Supreme Court: In a special leave petition against the Delhi High Court order, whereby the Motor Vehicle Accident Claims Tribunal’s award which granted the right of recovery to the IFFCO Tokio General Insurance Co. Ltd. (‘petitioner-insurance company’) was reversed, the Division Bench of C.T. Ravikumar and Sanjay Kumar, JJ. dismissed the appeal and upheld the Delhi High Court’s order, that the petitioner-insurance company was not liable to recover the damages paid to the accident victim from the owner of the vehicle for breach of the insurance conditions.
Factual Matrix
The dependents of the victim who suffered fatal injuries in accident approached the Motor Accident Claims Tribunal, Rohini Courts, Delhi, under Sections 140 and 166 of the Motor Vehicles Act, 1988 (‘the Act’), seeking compensation. The Tribunal awarded a sum of Rs. 13,70,000/- as compensation with interest. However, on finding that the driver of the Tempo had a fake driving licence, the Tribunal opined that the petitioner-insurance company would not be liable to pay the compensation, therefore, directed the petitioner-insurance company to deposit the awarded amount with liberty to recover the same from the present owners of the vehicle. Aggrieved by the decision, the owners of the vehicle filed an appeal before the Delhi High Court, whereby it was opined that the petitioner-insurance company did not prove that the deceased vehicle owner did not take adequate steps to verify the genuineness of the driving licence and in the absence of such a plea on its part, the Tribunal could not have concluded that there was a breach of the terms and conditions of the insurance policy. The High Court, therefore, held that the petitioner-insurance company did not have the right to recover the compensation from the vehicle owners.
Decision
The Court said that there is no mandate in the Act or the condition in the insurance policy which requires that a driving skill test should be undertaken without fail before employing a driver. Therefore, the Court said that it is not open to the petitioner-insurance company to cite the same as a breach of the terms and conditions of the insurance policy, particularly when there was no such term or condition in the policy. Regarding the contention that the driver of the vehicle was not duly licensed as he possessed a fake license, the Court noted that neither Section 149(2)(a)(ii) of the Act nor the ‘Driver Clause’ in the insurance policy provided that the owner of the insured vehicle must, as a rule, get the driving licence of the person employed as a driver for the said vehicle verified and checked with the transport authorities concerned.
The Court said that generally, no person employing a driver would undertake such a verification exercise and would be satisfied with the production of a valid licence issued by a competent authority. The Court also said that it is impracticable for every person employing a driver to expect the transport authority concerned to verify and confirm whether the driving licence produced by that driver is a valid and genuine one. Therefore, the Court said that it is not open to the petitioner-insurance company, which also did not prescribe such a stringent condition, to cite the failure of the deceased vehicle owner to get driver’s driving licence checked with the RTO as a reason to disclaim liability under the insurance policy.
The Court referred to Skandia Insurance Co. Ltd. v. Kokilaben Chandravadan, (1987) 2 SCC 654, wherein it was observed that “it is therefore abundantly clear that the insurer will have to establish that the insured is guilty of an infringement or violation of a promise that a person who is duly licensed will have to be in charge of the vehicle. It is only when the insured himself places the vehicle in charge of a person who does not hold a driving licence, that it can be said that he is ‘guilty’ of the breach of the promise that the vehicle will be driven by a licensed Driver. It must be established by the insurance company that the breach was on the part of the insured and that it was the insured who was guilty of violating the promise or infringement of the contract. Unless the insured is at fault and is guilty of a breach the insurer cannot escape from the obligation to indemnify the insured and successfully contend that he is exonerated having regard to the fact that the promisor (the insured) committed a breach of his promise”.
Further, the Court referred to National Insurance Co. Ltd. v. Swaran Singh, (2004) 3 SCC 297, wherein the Court while interpreting Section 149 of the Act observed that “an insurance company which wished to avoid its liability is not only required to show that the conditions laid down in Section 149 (2)(a) or (b) are satisfied but is further required to establish that there has been a breach on the part of the insured. Such a breach on the part of the insured must be established by the insurer to show that the insured used or caused or permitted to be used the insured vehicle in breach of the provisions. Where the insurer, relying upon the violation of law by the assured, takes exception to pay the assured or a third party, it must prove a willful violation of the law by the assured”.
The Court also referred to Ram Chandra Singh v. Rajaram, (2018) 8 SCC 799, wherein the issue was whether an insurance company could be absolved of liability on the ground that the insured vehicle was being driven by a person who did not have a valid driving licence at the time of the accident? The Court held that it is only if the owner was aware of the fact that the licence was fake but still permitted such a driver to drive the vehicle that the insurer would stand absolved from the liability of paying. It was also held that mere fact that the driving licence was fake, per se, would not absolve the insurer.
In the matter at hand, the Court noted that the petitioner-insurance company did not even raise the plea that the owner of the vehicle allowed the driver to drive the vehicle with his fake licence. Therefore, the Court said that the claim of the petitioner-insurance company that it has the right to recover the compensation from the owners of the vehicle, owing to a willful breach of the condition of the insurance policy, viz., to ensure that the vehicle was driven by a licenced driver, was without pleading and proof. The Court reiterated that once a seemingly valid driving licence is produced by a person employed to drive a vehicle, unless such licence is demonstrably fake on the face of it, warranting any sensible employer to make inquiries as to its genuineness, or when the period of the licence has already expired, or there is some other reason to entertain a genuine doubt as to its validity, the burden to prove that there was a failure on the part of the vehicle owner in carrying out due diligence apropos such driving licence before employing that person to drive the vehicle is upon the insurance company.
The Court said that in the present case no evidence was placed on record which would draw an inference that the vehicle owner ought to have gotten verified the driver’s driving licence. The Court held that it was for the petitioner-insurance company to prove willful breach on the part of the said vehicle owner. Therefore, the Court upheld the impugned order of the High Court.
[IFFCO Tokio General Insurance Co. Ltd. v. Geeta Devi, 2023 SCC OnLine SC 1398, Decided on: 30-10-2023]
