The main legal point established in the judgment is that the breach of policy condition regarding the driver's license must be proved by the insured for the insurer to avoid liability. The insurer can be directed to pay and recover the compensation from the insured, and the Tribunal has the power to adjudicate claims and disputes between the insurer and the insured.

1. These Civil Miscellaneous Appeals are filed by the Appellant, against the judgment and decree of the Tribunals by questioning the liability to pay the compensation to the Claimants in cases of no valid driving licenses.

2. In all these Civil Miscellaneous Appeals, the common question arises for consideration is:

“Whether the Insurer has to be exonerated totally in a case where they have established that the driver of the insured vehicle did not possess any type of licence on the date of accident or whether the liability can be fastened on the Insurer by directing them to pay the compensation to the Claimants with a liberty to recover the same from the insured.”

3. In a catena of judgments, the Hon’ble Apex court has dealt with the liability of the Insurance Company while interpreting Section 149(2)(a)(ii) and the Proviso appended to sub-sections (4) & (5) of the Motor Vehicles Act, 1988. In the celebrated case of National Insurance Co. Ltd. v. Swaran Singh and others, 2004 (1) TN MAC 104 (SC), the Three Judges of the Hon’ble Supreme Court has dealt in detail with the licence and had settled the principles in cases where—

(a) when the person has been granted licence for one type of vehicle, but, at the relevant time he has driving another type of vehicle;

(b) where the driver’s licence is found to be fake;

(c) where the person is in possession of a learner’s licence and has concluded with the following summary of findings—

“102. The summary of our findings to the various issues as raised in these Petitions are as follows:

(i) Chapter XI of the Motor Vehicles Act, 1988 providing compulsory insurance of vehicles against third party risks is a social welfare legislation to extend relief by compensation to victims of accidents caused by use of Motor vehicles. The provisions of compulsory insurance coverage of all vehicles are with this paramount object and the provisions of the Act have to be so interpreted as to effectuate the said object.

(ii) Insurer is entitled to raise a defence in a Claim Petition filed under Section 163-A or Section 166 of the Motor Vehicles Act, 1988 inter alia in terms of Section 149(2)(a)(ii) of the said Act.

(iii) The breach of policy condition e.g., disqualification of driver or invalid driving licence of the driver, as contained in sub-section (2)(a)(ii) of Section 149, have to be proved to have been committed by the insured for avoiding liability by the Insurer. Mere absence, fake or invalid driving licence or disqualification of the driver for driving at the relevant time, are not in themselves defences available to the Insurer against either the insured or the third parties. To avoid its liability toward insured, the Insurer has to prove that the insured was guilty of negligence and failed to exercise reasonable care in the matter of fulfilling the condition of the policy regarding use of vehicles by duly licensed driver or one who was not disqualified to drive at the relevant time.

(iv) The Insurance Companies are, however, with a view to avoid their liability must not only establish the available defence(s) raised in the said proceedings but must also establish ‘breach’ on the part of the owner of the vehicle; the burden of proof where for would be on them.

(v) The Court cannot lay down any criteria as to how said burden would be discharged, inasmuch as the same would depend upon the facts and circumstance of each case.

(vi) Even where the Insurer is able to prove breach on the part of the insured concerning the Policy condition regarding holding of a valid licence by the driver or his qualification to drive during the relevant period, the Insurer would not be allowed to avoid its liability towards insured unless the said breach or breaches on the condition of driving licence is/are so fundamental as are found to have contributed to the cause of the accident. The Tribunals in interpreting the Policy conditions would apply “the rule of main purpose” and the Concept of “fundamental breac