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.P1 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 & Ors. v. Santhir Singh & Ann (2000 (3) TAC 351 (P&)) 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 S.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 S.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-s.(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