IMPORTANT POINT
(1) Driving Licence – No endorsement is required to drive a commercial vehicle of type in question, by Driver who possesses a license to drive a Light Motor Vehicle (LMV).
(2) Motor Insurance – Principle of “Pay and Recover” can be invoked even in case of “Liability Only Policy”.

JUDGMENT :

SANJAY KAROL, J.

Leave Granted.

2. The present appeal arises from the final judgment and order dated 12th December 2022, passed by the High Court of Madhya Pradesh at Jabalpur in Misc. Appeal No. 554 of 2017, which, in turn, was preferred against the award dated 19th December 2016 passed in Case Claim No.22 of 2015 by the Motor Accident Claim Tribunal, District: Seedhi (M.P).

3. The facts giving rise to the present appeal, in a nutshell are that on 27th November 2013, at about 8:15 p.m., the deceased, namely, Gokul Prasad, aged 32 years, was returning home from a weekly market, travelling in a vehicle i.e., TATA 407 Truck bearing registration No. M.P. 53G/0386¹[Hereinafter referred to as “Offending Vehicle”.], being driven by Respondent No. 3 herein. Upon reaching near Kurwaiha Ghati Road, the said vehicle driven, in a rash and negligent manner, met with an accident. As a result, the deceased sustained severe injuries and died on the spot.

4. A claim petition was filed on behalf of the Appellants (the legal representatives of the deceased) under Section 166 of the Motor Vehicles Act, 1988, before the Tribunal seeking compensation to the tune of Rs. 49,26,000/- claiming the income of the deceased to be Rs.12,000/- per month engaged as a cloth-seller.

5. The Respondent Insurance Company opposed the claimant-appellant(s)’s claim and set up a plea of breach of Policy as the offending vehicle was being used as a loading vehicle without a valid permit, registration and fitness certificate. This was in violation of the conditions of the Insurance Policy. Also, the driver of the vehicle was also not holding a valid license. Consequently, the Insurance Company is not liable to pay any compensation.

6. The Tribunal vide its order dated 19th December 2016, awarded compensation amounting to Rs.19,53,000/- along with interest @6% per annum. The liability to pay compensation was fastened upon the driver and the owner of the vehicle, jointly and severally, as there was a clear violation of the terms and conditions of the Policy. The Tribunal held that though the vehicle was commercial in nature but driven by the driver possessing a license only to drive a Light Motor Vehicle, i.e., a non-commercial vehicle. Furthermore, there was no endorsement stating that the driver was authorized to drive the commercial vehicle. Subsequently, the Tribunal concluded that the offending vehicle was insured under the “Liability Only Policy” which covered only third-party liability as no premium was paid covering the driver or the owner of the vehicle.

7. Being aggrieved thereof, the owner of the offending vehicle preferred an appeal before the High Court. The High Court vide impugned order dated 12th December 2022 dismissed the appeal filed by the owner, affirming the compensation awarded by the Tribunal. The Court observed that the Insurance Company stood rightly exonerated by the Tribunal with liability being fastened on the driver and owner of the vehicle. The High Court gave the following findings by referring to the decisions rendered by this Court:

7.1. By relying on Mukund Dewangan v. Oriental Insurance Company Ltd. Limited & Others, (2017) 14 SCC 663, the High Court held that the endorsement or any other authorization to drive a commercial vehicle was not required, if the driver was holding a license to drive the Light Motor Vehicle (LMV);

7.2. The offending vehicle is insured under the “Liability Only Policy”, which only fixes the liability of the Insurance Company towards third-party liability. Since no premium was paid to cover the liability of the driver as well as any passenger travelling, in the light of law laid down in New India Assurance Company Ltd. v. Vedwati & Ors., (2007) 9 SCC 486, and New India Assurance Company Ltd. v. Asharani & Ors., (2003) 2 SCC 223, the Court came at the conclusion that the liability of the Insurance Company stood rightly exonerated.

8. The present appeal has been instituted by the claimant- appellant(s). The si