Kerala High Court
Oriental Insurance Co. Ltd. vs Paulose on 21 August, 2003
Equivalent citations: I(2004)ACC693, 2004ACJ457, 2004(1)KLT8
Author: K.A. Abdul Gafoor
Bench: K.A. Abdul Gafoor, A.K. Basheer
JUDGMENT K.A. Abdul Gafoor, J.
1. Is the insurer absolved of the liability to indemnify the insured merely because the driver's licence had not been renewed on the date of the accident? This is the short question.
2. Facts are not in dispute. The accident occurred on 23.5.1997. Ext.Pl insurance policy was subsisting as on the said date. The third respondent, who was riding the scooter having registration No. KL-7/A-9171 had a driving licence. Its validity period expired on 30.11.1996. He renewed it later, on 18.6.1997. As on the date of accident, he did not have a valid driving licence, according to the appellant. Therefore, the appellant did not have the liability to indemnify the owner, the appellant submitted. A person without an effective and valid driving licence is not duly licenced. Consequently there was breach of the terms and conditions in the policy. On the basis of this violation of policy conditions, the insurer can plead immunity from the liability to indemnify the insured. Policy contained a condition that only those having "an effective and valid driving licence" alone can drive the vehicle. In this case the rider did not have an effective and valid licence as on the date of the accident. This breach of the policy conditions enables the insurer to avoid the liability, in terms of the policy.
3. Reliance was placed on the decision reported in Ashok Gangadhar Maratha v. Oriental Insurance Co. Ltd. (1999 (6) SCC 620) to contend that effective driving licence means a valid licence both as regards the period and type of licence and on the judgment in MFA 507/00 of this Court to contend that, if the driver was not having an effective driving licence as on the date of the accident, the insurer will not be liable to indemnify the insured. It was also contended, placing reliance on the decision in New India Assurance Co., Shimla v. Kamala and Ors. (2001 (2) KLT (SC) (SN) 18 = JT 2001 (4) SC 235) that, even if the insurer is found liable to pay the award amount to the claimant, the appellant shall be permitted to recover the same from the insured. It was further contended citing the decision in Beer Singh and Ors. v. Santhir Singh and Anr. (2000 (3) TAC 351 (P&H)) that, when there is evidence to show that the driving licence had expired prior to the date of accident, it was not necessary for an insurer to further establish that the driver was disqualified from holding the licence. The appellant also submits that possession of an effective and valid driving licence was a condition in terms of the policy.
4. On the other hand, it was contended by the claimant and the insured that the rider had been issued with a valid driving licence on 22.2.1994. Therefore he was duly licenced. Though the validity period of that licence had expired on 30.11.1996, it had been duly renewed on 18.6.1997. This indicates that he had never been disqualified from holding or obtaining driving licence. Whatever be the conditions in the policy, in terms of Section 149(2)(a)(ii) of the Motor Vehicles Act, 1988 (hereinafter referred to as "the Act"), the insurer can raise only the points of defence statutorily allowed.
5. As regards the driving licence, the provision in Section 149(2)(a)(ii) reads as follows:
"149. Duty of insurers to satisfy judgments and awards against persons insured in respect of third party risks.
(1) .........................................
(2) No sum shall be payable by an insurer under Sub-section (1) in respect of any judgment or award unless, before the commencement of the proceedings in which the judgment or award is given the insurer had notice through the court or, as the case may be, the Claims Tribunal of the bringing of the proceedings, or in respect of such judgment or award so long as execution is stayed thereon pending an appeal; and an insurer to whom notice of the bringing of any such proceedings is so given shall be entitled to be made a party thereto and to defend the action on any of the following grounds, namely: -
(a) that there has been a breach of a specified condition of the policy, being one of the following conditions, namely:-
(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;
6. As the third respondent was duly licenced and was not disqualified from holding the said licence the insurer cannot avoid the liability in terms of the award. The contention that, the driver did not have an effective driving licence is not a ground of defence permitted in terms of the statutory provision as aforementioned.
7. Driving licence is defined in Section 2(10) of the Act and it does not make any reference to the period of its validity. Section 14 mentions about the period during which a driving licence can be said to be effective. On expiry of the said period, though it ceases to be effective, it does not cease to exist because, the holder of the licence has an option, in terms of Section 15, to renew it even after the expiry of its effectiveness. Even after the period of its expiry, to get it renewed, one need not apply for a fresh licence. He need apply only for renewal. On such renewal it regains its effectiveness. Sections 3, 14 and 15 taken together convey an idea that the licensee continues to be duly licenced, subject to his obligation to get the licence renewed, after the period of its effectiveness.
8. A Division Bench of this Court consisting one among us (Abdul Gafoor, J.) in the judgment in MFA 507/00 had taken a view that, if the driver was not having an effective driving licence as on the date of accident, the insurance company will not be liable to indemnify the insured. But in that decision the impact of the aforesaid statutory provision had not been considered. A reading of the said judgment discloses that the contention with reference to the term "duly licenced" appearing in Section 149(2)(a)(ii) was also not seen considered. Therefore, another Division Bench to which one among us (Abdul Gafoor, J.) is a party referred this issue for consideration by a Larger Bench. The contentions as aforesaid were re-agitated before us, placing reliance on the said decisions.
9. The Act embodies beneficent provisions. Such provisions have to be liberally construed. Literal construction can defeat the object and the purpose.
10. The decision in Ashok Gangadhar Maratha is not one relating to the 3rd party claim. It does not have any relevance, while examining the grounds available to the insurer under Section 149. Therefore, it does not in any way help us to resolve the disputed question. Of course, the facts in MFA 507/00 is similar to the case on hand. But as already mentioned, the impact of Sections 3, 14 and 15 of the Act and the meaning of the word "duly licenced" appearing in Section 149(2)(a)(ii) have not been examined in that decision. The decision in Kamala's case is with reference to a forged driving licence which happened to be renewed by the statutory authorities. The facts in Beer Singh's case reveals that the driver was driving a tractor without registration and that he was not having a valid driving licence.
11. In terms of Section 149(2) the insurer can take breach of a specified condition in the policy as a ground to dispute the liability, only if such condition is one among the specified ones in the said provision. As regards the condition regarding licence, the statute provides that the insurer can avoid liability if the vehicle was driven by "any person who is not duly licenced or by any person who has been disqualified for holding or obtaining a driving licence". In this case the appellant insurer does not have a contention that the 3rd respondent had been disqualified from holding or obtaining a driving licence. On the other hand, the facts on records reveal that immediately after the date of accident, the authority concerned had renewed his licence on 18.6.1997 for a further period of three and a half years. That means, he had never been disqualified from holding a licence. There was no such contention as well by the appellant insurer before the tribunal below.
12. The definition of the licence as contained in Section 2(10) does not stipulate any period of validity. Once a licence is issued to one, it shall be regarded that it has been duly issued. The period of effectiveness of a licence is mentioned in Section 14 and on its expiry, it can be renewed as provided in Section 15. That means the licence, in spite of the expiry of its validity period, continues to exist, unless it has been shown that the licensee had been disqualified to hold one. In such circumstances, it shall have to be regarded that he continues to be duly licenced.
13. Of course, the policy stipulates a condition that one should have, to drive the vehicle, held an effective and valid driving licence. But Section 149(2) does not enable the insurer to avoid the liability, on breach of any condition in the policy other than the one provided in that section. Section 149(2)(a)(ii) as mentioned above makes it clear that insurer can avoid liability only if the driver is not duly licenced or disqualified from holding or acquiring a licence. In cases of breach of such conditions mentioned in Section 149(2)(a) alone, the insurer can, on payment of the awarded amount, recoup it from the insured. In this case, as already discussed above, the 3rd respondent had been duly licenced as early as on 22.2.1994, though its validity period had expired earlier than on 23.5.1997, the date of accident. This licence has been later renewed from 18.6.1997 to 18.11.2000. Thus he was never been disqualified from holding one.
14. The statute specifies the defences, which are open to an insurer. One of these is that the driver was not 'duly licenced' to drive. If it is literally construed, the insurer may be able to evade its liability. This would defeat the purpose of the provision. Thus, a liberal construction deserves to be given. Thus, even if the license had expired on the date of the accident but was subsequently renewed, it would fulfil the mandate of the statute.
15. When he is a person duly licenced, the insurer cannot so long as the policy is admitted, avoid the liability to compensate the injured or to indemnify the insured, because none of the conditions in the policy coming within Section 149(2) has been violated in this case.
As we answer the question raised in the reference order as above, the appeal has to fail. Appeal is dismissed.