The Court held that when the driver of the offending ‘Transport Vehicle’ did not possess a valid and effective driving licence on the date of the accident, and there was no application for timely renewal, the insurer is fully exonerated from liability and the owner alone is liable to satisfy the compensation award. Existing Supreme Court precedents were distinguished or applied, clarifying the allocation of liability for third party claims under the Motor Vehicles Act. This pronouncement serves as binding authority within Chhattisgarh and carries persuasive value for similar fact situations nationwide.
Summary
| Category | Data |
|---|---|
| Case Name | MAC/1901/2018 of BRANCH MANAGER NATIONAL INSURANCE COMPANY LIMITED Vs MANNU LAL NAYAK |
| CNR | CGHC010379552018 |
| Date of Registration | 01-12-2018 |
| Decision Date | 03-09-2025 |
| Disposal Nature | DISPOSED OFF |
| Judgment Author | HON’BLE SHRI JUSTICE AMITENDRA KISHORE PRASAD |
| Court | High Court of Chhattisgarh |
| Bench | Single Bench |
| Precedent Value | Binding on subordinate courts in Chhattisgarh; persuasive elsewhere |
| Overrules / Affirms |
|
| Type of Law | Motor Accident Compensation / Insurance Law |
| Questions of Law | Whether the insurer remains liable to satisfy a third-party award if the driver lacked a valid/renewed licence for a transport vehicle and the owner failed to exercise due diligence under the Motor Vehicles Act. |
| Ratio Decidendi |
The High Court held that where the driver of the offending transport vehicle did not possess a valid and effective licence on the accident date, and the owner failed to exercise due diligence, there is a fundamental breach of the insurance policy under Section 149(2) M.V. Act. Referring to Section 15 and Supreme Court authorities, the Court concluded that the insurer is exonerated from liability and only the owner is bound to satisfy the award. The Court made clear that mere subsequent renewal of the licence does not validate its absence on the accident date. The insurer is entitled to recover any amount paid during pendency from the owner. The Supreme Court precedents on breach and third party rights were relied upon but read in light of the clear statutory default in this case. |
| Judgments Relied Upon |
|
| Logic / Jurisprudence / Authorities Relied Upon by the Court | Statutory interpretation of Section 15 and 149 of the Motor Vehicles Act; Supreme Court precedents on policy breach and owner’s diligence concerning driver’s licence |
| Facts as Summarised by the Court | The claimant pillion rider and driver were injured when a truck struck their motorcycle on 19.04.2016. Claims Tribunal found breach of policy as the truck driver’s authorisation to drive a ‘Transport Vehicle’ had lapsed and was only renewed after the accident. Tribunal ordered insurer to pay first, with right of recovery. Both insurer and owner appealed allocation of liability. |
| Citations |
|
Practical Impact
| Category | Impact |
|---|---|
| Binding On | All subordinate courts in Chhattisgarh |
| Persuasive For | Other High Courts and Motor Accident Claims Tribunals nationwide, especially where facts mirror absence of valid transport vehicle authorisation at accident time |
| Overrules | None—rather, distinguishes Supreme Court precedents which allowed “pay and recover” in certain cases |
| Distinguishes | National Insurance Co. Ltd. v. Swaran Singh (2004) 3 SCC 297 and like cases, based on factual matrix where owner failed due diligence and licence not renewed in time |
| Follows |
|
What’s New / What Lawyers Should Note
- Clarifies that insurer is fully exonerated where there is proven breach due to lack of valid/renewed transport vehicle authorisation for the driver at the relevant time.
- Subsequent renewal of licence does not retrospectively validate its absence on the accident date.
- Owners’ claim of diligence is negated if evidence shows no proper verification or timely renewal of transport authorisation.
- The “pay and recover” option is not automatic—applies only if owner’s fault is not established; here, owner is directly liable.
- Insurers can recover amounts paid during the interim period or litigation from the owner.
- All Chhattisgarh claim tribunals must apply this allocation of liability in cases involving expired transport licences not renewed within prescribed period.
Summary of Legal Reasoning
- The Court scrutinised S. 15(1) M.V. Act and concluded that an application for renewal of a transport vehicle licence, if made after 30 days of expiry, ensures the renewed licence is valid only prospectively, not retrospectively.
- The evidence established that the truck driver’s authorisation to drive a ‘Transport Vehicle’ expired on 09.09.2013 and was renewed only on 06.03.2017; no timely renewal application was made.
- Supreme Court authorities (Ram Babu Tiwari, Kusum Rai, Ishwar Chandra) were applied: an owner must verify the driver’s valid licence; failure to do so constitutes a fundamental breach that exonerates the insurer.
- Court distinguished Swaran Singh and Manjeet Kaur: those cases apply “pay and recover” only where owner is not at fault or exercised requisite care; here, owner failed to do so and breach was established.
- No evidence was produced by owner to show that due diligence requirements were met; therefore, insurer cannot be saddled with liability—even for third party claims.
- Accordingly, sole responsibility for compensation rests with the owner; insurer gains right to recover any amounts paid under interim orders.
Arguments by the Parties
Petitioner (Insurance Company):
- Tribunal erred in directing insurer to pay award and recover from owner given established breach of policy (driver lacked transport vehicle authorisation).
- No proper medical evidence was adduced by claimants as to nature or extent of injuries.
- Owner is solely liable, having failed statutory and contractual obligation to ensure driver’s licence validity.
Petitioner (Owner):
- Vehicle was duly insured; insurance certificate exhibited.
- Driver held a valid driving licence, claimed to be effective on date of accident.
- Owner exercised due diligence by testing driver’s skill and inspecting licence.
- Insurer failed to prove that alleged licence invalidity was within owner’s knowledge.
- Liability should remain with insurer or insurer should pay first and recover later.
Factual Background
On 19.04.2016, the claimants were injured in a road accident involving a truck (offending vehicle) and a motorcycle. The truck, driven rashly, struck the motorcycle, causing serious injuries. The claimants filed for compensation. Owner and insurer each denied liability, contesting facts around the validity of the truck driver’s driving licence. The Claims Tribunal found the driver had no valid authorisation to drive a ‘Transport Vehicle’ due to lapse and non-renewal, but applied “pay and recover”: insurer to pay claimants, then recover from owner. Both sides appealed this allocation.
Statutory Analysis
- Section 15, Motor Vehicles Act, 1988 (“Renewal of driving licences”): Renewal application filed after lapse of 30 days from expiry means renewed licence is only effective from renewal date, not retrospectively. For transport vehicles, medical certificates are mandatory for renewal.
- The Court explained the proviso’s effect: if the driver did not apply for renewal within 30 days, the licence cannot be considered valid for the lapsed period.
- Section 149(2), M.V. Act: Insurer is entitled to contest claims where terms of policy are breached—here, due to lack of valid driving licence for the required class of vehicle.
Alert Indicators
- ✔ Precedent Followed—Statutory interpretation and allocation of liability closely follows Supreme Court precedent but is clarified and reinforced for similar factual matrices.
- 📅 Time-Sensitive—Emphasises the significance of timelines in driving licence renewal under M.V. Act.
Citations
- 2025:CGHC:44966
- National Insurance Co. Ltd. v. Swaran Singh (2004) 3 SCC 297
- New India Assurance Co. Ltd. v. Manjeet Kaur (2004) 1 SCC 551
- United India Insurance Co. Ltd. v. Lehru (2003) 3 SCC 338
- Nirmala Kothari v. United India Insurance Ltd. (2020) 4 SCC 49
- Skandia Insurance Co. Ltd. v. Kokilaben Chandravadan (1987) 2 SCC 645
- Ram Babu Tiwari v. United India Insurance Co. Ltd. (2008) 8 SCC 165
- Ram Chandra Singh v. Rajaram (2018) 8 SCC 799
- National Insurance Co. Ltd. v. Kusum Rai (2006) 4 SCC 250
- Ishwar Chandra v. Oriental Insurance Co. Ltd. (2007) 10 SCC 650