Can an Insurance Company refuse to Compensate if Driver of Offending Vehicle had a Fake Driving License? NO says HC,

 

 

 The Gauhati High Court has observed that Insurance Company cannot be absolved of the liability to pay compensation in cases where the driver of the offending vehicle possesses a fake license.

The single-judge bench of Justice Arun Dev Choudhury while adjudicating upon an appeal by the Insurance Company against MACT order on the ground that the award ought to have been made payable by the owner cum driver of the vehicle as it is established that he was possessing fake driving license, reiterated Supreme Court's rulings in the same.

The Court referred to Pepsu Road Transport Corporation Vs. National Insurance Company, 2013 Latest Caselaw 582 SC wherein the Supreme Court established three key facts:
I. It is 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.
II. If such defence is taken, the onus is upon the insurance to prove the same.
III. The owner of a vehicle when hires a driver, he has to check the validity of the driving license and to satisfy himself as to the competent of the driver. The owner cannot be expected to go beyond that, to the extent of verifying the genuineness of the driving license with the licensing authority before hiring the services of the driver. In an event, if, despite having information regarding a fake license, yet the owner does not take appropriate action for verification of the matter, then, insured will be not at fault and in circumstances, insurance company is not liable for compensation.

Further reference was made to National Insurance Co. Ltd. Vs. Swaran Singh & Ors, 2004 Latest Caselaw 12 SC wherein the Supreme Court has observed that mere absence, fake or invalid driving license 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 3rd parties. It was also observed that 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 policy regarding use of vehicle by duly licensed driver or one who was not disqualified to drive at that relevant point of time.The Court also cited Ram Chandra Singh Vs. Rajaram and Ors., 2018 Latest Caselaw 544 SC wherein the Supreme Court after deliberating on previous judgements, categorically held that the mere fact that driving license is fake, per- se, would not absolve the insurer and in that case, the principle of pay and recovery shall be applicable.

Another ruling on the same line, in was also mentioned wherein the Court laid down that if a driver of an offending vehicle does not possess a valid driving license, the principle of “pay and recover” can be ordered.

Noting that the 3rd party victim shall not be allowed to suffer any further, the Court concluded that Tribunal has not committed any error while passing the impugned judgment.

CASE TITLE: UNITED INDIA INSURANCE COMPANY LIMITED vs SMTI DAMYANTI LAHKAR and ANR

 

CASE DETAILS: Case No. : MACApp./110/2016

CORAM: Justice Arun Dev Choudhury

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(With input from news agency language)

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