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Motor Vehicles Act, 1988 – Sections 3, 11, 14, 149 – Central Motor Vehicles Rules, 1989 – Rule 9 – Motor Accident – Rash and Negligent Driving – Absence of Endorsement for Driving Vehicle Carrying Dangerous or Hazardous Goods – Breach of Insurance Policy – Pay and Recover Order – Admissibility of Evidence in Appeal – Order 41 Rule 27, CPC

Held

The absence of an endorsement under Rule 9 of the Central Motor Vehicles Rules, 1989, on the driver’s license to drive a vehicle carrying dangerous or hazardous goods constitutes a significant breach of insurance policy conditions, as it mandates specialized training in driving skills and product safety. The driver’s lack of such endorsement, coupled with rash and negligent driving of an oil tanker carrying oil, justified the Tribunal’s direction to the insurer to pay compensation to claimants and recover from the vehicle owner. A training certificate produced for the first time in appeal was inadmissible under Order 41 Rule 27 of the CPC due to lack of explanation for non-production before the Tribunal and doubts about its authenticity.

The insurer is not liable to indemnify the owner when the accident results from negligent driving of a vehicle requiring specific authorization, as per National Insurance Co. Ltd. v. Swaran Singh distinguished.

Appeals dismissed, affirming the “pay and recover” order.

Case Citation: 2025 (4) KLR (SC) 46 : 2025 INSC 468
Court: Supreme Court of India
Bench: Sudhanshu Dhulia, J.; K. Vinod Chandran, J.
Date of Judgment: April 08, 2025
Case No.: Civil Appeal Nos. ________ of 2025 (@ Special Leave Petition (C) Nos. 25789-25792/2019)

Facts

  • The case arises from a motor accident involving an oil tanker owned by the appellant, M/S Chatha Service Station, which resulted in the deaths of two individuals (a bicyclist and a pedestrian), the breadwinners of the respondents’ families.
  • An FIR was registered against the driver of the oil tanker for rash and negligent driving, corroborated by an eyewitness (CW2) and supported by the charge sheet and FIR (Ext. C1 and Ext. C3).
  • The Motor Accidents Claims Tribunal found the driver negligent and awarded compensation to the claimants. The Tribunal directed the insurance company to pay the award amounts and recover them from the owner and driver, as the driver lacked a valid endorsement to drive a vehicle carrying dangerous or hazardous goods under Rule 9 of the Central Motor Vehicles Rules, 1989.
  • The appellant (owner) challenged the Tribunal’s “pay and recover” order in the High Court of Punjab and Haryana through first appeals (FAO Nos. 3250/2015 and 3252/2015) and review applications (RACR Nos. 21/2019 and 22/2019), all of which were dismissed.
  • The appellant appealed to the Supreme Court, arguing that the absence of the endorsement was not a fundamental breach of policy conditions and that the accident was unrelated to the carriage of hazardous goods. The appellant also produced a certificate in the first appeal, claiming the driver had completed a required three-day training course.

Issues

  1. Whether the absence of an endorsement under Rule 9 of the Central Motor Vehicles Rules, 1989, for driving a vehicle carrying dangerous or hazardous goods constitutes a breach of insurance policy conditions sufficient to justify the “pay and recover” order.
  2. Whether the training certificate produced by the appellant during the first appeal should be accepted as evidence under Order 41 Rule 27 of the Civil Procedure Code, 1908.
  3. Whether the lack of endorsement contributed to the cause of the accident.

Arguments

  • Appellant:
    • The absence of an endorsement under Rule 9 is a minor (venial) breach, as the accident was not caused by the carriage of dangerous or hazardous goods.
    • The vehicle was not carrying hazardous goods at the time of the accident.
    • The driver had completed a three-day training course (evidenced by a certificate produced in the first appeal), equipping him to drive the tanker, and the lack of endorsement should not absolve the insurer of liability.
    • Cited High Court decisions (e.g., National Insurance Co. Ltd. v. K. Ramasamy) to argue that the insurer must prove the breach was fundamental and contributed to the accident.
  • Respondent (Insurer):
    • Under Rule 9 and Section 14 of the Motor Vehicles Act, 1988, a driver of a vehicle carrying dangerous or hazardous goods must undergo specific training and obtain an endorsement on their license, which the driver lacked.
    • The driver admitted during examination that the tanker was carrying oil at the time of the accident and that his license lacked the required endorsement.
    • The training certificate produced in the first appeal was rightly rejected by the High Court, as it did not comply with Order 41 Rule 27 of the CPC (no explanation for non-production before the Tribunal).
    • The absence of the endorsement is a significant breach, as Rule 9 mandates training to enhance driving skills and ensure product safety for vehicles carrying hazardous goods.

Judgment

  • Issue 1: Absence of Endorsement:
    • The Supreme Court held that the absence of an endorsement under Rule 9 is not a venial breach. Rule 9 requires drivers of vehicles carrying dangerous or hazardous goods to hold a transport vehicle license, possess literacy in specified languages, and complete a training course with a prescribed syllabus (covering defensive driving, advanced driving skills, and product safety).
    • The syllabus under Rule 9 (Parts A, B, and C) emphasizes both driving skills and product safety, not merely emergency procedures for spillage, as argued by the appellant.
    • The Court rejected the appellant’s reliance on High Court decisions (K. Ramasamy, A. Verlaxmi, Harbans Kaur), finding they misinterpreted Rule 9 by limiting its scope to product safety rather than driving skills.
    • The tanker was carrying oil at the time of the accident, reinforcing the necessity of the endorsement. The Court clarified that even an empty tanker designed for hazardous goods requires such an endorsement due to its specialized design and purpose.
  • Issue 2: Training Certificate:
    • The Court upheld the High Court’s rejection of the training certificate under Order 41 Rule 27 of the CPC. The certificate was not produced before the Tribunal, and the appellant provided no explanation for its non-production despite the driver’s examination.
    • The certificate lacked authenticity (no serial number or institutional seal), and the driver did not claim during cross-examination to have undergone the training, raising doubts about its veracity.
  • Issue 3: Contribution to Accident:
    • Citing National Insurance Co. Ltd. v. Swaran Singh, the Court noted that the absence of a license for the specific vehicle type must be a main or contributory cause of the accident to absolve the insurer. Here, the accident was caused by rash and negligent driving, as evidenced by the eyewitness (CW2) and charge sheet.
    • The driver’s lack of endorsement under Rule 9 meant he was not authorized to drive the tanker, a vehicle requiring specialized skills. The Court rejected the driver’s claim of swerving to avoid pedestrians, finding it contradicted by the eyewitness testimony.
  • Conclusion:
    • The Supreme Court dismissed the appeals, affirming the Tribunal and High Court’s “pay and recover” order. The insurance company was directed to pay the compensation to the claimants and recover the amount from the owner of the oil tanker.
    • The Court emphasized that compliance with Rule 9 is a statutory requirement to ensure driving efficiency and safety for vehicles carrying hazardous goods, and non-compliance constitutes a significant breach of policy conditions.

Ratio Decidendi

  • The absence of an endorsement under Rule 9 of the Central Motor Vehicles Rules, 1989, for driving a vehicle carrying dangerous or hazardous goods is a significant breach of insurance policy conditions, as it requires specialized training in driving skills and product safety.
  • A training certificate produced for the first time in appeal is inadmissible under Order 41 Rule 27 of the CPC without a satisfactory explanation for its non-production before the original court.
  • The insurer is not liable to indemnify the owner if the driver lacks the required license endorsement, especially when the accident results from rash and negligent driving of a vehicle requiring specialized skills.

Obiter Dicta

  • The Court clarified that even an empty vehicle designed to carry hazardous goods requires an endorsement under Rule 9 due to its specialized design, though this was not the decisive factor in the case (as the tanker was carrying oil).
  • The statutory scheme under the Motor Vehicles Act, 1988, distinguishes between vehicle classes and descriptions, requiring specific endorsements for vehicles like tankers under Section 11 and Rule 9.

Statutes/Rules Cited

  • Motor Vehicles Act, 1988: Sections 3, 10, 11, 14, 41, 149
  • Central Motor Vehicles Rules, 1989: Rule 9
  • Civil Procedure Code, 1908: Order 41 Rule 27
  • Notification: S.O. 1248 (E) dated 05.11.2004

Precedents Cited

  • National Insurance Co. Ltd. v. Swaran Singh, (2004) 3 SCC 297 (distinguished)
  • National Insurance Co. Ltd. v. K. Ramasamy, 2006 SCC OnLine Mad 963
  • United India Insurance Co. Ltd. v. A. Verlaxmi, 2013 SCC OnLine Chh 272
  • National Insurance Company v. Harbans Kaur, FAO Nos. 1210 & 8292