The Insurance Company can be exonerated from liability if the insured had handed over the vehicle for being driven by an unlicensed driver, as per the provisions of the Motor Vehicles Act, 1988.

Suresh Kait, J. (Oral)

CM No.7043/2014 (for exemption)

Exemptions allowed, subject to all just exceptions.

The application stands disposed of.

MAC.APP. 371/2014

1. Admit.

2. The present appeal has been filed by the appellant/Insurance Company on the sole ground that the respondent No.2, i.e., driver of the offending vehicle was minor and was not holding valid driving licence on the date of the accident.

3. Mr.L.K.Tyagi, learned counsel appearing on behalf of the appellant/Insurance Company submits that in such an eventuality, the learned Tribunal ought to have exonerated the appellant company from any liability instead of directing it to pay the compensation and then recover the same from respondent Nos. 2 and 3, i.e., driver and owner of the offending vehicle.

4. On this issue, the learned counsel has relied upon the following cases:-

(I) United India Insurance Co. Ltd. Vs. Gian Chand, II (1997) ACC 437 (SC), wherein after considering the judgments of Skandia Insurance Company Limited Vs. Kililaben Chandravadan & Ors; I (1997) ACC 413 and Sohanlal Passio Vs. P. Sesh Reddy & Ors., 1996 (5) SCC 21, held as under:-

“6. In order to resolve this controversy between the parties, it must be observed at the outset that the aforesaid decisions clearly indicate two distinct lines of cases. The first line of cases consists of fact situations wherein the insured are alleged to have committed breach of the condition of Insurance Policy, which required them not to permit the vehicle to be driven by an unlicensed driver. Such a breach is held to be a valid defence for the Insurance Company to get exonerated from meeting the claims of third parties who suffer on account of vehicular-accidents which may injure them personally or which may deprive them of their bread winner on account of such accidents caused by the insured vehicles. The other line of cases deals with the insured owners of offending motor vehicles that cause such accidents wherein the insured owners of the vehicles do not themselves commit breach of any such condition and hand over the vehicles for driving to licensed drivers who on their own and without permission, express or implied, of the insured, hand over vehicles or act in such a way that the vehicles get available to unlicensed drivers for being driven by the latter and which get involved in vehicular accidents by the driving of such unlicensed drivers. In such cases the Insurance Company cannot get benefit of the exclusionary clause and will remain liable to meet the claims of third parties for accidental injuries, whether fatal or otherwise. The decisions of this Court in Skandia Insurance Company (Supra) and in Sohan Lal Passi (Supra) represent this second line of cases while the decisions of this Court in New India Assurance Co. (Supra) and in Kashiram Yadav (Supra) represent the first line of cases. ..................

..................

..................

10. Under the circumstances, when the insured had handed over the vehicle for being driven by an unlicenced driver, the Insurance Company would get exonerated from its liability to meet the claims to third party who might have suffered on account of vehicular accident caused by such unlicensed driver. In view of the aforesaid two sets of decisions of this Court, which deal with different fact situations, it cannot be said that the decisions rendered by this Court in Skandia Insurance Co. Ltd. Vs. Kokilaben Chandravadan & Ors. (Supra) and the decision of the Bench of 3 learned Judges in 1996 (5) SCC 21 (Supra) in any way conflict with the decisions rendered by this Court in the cases of New India Assurance Company Ltd. Vs. Mandar Madhav Tambe & Ors. (Supra) and Kashiram Yadav & Ors. Vs. Oriental Fire and General Insurance Co. & Anr. (Supra).

11. In the result, therefore, this appeal is allowed. The decision of the High Court under appeal to the extent it refused to exonerate the Insurance Company will stand set aside and it is held that the appellant-In