Insurer's Liability Not Avoided By Driver's Unlicensed Status: NCDRC

Brief Facts of the Case

The complainant insured his Mini Truck vehicle with United India Insurance Company/insurer for a package policy with an insured declared value (IDV) amount. The vehicle met with an accident, and the complainant reported it to the police. He informed the insurer, who deputed surveyors for spot and final surveys. A service station estimated the damaged vehicle to be repaired. The complainant submitted the claim form and documents to the insurer. The vehicle was repaired by the service station, and the complainant paid the repair amount. Subsequently, the complainant submitted the repair invoice to the insurer. However, the insurer repudiated the claim by making the plea that the driver's license was found to be fake upon verification. Hence, the complainant filed a complaint before the District Forum, which allowed the complaint. Aggrieved by the District Forum's order, the insurer appealed to the State Commission of Odisha. The State Commission upheld the District Forum's order and dismissed the appeal. Consequently, the insurer filed a revision petition before the National Commission.

Contentions of the Insurer

The insurer contended that the complainant's claim was rightly repudiated as the driver's license was found to be fake on verification. The insurer relied on judgments stating that the National Commission cannot interfere with concurrent findings of facts by lower fora in revisional jurisdiction. The insurer further argued that as per Nirmala Kothari Vs. United India Insurance Co. Ltd, if an employer finds the driver competent and satisfied with a driving license appearing genuine at face value, there is no breach, and the insurer would be liable under the policy unless proven that the owner/insured was aware the license was fake but still permitted driving.

Observations by the National Commission

The commission observed that as per Nirmala Kothari v. United India Insurance Co. Ltd., the mere existence of a fake driving license does not absolve the insurer of liability unless they prove the vehicle owner failed to exercise reasonable care in employing the driver. If the owner diligently verifies the driver's credentials at employment, they are not obliged to further verify the license authenticity from the licensing authority. The commission cited United India Insurance Co. Ltd. vs. Lehru & Ors. and Pepsu RTC vs. National Insurance Co., stating the insurer cannot avoid liability solely because the driver is not duly licensed and must establish willful breach of policy conditions. As per National Insurance Co. Ltd. vs. Swaran Singh & Ors., an invalid/fake license alone is not a defense available to insurers against insured or third parties. To avoid liability, the insurer must prove that the insured was negligent in ensuring policy conditions of use by a duly licensed driver. As per case laws, the commission observed that the National Commission's revisional jurisdiction is limited and cannot interfere with concurrent findings unless against the law, pleadings, or evidence provisions.

The National Commission upheld the State Commission's order and dismissed the revision petition.

Case Title: United India Insurance Company Ltd. Vs. Rabi Narayan Naik

Case Number: R.P. No. 1907/2016