An insurance company is liable to cover a risk that occurred in a case where a driver has held a license previously but did not hold an effective license at the time of the accident and has not been disqualified at the time of the accident for holding or obtaining such a license, if the insurance policy incorporates the condition that the company would be liable in such a case.

MAHARAJAN, J.:- These appeals and civil revision petitions are directed against the common order of the Motor Accidents Claims Tribunal, Madurai, in M. A. C. O. P. 75 and 143 to 145 of 1968. On 3-9-1967, at about 5-30 p. m., between milestones 274/4 and 274/5, in Madurai-Dindigul road, there was a collision between the bus MDU 6991 belonging to the Kodaikanal Motor Union (Pte) Ltd., and lorry MDA 1440 belonging to Srinivasa Roadways Ltd. A number of persons were inside the Bus as passengers at the time of the collision and ten of the passengers received injuries and one of them, Prof. Sundaramoorthy, succumbed to his injuries in the hospital about two weeks after the accident. The scene of the accident is a national highway, the tarred portion of which is 22ft. 4 inches wide. There is a mud portion about 4 ft. wide on either side of the road. The total width of the road at the scene of accident would therefore be about 30 ft. 4 inches. The road is wide enough, therefore, to allow free passage for a lorry and a bus moving in opposite directions. If each of the vehicles had been driven on its right side of the road, there would have been a clearance of at least 14 ft. in between the crossing vehicles. But unfortunately, at the time of crossing, the right portion of one of the vehicles came into contact with the right portion of its opposite number and both got badly damaged.

2. The Sub-Inspector of Police, R. W. 2, came to the scens and prepared a rough sketch Ex. B-7. The Motor vehicles Inspector, R. W. 4, visited the scene the next day and prepared a report as per Ex. B-19. Strangely enough, neither of them is able to say, from the marks on the road and the relative positions of the vehicles, which of the drivers was responsible for this tragic collision. We have therefore to fall back upon the oral evidence on record in order to understand how the collision could have happened.

3. As many as five eye witnesses to the accident were examined by both the parties and they are P. Ws. 2, 5 and 7, who were passengers in the bus and who got injured, R. W. 1, the driver of the bus and R. W. 5, the driver of the lorry.

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(His Lordship discussed the evidence and proceeded)

We, therefore, disagree with the Tribunal and hold that neither of the reasons given by it for rejecting the evidence of P. Ws. 2, 5 and 7 is sound. We are satisfied that their evidence is acceptable and shall be acted upon, in which case we have no option but to hold that it was the driver of the bus MDU 6991 who was responsible for the accident by his rash and negligent driving.

4. It would then follow that the Kodaikanal Motor Union (P.) Ltd.. Ammayanaickanur, will be vicariously liable to pay compensation for the victims of the accident. The insurer of Kodaikanal Motor Union (P.) Ltd. is the Motor Owners Insurance Co. Ltd., Belgaum. Though the insurer did not take the objection before the Tribunal that it was not liable to cover the risks involved in the case, because the driver of the bus had no valid licence at the time of the accident, this objection has been taken before us on foot of an admission made by the driver of the bus himself, R. W. 1, to the effect that though he had been holding a licence previously, he had failed to renew the licence for the period from 16-10-1966 upto 29-9-1967 and that he actually renewed the licence only with effect from 30-9-1967. Let us assume that R W. 1, the bus driver, did not have an effective licence on the date of the accident. The question arises whether this circumstance would exonerate the insurer of the liability to pay compensation. Reference has been made by learned counsel for the Insurance Co. to Section 96 of the Motor Vehicles Act. That section provides that an insurer shall be entitled to defend the action on any of the following grounds, namely,

"96 (2) (a) ......... or (b) that there has been a breach of a sp