Case Note & Summary
The case arises from a motor accident claim petition filed under Section 166 of the Motor Vehicles Act, 1988, by the original claimant (respondent No.1) seeking compensation for injuries sustained in a vehicular accident that occurred on 30.06.2014 involving a truck owned by respondent No.2 and driven by respondent No.3. The Motor Accident Claims Tribunal, Bharuch, partly allowed the claim petition and awarded compensation of Rs.5,29,782/-, directing the insurance company (appellant) to pay the amount and then recover it from the owner and driver, despite finding that the driver did not hold a valid driving licence. The insurance company appealed under Section 173 of the MV Act, challenging only the liability aspect, not the quantum. The appellant argued that since the driver held no licence at all, it was a fundamental breach of policy conditions, and the Tribunal had no authority to pass a 'pay and recover' order, which is only permissible in cases of defective or invalid licences. The respondent-claimant supported the Tribunal's order. The High Court, upon perusal of the record, noted that the driver's lack of a licence was undisputed. Relying on the Supreme Court's decision in Kempaiah v. (citation not fully provided), the court held that when the driver does not hold any driving licence, it is a fundamental breach, and the insurer cannot be held liable even on a 'pay and recover' basis. Consequently, the appeal was allowed, the impugned award was modified, and the insurance company was exonerated from liability. The owner and driver were held jointly and severally liable to pay the compensation.
Headnote
A) Motor Accident Claims - Insurance Liability - Pay and Recover - Driver without Licence - The Tribunal had directed the insurer to pay compensation and recover from the owner despite the driver not holding any driving licence. The High Court held that an order of 'pay and recover' can only be passed in cases of defective or invalid licence or disqualification, not when the driver holds no licence at all. The insurer was exonerated from liability. (Paras 4-6) B) Motor Vehicles Act, 1988 - Section 149(2)(a)(ii) - Breach of Policy Conditions - Fundamental Breach - Where the driver of the offending vehicle did not possess any driving licence, it constitutes a fundamental breach of the policy conditions, and the insurer is not liable to pay compensation. The Tribunal erred in fastening liability on the insurer. (Paras 4-6)
Issue of Consideration
Whether the Tribunal could pass an order of 'pay and recover' when the driver of the offending vehicle did not hold any driving licence at the time of the accident, thereby constituting a fundamental breach of the insurance policy conditions.
Final Decision
The appeal is allowed. The impugned judgment and award dated 22.11.2023 passed by the Motor Accident Claims Tribunal, Bharuch, in MACP No. 349/2014 is modified. The appellant-Insurance Company is exonerated from liability to pay compensation. The owner and driver of the offending vehicle are jointly and severally liable to pay the compensation amount.
Law Points
- Pay and recover order cannot be passed when driver holds no driving licence at all
- fundamental breach of policy conditions
- insurer exonerated from liability
