[Motor Accident Compensation] Insurer Not Liable Unless Vehicle Owner Proves That He Took Reasonable Care To See That His Driver Renewed Driving Licence Within Time: SC [Read Judgment]

When an employer employs a driver, he has to take reasonable care to see that his employee gets his licence renewed within time, the Supreme Court has observed.

The bench comprising Justices Sanjay Kishan Kaul, Aniruddha Bose and Krishna Murari observed that, when the driver did not renew his licence, the insurance employee cannot be held liable unless the owner proved that he had either checked the driving licence or had given instructions to his driver to get his driving licence renewed on expiry thereof.

In this case, Rajinder Kumar was employed as a driver by Beli Ram. The former met with an accident while driving a truck owned by the latter. He filed a petition under the Workmen's Compensation Act, 1923. The commissioner passed an award directing the insurance to pay compensation [Rs. 94,464/- for the injuries suffered and Rs.67,313/- towards medical expenses]. Interest was directed to be paid by the employer. In appeal, the High Court absolved the insurance company of any liability on account of there being a material breach of the insurance policy inasmuch as the driver/claimant's driving licence had expired at the relevant time.

The question of law considered by the Apex Court was whether in case of a valid driving licence, if the licence has expired, the insured is absolved of its liability?

The court noted that this is not a case where a licence has not been renewed for a short period of time, say a month, as was considered in the case of Swaran Singh where the benefit was given to a third party by burdening the insurance company. The bench observed thus:

"We are of the view that once the basic care of verifying the driving licence has to be taken by the employer, though a detailed enquiry may not be necessary, the owner of the vehicle would know the validity of the driving licence as is set out in the licence itself. It cannot be said that thereafter he can wash his hands off the responsibility of not checking up whether the driver has renewed the licence. It is not a case where a licence has not been renewed for a short period of time, say a month, as was considered in the case of Swaran Singh5 where the benefit was given to a third party by burdening the insurance company. The licence in the instant case, has not been renewed for a period of three years and that too in respect of commercial vehicle like a truck. The appellant showed gross negligence in verifying the same"

The bench thereafter noted the observations made by the Delhi High Court in Tata AIG General Insurance Co. Ltd. v. Akansha & Ors., by Allahabad High Court in Oriental Insurance Co. Ltd. v.Manoj Kumar & Ors and by Himachal Pradesh High Court in National Insurance Co. Ltd. a. Hem Raj. The bench particularly quoted the observations made in Hem Raj:

""18. When an employer employees a driver, it is his duty to check that the driver is duly licensed to drive the vehicle. Section- 5 of the Motor Vehicles Act provides that no owner or person in charge of a motor vehicle shall cause or permit any person to drive the vehicle if he does not fulfil the requirements of Sections 3 and 4 of the Motor Vehicles Act. The owner must show that he has verified the licence. He must also take reasonable care to see that his employee gets his licence renewed within time. In my opinion, it is no defence for the owner to plead that he forgot that the driving licence of his employee had to be renewed. A person when he hands his motor vehicle to a driver owes some responsibility to society at large. Lives of innocent people are put to risk in case the vehicle is handed over to a person not duly licensed. Therefore, there must be some evidence to show that the owner had either checked the driving licence or had given instructions to his driver to get his driving licence renewed on expiry thereof. In the present case, no such evidence has been led. In view of the above discussion, I am clearly of the view that there was a breach of the terms of the policy and the Insurance Company could not have been held liable to satisfy the claim.""

Taking note of the above observations, the bench observed:

"We have reproduced the aforesaid observations as it is our view that it sets forth lucidly the correct legal position and we are in complete agreement with the views taken in all the three judgments of three different High Courts with the culmination being the elucidation of the correct legal principle in the judgment in the Hem Raj case."

The bench finally dismissed the appeal.

Case name: BELI RAM vs. RAJINDER KUMAR

Case no.: CIVIL APPEAL NOS. 7220-7221 OF 2011 

Coram: Justices Sanjay Kishan Kaul, Aniruddha Bose and Krishna Murari

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