SUPREME COURT OF INDIA

Before:- K.T. Thomas and S.N. Variava, JJ.

Civil Appeal No. 7244 of 2001, Arising out of SLP (C) No. 17788 of 2000. D/d. 17.10.2001.

National Insurance Company Limited - Appellant

Versus

Jarnail Singh and others - Respondents

A. Motor Vehicles Act, 1988, Section 15(1) - Valid driving licence - Driving licence of the person driving vehicle expired on 18.5.1994 which was renewed with effect from 28.10.1996 - Held, that the driver had no valid driving licence on the date of accident i.e. 20.10.1994 - No dispute that the policy stipulated a condition that the vehicle would not be driven by a person without a valid driving licence - It means that the policy condition had been violated.

[Para 7]

B. Motor Vehicles Act, 1988, Sections 149(2)(a)(ii), (5) and 15(1) - Accident - Driver had not valid licence on the date of accident - Breach of a condition of the contract of insurance - The insurance company is nonetheless liable to pay the compensation to the third party on the strength of the valid insurance policy issued in respect of a vehicle, but the remedy of the insurer when there was breach or violation of the policy condition was to recover the amount from the insured.

[Para 8]

Cases Referred :-

New India Assurance Co. v. Kamla, (2001) 4 SCC 342 .

ORDER

K.T. Thomas, J. - Leave granted. The appellant is the Insurance Company which had to pay a certain sum under an award passed by the Motor Accidents Claims Tribunal.

2. The appellant Insurance Company contended before the Tribunal that they are not liable to pay any amount on account of the breach of a condition of the insurance contract in that the driver employed by the insured had no valid driving licence on the date of the accident. The said contention was overruled by the Tribunal and directed the Insurance Company to pay the amount adjudged by it to the claimants.

3. The Insurance Company filed an appeal before the High Court. A Division Bench of the High Court of Punjab and Haryana dismissed the appeal after repelling the aforesaid contention advanced by the Insurance Company.

4. We extract below the reasoning adopted by the Division Bench on that aspect:

"We have given a thoughtful consideration to the contention raised by learned counsel and are of the opinion that the same is without any substance.

Admittedly, Surjit Singh who was driving the scooter was holding a valid driving licence up to 16-5-1994 and it is not the case of the appellant that the licence was a fake one. It is also the admitted case of the appellant that the licence has been got renewed after the date of accident. Once the licence has been renewed, the Insurance Company is liable to pay the compensation."

We agree with the learned counsel for the appellant that the High Court has approached the contention in a very unsatisfactory manner.

5. It is an admitted fact that the driver who drove the vehicle which got involved in the accident had a driving licence which expired on 18-5-1994. The accident had happened more than five months thereafter i.e. on 20-10-1994. It is nobody's case that the driver had renewed his driving licence for covering any period including the date of the accident. On the other hand, it was the specific case that the driving licence was renewed only with effect from 28-10-1996. The said factual position is not disputed before us.

6. Under Section 15(1) of the Motor Vehicles Act, 1988 a driving licence can be renewed from the date of its expiry if an application is made to it for that purpose. But the proviso to the said sub-section says that

"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".

In the present case, the fact that the driving licence was renewed only with effect from 28-10-1996 shows that the first proviso to Section 15(1) abovequoted had applied and its corollary is that driver had no licence to drive the vehicle on the date of accident i.e. 20-10-1994.

7. There is no dispute that the policy stipulated a condition that the vehicle would not be driven by a person without a valid driving licence. It means that the policy condition had been violated.

8. This Court held in New India Assurance Co. v. Kamla, (2001) 4 SCC 342 that the insurance company is nonetheless liable to pay the compensation to the third party on the strength of the valid insurance policy issued in respect of a vehicle, but the remedy of the insurer when there was breach or violation of the policy condition was to recover the amount from the insured. Para 22 of the said judgment clarifies the position and hence, it is extracted below: (SCC p.349)

"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 the 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."

9. Learned counsel for the appellant submits that the appellant Insurance Company has already deposited the amount covered by the award to be disbursed to the claimants. We, therefore, allow this appeal by permitting the appellant Insurance Company to realise the said amount from Respondent 3, the insured. It is open to the Insurance Company to apply to the authorities concerned for execution of this direction as per law.

Allowing the Appeal, the Supreme Court.