REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 396 OF 2009
(Arising out of SLP(C ) No. 19513 of 2006)
National Insurance Company Ltd. ......Appellant
Versus
Meena Aggarwal ......Respondent
JUDGMENT
Dr. ARIJIT PASAYAT, J.
1. Leave granted.
2. Challenge in this appeal is to the order passed by the National
Consumer Disputes Redressal Commission, New Delhi, (in short the
`National Commission').
3. Background facts in a nutshell are as follows:
Respondent was the owner of a vehicle- a Maruti van which was the
subject matter of insurance with the present appellant for a period from
27.1.2003 to 26.1.2004. The Vehicle in question met with an accident on
12.6.2003 and was badly damaged. The estimate of the cost of repair was
prepared by Automobiles Satya of Bilaspur. According to him the estimated
expenditure on total repair of the vehicle was Rs.2,00,000/-. Intimation of
the same was given by the complainant to the present appellant and claim
was made. The same was rejected on the ground that the driver of the
vehicle did not possess a valid driving licence and the vehicle which was a
private vehicle was insured for personal use, but was being used as a taxi for
carrying marriage parties. a marriage party was being transported in the
vehicle after charging rent of Rs.2100/- when the accident occurred. The
driver did not possess a valid licence and, therefore, the vehicle was being
plied against the terms of the insurance policy. The District Consumer
Disputes Redressal Forum Sarguja, Ambikapur Chhattisgarh, rejected the
claim petition. An appeal was preferred before the State Consumer Dispute
Redressal Commission, Rajpur (in short the `State Commission'). By order
dated 17.10.2005, the appeal was allowed. It was held that it would be
proper to declare the claim of complainant as "Non-standard" consequent to
the violation and breach. Therefore, the present appellant was directed to
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pay Rs.90,000/- i.e. 75% of Rs.1,20,000/- i.e. the amount assessed by the
surveyor of the insurance company along with 9% interest. The only reason
given by the State Commission was that even if the vehicle was being used
as a taxi, there was no fundamental breach of the terms of the policy. A
revision petition was filed before the National Commission which came to
be dismissed by the impugned order. The National Commission held that
even though the vehicle was being used as a commercial vehicle and the
driver did not have a valid driving licence, there was no fundamental breach
of the terms of the policy.
According to the appellant the insured vehicle was being used as a
commercial vehicle, and the driver of the vehicle is required to hold an
appropriate licence. If the driver who was driving the vehicle at a relevant
point of time did not possess any licence to drive a commercial vehicle,
there is a breach of the conditions of the policy and such plea was available
to be raised as a defence.
4. This Court in National Insurance Co. Ltd. v. Swaran Singh [2004(3)
SCC 297] clearly laid down that the liability of the Insurance Company vis-
`-vis the owner would depend upon several factors. The owner would be
liable for payment of compensation in a case where the driver was not
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having a licence at all. It was the obligation on the part of the owner to take
adequate care to see that the driver had an appropriate licence to drive the
vehicle. The question as regards the liability of the owner vis-`-vis the
driver being not possessed of a valid licence was considered in Swaran
Singh's case stating:
"89. Section 3 of the Act casts an obligation on a driver
to 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
vehicles described for which a driver may obtain a licence
for one or more of them are: (a) motorcycle without gear,
(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 in Section 2 of the Act defines various
categories of vehicles which are covered in broad types
mentioned in 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 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] 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 before the Tribunal, a decision has to
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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 the accident was caused solely
because of some other unforeseen or intervening causes
like 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."
5. The matter came up for consideration again before this Court in
National Insurance Corpn. Ltd. v. Kanti Devi [2005 (5) )SCC 789] wherein
this Court upon consideration of the observations made in Swaran Singh's
case opined:
"12. The decision in Swaran Singh case was not
before either MACT or the High Court when the
respective orders were passed. Therefore, we think it
proper to remit the matter to MACT for fresh
consideration. It shall permit the parties to lead such
further evidence as they may intend to lead. The matter
shall be decided keeping in view the principle enunciated
by this Court in Swaran Singh case."
6. In a case of this nature, therefore, the owner of a vehicle cannot
contend that he has no liability to verify the fact as to whether the driver of
the vehicle possessed a valid licence or not.
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7. The aforesaid aspect was thereafter highlighted in National Insurance
Co. Ltd. v. Kusum Rai [2006(4) SCC 250]. The said case related to the
liability in the case of a third party. In the instant case, no such claim is
involved and the claim is related to the damage of a vehicle.
8. The respondent has not appeared in spite of service of notice.
9. We find that the State Commission and the National Commission
have not practically indicated any reason for coming to the conclusion that
there was no fundamental breach of the terms of the policy. Both the State
Commission and the National Commission observed that the vehicle was
being driven by a person who did not have a valid driving licence. In
addition to that the vehicle which was insured for personal use was used for
commercial purposes.
10. Looked at from any angle the impugned orders of the State
Commission and the National Commission are unsustainable, deserve to be
set aside, which we direct. No costs.
............................................J.
(Dr. ARIJIT PASAYAT)
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..............................................J.
(ASOK KUMAR GANGULY)
New Delhi,
January 23, 2009
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