Insurance Claim Can Be Denied If Driver Lacked Valid License At Time Of Accident, NCDRC Dismisses Revision Petition Against National Insurance Co.

Brief Facts:

The Complainant insured his vehicle with National Insurance Company Limited (“Insurance Company”). During the subsistence of the policy, the vehicle met an accident due to a collision caused by the reckless driving of a truck. The vehicle overturned and was completely damaged. The driver, a government-trained driver since 1995, died in the accident. An FIR was registered, and the Insurance Company was informed. The damaged vehicle was inspected, and a claim was filed by the Complainant. However, the Insurance Company repudiated the claim and stated that the driver's license had expired at the time of the accident. The Complainant argued that the driver was duly licensed and trained, and the claim was wrongfully denied. Feeling aggrieved, the Complainant filed a consumer complaint before the District Consumer Disputes Redressal Commission, Guna, Madhya Pradesh (“District Commission”) against the Insurance Company.

The District Commission allowed the complaint and directed the Insurance Company to pay 75% of the damage amount to the Complainant. Dissatisfied with the order of the District Commission, the Insurance Company filed an appeal before the State Consumer Disputes Redressal Commission, Madhya Pradesh (“State Commission”). The State Commission allowed the appeal by dismissing the complaint and setting aside the order of the State Commission. Thereafter, the Complainant filed a revision petition before the National Consumer Disputes Redressal Commission (“NCDRC”), New Delhi.

The Complainant contended that the driver had a valid driving license for many years, which had expired only two months before the accident. It argued that the driver intended to renew it but met with the accident before doing so.

Observations by the NCDRC:

The NCDRC held that the absence of a valid driving license amounts to a violation of the essential terms and conditions of the insurance policy. Therefore, it held that the rejection of the claim by the insurance company does not amount to a deficiency in service.

Reliance was placed on New India Assurance Co. Ltd. vs. Suresh Chandra Aggarwal [(2009) 15 SCC 761], wherein the Supreme Court perused Section 15 of the Motor Vehicles Act, 1988. It was held that if an application for renewal of a license is made within 30 days of its expiry, the license continues to be valid without interruption as the renewal relates back to the date of expiry. However, if the renewal application is filed after 30 days, the license is renewed only from the date of renewal which means there is no valid license in the intervening period. The NCDRC further referred to Ashok Kumar vs New India Assurance Company Limited [(2024) 1 SCC 357], wherein it was held that if the violation of a policy condition is violated fundamentally, the insurer can repudiate the claim. It was observed that in case of a violation of the Motor Vehicles Act, 1988, the insurer is absolved of any liability under the insurance policy.

Due to a lack of an effective driving license at the time of the accident, the NCDRC found that the Complainant was not entitled to a claim. Consequently, the NCDRC upheld the decision of the State Commission and dismissed the revision petition filed by the Complainant.

Case Title: Van Mandaladhikari vs National Insurance Company Limited and Anr.

Case Number: NC/RP/1902/2024

Advocate for the Petitioner: Ritesh Khare

Advocate for the Respondent: Mansimran Singh

Date of Judgment: 24.03.2025

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