The Hindu : `Insurance firm cannot escape liability even if licence is fake'

Online edition of India's National Newspaper
Tuesday, Feb 03, 2004

National

National

`Insurance firm cannot escape liability even if licence is fake'

By J. Venkatesan

NEW DELHI, FEB. 2. The Supreme Court has held that the absence of the licence with the driver of a motor vehicle or his having a fake or invalid licence would not absolve the insurance company of the obligation payment of compensation to the victims.

A three-Judge Bench, comprising the Chief Justice V.N. Khare, Justice D.M. Dharmadhikari and Justice S.B. Sinha, while giving this ruling recently, however, said that if the driver did not have the licence or possessed a fake licence at the time of accident, then though the insurance company would have to pay third party insurance, it could recover the same from the owner of the vehicle.

The Bench made it clear that the insurance company alleging breach of conditions must establish the said breach by cogent evidence. "To avoid its liability towards the insured vehicle, the company has to prove that the insured person was actually negligent and had failed to exercise reasonable care in the matter of fulfilling the condition of the policy regarding the use of vehicles by duly licensed driver or one who was not disqualified to drive at the relevant time, whether having the licence or not," the Bench ruled.

Even where the insurance company was liable to prove the breach on part of the vehicle owner, concerning the policy of holding a valid licence by the driver, the company would not be allowed to avoid its liability unless the said breach on condition of the driving licence was the fundamental cause of the accident.

The ruling was given by the Bench on a batch of petitions filed by National Insurance Company Ltd (NICL) relating to the correct interpretation of Section 149 of the Motor Vehicles Act, 1988 vis-a-vis Sub-Section (4) and (5) of the Act, and challenging various awards in favour of vehicle owners passed by the Motor Vehicle Claims Tribunals (MACTs) and different High Courts.

The NICL had sought a correct interpretation of the law with regard to the insurance claims if: the licence was fake; the driver did not have any licence at the time of accident; the licence had expired; the driver was driving a vehicle other than the category for which the licence was provided and the status of the learner's licence.

Dismissing the petitions, the Bench made it clear that in the course of adjudicating the claim for compensation and to decide the availability of defence to the insurer, the Tribunal had the power and jurisdiction to decide disputes inter se between the insurer and the insured and the award made thereon was enforceable and executable.

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