# NATIONAL INSURANCE CO. LTD v. SWARAN SINGH AND ORS

- **Citation:** [2004] 1 S.C.R. 180
- **Court:** Supreme Court of India
- **Decided:** 2004-01-05
- **Bench:** V. N. Khare, D.M. Dharmadhikari, S.B. Sinha
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/national-insurance-co-ltd-v-swaran-singh-and-ors-19672
- **Pages:** 52

## Headnote

Motor Vehicles Act, 1988: Ss. 3, 149(2(a)(ii), (4), (5) & (7), 165 and
/
168/The Third Parties (Rights against Insurers) Act, 1930:
C
Claim Petition-Awards by the Motor Vehicles Claims Tribunal-Liability
of insurer to third party-Defence available to insurer-Interpretation a/-
Held: Motor Vehicles Act is a social welfare legislatio,'1 extending relief to
victims/third party by awarding compensation-Breach of policy condi1ions
by the insured could be raised as defence but such breaches have to be
established by the insurer-The Insurer must also establish that the breaches
D had contributed to the cause of the accident to absolve himself from liability-
!nvalid driving licence/disqualification of the driver not available as defences
to insurer-If vehicle, at the time of accident, driven by a person having
learner's licence, insurer would be liable to satisfy the decree.
Power of the Motor Vehicles Tribunal-Held: Empowered to adjudicate
E all claims in respect of Motor Vehicles accidents-It cannot be restricted to
decide such claims inter se between the claimants on one side and the, insured/
insurer and driver on !he other--Awards enforceable/executable in terms of
Section 174 of the Act-If insurer satisfactorily proves its defence, 1he Tribunal
may issue a certificate to the Cof/ector directing rccove1y of compensation!
F 01her amounts from the insured-If determination of rights of the parties inter
se delays adjudication of the case of the victims, the Tribunal could relegate
them before regular court.
Words and Phrases:
The rule of main purpose' and the concept of 'fundamental breach'-
G Meaning of in the context of Section 149 (2) of the Motor Vehicles Act, 1988.
'Effective licence '-Meaning of in the context of Motor Vehicles Acl,
1988.
The questions involved in these petitions pertain to interpretation
If
180
(
..,_.
\
NATIONAL INSURANCE CO.LTD. 1·. SW ARAN SINGH
181
of Section 149 (2)(a)(ii), (4) & (5) vis-a-vis the proviso appended to sub- A
sections (4) & (5) thereof of the Motor Vehicles Act, 1988.
On behalf of the petitioner-insurer, it was contended that the insurer
has an absolute right to raise a defence in terms of Section 149(2)(a)(ii) of
the Act; that the insurer requires to prove/establish that the vehicle
involved in the accident was driven by a person who was not duly insured; B
that a person cannot be said to be duly insured unless he has been granted
a permanent licence for driving a particular vehicle in terms of provisions
of Chapter II of the Act; that when the defence raised by the insurer is
established, the liability shifted to the owner/driver of the vehicle; and that
the Tribunal/Court cannot direct the insurer to pay the compensation. C
However, the owner/driver of the vehicle could be directed to make
payment of compensation to the victim.
On behalf of the respondents/third party claimants, it was submitted
that a driver once licensed, unless he is disqualified, would continue to be
a duly licensed person; that once a person has been duly licensed, defence
under Section 149 of the Act would not be available to the insurer even if D
the licence was not renewed up to 5 years since its expiry; that the right
of insurer to avoid the claim of the third party would arise only when the
,,~
policy was obtained by misrepresentation of material facts and by fraud;
that the burden to prove the defence raised hy the insurer as to any breach
or violation of the policy would be upon the insurer; and that it is not E
sufficient for the insurer to prove that the person driving the vehicle at
the time of accident was not duly licensed but it must also be established
that there was a breach on the part of the insured.
Dismissing the petition, the Court
HELD: I. The provision for compulsory insurance has been F
incorporated in the Motor Vehicles Act with a view to protect the rights
of a third party. The intention of the Parliament became further evident
r
when in the Motor Vehicles Act, 1939, a new chapter being C

## Text

_Characters 0–39,987 of 124,308. This is a partial read: ask again with offset=39987 for what follows._

A
NATIONAL INSURANCE CO. LTD.
V.
SWARAN SINGH AND ORS.
JANUARY 5, 2004
B
[V. N. KHARE, CJ, D.M. DHARMADHIKARI AND S.B. SINHA, JJ.]
Motor Vehicles Act, 1988: Ss. 3, 149(2(a)(ii), (4), (5) & (7), 165 and
/
168/The Third Parties (Rights against Insurers) Act, 1930:
C
Claim Petition-Awards by the Motor Vehicles Claims Tribunal-Liability
of insurer to third party-Defence available to insurer-Interpretation a/-
Held: Motor Vehicles Act is a social welfare legislatio,'1 extending relief to
victims/third party by awarding compensation-Breach of policy condi1ions
by the insured could be raised as defence but such breaches have to be
established by the insurer-The Insurer must also establish that the breaches
D had contributed to the cause of the accident to absolve himself from liability-
!nvalid driving licence/disqualification of the driver not available as defences
to insurer-If vehicle, at the time of accident, driven by a person having
learner's licence, insurer would be liable to satisfy the decree.
Power of the Motor Vehicles Tribunal-Held: Empowered to adjudicate
E all claims in respect of Motor Vehicles accidents-It cannot be restricted to
decide such claims inter se between the claimants on one side and the, insured/
insurer and driver on !he other--Awards enforceable/executable in terms of
Section 174 of the Act-If insurer satisfactorily proves its defence, 1he Tribunal
may issue a certificate to the Cof/ector directing rccove1y of compensation!
F 01her amounts from the insured-If determination of rights of the parties inter
se delays adjudication of the case of the victims, the Tribunal could relegate
them before regular court.
Words and Phrases:
The rule of main purpose' and the concept of 'fundamental breach'-
G Meaning of in the context of Section 149 (2) of the Motor Vehicles Act, 1988.
'Effective licence '-Meaning of in the context of Motor Vehicles Acl,
1988.
The questions involved in these petitions pertain to interpretation
If
180
(
..,_.
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NATIONAL INSURANCE CO.LTD. 1·. SW ARAN SINGH
181
of Section 149 (2)(a)(ii), (4) & (5) vis-a-vis the proviso appended to sub- A
sections (4) & (5) thereof of the Motor Vehicles Act, 1988.
On behalf of the petitioner-insurer, it was contended that the insurer
has an absolute right to raise a defence in terms of Section 149(2)(a)(ii) of
the Act; that the insurer requires to prove/establish that the vehicle
involved in the accident was driven by a person who was not duly insured; B
that a person cannot be said to be duly insured unless he has been granted
a permanent licence for driving a particular vehicle in terms of provisions
of Chapter II of the Act; that when the defence raised by the insurer is
established, the liability shifted to the owner/driver of the vehicle; and that
the Tribunal/Court cannot direct the insurer to pay the compensation. C
However, the owner/driver of the vehicle could be directed to make
payment of compensation to the victim.
On behalf of the respondents/third party claimants, it was submitted
that a driver once licensed, unless he is disqualified, would continue to be
a duly licensed person; that once a person has been duly licensed, defence
under Section 149 of the Act would not be available to the insurer even if D
the licence was not renewed up to 5 years since its expiry; that the right
of insurer to avoid the claim of the third party would arise only when the
,,~
policy was obtained by misrepresentation of material facts and by fraud;
that the burden to prove the defence raised hy the insurer as to any breach
or violation of the policy would be upon the insurer; and that it is not E
sufficient for the insurer to prove that the person driving the vehicle at
the time of accident was not duly licensed but it must also be established
that there was a breach on the part of the insured.
Dismissing the petition, the Court
HELD: I. The provision for compulsory insurance has been F
incorporated in the Motor Vehicles Act with a view to protect the rights
of a third party. The intention of the Parliament became further evident
r
when in the Motor Vehicles Act, 1939, a new chapter being Chapter VllA
dealing with insurance of motor vehicles against third party risks was
introduced and the benelicent provisions contained in the Motor Vehicles G
Act, 1988 were further made liberal by reason of the amendments carried
out therein from time to time in aid of the third party claims by way of
grant of additional or new rights conferred on the road accident victims.
A third party claim arises when a victim of an accident suffers a bodily
injury or death as a result thereof, or his property is damaged. An accident
is not susceptible to a very precise definition. 1202-D; H; 203-A-BJ
H
182
SUPREME COURT REPORTS
[20041 I S.C.R.
A
R. v. Morris, (1972) l W.L.R. 228 and Pickford & Black ltd. v.
-r
B
c
D
E
F
G
H
Canadian General Insurance Co., (1976) 2 Lloyd'; Rep. 108, referred to.
Halsbury's laws of England, Fourth Edition Reissue and law of
Insurance by Colinvaux (6th Edition) page 304, referred to.
2.l. The Third Parties (Rights Against Insurers) Act, 1930 was
enacted with a view to correct injustice effecting a statutory assignment
of the rights of the assured to the injured person as prior thereto the right
of a person to be indemnified under a contract of insurance in respect of
claims made against him by persons whom he might have injured was one
personal to himself, and there was no privity of any sort between the
injured person and the insurers. The injured person had no interest either
at law or in equity in the insurance money, either before or after it was
paid by the insurers to the assured. 1203-C-D)
2.2. A right of the victim of a road accident to claim compensation
is a statutory one. He is a victim of an unforeseen situation. He would not
ordinarily have a hand in it. The negligence on the part of the victim may,
however, be contributory. He has suffered owing to wrongdoing of others.
An accident may ruin an entire family. It may take away the only earning
member. (205-C)
2.3. A person suffering grievous bodily injury may require money
for his survival/medical treatment. Statutory compensation paid to the next
of kin of the victim of an accident may, thus, bring to a large number of
families the only ray of light at the end of the tunnel. When a death or
bodily injury has been caused as a result of assured's own voluntary act,
it would be covered by the contract of insurance vis-a-vis the beneficent
statutory provisions like sub-section (2) of Section 149 of the Act. Even
an unforeseeable result of assured's deliberate act may come within the
purview of the accident. Even if an accident has occurred due to negligent
driving of the assured person, it may not prevent recovery under the policy
and certainly thereby a third party would not be non-suited. 1206-A-C!
2.4. Sub-section (I) of Section 149 casts a liability upon the insurer
to pay to the person entitled to the benefit of the decree as if he were the
judgment debtor. Although the said liability is subject to the provision of
this section, it prefaces with a 11011-obstanle clause that the insurer may be
entitled to avoid or cancel or may have avoided or cancelled the policy.
Furthermore, the statute raises a legal fiction to the effect that for the said
purpose the insurer would be deemed to be judgment debtor in respect of
J
'""'
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NATIONAL INSURANCE CO. LTD. v. SWARAN SINGH
183
the liability of the insurer. (206-G-H; 207-A(
2.5. The defence available to an insurance company would be a
limited one. It is beyond any doubt or dispute that under Section 149(2)
A
of the Act an insurer, to whom notice of the bringing of a proceeding for
compensation has been given, can defend the action on any of the grounds
mentioned therein. However, Clause (a) opens with the words "that there B
has been a breach of a specified condition of the policy", implying that
the insurer's defence of the action would depend upon the terms of the
policy. (207-F; G-H; 208-A]
National Insurance Co. Ltd Chandigar,h v. Nicol!etta Rohtagi and Ors., C
[2002] 7 SCC 456 and Sadhana Lodh v. National Insurance Company Ltd
and Anr .. [2003( I SCR 567, relied on.
3. The words used in Section 3 of the Act are 'effective licence'.
However, it has been differently worded in Section 149(2) i.e. 'duly
licensed'. If a person does not hold an effective licence as on the date of D
the accident, he may be liable for prosecution in terms of Section 141 of
the Act but Section 149 pertains to insurance as regard third party risks.
r>
(208-B-C(
4. A provision of a statute which is penal in nature vis-a-vis a
provision which is beneficent to a third party must be interpreted E
differently. It is also well known that the provisions contained in different
expressions are ordinarily construed differently. [208-C-D]
5.1. The insurance company, with a view to avoid its liabilities, is
not only required to show that the conditions laid down under Section
149(2)(a) or (b) of the Act are satisfied but is further required to establish F
that there has been a breach on the part of the insured. By reason of the
provisions contained in the 1988 Act, a more extensive remedy has been
conferred upon those who have obtained judgment against the user of a
vehicle and after a certificate of insurance is delivered in terms of Section
147(3) a third party has obtained a judgment against any person insured G
by the policy in respect of a liability required to be covered by Section
145, the same must be satisfied by the insurer, notwithstanding that the
insurer may be entitled to avoid or to cancel the policy or may in fact
have done so. The same obligation applies in respect of a judgment against
a person not insured by the policy in respect of such liability, but who
would have been covered if the policy had covered the liability of all H
184
SUPREME COURT REPORTS
[2004] I S.C.R.
A persons, except that in respect of liability for death or bodily injury. Such
a breach on the part of the insurer must be established by the insurer to
show that not only the insured used or caused or permitted to he used the
vehicle in breach of the Act but also that the damage he suffered flowed
from the breach. (209-B-F(
B
5.2. It is trite that where the insurers relying upon the provisions of
violation of law by the assured takes an exception to pay the assured or a
third party, they must prove a wilful violation of the law by the assured.
In some cases violation of criminal law, particularly, violation of the
provisions of the Motor Vehicles Act may result in absolving the insurers
C but, the same may not necessarily hold good in the case of a third party.
In any event, the exception applies only to acts done intentionally or so
recklessly as to denote that the assured did not care what the consequences
of his act might be. [209-H; 210-A-B]
Narcinva V.' Karnath and Anr. v. Alfredo Antonio Doe Martins and Ors.,
D ( 1985] 2 SCC 574, Skandia Insurance Company ltd. v. Koki/aben
Chandevadan and Ors., [198712 SCC 654 and B. V. Nagaraju v. Mis. Oriental
Insurance Co. Ltd., AIR (1996) SC 2054, referred to.
6. A contract of insurance also falls within the realm of contract.
'""'
Thus, like any other contract, the intention of the parties must be gathered
E from the exprt!ssions used therein. In the event the terms and conditions
of policy are obscure, it is permissible for the purpose of construction of
the deed to look to the surrounding circumstances as also the conduct of
the parties. The Courts also readily apply the doctrine of waiver in favour
of the insured and against the insurer. The insurer's liability arises both
from contract as well as statute. It will, therefore, may not be proper to
F apply the rules for interpretation of a contract for interpreting a statute.
[211-E-F; 212-H; 213-F-GI
G
Oriental Insurance Co. ltd. v. Sony Cheriyan, [ 1999] 6 SCC 451 and
Oriental Insurance Co. Ltd. v. Samayanallur Primary Agricultural Co-op Bank,
Al R (2000) SC I 0, relied on.
Sweeney v. Kennedy, (1948) 82 L.l.L. Rep. 294, referred to.
7.1. The provisions of Section 149 of the Act reveal that usual rule
is that once the assured proved that the accident is covered by the
compulsory insurance clause, it is for the insurer to prove that it comes
H within an exception. The proposition of law is no longer res integra that
...
NATIONAL lNSURANCECO. LTD.1·. SW ARAN SINGH
185
I
-
the person who alleges breach must prove the same. The insurance A
<
company is, thus, required to establish the said breach by cogent evidence.
In the event, the insurance company fails to prove that there has been
breach of conditions of'Policy on the part of the insured, the insurance
company cannot be absolved of its liability. 1215-E; 216-D~EI
Rukmani and Ors. \'. New India Assurance Co. Ltd. and Ors., (1999) B
ACJ 171 and Sohan Lal Passi v. P. Sesh Reddy and Ors., 119961 5 SCC 21,
relied on.
Mac Gillivray on Insurance Law, referred to.
7.2. The degree of proof which would satisfy the requirement of law c
would indisputably depend upon the facts and circumstances of each case.
It will also depend upon the terms of contract of insurance. Each case may
pose different problem which must be resolved having to a large number
1
of factors governing the case including conduct of parties as regard duty
to inform, co.-rect disclosure, suppression, fraud on the insurer etc. It will D
also depend upon the fact as to who is the owner of the vehicle ar.d the
}'.
circumstances in which the vehicle was being driven by a person having
_ no valid and effective licence. No hard and fast rule can therefor be laid
down. If in a given case there exists sufficient material to draw an adverse
inference against either the insurer or the insured, the Tribunal may do
so. The provisions of sub-sections (4) and (5) of Section 149 may be E
considered as the liability of the Insurer to satisfy the decree at the first
instance.1216-E-H; 217-AI
7.3 The liability of the insurer is a statutory one. The liability of the
insurer to satisfy the decree passed in favour of a third party is also F
statutory. The insurance company cannot shake off its liability to pay lhe
compensation only by saying that at the relevant point of time the vehicle
r
was driven by a person having no licence. Where a liability has been
established by a judgment, it is not permissible to look beyond tlte
determination in order to establish the basis of the li~bility. The
submission, that sub-section (4) of Section 149 deals with the situation G
where the insurer in the policy purports to restrict the insurance of the
persons insured thereby by reference to any condition other than those in
clause (b) of sub-section (2) of Section 149 and in that view of the matter
no liability is covered for driving of a vehicle without licence or fake
licence, ignores the plain and unequivocal expression used in sub-section
H
(2) of Section 149 as well as the proviso appended thereto. With a view to
186
SUPREME COURT REPORTS
[2004) I S.C.R.
A consfrue a statute the scheme of the Act has to be taken into consideration.
For the said purpose the entire Act has to be read as a whole and then
chapter by chapter, section by section and word by word.
1217-C; 218-B-C; 220-H; 221-A-Bj
Sohan lal Passi v. P. Sesh Reddy and Ors., 11996) 5 SCC 21; Reserve
B Bank of India etc. v. Peerless General Finance and Investment Co. ltd. and
Ors., 1198711 SCC 424, relied on.
United Insurance Co. Ltd. v. Jaimy and Ors., (1998) ACJ 1318, referred
to.
C
Halsbury 'slaws of England, fourth Edition Reissue, Volume 25,
referred to.
7.4. Proviso appended to sub-section (4) of Section 149 is referable
only to sub-section (2) of Section 149 of the Act. It is an independent
provision and must be read in the context of Section 96(4) of the Motor
D Vehicles Act, 1939; that the insurer will be entitled to avoid its liability
owing to breach of terms of a contrnct of insurance but it is another thing
to say that the vehicle is not insured at all. 1221-C-DI
E
New India Assurance Co .. Shi111'a v. Ka111'a and Ors. etc., 1200114 SCC
342, referred to.
7.5. Sub-section (5) of Section 149 which imposes a liability on the
insurer must also be given its full effect. The insurance company may not
be liable to satisfy the decree and, therefore, its liability may be zero b:1t
it does mean that it did not have initial liability at all. Thus, if the insurance
F company is made liable to pay any amount, it can recon~r the entire
amount paid to the third party on behalf of the assured. If this
interpretation is not given to the beneficent prnvisions of the Act having
regard to its purport and object, the beneficent provisions cannot be given
effect to. A beneficent statute must receive a liberal interpretation.
G
1221-E, Fl
Bangalore Water S11pp~F & Sewerage Board etc. v. A. Rajappa and Ors.
etc., 119781 2 SCC 213; Steel Authori(J' of India ltd. and Ors. v. National
Union IYaterfront Workers and Ors., 120011 7 SCC I; IT/ ltd. , .. Siemens
Public Communications Network ltd., 1200215 SCC 510; Amrit Bhikaji Kale
and Ors. v. Kashinath Janardhan Trade and Anr., 119831 3 SCC 437 and
H K11nal Singh v. Union of India and Anr., 120031 4 SCC 524,_ relied on.
l
1 ,
NATIONAL INSURANCE CO. LTD.''· SWARAN SINGH
187
7.6. Sub-section (7) of Section 149 of the Act must be read with sub~ A
section (I) thereof. The right to avoid liability in terms of sub-section (2)
of Section 149 is restricted; that the insurance companies are entitled to
raise a defence. However, to say that despite the fact that its defence has
been accepted having regard to the facts and circumstances of the case,
the Tribunal has power to direct them to satisfy the decree at the first
instance and then direct recovery of the same from the owner. These two
matters stand apart and require contextual reading. 1221-G-H; 222-Af
8. The owner of a motor vehicle, in terms of Section 5 of the Act,
B
has a responsibility to see that no vehicle is driven except by a person who
does not satisfy the provisions of Section 3 or 4 of the Act. In a case where C
the driver of the vehicle admittedly did not hold any licence and the same
was allowed consciously to be driven by the owner of the vehicle by such
person, the insurer is entitled to succeed in its defence and avoid liability.
The matter, however, may be different where a disputed question of fact
arises as to whether the driver had a valid licence or where the owner of
the vehicle committed a breach of the terms of the contract of insurance D
as also the provisions of the Act by consciously allowing any person to
drive a vehicle who did not have a valid driving licence. (222-B-Df
V. Mepherson v. Shiv Charan Singh, (1998) ACJ 601 (Del.), relied on.
Jitendra Kumar v. Oriental Insurance Co. Ltd and Anr., J.T. (2003) 5 E
SC 538; New India Assurance Co. Ltd v. Jagtar Singh and Ors., (1998) ACJ
1074 and National Insurance Co. Ltd v. !shroo Devi and Ors., (1999) ACJ
615, referred to.
9.1. Jn each case, on evidence led before the Tribunal, a decision has
to be taken whether the 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 accident was
caused solely because of some other unforeseen or intervening causes like
mechanical failures and similar other causes having no nexus with driver
F
not possessing requisite type of licence, the insurer will not be allowed to G
avoid its liability merely for technical breach of conditions concerning
driving licence. Minor breaches of licence conditions, such as want of
medical fitness certificate, requirement about age of the 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 H
188
SUPREME COURT REPORTS
[2004] I S.C.R.
A licensing conditions would not constitute sufficient ground to deny the
benefit of coverage of insurance to the third parties. Where 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. [224-A-CI
B
9.2. It cannot be said that a person holding a learner's licence is not
entitled to drive the vehicle. Even if there exists a condition in the contract
of insurance that the vehicle cannot be drinn by a person holding a
learner's licence, the same would run counter to the provisions of Section
149(2) of the said Act. Learner's licences are granted under the rules
C framed by the Central Government or the State Governments in exercise
of their rule making power. Conditions are attached to the learner's
licences granted in terms of the statute. A person holding learner's licence
would also come within the purview of "duly licensed" as such a licence
is also granted in terms of the provisions of the Act and the Rules framed
thereunder. It is now a well-settled principle of law that rules validly
D framed become part of the statute. Such rules are, therefore, required to
be read as part of the main enactment. It is also well-settled principle of
law that for the interpretation of statute an attempt must be made to give
effect to all provisions under the rule. No provision should be considered
as surplusage. 1224-G-H; 225-A; C-D)
E
F
New India Assurance Co. Ltd. v. Mandar Madhav Tambe and Ors ..
119961 2 sec 328, distinguished.
New India Assurance Co. ltd. v. latha Jayaraj and Ors., (1991) ACJ
298, approved.
9.3. The defence to the effect that the licence held by the person
driving the vehicle was a fake one, would be available to the insurance
companies, but whether despite the same, the plea of default on the part
of the owner has been established or not would be a question which will
have to be determined in each case. A defence that the licence is fake can
G certainly be raised by the insurer but then onus lies on the insurer to prove
that the insured did not take adequate care and caution to verify the
genuineness or otherwise of the licence held by the driver. 1226-0-G I
New India Assurance Co., Shim/av. Kam/a and Ors. etc., 120011 4 SCC
342 and United India Insurance Co. ltd. v. Lehru and Ors., 12003] 3 SCC
H 338, referred to.
•
r-·
NATIONAL INSURANCE CO.LTD. v. SW ARAN SINGH
189
y
Malla Prakasarao v. Mall Janaki and Ors., (Civil Appeal No.163 of A
1996 decided by S.C. on 6th August, 2002), distinguished.
9.4. The liability of the insurance company to satisfy the decree at
the first instance and to recover the awarded amount thereof has been
holding the field for a long time. Apart from the reasons, the doctrine of
stare decis persuades this Court not to deviate from the said principle. B
Further, it is well-settled rule of law and should not ordinarily be deviated
~
t
from. The Tribunal, and the Court must exercise their jurisdiction to issue
such a direction upon consideration of the facts and circumstances of each
case and in the event such a direction has been issued despite arriving at
a finding of fact to the effect that the insurer has been able to establish c
that the insured has committed a breach of contract of insurance as
envisaged under sub-clause (ii) of clause (a) of sub-section (2) of Section
149 of the Act, the insurance compar.y shall be entitled to realise the
awarded amount from the owner or driver of the vehicle, as the case may
be, in execution of the same award having regard to the provisions of
Sections 165 and 168 of the Act. However, in the event, having regard to D
the limited scope of inquiry in the proceedings before the Tribunal it had
not been able to do so, the insurance company may initiate a separate
i"
action therefor against the owner or the driver of the vehicle or both, as
the case may be. Those exceptional cases may arise when the evidence
becomes available to or comes to the notice of the insurer at a subsequent E
stage or for one reason or the other, the insurer was not given opportunity
to defend at all. Such a course of action may also be resorted when a fraud
or collusion between the victim and the owner of the vehicle is detected
or comes to the knowledge of the insurer at a later stage.
[227-E; 228-A-DI
F
The Bengal Immunity Company limited v. The State of Bihar and Ors.,
-I
'
[1955[ 2 SCR 603; Keshav Mills Co. Ltd. v. Commissioner of Income Tax,
)c
Bombay North, [ 1965[ 2 SCR 908; Union of India and Anr. v. Raghubir Singh
(dead) by Lrs. etc., [1989[ 3 SCR 316; Mis. Gannon Dunkerley & Co. & Ors.
v. State of Rajasthan and Ors:, [1993[ I SCC 364; Belgaum Gardeners
G
Cooperative Production Supply & Sale Society ltd. v. State of Karnataka,
119931 Supp. 1 SCC 96 and Hanumantappa Krishnappa Mantur and Ors.,
v. State of Karnataka, [19921 Supp. 2 SCC 213, relied on.
-..,{
CIVIL APPELLATE JURISDICTION : Special Leave Petition (C) No.
9027 of 2003.
H
190
SUPREME COURT REPORTS
[2004] I S.C.R.
A
From the Judgment and Order dated 9.12.2002 of the Punjab and
Haryana High Court in F.A.O. No. 5723 of 2002.
WITH
SLP (C) Nos. 10017, 10042, 10055, 10510, 10787, 10829-10831,
B 11129/2003, 153/04, 4917/2003, 154, 156, 155, 157, 159, 356/2004, 9335,
9356, 9554, 9560, 9811, 9812, 9815, 9867, 9900, 9947/2003, 321, 160, 357/
2004, .15528 and 15772 of 2002.
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Barish N. Salve, M.L. Verma, P.P. Malhotra, Pramod Dayal, Prysh
Shanna, Vishnu Mehra, B.K. Satija, Jcy Basu, Atul Nanda, Ms. Veena Nanda,
c P.N. Puri, Shailendra Sharma, Ms. Binu Tamta, Ms. Pankaj Bala Verma, Ms.
Kirti Renu Mishra, S.L. Gupta, S.P. Jain, K.P. Singh, S.M. Suri, Ms. Meenu
Pandey, Pramod Dayal, Sudhir Kumar Gupta, P.K. Seth, Anurag Pandey, Ms.
Kiran Suri, Kishore Rawat, M.K. Dua, Manish Goswami, Rameshwar Prasad
Goyal, B.S. Chahar, Ms. Jyoti Chahar, Vinay Garg, Parveen K. Vohra, Dinesh
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Venna, Ms. Suresh Kumari and A.P. Mohanty for the appearing parties.
The Judgment of the Court was delivered by
V. N. KHARE, CJ. Interpretation of Section 149(2)(a)(ii) vis-a-vis the
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proviso appended to sub-sections (4) and (5) of the Motor Vehicles Act, 1988
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is involved in this batch of special leave petitions filed by the National
Insurance Company Limited (hereinafter referred to as Insurer) assailing
various awards of the Motor Vehicle Claims Tribunal and judgments of the
High Courts.
In view of the fact that these petitions involve pure questions of law,
F it is not necessary to advert to the individual fact pertaining to each matter.
Suffice, however, is to point out that the vehicles insured with the
...
petitioners were involved in accidents resulting in filing of claim applications
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by the respective legal representatives of the deceased(s) or the injured
person(s), as the case may be.
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Defences raised by the Petitioner company in the claim pet1t1ons
purported to b1: in terms of Section 149(2)(a)(ii) of the Motor Vehicles Act,
1988 (hereinafter referred to as 'the Act') were : (a) driving licence produced
by the driver or owner of the vehicle was a fake one; (b) driver did not have
any licence whatsoever; (c) licence, although was granted to the concerned
H driver but on expiry thereof, the same had not been renewed; ( d) licence
NATIONAL INSURANCE CO. LTD. r. SW ARAN SINGH [V. N. KHARE. CJ.]
191
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granted to the drivers being for one class or description of vehiele but the A
vehicle involved in the accident was of different class or description; and (e)
the vehicle in question was driven by a person having a learner's licence.
Before we. proceed further in the matter it is relevant to notice certain
relevant statutory provisions which are :
"2( I 0) "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:
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3. Necessity for driving licence.-{ I) No person shall drive a motor C
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 motor cab or motor
cycle] 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.
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(2) The conditions subject to which sub-section (I) shall not apply to
a person receiving instructions in driving a motor vehicle shall be
such as may be prescribed by the Central Government.
4. Age limit in connection with driving of motor vehicles.--(J) No E
person under the age of eighteen years shall drive a motor vehicle in
any public place:
Provided that a motor cycle with engine capacity not exceeding 50cc
may be driven in a public place by a person after attaining the age
of sixteen years.
(2) Subject to the prov is ions of section 18, no person under the
age of twenty years shall drive a transport vehicle in any pub I ic
place.
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(3) No learner's licence or driving licence shall be issued to any
person to drive a vehicle of the class to which he has made an G
application unless he is eligible to drive that class of vehicle under
this section.
5. Responsibility of owners of motor vehicles for contravention of
sections 3 and 4.-No owner or person in charge of a motor vehicle
shall cause or permit any person who does not satisfy the provisions H
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of section 3 or section 4 to drive the vehicle.
6. Restrictions on the holding of driving licences. -(I) No person
shall, while he holds any driving licence for the time being in force,
hold any other driving licence el(cept a learner's licence or a driving
licence issued in accordance with the provisions of section 18 or a
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document authorising, in accordance with the rules made under section
139, the person specified therein to drive a motor vehicle.
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(2) No holder of a driving licence or a learner's licence shall pennit
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it to be used by any other person.
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(3) Nothing in this section shall prevent a licensing authority having
the jurisdiction referred to in sub-section (I) of section 9 from adding
to the classes of vehicles which the driving licence authorises the
holder to drive.
7. Restrictions on the granting of learner's licences for certain vehicles.
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(I) No person shall be granted a learner's licence to drive a transport
vehicle unless he has held a driving licence to drive a light motor
vehicle for at least one year.
(2) No person under the age of eighteen years shall be granted a
learner's licence to drive a motor cycle without gear except with the
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consent in writing of the person having the care of the person desiring
the learner's licence."
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Section 9 provides for grant of driving licence.
"9. Grant of driving licence.-(1) Any person who is not for the time
being disqualified for holding or obtaining a driving licence may
apply to the licensing authority having jurisdiction in the area-
(i)
in which he ordinarily resides or carries on business, or
(ii) in which the school or establishment referred to in section 12
from where he is receiving or has received instruction in driving
a motor vehicle is situated.
for the issue to him of a driving licence.
xxx
xxx
xxx
xxx
(7) When any application has been duly made to the appropriate
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licensing authority and the applicant has satisfied such authority of
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NATIONAL INSURANCE CO.LTD. v.SWARAN SINGH [V.N. KHARE, CJ.]
193
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his competence to drive, the licensing authority shall issue the applicant A
a driving licence unless the applicant is for the time being disqualified
for holding or obtaining a driving licence.
Provided that a licensing authority may. issue a driving licence to
drive a motor cycle or a light motor vehicle notwithstanding that it
is not the appropriate licensing authority, if the licensing authority is B
satisfied that there is good and sufficient reason for the applicant's
inability to apply to the ilPPf.Opriate licensing authority.
Provided further that the licensing authority shall not issue a new
driving licence to the applicant, if he had previously held a driving
licence, unless it is satisfied that there is good and sufficient reason c
for his inability to obtain a duplicate copy of his fonner licence.
(8) If the licensing authority is satisfied, after giving the applicant
an opportunity of being heard, that he-
(a) is a habitual criminal or a habitual drunkard; or
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(b) is a habitual addict to any narcotic drug or psychotropic substance
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within the meaning of the Narcotic Drugs and Psychotropic Substances
Act, 1985 (61 of 1985); or
(c) is a person whose licence to drive any motor vehicle has, at any E
time earlier, been revoked, it may, for reasons to be recorded in
writing, make an order refusing to issue a driving licence to such
person and any person aggrieved by an order made by a licensing
authority under this sub-section may, within thirty days of the receipt
of the order, appeal to the prescribed authority.
(9) Any driving licence for driving a motor cycle in force immediately F
_.,.
before the commencement of this Act shall, after such commencement,
)
be deemed to be effective for driving a motor cycle with or without
gear.
10. Form and contents of licences to drive.--{ I) Every learner's licence
and driving licence, except a driving licence issued under section 18, G
shall be in such form and shall contain such information as may be
prescribed by the Central Government.
(2) A learner's licence or, as the case may be, driving licence
shall also be expressed as entitling the holder to drive a motor vehicle H
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of one or more of the following classes, namely: -
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(a) motor cycle without gear;
(b) motor cycle with gear;
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(c) invalid carriage;
(d) light motor vehicle;
( e) transport vehicle;
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(i) road-roller;
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Q) motor vehicle of a specified description.
14. Currency of licences to drive motor vehicles.-(/) A learner's
licence issued under this Act shall, subject to the other provisions of
this Act, be effective for a period of six months from the date of issue
of the licence.
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(2) A driving licence _issued or renewed under this Act shall.-
(a) in the case of a licence to drive a transport vehicle, be effective
...
for a period of three years:
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Provided that in the case of licence to drive a transport vehicle carrying
goods of dangerous or hazardous nature be effective for a period of
one year and renewal thereof shall be subject to the condition that the
driver undergoes one day refresher course of the prescribed syllabus;
and
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(b) in the case of any other licence,-
(i) if the person obtaining the licence, either originally or on renewal
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thereof, has not attained the age of fifty years on the date of issue or,
as the case may be, renewal thereof,-
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(A) be effective for a period of twenty years from the date of such
issue or renewal; or
(B) until the date on which such person attains the age of fif:y years,
whichever is earlier;
,...
(ii) if the person referred to in sub-clause (i), has attained the age of
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fifty years on the date of issue or as the case may be, renewal
NATIONAL INSURANCE CO.LTD. v.SWARAN SINGH [V.N. KHARE, CJ.]
J 95
thereof, be effective, on payment of such fee as may be prescribed, A
for a period of five years from the date of such issue or renewal:
Provided that every driving licence shall, notwithstanding its expiry
under this sub-section continue to be effective for a period of thirty
days from such expiry,
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15. Renewal of driving licences.-( I) Any licensing authority may,
on application made to it, renew a driving licence issued under the
provisions of this Act with effect from the date of its expiry: Provided
that in any case where the application for the renewal of a licence is
made more than thirty days after the date of its expiry, the driving
licence shall be renewed with effect from the date of its renewal. c
Provided further that where the application is for the renewal of a
licence to drive a transport vehicle or where in any other case the
applicant has attained the age of forty years, the same shall be
accompanied by a medical certificate in the same form and in the D
same manner as is referred to in sub-section (3) of section 8, and the
provisions of sub-section {4) of section 8 shall, so far as may be,
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apply in relation to every such case as they apply in relation to a
learner's licence.
(2) An application for the renewal of a driving licence shall be E
made in such form and accompanied by such documents as may be
prescribed by the Central Government.
(3) Where an application for the renewa.I of a driving licence is
made previous to, or not more than thirty days after the date of its
expiry, the fee payable for such renewal shall be such as may be F
prescribed by the Central Government in this behalf .
....,
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( 4) Where an application for the renewal of a driving licence is
made more than thirty days after the date of its expiry the fee payable
for such renewal shall be such amount as may be prescribed by the
Central Government:
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Provided that the fee referred to in sub-section (3) may be accepted
by the licensing authority in respect of an application for the renewal
of a driving licence made under this sub-section if it is satisfied that
the applicant was prevented by good and sufficient cause from applying
within the time sp(!cified in sub,section (3):
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Provided further that if the application is made more than five years
after the driving licence has ceased to be effective the licensing
authority may refuse to renew the driving licence unless the applicant,
undergoes and passes to its satisfaction the test of competence to
drive referred to in sub-section (3) of section 9.
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(5) Where the application for renewal has been rejected, the fee
paid sh al I be refunded to such extent and in such manner as may be
prescribed by the Central Government.
(6) Where the authority renewing the driving licence is not the
authority which issued the driving licence it shall intimate the fact of
renewal to the authority which issued the driving licence.
16. Revocation of driving licence on grounds of disease or disability.-
Notwithstanding anything cont(\ined in the foregoing sections, any
licensing authority may at any time revoke a driving licence or may
require, as a condition of continuing to hold such driving licence, the
holder the_reof to produce a medical certificate in the same form and
in the same manner as is referred to in sub-section (3) of section 8
if the licensing authority has reasonable grounds to believe that the
holder of the driving licence is, by virtue of any disease or disability,
unfit to drive a motor vehicle and where the authority revoking a
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driving licence is not the authority which issued the same, it shall
intimate the fact of revocation to the authority which issued that
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licence."
Section 19 provides for power of the licensing authority to disqualify
from holding a driving licence or revoke such licence.
Section 20 empowers the court to disqualify a person in the event a
person is convicted of an offence under the Motor Vehicles Act or of an
offence in the commission of which a motor vehicle was used.
Section 21 provides for suspension of driving licence. in certain cases.
G Section 23 provides for effect of disqualification order. Section 27 provides
for the power of the Central Government to make ru Jes.
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Chapter II of the Act deals with the provisions of licensing of drivers
of motor vehicles.
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Section 147 of the Act provides for requirements of policies and limits
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NATIONAL INSURANCE CO LTD. v.SWARAN SINGH [V.N. KHARE, CJ.]
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ofliability. Section 149 provides for the duty of insurers to satisfy judgments A
and award against persons insured in respect of third party risks.