Ramakrishna Pillai, J.

1. “Whether a driving licence which stood expired on the date of the road traffic accident and was not renewed within the statutory period would fulfill the requirement of 'duly licenced' under Section 149(2)(a)(ii) of the Motor Vehicles Act, 1988 (for short, the Act)” ? This is the primary question we are called up on to answer in this reference made by the Full Bench. Incidentally, we have to consider whether, the insurer could be exonerated from the liability of compensating the claimant or whether the insurer be directed to satisfy the award and to recover the award amount so paid, from the insured.

2. When this appeal, filed by the insurer who was directed by the claims Tribunal to satisfy the award, came up for consideration of the Division Bench, the Division Bench noticed an apparent conflict between the decision of the Full Bench of this Court in Oriental Insurance Company v. Paulose [2004 (1) KLT 8 (F.B)] and the decisions of the Apex Court in Malla Prakasarao v. Malla Janaki and others [(2004) 3 Supreme Court Cases 343] as well as National Insurance Co. Ltd. v. Kusum Rai [2006 ACJ 1336 (SC)]. Therefore, the Division Bench referred the matter to a Full Bench. The Full Bench, however, was of the opinion that the matter requires reconsideration by a Larger Bench in view of the decision of the Apex Court in Ram Babu Tiwari v. United India Insurance Co. Ltd. and others (2008 ACJ 2654) and other cases. Thus, the matter has come up before us.

3. The relevant facts of the case may be briefly stated:

The claim petition under Section 166 of the Act was filed by the first respondent herein for compensation to the tune of Rs.3 lakhs for the injuries sustained by him in a road traffic accident occurred on 7.3.1996. His case was that while he was standing on the side of a road, a goods vehicle owned and driven by the second respondent knocked him down causing serious injuries to him. The second respondent against whom negligence was alleged, remained ex parte. The appellant/insurer while admitting the policy of the offending vehicle contended that the second respondent was not 'duly licenced' at the time of accident, i.e., on 7.3.1996, for the reason that the driving licence of the second respondent expired on 24.6.1995. The Tribunal after considering the evidence found that the second respondent was rash and negligent and passed an award for Rs.1,36,900/- with interest which was directed to be paid by the appellant.

4. This appeal has been filed aggrieved by the said award. In the appeal, the appellant would contend that the Tribunal ought to have accepted the contention of the appellant that it is not liable to compensate the first respondent as the second respondent was not duly licensed at the time of accident.

5. We have heard Mr. Mathews Jacob, the learned Senior Counsel appearing for the appellant and Mr. P.V. Baby, the learned counsel for the first respondent/claimant.

6. Mr. Mathews Jacob argued that going by Section 3 of the Act, in order to clothe the insurer with the liability of compensating the claimant, the driver of the offending vehicle should have an effective driving licence at the time of the accident. Inviting our attention to Section 2(10) of the Act which defines driving licence and Section 3 of the Act which mandates the necessity of a driving licence, Mr. Mathews Jacob argued that in the light of Section 3 of the Act any person driving the vehicle should have an “effective valid driving licence” on the date of accident and the absence of an effective driving licence in this case has resulted in violation of the conditions of the policy under Section 149(2)(a)(ii) of the Act.

7. The learned counsel for the first respondent, per contra, would submit that the contention of the insurance company that breach of policy is automatic in such a situation cannot be accepted, and going by the facts of the present case, the claimant is a third party and the appellant has no case that absence of