Neither Motor Vehicles Act Nor Insurance Policy Requires Owner To Verify License Of Driver With Transport Authorities: SC Holds That Owner Is Not Liable For Fake License Of Driver
The Supreme Court held that there is no condition mandating the owner of any vehicle to verify and check the driving license of any driver being employed with the concerned authorities under Section 149(2)(a)(ii) of the Motor Vehicles Act, 1988 (Act) or in the Insurance Policy and hence the owner/employer is not liable to pay compensation in case where the driver involved in the accident had a fake license.
The Court dismissed the Petition challenging the order of the High Court whereby it was held that the Insurance Company does not have the right to recover the compensation amount from the vehicle's owner. The Court noted that it would be an unrealistic and unnecessary condition to expect every person employing a driver to get their driving license verified and confirmed by the authorities.
“There is, thus, no mandate in the statutory provision or the above clause that a driving skill test should be undertaken without fail before employing a driver. Therefore, it is not open to the petitioner-insurance company to cite the same as a breach of the terms and conditions of the policy. In fact, there was no such term or condition in the policy… As regards the contention that the driver of the vehicle was not duly licensed as he possessed a fake license, it may be noted that neither Section 149(2)(a)(ii) of the 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”, the Bench comprising Justice C.T. Ravikumar and Justice Sanjay Kumar observed.
Advocate Gopal Singh appeared on behalf of the Petitioner.
One Dharambir suffered fatal injuries when a Tempo vehicle that was driven in a rash and negligent manner, hit his motorcycle. His dependents approached the Motor Accident Claims Tribunal (Tribunal) under Sections 140 and 166 of the Act, seeking compensation. The Tribunal granted an award of compensation with interest to the claimants. However, the Tribunal discovered that the driver of the Tempo had a fake driving license, and opined that the insurance company would not be liable to pay the compensation. The Tribunal directed the insurance company to deposit the awarded amount, with the liberty to recover the same from the owners of the Tempo. The owners of the vehicle challenged the order before the High Court, whereby it was held that the insurance company did not have the right to recover the compensation from the vehicle owners. Aggrieved, the insurance company challenged the order of the High Court.
The Court noted that the statutory provision and the 'Driver Clause' of the insurance policy do not require a driving skill test to be undertaken before employing a driver. The Court held that the Insurance company cannot claim that the deceased vehicle owner breached the policy by not conducting such a test.
Additionally, the Bench observed that there was no mandatory condition in any car insurance policy that required the owner to verify and check the driving license of their driver with the concerned transport authorities. The Court emphasized that it would be impractical for every person employing a driver to expect the transport authority to verify and confirm the validity of the driving license produced by the driver.
“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. 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”, the Bench observed.
Furthermore, the Court held that the Insurance company cannot claim that the deceased vehicle owner failed to conduct due diligence by not verifying the tempo driver’s license with the concerned authorities.
Additionally, the Bench reiterated that when a person employed to drive a vehicle presents a seemingly valid driving license, the burden of proof is on the insurance company to demonstrate that the vehicle owner did not conduct due diligence regarding the license's validity before hiring the driver. However, the Bench asserted that if the license is evidently fake or has expired, or if there is a genuine doubt about its validity, the employer should make inquiries.
The Bench held that the insurance company must prove that there was a willful breach on the part of the vehicle owner. The Court observed that as the petitioner did not undertake such an exercise, they have no right to recover the compensation amount from the owners of the vehicle.
The Court noted, “Presently, no evidence has been placed on record whereby an inference could be drawn that the deceased vehicle owner ought to have gotten verified Ujay Pal’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 expressed concerns regarding insurance companies regularly raising such pleas without considering the facts of the case or the available evidence. They also appeal such matters to the highest court without regard for the waste of valuable time and effort.
Accordingly, the Court dismissed the Petition.
Cause Title: IFFCO Tokyo General Insurance Co. Ltd v Geeta Devi And Ors (2023 INSC 954)
