An insurance company is not liable to indemnify the insured if the driver's license had expired and was not renewed within 30 days of expiry, as this constitutes a breach of the insurance contract, though the 'pay and recover' principle may be applied.

(Single Bench)

Judgment on Board

1. The appellant/insurance company has preferred this appeal under Section 173 of the Motor Vehicles Act, 1988 calling in question the legality, validity and correctness of the impugned award dated 31.01.2020 passed by learned First Additional Motor Accident Claims Tribunal, Durg in Claim Case No.90/2019 by which the claim application of the claimants is allowed and liability has been fastened upon the insurance company to pay the amount of compensation.

2. Mr. Sudhir Agrawal, learned counsel for the appellant/insurance company, would submit that in this case the driver of the offending vehicle did have valid & effective driving licence to drive the transport vehicle i.e. heavy goods vehicle from 31.08.2015 to 30.08.2018 and thereafter, the licence was only renewed on 15.01.2019 and in the meanwhile, the accident occurred on 14.01.2019; therefore, the insurance company is not responsible in light of the decision rendered by the Supreme Court in the matter of Ram Babu Tiwari¹2008(8) SCC 165 v. United India Insurance Co. Ltd. & Others and also in the matter of Rama Bai²2025 SCC OnLine SC 2067 v. M/s. Amit Minerals Through Incharge Officer/Competent Officer & Another

3. Mr. A.L.Singroul, learned counsel for the respondent No. 3 & 4 i.e. owner & driver would submit that the driver has experience to drive the heavy goods vehicle and mainly the licence had expired and renewed immediately after the accident, that was not a sole cause for accident. As such, the breach being technical, the insurance company cannot be exonerated from its liability to pay the compensation.

4. I have heard learned counsel appearing for the parties, considered their rival submissions made herein-above and went through the records with utmost circumspection.

5. This case is prior to amendment in Section 15 on 01.09.2015. In this regard, the law is very clear and the Supreme Court has laid down the principles in Ram Babu Tiwari (supra) at para 17 & 18, which have been subsequently followed in Rama Bai (supra) and which state as under :-

17. It is beyond any doubt or dispute that only in the event an application for renewal of licence is filed within a period of 30 days from the date of expiry thereof, the same would be renewed automatically which means that even if an accident had taken place within the aforementioned period, the driver may be held to be possessing a valid licence. The proviso appended to sub-section (1) of Section 15 , however, clearly states that the driving licence shall be renewed with effect from the date of its renewal in the event the application for renewal of a licence is made more than 30 days after the date of its expiry. It is, therefore, evident that as on renewal of the licence on such terms the driver of the vehicle cannot be said to be holding a valid licence, the insurer would not be liable to indemnify the insured.

The second proviso appended to sub-section (4) of Section 15 is of no assistance to the appellant. It merely enables the licensing authority to take a further test of competent driving and passing thereof to its satisfaction within the meaning of sub-section (3) of Section 9. It does not say that the renewal would be automatic. It is, therefore, a case where a breach of the contract of insurance is established.

This aspect of the matter has been considered by this Court in National Insurance Co. Ltd. v. Kusum Rai & Ors. [(2006) 4 SCC 250 : holding:

“11. It has not been disputed before us that the vehicle was being used as a taxi. It was, therefore, a co