K.G. Srinivasamurthy Vs. Habib Khathun and ors. - Court Judgment

V.G. Sabhahit, J.

1. M.F.A. No. 5566 of 1999, M.F.A. No. 690 of 2000 and Cross-objection No. 23 of 2000 arise out of the judgment and award passed by the Motor Accidents Claims Tribunal, Madhugiri in M.V.C. No. 177 of 1997 dated 23.10.1999.

2. M.F.A. No. 3557 of 1998 arises out of and is directed against the judgment and award passed by Motor Accidents Claims Tribunal, Chickmagalur, in M.V.C. No. 140 of 1994 dated 29.5.1998. The essential facts of the case necessary for the disposal of these appeals are as follows:

Facts Re: M.V.C. No. 177 of 1997

3. The parties would be referred to with reference to their rank before the Tribunal. M.V.C. No. 177 of 1997 was filed by Suma, the daughter of Mariyappa, aged 4 years, minor represented by her natural guardian father seeking compensation of Rs. 10,00,000 towards the personal injury suffered by her in a motor accident that occurred on 13.1.1997. It is averred in the petition that on 13.1.1997 at about 9 a.m. claimant was standing by the side of Katalagollahalli-Ajjihalli Road near Kallumane Thota in front of her house, lorry bearing No. MYT 6600 belonging to the respondent No. 1 was driven in a rash and negligent manner by its driver Kanakaraju and the lorry came in a high speed and dashed against Suma, who sustained crush injury to her lower limb above knee. As a result of grievous injury sustained by the injured, the right lower limb has been amputated above knee and the petitioner has suffered permanent physical disability and wherefore, she filed the claim petition seeking compensation of Rs. 10,00,000 from the respondents being the owner and insurer of the lorry MYT 6600.

4. The respondent No. 1 (owner) filed objections statement denying the averment made in the petition regarding the manner of accident and the injury sustained by the claimant. He also averred that quantum of compensation claimed is excessive. The respondent No. 1 lastly averred that, without prejudice to the other contentions, that, if any award is to be passed, it has to be satisfied by the insurance company as the lorry was validly insured with the respondent No. 2 on the date of the accident, 13.1.1997 and that award has to be passed against the respondent No. 2.

5. The respondent No. 2 (insurer) filed the objections statement denying the averment made in the petition regarding the manner of accident and the injuries sustained by the petitioner and also averred that the quantum of compensation claimed is excessive. It was further averred that the respondent No. 2 is not liable to pay the compensation as it was ascertained that the driver of the vehicle had no licence to drive any vehicle, much less lorry, as on the date of the alleged accident; and that compensation if any awarded, has to be paid by the respondent No. 1 being the registered owner of the lorry. The respondent No. 2 contended that its liability was subject to terms and conditions of the policy, one of which is that the vehicle should be driven by person holding a valid driving licence; and as there was a breach of the said condition, the respondent No. 2 is not liable to pay the compensation. Accordingly, respondent No. 2 sought dismissal of the claim petition against the respondent No. 2.

6. Having regard to the pleadings, the following two issues were framed:

(1) Whether the claimant proves that on 13.1.1997 at 9 a.m. the driver of the lorry bearing No. MYT 6600 drove the same in a rash and negligent manner and dashed to her and thereby sustained severe injuries?

(2) Whether the claimant is entitled for any compensation? If so, from whom?

7. On behalf of the claimant, the natural guardian, father of the claimant, was examined as PW 1 and he got marked Exhs. P-1 to P-168. On behalf of the respondents, respondent No. 2 the Branch Manager of the respondent No. 2 insurance company was examined as RW 1 and he got marked Exh. R-1, history sheet of the driver. The Tribunal after considering the oral and documentary evidence on record, by its judgment dated 23.10.1999 held that the accident occurred due to rash and negligent driving of the lorry by its driver and the claimant sustained grievous injury in the said accident and that her right leg has been amputated above knee and having regard to the permanent physical disability sustained by the petitioner and other material on record and the material adduced by the claimant regarding the expenses incurred towards treatment, the Tribunal held that claimant is entitled to compensation of Rs. 3,10,000 including the interim compensation of Rs. 25,000 with interest at 12 per cent per annum from the date of petition till payment and further held that in view of the decision of this Court in Oriental Insurance Co. Ltd. v. Mohammed Sab Ali Sab Kaladagi : ILR1999KAR2100 , the respondent Nos. 1 and 2 are jointly and severally liable to pay the compensation awarded to the claimant.

8. Being aggrieved by the said judgment and award insofar as it relates to the liability of the respondent No. 2 insurance company to pay the compensation awarded by the Tribunal, the insurance company has filed M.F.A. No. 5566 of 1999 contending that the Tribunal was not justified in holding that the insurance company was liable to pay the compensation to the claimant along with the owner jointly and severally as there was breach of condition of the policy regarding driving of the vehicle as the driver of the lorry did not possess a valid driving licence on the date of the accident.

9. Being aggrieved by the quantum of compensation awarded by the Tribunal, the claimant has filed M.F.A. No. 690 of 2000 seeking enhancement of compensation awarded by the Tribunal. In the said appeal filed by the claimant for enhancement, the owner of the lorry, the respondent No. 1 before the Tribunal has filed Cross-objection No. 23 of 2000 contending that the quantum of compensation awarded to the claimant by the Tribunal is excessive and the same is liable to be reduced.

Facts Re: M.V.C. No. 140 of 1994

10. M.V.C. No. 140 of 1994 was filed by Habib Khathun seeking compensation of Rs. 5,00,000 towards the death of her son Into Pasha in a motor accident that occurred on 19.1.1994. It is averred in the petition that Into Pasha, son of the petitioner was proceeding on a motor cycle bearing No. KA 04-J 8730 towards Bangalore as a pillion rider on Kadur-Bangalore Road and one Srinivas was driving the said motor cycle slowly and cautiously, observing all the traffic rules and was moving on the left side of the road. While he was so proceeding near Shivaganga Farm, Koppalli village, a Canter lorry bearing No. KA 18-240 came from the opposite direction being driven by the respondent No. I Putta Naika and owned by respondent No. 2 K.G. Srinivasamurthy in a rash and negligent manner and dashed against the motor cycle as a result of which both the rider of the motor cycle and Into Pasha (pillion rider) sustained injuries and died at the spot and accident occurred due to rash and negligent driving of the lorry by the driver respondent No. 1.

11. It is averred that deceased was working as a Field Assistant in Manjunatha Granites. He was hale and healthy prior to the accident and he was getting monthly income of Rs. 1,500 with other perks such as batta, daily allowance, etc. The deceased was aged 20 years and the petitioner being the mother was dependent upon the income of the deceased. She, therefore, filed the petition seeking compensation of Rs. 5,00,000 from respondent Nos. 1 to 5. Respondent Nos. 1 to 3 being respectively the driver, owner and insurer of the lorry bearing No. KA 18-240 and respondent Nos. 4 and 5 being the owner and insurer of motor cycle bearing No. KA 04-J 8730.

12. Respondent Nos. 1 and 4 remained ex parte before the Tribunal. Respondent No. 2 filed objection statement denying the averment made in the petition regarding the manner of accident, age, income and status of the deceased and averred that the vehicle was insured with the respondent No. 3 under a valid insurance policy and wherefore, the award if any passed should be met by the insurance company. It is also averred that accident occurred due to rash and negligent driving of the motor cycle and not due to rash and negligent driving of the vehicle belonging to the respondent No. 2. The respondent No. 3 filed statement of objections contending that the insurance company is not liable to pay the compensation as the respondent No. 1 who is alleged to be the driver of the lorry bearing No. KA 18-240 had no effective driving licence to drive the said vehicle and, therefore, there was a breach of condition of the policy of the insurance issued by the respondent No. 2 and wherefore, it is not liable to pay the compensation. It was also averred that the driver of the motor cycle also did not hold valid driving licence and wherefore, the respondent Nos. 3 and 5 are not liable to pay the compensation and petition be dismissed against them.

13. Having regard to the above pleadings, the following three issues were framed:

(1) Whether the petitioner proves that on 19.1.1994 at about 11.45 a.m. near Shivaganga Farm, Koppalli village on BH Road, while the deceased Into Pasha was proceeding in a motor cycle towards Bangalore as a pillion rider, the respondent No. 1 being the driver of Canter lorry bearing No. KA 18-240 drove it in rash and negligent manner, dashed against the motor cycle and that her son Into Pasha sustained grievous injuries and succumbed to them at the spot?

(2) To what compensation the petitioner is entitled and from whom?

(3) What order or award?

14. The petitioner examined herself as PW 1 and also examined Ameer Jan an eyewitness to the accident as PW 2 and got marked the documents Exhs. P-1 to P-13. On behalf of the respondents, no oral evidence was adduced. However, Exhs. R-1 to R-5 were got marked on behalf of the respondents. The Tribunal after considering the oral and documentary evidence on record and the contention of the parties by its order dated 29.5.1998 held that, accident occurred due to rash and negligent driving of the lorry bearing No. KA 18-240 by the respondent No. 2 and that Into Pasha died due to injury sustained in the said accident and further held that the petitioner being the mother of the deceased is entitled to compensation of Rs. 1,64,000 with costs and current interest at 12 per cent per annum from the date of petition till realisation. The Tribunal held that the insurer of the lorry respondent No. 3, was not liable to pay the compensation as the driver of the lorry did not possess an effective driving licence on the date of accident, 19.1.1994. It accordingly passed the award against respondent Nos. 1 and 2 jointly and severally and dismissed the petition against respondent Nos. 3, 4 and 5.

15. Being aggrieved by the judgment and award passed by the Motor Accidents Claims Tribunal, the owner of the lorry bearing No. KA 18-240 has preferred M.F.A. No. 3557 of 1998 contending that the Tribunal was not justified in dismissing the claim petition against the respondent No. 3 (insurer) and Tribunal ought to have passed the award against the insurance company also. The claimant in M.V.C. No. 140 of 1994 has preferred the cross-objection seeking enhancement of compensation as claimed in the petition. Contentions:

16. We have heard the learned Counsel appearing for the appellant in the above said appeal and cross-objectors and also the learned Counsel appearing for the respondents in the respective appeals. It is contended by the learned Counsel appearing for the appellant in M.F.A. No. 5566 of 1999 that the Tribunal was not justified in fastening the liability on the insurance company in view of the fact that according to the material adduced before the Tribunal, the driver of the lorry did not possess an effective driving licence on the date of accident 13.1.1997. He submitted that Exh. R-1 clearly shows that the driver of the lorry possessed driving licence only from 29.11.1993 to 28.11.1996 and again from 17.1.1997 to 16.1.2000 and did not possess an effective driving licence on the date of the accident (13.1.1997). He contended that in view of the provisions of th Motor Vehicles Act, 1988 ('Act' for short) dealing with driving licences and in view of the conditions in the policy of insurance issued by the insurance company, it was clear that there was breach of conditions of the policy as the driver did not possess an effective driving licence on the date of accident and the fact that the licence might have been renewed subsequently on 17.1.1997 would not in any way help the owner to contend that insurance company is also liable to pay the compensation; and as there was breach of conditions of the policy and wherefore, the insurance company was not liable to pay the compensation. He submitted that the Tribunal ought to have dismissed the claim petition against the insurance company. He submitted that the decision in Mohammed Sab's case, : ILR1999KAR2100 , does not lay down the correct law.

17. The learned Counsel appearing for the appellant in M.F.A. No. 3557 of 1998 submitted that the Tribunal was not justified in dismissing the claim against the insurance company. He submitted that the insurance company has failed to prove that there was any breach of condition of the policy as no oral evidence is adduced on behalf of the insurance company and the material on record did not prove that there was any breach of conditions of the policy. He submitted that, in view of the provisions of the Motor Vehicles Act dealing with the renewal of driving licence and the liability of the insurance company to satisfy the award against third parties contained in Section 149 of the Motor Vehicles Act, the Tribunal ought to have passed the award against the insurance company also.

18. The learned Counsel for respondent No. 2 in M.F.A. No. 5566 of 1999 (owner in M.V.C. No. 177 of 1997) submitted that the quantum of compensation awarded by the Tribunal is excessive and the same is liable to be reduced. He, however, supported the decision of the Tribunal holding that the insurance company was also liable to pay the compensation. He submitted that since claimant is a third party and the insurance company is statutorily required to issue the policy as per the provisions of Chapter XII of Motor Vehicles Act, in view of the provisions of Section 149(4) the insurance company is liable to satisfy the award passed against the claimant; and that the liability to satisfy the award is statutory and not dependent upon the conditions imposed by the insurance company in the policy of insurance issued by it.

19. The learned Counsel appearing for the appellant in M.F.A. No. 690 of 2000 (the claimant in M.V.C. No. 177 of 1997), the claimant before the Tribunal submitted that the quantum of compensation awarded by the Tribunal is on a lower side, having regard to the nature of the injury and the consequential permanent physical disability sustained by the petitioner who was aged 3 years at the time of accident on account of her right limb has been amputated above knee. The learned Counsel submitted that the claimant is entitled to enhancement of compensation as claimed in the petition.

20. The learned Counsel appearing for the respondent No. 2 in M.F.A. No. 3557 of 1998 (insurer in M.V.C. No. 140 of 1994) submitted that the Tribunal has rightly held that the insurance company was not liable to pay the compensation as there was breach of conditions of the policy inasmuch as the driver of the van did not possess effective driving licence on the date of the accident and has filed the written submissions.

21. We have heard the arguments and perused the written submissions filed by the counsel. Having regard to the contentions being urged in the appeals and the cross-objections, the points that arise for determination in these appeals and cross-objections are:

(1) Whether the quantum of compensation awarded to the claimant in M.V.C. No. 177 of 1997 is inadequate as contended by the appellant in M.F.A. No. 690 of 2000 and whether the claimant is entitled to enhancement of compensation?

(2) Whether the quantum of compensation awarded to the claimant in M.V.C. No. 177 of 1997 is excessive as contended by the cross-objector (owner of vehicle) and whether the quantum of compensation awarded to the claimant is liable to be reduced?

(3) Whether quantum of compensation awarded to the claimant in M.V.C. No. 140 of 1994 is on the lower side as contended by the cross-objector in M.F.A. No. 3557 of 1998? And as to whether the claimant is entitled to enhancement of compensation?

(4) Whether the insurance company is liable to satisfy the award passed against a third party notwithstanding violation of any conditions of the policy by the insured; if so, whether the insurance company can recover the amount so paid from the insured on proof of breach?

(5) Where there is breach of conditions of the policy on account of the driver of the vehicle not holding an effective driving licence on the date of accident, whether insurer is not liable to pay the compensation under the policy?

(6) Whether the Tribunal was justified in holding that the insurance company is liable to pay the compensation jointly and severally with the owner of the lorry to the claimant in M.V.C. No. 177 of 1997?

(7) Whether the Tribunal was justified in holding that the claim in M.V.C. No. 140 of 1994 was liable to be dismissed against the insurance company?

(8) Whether the judgment and award passed by the Motor Accidents Claims Tribunal in M.V.C. No. 177 of 1997 calls for interference in M.F.A. No. 5566 of 1999 and M.F.A. No. 690 of 2000 and Cross-objection No. 23 of 2000?

(9) Whether the judgment and award passed by the Motor Accidents Claims Tribunal, Chickmagalur in M.V.C. No. 140 of 1994 calls for interference in appeal M.F.A. No. 3557 of 1998 or cross-objection filed by the claimants in the said appeal?

We answer the above points as follows for the following reasons:

Points 1 and 2:

22. These points for determination relate to the quantum of compensation awarded to the claimant in M.V.C. No. 177 of 1997. The Tribunal has awarded compensation of Rs. 3,10,000 with interest at 12 per cent per annum from the date of petition till payment under the following heads:

(1) Loss of income Rs. 1,80,000(2) Pain and suffering Rs. 25,000(3) Loss of amenities Rs. 25,000(4) Loss of marriageprospects Rs. 50,000(5) Medical and otherallowances Rs. 20,000(6) Artificial leg Rs. 10,000

23. PW 1 is the father of the injured being the natural guardian of the minor claimant. He has stated in his evidence that his daughter sustained crush injury to her leg. She was taken to Koratagere Hospital, from there she was taken to Tumkur District Hospital wherein they were advised to take the injured to Sanjay Gandhi Hospital at Bangalore and accordingly, the injured was admitted in Sanjay Gandhi Hospital at Bangalore and her right leg above knee has been amputated. He has stated that due to amputation of right leg above knee, she has sustained permanent physical disability and she would constantly require one person to attend to her as she cannot move independently. He has also stated that since she is physically disabled, her prospect of marriage is prejudicially affected and she has to be looked after throughout her life by the parents. He has further stated that his wife was staying in the hospital with the injured. He was coming to Bangalore once in three days and he had to spend Rs. 150 per trip to Bangalore. His daughter and wife were getting food from the hotel and he has spent Rs. 30,000 for food and medicine and Rs. 6,000 towards conveyance. He has stated that injured has to be taken to the hospital once in a month and for every trip to Bangalore, they have to spend Rs. 250. He has produced Exh. P-3 wound certificate issued by Sanjay Gandhi Hospital, Exh. P-7 photograph of the injured child, negative of which is at Exh. P-7 (a), medicine bills Exhs. P-10 to P-40, Exhs. P-41 to P-166 bus tickets, Exh. P-167 certificate issued by Sanjay Gandhi Hospital. He has also produced certificate of disability as per Exh. P-168, according to which the injured has suffered 80 per cent permanent physical disability. Nothing also has been elicited in the cross-examination of PW 1 to disbelieve his evidence regarding the injury sustained by the daughter of PW 1 and also the fact that due to crush injuries sustained to right leg of the claimant, right leg above knee has been amputated. It is suggested to PW 1 that his daughter has not sustained permanent physical disability of 80 per cent and that he has produced a false certificate. The said suggestion has been denied by PW 1. However, the fact that the claimant had sustained crush injury to right leg and her right leg has been amputated above knee has been proved by the claimant and the documentary evidence produced by the claimant Exh. P-4 wound certificate issued by Sanjay Gandhi Hospital and also Exh. P-167 shows that there is amputation of the right lower limb above knee., The photograph Exh. P-7 shows that the injured had suffered amputation of the right leg above knee and wherefore, even assuming that Exh. P-168 has not been proved by examining the doctor who has issued the certificate. It is clear from Schedule I to the Workmen's Compensation Act that amputation of lower limb below hip with stump not exceeding 12.70 cm. in length measured from tip of great to canter but not beyond middle thigh would constitute 80 per cent permanent physical disability and wherefore, the amputation of right leg of the injured above knee would constitute 80 per cent permanent physical disability as rightly held by the Tribunal. However, the learned Tribunal has proceeded to fix the loss of earning capacity also at 80 per cent, i.e., permanent physical disability sustained by the claimant. It is well settled that permanent physical disability is not the same as functional or economic disability and what has to be considered by the Tribunal for assessing the loss of reduced earning capacity is the functional or economic disability, that is the disability which would reduce the income which the claimant would have earned but for the fact of disability sustained in the accident. But in this case, having regard to the fact that right leg of the claimant has been amputated above knee and the income is assessed on notional minimum income basis, it would be just and reasonable to take the loss of earning capacity as 80 per cent as held by the Tribunal. The Tribunal has rightly taken the income of Rs. 15,000 per annum in view of the fact that the claimant is aged only 3 years at the time of accident as the injured was not earning any amount which is also supported by Second Schedule of the Motor Vehicles Act. The multiplier taken as 15 with reference to Second Schedule also does not call for interference on the facts of this case. Wherefore, the claimant would be entitled to compensation of 80 per cent of Rs. 15,000 which would be Rs. 12,000 and multiplying the same with 15, the compensation would come to Rs. 1,80,000. Accordingly, we hold that the compensation of Rs. 1,80,000 awarded by the Tribunal towards loss of earning is proper.

24. However, we find that the quantum of compensation awarded by the Tribunal under other heads are on a lower side. The Tribunal has awarded compensation of Rs. 25,000 towards pain and suffering and has not awarded any amount towards the injury sustained by the claimant. Having regard to the nature of injury sustained by the petitioner, the period of treatment taken by her and also having regard to the fact that there is amputation of right leg of the claimant above knee, it would be just and reasonable to award compensation of Rs. 50,000 towards injury, pain and suffering.

25. The Tribunal has awarded compensation of Rs. 25,000 towards loss of amenities and Rs. 50,000 towards loss of marriage prospects. The claimant has suffered loss of right leg above knee as the same has been amputated due to the injury sustained and due to the loss of right leg above knee, she has to suffer throughout the life and she has to suffer the loss of amenities. The amenities which she would have enjoyed had there not been loss of right leg above knee due to the injury sustained in the accident. The injured was aged 3 years on the date of accident. She has virtually lost her marriage prospects. Having regard to these facts, instead of compensation of Rs. 25,000 awarded towards loss of amenities and Rs. 50,000 towards loss of marriage prospects, interest of justice would be met by awarding a lump sum compensation of Rs. 90,000 under these heads. While deciding the said amount, we have also kept in view the amount awarded under the head of loss of future earning capacity.

26. The compensation awarded by the Tribunal towards medical expenses and artificial limb at Rs. 20,000 and Rs. 10,000 respectively is just and reasonable and accordingly, we hold that the claimant is entitled to the following compensation under different heads;

(1) Loss of income Rs. 1,80,000(2) Injury, pain andsuffering Rs. 50,000(3) Loss of amenitiesand marriage prospects Rs. 90,000(4) Medical and otherincidental expenses Rs. 20,000(5) Artificial limb Rs. 10,000Total Rs. 3,50,000

27. The Tribunal has awarded interest at 12 per cent per annum from the date of petition to the date of payment. The Apex Court in Kaushnuma Begum v. New India Assurance Co. Ltd., : [2001]1SCR8 , has held that, in view of the change in the economy and policy of Reserve Bank of India and the prevalent rate of interest for the fixed deposit by the nationalised banks, it would be reasonable to award interest at 9 per cent per annum and wherefore, we hold that the interest awarded by the Tribunal is liable to be reduced from 12 per cent to 9 per cent per annum from the date of petition to the date of payment. Accordingly, we answer point Nos. 1 and 2 for determination by holding that the quantum of compensation awarded by the 'Tribunal is on a lower side and the same is entitled to be enhanced to Rs. 3,50,000. However, the rate of interest awarded by the Tribunal is liable to be reduced to 9 per cent per annum.

Point 3:

28. The Tribunal has awarded compensation of Rs. 1,64,000 with interest at 12 per cent per annum from the date of petition till realisation to the claimant being the mother of the deceased Into Pasha under the following heads:

(1) Loss of dependency Rs. 1,44,000(2) Compensation under conventional head Rs. 10,000(3) Obsequies and transportationof body Rs. 10,000Total Rs. 1,64,000

29. The Tribunal has taken the income of the deceased at Rs. 1,500 per month and has deducted 1/3rd towards personal expenses and has arrived at the income at Rs. 12,000 per annum and out of the said amount, it has further deducted Rs. 3,000 towards the personal expenses and has arrived at the annual loss of dependency at Rs. 9,000. It has adopted multiplier of 16 and has arrived at loss of dependency at Rs. 1,44,000. Exh. P-5 is the salary certificate issued by the employer of the deceased wherein it is stated that deceased was working as Field Assistant and he was drawing salary of Rs. 1,500 per month in addition to this, he was also drawing conveyance allowance, dearness allowance and other perks. The deceased was aged 20 years at the time of his death due to the injury sustained in the accident. Therefore, the income of the deceased was more than Rs. 1,500 per month. It should also be remembered that the income of Into Pasha would have increased in due course of time as there would have been raise in the salary and his salary would not have remained at Rs. 1,500 only for all the period to come. The future prospects of advancement in life and career should also be sounded in terms of money as held by the Apex Court in Sarla Dixit v. Balwant Yadav : (1993)IILLJ664SC and wherefore, having regard to the age of the deceased and the income he was getting which was in addition to the dearness allowance, conveyance allowance and other perks which he was getting from the employer and also having regard to the prospects of higher income in future, it would be reasonable to take income of Rs. 2,500 per month. It is clear from the evidence of PW 1, the deceased was the son of the claimant, he was a bachelor who was aged 20 years. It has been held by this Court in Gulam Khader v. United India Insurance Co. Ltd., : ILR2000KAR4416 , that where the deceased was a bachelor and the claimant is the mother, it would be just and reasonable to deduct 50 per cent towards personal expenses. The Tribunal was not right in deducting only 1/3rd towards personal expenses. The contribution to the family (mother) would be 50 per cent of Rs. 2,500 that is Rs. 1,250 per month, which would be Rs. 15,000 per annum. The Tribunal has erred in taking multiplier with reference to the age of the deceased. It is well settled that to choose appropriate multiplier, the age of the deceased or the claimant whichever is higher should be taken. Therefore, in the present case, the age of the mother claimant being higher than the age of the deceased, it would be the age of the mother which would determine the appropriate multiplier. The age of the claimant is given as 50 years in the petition and she has given her age as 50 years on the date of deposition also, her age given in the petition is not controverted by the respondents and wherefore, it would be reasonable to take the age of the claimant as 50 years and appropriate multiplier would be 12, having regard to the date of the accident. Therefore, loss of dependency would come to Rs. 1,80,000. The claimant would also be entitled to compensation of Rs. 8,000 towards loss to the estate of the deceased and Rs. 7,000 towards obsequies and transportation of body and, therefore, the claimant would be entitled to compensation of Rs. 1,95,000 and accordingly, we hold that the claimant is entitled to enhanced compensation of Rs. 1,95,000.

30. The Tribunal has awarded interest at 12 per cent per annum from the date of petition to the date of payment. The Apex Court in Kaushnuma Begum v. New India Assurance Co. Ltd., : [2001]1SCR8 , has held that, in view of the change in economy and policy of Reserve Bank of India and the prevalent rate of interest for fixed deposit by the nationalised banks, it would be reasonable to award interest at 9 per cent per annum and wherefore, we hold that the interest awarded by the Tribunal is liable to be reduced from 12 per cent to 9 per cent from the date of petition to the date of payment and accordingly, answer point No. 3 by holding that the quantum of compensation awarded by the Tribunal is on the lower side and the claimant is entitled to enhancement of compensation to Rs. 1,95,000 with interest at 9 per cent per annum from the date of petition to the date of payment.

Points 4 and 5:

31. These points relate to the liability of the insurance company to satisfy the award passed against third party and as to its right to recover any amount paid to the third party in view of the provisions of the Motor Vehicles Act from the insured.

32. Chapter XI of the Motor Vehicles Act, 1988 containing Sections 145 to 164 deals with insurance of the motor vehicle against third party risk. Section 146 imposes prohibition against the use of motor vehicle in public place unless the vehicle is covered by the policy of insurance complying with the requirement enumerated in the Chapter. The requirements of policy including the liability to be incurred are enumerated in Section 147. Section 149(4) states that, so much of policy as purports to restrict the insurance of the person insured thereby, by reference to any conditions shall, as respects such liabilities as are required to be covered by the policy under Section 147(1)(b) be of no effect. The proviso to Section 149(4) enables the insurance company to recover the amount paid towards discharge of any liability of any person which is covered by the policy, by virtue of that sub-section from the insured.

33. The corresponding provisions contained in Chapter VIII of Motor Vehicles Act, 1939, came up before a three-Judge Bench of the Supreme Court in New Asiatic Insurance Co. Ltd. v. Pessumal Dhanamal Aswani 1958-65 ACJ 559 (SC). The Apex Court after considering the relevant provisions of Chapter VIII of the Motor Vehicles Act held as follows:

(12) Chapter VIII of the Act, it appears from the heading, makes provision for insurance of the vehicle against third party risks, that is to say, its provisions ensure that third parties who suffer on account of the user of the motor vehicle would be able to get damages for injuries suffered and that their ability to get the damages will not be dependent on the financial condition of the driver of the vehicle whose user led to. the causing of the injuries. The provisions have to be construed in such a manner as to ensure this object of the enactment.

(16) Sub-section (5) of Section 95 makes the insurer liable to indemnify the person or classes of persons specified in the policy in respect of any liability which the policy purports to cover in the case of that person or those classes of persons. If the policy covers the insured for his liability to third parties, the insurer is bound to indemnify the person or classes of persons specified in the policy. The same is the effect of Sub-section (1) of Section 96 which provides that the insurer is bound to pay to the person entitled to the benefit of a decree he obtains in respect of any liability covered by the terms of the policy against any person insured by the policy irrespective of the fact whether the insurer was entitled to avoid or cancel or might have avoided or cancelled the policy. This means that once the insurer has issued a certificate of insurance in accordance with Sub-section (4) of Section 95 he has to satisfy any decree which a person receiving injuries from the use of the vehicle insured obtains against any person insured by the policy. He is, however, liable to satisfy the decree only when he has been served with a notice under Sub-section (2) of Section 96 about the proceedings in which the judgment was delivered...

(21) The Act contemplates the possibility of the policy of insurance undertaking liability to third parties providing such a contract between the insurer and the insured, that is, the person who effected the policy, as would make the company entitled to recover the whole or part of the amount it has paid to the third party from the insured. The insurer thus acts as security for the third party with respect to its realising damages for the injuries suffered, but vis-a-vis the insured, the company does not undertake that liability or undertakes it to a limited extent. It is in view of such a possibility that various conditions are laid down in the policy. Such conditions, however, are effective only between the insured and the company and have to be ignored when considering the liability of the company to third parties. This is mentioned prominently in the policy itself and is mentioned under the heading 'Avoidance of certain terms and rights of recovery', as well as in the form of 'an important notice' in the Schedule to policy. The avoidance clause says that nothing in the policy or any endorsement thereon shall affect the right of any person indemnified by the policy or any other person to recover an amount under or by virtue of the provisions of the Act. It also provides that the insured will repay to the company all sums paid by it which the company would not have been liable to pay but for the said provisions of the Act. The 'Important Notice' mentions that any payment made by the company by reason of wider terms appearing in the certificate in order to comply with the Act is recoverable from the insured and refers to the avoidance clause.

(22) Thus the contract between the insured and the company may not provide for all the liabilities which the company has to undertake vis-a-vis the third parties, in view of the provisions of the Act. We are of opinion that once the company had undertaken liability to third parties incurred by the persons specified in the policy, the third parties right to recover any amount under or by virtue of the provisions of the Act is not affected by any condition in the policy. Considering this aspect of the terms of the policy, it is reasonable to conclude that proviso (a) of para 3 of Section 11 is a mere condition affecting the rights of the insured who effected the policy and the persons to whom the cover of the policy was extended by the company and does not come in the way of third-parties' claim against the company on account of its claim against a person specified in para 3 as one to whom cover of the insurance policy was extended.

34. The Apex Court in Skandia Insurance Co. Ltd. v. Kokilaben Chandravadan 1987 ACJ 411 (SC), has observed as follows regarding the liability of the insurance company to satisfy the award against third party and the object behind imposition of compulsory insurance of the vehicle against third party risk by the provision of Motor Vehicles Act:

In order to divine the intention of the legislature in the course of interpretation of the relevant provisions there can scarcely be a better test than that of probing into the motive and philosophy of the relevant provisions keeping in mind the goals to be achieved by enacting the same. Ordinarily it is not the concern of the legislature whether the owner of the vehicle insures his vehicle or not. If the vehicle is not insured any legal liability arising on account of third party risk will have to be borne by the owner of the vehicle. Why then has the legislature insisted on a person using a motor vehicle in a public place to insure against third party risk by enacting Section 94. Surely the obligation has not been imposed in order to promote the business of the insurers engaged in the business of automobile insurance. The provision has been inserted in order to protect the members of the community travelling in vehicles or using the roads from the risk attendant upon the user of motor vehicles on the roads. The law may provide for compensation to victims of the accidents who sustain injuries in the course of an automobile accident or compensation to the dependants of the victims in the case of a fatal accident. However, such protection would remain a protection on paper unless there is a guarantee that the compensation awarded by the courts would be recoverable from the persons held liable for the consequences of the accident. A court can only pass an award or a decree. It cannot ensure that such an award or decree results in the amount awarded being actually recovered, from the person held liable who may not have the resources. The exercise undertaken by the law courts would then be an exercise in futility. And the outcome of the legal proceedings which by the very nature of things involve the time cost and money cost invested from the scarce resources of the community would make a mockery of the injured victims, or the dependants of the deceased victim of the accident, who themselves are obliged to incur not inconsiderable expenditure of time, money and energy in litigation. To overcome this ugly situation the legislature has made it obligatory that no motor vehicle shall be used unless a third party insurance is in force. To use the vehicle without the requisite third party insurance being in force is a penal offence. The legislature was also faced with another problem. The insurance policy might provide for liability walled in by conditions which may be specified in the contract of policy. In order to make the protection real, the legislature has also provided that the judgment obtained shall not be defeated by the incorporation of exclusion clauses other than those authorised by Section 96 and by providing that except and save to the extent permitted by Section 96, it will be the obligation of the insurance company to satisfy the judgment obtained against the persons insured against third party risks. [Vide Section 96]. In other words, the legislature has insisted and made it incumbent on the user of a motor vehicle to be armed with an insurance policy covering third party risks which is in conformity with the provisions enacted by the legislature. It is so provided in order to ensure that the injured victims of automobile accidents or the dependants of the victims of fatal accidents are really compensated in terms of money and not in terms of promise. Such a benign provision enacted by the legislature having regard to the fact that in the modern age the use of motor vehicles notwithstanding the attendant hazards, has become an inescapable fact of life, has to be interpreted in a meaningful manner which serves rather than defeats the purpose of the legislation. The provision has, therefore, to be interpreted in the twilight of the aforesaid perspective.

The decision of the Supreme Court in Skandia Insurance Company's case has been approved and reiterated in the case of Sohan Lal Passi v. P. Sesh Reddy : AIR1996SC2627 .

35. The Supreme Court in G. Govindan v. New India Assurance Co. Ltd. : [1999]2SCR476 , has held that, the provisions of Chapter VIII of Motor Vehicles Act, 1939 indicate that the legislature has made insurance of motor vehicles compulsory against third party (victim) risk and since the third party risk is compulsory, once the insurance company has undertaken liability to third parties incurred by the persons specified in the policy, the third parties' right to recover any amount under or by virtue of the provisions of the Act is not affected by any condition in the policy.

36. In Oriental Insurance Co. Ltd. v. Inderjit Kaur : (1998)1SCC371 , the Supreme Court has observed that the policy of insurance issued by the insurance company was a representation upon which the authorities and third parties were entitled to act. The public interest that a policy of insurance serves must, clearly, prevail over the interest of the insurer.

37. In a recent decision of the Supreme Court in New India Assurance Co. Ltd. v. Kamla, : [2001]2SCR797 , the Supreme Court has considered the earlier decisions rendered by it and has considered in detail the liability of the insurance company to satisfy the award against the third party and has observed as follows:

(16) Chapter XI of the Act contains provisions for insurance of motor vehicles against third party risk. Sections 145 to 164 are subsumed in the said Chapter. Section 146 of the Act imposes a prohibition against use of a motor vehicle in public place unless the vehicle is covered by a policy of insurance complying with the requirements enumerated in the Chapter. Some categories of vehicles are exempted from the aforesaid compulsion, but we are not concerned with any such category now.

(17) The details regarding the requirements of the policy including the limits of liability to be insured are enumerated in Section 147. Sub-section (3) of it states that a policy shall be of no effect for the purposes of that Chapter unless and until a certificate of insurance is issued by the insurer in the prescribed form in favour of the insured. It is in Section 149 that provisions relating to the duty of the insurer for satisfying the judgments and awards in respect of third party claims are incorporated. Subsection (1) says that the insurer shall pay to the person entitled to the benefit of a judgment or award as if the insurer were the judgment-debtor in respect of the liability, when any such judgment or award is obtained against the insured in whose favour a certificate of insurance has been issued. Of course, the said liability of the insurer is subject to the maximum sum assured payable under the policy.

(18) Section 149(2) of the Act says that notice regarding the suit or other legal proceedings shall be given to the insurer if such insurer is to be fastened with such liability. The purpose of giving such notice is to afford the insurer to be made a party in the proceedings for defending the action on any one of the grounds mentioned in the subsection. Among the multiplicity of such grounds the one which is relevant in this case is extracted below:

(a) That there has been a breach of a specified condition of the policy, being one of the following conditions, namely:

xxx xxx xxx(ii) a condition excluding driving by a named person or persons or by any person who is not duly licensed, or by any person who has been disqualified for holding or obtaining a driving licence during the period of disqualification.'

(19) Sub-section (4) of Section 149 of the Act says that so much of the policy as purports to restrict the insurance of the persons insured by reference to any condition shall 'as respects such liabilities as are required to be covered by a policy, be of no effect'. The proviso to the said sub-section is important for the purpose of considering the question involved in this case and hence that proviso is extracted below:

Provided that any sum paid by the insurer in or towards the discharge of any liability of any person which is covered by the policy by virtue only of this sub-section shall be recoverable by the insurer from that person.(20) Similarly, in this context Sub-section (5) is equally important and hence that is also extracted below:

If the amount which an insurer becomes liable under this section to pay in respect of a liability incurred by a person insured by a policy, exceeds the amount for which the insurer would apart from the provisions of this section be liable under the policy in respect of that liability, the insurer shall be entitled to recover the excess from that person.(21) A reading of the proviso to Sub-section (4) as well as the language employed in Sub-section (5) would indicate that they are intended to safeguard the interest of an insurer who otherwise has no liability to pay any amount to the insured but for the provisions contained in Chapter XI of the Act. This means, the insurer has to pay to the third parties only on account of the fact that a policy of insurance has been issued in respect of the vehicle, but the insurer is entitled to recover any such sum from the insured if the insurer were not otherwise liable to pay such sum to the insured by virtue of the conditions of the contract of insurance indicated by the policy.

(22) To repeat, the effect of the above provisions is this: When a valid insurance policy has been issued in respect of a vehicle as evidenced by a certificate of insurance the burden is on the insurer to pay to third parties, whether or not there has been any breach or violation of the policy conditions. But the amount so paid by the insurer to third parties can be allowed to be recovered from the insured if as per the policy conditions the insurer had no liability to pay such sum to the insured.

(25) The position can be summed up thus: The insurer and insured are bound by the conditions enumerated in the policy and the insurer is not liable to the insured if there is violation of any policy condition. But the insurer who is made statutorily liable to pay compensation to third parties on account of the certificate of insurance issued shall be entitled to recover from the insured the amount paid to the third parties, if there was any breach of policy conditions on account of the vehicle being driven without a valid driving licence. Learned counsel for the insured contended that it is enough if he establishes that he made all due inquiries and believed bona fide that the driver employed by him had a valid driving licence, in which case there was no breach of the policy condition. As we have not decided on that contention it is open to the insured to raise it before the Claims Tribunal. In the present case, if the insurance company succeeds in establishing that there was breach of the policy condition, the Claims Tribunal shall direct the insured to pay that amount to the insurer. In default the insurer shall be allowed to recover that amount (which the insurer is directed to pay to the claimants-third parties) from the insured person.

38. The Apex Court in Oriental Insurance Co. Ltd. v. Cheruvakkara Nafeessu, : 2000(8)SCALE412 , has reiterated the observations made by the Supreme Court in the case of New Asiatic Insurance Co. Ltd. v. Pessumal Dhanamal Aswani 1958-65 ACJ 559 (SC) and has held as follows:

(8) Relying upon the aforesaid judgment and referring to the avoidance clause, a three-Judge Bench of this Court in Amrit Lal Sood v. Kaushalya Devi Thapar : [1998]2SCR284 , held:

In the policy in the present case also, there is a clause under the heading 'Avoidance of certain terms and right of Recovery' which reads thus:

Nothing in this policy or any endorsement hereupon shall affect the right of any person indemnified by this policy or any other person to recover an amount under or by virtue of the provisions of Motor Vehicles Act 1939, Section 96. But insured shall repay to the company all sums paid by the company which the company would not have been liable to pay but for the said provisions.'

'The above clause does not enable the insurance company to resist or avoid the claim made by the claimant. The clause will arise for consideration only in a dispute between the insurer and the insured. The question whether under the said clause the insurer can claim repayment from the insured is left open. The circumstance that the owner of the vehicle did not file an appeal against the judgment of the single Judge of the High Court under the Letter Patent may also be relevant in the event of claim by the insurance company against the insured for repayment of the amount. We are not concerned with that question here.'

(9) The reliance of the learned Counsel for the appellant on New India Assurance Co. Ltd. v. Shanti Bai : [1995]1SCR871 and National Insurance Co. Ltd. v. Jugal Kishore 1988 ACJ 270 (SC), is of no help to him inasmuch as in those cases the effect of judgment in Amrit Lal Sood's case : [1998]2SCR284 , has not been considered. In Shanti Bai's case the court was dealing with the effect of a comprehensive policy vis-a-vis the liability of the insurer in respect of third party risk on the basis of the estimated value of the vehicle and found that the limit of liability with regard to third party risk does not become unlimited or higher than the statutory liability only on account of entering into a comprehensive policy. It was pointed out that the comprehensive policy only entitles the owner to claim reimbursement of the entire amount of loss or damage suffered up to the estimated value of the vehicle which did not mean the limit of liability with regard to third party risk becoming unlimited or higher than the statutory liability. In the case of National Insurance Co. Ltd. v. Jugal Kishore (supra) this Court observed that the liability under the policy could not exceed the statutory liability under Section 95 of the Act only on the ground that the insured had undertaken comprehensive insurance of the vehicle. The payment of a higher premium on that score, however, did not mean that the limit of liability with regard to the third party risk became unlimited or higher than the statutory liability fixed under Sub-section (2) of Section 95 of the Act.

(10) In the facts and circumstances of this case, we find that despite holding the liability under the policy limited to the extent of Rs. 50,000, the Claims Tribunal and the High Court were not unjustified in directing the appellant company to pay the whole of the awarded amount to the claimants on the basis of the contractual obligations contained in clauses relating to the liability of the third parties and avoidance clause. However, the Claims Tribunal and the High Court were not justified in rejecting the right of the appellant company to recover from the insured the excess amount paid in execution and discharge of the award of the Tribunal.

39. In view of the above said decisions of the Apex Court, it is clear that the liability of the insurance company to satisfy the award passed against third party is a statutory liability and the same is not inhibited by any of the conditions imposed in the policy and any breach of conditions imposed in the policy would not bind the third party and the insurance company is bound to satisfy the award against the third party; and if the insurance company is able to prove that there was breach of conditions of the policy vis-a-vis the insured and can avoid liability under the policy, it can recover from the insured, the amount paid by it to the third party by virtue of its statutory liability under the Motor Vehicles Act. In view of the duty cast on the Tribunal to determine the amount of compensation liable to be paid by each of the respondents and as the jurisdiction of the civil court in respect of the matters which are to be decided by the Tribunal is barred in view of provisions of the Motor Vehicles Act, it is clear that the insurance company can recover the said amount to which it would be entitled from the insured by virtue of the order in the same proceedings before the Tribunal. This view is supported by the recent decisions of the Supreme Court referred to above in Oriental Insurance Co. Ltd. v. Cheruvakkara Nafeessu, : 2000(8)SCALE412 and New India Assurance Co. Ltd. v. Kamla, : [2001]2SCR797 , where the Supreme Court has remitted the matter to the Tribunal to consider the question of recovery of the amount by the insurer from the insured. It has been observed in the case of New India Assurance Co. Ltd. v. Kamla (supra) as follows:

Now the Claims Tribunal has to decide the next question whether the insurance company is entitled to recover that amount from the owner of the vehicle on account of the vehicle being driven by a person who had not valid licence to drive the vehicle. For that purpose we remit the case to the Claims Tribunal. An opportunity shall be afforded to the parties concerned for adducing evidence in that regard. We make it clear that the claimants shall not be bothered during the remaining part of the proceedings.

In Oriental Insurance Co. Ltd. v. Cheruvakkara Nafeessu (supra) referred to above, the Supreme Court has observed that upon making such payment the appellant can recover the excess amount from the insured by executing this award against the insured to the extent of such excess as per Section 174 of the Motor Vehicles Act, 1988 and accordingly, we answer point Nos. 4 and 5 by holding that the insurance company is bound to satisfy the award passed against the third party and the conditions imposed in the policy would not bind the third party and the amount paid by the insurance company in view of the provisions of the Motor Vehicles Act can be recovered by the insurance company from the insured before the Tribunal on proof of breach of condition of the policy.

Point Nos. 6 to 8:

40. It is the contention of the insurance company in both the claim petition Nos. 177 of 1997 and 140 of 1994 that the person who was driving the vehicle at the time of the accident was not holding an effective driving licence on the date of the accident and, therefore, there is breach of conditions of the policy requiring that the vehicles shall not be permitted to be driven by a person who does not hold an effective driving licence. The copy of the insurance certificate issued by the insurer in M.V.C. No. 177 of 1997 has been marked as Exh. P-6 and the relevant condition regarding the classes of persons entitled to drive, reads as follows:

Any person including insured provided that a person driving holds an effective driving licence at the time of the accident and is not disqualified from holding or obtaining such a licence.

41. The certificate of insurance contains that the policy has been issued in accordance with the provisions of Chapters X and XI of the Motor Vehicles Act, 1988. The copy of the insurance policy has not been produced in M.V.C. No. 177 of 1997. In M.V.C. No. 140 of 1994 the insurance company has produced Exh. R-1 which is the copy of the insurance policy and the relevant clause relating to persons or class of persons entitled to drive, reads as follows:

Any person including insured provided that a person driving holds an effective driving licence at the time of the accident and is not disqualified from holding or obtaining such a licence.

42. It is the case of the insurance company in both the cases that, though the person who was driving the vehicle on the date of accident was holding an effective driving licence prior to the date of accident and such licence has been renewed after the date of the accident, during the interregnum when the accident occurred, the licence was not current and, therefore, there is a breach of the conditions of the policy. It is the contention of the insurance company in M.V.C. No. 177 of 1997 that the driving licence has not been renewed from 29.11.1996 to 16.1.1997. The insurance company has produced Exh. R-1 (through RW 1, the Branch Manager of the insurance company) which shows that the driving licence had been issued to drive heavy goods vehicle for the period from 1.12.83 to 30.11.1986 and thereafter it was renewed from 28.7.1987 to 27.7.1990, 28.7.1990 to 27.7.1993, 29.11.1993 to 28.11.1996 and 17.1.1997 to 16.1.2000. The accident occurred on 13.1.1997, i.e., during the interregnum period from 28.11.1996 to 17.1.1997 during which period the driving licence has not been renewed and, therefore, on the date of accident, the driver who caused the accident was not holding a valid driving licence.

43. In M.V.C. No. 140 of 1994 the insurance company produced the driving licence extract containing the particulars of the licence of the driver as Exh. P-3 which shows that the driver had been issued driving licence to drive heavy passenger vehicle from 28.2.1983 to 27.2.1986, later renewed up to 21.8.89 again renewed from 6.7.1990 to 5.7.1993 and thereafter it was renewed from 24.2.94 to 23.2.1997. Therefore, during the interregnum period between 6.7.1993 and 23.2.1994 the'licence had not been renewed though it is renewed after 24.2.1994. Thus, on the date of accident 19.1.1994, the driver did not possess an effective driving licence.

44. It is the contention of the learned Counsel appearing for the insurance company that the driver should possess an effective driving licence on the date of the accident and the term effective would mean valid driving licence both as regards the period and type of vehicle as laid down by the Supreme Court in Ashok Gangadhar Maratha v. Oriental Insurance Co. Ltd., : AIR1999SC3181 . In M.V.C. No. 177 of 1997, it is not disputed that the driver was holding licence to drive heavy passenger vehicle and there is no dispute regarding the type of vehicle which was permitted to be driven by the driver in both the cases as they have been permitted to drive the vehicle which they were driving on the date of accident. However, the contention of the insurance company is that, on the date of accident in both the cases the licence issued to the driver had expired and it has not been renewed and it has been renewed subsequent to the date of accident and, therefore, there is breach of condition of the policy. In M.V.C. No. 140 of 1994 it is contended by the insurance company, respondent Nos. 3 and 5 that the driver of Mitsubishi van and the motor cycle did not have an effective driving licence. It is specifically averred that, so far as the driver of the motor cycle is concerned, he did not have licence to drive the motor cycle and there is breach of condition of the policy. However, so far as respondent No. 3 is concerned, he did not have valid and effective driving licence to drive the said vehicle because of which, the insurance company is not liable to pay the compensation.

45. It is well settled that when the insurance company contends that there is breach of conditions of the policy by the insured, the burden would lie squarely upon the insurance company to prove the breach of conditions of the policy as the insurance company would fail if no evidence is lead on the said question of breach of condition of the policy. The burden of proof required to be discharged by the insurance company to show that there is breach of conditions of the policy to absolve itself of its liability to pay the compensation under the insurance policy to the insured has been considered by the Apex Court in Skandia Insurance Co. Ltd. v. Kokilaben Chandravadan 1987 ACJ 411 (SC), wherein it is observed as follows:

Section 96 (2) (b) (ii) extends immunity to the insurance company if a breach is committed of the condition excluding driving by a named person or persons or by any person who is not fully licensed, or by any person who had been disqualified for holding or obtaining a driving licence during the period of his disqualification. The expression 'breach' is of great significance. The dictionary meaning of 'breach' is 'infringement or violation of a promise or obligation'. [See Collins English Dictionary]. It is, therefore, abundantly clear that the insurer will have to establish that the insured is guilty of an infringement or violation of a promise that a person who is (Sic.) duly licensed will have to be in charge of the vehicle. The very concept of infringement or violation of the promise that the expression 'breach' carries within itself induces an inference that the violation or infringement on the part of the promisor must be a wilful infringement or violation. If the insured is not at all at fault and has not done anything he should not have done or is not amiss in any respect how can it be conscientiously posited that he has committed a breach? It is only when the insured himself places the vehicle in charge of a person who does not hold a driving licence, that it can be said that he is 'guilty' of the breach of the promise that the vehicle will be driven by a licensed driver. It must be established by the insurance company that the breach was on the part of the insured and that it was the insured who was guilty of violating the promise or infringement of the contract. Unless the insured is at fault and is guilty of a breach the insurer cannot escape from the obligation to indemnify the insured and successfully contend that it is exonerated having regard to the fact that the promisor (the insured) committed a breach of his promise. Not when some mishap occurs by some mischance.

In the said case, while considering the defence raised by the insurance company, that it was not liable as there was breach of conditions of the policy inasmuch as the person who was driving the vehicle on the date of accident, at the time of accident was not holding a valid driving licence, the Supreme Court observed as follows:

The defence built on the exclusion clause cannot succeed for three reasons, viz.:

(1) On a true interpretation of the relevant clause which interpretation is at peace with the conscience of Section 96, the condition excluding driving by a person not duly licensed is not absolute and the promisor is absolved once it is shown that he has done everything in his power to keep, honour and fulfil the promise and he himself is not guilty of a deliberate breach.

(2) Even if it is treated as an absolute promise, there is substantial compliance therewith upon an express or implied mandate being given to the licensed driver not to allow the vehicle to be left unattended so that it happens to be driven by an unlicensed driver.

(3) The exclusion clause has to be 'read down' in order that it is not at war with the 'main purpose' of the provisions enacted for the protection of victims of accidents so that the promisor is exculpated when he does everything in his power to keep the promise.

46. The insurance company has often taken the defence of breach of conditions of the policy on the part of the insured due to driving of the vehicle by a person who did not hold a valid driving licence at the time of accident. Two lines of cases had come up for consideration before the Supreme Court in United India Insurance Co. Ltd. v. Gian Chand : AIR1997SC3824 . The Supreme Court as referred to above said two lines of cases as follows:

In order to resolve this controversy between the parties, it must be observed at the outset that the aforesaid decisions clearly indicate two distinct lines of cases. The first line of cases consists of fact situations wherein the insured are alleged to have committed breach of the condition of insurance policy, which required them not to permit the vehicle to be driven by an unlicensed driver.

Such a breach is held to be a valid defence for the insurance company to get exonerated from meeting the claims of third parties who suffer on account of vehicular accidents which may injure them personally or which may deprive them of their breadwinner on account of such accidents caused by the insured vehicles. The other line of cases deals with the insured owners of offending motor vehicles that cause such accidents wherein the insured owners of the vehicles do not themselves commit breach of any such condition and hand over the vehicles for driving to licensed drivers who on their own and without permission, express or implied, of the insured, hand over vehicles or act in such a way that the vehicles get available to unlicensed drivers for being driven by the latter and which get involved in vehicular accidents by the driving of such unlicensed drivers. In such cases the insurance company cannot get benefit of the exclusionary clause and will remain liable to meet the claims of third parties for accidental injuries, whether fatal or otherwise. The decisions of this Court in Skandia Insurance Co. Ltd. v. Kokilaben Chandravadan 1987 ACJ 411 (SC) and in Sohan Lal Passi v. P. Sesh Reddy : AIR1996SC2627 , represent this second line of cases while the decisions of this Court in New India Assurance Co. Ltd. v. Mandar Madhav Tambe : AIR1996SC1150 and in Kashiram Yadav v. Oriental Fire & General Ins. Co. Ltd. 1989 ACJ 1078 (SC), represent the first line of cases.

The Supreme Court has further observed as follows:

In view of the aforesaid two sets of decisions of this Court, which deal with different fact situations, it cannot be said that the decision rendered by this Court in Skandia Insurance Co. Ltd. v. Kokilaben Chandravadan 1987 ACJ 411 (SC) and the decision of the Bench of three Judges in Sohan Lal Passi v. P. Sesh Reddy : AIR1996SC2627 , in any way conflict with the decisions rendered by this Court in the cases of New India Assurance Co. Ltd. v. Mandar Madhav Tambe : AIR1996SC1150 and Kashiram Yadav v. Oriental Fire & Genl. Ins. Co. 1989 ACJ 1078 (SC).

The Supreme Court in the above referred Gian Chand's case held that the facts of the case fell within the second line of cases and wherefore, the insurance company was liable to pay the compensation.

47. The contention of the insurance company in these appeals has to be considered in the light of the principles laid down by the Hon'ble Apex Court in the above said case to find out as to whether the insurance company has proved that there was breach of conditions of the policy and wherefore, it is absolved of its liability to indemnify the insured in terms of the policy.

48. In M.V.C. No. 140 of 1994 it was contended in the objections statement of respondent Nos. 3 and 5 that the drivers of the motor cycle and the van did not have valid and effective driving licence on the date of the accident. So far as the driving licence of respondent motor-cyclist is concerned, the same would not arise for consideration in this appeal as the claim petition has been dismissed against R4 and R5 by holding that the accident occurred due to rash and negligent driving of the van by the respondent No. 1 and, therefore, the question would be as to whether respondent No. 1 had valid and effective driving licence to drive the vehicle KA 18-240 on the date of accident. There is no specific plea in the objections statement filed by the insurance company about the description and type of the vehicle KA 18-240. It has been described as a van in claim petition and in the objections statement also it has been described as a van as is clear from para 3 of the objections statement wherein it has been stated that respondent No. 3 is the insurer of the respondent No. 2 with respect to van KA 18-240 and wherefore, the description of the vehicle KA 18-240 has not been given in the objections statement and there is also no specific averment in the objections statement that the driver did not possess the driving licence to drive the vehicle of the type which respondent No. 1 was driving on the date of the accident, viz., van bearing No. KA 18-240. The burden is always on the insurance company to prove breach of condition of the policy and in M.V.C. No. 140 of 1994 as is clear from the contents of the objections statement as also the order passed by the Tribunal it is clear that the only contention that was urged was that, on the date of accident, the driver did not have a valid driving licence, i.e., he had no driving licence and the contention that he did not have valid driving licence to drive the vehicle of the description of the vehicle KA 18-240 has not been taken and for the first time the said contention is sought to be taken in this appeal by contending that the respondent No. 1 was holding a driving licence to drive heavy passenger vehicle and not a goods vehicle and wherefore, he was not having valid driving licence to drive the van KA 18-240. The insurance company has not led any oral evidence to substantiate the said contention. It has produced Exh. R-1 or R-5 which has been marked. But there is evidence to show on the said documents that they have been marked by consent and the contents were not disputed and even otherwise the said documents would not be helpful to the insurance company to describe the description of the said vehicle. Exh. R-1 describes the vehicle insured as Canter truck of 1990 model gross vehicle weight 5950 kg. and in the insurance policy it shows that Badge No. 1759 has been issued. The said policy is described as commercial vehicles insurance 'B' policy and no evidence is led to explain about the nature of the said policy and that description of the vehicle which it would cover. Further, it is clear from the claim petition filed by the owner of the said vehicle KA 18-240 that it is described as a goods carrier which was transporting milk on the date of the accident. Exh. R-3 shows that, respondent No. 1 in the claim petition was authorised to drive public service vehicle and heavy passenger vehicle. Having regard to the gross vehicle weight of the vehicle as 5950 kg., the vehicle cannot at all be described as a heavy goods vehicle as contended by the learned Counsel appearing for the insurance company. Further Exh. R-3 shows that the driver respondent No. 1 was also authorised to drive public service vehicle and it is not mentioned as to whether the said public service vehicle would be a heavy, light or medium vehicle and the definition of the transport vehicle as contained in Section 2, Clause (47) of the Motor Vehicles Act means a public service vehicle, a goods carriage, an educational institution bus or a private service vehicle and wherefore, it would include a public transport vehicle including public service vehicle, goods carriage or a vehicle belonging to an educational institution or educational institution bus or private service vehicle and wherefore, the burden was upon the insurance company to prove that the respondent No. 1 did not possess valid driving licence to drive the vehicle described as KA 18-240 which was driven by respondent No. 1 on the date of the accident. Exh. R-2 shows that on the date of the accident, the vehicle was transporting milk and Exh. R-2 would also show that the number of passengers permitted was 2+1 and that passengers were also permitted to travel in the said vehicle. There is no material on record to show that, at the time of accident, the vehicle was transporting goods and did not have any passengers and further, insurance company has not chosen to produce the extract from the RTO office regarding the description of the vehicle and the purpose for which it was to be put. In the case of Ashok Gangadhar Maratha v. Oriental Insurance Co. Ltd. : AIR1999SC3181 , Hon'ble Supreme Court has said that, effective driving licence would mean that the licence should be effective as regards the description of the vehicle and also valid on the date of the accident. In the said case, Hon'ble Supreme Court has observed as follows:

(5) This section uses two expressions, namely, 'motor vehicle' and 'effective driving licence'. 'Effective' would mean a valid licence both as regards the period and type of vehicle. We are not considering here otherwise any incapacity of the person holding a driving licence. 'Driving licence', 'motor vehicle' or 'vehicle', 'transport vehicle', 'light motor vehicle', 'goods carriage', 'heavy goods vehicle' and 'medium goods vehicle' have been defined in Section 2 of the Act.

(8) Section 77 deals with an application for permit to use a motor vehicle for the carriage of goods. Section 78 prescribes relevant considerations for processing such an application. Section 79 provides for grant of goods carriage permit.

(11) To reiterate, since a vehicle cannot be used as a transport vehicle on a public road unless there is a permit issued by the Regional Transport Authority for that purpose and since in the instant case there is neither a pleading to that effect by any party nor is there any permit on record, the vehicle in question would remain a light motor vehicle. The respondent also does not say that any permit was granted to the appellant for plying the vehicle as a transport vehicle under Section 66 of the Act. Moreover, on the date of the accident, the vehicle was not carrying any goods and though it could be said to have been designed to be used as a transport vehicle or goods carrier, it cannot be so held on account of the statutory prohibition contained in Section 66 of the Act.

'(14) Now the vehicle in the present case weighed 5,920 kg. and the driver had the driving licence to drive a light motor vehicle. It is not that, therefore, the insurance policy covered a transport vehicle which meant a goods carriage. The whole case of the insurer has been built on a wrong premise. It is itself the case of the insurer that in the case of a light motor vehicle which is a non-transport vehicle, there was no specific authorisation on the licence of the driver under Form 6 under the Rules. It has, therefore, to be held that Jadhav was holding effective valid licence on the date of accident to drive light motor vehicle bearing registration No. KA 28-567.

In view of the above said decision of the Hon'ble Supreme Court and in the absence of any oral evidence adduced by the insurance company about the type and description of the vehicle KA 18-240 which has been driven by respondent No. 1 on the date of the accident and in the absence of proof of fact that the respondent No. 1 driver had no licence to drive such type of vehicle, it is clear that the fact that the respondent No. 1 did not have valid driving licence to drive the description of the vehicle KA 18-240 has not been proved by the insurance company and the only contention that would be required to be considered would be as to whether the insurance company would be liable as the licence had not been got renewed on the date of the accident 19.1.94 which would also arise for consideration in M.V.C. No. 177 of 1997 on the file of Motor Accidents Claims Tribunal, Madugiri.

49. In M.V.C. No. 177 of 1997 the Branch Manager of the insurance company has been examined as RW 1 and he has stated in his evidence that driver Kanakaraj was not holding a driving licence on 13.1.1997. He has produced Exh. R-1, particulars of the driving licence and has stated that the said driver has driving licence up to 28.11.1996 and it was renewed from 17.1.1997 to 16.1.2000 and since he did not have licence on the date of accident (13.1.1997) there is breach of condition of the policy. It is elicited in his cross-examination that there is no endorsement in Exh. R-1 regarding disqualification and that the driver was licensed to drive heavy goods vehicle. He has not said anything about any wilful breach.

50. The insurers in both cases have failed to establish before the Tribunal that there was a wilful breach of the condition of the policy and that the insured had placed the vehicle in the hands of a person who did not hold an effective driving licence on the date of accident. Even otherwise, the documents that are produced by the insurance company in these two cases show that drivers of vehicles in both the cases had driving licences for driving the type of the vehicle which they were driving on the date of the accident. However, it is the case of the insurance company that the licence which the respective driver possessed had not been renewed on the date of the accident and it has been renewed subsequently.

51. The question is as to whether the proof of the fact that on the date of accident in both the cases the drivers who were holding valid driving licence which had expired had not got renewed their driving licence on the date of accident and got it renewed subsequently can be said to be proving that the vehicles were driven by persons who did not possess effective driving licences. In the present cases, the drivers who had not got their licences renewed on the date of accident do not stand on the same footing as the persons who did not have any licence at all or the persons who had driving licence which had expired and had never got it renewed. Nor are they who held licences but were disqualified from obtaining or holding driving licence. The very fact that the licence has been renewed subsequent to the date of the accident by the drivers in both the cases would show that they were not disqualified from obtaining driving licence and it is not the case of the insurance company that they had incurred any disqualification for holding the licence. This is a case wherein the driver in both the cases did possess valid driving licence for driving the type of vehicle which they were driving on the date of accident, but the licences having expired they had not been got renewed immediately, but got the licence renewed after the date of the accident. Since the application for renewal was not made by the drivers within 30 days from the date of expiry, their respective driving licence was not renewed retrospectively with effect from the date of expiry and has been renewed from the date of actual renewal of licence.

52. Section 15 of the Motor Vehicles Act, 1988 deals with renewal of driving licences and it reads as follows:

15. Renewal of driving licences.- 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:

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 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, 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 made in such form and accompanied by such documents as may be prescribed by the Central Government.

(3) Where an application for the renewal 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 prescribed by the Central Government in this behalf.

(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:

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 specified in Sub-section (3):

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.

53. It is clear from the above provision that, if the application for renewal is made within thirty days after the date of its expiry, the licence shall be renewed from the date of its expiry. However, if the application 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. The above said provisions also show that the licensing authority has no power to refuse renewal of licence unless the application has been filed beyond period of five years from the date of expiry in view of the proviso to Sub-section (4). In the present case, the licence of the driver in M.V.C. No. 177 of 1997 had expired on 28.11.1996 and it was renewed on 17.1.1997 and wherefore, it is renewed after 50 days from the date of expiry of the licence and obviously, the application for renewal had not been made within 30 days from the date of expiry of the licence. Similarly, the driving licence of the driver in M.V.C. No. 140 of 1994 expired on 5.7.93 and his driving licence was renewed on 24.2.1994, i.e., after a period of about 7 months and 20 days and obviously the licence was not renewed from the date of expiry as the application must have been made more than 30 days after the date of its expiry. It is clear from the above said provisions of Sub-section (4) that, if the application for renewal is made more than 30 days after the date of its expiry, the fee prescribed by the Central Government has to be paid and under the further proviso to Sub-section (4) it is clear that only when the application for renewal is made, more than 5 years after the driving licence has ceased to be effective, the licencing 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 and wherefore, if the application for renewal is made within 5 years after the expiry of the driving licence for renewal, the authority cannot refuse to renew the licence if the prescribed fee is paid and if only the application is made beyond the period of five years from the date of expiry of the driving licence, the applicant has to undergo and pass to the satisfaction of the licensing authority the test of competence to drive referred to in Sub-section (3) of Section 9. The offending drivers in both the claim petitions were holding driving licences and the same was renewed. However, there was delay in getting the licences renewed as the application has been made more than 30 days after the expiry of the period of licence, the renewal was made from the date of renewal and wherefore, the renewal could not be made from the date of expiry of the period of licence and having regard to this fact it has to be considered as to whether the owner of the vehicle can be said to have handed over the vehicle to a person who is not holding any licence.

54. An identical question arose for consideration before the Division Bench of the Madras High Court in Oriental Insurance Co. Ltd. v. Indirani , M. Srinivasan, J., (as he then was), has observed as follows:

The only contention raised by learned Counsel for the appellant is that the insurance company is not liable in this case to pay the compensation inasmuch as the driver of the vehicle, involved in the accident, did not have an effective licence on the date of accident. Accident had occurred on 28.9.1992. The licence which had expired on 26.6.1992. That was renewed only on 26.10.1992. In between the two dates, the accident had occurred. Hence, it is contended by the learned Counsel for the appellant that the exclusion clause in the policy will come into play.

In that case the relevant clause in the insurance policy read as follows:

Provided that a person driving holds an effective driving licence at the time of the accident and is not disqualified from holding or obtaining such a licence.

It was contended by the learned Counsel appearing for the insurance company in that case that, previously such inclusion clauses in the insurance company were differently worded and when courts had held that even if the driver of the vehicle had no effective subsisting licence at the time of the accident, the insurance company cannot escape from this liability, the latter took care to alter the language of the clauses with the result, the present clause which reads as above has been inserted in the policy. It was contended that the clause meant that a person who has an effective driving licence at the time of the accident and if he is disqualified from holding the licence or if he is disqualified from obtaining such a licence, then also the exclusion clauses will apply. The Division Bench expressed its inability to accept, the said construction of the clause and observed as follows:

The clause can be divided into three parts. The first part refers to a person holding an effective driving licence at the time of the accident. The second part refers to the disqualification of such person from holding it. Even after obtaining a licence, a person may get disqualified under the provisions of the Act from holding it and such a person will be governed by the second part. The third part refers to persons who are disqualified from obtaining such a licence. The first part cannot go together with the third part. In other words, if a person is having an effective driving licence he cannot be said to be disqualified from obtaining such a licence. It means if there is an effective valid licence, it could be contended by the insurance company that he is subsequently disqualified from holding it, but it is not open to the company to contend that he was disqualified from obtaining that licence.

The court observed that:

(3) A similar question arose in case of National Insurance Co. Ltd. v. Thulasi (1994) 1 LW 567. The clause in the insurance policy in that case was worded exactly in similar language. While considering that clause the Bench to which one of us (Srinivasan, J.) was a party referred to Section 96(2) (b) (ii) of the Motor Vehicles Act and said:

There are two limbs to the section and the disjunctive 'or' is used. The first part deals with a case where the driver is not duly licensed. If a person had no licence at all prior to and at the time of the accident he will be covered by the first part. If the first part applies to a case, the second part will not apply. The second part will necessarily apply only to cases in which the driver had a licence sometime or other and at the time of the accident it is not subsisting. The latter part of the section cannot be interpreted as meaning that even if the driver had no licence at any time, he must be shown to be disqualified to hold or obtain a licence for the purpose of excluding the liability of the insurer.

(7) We have no doubt that the burden is on the insurance company to prove that the driver of the vehicle is disqualified from holding or obtaining a licence. Admittedly, on the facts of the case, it is seen that the driver had renewed the driving licence on 26.10.1992. That itself shows that he was not disqualified. If in respect of the licence, the insurance company contends that the driver was disqualified from obtaining licence, it should have let in sufficient evidence in that regard. That burden has not been discharged by the insurance company in this case.

(8) In the circumstances of the case, the conclusion arrived at by the Tribunal that the insurance company is liable to pay compensation and the exclusion clause cannot save it, is correct. The appeal is dismissed. No costs.

55. The exclusion clause mentioned in the certification of insurance, Exh. P-6 in M.V.C. No. 177 of 1997 and the policy of insurance in M.V.C. No. 140 of 1994 as at Exh. R-1 is identical to the exclusion clause contained in the policy which had come up for consideration before the Division Bench of Madras High Court. Same question had come up for consideration before this Court also.

56. In Oriental Insurance Co. Ltd. v. Mohammed Sab Ali Sab Kaladagi, : ILR1999KAR2100 , the period of driving licence had expired on 9.6.1988 and it was renewed on 3.11.1992 and in the meanwhile the accident had occurred on 13.10.1992 and the question was as to whether the insurer will be liable if the driving licence of the driver of the offending vehicle had not been renewed on the date of the accident, learned single Judge of this Court held as follows:

(5) The wording used as 'or' assumes much importance in this case. According to the construction of this section, the insurance company can succeed only if the person was not duly licensed or he was disqualified from holding or obtaining the driving licence during the period of disqualification. According to the construction of the language either of the conditions has to be duly fulfilled. But in the policy issued the word 'and' is used as conjunction. By the use of word 'and' it goes to show that the insurance company has to prove that the driver was not only not duly licensed but was also disqualified for holding the licence. The word 'or' and the word 'and' used in the policy assumes much importance. There cannot be compromise between the word 'or' and 'and'. The plain language as it is read has to be understood. In this direction, Mr. B.S. Patil, learned Counsel for the respondents relied upon the observation as how the construction of the statute be understood. On page 96 of the Interpretation of Statutes by Maxwell it is stated as follows:

To suppress the mischief and advance the remedy.-It is said to be the duty of the Judge to make such construction of a statute as shall suppress the mischief and advance the remedy.'

(6) The another golden rule that is to be remembered is that, the statute is capable of being interpreted in two ways. In the case on hand the claimants shall become the victims in the event of insurance company is exonerated. The very purpose of issuing the policy is to protect the third party risk. If the insurance company is allowed to go scot-free on this ground, great hardship would be caused to the claimants. Hence, in view of the impending danger that is likely to arise in the case of claimants, the beneficial interpretation has to come to the rescue of the claimants. It is oft-quoted that the duty is to provide the light and not to generate heat. Unless the insurance company can place any of the materials covered by Sections 19, 20, 130, 134 and 185, it can never be said that there was any disqualification to hold the licence. It goes without saying that when the specific contention of disqualification is taken by the insurance company, the burden is also on the insurance company to adduce the evidence that the driver was not duly licensed and was disqualified. But no material evidence is adduced in this direction.

57. The Punjab & Haryana High Court in Ramesh Chand v. United India Insurance Co. Ltd. , considered a case where the licence of the driver of the offending vehicle had expired much before the date of accident and it was renewed few months after the accident and it was contended by the insurance company that the driver had no valid licence on the date of the accident and it should be absolved of its liability. The contention of the insurance company was not accepted and it was held that the insurance company would be liable and the court followed the earlier decisions of the same High Court and held as follows:

(6) I have heard the learned Counsel for the parties and have also gone through the record. As already mentioned above, the compensation that has been found due has not been seriously challenged by Mr. Suri. The only ground by which the insurance company was able to escape its liability was that Bhagwan Dass did not hold a driving licence. As mentioned above, this shortcoming in the evidence was filed upon as the licence, Exh. C-l, has been produced and proved in this Court. A look at this licence (which is limited for the purpose of driving a tractor) would indicate that it was initially valid from 7.9.1965 to 6.9.1968 and that it was subsequently renewed from 7.1.1982 to 6.1.1985. It is apparent, therefore, that as the accident had taken place on 4.9.1981, the licence at the time was not a valid one as it had expired. However, in the light of the judgment in Ram Phal v. Krishna Makkar 1989 ACJ 1126 (P&H;), Mr. Suri has urged that if the driver at the time of the accident had a valid driving licence or had held one earlier, the insurance company was liable ipso facto. This assertion of the learned Counsel is borne out by the judgment cited by him.

58. In Ram Phal v. Krishna Makkar 1989 ACJ 1126 (P&H;), the Punjab and Haryana High Court considered a case where the licence of the driver of the offending vehicle had expired before the accident and was renewed nearly after two years of the accident and repelling the contention of the insurance company that it be absolved of its liability, it was held that insurance company is liable to pay the compensation as the breach of condition of the policy had not been proved.

59. In National Insurance Co. Ltd. v. Abha Sinha 1999 ACJ 450 (Patna), an identical question had come up for consideration of Patna High Court. In the said case, the period of licence of the driver of the offending vehicle had expired before the date of accident and it had been renewed covering the date of accident. The High Court did not accept the contention of the insurance company that it was absolved of its liability as the driver did not hold a valid driving licence on the date of accident and observed as follows:

It is not the case of the appellant that the person who was driving the vehicle had no valid driving licence at any point of time or the said person was not authorised to drive the vehicle. Admittedly, the driver who was driving the vehicle on the date of accident was holding a valid driving licence duly granted by licensing authority in 1986 and the licence was valid up to 7.10.1989. The driver was, therefore, authorised to drive transport vehicles and he was a licensed driver. Although there is an endorsement of renewal of the licence also as appearing in the licence but even assuming that there is no renewal endorsement, it cannot be said that the person driving the vehicle was not a licensed driver. It is not a case where the insured entrusted the vehicle to a person who does not hold a driving licence rather admittedly the driver to whom the vehicle was entrusted by the insured was having a valid driving licence duly granted by transport authority. Merely because of expiry of the period of licence and the omission of the driver to get the licence renewed it cannot be said by any stretch of imagination that there is breach of condition of policy for which insurance company can be exonerated from the liability. As stated above, the driver was authorised to drive the transport vehicles and the vehicle was entrusted by the insured to the licensed driver and, therefore, in my considered opinion, this plea of the insurance company to absolve itself from the liability cannot be sustained in law.

60. We are in respectful agreement with the above said decisions. It is clear that mere fact that the driver of the offending vehicle had not got his driving licence renewed on the date of the accident and got it renewed subsequently would not amount to breach of condition of the policy as it cannot be said that there was violation of the condition of the exclusion clause.

61. The learned Counsel for the insurance company relied on the decision in Beer Singh v. Satbir Singh, , where the court was considering the interpretation of the provisions of Section 149(2)(a)(ii), which reads as follows:

149 (2) (a) (ii): a condition excluding driving by a named person or persons or by any person who is not duly licensed, or by any person who has been disqualified for holding or obtaining a driving licence during the period of disqualification;

It was contended in the above said case that the/word 'or' should be read as 'and' and, therefore, the mere fact that the driver did not hold driving licence without proving that he was disqualified from holding or obtaining a driving licence would not absolve the insurance company of its liability and the court held that, since the word used is 'or' and not 'and' the said contention cannot be accepted. In the present case, the exclusion clause contained in the policy in both the cases contains the word 'and' and not 'or' and wherefore, the said decision is not helpful to the insurance company in the present case, but would rather help the contention of the owner in this case.

62. The decision of the Supreme Court in United India Insurance Co. Ltd. v. Gian Chand : AIR1997SC3824 , will also not help the insurance company in the present case as in the said case the finding was that person who was driving the vehicle had no driving licence.

63. Even otherwise, it is clear from the driving licence, particulars of the drivers of both the vehicles that the driver in M.V.C. No. 140 of 1994 had obtained licence on 28.2.1983 and the driver of the offending vehicle in M.V.C. No. 177 of 1997 had obtained licence on 1.12.1983. They have been holding valid driving licence since 1983 except for the interregnum period of 50 days in M.V.C. No. 177 of 1997 and 7 months and 20 days in M.V.C. No. 140 of 1994 during which the driving licence was not got renewed. It is not the case of the insurers that the driver did not know driving. Therefore, the non-renewal of the licence as on the date of the accident cannot be said to have contributed to the causing of the accident. Where the breach alleged is not a factor which has contributed to the causing of the accident, the said breach would not be a fundamental breach so as to afford a ground to the insurer to avoid liability altogether and the exclusion clause must be read down so as to serve the main purpose of the policy, i.e., to indemnify the insured.

64. In this context, we may refer to the decision in B.V. Nagaraju v. Oriental Insurance Co. Ltd. : AIR1996SC2054 , the following question had come up for consideration of the Supreme Court:

In this appeal by special leave, the question of importance arising therein is whether the alleged breach of carrying humans in a goods vehicle more than the number permitted in terms of the insurance policy, is so fundamental a breach so as to afford ground to the insurer to eschew liability altogether? Ancillary to the question is the poser: whether the terms of the policy of insurance need be construed strictly or be read down to advance the main purpose of the contract as viewed by this Court in Skandia Insurance Co. Ltd. v. Kokilaben Chandravadan 1987 ACJ 411 (SC)?

In that case, the insurance company contended that there was breach of conditions of the policy inasmuch as the vehicle which caused the accident in the said case was carrying nine persons even though only six persons could be carried as per the conditions of the policy and wherefore, the said carrying of nine persons in excess of permissible limit of six persons constitute breach of conditions of the policy and the insurance company was not liable. In the said case, admittedly nine persons were being earned in the lorry though according to the conditions of the policy, not exceeding six persons were permitted to be carried in the truck. The Supreme Court did not accept the contention of the insurance company and held as follows:

It is plain from the terms of the insurance policy that the insured vehicle was entitled to carry 6 workmen, excluding the driver. If those six workmen when travelling in the vehicle are assumed not to have increased any risk from the point of view of the insurance company on occurring of an accident, how could those added persons be said to have contributed to the causing of it is the poser, keeping apart the load it was carrying. Here, it is nobody's case that the driver of the insured vehicle was responsible for the accident. In fact, it was not disputed that the oncoming vehicle had collided head-on against the insured vehicle, which resulted in the damage.

Merely by lifting a person or two, or even three, by the driver or the cleaner of the vehicle, without the knowledge of the owner, cannot be said to be such a fundamental breach that the owner should, in all events, be denied indemnification. The misuse of the vehicle was somewhat irregular though, but not so fundamental in nature so as to put an end to the contract, unless some factors existed which, by themselves, had gone to contribute to the causing of the accident.

(Emphasis supplied)

In the light of the above said observations, the Apex Court held that the exclusion term of the insurance policy must be read down so as to serve the main purpose of the policy, i.e., to indemnify the damage caused to the vehicle and accordingly, allowed the appeal and held that the insurance company was liable to pay the compensation.

65. In view of the above, we hold that the insurance company has failed to prove that there was breach of conditions of the policy and that, it is absolved of its liability to pay the compensation as per the terms of the policy and hold that the insurance company in both the cases is liable with the owner jointly and severally to pay the compensation awarded in these appeals. In view of the finding that the insurance company has failed to prove the breach of condition of the policy, the question of ordering any recovery of the amount by the insurance company from the insured does not arise and accordingly, we answer the points for determination.

66. In view of the above, we dispose of the appeals and cross-objection as follows:

I. M.F.A. No. 5566 of 1999 is dismissed.

II. M.F.A. No. 690 of 2000 is allowed in part and cross-objection No. 23 of 2000 is allowed in part insofar as it relates to the rate of interest on the following terms, pass the following order:

The claimant in M.V.C. No. 177 of 1997 is awarded total compensation of Rs. 3,50,000 with interest at 9 per cent per annum from the date of petition to the date of payment. Out of the said compensation Rs. 3,10,000 shall be deposited in the name of the minor injured for a period of five years in the first instance and the same shall be renewed from time to time, during the minority of the injured, the guardian of the claimant shall be entitled to withdraw interest accruing on the said deposit from time to time for the upkeep and maintenance of the minor.III. M.F.A. No. 3557 of 1998 is allowed. Cross-objections therein is allowed in part. As a consequence the claimant in M.V.C. No. 140 of 1994 is entitled to compensation of Rs. 1,95,000 with interest at 9 per cent per annum from the date of petition to the date of payment. The insurer is jointly and severally liable with the owner and is ordered to pay the compensation amount. Out of the compensation amount awarded, Rs. 1,40,000 shall be deposited in the name of the claimant in any nationalised bank for a period of five years in the first instance with liberty to the claimant to withdraw interest accruing on the said deposit from time to time and the balance amount of Rs. 55,000 shall be disbursed to the claimant.

Parties to bear respective costs.