The main legal point established in the judgment is that the interpretation of driving licence provisions under the Motor Vehicles Act, 1988, is crucial in determining liability and substantial breach of insurance policies in accident compensation cases.

Arun Mishra, J.

1. The appeal has been preferred by the insurer aggrieved by award dated 4-5-2007 passed by MACT, Mandla in Claim Case No. 1/2006. Vide impugned award, the Claims Tribunal has awarded compensation of Rs. 1,52,000/- on account of death of Ku. Ranu.

2. Insurer has come up in the appeal to assail it's liability to make the payment of compensation on the ground that driver was not holding the valid and effective driving licence as on the date on which accident took place.

3. Ms. Amrit Ruprah, learned Counsel appearing for insurer has submitted that driver was holding two kind of licences as on the date of accident, which permitted him to drive two wheelers without gear and four wheeler with gear. At the relevant time, he was driving the two wheeler with gear for which he was not holding the licence as such there was breach of policy.

4. The main question for consideration is whether there was breach or substantial breach on the part of the owner/driver so as to exonerate the insurer. Form and contents of licences to drive have been provided under Section 10 of the Motor Vehicles Act, 1988. Section 10 (2) Clause (a) provides for motor cycle without gear, Clause (b) provides for motor cycle with gear, Clause (c) provides for invalid carriage, Clause (d) provides for light motor vehicle, Clause (e) provides for transport vehicle, Clause (i) provides for road-roller and Clause (j) provides for motor vehicle of a specified description. Licences have been mentioned in ascending order of liability to drive the vehicle. In the instant case, driver was admittedly holding licence to drive the motor cycle without gear and light motor vehicle with gear, thus he was well acquainted how to use the gears. He was holding the licence of greater responsibility than the one which is required for driving the two wheeler with gear, thus, on the facts of the instant case as driver was holding two aforesaid licences as on the date of accident, in my opinion, he was having sufficient knowledge to use the gears, there was no breach much less substantial breach on the part of the owner/driver so as to exonerate the insurer. The view taken by the Tribunal is found to be just and proper in the facts and circumstances of the case.

5. The Apex Court in National Insurance Co. Ltd. v. Swaran Singh and Ors. (2004) 3 SCC 297, has laid down thus:

110. (iii) The breach of policy condition, e.g., disqualification of the driver or invalid driving licence of the driver, as contained in Sub-section (2) (a) (ii) of Section 149, has 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 towards the insured, the insure 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 a duly licensed driver or one who was not disqualified to drive at the relevant time.

110. (vi) Even where the insurer is able to prove breach on 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 the 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 breach" to allow defences available to the insurer under Section 149 (2) of the Act.

6. Shri Paritosh Trivedi, learned Counsel appearing for respondents has placed reliance on a decision of Division Bench of this Court rendered in Ram Bhagat Goutam