A) ABSTRACT / HEADNOTE

This analysis examines M/s Chatha Service Station v. Lalmati Devi & Ors., Civil Appeal Nos. 5089–5092 of 2025, decided by the Supreme Court on 08 April 2025, concerning the insurer’s pay-and-recover liability when the driver of an oil tanker lacked the statutory endorsement required to operate vehicles carrying dangerous and hazardous goods under Section 11 of the Motor Vehicles Act, 1988 read with Rule 9 of the Central Motor Vehicles Rules, 1989. The Tribunal had awarded compensation to claimants for deaths caused by rash and negligent driving; it directed the insurer to pay the awards and recover from the owner and driver because the driver did not possess the requisite endorsement. The High Court affirmed and the owner appealed only against the pay-and-recover direction. The Supreme Court dismissed the appeals, holding that Rule 9 prescribes a three-part syllabus (Parts A, B and C) where Parts A and B expressly concern advanced and defensive driving skills for drivers of specially designed tankers, and Part C deals with product safety and emergency procedures. The Court found the absence of the endorsement was not a venial or purely technical breach: it bore on the driver’s entitlement to operate that class/description of vehicle and could be causally linked to the accident where evidence points to rash driving by a driver unendorsed for hazardous goods carriage. The Court also refused to admit a training certificate produced for the first time on appeal under Order 41 Rule 27, CPC, observing absence of explanation and suspicious features in the document. The decision clarifies the disjunctive meaning of “class” and “description” in Section 11, reiterates the effective licence/duly licensed distinction as in National Insurance Co. Ltd. v. Swaran Singh, and confirms insurer liability to pay and recover where non-endorsement is material and contributory.

Keywords: Motor Vehicles Act, 1988; Central Motor Vehicles Rules, 1989; pay-and-recover; endorsement; dangerous and hazardous goods; Order 41 Rule 27 CPC; rash and negligent driving.

B) CASE DETAILS

C) INTRODUCTION AND BACKGROUND OF JUDGEMENT

The case arises from two claim petitions where an oil tanker collided with a bicyclist and a pedestrian, resulting in fatalities. The Motor Accident Claims Tribunal found rash and negligent driving on the part of the tanker driver on the basis of the FIR, charge sheet and eyewitness testimony, and made awards for compensation. The Tribunal directed the insurer to pay and recover the awards under the policy from the owner and driver because the driver lacked the statutory endorsement required for vehicles carrying dangerous and hazardous goods under Section 11 read with Rule 9. The owner appealed, contending (i) that no hazardous goods caused the accident and therefore lack of endorsement could not be imputed as a policy breach materially contributing to the accident, and (ii) that a training certificate (produced only at the first-appeal stage) showed the driver had undergone the requisite course, rendering the absence of endorsement venial. The insurer countered that Rule 9 prescribes a three-day course whose syllabus includes advanced driving skills and defensive driving; the driver’s licence bore no endorsement and he admitted oil was being carried. The High Court affirmed the Tribunal’s pay-and-recover direction; the owner appealed to the Supreme Court challenging that direction alone. The Supreme Court’s task was to interpret Rule 9 (scope and object), reconcile precedents (notably Swaran Singh), and decide whether non-endorsement, on the facts, disentitled the insurer from refusing indemnity or merely constituted a technical breach. The Court examined the statutory scheme (Sections 10 and 11, the registration regime under Section 41 and notifications classifying tankers), the Rule-9 syllabus (Parts A–C), previous High Court decisions that had treated endorsement absence as non-fundamental, and the belated training certificate offered on appeal, with reference to Order 41 Rule 27, CPC.

D) FACTS OF THE CASE

An oil tanker owned by the appellant estate caused a collision killing two persons — a bicyclist and a pedestrian. The police registered an FIR and filed a charge sheet against the tanker driver for death by rash and negligent driving. The Tribunal relied on the FIR, the charge sheet and the deposition of CW2 (an eyewitness) to hold negligence and fixed compensation amounts (unchallenged on quantum). The Tribunal further directed the insurer to pay the awards and recover from the owner and driver because the driver did not have the statutory endorsement on his transport vehicle licence required under Rule 9 to operate a vehicle carrying dangerous and hazardous goods. At trial the driver admitted there was no endorsement. At the appellate stage the owner produced a training certificate stating completion of a three-day course (dates: 13.01.2012 to 16.01.2012), approved by the Punjab Government, but with suspicious indicia: absence of serial number and institutional round seal; the certificate was produced for the first time in the first appeal without explanation for non-production before the Tribunal. The driver had not earlier pleaded or produced such a certificate and did not claim before the Tribunal to have undergone such training. The High Court rejected the belated certificate under Order 41 Rule 27, CPC and upheld the pay-and-recover direction. Aggrieved, the appellant owner appealed to the Supreme Court only against the direction to the insurer to pay and recover.

E) LEGAL ISSUES RAISED

1. Whether absence of the endorsement under Rule 9, when the driver holds a transport vehicle licence, is a merely technical breach that cannot disentitle the insurer from indemnity where the accident resulted from rash and negligent driving.

2. Whether the syllabus in Rule 9 confines itself to product safety (spillage/emergency) or also mandates advanced and defensive driving skills relevant to causation.

3. Whether a training certificate produced for the first time on appeal can be admitted under Order 41 Rule 27, CPC absent explanation and when circumstances raise suspicion.

F) PETITIONER / APPELLANT’S ARGUMENTS

The counsel for the appellant owner contended that the accident arose solely from rash and negligent driving and not from any hazardous characteristics of the cargo; therefore absence of the endorsement under Rule 9 was not a fundamental breach of policy conditions. It was submitted that where the hazardous nature of goods did not contribute to the accident, the training/endorsement requirement could not be treated as causally relevant. Further, reliance was placed on certain High Court authorities to say that the insurer must prove that lack of endorsement contributed to the accident before avoiding liability. The appellant also pointed to the training certificate produced in first appeal to show the driver had undergone the prescribed course, thereby making any absence of endorsement a venial irregularity rather than a disqualifying defect.

G) RESPONDENT’S ARGUMENTS

The insurer/respondent argued that Rule 9 expressly prescribes a three-part syllabus whose Parts A and B are dedicated to defensive and advanced driving skills for specially designed tankers, and that absence of endorsement meant the driver was not statutorily qualified to operate the tanker carrying oil. The driver admitted absence of endorsement and admitted oil was being carried at the relevant time. The belated training certificate was produced without explanation for non-production at the tribunal and lacked usual indicia of authenticity; it was rightly rejected under Order 41 Rule 27, CPC. The respondent relied on the statutory scheme and authorities (including National Insurance Co. Ltd. v. Swaran Singh) to show that where absence of licence/endorsement is causally relevant it disentitles the insurer from avoiding the pay-and-recover obligation.

H) JUDGEMENT

The Supreme Court affirmed the Tribunal and High Court in dismissing the appeals and upholding the pay-and-recover direction against the insurer. The Court began by construing Rule 9, holding that it requires that any person driving a goods carriage carrying goods of dangerous or hazardous nature to human life must, besides possessing a transport vehicle licence, be able to read/write at least one scheduled language and possess a certificate for completion of a course whose syllabus spans three parts. The Court analysed Parts A and B of the syllabus and observed these parts expressly concern driving skill and efficiency, including defensive driving and advanced driving, while Part C deals with product safety (spillage handling, firefighting, toxic release control, first aid, use of protective equipment). From this, the Court concluded Rule 9 is not confined to emergency handling of hazardous cargo; it deals substantially with the professional skill to operate specially designed vehicles carrying hazardous goods. The Court therefore rejected the proposition that endorsement absence is merely venial whenever cargo characteristics did not contribute to the accident.

The Court further examined Section 10 and Section 11. It interpreted “class” and “description” in Section 11 disjunctively, not alternatively, aligning the statutory scheme that recognizes various types and descriptions (goods vehicle, heavy passenger vehicle, tankers) and the power under Section 41(4) and ensuing notifications to specify vehicle types. That construction supports the view that an endorsement for description (e.g., tanker carrying hazardous goods) is separately material to driving entitlement. The Court applied the test from Swaran Singh that the absence of requisite licence/endorsement disentitles insurer only where that absence was main or contributory cause of the accident. On facts the eye-witness deposition, FIR and charge sheet established rash and negligent driving; the driver admitted absence of endorsement and that oil was being carried. Thus the absence of endorsement was materially connected to the driving of the tanker and the risk profile. Finally, the Court declined to admit the certificate produced on appeal under Order 41 Rule 27, CPC, noting no satisfactory explanation for non-production and suspicious features in the document (no serial number or round seal). Thus the insurer’s obligation to pay and recover was affirmed.

a. RATIO DECIDENDI

The operative ratio is that Rule 9 prescribes both driving skill and product safety training for drivers of vehicles designed to carry hazardous goods; absence of the statutory endorsement evidencing completion of that course cannot be treated as a mere technicality if evidence shows the driver was operating a vehicle of the specified description and the accident occurred due to his rash/negligent driving. In such circumstances absence of endorsement amounts to lack of statutory entitlement to drive that description of vehicle; the insurer remains obliged to pay the award but may recover the sums from the owner/driver. The statutory language of Section 11 (use of class and description disjunctively) and the syllabus in Rule 9 support this outcome. The Swaran Singh principle is applied: where lack of licence/endorsement is main or contributory cause of accident insurer’s indemnity can be curtailed by pay-and-recover operation.

b. OBITER DICTA

The Court observed that a licence holder without endorsement should not be permitted to drive a tank designed for hazardous goods even if empty; the statutory object is safety and specialized driving competence. The judgment criticized prior High Court decisions that confined Rule 9 to product safety alone, clarifying that the syllabus expressly includes professional driving skills. The Court also emphasised strictness in admitting documentary evidence at appellate stage (Order 41 Rule 27) and the need for satisfactory explanation for non-production. These observations, while not strictly necessary to the conclusion, provide guidance on the construction of Rule 9 and appellate admissibility principles.

c. GUIDELINES

1. Where Rule 9 endorsement is absent, tribunals must examine whether the driver was operating a vehicle of the specified description and whether lack of endorsement was main or contributory cause of the accident; apply the Swaran Singh causation test.

2. Rule 9 training is multi-faceted: Parts A & B (defensive/advanced driving) and Part C (product safety). Endorsement is material to driving entitlement, not a mere procedural formality.

3. Insurers directed to pay awards may recover from owner/driver where statutory non-compliance is established and material to causation.

4. Documents produced first on appeal (e.g., training certificates) must be accompanied by satisfactory explanation for non-production below; absence of explanation and suspicious document indicia justify rejection under Order 41 Rule 27, CPC.

I) CONCLUSION & COMMENTS

The decision realigns jurisprudence to treat endorsement under Rule 9 as substantive, reflecting legislative intent to ensure specialized driving competence for vehicles carrying dangerous and hazardous goods. By reading Parts A–C of the syllabus together the Court rejects artificial compartmentalization between driving skill and product safety. Practically, the judgment underscores that insurers cannot avoid statutory pay-and-recover obligations on purely technical grounds where evidence shows the driver lacked statutory entitlement to operate the vehicle and that absence had a nexus with the accident. It also provides a caution to litigants about adducing evidence belatedly: appellate courts will not admit critical documents without a credible explanation for initial non-production and where authenticity is doubtful. For claims practice and policy drafting, the decision emphasizes scrutiny of endorsements on licences, insurer diligence in investigating licence endorsements at claim stage, and the importance of contemporaneous production of training records. The ruling is fact-sensitive but sets a clear precedent that regulatory safety prescriptions for hazardous cargo carriage carry direct consequences in civil liability and insurance recovery.

J) REFERENCES

a. Important Cases Referred

1. National Insurance Co. Ltd. v. Swaran Singh, (2004) 3 SCC 297; [2004] 1 SCR 180.

2. National Insurance Co. Ltd. v. K. Ramasamy, 2006 SCC OnLine Mad 963.

3. United India Insurance Co. Ltd. v. A. Verlaxmi, 2013 SCC OnLine Chh 272.

4. National Insurance Company v. Harbans Kaur, FAO Nos. 1210 & 8292 of 2004 (26.03.2018).

b. Important Statutes Referred

1. Motor Vehicles Act, 1988 (Sections 2, 3, 9, 10, 11, 14, 41).

2. Central Motor Vehicles Rules, 1989 (Rule 9).

3. Civil Procedure Code, 1908 (Order 41 Rule 27).