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Synopsis

The Supreme Court has said that an insurance company cannot absolve itself from paying the compensation in motor accident cases on the ground of a fake driving licence, if it is not able to prove that the vehicle owner did not apply due diligence in using services of such a driver.

A bench of Justices C T Ravikumar and Sanjay Kumar dismissed an appeal filed by IFFCO Tokio General Insurance Co Ltd against the Delhi High Court's order which reversed a decision by the Motor Accident Claims Tribunal allowing it to recover the compensation amount from the vehicle owner as the driving licence of the driver was not a genuine one.

"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 as to its genuineness, or when the period of the licence has already expired, or there is some other reason to entertain a genuine doubt as to its validity, the burden is upon the insurance company to prove that there was a 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," the bench said. 

In the case, the court noted that no evidence had been placed on record whereby an inference could be drawn that the vehicle owner ought to have gotten verified vehicle driver's driving licence. 

"Therefore, it was for the petitioner-insurance company to prove willful breach on the part of the said vehicle owner. As no such exercise was undertaken, the petitioner-insurance company would have no right to recover the compensation amount from the present owners of the vehicle," the bench held. 

The tribunal had awarded a compensation of Rs 13.70 lakh to the family of one Dharambir, who had suffered fatal injuries after being hit by a tempo, driven in a rash and negligent manner. It, however, had said that the driver of the Tempo had a fake driving licence, so it had opined that the petitioner-insurance company would not be liable to pay the compensation. The Tribunal, therefore, had directed the insurance company to deposit the awarded amount with the liberty to recover it from the owners of the Tempo. 

With regard to the insurance company's contention that the driver of the vehicle was not duly licensed as he possessed a fake license, the bench said that it may be noted that neither Section 149(2)(a)(ii) of the Motor Vehicles Act of 1988 nor the ‘Driver Clause’ in the subject insurance policy provide that the owner of the insured vehicle must, as a rule, get the driving licence of the person employed as a driver for the said vehicle verified and checked with the concerned transport authorities.

"Generally, and as a matter of course, no person employing a driver would undertake such a verification exercise and would be satisfied with the production of a licence issued by a seemingly competent authority, the validity of which has not expired," the bench said. 

"It would be wholly impracticable for every person employing a driver to expect the transport authority concerned to verify and confirm whether the driving licence produced by that driver is a valid and genuine one, subject to just exceptions. In fact, no such mandatory condition is provided in any car insurance policy," the bench added.

The court also said that it is not open to the petitioner-insurance company, which also did not prescribe such a stringent condition, to cite the failure of the deceased vehicle owner to get Ujay Pal’s driving licence checked with the RTO as a reason to disclaim liability under the insurance policy.

"In effect and in consequence, 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," the bench said.

It also cited the Supreme Court's judgment in the case of 'Ram Chandra Singh vs Rajaram and others' (2018) wherein it was held the mere fact that the driver's licence was fake, per se, would not absolve the insurer.

The court said that the claim of the petitioner-insurance company that it had the right to recover the compensation from the owners of the vehicle, owing to a willful breach of the condition of the insurance policy, viz, to ensure that the vehicle was driven by a licenced driver, was without pleading and proof. 

Holding that the high court's order did not brook interference either on facts or in law, the bench said, "These legal propositions being so well settled, it is indeed shocking that insurance companies deem it appropriate to raise such pleas as a matter of course, without reference to the facts of the given 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!"

Case Title: IFFCO Tokio General Insurance Co Ltd Vs Geeta Devi and Others