
682 INDIAN LAW REPORTS ALLAHABAD SERIES [2007
of the person under law to drive the
vehicle before entrusting the motor
vehicle into his hands. In the instant
cases, the owner had not taken reasonable
care in this regard as pointed out earlier.
The driver who was entrusted with the
vehicle had ceased to be a person
competent to drive under the Act.

9. Sri Satish Chaturvedi, learned
counsel
for
the
appellant
Oriental
Insurance Company has placed reliance
upon
(2004)
3
SCC
343
Malla
Prakasarao Vs. Malla Janaki and
others a three judges decision of the
supreme
Court
wherein
a
similar
controversy had come up before the
supreme Court and it was held that as the
licence of the driver of the vehicle had
expired and driver had not applied for
renewal of licence within 30 days of its
expiry the driver of the vehicle had no
driving licence on the date the accident
took place. Therefore, according to the
terms of the contract the insurance
company
had
no
liability
to
pay
compensation. In another case reported in
JT 2006 (4) SC 9 National Insurance
Co. Ltd. Vs. Smt. Kusum Rai and
others the driver was having a licence to
drive a private light motor vehicle but he
was driving a taxi without having an
appropriate
commercial
licence.
Therefore, the court held that as he was
not possessed of the licence to drive a
commercial vehicle, there was breach of
conditions of the contract. Accordingly,
the insurance company was held entitled
to raise the said plea and was held not
liable
to
pay
the
compensation
particularly in absence of the pleadings
and evidence of the owner that he had
verified about the driver of the vehicle
having a valid licence or not. In another
division bench of the supreme Court in
2007 (2) TAC 393 (SC) Iswar Chandra
and others Vs. Oriental Insurance Co.
Ltd. and others a similar controversy had
come up before the supreme Court for
consideration. In this case also the licence
of the driver had expired and thereafter
the accident had taken place. Till the
accident no application for the renewal
the licence was moved. It was held that
the driver had no valid licence on the date
of the accident and therefore, the
Insurance Company would not be liable to
pay the compensation even if driving
licence had been renewed subsequently.
The above three decisions of the Apex
Court squarely covers the field.

10. In view of the above discussion
it is apparent on record that the licence of
the driver had expired and he was not
possessed of any valid driving licence on
the date of the accident. He had not even
applied for its renewal either within the
30 days of the expiry of the licence or till
the date of the accident. The owner of the
vehicle who was under a legal obligation
to ensure that the vehicle was not driven
by any unlicensed person had also not
taken care to ensure that the driver applies
and get the licence renewed. The purpose
for issuing driving licence for a fixed
period and to provide for its renewal is to
enable the licensing authority to verify the
continued competence of the persons to
drive a motor vehicle. A person may be
rendered unfit physically or mentally with
the passage of time or otherwise to drive
even though he was competent to do so
earlier. Thus, the non-renewal of his
driving licence coupled with the fact that
he had not even applied for its renewal
gives rise to a legitimate presumption that
he had become incompetent to drive and
was not a person competent to drive the
motor vehicle at the time of accident.
3 All] M/s Kamil & Brothers V. Central Dairy Farm and another
683
Therefore, on the facts there was a breach
of the conditions of the contract of the
insurance and accordingly the insurance
company i.e. the appellant Oriental
Insurance Company was not liable for
payment of any compensation.

11. In view of the above, the appeal
succeeds. The judgment order and award
passed by the Motor Accident Claims
Tribunal dated 14.1.2003 passed in
MACP No. 33/70/93 (Jagdish Singh &
another Vs. Sushil Kumar Shukla &
another) is set aside to the extent it fixes
the liability to pay the compensation
awarded upon the appellant insurance
company. The respondent No.3 the owner
of the vehicle is held liable to satisfy the
award.

12. The appeal is allowed as above
with no orders as to costs.
---------
APPELLATE JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 22.08.2007

BEFORE
THE HON'BLE PANKAJ MITHAL, J.

Second Appeal No. 1007 of 2005

M/s Kamil & Brothers

...Plaintiff/Appellant
Versus
Central Dairy Farm, U.P., Pashu Dhan
Uddyog, Ltd. and another
...Defendants/Respondents

Counsel for the Appellant:
Sri Ramendra Asthana

Counsel for the Respondents:
Sri Ram Niwas Singh
Sri V.K. Chandel
Sri V.K.S. Chandel

Indian Contract Act-1872-Section 73,
74-Compension
for
loss
caused
by
breach of contract-Contract for supply of
30,000 live sheep and goats-deposit of
Rs.2,60,000/- towards security-breach
of contract-without proof of actual losswhether the amount of security can be
for fitted?-held-'No'.

Held: Para 14

Therefore, on breach of the contract by
the plaintiff-appellant, the defendantrespondent
No.1
is
entitled
to
a
reasonable compensation not exceeding
the amount of security but not without
establishing that it had actually suffered
damage or loss on account of the said
breach. In other words, compensation
cannot be awarded where no loss or
damage has been suffered at all. There is
nothing on record to establish that any
loss/damage was actually suffered by
the
defendant
respondent
No.1
on
account of the alleged breach of contract
by the plaintiff-appellant. Thus, in view
of the legal position as discussed above
specially in the light of five judges
decision of the Supreme Court in Fateh
(Supra) the defendant-respondent No.1
cannot
forfeit
the
security
amount
without proving any actual loss or
damage suffered by it.
Case law discussed:
AIR 1963 SC-1405
AIR 1970 SC-1955
AIR 1973 SC-1098
AIR 1977 Alld. 28
AIR 2003 SC-2629

(Delivered by Hon'ble Pankaj Mithal, J.)

1. The plaintiff-appellant was
awarded a contract for the supply of
30,000/- live sheep & goats to the
defendant-respondent No.1 i.e. Central
Dairy Farm, Uttar Pradesh Pashu Dhan
Uddyog Nigam Limited at the rate of
Rs.786/- per quintal. The contract was for
a period of one year and the supply was to
be made between 1.10.1985 to 30.9.1986.