Allahabad High Court
Sanjay Gupta vs Oriental Insurance Co. Ltd. on 1 March, 1996
Author: G.P. Mathur
Bench: G.P. Mathur
JUDGMENT R.A. Sharma, J.
1. In view of the difference of opinion between the Hon'ble Judges, the Division Bench passed the following order referring three questions mentioned therein for being decided by a third Judge:
Since we are divided in opinion, we refer the following points of difference for being decided by a third Judge in accordance with Chapter VII, Rule 3 of the Rules of the Court:
(1) If a vehicle which is registered as a taxi meets an accident, whether the insurance company can disown its liability to compensate for the loss, if the driver driving the vehicle did not possess a driving licence which entitled him to drive a transport vehicle (taxi)?
(2) Whether there is any embargo under the provisions of the Motor Vehicles Act, 1988, prohibiting driving of a transport vehicle (taxi) for private use by a person having a valid licence to drive a motor vehicle other than transport vehicle?
(3) Whether on the facts and circumstances of the present case, the action of the insurance company in repudiating the claim of the petitioner was justified in law?
Let the papers of this case be placed before the Hon'ble Chief Justice for appropriate orders, forthwith.
The Hon'ble Chief Justice has nominated me for deciding those questions. I have heard the learned Counsel for the parties.
Petitioner purchased a Maruti 1000 car under the State sponsored scheme and it was registered as a taxi. Petitioner submitted a proposal on 4.9.1992 before Oriental Insurance Co. Ltd. (hereinafter referred to as 'the company') for getting the said car insured as a taxi. The company, however, insured the car as a private car instead of a taxi. On 6.10.1992 petitioner's young brother, Parag Gupta, aged about 26 years was driving the said car when it was involved in a serious accident, resulting in the death of Parag Gupta and two of his friends. After the accident the car was declared as a total loss. The petitioner lodged a claim for Rs. 4,00,000/- against the company. The company repudiated the claim of the petitioner on the ground that Parag Gupta, who was driving the car, did not have a licence to drive a taxi. Hence this petition.
2. Chapter XI consisting of Sections 145 to 164 of the Motor Vehicles Act, 1988, (hereinafter referred to as 'the Act') deals with the insurance of the motor vehicles. Section 146 prohibits the use of a motor vehicle in a public place by any person except as a passenger, unless there is in force in relation to the use of the vehicle by that person, a policy of insurance complying with the requirements of the aforesaid Chapter. Section 147 has laid down the requirements of the insurance policy and limit of the liability of the insurance company. Relevant part of Sub-section (1) of Section 147 of the Act is extracted below:
147. Requirements of policies and limits of liability.-(1) In order to comply with the requirements of this Chapter, a policy of insurance must be a policy which-
(a) is issued by a person who is an authorised insurer; and
(b) insures the person or classes of persons specified in the policy to the extent specified in Sub-section (2)-
(i) against any liability which may be incurred by him in respect of the death of or bodily injury to any person or damage to any property of a third party caused by or arising out of the use of the vehicle in a public place;
(ii) against the death of or bodily injury to any passenger of a public service vehicle caused by or arising out of the use of the vehicle in a public place.
3. Section 149 places an obligation on the insurer to satisfy judgment and award against the person insured in respect of third party risks. Sub-section (1) of Section 149 is as under:
149. Duty of insurers to satisfy judgments and awards against persons insured in respect of third party risks.- (1) If, after a certificate of insurance has been issued under Sub-section (3) of Section 147 in favour of the person by whom a policy has been effected, judgment or award in respect of any such liability as is required to be covered by a policy under Clause (b) of Sub-section (1) of Section 147 (being a liability covered by the terms of the policy) is obtained against any person insured by the policy then, notwithstanding that the insurer may be entitled to avoid or cancel or may have avoided or cancelled the policy, the insurer shall, subject to the provisions of this section, pay to the person entitled to the benefit of the decree any sum not exceeding the sum assured payable thereunder, as if he were the judgment debtor, in respect of the liability, together with any amount payable in respect of costs and any sum payable in respect of interest on that sum by virtue of any enactment relating to interest on judgments.
(Emphasis added) Under Sub-section (2) of Section 149 the insurer is entitled to defend the action initiated for recovery of the compensation on any of the following grounds:
(a) that there has been a breach of a specified condition of the policy, being one of the following conditions, namely:
(i) a condition excluding the use of the vehicle-
(a) for hire or reward, where the vehicle is on the date of the contract of insurance a vehicle not covered by a permit to ply for hire or reward, or
(b) for organised racing and speed testing, or
(c) for a purpose not allowed by the permit under which the vehicle is used, where the vehicle is a transport vehicle, or
(d) without side-car being attached where the vehicle is a motor cycle, or
(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; or
(iii) a condition excluding liability for injury caused or contributed to by conditions of war, civil war, riot or civil commotion; or
(b) that the policy is void on the ground that it was obtained by the nondisclosure of a material fact or by a representation of fact which was false in some material particular.
4. Supreme Court in Skandia Insurance Co. Ltd. v. Kokilaben Chandravadan 1987 ACJ 411 (SC), while dealing with a case under the old Motor Vehicles Act, 1939, the provisions of which, in this connection, are similar to those contained in the Act, has laid down that the provisions regarding insurance of the motor vehicles have been incorporated in the said Act so as to protect the members of the public travelling in vehicles or using the roads from the risk attendant upon the user of motor vehicles on the roads. In order to achieve the said object the legislature has, on the one hand, prohibited the use of motor vehicle in public place without a third party insurance and, on the other hand, has made it obligatory for the insurance company to satisfy the judgment against the person insured against third party risk except and save to the extent provided for in Section 96 of the old Act (section 149 of the Act). The relevant extract from the aforesaid decision of the Supreme Court is reproduced below:
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.
5. Insurance company, therefore, can avoid its liability only on the grounds mentioned in Section 149 of the Act and it cannot defeat the claim on the basis of the exclusion clause other than those authorised by Section 149. Sub-section (7) of Section 149 which is reproduced below also makes this position clear:
(7) No insurer to whom the notice referred to in Sub-section (2) or Sub-section (3) has been given shall be entitled to avoid his liability to any person entitled to the benefit of any such judgment or award as is referred to in Sub-section (1) or in such judgment as is referred to in Sub-section (3) otherwise than in the manner provided for in Sub-section (2) or in the corresponding law of the reciprocating country, as the case may be.
Explanation.-For the purposes of this section 'Claims Tribunal' means a Claims Tribunal constituted under Section 165 and 'award' means an award made by that Tribunal under Section 168.
As regards the breach of condition referred to in Section 96 (2) (b) (ii) of the old Act (section 149(2)(a)(ii) of the Act) excluding driving by named person or a person, who is not duly licensed or by a person, who has been disqualified for holding or obtaining a driving licence, on account of which the insurance company can avoid its liability, Supreme Court in Skandia Insurance Co. Ltd. v. Kokilaben Chandravadan 1987 ACJ 411 (SC), extract from which is reproduced below, has laid down that unless the insured is at fault, insurance company cannot avoid its liability:
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 has been disqualified for holding or obtaining a driving licence during the period of 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 not duly licensed will not 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 he 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. When the insured has done everything within his power inasmuch as he has engaged a licensed driver and has placed the vehicle in charge of a licensed driver, with the express or implied mandate to drive himself, it cannot be said that the insured is guilty of any breach. And it is only in case of a breach or a violation of the promise on the part of the insured that the insurer can hide under the umbrella of the exclusion clause.
(Emphasis added) Regarding the defence of the insurance company on the exclusion clause the Supreme Court summed up the position as under:
(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.
6. In the above case the driver of the truck with its running engine had handed over its control to the cleaner who was not having a driving licence to drive such a vehicle. During the period when the truck was in the control of the cleaner, it was involved in an accident giving rise to the claim against the insurance company. Supreme Court upheld the claim holding that the owner of the truck was not at fault and, therefore, the insurance company is liable to satisfy the judgment. The law laid down in the case of Skandia Insurance Co. Ltd. v. Kokilaben Chandravadan 1987 ACJ 411 (SC), has been reaffirmed by the Supreme Court in Kashiram Yadav v. Oriental Fire & Genl. Ins. Co. Ltd. 1989 ACJ 1078 (SC), wherein, in this connection, it was laid down as follows:
We affirm and reiterate the statement of law laid down in the above case. We may also state that without the knowledge of the insured, if by driver's acts or omission others meddle with the vehicle and cause an accident, the insurer would be liable to indemnify the insured. The insurer in such a case cannot take the defence of a breach of the condition in the certificate of insurance.
In Guru Govekar v. Filomena F. Lobo 1988 ACJ 585 (SC), the vehicle was in the custody of a mechanic of repairer when it was involved in an accident. Supreme Court held that the insurance company is liable to pay compensation not only when the insured has used the vehicle but also when he has allowed any other person to use the vehicle in a public place. In this connection, Supreme Court has laid down as follows:
Thus, if a policy is taken in respect of a motor vehicle from an insurer in compliance with the requirements of Chapter VIII of the Act, the insurer is under an obligation to pay the compensation payable to a third party on account of any injury to his/her person or property or payable to the legal representatives of the third party in case of death of the third party caused by or arising out of the use of the vehicle at a public place. The liability to pay compensation in respect of death of or injury caused to the person or property of a third party undoubtedly arises when such injury is caused when the insured is using the vehicle in a public place. It also arises when the insured has caused or allowed any other person (including an independent contractor) to use his vehicle in a public place and the death of or injury to the person or property of a third party is caused on account of the use of the said vehicle during such period unless such other person has himself taken out a policy of insurance to cover the liability arising out of such an accident.
7. When a taxi is involved in an accident, insurance company cannot disown its liability to pay compensation for the loss unless it is proved that the insured was at fault in placing the vehicle in charge of a person, who was not holding a driving licence to drive the vehicle. So far as driving the motor vehicle in public place is concerned, the Act has approved for and defined different types of vehicles and has also made provisions for grant of driving licence to drive those vehicles. Section 2(25) of the Act defines 'motor cab' as follows:
Any motor vehicle constructed or adapted to carry not more than six passengers excluding the driver for hire or reward.
Section 2(26) defines 'motor car' as under:
Motor car' means any motor vehicle other than a transport vehicle, omnibus, road-roller, tractor, motor cycle or invalid carriage.
'Public service vehicle' has been defined by Section 2(35) of the Act as follows:
Public service vehicle' means any motor vehicle used or adapted to be used for the carriage of passengers for hire or reward and includes a taxi-cab, a motor cab, contract carriage and stage carriage.
According to Section 2(47) 'transport vehicle' means:
a public service vehicle, a goods carriage, an educational institution bus or a private service vehicle.
8. The difference between a motor cab and motor car is that the former is used for carrying not more than six passengers for hire or reward, whereas the latter is not used for such a purpose.
Section 3, which is reproduced below, prohibits every person to drive a motor vehicle in any public place unless he holds an effective driving licence to drive the vehicle:
3. (1) Necessity for driving licence.- No person shall drive a motor vehicle in any public place unless he holds an effective driving licence issued to him authorising him to drive the vehicle; and no person shall so drive a transport vehicle (other than a motor cab hired for his own use or rented under any scheme made under Sub-section (2) of Section 75) unless his driving licence specifically entitles him so to do.
Section 5 casts a duty on owner or person in charge of a motor vehicle not to permit any person, who does not satisfy the provisions of Sections 3 and 4, to drive the vehicle. Sections 180 and 181 have made driving of a vehicle in public place in contravention of Sections 3 and 4 of the Act a penal offence punishable for a term or with fine or with both specified therein.
9. Although Section 3 has laid down that no person shall drive a transport vehicle in public place unless his driving licence specifically entitles him so to do but it has made an exception in the case of a motor cab hired for his own use or rented under any scheme under Sub-section (2) of Section 75 of the Act. It is true that motor cab is transport vehicle and no person can drive it in public place unless he holds a licence to drive a transport vehicle; but when it is hired for one's own use or rented under any scheme under Section 75, such a driving licence is not required. Had the legislature intended that even when a motor cab is hired for one's own use or rented under a scheme under Section 75, it must be driven by a person holding a driving licence entitling him to drive a transport vehicle, it would not have made any exception in its favour and the prohibition contained in Section 3 would have governed the situation. But when the legislature while laying down the prohibition against driving of a transport vehicle in a public place by a person, who does not hold a driving licence, which specifically entitles him to drive such a vehicle, makes an exception regarding motor cab hired for one's own use or rented under a scheme under Section 75, it is clear that in such case, a motor cab can be driven by a person who holds a driving licence to drive a motor car; which is a motor vehicle other than transport vehicle.
10. In this connection it may be mentioned that Section 3 of the old Motor Vehicles Act, 1939, prior to its amendment in 1959 was as under:
3. Necessity for driving licence.-No person shall drive a motor vehicle in any public place unless he holds an effective driving licence issued to him authorising him to drive the vehicle; and no person shall so drive a motor vehicle as a paid employee or shall so drive a transport vehicle unless his driving licence specifically entitles him so to do.
(2) A State Government may prescribe the conditions subject to which Sub-section (1) shall not apply to a person receiving instruction in driving a motor vehicle.
Sub-section (3), which was added to the said section in 1969, provided for driving motor cab by a person holding a driving licence to drive a motor car if he has hired it for his own use. Sub-section (3) as inserted in 1969 is as under:
3. (3) Notwithstanding anything contained in Sub-section (1), a person who holds an effective driving licence authorising him to drive a motor car may drive any motor cab hired by him for his own use.
The reason for inserting Sub-section (3) in Section 3 of the old Act is as under:
Clause 3-Under the existing law, a person possessing a driving licence for a private car cannot drive a taxi cab even for his own use. In foreign countries, however, it is possible to hire and drive a taxi cab on payment of moderate charges. This clause seeks to introduce a similar facility in India, particularly for the purposes of promotion of tourism.
Section 3 of the Act has retained what was contained in Sub-section (3) of Section 3 of the old Act. Instead of making a separate provision like Sub-section (3) of Section 3 of the old Act, Parliament has made latter part of Sub-section (1) of Section 3 of the Act, which prohibits the driving of a transport vehicle by a person unless his driving licence specifically entitles him so to do, inapplicable to 'motor cab' hired for his own use or rented under the scheme framed under Section 75. The result of the above provision is that the motor cab hired or rented can be driven by a person who holds driving licence to drive a motor vehicle, which includes the car, other than the transport vehicle. Therefore, a taxi (motor cab) can also be driven by a person holding a driving licence to drive motor car, if it has been hired by him for his own use or rented under any scheme under Section 75.
11. In the instant case the vehicle was insured by the company as a private car. The insurance policy contained the following 'Driver's clause' and the clause relating to 'Limitation as to use':
Driver's clause: Persons or classes of persons entitled to drive-Any person including insured provided that a person driving holds an effective driving licence at the time of accident and is not disqualified from holding or obtaining such a licence. Provided also that the person holding an effective learner's licence may also drive the vehicle and such a person satisfied the requirement of Rule 3 of the Central Motor Vehicles Rules 1989.
Limitation as to use: Use only for social, domestic and pleasure purposes and insured's own business. The policy does not cover use for hire or reward or for organised racing, pacemaking, reliability trials, speed testing, carriage of goods (other than samples) in connection with any trade or business or use for any purpose in connection with motor trade.
12. In view of the clause laying down 'limitation as to use' the vehicle in question could not have been used for hire or reward. It is admitted that at the time of the accident the vehicle was being driven as private car and was not used for hire or reward or for any other prohibited purpose. As the vehicle in question was insured as a private car and was being used as a private car at the time of the accident, the company cannot avoid its liability to pay the compensation if the person holding a driving licence to drive a private car was driving it. It is admitted that the deceased Parag Gupta, who was driving the car at the time of the accident, was holding an effective driving licence to drive a car. Deceased was thus entitled to drive the vehicle. The insurance company is, therefore, bound to pay the compensation to the victims of the accident or their heirs and legal representatives, as the case may be. The company's liability to pay the compensation is absolute unless it establishes that the case is covered by any of the grounds specified in Section 149. It is not disputed that none of the grounds referred to in the said section exists so as to enable the insurer to avoid its liability. It is also not a case where the policy can be said to be void on the ground that it was obtained by non-disclosure of a material fact or by a representation of fact, which was false in some material particulars. Petitioner has submitted a proposal of insurance of his vehicle as a taxi before the company. He is neither guilty of nondisclosure of a material fact nor is he guilty of a representation of fact, which was false in some material particulars. If the company has insured a taxi as a private car on account of some mistake, it may be open to it to correct or cancel the insurance certificate, but till it is done it cannot avoid its liability to pay compensation to the victims or their heirs and legal representatives. It can neither avoid its liability on the ground that the policy was issued under some mistake nor can it defeat the claim on the ground that the vehicle was registered as a taxi and at the time of the accident it was being driven by a person, who did not hold a driving licence to drive a taxi. The company is bound by the insurance policy under which the vehicle was insured as a private car.
13. Before parting with the case, the plea raised on behalf of the insurance company regarding the exercise of power by this Court may also be dealt with. Their contention is that this Court should not interfere with this matter under Article 226 of the Constitution, because the petitioner himself was the agent of the insurance company and was instrumental in getting the vehicle insured as a private car. Such a plea cannot be sustained for three reasons, namely, (i) once the vehicle has been insured the claim of the victims of the accident or their heirs or legal representatives cannot be defeated on the ground that the insurance policy was issued under some bona fide mistake or otherwise, unless the case falls within some 'exclusion clause' specified in Section 149. That is not the position here. Apart from the brother of the petitioner, two other persons have also died in the same accident. If such a plea, as is raised by the company, is accepted the claim of the heirs and legal representatives of those deceased will be defeated without any justification, (ii) if the petitioner was instrumental in getting the vehicle insured as a private car, it was open to the company to correct or cancel it and till it is corrected or cancelled the company cannot avoid its liability to pay the compensation. This is clear from Sub-section (1) of Section 149 of the Act, according to which the insurer has to satisfy the judgment against the person insured 'notwithstanding that the insurer may be entitled to avoid or cancel or may have avoided or cancelled the policy' and (iii) the questions raised in this case are to be decided on the basis of the statutory provisions and not on the basis of the contract between the parties or their conduct. Supreme Court in Skandia Insurance Co. Ltd. v. Kokilaben Chandravadan 1987 ACJ 411 (SC), the relevant extract from which is reproduced below, has laid down that when deciding the question of liability of the insurer it is not the contract of insurance which is to be interpreted but it is the statutory provision relating to the exclusion clause under which the insurer can avoid its liability, which is to be interpreted:
It needs to be emphasised that it is not the contract of insurance which is being interpreted. It is the statutory provision defining the conditions of exemption which is being interpreted. These must, therefore, be interpreted in the spirit in which the same have been enacted accompanied by an anxiety to ensure that the protection is not nullified by the backward looking interpretation which serves to defeat the provision rather than to fulfil its life-aim. To do otherwise would amount to nullifying the benevolent provision by reading it with a non-benevolent eye and with a mind not tuned to the purpose and philosophy of the legislation without being informed of the true goals sought to be achieved. What the legislature has given, the court cannot deprive of by way of an exercise in interpretation when the view which renders the provision potent is equally plausible as the one which renders the provision impotent. In fact it appears that the former view is more plausible apart from the fact that it is more desirable. When the option is between opting for a view which will relieve the distress and misery of the victims of accidents or their dependants on the one hand and the equally plausible view which will reduce the profitability of the insurer in regard to the occupational hazard undertaken by it by way of business activity, there is hardly any choice. The court cannot but opt for the former view.
14. The questions referred to by the Division Bench are answered as under:
(1) (a) If a vehicle, which was registered as a taxi, meets an accident, insurance company cannot disown its liability to compensate for the loss merely on the ground that the driver driving the vehicle was not holding a driving licence, which entitled him to drive a transport vehicle (taxi) unless the insured was at fault in placing the vehicle in charge of a person, who was not holding a driving licence to drive the vehicle;
(b) If a taxi (motor cab) has been hired for one's own use or rented under a scheme under Section 75 of the Act, insurance company cannot refuse to pay the compensation even if the said vehicle at the time of the accident was being driven by a person, who was holding a driving licence to drive a private car and was not holding a driving licence to drive a taxi;
(2) There is no embargo under the Act prohibiting driving of a transport vehicle (motor cab-taxi) for private use by a person holding a valid driving licence to drive a motor vehicle other than the transport vehicle, if the motor cab has been hired for his own use or rented under a scheme framed under Section 75 of the Act.
(3) Insurance company was not justified to repudiate the claim of the petitioner.
15. Let the papers of this case be placed before the appropriate Division Bench for deciding the writ petition.
G.P. Mathur, J.
16. The principal reliefs claimed in this writ petition are that communication dated 5.3.1993 (Annexure 3) to the writ petition be quashed and a writ of Mandamus be issued directing the respondent to process the claim of the petitioner taking the value of insured vehicle as Rs. 4,00,000/-
17. The facts which emerge out from the affidavits filed by the parties are that the petitioner purchased a Maruti 1000 car in the State sponsored scheme and it was registered as a taxi bearing registration No. MP-20-T-0050. The vehicle was initially insured on 4.9.1992 as a private car by the respondent Oriental Insurance Co. Ltd. for an amount of Rs. 3,22,462.65 and a premium of Rs. 9,192/- was paid. Within a few days the petitioner made a request for enhancing the value of car to Rs. 4,00,000/- and the difference of premium in respect to the enhanced amount was deposited which was accepted. The vehicle met with an accident on 6.10.1992, while it was being driven by the petitioner's younger brother Parag Gupta. It was completely damaged and was declared a total loss. Parag Gupta possessed a driving licence which entitled him to drive a private vehicle and not a transport vehicle. A claim for Rs. 4,00,000/- was lodged with the insurance company which was repudiated on 5.3.1993 on account of invalidity of driving licence held by Parag Gupta to drive a taxi. It is the specific case of the petitioner that though the vehicle had been registered as a taxi, but it was not being so used and was being used solely for private purposes. It is averred in the counter-affidavit, which fact is not disputed, that the petitioner is himself an agent of the respondent Oriental Insurance Co. Ltd. and the initial cover note regarding insurance of the vehicle was issued by him under his own signature. The petitioner is aggrieved by the communication dated 5.3.1993 sent by the Branch Manager of the respondent company repudiating his claim.
18. The main submission of the petitioner is that as the vehicle was insured as a private vehicle and not as a transport vehicle, that claim could not be repudiated on account of the fact that the driver of the same at the time of accident did not hold a licence which entitled him to drive a transport vehicle. In order to examine the contention raised on behalf of the petitioner, it will be useful to reproduce the relevant conditions of the policy, copy of which has been filed as Annexure 1 to the writ petition. At the top on the right side, it has been described as 'Private Car B Policy (India)', under the heading General Exceptions, it is mentioned as follows;
The Company shall not be liable under this policy in respect of, (1) xxx xxx xxx (2) xxx xxx xxx
(3) any accident loss, damage and/or liability caused, sustained or incurred while any motor car in respect of or in connection with which insurance is granted under this policy is-
(a) being used otherwise than in accordance with the limitations as of use or,
(b) being driven by any person other than the driver as stated under the driver's clause.
The last page of policy contains driver's clause which is as under:
Driver's Clause: Persons or classes of persons entitled to drive-Any person including insured provided that a person driving holds an effective driving licence at the time of accident and is not disqualified from holding or obtaining such a licence. Provided also that the person holding an effective learner's licence may also drive the vehicle and such a person satisfied the requirements of Rule 3 of the Central Motor Vehicles Rules 1989.
19. The driver's clause clearly provides that the person driving the vehicle must possess an effective driving licence at the time of the accident. The question to be considered is whether Parag Gupta, who held a licence to drive a private car and not a taxi, can be said to be holding an effective driving licence. This question has to be examined in the light of the provisions of Motor Vehicles Act, 1988 and the Rules framed thereunder (hereinafter referred to as the Act and Rules respectively).
20. Chapter II of the Act deals with licensing of drivers of motor vehicles and Sections 3 to 28 provide for different kinds of licences, procedure for obtaining the same and their duration, etc. Sub-section (1) of Section 3 of the Act provides that no person shall drive a motor vehicle in any public place unless he holds an effective driving licence issued to him authorising him to drive the vehicle and no person shall so drive a transport vehicle (other than a motor cab hired for his own use or rented under any scheme made under Sub-section (2) of Section 75) unless his driving licence specifically entitled him so to do. Section 5 lays down that no owner or person in charge of a motor vehicle shall cause or permit any person who does not satisfy the provisions of Section 3 or Section 4 to drive the vehicle. Section 2(47) defines a 'transport vehicle' and it means a public service vehicle, a goods carriage and educational institution bus. Section 2(35) defines a 'public service vehicle' and it means any motor vehicle used or adapted to be used for the carriage of passengers for hire or reward and includes a maxi-cab, a motor-cab, contract carriage and stage carriage. A 'taxi' is a 'public service vehicle' within the meaning of Section 2(35) and is, therefore, a 'transport vehicle' as defined in Section 2(47) of the Act. Rule 16 (1) of the Rules provides that every driving licence issued or renewed by the Licensing Authority shall be in Form 6 and Rule 17 provides that an application for addition of another clause or description of motor vehicle to the driving licence shall be made in Form 8 and shall be accompanied by, in the case of an application for addition of transport vehicle, the driving certificate in Form 5. In Form 6, there are two separate entries which are as follow:
The licence to drive a The licence to motor vehicle other drive transport than transport vehicle vehicle is valid is valid from...to... from...to...
21. Sections 9(3), 9(4), 14(2) indicate that a licence to drive a transport vehicle is different from a licence to drive a private vehicle and in law they are treated as separate and distinct licences. The Act further makes a provision under Section 11 that an addition can be made in the licence which would entitle the holder thereof to drive another class of vehicle. Section 3 of the Act provides that no person shall so drive a transport vehicle unless his driving licence entitles him to do so. Therefore, the mandate of law is that a person shall not drive a transport vehicle unless his licence entitles him to do so. If a transport vehicle is driven or is allowed to be driven by a person who does not hold licence to drive such a vehicle, it will be clearly a breach of Sub-section (1) of Section 3 or Section 5 of the Act and will be an offence which is punishable under Sections 180 or 181 of the Act. Section 180 lays down that if an owner of the vehicle permits any other person who does not satisfy the provisions of Section 3 to drive the motor vehicle, he shall be punishable with imprisonment which may extend to one month or fine which may extend to Rs. 1,000/- or with both. Similarly, Section 181 provides that whoever drives a motor vehicle in contravention of Section 181 shall be punishable with imprisonment which may extend to 3 months or with fine which may extend to Rs. 500/- or with both. There can, thus, be no doubt that if an owner of a taxi allows it to be driven by a person who does not hold a licence to drive such a vehicle, he commits an offence under Section 180 of the Act. The conditions in the insurance policy should be interpreted in a manner that they do not come in conflict with the provisions of the Motor Vehicles Act or Rules. If any condition of the policy is in variance with the provisions of the Act, the same would be invalid as the policy being in the nature of a contract, cannot contain terms which are opposed to the provisions of an Act of Parliament. Similarly, it cannot be interpreted in a manner which is opposed to public policy. The 'driver's clause' of the insurance policy in the present case lays down that the person driving the vehicle should hold an effective driving licence. There can be no doubt that the words 'effective driving licence' mean a licence which is valid under the provisions of the Motor Vehicles Act and Rules. A licence which is not valid under the provisions of the Act cannot be held to be an 'effective driving licence'. Therefore, in order to drive a taxi, one must hold a licence which entitles him to drive a transport vehicle. In absence of such a licence a driver cannot be said to be holding an effective driving licence and there will be a breach of the driver's clause of the insurance policy. It is admitted by the petitioner also that Parag Gupta did not hold a licence to drive a transport vehicle. It is, therefore, clear that there is a breach of the driver's clause of the insurance policy and as such the company was perfectly within its right to repudiate the claim.
22. It has been contended that the vehicle was not being used as a taxi and at the time of accident also it was being used for private purposes and, therefore, under law, there should be no requirement with the driver to hold a licence which entitled him to drive a transport vehicle. In my opinion, the contention raised is fallacious. The language used in later part of Section 3(1) is that no person shall so drive a transport vehicle unless his driving licence specifically entitles him so to do. The definitions of 'transport vehicle' as given in Section 2(47) and of 'public service vehicle' as given in Section 2(35) clearly show that it is the nature of the vehicle which is relevant and not the use thereof. If the contention of the petitioner is accepted, it would mean that the same vehicle may become a private service vehicle as defined in Section 2(33) or a public service vehicle as defined in Section 2(35) or transport vehicle as defined in Section 2(47) at different points of time. While passengers are being carried for hire or reward, a vehicle will become a public service vehicle and the moment all such passengers get down, it will become a private service vehicle. Obviously such an interpretation of the provisions of the Act cannot be accepted. The main test would be how a vehicle has been registered under Chapter IV of the Motor Vehicles Act and not its use at the time of accident. Section 56 provides that subject to the provisions of Sections 59 and 60, a transport vehicle shall not be deemed to be validly registered for the purpose of Section 39 unless it carries a certificate of fitness issued by the prescribed authority. Section 59 makes a special provision with regard to registration of a transport vehicle and lays down certain particulars which have to be noted down in the certificate of registration. The whole scheme of the Motor Vehicles Act shows that it makes a distinction between a private vehicle and a transport vehicle and lays down different manner of registration thereof. The manner of use of a vehicle at a particular moment, namely, for private purposes or as a transport vehicle for hire or reward has no relevance at all. Therefore, the mere fact that the vehicle was not being used as a taxi has no bearing on the issue involved on account of mandatory provisions of Section 3 and other provisions of the Act. In E. Enjana-devi v. Arumugham 1983 ACJ 625 (Madras), the car by which accident took place had been registered as tourist car coming under the definition of 'public service vehicle' and thus a 'transport vehicle', it was held that in the absence of necessary special endorsement on the licence of the driver there was contravention of Section 3 of the Act. Similarly, in National Insurance Co. Ltd. v. Mahadevayya AIR 1982 Mad 151, it was held that though autorickshaw is light motor vehicle, a licence to drive light motor vehicle will not enable licensee to drive autorickshaw as a public carrier for that requires a special authorisation under the later part of Section 3. The claim of the petitioner that the provisions of the Act had not been violated on account of the fact that the vehicle was not being used as taxi, cannot, therefore, be accepted.
23. It has also been contended that the vehicle was insured by the respondent company as a private car and not as a taxi and as the driver possessed a valid licence to drive a private car, the company is bound to honour the claim. In my opinion, the mere fact that the vehicle was insured as private car cannot make any difference as it cannot override the requirements of the Act. The driver's clause lays down that the driver should hold an effective driving licence and whether the driving licence was effective or not has to be examined in the light of the provisions of the Motor Vehicles Act and Rules and not on the basis that the policy mentioned that it was for a private car.
24. That apart, the mere fact that the insurance policy issued by the respondent company is of the nature which is issued for a private car cannot be given undue importance on the facts and circumstances of the present case. The assertion of the respondents in paras 4 and 6 of the counter-affidavit that the petitioner is himself an agent of the company and the cover note had been issued by him under his own signature is not controverted. On the contrary, it is admitted in para 4 of the rejoinder affidavit that the petitioner is an agent of the company and he had himself signed the cover note. It is further admitted that he is a partner of Auto Sales (Scooters) which are dealers of Bajaj scooters and the firm sells a large number of vehicles. It is, therefore, obvious that the petitioner is himself in the trade of sale of auto vehicles and being an agent of the insurance company must be well conversant with intricacies of various kinds of insurance policies. The possibility of a private car insurance policy having been issued deliberately by the ministerial staff of the company cannot be ruled out. That some manipulation was done is evident from the relevant page bearing the heading 'Certificate of Insurance' of the policy itself. The column at the extreme left hand at the top is meant for mentioning registration mark and the number of the vehicle. The 4th column is for 'make' and the 5th column is for the 'year of manufacture'. Instead of mentioning registration number of the vehicle in the extreme left hand column, what has been written is Maruti 1000 which should have been written in the column 'make'. Both in the column of 'make' and 'year of manufacture' 1992 has been written. The fact that the number of vehicle was not mentioned in the extreme left hand column may not be an innocuous omission but may be a deliberate move. In fact, the whole policy is conspicuous by absence of its registration number which is the normal way of identifying a vehicle. The number of vehicle is MP-20-T-0050 and if this number had been written, it would have been apparent that it is a taxi as the alphabet'T' in the number stands for a taxi. In such a situation, it would have been immediately revealed that a wrong policy showing it to be a private car had been issued. It is for this reason that both in the column 'make' and 'year of manufacture' 1992 is written, otherwise 'Maruti 1000' should have been written in the column 'make'. By way of exemplar, copy of another policy issued for a commercial vehicle has been filed as Annexure 6 to the writ petition and incidentally this is also for a Maruti 1000 car which had been registered as a taxi. In this document the number of the insured vehicle (MP-17-T-0012) has been written in the extreme left hand column which is meant for registration mark and number. In the supplementary affidavit no satisfactory explanation has been given as to how a policy of private car was issued for a taxi.
25. It may be mentioned here that the legislature has also laid considerable emphasis upon the fact that benefits under an insurance policy may be availed of by a person holding a valid licence and not otherwise. Chapter XI of the Act deals with insurance of motor vehicles against third party risk. Section 149 casts a duty on insurer to satisfy the judgments and awards against persons insured in respect of third party risk and it lays down that the insurer shall, subject to the provisions of this section, pay to person entitled to the benefits of the decree any sum if he were the judgment debtor in respect of a liability. However, Section 149(2)(a)(ii) provides that an insurer shall be entitled to defend the action on the ground that there has been a breach of a specified condition of the policy, namely, a condition excluding driving by a person who is not duly licensed. Similarly, under Sub-clause (b) of Sub-section (2) of Section 149 an insurer is entitled to defend the action on the plea that the policy is void on the ground that it was obtained by non-disclosure of a material fact or by a representation of fact which was false in some material particulars. It has been held by a Division Bench of Madras High Court in E. Enjanadevi v. Arumugham 1983 ACJ 625 (Madras) and by Punjab & Haryana High Court in Balli Singh v. Sushil Singhal 1985 ACJ 815 (P&H), that in absence of requisite endorsement on the licence of the driver to drive a transport vehicle, the insurance company would not be liable to satisfy the award given against owner of the vehicle.
26. The authorities cited by learned Counsel for the petitioner may now be considered. In Narcinva V. Kamat v. Alfredo Antonio Doe Martins 1985 ACJ 397 (SC), it was held that onus was on the insurance company to prove that the driver had no driving licence and mere non-production of the licence did not exonerate the insurance company. In the present case, it is admitted by the petitioner that in the licence possessed by Parag Gupta, there was no endorsement enabling him to drive a transport vehicle. In Skandia Insurance Co. Ltd. v. Kokilaben Chandra-vadan 1987 ACJ 411 (SC), where the insured had placed the vehicle in charge of a licensed driver with a mandate to drive himself, it was held that he had done everything in his power to keep, honour and fulfil the promise and was not guilty of deliberate breach. This authority has also no application on the facts of the present case. In Canara Motor & General Insurance Co. Ltd. v. Abdul Hamid Khan Saheb 1984 ACJ 467 (Bombay), it was held by learned single Judge that the condition appearing in the policy refers more to the type of vehicle rather than the mode of its user and the insurance company cannot defeat the claim on the ground that the driver who was driving the taxi though holding a valid licence did not have an endorsement on it enabling him to drive a taxi. With profound respect, I am unable to agree with the view taken in this case as the provision of Section 3 of the Act and also the fact that the driving of a vehicle by a person who does not hold an effective licence amounts to an offence, has not been considered. That apart, it was a case of third party risk under Section 96 of the old Act where considerations are slightly different.
27. There is another aspect of the matter which is also to be taken into consideration. According to own case of the petitioner, the vehicle was purchased under the State sponsored scheme as a taxi. As per allegations made in paras 7, 12 and 17 of the writ petition, it was being used as private car and not as a taxi. The Government in order to provide livelihood to those who belong to poor sections of society gives some concession to purchase vehicles so that they may run them as taxi. On account of substantial rebate in taxes, the price of a vehicle purchased as taxi under the State sponsored scheme is substantially less. The difference in the price of Maruti 1000 car is about Rs. 70,000/-. The fact that the petitioner initially insured his vehicle for an amount of Rs. 3,22,462.65 and within a few days enhanced the value to Rs. 4,00,000/- and paid additional premium of Rs. 2,263/- is significant and was not done without any purpose. This enhancement in the value of the car coupled with the fact that an insurance policy of 'private car' was procured shows that the petitioner had purchased the same for private use only and had covered the risk for an amount which represented its price in open market. If a vehicle is purchased ostensibly as a taxi under the State sponsored scheme but is used for private purposes, there is misuse of the facility or concession provided by the Government and also loss to the public exchequer. Probably, there is no device or machinery with the Government to curb this malpractice. It does not mean that legal sanction should be given to such device. That apart, as shown earlier if an owner of a vehicle allows or permits any other person who does not satisfy the provision of Section 3 to drive the vehicle, there is breach of Section 5 and it also amounts to an offence which is punishable under Section 180 of the Act. The petitioner has approached this Court in writ jurisdiction under Article 226 of the Constitution of India which is an equitable relief. Those who seek such relief must come with clean hands. On the facts and circumstances of the present case, as noticed above, I am not inclined to exercise my discretion in favour of the petitioner and grant the relief claimed by him.
28. In view of the discussions made above, I am of the opinion that the writ petition is liable to be dismissed.
R.B. Mehrotra, J.
29. I have gone through the opinion of my learned brother G.P. Mathur, J. for whom I have the highest regards, but unfortunately I am not in agreement with the opinion expressed by my learned brother and the reasons for not agreeing with the said opinion are being incorporated herein:
Before considering the issue involved for consideration in the present writ petition, it is necessary to clear the cobwebs and straighten the facts not disputed between the parties.
30. The petitioner purchased a Maruti 1000 car at Jabalpur and the same was registered at Jabalpur with registration No. MP-20-T-0050. The aforesaid vehicle was purchased under State sponsored scheme and was registered as a taxi. The petitioner got the aforesaid vehicle insured with Oriental Insurance Co. Ltd., having its branch office at 14/18, Shastri Marg, Allahabad. The proposal for insurance submitted by the petitioner was for insuring the vehicle as a 'taxi'.
31. Initially we had some doubt about the correctness of the statement made by the petitioner in his writ petition that the original proposal submitted by the petitioner was for a taxi. On our direction, the original record v/as produced before us. The original record demonstrated that the proposal originally submitted by the petitioner was for getting the vehicle insured as a taxi. On perusing the record in original, we directed the counsel for the respondent insurance company to file a supplementary counter-affidavit bringing on record the photostat copies of the original records including the proposal submitted by the petitioner for insuring the aforesaid vehicle. In compliance thereof, a supplementary counter-affidavit was filed by D.N. Srivastava, Asstt. Manager (Legal) of the respondent insurance company, bringing on record the photostat copies of the original documents submitted by the petitioner and the endorsements made by the petitioner insurance company. This proposal was submitted on 4.9.1992 and was valid till 3.9.1993. In the proposal form, a photo- copy of which has been filed with the supplementary counter-affidavit by the insurance company itself, against column '7', the following entries have been made:
(7) Will vehicle ply for hire? - Yes.
32. In the supplementary counter-affidavit, the insurance company has categorically admitted that the petitioner submitted a proposal for insuring the vehicle as a taxi but by mistake, the insurance company insured the vehicle as a private car. It is also admitted by the respondent that due to mistake of the insurance company, the vehicle was insured as a private car instead of a taxi as applied by the petitioner. Photostat copies of the original proposal and the insurance policy have been filed with the supplementary counter-affidavit and we have perused the original records which clearly bear out that the petitioner applied for getting the vehicle insured as a taxi but the insurance company wrongly insured the vehicle as a private car. It is true that in the proposal as well as in the insurance policy, in the column registered letter and number, the words mentioned in the proposal as well as the insurance policy are Maruti 1000 car.
33. Before an owner is to take out the vehicle from the garage, the vehicle is insured to avoid any accident during the period when the application for registration is made and the registration number is provided. So merely the fact that in the column of registered letter and number, Maruti 1000 car is mentioned, no adverse inference can be drawn against the petitioner for manipulating anything in the insurance proposal and insurance policy, smelling foul in the proposal and issuance of the insurance policy merely on the basis that the proprietor of the vehicle was himself the agent of the insurance company is absolutely baseless and unfounded. I have no reason to doubt the correctness of the statement made in the supplementary counter-affidavit filed on behalf of the insurance company, referred to above, which is supported by the original records which we have perused in the court and photostat copies thereof have been filed with the supplementary counter- affidavit referred to above.
34. On the advice of the agent of the insurance company, a request was made by the petitioner to enhance the value of the car to Rs. 4,00,000/- from the original sum insured which was Rs. 3,22,462.65 and in respect of this enhancement, the difference of premium to the extent of Rs. 2,263/- was also deposited by the petitioner. The letter, dated 28.9.1992, of the Branch Manager of the insurance company accepting the additional premium given by the petitioner has been brought on record which clearly says that the rest of the terms and conditions of policy No. 93/03496 shall remain unchanged, meaning thereby that the vehicle continued to be insured as a private vehicle.
35. Under the aforesaid circumstances, the terms of the policy of the insurance company compelled the petitioner not to use the vehicle as a taxi. The petitioner has stated in his writ petition that since the vehicle was wrongly insured as a private vehicle and the terms of the policy required that if the petitioner uses the vehicle contrary to the terms of the policy, the petitioner will not be entitled to claim the insured money in case the vehicle meets with an accident. The petitioner has contended that in the aforesaid circumstances, the petitioner was driven to a situation to use the vehicle as a private vehicle temporarily as and when the occasion arose.
36. Before the mistake of the insurance company could be got corrected almost in a month from the date the vehicle was insured, i.e., 6.10.1992, the petitioner's younger brother Parag Gupta, aged about 26 years, who had a valid driving licence to drive a motor vehicle other than transport vehicle took out the car for personal use and unfortunately at about 4.15 a.m. on 6.10.1992, he met with a fatal accident in front of old Phaphamau on the Allahabad-Pratapgarh road. Apart from the death of petitioner's younger brother, who was driving the car, his two friends Amit Chatterjee and Anurag Goswami also met their death. The vehicle was totally damaged and it was declared a total loss.
37. The petitioner lodged a claim with the insurance company for Rs. 4,00,000, the amount for which the vehicle was insured. The insurance company, vide its letter, dated 5.3.1993, repudiated the claim of the petitioner on account of invalidity of driving licence held by the driver of the vehicle, to drive 'taxi'. Aggrieved thereby, the petitioner has filed the present writ petition.
38. The issue involved for consideration in the present writ petition is:
Is the insurance company justified in repudiating the claim of the petitioner on the ground that the vehicle was registered as taxi but was being driven by a person, who had a valid licence of driving vehicle other than transport vehicle, even though the insurance company having itself registered the vehicle as a private vehicle?
39. So far as the insurance company is concerned, it is bound by the insurance policy issued by it to the petitioner in respect of the vehicle. The said policy, as stated above, was issued for a private car. The insurance policy contained clauses relating to persons entitled to drive as also limitations as to use of the vehicle. The same are reproduced below:
Driver's clause: Persons or classes of persons entitled to drive-Any person including insured provided that a person driving holds an effective driving licence at the time of accident and is not disqualified from holding or obtaining such a licence. Provided also that the persons holding an effective learner's licence may also drive the vehicle and such a person satisfies the requirement of Rule 3 of the Central Motor Vehicles Rules 1989.
Limitations as to use: Use only for social, domestic and pleasure purposes and insured's own business. The policy does not cover use for hire or reward or for organised racing, pacemaking, reliability trials, speed testing, carriage of goods (other than samples) in connection with any trade or business or use for any purpose in connection with motor trade.
40. The limitations to use the vehicle clearly provided that the policy does not cover the use for hire or reward. This condition compelled the petitioner not to use the vehicle for hire or reward and the insurance company cannot be permitted to take a somersault on the ground that since the vehicle was registered as a taxi and the driver of the vehicle was not having a valid driving licence for driving taxi, the insurance company is not liable for the loss.
41. Permitting such a stand to the insurance company would amount to negativing the claim of the petitioner for no fault of his, had the petitioner been driving the vehicle as a taxi, the insurance company would have claimed that since the vehicle was insured as a private car, the insurance company cannot be held liable for the loss of the vehicle. The insurance company cannot be permitted to take a contradictory stand. I am clearly of the opinion that the insurance company is bound by its policy and the claim cannot be defeated for the fault of the insurance company for insuring the vehicle as a private car instead of taxi for which the petitioner made the proposal.
42. A clarification is also needed that since the insurance company admittedly wrongly insured the vehicle as private car, it was not possible for the petitioner to have used the vehicle as a taxi and no adverse inference can be drawn against the petitioner in not using the car as a taxi even though the petitioner was allotted the vehicle on a State sponsored scheme. In the facts and circumstances of the case, when the vehicle met with an accident almost within a month from the date the vehicle was registered and insurance company having wrongly issued the policy, the petitioner had hardly any time to get the mistake corrected, he cannot be blamed for approaching the court with uncleaned hands or for misutilising the vehicle as a private car, the car having been allotted in State sponsored scheme. The mere fact that the petitioner right from the day go, applied for getting the vehicle insured as a taxi, makes it abundantly clear that the petitioner never intended to misuse the vehicle, allotted to him a State spomoted scheme as a private car. There cannot be any justification, in the facts and circumstances of the case, to draw an inference to the contrary against the petitioner.
43. With the aforesaid background, certain provisions of the Motor Vehicles Act, 1988 (hereinafter referred to as 'the Act') need to be noticed:
Section 2(22) of the Act-
(22) 'maxi cab' means any motor vehicle constructed or adapted to carry more than six passengers, but not more than twelve passengers, excluding the driver, for hire or reward.
Section 2(26) of the Act-
(26) 'motor car' means any motor vehicle other than a transport vehicle, omnibus, road-roller, tractor, motor cycle or invalid carriage.
Section 2(47) of the Act-
(47) 'transport vehicle' means a public service vehicle, a goods carriage, an educational institution bus or a private service vehicle.
Section 2(35) of the Act-
(35) 'public service vehicle' means any motor vehicle used or adapted to be used for the carriage of passengers for hire or reward and includes a maxi cab, a motor cab, contract carriage and stage carriage.
Section 3 of the Act-
3. Necessity for driving licence.-(1) No person shall drive a motor vehicle in any public place unless he holds an effective driving licence issued to him authorising him to drive the vehicle; and no person shall so drive a transport vehicle other than a motor cab hired for his own use or rented under any scheme made under Sub-section (2) of Section 75, unless his driving licence specifically entitles him so to do.
(2) The conditions subject to which Sub-section (1) shall not apply to a person receiving instructions in driving a motor vehicle shall be such as may be prescribed by the Central Government.
44. For appreciating the intent of Section 3, it is necessary to notice its legislative history. Section 3 of the Act of 1939 prior to its amendment in 1969 stood as under:
3. Necessity for driving licence.-(1) No person shall drive a motor vehicle in any public place unless he holds an effective driving licence issued to him authorising him to drive the vehicle; and no person shall so drive a motor vehicle as a paid employee or shall so drive a transport vehicle unless his driving licence specifically entitles him so to do.
(2) a State Government may prescribe the conditions subject to which Sub-section (1) shall not apply to a person receiving instructions in driving a motor vehicle.
The section placed an absolute bar on any person to drive a transport vehicle unless he possessed licence for the same. The said section was amended by Act No. 56 of 1969 and Sub-section (3) was inserted in the said section, which is as under:
(3) Notwithstanding anything contained in Sub-section (1), a person who holds an effective driving licence authorising him to drive a motor car may drive any motor cab hired by him for his own use.
45. The object and reasons for amending Section 3 of the Motor Vehicles Act, 1939, by inserting Clause (3) are as follow:
Clause 3-Under the existing law, a person possessing a driving licence for a private car cannot drive a taxi cab even for his own use. In foreign countries, however, it is possible to hire and drive a taxi cab on payment of moderate charges. This clause seeks to introduce a similar facility in India, particularly for the purposes of promotion of tourism.
46. An interpretation of Section 3 of the Motor Vehicles Act, laying down conditions for having a driving licence, a condition precedent for driving a motor vehicle is vital for decision in the present matter.
47. Section 3 of the Motor Vehicles Act, 1939, prior to its amendment in 1969 placed a complete embargo for driving a transport vehicle unless the person driving such vehicle possessed a driving licence specifically entitling him to drive such transport vehicle.
48. This section was drastically amended in 1969 and a rider was added by Sub-section (3) providing that notwithstanding the absolute bar imposed by Sub-section (1) prohibiting driving of a transport vehicle by any person not having been specifically authorised to drive a transport vehicle in case a motor cab (which included maxi cab or taxi) is hired by a person, he can drive the same having a driving licence to drive a motor vehicle other than transport vehicle.
49. This amended provision has been retained in the Act of 1988. However, Section 3 of the Act permitted an additional exemption extending it also to motor cabs rented under any scheme made under Sub-section (2) of Section 75.
50. Conjunction 'or' between the words 'hired for his own use' and 'rented under any scheme under Sub-section (2) of Section 75' also permits driving of taxi cab by a person having a licence to drive a vehicle other than transport vehicle, in case he hires the taxi cab for his own use.
51. It will be a travesty of interpretation of the aforesaid provision to hold that a person is competent to drive a vehicle other than transport vehicle, in case he hires a 'taxi cab' but an owner of a 'taxi cab' or any person authorised by such owner, having a licence to drive a vehicle other than transport vehicle is not competent to drive his taxi cab for personal use.
52. Some other provisions relating to issue of driving licence may also be noticed:
Section 4(2) of the Act reads:
4. Age limit in connection with driving of motor vehicles.-
(1) xxx xxx xxx (2) Subject to the provisions of section
18, no person under the age of twenty years shall drive a transport vehicle in any public place.
xxx xxx xxx Section 5 of the Act reads:
5. Responsibility of owners of motor vehicles for contravention of Sections 3 and 4.-(1) No owner or person in charge of a motor vehicle shall cause or permit any person who does not satisfy the provisions of Section 3 or Section 4 to drive the vehicle.
53. Driving licences are issued in Forms 6 and 7. For the present purpose, Form No. '6' is relevant which provides two classes of vehicles, one for licence to drive a motor vehicle other than transport vehicle and the other for licence to drive transport vehicle.
54. Section 9(3) of the Act provides that where the application is for a driving licence to drive a motor vehicle, the Licensing Authority may exempt the applicant from the test of competence to drive prescribed under this sub-section, if the applicant possesses a driving certificate issued by an automobile association recognised in this behalf by the State Government.
55. Sub-section (4) provides that if the application is for a licence to drive a transport vehicle, the automobile association shall not issue such authorisation unless the applicant possesses minimum educational qualification as prescribed by the Central Government and a driving certificate issued by a school or establishment referred to in Section 12.
56. Section 14 of the Act provides that a learner's licence will be valid for a period of six months.
The aforesaid provisions demonstrate that driving of transport vehicle is even permissible under the learner's licence.
57. A survey of other provisions of the Act (not being referred herein) also makes out, there is no prohibition under the Act, for using a transport vehicle for private purpose. The vice versa, i.e., using a private vehicle as transport vehicle is, of course, not permissible.
58. The aforesaid propositions are supported by a catena of decisions:
In Skandia Insurance Co. Ltd. v. Kokilaben Chandravadan 1987 ACJ 411 (SC), the Apex Court was considering an issue as to whether the insurance company can be absolved of its liability on the ground that the driver of the vehicle was not having a valid driving licence at the time the accident was caused. The relevant portions of the judgment are quoted hereinunder:
(12) 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.
xxx xxx xxx (14)...It is the statutory provision defining the conditions of exemption which is being interpreted. These must, therefore, be interpreted in the spirit in which the same have been enacted accompanied by an anxiety to ensure that the protection is not nullified by the backward looking interpretation which serves to defeat the provision rather than to fulfil its life-aim. To do otherwise would amount to nullifying the benevolent provision by reading it with a non-benevolent eye and with a mind not tuned to the purpose and philosophy of the legislation without being informed of the true goals sought to be achieved.
59. In Canara Motor and General Insurance Co. Ltd. v. Abdul Hamid Khan Saheb 1984 ACJ 467 (Bombay), the court held:
(10) It seems to me that the expression 'held a licence to drive the motor vehicle' appearing in the policy refers more to the type of vehicle rather than the mode of its user. The vehicle in question was a Fiat car which was a light motor vehicle and Thakur did possess a valid licence for driving a light motor vehicle. In addition, he also had more than two years' driving experience which experience would have entitled him to obtain the required endorsement on a licence as a matter of routine. No doubt, he has broken one of the prescriptions of the Act that he shall not drive a motor cab unless he holds an endorsement on the licence. So far as the driving abilities are concerned, it matters little whether a driver has adequate knowledge of Hindi or Marathi or about the topography of the city where he is driving the vehicle. It no doubt assumes importance when a taxi driver is plying for hire and makes for better facilities for the passenger.
60. In the State of Mysore v. Syed Ibrahim AIR 1967 SC 1224, the Apex Court held:
(5)...It is the use of the motor vehicle for carrying passengers for hire or reward which determines the category of the motor vehicle whether it is adapted for that purpose or not...
61. In A. Shanmugha Mudaliar v. A. Abdul Kareem AIR 1975 Madras 248, a Division Bench of the Madras High Court held:
(4) It is lastly contended that the construction contended for would receive support from Section 3 of the Motor Vehicles Act. I am unable to agree. Section 3 says:
No person shall drive a motor vehicle in any public place unless he holds an effective driving licence issued to him authorising him to drive the vehicle...
The penalty for disobeying Section 3 is that the driver would forfeit his licence or otherwise would be penalised. There is nothing in Section 3 or any other section of the Act which would justify the contention that a driver violating Section 3 or any other penal provision of the Act would by virtue of his violation relieve the insurance company of its liability to indemnify. Violation of the motor vehicle rules is a matter for which certain penalties are prescribed. These penalties do not and cannot exonerate the insurance company of its liability because under an express contract it has stipulated to cover a liability of this kind. In the result, I repel all the contentions raised by the insurance company and confirm the order of the court below.
62. In M. Sidda Lingama Naidu v. Licensing Officer-cum-Asstt. Secretary, R.T.A., Chittoor AIR 1987 AP 154, the court held:
(5) It may not be necessary to multiply the decisions. Suffice it to say that the dominant factor that determines whether a transport vehicle is plied as a contract carriage or as a stage carriage is the actual user of the vehicle and not the permit granted authorising the use...
(13) To sum up: The dominant factor that determines whether a transport vehicle is plied as a contract carriage or as a stage carriage is the actual user of the vehicle and not the permit granted authorising the use...
63. In Indian Telephone Industries v. Regional Transport Officer, Bangalore AIR 1975 Karnataka 211, a Division Bench of Karnataka High Court constituting Justice DM. Chandrashekhar and Justice E.S. Venkataramiah as he then was, considered the case where an omnibus of the factory owner for transporting the employees between their houses and the factory was engaged and the permit for the bus was obtained for contract carriage by the factory. The Transport Department demanded tax for the vehicle treating it as a contract carriage. The Division Bench repelled the claim of the Transport Department and held that since the vehicle was not being used as a contract carriage, the mere grant of permit and label attached to the bus is of no consequence. The relevant portion of the judgment is quoted herein:
The relevant words in item No. 4-A of the Schedule to the Taxation Act are 'motor vehicle plying for hire or reward and used for transportation of passengers and in respect of which contract carriage permits have been issued under the Motor Vehicles Act, 1939'. Though the companies applied for contract carriage permits and the Regional Transport Officer purported to grant such permits, can those permits be regarded as contract carriage permits? We should not be carried away by the label attached to these permits, but we should ascertain the true nature of the permits. As stated earlier, the Regional Transport Authority had endorsed on the permits issued in respect of each of these vehicles a condition that only the company's employees and none else should be carried in it. There is nothing in the definition of contract carriage which warrants such a restriction. When such a restriction is imposed and the permit holder is prohibited from carrying the public who may desire to travel therein under a contract for the use of the vehicle as a whole, it cannot be said that the permit granted to any of these vehicles is a contract carriage permit. Hence, such permits cannot be said to fall within the ambit of Item 4-A of the Schedule to the Taxation Act to attract levy at the rates mentioned in that item.
64. A survey of the aforesaid decisions, a purposive and forward looking interpretation of the provisions of the Motor Vehicles Act, makes out:
(i) It is the user of the vehicle which is to determine the nature thereof. If a vehicle is used as a motor vehicle for the purposes of the Motor Vehicles Act, it is to be treated as a motor vehicle even though registered as a transport vehicle.
(ii) The insurance company cannot be absolved of its liability assuming the driver of the vehicle was not having a licence at the time the accident occurred in accordance with the registration of he vehicle, the determining factor is the mode of user at the time when the vehicle met with an accident.
65. On the basis of aforesaid analysis, I summarise my conclusions:
(1) The petitioner could not have used the vehicle as taxi, due to the folly of insurance company, i.e., issuing an insurance cover for the vehicle as private vehicle.
(2) In the facts of the case, petitioner had hardly any time to get the mistake of insurance company corrected before the vehicle met with an accident.
(3) The petitioner cannot be blamed for misutilising the use of vehicle allotted under a State sponsored scheme in the facts of the case.
(4) There is no material on record to smell a foul regarding genuineness of the proposal submitted by the petitioner to insurance company and the genuineness of the insurance policy issued in favour of the petitioner.
(5) There is no embargo under the provisions of the Motor Vehicles Act prohibiting use of transport vehicle for private use.
(6) The provisions of Motor Vehicles Act permit driving of a maxi cab or taxi as motor cab for personal use by a person having a licence to drive a motor vehicle other than transport vehicle and such person will be having an effective driving licence to drive such maxi cab or taxi cab, the driver of the vehicle which met with accident had an effective driving licence to drive the said vehicle.
(7) The insurance company is bound by the terms of insurance policy and the vehicle which met with accident having been insured as private car the insurance company cannot be absolved of its liability on the ground that driver of the vehicle was not having a licence to drive a 'taxi'.
(8) The petitioner cannot be punished for the fault of the insurance company which is admitted on record.
For the above reasons, I am of the opinion that the writ petition deserves to be allowed with costs with a direction to the respondent to pay the amount of Rs. 4,00,000/- to the petitioner for which the vehicle was insured along with interest at the rate of 12 per cent per annum from the date the petitioner made a claim to the insurance company till the amount is paid.