PRABHA SRIDEVAN, J.
The irresponsibility on the part of owners who allow their vehicles to be driven by persons who do not possess a valid driving license and the tragic consequences that visit an innocent third party on account of this irresponsibility is the subject of this appeal.
2. The claimant, who is indisputably in a vegetative condition because of the accident, is represented by his next friend, his wife. He was 33 years at the time of the accident, which occurred on 26.10.2002. He was a Lecturer in the Physics Department in Kaveri Polytechnic. His injuries are of such nature that he has to take continuous medical treatment. This misfortune fell on him because the second respondent allowed one of his relatives, who did not have a license, to drive his motorcycle. Because of his lack of expertise, the driver of the insured vehicle drove the motorcycle at an uncontrollable speed and hit the claimant, who was going to his house. After the accident, the claimant was admitted in Sri Gokulam Hospital, Salem; then to NIMHANS, Bangalore; Manipal Institute for Neurological Disorders, Bangalore; Kamala Hospital, Salem and A.G. Neurological Hospital, Salem. A compensation of Rs.25,00,000/- was claimed. The Tribunal awarded a sum of Rs.17,24,953/-. The learned Presiding Officer of the Tribunal saw for himself the claimant's condition when he was brought to the Court and he has recorded that the claimant, Saravanan had his eyes open and he was breathing, but he was otherwise not conscious of anything that was happening around him. He has also recorded that the claimant was in a vegetative state.
3. Learned counsel appearing for the Insurance Company mainly disputed the liability of the insurance company to pay the compensation since the insured had breached the specific condition of the insurance policy, which excludes the driving of the vehicle by a person who is not duly licensed. On a perusal of the records, it is seen from Ex.B.2 that Murugesan , who was driving the vehicle, had applied for a license only on 28.1.2003. His learner's license is dated 11.12.2002 and was valid from 11.12.2002 to 10.6.2003. Ex.B.2 also shows that the second respondent has addressed a letter to the Motor Vehicles Inspector, Mettur stating that he has no objection to his relative's son Thiru. Murugesan to obtain a driver's license. This letter is dated 28.1.2003. The accident,we repeat, occurred on 26.10.2002.
4. Learned counsel appearing for the claimant, on the other hand, submitted that considering the pathetic case of the claimant, a third party, and the trauma his family members have been going through, this Court must enhance the compensation awarded by the Tribunal.
5. Sections 3, 4 , and 5, of the Motor Vehicles Act, 1988 are extracted hereunder:-
"3. Necessity for driving license. (1) No person shall drive a motor vehicle in any public place unless he holds an effective driving license issued to him authorising him to drive the vehicle; and no person shall so drive a transport vehicle other than1[a motor cab or motor cycle] hired for his own use or rented under any scheme made under subsection (2) of section 75] unless his driving license specifically entitles him so to do.
(2) The conditions subject to which sub-section (1) shall not apply to a person receiving instructions in driving a motor vehicle shall be such as may be prescribed by the Central Government.
4. Age limit in connection with driving of motor vehicles. (1) No person under the age of eighteen years shall drive a motor vehicle in any public place:
Provided that1[a motor cycle with engine capacity not exceeding 50cc] may be driven in a public place by a person after attaining the age of sixteen years.
(2) Subject to the provisions of
section 18, no person under the age of twenty years shall drive a transport vehicle in any public place.
(3) No learner's license or driving license shall be issued to any person to drive a vehicle of the class to which he has made an application unless he is eligible to drive that class of vehicle under this section.
5. Responsibility of owners of motor vehicles for contravention of sections 3 and 4. No owner or person in charge of a motor vehicle shall cause or permit any person who does not satisfy the provisions of
section 3 or
section 4 to drive the vehicle."
6. Insurance is really about spreading of risk. In the book "Principles of Insurance Law", we find the following quotation from Porter's Law of Insurance (page 3) :
"All the insured persons who pay their motor insurance premia without facing an accident even once in their lives provide the funds, with which the insurer indemnifies the few against whom claims are made. So, this is the insurance business; the insurers make a profit from the former class of persons and indemnify the losses of the second group. The hazards of road travel are well known, without the quoting of statistics, and it is to protect the innocent third party from the loss caused by death or disability that third party insurance had been made compulsory. Indeed the world over, this insurance cover has been made mandatory, and placing an uninsured motor vehicle on the road is an offence, as also the placing of a vehicle in the hands of a person who does not have a valid licence. It could be a person having a fake / forged licence, or an expired licence or no, licence at all. It amounts to the same, namely non-possession of a valid licence as mandated by
Section 3 of the Act."
7. To decide the third party claim, we have to go to Oriental Insurance Co. Ltd. vs. Swaran Singh, 2004 A.C.J. 1. But before that, we might take a look at United India Insurance Co. Ltd. vs. Lehru, (2003) 3 S.C.C. 338, and also the insightful comments in New India Assurance Co. vs. Kamla, (2001) 4 S.C.C. 342.
8. In Kamla's case (supra), the insurance company contended that it is exonerated of its liability on proof of breach of the conditions of the insurance policy. The Supreme Court looked at the ffect of all the provions under Chapter IX of the Motor Vehicles Act, in particular, the proviso to sub-section (4) of Section 147 and sub-section (5) and then said that :
"21. A reading of the proviso to sub-section (4) as well as the language employed in sub-section (5) would indicate that they are intended to safeguard the interest of an insurer who otherwise has no liability to pay any amount to the insured but for the provisions contained in Chapter XI of the Act. This means, the insurer has to pay to the third parties only on account of the fact that a policy of insurance has been issued in respect of the vehicle, but the insurer is entitled to recover any such sum from the insured if the insurer were not otherwise liable to pay such sum to the insured by virtue of the conditions of the contract of insurance indicated by the policy.
22. To repeat, the effect of the above provisions is this: When a valid insurance policy has been issued in respect of a vehicle as evidenced by a certificate of insurance the burden is on the insurer to pay to third parties, whether or not there has been any breach or violation of the policy conditions. But the amount so paid by the insurer to third parties can be allowed to be recovered from the insured if as per the policy conditions the insurer had no liability to pay such sum to the insured."
Then they summed up the position thus :
"The insurer and insured are bound by the conditions enumerated in the policy and the insurer is not liable to the insured if there is violation of any policy condition. But the insurer who is made statutorily liable to pay compensation to third parties on account of the certificate of insurance issued shall be entitled to recover from the insured the amount paid to the third parties, if there was any breach of policy conditions on account of the vehicle being driven without a valid driving licence...".
9. In Lehru's case (supra), the insurance company attempted to avoid its liability on the ground that the driver of the insured vehicle had a fake licence. The Supreme Court traced the history of decided law from 1960. The following extract from A.I.R. 1959 S.C. 1331 was reproduced :
"We are furthermore not convinced that the statute causes any hardship. First, the insurer has the right, provided be his reserved it by the policy, to defend the action in the name of the assured and if he does so, all defences open to the assured can then be urged by him and there is no other defence that he claims to be entitled to urge. He can thus avoid all hardship, if any, by providing for a right to defence the action in the name of the assured and this he has full liberty to do. Secondly, if he has been made to pay something which on the contract of the policy he was not bound to pay, he can under the proviso to Sub-section (3) and under Sub-section (4) recover it from the assured. It was said that the assured might be a man of straw and the insurer might not be able to recover anything from him. But the answer to that is that it is the insurer's bad luck. In such circumstances the injured person also would not have been able to recover the damages suffered by him from the assured, the person causing the injuries. The loss had to fall on some one and the statute has thought fit that it shall be borne by the insurer. That also seems to us to be equitable for the loss falls on the insurer in the course of his carrying on his business, a business out of which he makes profit, and he could so arrange his business that in the net result he would never suffer a loss. On the other hand, if the loss fell on the injured person, it would be due to no fault of his, it would have been a loss suffered by him arising out of an incident in the happening of which he had no hand at all."
Then, they quoted from Skandia Insurance Co. Ltd. vs. Kokilaben Chandravadan, (1987) 2 S.C.C. 654 the following paragraph :
"To construe the provision differently would be to rewrite the provision by engrafting a rider to the effect that in the event of the motor vehicle happening to be driven by an unlicensed person, regardless of the circumstances in which such a contingency occurs, the insured will not be liable under the contract of insurance. It needs to be emphasised that it is not the contract of insurance which is being interpreted. It is the statutory provision defining the conditions of exemption which is being interpreted. These must therefore be interpreted in the spirit in which the same have been enacted accompanied by an anxiety to ensure that the protection is not nullified by the backward looking interpretation which serves to defeat the provision rather than to fulfill its life-aim. To do otherwise would amount to nullifying the benevolent provision by reading it with a non-benevolent eye and with a mind not turned to the purpose and philosophy of the legislation without being informed of the true goals sought to be achieved. What the legislature has given, the Court cannot deprive of by way of an exercise in interpretation when the view which renders the provision potent is equally plausible as the one which renders the provision important. In fact it appears that the former view is more plausible apart from the fact that it is more desirable. When the option is between opting for a view which will relieve the distress and misery of the victims of accidents or their dependants on the one hand and the equally plausible view which will reduce the profitability of the insurer in regard to the occupational hazard undertaken by him by way of business activity, there is hardly any choice. The Court cannot but opt for the former view. Even if one were to make a strictly doctrinaire approach, the very same conclusion would emerge in obeisance to the doctrine of 'reading down' the exclusion clause in the light of the 'main purpose' of the provision so that the 'exclusion clause' does not cross swords with the 'main purpose' highlighted earlier. The effort must be to harmonize the two instead of allowing the exclusion clause to snipe successfully at the main purpose."
Then, Sohan Lal Passi vs. P. Sesh Reddy, (1996) 5 S.C.C. 21 was referred to and the following paragraph was quoted therefrom :
"It need not be pointed out that the whole concept of getting the vehicle insured by an insurance company is to provide an easy mode of getting compensation by the claimants, otherwise in normal course they had to pursue their claim against the owner from one forum to the other and ultimately to execute the order of the Accident Claims Tribunal for realisation of such amount by sale of properties of the owner of the vehicle. The procedure and result of the execution of the decree is well known."
The Supreme Court in Lehru's case, rejected the submission that Kamla's case was not correctly decided. In the judgment in Lehru's case, it was further declared thus :
"... It shows that the Insurance Company has to pay to third parties but it may recover from the person who was primarily liable to pay. The liability of the Insurance Company to pay is further emphasised by Sub-section (5). This also shows that the Insurance Company must first pay, then it can recover...".
"... The injured or relatives of person killed in the accident may find that the decree obtained by them is only a paper decree as the owner is a man of straw. The owner himself would be an innocent sufferer. It is for this reason that the Legislature, in its wisdom, has made insurance, at least third party insurance, compulsory. The aim and purpose being that an Insurance Company would be available to pay. The business of the Company is to insurance. In all businesses there is an element of risk. All persons carrying on business must take risks associated with that business. Thus it is equitable that the business which is run for making profits also bears the risk associated with it. At the same time innocent parties must not be made to suffer or loss. These provisions meet these requirements...".
The Supreme Court aalso held that if it was proved that the insured/owner was aware that the licence was fake, "even in such a case the Insurance Company would remain liable to the innocent third party, but it may be able to recover from the insured."
10. Now we come to Swaran Singh's case (supra). Paragraph 4 is relevant and is extracted hereunder :
"4. Defences raised by the Petitioner Company in the claim petitions purported to be in terms of
Section 149(2)(a)(ii) of the Motor Vehicles Act, 1988 (hereinafter referred to as 'the Act') were : (a) driving licence produced by the driver or owner of the vehicle was a fake one; (b) driver did not have any licence whatsoever, (c) licence, although was granted to the concerned driver but on expiry there of, the same had not been renewed; (d) licence granted to the drivers being for one class or description of vehicle but the vehicle involved in the accident was of different class or description; and (e) the vehicle in question was driven by a person having a learner's licence."
It was contended thus :
"15. The decisions of this Court in New India Assurance Co., Shimla v. Kamla, (2001) 4 SCC 342 and United India Insurance Company Ltd. v. Lehru, (2003) 3 SCC 338, wherein it has been held that the court is entitled to issue a direction upon the insurer to satisfy the award and thereafter recover the same from the owner of the vehicle do not lay down the correct law and should be overruled."
The Supreme Court held, on hearing the rival submissions and the case law, thus :
"72. A beneficent statute, as is well known, must receive a liberal interpretation [See Bangalore Water Supply & Sewerage Board etc. v. A. Rajappa and Ors. Etc., (1978) 2 SCC 213, Steel Authority of India Ltd. and Ors. v. National Union Waterfront Workers and Ors., (2001) 7 SCC 1, ITI Ltd. v. Siemens Punjab Communications Network Ltd., (2002) 5 SCC 510, Amrit Bhikaji Kale and Ors. v. Kashinath Janardhan Trade and Anr., (1983) 3 SCC 437 and Kunal Singh v. Union of India and Anr., (2003) 4 SCC 524].
73. The liability of the insurer is a statutory one. The liability of the insurer to satisfy the decree passed in favour of a third party is also statutory."
As far as possession of a valid licence is concerned, the Supreme Court distingushed four different scenarios
a) where there was no licence,
b) where the licence is forged/fake,
c) where the licence is for a different class of vehicle from the offending vehicle, and
d) where the licence is for a learner.
It then made the following primary conclusion :
"104. It is, therefore, evident from the discussions made hereinbefore that the liability of the insurance company to satisfy the decree at the first instance and to recover the awarded amount from the owner or driver thereof has been holding the field for a long time.
104. Apart from the reasons stated hereinbefore the doctrine of stare decisis persuades us not to deviate from the said principle."
And for us, in this case, the following is important :
"110.(xi). The provisions contained in Sub-section (4) with proviso thereunder and Sub-section (5) which are intended to cover specified contingencies mentioned therein to enable the insurer to recover amount paid under the contract of insurance on behalf of the insured can be taken recourse of by the Tribunal and be extended to claims and defences of insurer against insured by, relegating them to the remedy before, regular court in cases where on given facts and circumstances adjudication of their claims inter se might delay the adjudication of the claims of the victims."
11. This then is the law, that if the breach of a condition under an insurance policy is proved, then the insurance company must pay and may recover. All the subsequent cases are guided by Swaran Singh's case. When the insurance company is exonerated of its liability for breach of policy conditions, it must be understood that the Court/Tribunal may direct in its discretion, the insurer to pay first and decide whether to recover.
12. In 2008 A.C.J. 776 [Prem Kumari vs. Prahlad Dev], the driving license was a fake one. The Tribunal held that the driver, who is the brother of the insured, did not possess a valid and effective license on the date of the accident and exonerated the insurance company from liability.
13. In National Insurance Co. Ltd. vs. Laxmi Narain Dhut, 2007 A.C.J. 721 (SC), The following conclusions in para 41 are relevant :-
"41. In view of the above analysis the following situations emerge : (1) The decision in Swaran Singh case has no application to cases other than third-party risks.
(2) Where originally the license was a fake one, renewal cannot cure the inherent fatality.
(3) In case of third-party risks the insurer has to indemnify the amount, and if so advised, to recover the same from the insured.
(4) The concept of purposive interpretation has no application to cases relatable to
Section 149 of the Act."
14. In the case of National Insurance Co. Ltd. vs. Kusum Rai, 2006 ACJ 1336 (SC), the vehicle was being used as a taxi. It was, therefore, a commercial vehicle. The driver of the said vehicle was required to hold an appropriate license therefore. Ram Lal, who allegedly was driving the said vehicle at the relevant time, was holder of a license to drive light motor vehicle only. He did not possess any license to drive a commercial vehicle. Therefore, there was a breach of condition of the contract of insurance. In such circumstances, the Court observed that the appellant-National Insurance Co. Ltd., therefore, could raise the said defence while considering the stand of the Insurance Company. This Court, pointing out the law laid down in Swaran Singh (supra) concluded that the owner of the vehicle cannot contend that he has no liability to verify the fact as to whether the driver of the vehicle possessed a valid license or not. However, taking note of the fact that the owner has not appeared, the victim was aged only 12 years, the claimants are from a poor background and to avoid another round of litigation applying the decision in Oriental Insurance Co. Ltd. v. Nanjappan, 2004 A.C.J. 721 (SC) and finding that though the appellant-Insurance Company was not liable to pay the claimed amount as the driver was not possessing a valid license and the High Court committed an error in holding otherwise, in the peculiar facts and circumstances of the case and in exercise of jurisdiction under
Article 136 of the Constitution declined to interfere with the impugned judgment therein and permitted the appellant-Insurance Company to recover the amount from the owner of the vehicle.
15. In 2008 A.C.J. 2860 [National Insurance Co. Ltd. vs. Vidhyadhar Mahariwala], the date of accident was 11.6.2004. The driver's license was initially valid for the period from 15.12.1997 to 14.12.2000 and thereafter from 29.12.2000 to 14.12.2003. The Supreme Court, referring to National Insurance Co. Ltd. vs. Swaran Singh, 2004 (3) S.C.C. 297, National Insurance Co. Ltd. vs. Kusum Rai, 2006 (4) S.C.C. 250 and Oriental Insurance Co. Ltd. vs. Nanjappan, 2004 (13) S.C.C. 224, held that the insurance company has no liability in a case of this nature and the claimant may recover the amount from the owner.
16. In 1994 (1) L.W. 567 [M/s. National Insurance Company Limited, Gobichettipalayam vs. Thulasi], the application for driving license was made by the driver involved in an accident five days after the accident. The defence of the insurance company of non-liability was upheld and accepted.
17. In J.T. 2009 (3) S.C. 333 [Bhuvan Singh vs. M/s. Oriental Insurance Company Ltd.], the driver of the offending vehicle was holding a learner's license. It expired on 22.12.2000. The accident occurred on 5.1.2001. He applied for a regular license only on 22.1.2001. The Supreme Court referred to various provisions of the Motor Vehicles Act and also referred to the fact that while
Section 3 of the Act uses the words 'effective license' and
Section 149(2) uses the words "duly licensed". The Supreme Court held that since the driver had applied for grant of license after the accident, the insurance company was not liable.
18. In 2008 (2) Supreme 451 [Sardari vs. Sushil Kumar], the Supreme Court held that where the breach of conditions of contract is ex facie apparent from the records, the Court will not fasten the liability on the insurance company and that sometimes, the Court may while fastening the liability on the owner, direct the insurance company to pay and recover the same from the owners.
19. In 2008 A.C.J. 1928 [Oriental Insurance Co. Ltd. vs. Zaharulnisha], the driver had license to drive a heavy motor vehicle, but he was driving a two wheeler when the accident occurred. The Supreme Court held that since the driver had a license for a totally different class of vehicle than the one he was driving, it was in violation of
Section 10(2) of the Act. In that case, the Supreme Court held that the insurance company was not liable, but ordered the insurance company to pay and recover the same from the owner of the vehicle.
20. In 2008 A.C.J. 2654 [Ram Babu Tiwari vs. United India Insurance Co. Ltd.], the accident took place on 27.1.1996 and the driver did not possess a valid license. Therefore, the Supreme Court dismissed the appeal against the insurance company.
21. In 2008 (2) T.N. M.A.C. 508 (SC) [United India Insurance Co. Ltd.], the vehicle involved in the accident was driven by a minor aged 15. The appeal filed by the insurance company was allowed and the Supreme Court directed the appellant-Insurance Company therein to recover the amount from the owner of the vehicle. In the present case, it is clear that the person who was driving the motorcycle had no license on the date of the accident. In fact, even the learner's license was obtained only after the accident occurred. Therefore, there was clearly a breach of the policy conditions.
22. Considerring the above decisions and the facts as seen from the records, the owner has breached the policy condition. At the same time, as far as the third party risk is concerned, the consistent view has been, as can be seen from the above, that the insurer must pay the third party and then take a decision whether to proceed aganist the owner. This is in consonance with the spirit of the Act. It would be the only just and reasonable course since the claimant, an intelligent young man, has been reduced to nothing in one moment of negligence. The continuous care and support he needs must be taken note of. It is virtually a life sentence that has been imposed on the claimant and his wife and his children too a sentence of living death on the claimant, and a life sentence on the wife, to care and nurture for 24 hours a dear husband, who is no more than a vegetable now. And, to require them to proceed against the owner would be rubbing salt in their raw wounds. We, therefore, feel that we must ask the appellant-insurance company to pay the compensation to the claimant and recover it from the owner for his breach of the policy conditions.
23. As regards the cross appeal filed by the claimant for enhancement of the compensation awarded by the Tribunal, the main grounds raised by the cross-appellant is with regard to the amount granted by the Tribunal towards future medical expenditure that would be incurred for treatment of the claimant. As regards the pecuniary loss, the disability of the claimant is assessed at 100% and we find that the documents filed by the claimant as well as the evidence of three experts show that the claimant is only in a vegetative state. Therefore, the percentage of disability deserves to be confirmed. The claimant was young, was only 33 years old at the time of the accident and was earning Rs.5,900/- per month. P.W.2 had given evidence that had he continued in service, the claimant could have earned upto Rs.15,000/-. We think it will not be inappropriate to take the monthly income of the claimant as Rs.10,000/- in view of the fact that he had at least 25 years of service. The Tribunal had deducted one-thirds of this amount towards his personal expenses. When the claimant is the injured himself, we cannot deduct any amount under this head. The question of deduction will arise only when the claimants are the legal representatives of the deceased.
24. Therefore, if we take Rs.10,000/- as the claimant's monthly income, then his annual income would have been Rs.1,20,000/-. The multiplier to be adopted in this case will be 17 and thus calculating, the pecuniary loss to the family would be to the tune of Rs.20,40,000/-. The Tribunal has awarded Rs.1,00,000/- towards transport expenses and Rs.1,00,000/- for extra nourishment. We do not see how the Tribunal had arrived at these amounts. However, in view of the finding that the claimant is in a vegetative state, extra expenditure is bound to be incurred by the wife to sustain her injured husband and in these circumstances, though there is no evidence for the claim towards transport expenses and extra nourishment, we confirm the same. The Tribunal has awarded only Rs.1,00,000/- for future medical expenses. The copies of medical bills have been enclosed in the typed set of papers, which give an indication of the huge expenditure that has been incurred on behalf of the claimant. Since for past expenses a sum of 5,22,553/- has been spent, we do no think we would be erring if we award a sum of Rs.5,00,000/- for future medical expenses. The award of Rs.5,22,553/- for medical expenses as per Ex.P.22 is, therefore, not disturbed. The award of Rs.1,00,000/- for pain and suffering is also not disturbed. All these amounts add upto a sum of Rs.33,62,553/-. We round it off to Rs.35,00,000/-. We think it is only just and reasonable that we have awarded more than what was claimed, taking into account the condition of the claimant and the bills produced.
25. For the reasons stated above and in view of the decisions in Kamla, Lehru, Skandia Insurance, Sohanlal Passy and Swaran Singh's cases, and also as reiterated in Lakshmi Narayan Dhut's case, we are of the firm opinion that the insurer must pay the amount as far as third party risks are concerned and then recover the same from the insured, if so advised. The C.M.A. is, therefore, dismissed and the cross appeal is allowed. The insurance company is given a time of eight weeks from the date of receipt of a copy of this judgment to deposit the entire amount of compensation as awarded by this Court. The claimant is entitled to interest at the rate of 9% for the enhanced amount from the date of the petition till today for the claim amount, i.e., Rs.25,00,000/- and from today for the amount awarded that is in excess of what was claimed. The cross-appellant is given four weeks' time to pay the additional court fee for the amount over and above the claim made originally.
ab To The Presiding Officer, Motor Accidents Claims Tribunal (IV Judge, Court of Small Causes), Chennai