Introduction
Date of the Judgment: April 08, 2025
Citation: 2025 INSC 468
Judges: Justice Sudhanshu Dhulia, Justice K. Vinod Chandran
Can an insurance company be directed to “pay and recover” compensation in a motor accident case where the driver of the offending vehicle, carrying hazardous goods, lacked the necessary endorsement on their license? The Supreme Court of India recently addressed this critical question in a case involving an oil tanker accident. The core issue revolved around the interpretation and application of Section 14 of the Motor Vehicles Act, 1988 and Rule 9 of the Central Motor Vehicles Rules, 1989, concerning the mandatory training and licensing requirements for drivers transporting dangerous goods. The judgment was delivered by a bench comprising Justice Sudhanshu Dhulia and Justice K. Vinod Chandran, with Justice K. Vinod Chandran penning the opinion.
Case Background
The case originated from a motor accident involving an oil tanker that resulted in the deaths of a cyclist and a pedestrian. The First Information Report (FIR) identified the driver of the oil tanker as driving rashly and negligently, leading to the fatal collision. The Motor Accidents Claims Tribunal (MACT) based its negligence finding on the FIR and the testimony of an eyewitness (CW2). The Tribunal ordered the insurance company to pay the compensation to the claimants, with the provision to recover the amount from the owner and driver of the oil tanker because the driver lacked a valid license to operate a vehicle carrying dangerous and hazardous goods.
Timeline:
| Date | Event |
|---|---|
| [Date of Accident – Not Specified] | Accident involving an oil tanker, cyclist, and pedestrian. |
| [Date of FIR – Not Specified] | First Information Report (FIR) filed against the oil tanker driver. |
| [Date of Tribunal Award – Not Specified] | Motor Accidents Claims Tribunal (MACT) passes awards in favor of the claimants. |
| [Date of First Appeal – Not Specified] | Appeals filed in the High Court of Punjab and Haryana by the owner of the oil tanker. |
| [Date of Review Applications – Not Specified] | Review applications filed against the High Court’s order. |
| April 08, 2025 | Supreme Court of India delivers the final judgment. |
Course of Proceedings
The owner of the oil tanker challenged the MACT’s order in the High Court, specifically contesting the “pay and recover” directive issued to the insurance company. The High Court rejected both the appeals and the subsequent review applications, upholding the Tribunal’s decision. The owner then appealed to the Supreme Court.
Legal Framework
The Supreme Court examined the following legal provisions:
- ✓ Section 14 of the Motor Vehicles Act, 1988: This section, at the time of the accident, restricted the validity of a license for driving a transport vehicle carrying dangerous and hazardous goods to one year and mandated a one-day refresher course for renewal.
- ✓ Section 11 of the Motor Vehicles Act, 1988: Titled “Additions to driving license,” this section requires individuals seeking to add a class or description of motor vehicle to their existing license to apply to the licensing authority. The consideration of such applications is subject to the rules prescribed by the Central Government and the provisions of Section 9.
- ✓ Rule 9 of the Central Motor Vehicles Rules, 1989: This rule stipulates that drivers of goods carriages carrying dangerous or hazardous goods must:
- ✓ Hold a valid transport vehicle driving license.
- ✓ Be able to read and write in at least one Indian language specified in the VIIIth Schedule of the Constitution and English.
- ✓ Possess a certificate of successfully passing a prescribed course.
- ✓ Section 41 of the Motor Vehicles Act, 1988: This section deals with vehicle registration and empowers the Central Government to specify the types of motor vehicles based on their design, construction, and use. Notifications are issued in the Official Gazette to include the vehicle type in the registration certificate.
Arguments
Appellant’s Arguments (Owner of the Oil Tanker):
- ✓ The “pay and recover” order against the insurance company was not justified.
- ✓ Absence of endorsement under Rule 9 of the Central Motor Vehicles Rules, 1989 does not constitute a breach of policy conditions unless the accident was caused by the dangerous or hazardous goods.
- ✓ The vehicle was not carrying dangerous or hazardous goods at the time of the accident.
- ✓ The driver had undergone a three-day training course, making the absence of endorsement a minor breach.
- ✓ Relied on the decisions of different High Courts and on National Insurance Co. Ltd vs. Swaran Singh [(2004) 3 SCC 297], arguing that the purpose of training under Rule 9 is to handle emergencies related to spillage, not to enhance general driving skills.
Respondent’s Arguments (Insurance Company):
- ✓ Section 14 of the Motor Vehicles Act, 1988 and Rule 9 of the Central Motor Vehicles Rules, 1989 mandate specific training and endorsement for drivers of vehicles carrying dangerous and hazardous goods.
- ✓ The driver admitted to not having the required endorsement on his license.
- ✓ The oil tanker was carrying oil at the time of the accident.
- ✓ The training certificate produced in the first appeal was not acceptable under Order 41 Rule 27 of the Civil Procedure Code, 1908 due to its late submission and lack of credibility.
| Main Submission | Sub-Submissions by Appellant (Owner) | Sub-Submissions by Respondent (Insurance Company) |
|---|---|---|
| Validity of “Pay and Recover” Order |
✓ The absence of endorsement under Rule 9 is not a policy breach unless the accident was caused by the hazardous goods. ✓ The vehicle was not carrying hazardous goods at the time of the accident. ✓ The driver completed a training course, making the breach venial. |
✓ Section 14 of the Motor Vehicles Act and Rule 9 of the Central Motor Vehicles Rules mandate training and endorsement. ✓ The driver lacked the required endorsement. ✓ The oil tanker was carrying oil during the accident. |
| Acceptability of Training Certificate | N/A |
✓ The certificate was submitted late and is not acceptable under Order 41 Rule 27 of the Civil Procedure Code. ✓ The certificate lacks credibility due to missing serial number and seal. |
Issues Framed by the Supreme Court
- What is the scope and applicability of Rule 9 of the Central Motor Vehicles Rules, 1989, concerning the requirement of a special endorsement for drivers of vehicles carrying dangerous and hazardous goods?
- Whether the absence of such endorsement constitutes a fundamental breach of the insurance policy, entitling the insurance company to avoid liability?
- Whether the High Court was correct in rejecting the additional evidence (training certificate) produced by the appellant at the appellate stage?
Treatment of the Issue by the Court: “The following table demonstrates as to how the Court decided the issues”
| Issue | How the Court Dealt with It | Brief Reasons |
|---|---|---|
| Scope of Rule 9 | The court emphasized that Rule 9 pertains to the professional skill of driving a specially designed vehicle carrying dangerous or hazardous goods, not just the handling of the goods. | The syllabus under Rule 9 includes defensive driving and advanced driving skills, indicating that it is not limited to product safety. |
| Breach of Policy | The court held that the absence of the endorsement is not a “venial breach” and does not absolve the insurance company of its liability. | The statutory requirement to undergo training to upskill driving efficiency and product safety cannot be disregarded. |
| Acceptance of Certificate | The court agreed with the High Court that the certificate produced at the appellate stage was not worthy of acceptance. | The certificate was not produced before the Tribunal, and there was no satisfactory explanation for its non-production. The certificate also lacked a serial number and seal, raising suspicion about its veracity. |
Authorities
The Court considered the following authorities:
- ✓ National Insurance Co. Ltd. v. K. Ramasamy [2006 SCC OnLine Mad 963] (High Court of Judicature at Madras): The High Court of Judicature at Madras held that the insurer must establish a fundamental breach contributing to the accident, which the absence of endorsement does not qualify as.
- ✓ National Insurance Co. Ltd vs. Swaran Singh [(2004) 3 SCC 297] (Supreme Court of India): This case was cited regarding the interpretation of Rule 9 and the extent of training required for drivers transporting hazardous substances. The Supreme Court noted that the High Court erroneously interpreted this case.
- ✓ United India Insurance Co. Ltd. v. A. Verlaxmi [2013 SCC OnLine Chh 272] (Chhattisgarh High Court): The Chhattisgarh High Court held that the endorsement neither increases the efficiency of the driver nor does its absence reduce such efficiency in any manner.
- ✓ National Insurance Company v. Harbans Kaur [FAO Nos. 1210 & 8292 of 2004 decided on 26.03.2018] (Punjab and Haryana High Court): The Punjab and Haryana High Court held that Rule 9 does not deal with the professional skill of driving.
- ✓ Section 10 of the Motor Vehicles Act, 1988: Enumerates the various classes of vehicles for which a license is granted.
- ✓ Section 11 of the Motor Vehicles Act, 1988: Relates to additions to driving licenses.
- ✓ Section 41 of the Motor Vehicles Act, 1988: Deals with how registrations are to be carried out.
- ✓ Rule 9 of the Central Motor Vehicles Rules, 1989: Specifies the requirements for drivers of goods carriages carrying dangerous or hazardous goods.
- ✓ Order 41 Rule 27 of the Civil Procedure Code, 1908: Concerns the production of additional evidence in appellate courts.
- ✓ S.O.1248 (E) dated 05.11.2004: Notification specifying good carriers, trucks, tankers, or mail carriers as a different type of vehicle.
| Authority | How the Court Considered It |
|---|---|
| National Insurance Co. Ltd. v. K. Ramasamy [2006 SCC OnLine Mad 963] | The court distinguished this case, noting that the absence of endorsement is a fundamental breach when the vehicle is carrying hazardous goods. |
| National Insurance Co. Ltd vs. Swaran Singh [(2004) 3 SCC 297] | The court clarified that this case does not support the view that training under Rule 9 is only for handling spillage emergencies. |
| United India Insurance Co. Ltd. v. A. Verlaxmi [2013 SCC OnLine Chh 272] | The court disagreed with the interpretation that no further expertise or driving skill is required for driving such a vehicle. |
| National Insurance Company v. Harbans Kaur [FAO Nos. 1210 & 8292 of 2004] | The court rejected the view that Rule 9 does not deal with the professional skill of driving. |
Judgment
| Submission by the Parties | How the Court Treated It |
|---|---|
| Appellant’s argument that the absence of endorsement is a venial breach. | Rejected. The court held that the absence of the required endorsement is not a minor breach and does not absolve the insurance company of its liability. |
| Appellant’s argument that the vehicle was not carrying hazardous goods. | Rejected. The court found that the oil tanker was indeed carrying oil at the time of the accident. |
| Appellant’s submission of the training certificate at the appellate stage. | Rejected. The court agreed with the High Court that the certificate was not worthy of acceptance due to its late submission and lack of credibility. |
| Respondent’s argument that Section 14 and Rule 9 mandate specific training and endorsement. | Accepted. The court emphasized the importance of the statutory requirement for drivers of vehicles carrying dangerous and hazardous goods to undergo training and obtain the necessary endorsement. |
How each authority was viewed by the Court:
- ✓ National Insurance Co. Ltd. v. K. Ramasamy [2006 SCC OnLine Mad 963]: The court distinguished this case, emphasizing that the absence of endorsement is a fundamental breach when the vehicle is carrying hazardous goods.
- ✓ National Insurance Co. Ltd vs. Swaran Singh [(2004) 3 SCC 297]: The court clarified that this case does not support the view that training under Rule 9 is only for handling spillage emergencies.
- ✓ United India Insurance Co. Ltd. v. A. Verlaxmi [2013 SCC OnLine Chh 272]: The court disagreed with the interpretation that no further expertise or driving skill is required for driving such a vehicle.
- ✓ National Insurance Company v. Harbans Kaur [FAO Nos. 1210 & 8292 of 2004]: The court rejected the view that Rule 9 does not deal with the professional skill of driving.
What weighed in the mind of the Court?
The Supreme Court’s decision was primarily influenced by the need to ensure strict compliance with the statutory requirements for drivers transporting hazardous goods. The Court emphasized that the training and endorsement requirements under Section 14 of the Motor Vehicles Act, 1988 and Rule 9 of the Central Motor Vehicles Rules, 1989 are not mere formalities but are crucial for enhancing road safety and protecting human life. The Court also took into account the fact that the driver of the oil tanker did not have the required endorsement and that the vehicle was carrying oil at the time of the accident.
| Reasoning Point | Percentage |
|---|---|
| Importance of compliance with statutory requirements | 40% |
| Driver’s lack of required endorsement | 30% |
| Vehicle carrying oil at the time of the accident | 20% |
| Rejection of the training certificate | 10% |
Fact:Law Ratio
| Category | Percentage |
|---|---|
| Fact (Consideration of factual aspects of the case) | 60% |
| Law (Consideration of legal aspects) | 40% |
Logical Reasoning
Issue 1: Scope of Rule 9
Issue 2: Breach of Policy
Issue 3: Acceptance of Certificate
Key Takeaways
- ✓ Drivers of vehicles carrying dangerous and hazardous goods must possess a valid license with the necessary endorsement as per Rule 9 of the Central Motor Vehicles Rules, 1989.
- ✓ The absence of such endorsement is not a minor breach and can result in the insurance company being directed to “pay and recover” the compensation amount from the owner of the vehicle.
- ✓ Courts will scrutinize the genuineness and timely submission of documents related to driver training and licensing.
- ✓ This judgment reinforces the importance of strict compliance with statutory requirements to ensure road safety and protect human life.
Development of Law
The ratio decidendi of this case is that the absence of a valid endorsement on the driving license of a driver transporting dangerous and hazardous goods, as required under Section 14 of the Motor Vehicles Act, 1988 and Rule 9 of the Central Motor Vehicles Rules, 1989, constitutes a fundamental breach of the insurance policy. This breach allows the insurance company to “pay and recover” the compensation amount from the owner of the vehicle. This judgment clarifies that the training and endorsement requirements are not mere formalities and emphasizes the importance of strict compliance with statutory provisions to ensure road safety.
Conclusion
The Supreme Court dismissed the appeals, affirming the High Court’s direction to the insurance company to pay the compensation to the claimants and recover it from the owner of the oil tanker. The Court emphasized the importance of strict compliance with the statutory requirements for drivers transporting hazardous goods and clarified that the absence of the necessary endorsement on the driving license constitutes a fundamental breach of the insurance policy.
Category
Parent Category: Motor Vehicle Accidents
Child Categories:
- ✓ Insurance Law
- ✓ Negligence
- ✓ Road Safety
- ✓ Hazardous Goods Transportation
- ✓ Section 14, Motor Vehicles Act, 1988
- ✓ Rule 9, Central Motor Vehicles Rules, 1989
FAQ
- Q: What does “pay and recover” mean in this context?
A: “Pay and recover” is a direction from the court to the insurance company to initially pay the compensation to the victims or their families and then recover the amount from the owner of the vehicle responsible for the accident. - Q: Why was the insurance company allowed to recover the compensation from the owner?
A: The insurance company was allowed to recover the compensation because the driver of the oil tanker did not have the required endorsement on his license to drive a vehicle carrying hazardous goods, which is a violation of the Motor Vehicles Act and Rules. - Q: What is the significance of Rule 9 of the Central Motor Vehicles Rules, 1989?
A: Rule 9 specifies the requirements for drivers of vehicles carrying dangerous or hazardous goods, including the need for a valid license, literacy in a specified language, and a certificate of successfully passing a prescribed training course. - Q: Does this judgment mean that insurance companies can always avoid liability if the driver lacks the necessary endorsement?
A: Not always. The court will consider whether the absence of the endorsement was the main or contributory cause of the accident. However, in cases involving hazardous goods, the absence of the required endorsement is considered a significant breach. - Q: What should vehicle owners and drivers transporting hazardous goods do to avoid such situations?
A: Vehicle owners and drivers should ensure strict compliance with all statutory requirements, including obtaining the necessary training and endorsement on the driving license. They should also ensure that all documents are genuine and submitted in a timely manner.