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2020 (3) TMI 1274 - SC - Indian LawsInsurance claim - accident of an insured vehicle - driver did not have a proper driving licence at the time of the accident - directions to the Respondent/Insurance Company to pay the Insured declared value - liability of the Insurance Company when the driver of the offending vehicle possessed an invalid/fake driving licence - what is the extent of care/diligence expected of the employer/insured while employing a driver? - HELD THAT - In the case of United India Insurance Co. Ltd. vs. Lehru Ors. 2003 (2) TMI 497 - SUPREME COURT a two Judge Bench of this court has taken the view that the Insurance Company cannot be permitted to avoid its liability on the ground that the person driving the vehicle at the time of the accident was not duly licenced. It was further held that the willful breach of the conditions of the policy should be established. As far as the owner of the vehicle is concerned when he hires a driver he has to check whether the driver has a valid driving licence. Thereafter he has to satisfy himself as to the competence of the driver. If satisfied in that regard also it can be said that the owner had taken reasonable care in employing a person who is qualified and competent to drive the vehicle. The owner cannot be expected to go beyond that to the extent of verifying the genuineness of the driving licence with the licensing authority before hiring the services of the driver. However the situation would be different if at the time of insurance of the vehicle or thereafter the insurance company requires the owner of the vehicle to have the licence duly verified from the licensing authority or if the attention of the owner of the vehicle is otherwise invited to the allegation that the licence issued to the driver employed by him is a fake one and yet the owner does not take appropriate action for verification of the matter regarding the genuineness of the licence from the licensing authority. While the insurer can certainly take the defence that the licence of the driver of the car at the time of accident was invalid/fake however the onus of proving that the insured did not take adequate care and caution to verify the genuineness of the licence or was guilty of willful breach of the conditions of the insurance policy or the contract of insurance lies on the insurer - While hiring a driver the employer is expected to verify if the driver has a driving licence. If the driver produces a licence which on the face of it looks genuine the employer is not expected to further investigate into the authenticity of the licence unless there is cause to believe otherwise. If the employer finds the driver to be competent to drive the vehicle and has satisfied himself that the driver has a driving licence there would be no breach of Section 149(2)(a)(ii) and the Insurance Company would be liable under the policy. It would be unreasonable to place such a high onus on the insured to make enquiries with RTOs all over the country to ascertain the veracity of the driving licence. However if the Insurance Company is able to prove that the owner/insured was aware or had notice that the licence was fake or invalid and still permitted the person to drive the insurance company would no longer continue to be liable. In the instant case the Appellant/Complainant had employed the Driver Dharmendra Singh as driver after checking his driving licence. The driving licence was purported to have been issued by the licencing authority Sheikh Sarai Delhi however the same could not be verified as the concerned officer of the licencing authority deposed that the record of the licence was not available with them - The driver had been driving competently and there was no reason for the Appellant/Complainant to doubt the veracity of the driver s licence. In view of above facts and circumstances the impugned judgment is not liable to be sustained and is hereby set aside. Appeal allowed - decided in favor of appellant.
Issues Involved:
1. Rejection of insurance claim due to driver not possessing a valid license. 2. Applicability of Section 149(2)(a) of the Motor Vehicles Act, 1988. 3. Employer's duty in verifying driver's license authenticity. 4. Onus of proving negligence or willful breach on the insured. 5. Interpretation of legal precedents regarding insurer's liability. Issue 1: Rejection of Insurance Claim: The case involved a claim rejection by the Insurance Company due to the driver not having a valid license at the time of the accident. The insurer argued that the breach of conditions under Section 149(2)(a) of the Motor Vehicles Act absolved them of liability. The Insurance Company contended that the driver's license was fake, leading to the claim repudiation. The complainant sought compensation for the accident, but the insurer rejected the claim based on the driver's invalid license. Issue 2: Applicability of Section 149(2)(a) of the Motor Vehicles Act: Section 149(2)(a)(ii) of the Motor Vehicles Act states that if a vehicle is driven by a person without a valid license, the insurer is not liable for compensation. In this case, the licensing authority did not have a record of the driver's license, leading to a dispute regarding the insurer's liability. The court analyzed the legal provisions under this section to determine the insurer's responsibility in case of the driver possessing an invalid license. Issue 3: Employer's Duty in Verifying Driver's License Authenticity: The court deliberated on the extent of care and diligence expected of the employer while hiring a driver. The employer's duty includes checking the driver's license authenticity and ensuring the driver's competence. The employer is not required to verify the license's genuineness with the licensing authority unless prompted. The case highlighted the employer's responsibility in ensuring the driver's qualifications and competence before entrusting them with a vehicle. Issue 4: Onus of Proving Negligence or Willful Breach: The onus of proving that the insured did not take adequate care to verify the driver's license authenticity or was guilty of willful breach of insurance policy conditions lies on the insurer. The court emphasized that the insurer must establish negligence or willful breach on the insured's part to avoid liability. The burden of proof regarding the insured's diligence in verifying the driver's license authenticity rests with the insurer. Issue 5: Interpretation of Legal Precedents Regarding Insurer's Liability: The court referred to legal precedents, including the case of United India Insurance Co. Ltd. vs. Lehru & Ors., to determine the insurer's liability in cases where the driver possesses an invalid license. The court highlighted that the insurer cannot avoid liability solely on the ground of the driver not having a valid license. The judgment emphasized the need for insurers to prove the insured's negligence or willful breach to avoid compensation. This comprehensive analysis of the judgment addresses the rejection of insurance claims, the legal provisions of the Motor Vehicles Act, the employer's duty in verifying driver's licenses, the burden of proof on insurers, and the interpretation of legal precedents regarding insurer's liability.
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