Supreme Court: Insurance company cannot forego compensation in accident by employed driver if vehicle owner did not verify his licence

Supreme Court: Insurance company cannot forego compensation in accident by employed driver if vehicle owner did not verify his licence

Cites Section 149(2)(a)(ii) of the Motor Vehicle Act, 1988, and refuses to interfere with the Delhi High Court order

The Supreme Court has held that an insurance company cannot claim that it is not liable to pay compensation in a motor vehicle (MV) accident claim just because the vehicle owner did not verify the genuineness of the driver’s licence.

A bench of Justice CT Ravikumar and Justice Sanjay Kumar said that the burden was on the insurance company to prove there was a failure on the part of the vehicle owner in carrying out due diligence. It was impractical to expect every person employing a driver to verify and confirm whether the driving licence produced by the driver was valid and genuine.

The Apex Court held, “Once a seemingly valid driving licence is produced by a person employed to drive a vehicle, unless such licence is demonstrably fake on the face of it, warranting any sensible employer to make inquiries of its genuineness, the licence has expired, or any other reason to entertain a genuine doubt of its validity, the burden is upon the insurance company to prove the failure on the part of the vehicle owner in carrying out due diligence apropos such driving licence before employing that person to drive the vehicle.”

While expressing shock at insurance companies pursuing such matters, the judges stated, “These legal propositions being so well settled, it is indeed shocking that insurance companies deem it appropriate to raise such pleas without reference to the facts of the case and/or the evidence available therein, and also consider it necessary to carry such matters in appeal till the last forum, unmindful of the wastage of valuable curial time and effort!”

The appellant insurance company approached the Top Court challenging the Delhi High Court order that reversed the award passed by the Motor Accident Claims Tribunal (MVCT) granting the right of recovery to the insurance company. Aggrieved by the outcome, the insurance company approached the Supreme Court.

The incident involved an accident where a person suffered fatal injuries due to the rash and negligent driving of a tempo. The dependents of the injured approached the MVCT for compensation.

The tribunal held that the insurance company was not liable due to a breach of the terms and conditions of the insurance policy by the vehicle owner.

The company argued before the Top Court that it was not liable to pay compensation, as the owner of the vehicle failed to verify the genuineness of the driver’s licence, which turned out to be fake.

However, the bench observed that there was no requirement under Section 149(2)(a)(ii) of the Motor Vehicle Act, 1988 or in the ‘Driver Clause’ of the insurance policy that the owner of the insured vehicle must, as a rule, get the driving licence of the person employed as a driver verified and checked with the concerned transport authority.

The Judges stated, “The petitioner insurance company cannot blithely claim that the deceased vehicle owner did not conduct due diligence while employing Ujay Pal as a driver, by now insisting upon a condition which was neither prescribed in the statute nor in the insurance policy. More so, an unrealistic condition that every person employing a driver must get the driving licence of such driver verified and confirmed by the RTO concerned, irrespective of the actual necessity to do so.”

Thus, the Court refused to interfere with the Delhi High Court order.