obtaining authorisation to drive transport vehicle, the person
concerned shall be given a metallic badge showing him as a
driver as contemplated therein. In other words, a 'badge' is a
material object given to the party, who is authorised to drive a
transport vehicle, to be given while returning the licence after
effecting endorsement as to his authorisation as provided in
Rule 11 of the Kerala Rules. This being the position,
authorisation to drive a transport vehicle is one thing; while
'badge' supplied after effecting the endorsement of authorisation
in the licence is another thing. As such, if the person concerned
has not applied for and obtained a badge to be worn on his left
chest, as prescribed by the rules does not do so, the absence of
badge by itself cannot be said to be 'fundamental breach' and
that it could only be 'technical'. Under such circumstance, the
Insurance Company cannot disown the liability or claim the right
of recovery from the insured. But if there is no authorisation at
all, enabling the driver to drive the transport vehicle, it is a
fundamental lapse and under such circumstance, it is open for
the Insurance Company to proceed with steps for recovery
from the insured, who is violator of law. This is more so since, as
observed by the Apex Court in Swaran Singh's case (cited supra),
insurance is also a contract and the provisions have to be
strictly interpreted to give effect to the terms agreed between the
insured and the insurer.
24. The statute/M.V Act is of course a welfare legislation,
which intends to extend benefit/welfare to the victims/third
parties/claimants. A person who is committing any breach
involving an offence under Section 3(1) of the Act r/w Sec.181
of the MV Act is a person who is having no regard to the rule of
law and as such, the provision is not intended to extend any
benefit to such wrong-doer. It is settled law that, provision of
law is not liable to be interpreted in favour of a 'wrong-doer'.
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT:
THE HONOURABLE MR.JUSTICE P.R.RAMACHANDRA MENON
&
THE HONOURABLE MR.JUSTICE K.HARILAL
MONDAY, THE 9TH DAY OF NOVEMBER 2015
MACA.No. 1026 of 2014 ()
SHAJI
Vs
PRADEESH,
Citation: 2016(2) ALLM(JOURNAL)75
The law stands declared by a Full Bench of this Court, vide
decision reported in 2015 (1) KLT 1 (National Insurance
Company Ltd. vs. Jisha K.P. And others), that mere absence
of 'badge' by driver of a transport vehicle is not sufficient to
exonerate the insurer from the liability to pay compensation to
the claimant and that absence of 'badge is not a fundamental
breach of the statutory/policy condition to enable the insurer to
have recovery from the insured, after satisfying the liability to
the claimant/third party. The question remains to be considered
is what is a 'badge' and is it the same as 'authorisation to
drive a transport vehicle' . If it is not the same, will it not
come within the purview of statutory defence under Section 149
(2) r/w. Sub-sections 4 and 5 of Section 149 of the M.V.Act,
enabling the insurer to have recovery from the insured for
driving the transport vehicle without authorisation to drive such
vehicle ( based on the experience to be gathered at least for
'one year' as envisaged under Section 7 (1) of the M.V.Act),
which right in fact stands declared by the Apex Court as well,
as per the celebrated judgment in 2004(1) KLT 781 (SC)
(National Insurance Company Ltd. vs. Swaran Singh). It
also remains a matter to be considered whether some of the
observations made by the Full Bench in 2015(1) KLT 1 (cited
supra) as to the meaning of the term "duly licensed" are
correct, in view of the subsequent Larger Bench decision of this
Court explaining the meaning of the said term in 2015 (1)KLT
682 (Oriental Insurance Company Limited vs. Poulose).
2. In understanding the findings of the Supreme Court in
Swaran Singh's case, as summed up in paragraph 102 of the
judgment, it is essential to have reference to the actual point
mooted by the appellants before the Apex Court, as contained in
paragraph 11 of the judgment and the rival contentions of the
respondents in paragraph 12, as to whether the Insurance
Company could 'avoid' the liability in cases of such violation
(instead of the settled principle of pay and recover), thus leading
to the findings in paragraphs 62, 63 and 64 that the Insurance
Company cannot absolve its liability; that each case will have to
be considered and decided by the facts in each case , (since no
factual position was considered by the Apex Court but for the
question of law); further holding that it would be the liability of
the insurer to satisfy the decree at the first instance with liberty
to proceed under sub section (4) and (5) of Section 149.
3. The M.V.Act, of course, is a 'beneficial statute' requiring
liberal interpretation as observed in paragraph 65 of the
judgment in Swaran Singh's case (cited supra). But is it not for
the benefit of the victim , or is it for extending unlawful gain to
the 'wrong doer/owner or driver' who violates the law ?. Is it still
not a matter of mistake of fact made by the Full Bench in 2015
(1) KLT 1 (cited supra) while observing in 'paragraph 25' that
the words "duly licensed" under Section 149(2)(a)(ii) of the M.V.
Act has been used in' Past Tense'; (which in fact has been used
in the Present Perfect Tense)?. Since a number of decisions
have already been rendered both ways round, it still requires
clarity in understanding the provision; particularly as to whether
'badge' is same as 'authorisation' to drive transport vehicle; more
so when the term 'badge' is nowhere defined either under the
Act or under the Central/State Rules.
4. Another important question to be considered is, if any
contrary/limited eligibility is stipulated under the Kerala Rules
(Rule 6) unlike the Central Rules, as referred to by the Full
Bench in 2015 (1) KLT 1(cited supra), can any rules framed
by the Central or any State override /overreach the clear
provisions of the 'Act'- insisting to have specific authorisation to
drive a 'transport vehicle' after obtaining the minimum
experience of one year from the date of obtaining the basic
licence for driving, by virtue of the mandate under Section 7
and 10 of the M.V.Act, read with Section 3 (1)of the same
enactment?.
5. In so far as this case is concerned, the grievance of the
appellant/ insured/owner-cum-driver of the transport vehicle is in
respect of the right of recovery given to the insurer, for
realisation of the amount after satisfying the liability to third
party/passenger, for violation of the statutory/policy conditions
in causing the vehicle to be driven by the appellant /owner-cum-
driver himself without any authorisation to drive the transport
vehicle .
6. Before proceeding with the analysis on the legal aspects
mentioned above, it is necessary to understand the law, as
understood and explained by the Apex Court in the celebrated
decision in Swaran Singh's case (cited supra ). This is because,
the said decision is seen quoted in several judgments with mere
reference to the 'conclusions in paragraph 102'. Absence of
driving licence to drive a particular type of vehicle and the
resultant violation/infringement of the statutory/policy
conditions was the subject matter. The Insurance companies
contended that, once there was infringement of the statutory
provisions and the defence of the insurer was established, the
Tribunal was bound to discharge the insurer and fix the liability
only on the owner or the driver of the vehicle. It was also
asserted by the Insurers that once such defence was established,
the Tribunal or the Court cannot direct the Insurance Company
to pay the award amount to the claimant and seek recover the
same from the owner /driver of the vehicle . This is discernible
from the paragraph 11 of the said verdict .
7. The contentions raised on behalf of the respondents
who were third parties/claimants was that, two different
expressions were used in the statute by the Parliament
( 'effective driving licence' under Section 3(1) and 'duly licensed'
under Section 149(2)], which suggested that, once a driver was
licensed, he would continue to be duly licensed for the purpose
of Chapter II of the Act, unless he was disqualified and that mere
non-renewal of the licence would not come within the scope of
Section 149 of the Act to confer any statutory defence to the
insurer, which will pop up only in the event of lapsing 5 years
from the date of expiry of licence. It was contended that the
Insurance Company, under no circumstance, except under
Section 149(2)(b) (involving fraud in obtaining policy) would be
able to avoid the claim of the third parties. It was further
asserted that by virtue of Section 149(1), the insurer should pay
the due amount first to the third parties and they can recover the
same if any of the grounds was established under Section 149
(2) of the Act and also that the breach on the part of the insured
must be wilful, being of fundamental in character, to avoid the
liability. This is discernible from paragraph 12 of the verdict in
Swaran Singh's case (cited supra). .
8. Referring to the plight of innocent persons, who virtually
came to be thrown to streets, who are either the victims or the
dependents of the victims of mounting road accidents scaling new
heights, [as noted by the Apex Court in Sohan Lal Passi Vs. P.
Sesh Reddy [1996 ACJ 1044 (SC)], the Apex Court observed
in 'paragraph 15' onwards, as to the conscious attempt made by
the Parliament to incorporate beneficial provisions to protect the
interest of the claimants and observed in 'paragraph 19', that in
the batch of cases dealt with by the Apex Court, the issue was
mostly concerned with the 3rd party right under the policy and
that any condition in the policy, whereby right of the 3rd party is
taken away, would be void.
9. Referring to the law declared by a Constitution Bench of
the Supreme Court in New India Assurance Co. Ltd. Vs. C.M.
Jaya [2002 (1) KLT 596 (SC)], it was observed that it was
open for the parties to enter into a contract for wider coverage,
than the statutory extent, and in the absence of such a term in
the policy, the limited statutory liability cannot be expanded to
make it unlimited or higher and if it is so done, it would amount
to rewriting the Statute or the contract of insurance, which is not
permissible.
10. The question considered was whether the Insurance
Company can avoid its liability, if a statutory defence is raised
under Section 149 (2) of the Act, as observed in paragraph 33,
which reads as follows :
"33. The question as to whether an insurer can
avoid its liability in the event it raises a defence as
envisaged in sub-s.(2) of S.149 of the Act
corresponding to sub-s.(2) of S.96 of the Motor
Vehicles Act, 1939 had been the subject-matter of
decisions in a large number of cases."
The difference in the terminology used in section 3 (where it is
"effective licence") and under Section 149 (2) (where it is "duly
licensed") was noted in paragraph 36 of the judgment and
observed in paragraph 38 that the words "effective license" used
in Section 3 cannot be imported for sub section 2 of Section 149,
where it is for the benefit of a '3rd party', as observed in the
previous paragraphs.
11. Referring to the mandate of Sections 14 and 15 of the
M.V. Act, it was observed by the Apex Court, in paragraphs 39
and 40 of the judgment, that even after the expiry of the driving
licence, it will remain valid for a period of '30 days' after its
expiry. To make it clear, once it is renewed within 30 days, the
licence will continue without break and there will not be any
violation of the statutory/policy condition. This however is not in
acceptance of the proposition/theory mooted by the respondents:
'once a license, always a license', which has not been
accepted anywhere in the judgment. This becomes more clear
from paragraph 44, where the Apex Court holds that under the
Motor Vehicles Act, holding of a valid licence is one of the
conditions of contract of insurance and driving of the vehicle
without a valid licence is an offence. The Apex Court observed in
paragraph 41 that, if a person has been given a licence for a
particular type of vehicle, as specified therein, he can drive
another type of vehicle of the same category, as in the case of a
person who has been granted license to drive the light motor
vehicle, who can drive either a 'car' or a 'jeep' and it is not
necessary that he must have a driving license of both the 'jeep'
and 'car' separately; it being of the 'same category'. It was
held in the subsequent paragraph that the Insurance Company,
in order to 'avoid' the liability, is required to establish the
breach on the part of the insured, apart from the fact that the
insured had used or caused or permitted the vehicle to be used
in breach of the Act.
12. From the above, it is clear that under certain
circumstances, the Insurance Company may be justified in
seeking for absolving the insurer, but the same may not
necessarily hold good in the case of a 3rd party. Obviously,
absolving the insurer from the liability is different from satisfying
the liability towards the 3rd party and thereafter to get it
recovered from the insured, for breach of the statutory/policy
conditions. This is more so, in view of the observation made by
the Apex Court, in paragraph 49, that a contract of insurance
also falls within realm of contract and hence like any other
contract intention of the party must be gathered from the
expression used therein, also adding, in paragraph 51, [with
reference to the decision rendered in Oriental Insurance Co.
Ltd. Vs. Sony Cheriyan [1999 CCJ 1333 (SC)], that terms of
the agreement have to be strictly construed to determine the
extent of liability of the insurer.
13. What is a 'technical breach' and what is a 'fundamental
breach' is explained, with reference to Sections 10 and 3 of the
Act, dealing with the form and contents of the license and
necessity to hold an effective driving licence, as discussed in
Paragraphs 81 and 82 of the verdict in Swaran Singh's
case (cited supra).
14. Incidentally, a question arose as to whether the benefit
could be extended to a 3rd party in a case where the vehicle was
being driven by a person, who was having only 'learners
license', more so when Section 2 (10) of the Act defining the
term 'driving license' specifically excludes the learner's license.
The Apex Court held with reference to Section 4 (3), 7 (2), 10 (2)
and Section 14, that a learner's license' is also a license within
the meaning of the provisions of the Act and it cannot, therefore
be said that a vehicle, when being driven by the learner subject
to the condition mentioned in the license he would not be a
person, who is not duly licensed, conferring any right to the
insurer to avoid the claim of 3rd party (paragraph 86). This by
itself makes it clear that such extended application will be there,
only when the learner is driving the vehicle, subject to the
conditions mentioned in the licence i.e. in the course of receiving
the instructions on learning (with duly licensed person on the
pillion- if it is a two wheeler and with a licensed person sitting on
his side- it it is a four wheeler or such other type of vehicle, as
the case may be).
15. Based on the above discussions, the Apex Court held
that, it is for the Insurance Company to satisfy the decree at the
first instance and to recover the Award amount from the owner
or driver thereafter, was the law holding the field for a long time
and that, apart the doctrine of 'stare decisis' persuaded the
Court not to deviate from such principles. The findings in
'paragraphs 96 and 97' are reproduced below for easy reference.
"96. It is, therefore, evident from the discussions
made hereinbefore that the liability of the
insurance company to satisfy the decree at the first
instance and to recover the awarded amount from
the owner or driver thereof has been holding the
field for a long time.(emphasis supplied)
97. Apart from the reasons stated hereinbefore
the doctrine of stare decisis persuades us not to
deviate from the said principle."
It was thereafter that the Apex Court made clear that, it was for
the Tribunal to consider each case separately to ascertain
whether any breach was involved in terms of Section 149 (2) (a)
(ii) of the Act and whether the Insurance Company will be
entitled to realize the Award amount from the owner or driver as
the case may be. The crux of the above discussions was given
as summary of the findings, in paragraph 102 of the judgment as
mentioned already.
16. From the above, it is crystal clear that the point
considered by the Apex Court in Swaran Singh's case (cited
supra) was in relation to the contentions raised by the Insurance
Company that they should be exonerated from the liability in
toto, when there was violation of statutory/policy condition,
instead of directing them to satisfy the liability initially and to
have it recovered later from the insured, which plea was rejected,
also adding that the liability will have to be satisfied in respect of
the 3rd party (also in respect of a person who was driving the
vehicle with the learners licence, subject to the condition
mentioned in the said license). In other words, the above
decision does not hold it anywhere that the Insurance Company
cannot recover the amount from the insured, if the violation is
established or that "once a licence, always a licence" was the
Rule. The point involved in the present case as to the
absence of authorization to drive a particular type of vehicle
(transport vehicle) has to be considered and analysed in the light
of the declaration of law as aforesaid.
17. Now comes to the question as to the absence of
'badge'. If it were mere absence of badge, it could only be
technical, which would confer no right of recovery upon the
insurer, as held by the Full Bench of this Court in 2015 (1) KLT
1 (cited supra). But if it is an absence of specific authorization
to drive a 'transport vehicle' (which can be acquired only after
obtaining one year's experience as stipulated under Section 7 of
the Act), the position may be different.
18. The term 'badge' is no where defined either under the
Act or under the State/Central Rules. But reference can be seen
from Rules 11, 12 and 13 of the Kerala Motor Vehicles Rules,
1989.; which are extracted below :
"11. Issue of authorisation to drive transport
vehicles:- The Licensing Authority granting an
authorisation shall,-
(a) issue a driver's badge to the applicant on
payment of the prescribed fee, endorse upon the driving
licence accordingly and return the driving licence to the
holder thereof along with the badge issued; and
(b) send intimation in form 'LTI' to the Authority
by which the driving licence was issued if it is not the
authority which issued the licence.
12. Driver's Badge and its fee:- (i) The metal badge
issued to a driver on authorising him to drive transport
vehicle shall be in the form illustrated in the First
Schedule to these rules and inscribed with the word
"Driver" and identification number and the name of the
district in which it was issued.
(ii) A driver shall not hold more than one such
badge.
(iii) The fee payable by an applicant for the issue
of a badge shall be fifty rupees.
Provided that the fee payable by an applicant authorised
to drive only a motorised cycle-richshaw for the issue of
badge shall be five rupees.
13. Driver's badge issued under the old rules-
Validity of.- A driver's badge in force immediately before
the commencement of these rules shall, after such
commencement be deemed to be effective as if issued
under these rules.
19. An issue came up for consideration before the Apex
Court in National Insurance Co. Ltd. vs. Annappa Irappa
Nesaria ((2008) 3 SCC 464=AIR 2008 SC 1418) as to
whether a person who was holding a licence to drive a light
motor vehicle could drive light goods vehicle on 09.12.1999.
It was observed by the Bench that the amendment of the
provisions under the Central Motor Vehicle Rules, 1989,
particularly clause (e) to (h) of Form 4, in which application for
granting a driving licence was to be filed, came to be deleted and
after the term 'light motor vehicle' under clause (d), a separate
class was carved out as 'transport vehicle' under clause (e)
(replacing the earlier entries of medium goods vehicle, medium
passenger vehicle, heavy goods vehicle and heavy passenger
vehicle. ). Reference was also made to Section 2(21) of the MV
Act , which defines the term 'Light Motor Vehicle', which included
a 'transport vehicle' as well , if unladen weight did not exceed
7500 Kgm. But a distinction was carved out to 'transport
vehicle' in differentiation from light motor vehicle under clause
(d). It was contended before the Supreme Court that in the
said circumstance, the licence to drive a light motor vehicle
was not enough to drive a transport vehicle . But the Apex
Court observed that the clause (e) referring to transport vehicle
was introduced only by virtue of amendment of the rules/Form
w.e.f. 28.03.2001 and as such, the term 'light motor vehicle'
defined under Section 2(21), as then existed, included a light
transport vehicle as well. It was in the said circumstance, that
the challenge raised was repelled, holding that the driver was
duly licensed as on the date of the accident i.e., 09.12.1999,
i.e. prior to the date of the amendment i.e., w.e.f. 28.03.2001.
20. A Division Bench of this Court in 2007(4) KHC 385
(P.T. Moidu vs. Oriental Insurance Co.Ltd. and others)
observed that absence of valid badge to drive a commercial
vehicle will attract penal consequences, but, it cannot be a
ground to deny statutory liability to third party compensation.
The right of recovery reserved in favour of the insurance
Company by the Tribunal after satisfying the liability towards
claimant was intercepted by the Bench; also making an
observation that, at the time of the accident, according to the
appellant/insured, though the vehicle involved was having a taxi
permit, it was actually being used by the owner for travel of
his family (private). No reference was made to Section 3, 7
and 10 of the relevant Act or Rule 6 of the Kerala Rules; but for
placing reliance on the decision rendered by the Full Bench in
Oriental Insurance Co. Ltd. vs. Paulose (2004(1) KLT 8 )so
as to arrive at an inference as to what duly licensed was
meant. But it remains a fact that the above decision rendered
by the Full Bench in 2004(1) KLT 8 (cited supra) has already
been overruled by a Larger Bench of this Court in 2015(1) KLT
682 (LB) (cited supra).
21. The Act is a beneficial statute and hence it has to be
liberally construed for the benefit of the victim, but not for the
benefit of 'wrong doer'; more so, in view of alarming increase in
the number of road traffic accidents because of the reckless
use/driving of transport vehicles, without any regard to the lives
and limbs of the general public. As mentioned already, mere
absence of 'badge' cannot be held as violation or involvement of
breach of statutory/policy conditions, providing a ground of
defence under Section 149 (2) of the M.V.Act. But authorization
to drive the vehicle of a particular class, as stipulated under the
Act has necessarily to be there. This is more so, since a person
on obtaining a learner's licence cannot claim authorisation to
drive a transport vehicle as a matter of right on the same day
and he has necessarily to gather experience of one year to
obtain such authorisation as discernible from Sections 7 and
10 of the Act and as per Rule 6 of the Kerala Motor Vehicles
Rules, 1989.
22. Particulars of the licence, the procedure ,the contents
and such other aspects come strictly within the rule making
power of the Central Government by virtue of Section 27 of the
Act. The rule making power of the State Government is only with
reference to the matters enunciated under Section 28 and as
such, the State Government cannot transgress into the powers
and authorities of the Central Government in this regard. Even
in the case of Kerala Rules, Rule 9 stipulates that a person
who is applying to obtain authorization to drive transport
vehicle, subject to the proviso of having gathered one
year's experience , shall be issued a summons to appear for
an oral test to ascertain the factual position before granting
the authorisation to drive the transport vehicle. The rule
further stipulates that, if the authority finds that the person
concerned was actually not having any experience for the past
one year immediately preceding the application, he can be asked
to undergo a fresh test to have granted the licence. This being
the position, 'test' is mandatory whether it be 'oral' or
'otherwise'; the sum and substance of which shows that it is
not automatic. The scheme of the statute is to safeguard the
rights and interests of the general public, particularly the lives
and limbs of the passengers or the persons who are proceeding
along the road.
23. It is also relevant from the rules quoted above that, on
obtaining authorisation to drive transport vehicle, the person
concerned shall be given a metallic badge showing him as a
driver as contemplated therein. In other words, a 'badge' is a
material object given to the party, who is authorised to drive a
transport vehicle, to be given while returning the licence after
effecting endorsement as to his authorisation as provided in
Rule 11 of the Kerala Rules. This being the position,
authorisation to drive a transport vehicle is one thing; while
'badge' supplied after effecting the endorsement of authorisation
in the licence is another thing. As such, if the person concerned
has not applied for and obtained a badge to be worn on his left
chest, as prescribed by the rules does not do so, the absence of
badge by itself cannot be said to be 'fundamental breach' and
that it could only be 'technical'. Under such circumstance, the
Insurance Company cannot disown the liability or claim the right
of recovery from the insured. But if there is no authorisation at
all, enabling the driver to drive the transport vehicle, it is a
fundamental lapse and under such circumstance, it is open for
the Insurance Company to proceed with steps for recovery
from the insured, who is violator of law. This is more so since, as
observed by the Apex Court in Swaran Singh's case (cited supra),
insurance is also a contract and the provisions have to be
strictly interpreted to give effect to the terms agreed between the
insured and the insurer.
24. The statute/M.V Act is of course a welfare legislation,
which intends to extend benefit/welfare to the victims/third
parties/claimants. A person who is committing any breach
involving an offence under Section 3(1) of the Act r/w Sec.181
of the MV Act is a person who is having no regard to the rule of
law and as such, the provision is not intended to extend any
benefit to such wrong-doer. It is settled law that, provision of
law is not liable to be interpreted in favour of a 'wrong-doer'.
25. In the above circumstance, we respectfully disagree
with the view expressed by the learned Judges of the Full Bench
in 2015(1) KLT 1 (cited supra).
The Registry is directed to place the matter before the
Hon'ble Chief Justice, to cause the matter to be considered by
the Bench of appropriate strength, to resolve the issue once and
for all.
P.R. RAMACHANDRA MENON,
JUDGE
K. HARILAL
JUDGE
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