Motor Accident- Insurer Not Absolved From Paying Damages Merely Because Erring Driver Had Fake Driving Licence: Allahabad HC

Referring to a 2003 ruling of the Apex Court (United India Insurance Company Limited vs. Lehru and others), the bench of Justice Subhash Chandra Sharma observed that it was not expected of the employer to verify the genuineness of a driving license from the issuing authority at the time of employment.

The case in brief

Essentially, the insurance company (National Insurance Company Ltd.) had moved the High Court challenging MACT, Ghaziabad's decision directing it to pay a sum of Rs.12,70,406/- along with 6 % interest on account of the death of deceased in a motor accident case.

It was claimed by the insurance company (Appellant) that it was on record that the accident had taken place due to the rash and negligent driving of the driver of the truck, owned by the insured and it also contended that at the time of the accident, the said driver had no valid driving licence.

Therefore, the insurance company argued, that in light of these facts, the Claims Tribunal had erred in fastening the liability of the payment of compensation upon the insurance company and that the insurance company must have been absolved from paying damages as per Section 149(2)(a) of the MV Act as the driver of the truck had no valid licence.

Court's observations

At the outset, the Court referred to several landmark decisions of the Apex Court to note that merely in the absence of a valid driving license, the insurance company can't be absolved from its duty to pay the compensation.

The Court also observed that in case the insured did not take reasonable and adequate care and caution to verify the genuineness or otherwise of the licence, the liability would still be open-ended and will have to be determined on the basis of facts of each case.

Court also noted that though in its own inquiry, the insurance company had found that the license of the driver of the offending vehicle (the truck) was fake, however, the company had not proved the fact before the MCAT that the truck owner had not taken adequate care and caution to verify the genuineness of the driving licence of the driver at the time of his employment.

"On investigation by the Insurance company/appellant, this driving license was found to be fake as per the report of Investigator Mr. Arvind Kumar Misra but he had not entered into the witness box to prove the contents of his report which was based on the observation of dealing assistant. Even the dealing assistant of the office of District Transport Officer, Muzaffarpur has also not been examined to prove that the seal and signature of District Transport Officer in the xerox copy of driving licence were not found to be correct," the Court observed.

Further, observing that it was also not proved that the owner was aware that the licence was fake or invalid and had still permitted the driver to drive the offending vehicle, the Court dismissed the appeal filed by the insurance company by stating thus:

"In such circumstances, it cannot be said that the insured/owner is at fault in having employed a person whose licence has been found to be fake by the insurance company before the learned Tribunal. Therefore, there exists no cause to disturb the findings recorded by the learned tribunal in this regard."

In view of this, the Court held that only the Insurance Company was liable to indemnify the dependents of the accident victim.

Case title - National Insurance Company Ltd. v. Kewal Krishna Arora And Others
Case citation: 2022 LiveLaw (AB) 47