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Supreme Court of India
Nirmala Kothari vs United India Insurance Co.Ltd. on 4 March, 2020Author: Krishna Murari
Bench: N.V. Ramana, Sanjiv Khanna, Krishna Murari
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REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NOS. 1999-2000 OF 2020
(ARISING OUT OF SPECIAL LEAVE PETITION (C) NOS. 14739-14740 OF 2018)
NIRMALA KOTHARI ….. APPELLANT(S)
VERSUS
UNITED INDIA INSURANCE CO. LTD. ….. RESPONDENT(S)
JUDGMENT
KRISHNA MURARI, J.
Leave granted.
2. The Appellant/Complainant, Nirmala Kothari’s husband, Vinod
Signature Not Verified
GEETA AHUJA Ray Kothari was owner of a Hyundai Elantra vehicle, registration no.
Digitally signed by
Date: 2020.03.04
15:39:02 IST
Reason:
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RJ36CA 0111, which was insured with the Insurance Company for a
sum of Rs.5,00,000/- .
3. The said vehicle met with an accident with a tractor bearing no.
HR38K 3216, on 06.06.2010 as a result of which the Appellant’s
husband, Vinod Ray Kothari, who was the owner of the car, and his
daughter died and the vehicle was damaged. The driver of the vehicle,
Dharmendra Singh Chauhan got an FIR registered with the police. The
Respondent/ Insurance Company, on intimation having been given to
them, appointed a spot surveyor, and also a regular surveyor to carry
out survey in the matter, but the claim was rejected by them vide their
letter dated 28.03.2011. The Respondent/ Insurance Company stated in
the repudiation letter that the driver Dharmendra Singh Chauhan did not
have a proper driving licence at the time of the accident. The licence
produced by him, alleged to have been procured from the office of the
licencing authority, Sheikh Sarai, Delhi could not be verified, as the
concerned officer of the transport department returned their letter with
the endorsement that the record pertaining to the said licence was not
available. Alleging deficiency on the part of the Respondent/ Insurance
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Company, the complainant filed a consumer complaint, seeking
directions to the Respondent/Insurance Company to pay the Insured
declared value (IDV) i.e. a sum of Rs. 5,00,000/- alongwith interest @
9% per annum from the date of filing the complaint till payment and also
to pay a sum of Rs. 50,000/- as compensation for mental agony and
Rs. 11,000/- as litigation cost. The District Forum vide their order dated
30.05.2012, allowed the said consumer complaint and directed
payment of an amount of Rs. 3,57,500/- to the complainant, as
assessed by the surveyor alongwith interest @ 9% p.a. and cost of
litigation of Rs. 2,500/-. Being aggrieved against the said order of the
District Forum, the Respondent/ Insurance Company challenged the
same by way of appeal before the State Commission, but the said
appeal having been dismissed vide impugned order dated 18.09.2015,
the Respondent/ Insurance Company came before National
Commission by way of the Revision Petition No. 2835/2015.
4. The complaint no. 227/2012 had been filed by the same
complainant Nirmala Kothari, against the Respondent/ Insurance
Company, requesting for compensation of Rs. 2,00,000/- as accident
claim with interest @ 9% per annum and compensation of Rs. 20,000/-
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for mental agony and Rs. 11,000/- for cost of litigation. The
Respondent/ Insurance Company repudiated the said claim also vide
their letter dated 14.02.2012 on the same ground that Dharmendra
Singh Chauhan, the driver of the vehicle did not possess a valid and
effective driving licence at the time of the accident in question.
5. The consumer complaint no. 227/2012 was also allowed by the
District Forum, vide order dated 28.02.2013 and the
Respondent/Insurance Company was directed to pay an amount of Rs.
2,00,000/- for personal accident claim along with interest @ 9% per
annum from the date of filing the complaint and the cost of litigation of
Rs. 2,500/-. Being aggrieved against the said order of the District
Forum, the Respondent/ Insurance Company challenged the same by
way of appeal no. 366/2013 before the State Commission. The said
appeal having been dismissed vide impugned order dated 01.08.2016,
the Respondent/ Insurance Company came before the National
Commission by way of the Revision Petition No. 3053/2016. The
National Commission absolved the Respondent/ Insurance Comapany
of its liability since no record of the licence of the Driver was found with
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the licencing authority. Thus, aggrieved the Appellant/Complainant has
come up in appeal.
6. It is the case of the Respondent/ Insurance Company that in the
absence of a valid and effective driving licence with the driver, there
was fundamental breach of the terms and conditions of the insurance
policy in question and hence, the claim made by the Appellant/
Complainant was not payable. Whereas, it is argued by the Appellant/
Complainant that at the time of employing the driver, the documents like
driving licence etc. are generally checked but no one usually verifies the
genuineness of the same.
7. Breach of conditions under Section 149(2)(a) of the Motor
Vehicles Act, 1988 absolves the insurer of its liability to the insured.
Section 149(2)(a)(ii) deals with the conditions regarding driving licence.
In case the vehicle at the time of accident is driven by a person who is
not duly licenced or by a person who has been disqualified from holding
or obtaining a driving licence during the period of disqualification, the
insurer is not liable for compensation. In the instant case it is a matter of
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fact that no record of the licence bearing no. P03041288753070 was
found with the licensing authority.
8. Having set forth the facts of the present case, the question of law
that arises for consideration is what is the extent of care/diligence
expected of the employer/insured while employing a driver? To answer
this question, we shall advert to the legal position regarding the liability
of the Insurance Company when the driver of the offending vehicle
possessed an invalid/fake driving licence. In the case of United India
Insurance Co. Ltd. vs. Lehru & Ors. 1 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. The
law with this respect has been discussed in detail in the case of Pepsu
RTC vs. National Insurance Co. 2 We may extract the relevant
paragraph from the Judgment: (Pepsu case, SCC pp. 223-24, para10)
1 (2003) 3 SCC 338 : 2003 SCC (Cri) 641
2 (2013) 10 SCC 217
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“In a claim for compensation, it is certainly open to the
insurer under Section 149(2)(a)(ii) to take a defence that
the driver of the vehicle involved in the accident was not
duly licensed. Once such a defence is taken, the onus is
on the insurer. But even after it is proved that the licence
possessed by the driver was a fake one, whether there is
liability on the insurer is the moot question. 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. That is what is
explained in Swaran Singh’s case (supra). If despite such
information with the owner that the licence possessed by
his driver is fake, no action is taken by the insured for
appropriate verification, then the insured will be at fault
and, in such circumstances, the insurance company is
not liable for the compensation.”
9. 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
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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.
10. The view taken by the National Commission that the law as settled in
the Pepsu case (Supra) is not applicable in the present matter as it related
to third-party claim is erroneous. It has been categorically held in the case
of National Insurance Co. Ltd. vs. Swaran Singh & Ors. 3 (SCC pp.341,
para 110) that,
“110. (iii)…Mere absence, fake or invalid driving licence
or disqualification of the driver for driving at the relevant
time, are not in themselves defences available to the
insurer against either the insured or the third parties.
To avoid its liability towards the insured, the insurer has
to prove that the insured was guilty of negligence and
failed to exercise reasonable care in the matter of fulfilling
the condition of the policy regarding use of vehicles by a
duly licenced driver or one who was not disqualified to
drive at the relevant time.”
3 (2004) 3 SCC 297 : 2004 SCC (Cri) 733
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11. 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.
12. On facts, 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. It is not the
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contention of the Respondent/ Insurance Company that the
Appellant/complainant is guilty of willful negligence while employing the
driver. 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. The appeals accordingly
stand allowed. The respondent/ Insurance Company is held liable to
indemnify the appellant.
……………………… J.
(Navin Sinha)
……………………… J.
(Krishna Murari)
NEW DELHI;
04TH MARCH, 2020
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