Pay & Recover Principle | Insurer Not Liable If Owner Fails To Prove He Verified Competency Of Offending Driver Before Employment: MP High Court

The Madhya Pradesh High Court has reiterated that an insurance company cannot be held liable when it emerges that the owner of the vehicle has not verified the skills of the offending driver before employing him.

The single-judge bench of Justice Achal Kumar Paliwal upheld the award made by the Motor Accidents Claims Tribunal at Rewa based on the 'Pay and Recover ' principle, after examining the deposition of the owner of the offending vehicle and other relevant documents. The tribunal had earlier found that the offending driver did not have a valid and effective license at the time of the incident, which made the insured liable under the 'Pay and Recover' Principle.

“….Pradeep, owner of offending vehicle has nowhere mentioned/deposed in his testimony and has not produced any evidence to establish that before employing Sukhnandan, as driver of offending vehicle, he verified the skills of driver Sukhnandan and thereby, he satisfied himself that Sukhnandan is competent to drive the vehicle…”, the court held that the appellant-bus operator was rightly burdened with the liability since the principles laid down in Rishi Pal Singh v. New India Assurance Co. Ltd. & Ors., 2022 Live Law SC 646 will be of no assistance to him.

The deposition of the Insurance Company's witnesses and other documents revealed that the driver of the offending vehicle did not possess a valid license at the time of the accident, i.e., on 24.06.2017. Before joining, the owner was allegedly given a photocopy of the driving license valid from 5.11.2015 to 4.11.2018 which turned out to be not genuine.

The appellant owner argued before the single judge bench that he was not legally obligated to verify the genuineness of the driving license shown to him as per the mandate in Rishi Pal Singh.

In Rishi Pal Singh, it was held by the Supreme Court that the owner of the vehicle is expected to verify the driving skills and not run to the licensing authority to verify the genuineness of the driving license before appointing a driver.

In Rishi Pal Singh, since the Driver's License of the offending driver was found to be fake, the Claims Tribunal had ordered the insurance company to recover the award amount from the owner of the vehicle. This award was challenged by the owner of the vehicle before the Supreme Court. The ratio elucidated by the apex court, in this case, was that once the owner is satisfied that the driver is competent to drive the vehicle, it is not expected from the owner thereafter to verify the genuineness of the driving license issued to the driver. In such circumstances, the insurance company cannot be absolved from liability by making the insured owner liable to pay.

The High Court noted that the above pre-requisite had not been observed by the owner/insured bus operator before employing the driver. Before dismissing the appeal under Section 173(1) of the Motor Vehicles Act, 1988, the bench sitting at Jabalpur went on to add that there was no evidence presented by the owner about the date of appointment of the respondent driver in the offending vehicle, prior to the accident.

For Appellant: Advocate S.K. Pandey

For Respondents: Advocate Prabhanshu Shukla

Case Name: Pradeep Singh Parihar v. Smt. Rubina & Ors.

Case No: Misc. Appeal No. 902 of 2023

Citation: 2024 LiveLaw (MP) 115

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