As has been noticed in Geeta Devi (supra) there is no
pleading or substantiation of due diligence having not been
employed at the time of entrustment. R1W1 was the
Advertising In-charge of the appellant who produced the
licence before the Court as Exhibit R1W1/1. The certificate
issued by the RTO Gurdaspur was also marked as R1 which
we referred to from the additional documents. In cross
examination, there was only a bland suggestion made to the
witness that the Directors of R2 knew that R1 possessed only
a fake driving licence. There were no questions put to the
witness, who was examined on behalf of the owner, as to the
actual entrustment of the vehicle or whether R1 was
employed regularly or temporarily and when such
employment commenced, which are crucial insofar as
proving or disproving due diligence by the owner at the time
of engagement of the driver and the entrustment of the
vehicle. As has been rightly held by the precedents above
noticed, the owner of a vehicle employing a driver can only
look at the licence produced by the person seeking
employment and is not expected to verify from the licence
issuing authority whether the licence is fake or not. {Para 16}
17. The insurance company from the totality of the
circumstances has to bring out the absence of due diligence
in the employment of the driver or the entrustment of the
vehicle, to prove breach by the insured, which is totally
absent in the present case.
Reportable
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
Civil Appeal Nos.12442-12446 of 2024
Hind Samachar Ltd. (Delhi Unit). Vs National Insurance Company Ltd. & Ors.
Author: K. VINOD CHANDRAN, J.
1. The appellant is the owner of a truck, involved in an
accident in which nine persons lost their lives and two
sustained injuries; passengers in another vehicle, a Matador
van. The appeal is against the “pay and recovery” directions
granted to the insurance company which had insured the
truck. The breach complained of and found in favour of the
insurance company by the High Court was of the driver of the
offending vehicle having produced a fake driving licence.
The High Court was considering also the quantum appeals in
which some modifications were made, with which we are not
concerned. The insurance companies; both of the truck and
the Matador van; found to be compositely negligent,
apportioned at the rate of 75:25, had paid the compensation
to the claimants.
2. Mr.Gopal Shankaranarayan, learned Senior Counsel
appearing for the appellant contended that the Tribunal
despite having noticed the two driving licences produced
directed the insurance company to indemnify the owner of
the vehicle, which is perfectly in order looking at the binding
precedents. The High Court has gone on surmises and
conjectures in presuming that the owner of the vehicle, the
appellant herein, had colluded with its driver to obtain a fake
licence based on a register produced from the office of the
District Transport Officer, Gurdaspur, which by reason of
many interpolations made therein could not have been relied
upon. The testimony of the witness, a Clerk from the office of
DTO was against the certificate issued by the very same
office, which had also indicated that the driving licence
issued was later renewed.
3. The High Court had also observed that the driving
licence seized from the driver of the vehicle, at the accident
spot, was a different one and also proved to have been not
issued from the office of RTO, Alwar. The same was produced
by the Clerk of the record room in Tis Hazari Court, Delhi with
the specific statement in the deposition that it was seized by
them. The Tribunal had specifically noticed that the Clerk of
the record room or the Court staff could not have made any
such seizure. The learned Senior Counsel relied upon the
decisions of this Court in United India Insurance Company
v. Lehru and Ors.(2003) 3 SCC 338
, National Insurance Co. Ltd. v. Swaran Singh2 and PEPSU RTC v. National Insurance Co. Ltd.3 and
IFFCO Tokio General Insurance Co. Ltd. v. Geeta Devi4.
4. Dr. Manish Singhvi, learned Senior Counsel appearing
for the respondent-insurance company pointed out that both
the licences produced; by the police and that produced by
the owner, were found to be fake. The registered owner of
the truck, hence, can be safely found to have been negligent
while entrusting the vehicle to the driver. It is vehemently
contended that unlike the usual practice of the driver
producing the driving licence, here, the owner’s
representative had produced it before the Tribunal which
clearly indicates a collusion. The driver was not examined
before the Tribunal. The Clerks of both DTO Gurdaspur and
RTO Alwar had deposed that the licences said to have been
issued from their office respectively R1W1/1 and A2 were not
actually issued from the said offices. There is absolutely no
reason to interfere with the finding of the High Court, and the
2
(2004) 3 SCC 297
3
(2013) 10 SCC 217
4 2023 SCC OnLine SC 1398
insurance company is definitely entitled to recover the
amounts from the appellant-owner of the truck.
5. Suffice it to notice that the accident occurred on
26.01.1993 at 02:00 am at an intersection when the two
vehicles, a truck and the Matador van carrying ten
passengers collided. The claim petitions filed before the
Tribunal were all of the passengers in the Matador van,
including the driver. Nine petitions were filed for
compensation for death occasioned and two, for the injuries
sustained as also one petition for the damage caused to the
Matador van. Before the Tribunal, the first respondent-the
driver of the truck, the second respondent-its owner and the
third respondent-the insurer, were impleaded, as originally
filed. On objection being raised by the insurer, alleging
negligence on the Matador van driver also, the owner and the
insurer of the van were impleaded subsequently as the 4th
and 5th respondents.
6. The Tribunal looked at the FIR, analysed the deposition
of PW-3, an injured in the accident who was travelling in the
Matador, and examined the site plan to find composite
negligence on the driver of both vehicles at the rate of 75:25.
The compensation was determined and appeals were filed by
both the insurance company and the owners of the vehicle,
challenging respectively the liability and the quantum. As we
noticed, we are only concerned with the “pay and recover”
directions issued by the High Court in favour of the insurer
and against the insured owner of the truck.
7. Lehru (supra) was a case in which though an allegation
of the driving licence produced being fake was raised, the
same was not proved before the Tribunal. The trite law was
noticed that even if the licence is fake, the insurance
company is liable to pay compensation, if they fail to prove
that the insured had deliberately committed breach in
entrusting the vehicle to a driver who had a fake licence. New
India Assurance Co. v. Kamla5 wherein despite finding
breach, the insurer was directed to pay compensation to the
third parties, but, enabled recovery from the insured was
noticed. It was categorically held that whether the insured
would be protected by such an order was left open to be
5
(2001) 4 SCC 342
considered on the facts of each case. It was held in Lehru and
Ors. (supra) that: -
“18……we are thus in agreement with what is laid
down in the aforementioned cases viz. that in order
to avoid liability it is not sufficient to show that the
person driving at the time of accident was not duly
licensed. The Insurance Company must establish
that the breach was on the part of the insured.”
8. In Swaran Singh (supra), a three Judge Bench of this
Court, considered the purported conflict in Kamla (supra)
and Lehru and Ors. (supra) to hold as under: -
“99. So far as the purported conflict in the
judgments of Kamla (2001) 4 SCC 342 and Lehru
(2003) 3 SCC 338 is concerned, we may wish to
point out that the defence to the effect that the
licence held by the person driving the vehicle was
a fake one, would be available to the insurance
companies, but whether despite the same, the plea
of default on the part of the owner has been
established or not would be a question which will
have to be determined in each case.”
9. In PEPSU RTC (supra) it was held so on the facts arising
in the said case, as under: -
“11. On facts, in the instant case, the appellant
employer had employed the third respondent
Nirmal Singh as driver in 1994. In the process of
employment, he had been put to a driving test and
he had been imparted training also. The accident
took place only after six years of his service in PRTC
as driver. In such circumstances, it cannot be said
that the insured is at fault in having employed a
person whose licence has been proved to be fake
by the Insurance Company before the Tribunal. As
we have already noted above, on scanning the
evidence of the licensing authority before the
Tribunal, it cannot also be absolutely held that the
licence to the driver had not been issued by the said
authority and that the licence was fake. Though the
appellant had also taken a contention that the
compensation is on the higher side, no serious
attempt has been made and according to us
justifiably, to canvas that position.”
10. In Geeta Devi (supra) this Court deprecated the
practice of the insurance companies blithely claiming that the
deceased vehicle owner did not conduct due diligence while
employing a driver; which is not a condition prescribed
either in the statute or in the insurance policy, despite the
wealth of precedents. It was held so in paragraph 15, as
under: -
“15. Applying the afore-stated edicts to the case on
hand, it may be noted that the petitioner-insurance
company did not even raise the plea that the owner
of the vehicle allowed Ujay Pal to drive the vehicle
knowing that his licence was fake. Its stand was that
the accident had occurred due to the negligence of
the victim himself. Further, the insurance policy did
not require the vehicle owner to undertake
verification of the driving licence of the driver of the
vehicle by getting the same confirmed with the
RTO. Therefore, the claim of the petitionerinsurance 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, is without pleading and
proof.”
11. Now, coming to the facts of this case, A2 was produced
by R3W1, a Clerk of the record room in Tis Hazari Court as
was pointed out by the appellant. While referring to his
deposition, the Tribunal had in paragraph 179 specifically
stated that neither the Clerk nor the Court could have seized
the driving licence at the time of accident. It is also stated in
paragraph 184 that: ‘Interestingly, the police had seized the
driving licence A2 from the driver of the Tempo issued from
Alwar, renewed on 18.04.1990 till 17.04.1993’. We would, for
the moment, assume that it is a typographical error and the
statement is that A2 was seized from the driver of the truck
itself. Even then, there is no evidence to substantiate the
seizure having been made, nor even the seizure mahazar
produced, which the police would have recorded if such
seizure had been made at the accident spot or from the
driver, later on.
12. We do not find any substance in the argument of the
respondent-insurer that a collusion can be validly inferred
since the driving licence was produced by the owner. In fact,
the owner of the truck is not an individual and is a company,
as we see from the cause title. Undisputedly, even if the tortfeasor is the driver, the liability for any negligence of the
driver rests on the owner of the vehicle, vicariously. There
can be no suspicion raised merely because the owner had
produced the driving licence before Court. It only indicates
that the owner had been diligent enough to procure the
driving licence from the driver and produce it before the
Tribunal, so as to validly raise a case for indemnification by
the insurer.
13. The office of the DTO, Gurdaspur had also issued a
certificate indicating that the driving licence No.5288 issued
in the name of the first respondent was so issued on
05.04.1991 valid from 05.04.1991 to 04.04.1994 and,
thereafter renewed from 11.08.1994 to 10.08.1997 vide entry
No.2903 dated 11.08.1994, produced along with the
additional documents by the appellant and marked before
the Tribunal as R-1.
14. The driving licence issued from the office of DTO
Gurdaspur was produced as R1W1/1 and R3W3 was a Clerk
from the office of DTO Gurdaspur who claimed that Exhibit
R1W1/1 was not issued from their office and no amount was
deposited in the name of R1 towards driving licence fees in
their office on 21.08.1990. Immediately, we have to notice that
the date 21.08.1990 has no nexus with the date of issuance of
R1W1/1, which was first issued on 05.04.1991 and the renewal
effected on 11.08.1994.
15. Further, it is to be noticed that the DL register produced
from the office of DTO Gurdaspur was full of interpolations. A
colour photograph of 1st respondent was found in the register
but the name shown was different. In cross examination, it
has come out that there were interpolations and deletions
made as against other entries too. Also on the ground of there
being no possibility of a colour photograph in the year 1990,
the High Court found collusion between the owner and the
driver. The collusion at best can be only alleged for the
production of the licence and not with respect to the
entrustment of the vehicle.
16. As has been noticed in Geeta Devi (supra) there is no
pleading or substantiation of due diligence having not been
employed at the time of entrustment. R1W1 was the
Advertising In-charge of the appellant who produced the
licence before the Court as Exhibit R1W1/1. The certificate
issued by the RTO Gurdaspur was also marked as R1 which
we referred to from the additional documents. In cross
examination, there was only a bland suggestion made to the
witness that the Directors of R2 knew that R1 possessed only
a fake driving licence. There were no questions put to the
witness, who was examined on behalf of the owner, as to the
actual entrustment of the vehicle or whether R1 was
employed regularly or temporarily and when such
employment commenced, which are crucial insofar as
proving or disproving due diligence by the owner at the time
of engagement of the driver and the entrustment of the
vehicle. As has been rightly held by the precedents above
noticed, the owner of a vehicle employing a driver can only
look at the licence produced by the person seeking
employment and is not expected to verify from the licence
issuing authority whether the licence is fake or not.
17. The insurance company from the totality of the
circumstances has to bring out the absence of due diligence
in the employment of the driver or the entrustment of the
vehicle, to prove breach by the insured, which is totally
absent in the present case. The High Court had erred in
finding that there was collusion between the employer and
the employee merely for reason of the driving licence having
been produced by the employer and the driver having not
contested the claim. The driver, as has been noticed in a
number of decisions of this Court, would have kept himself
away from the box, for fear of incriminating himself; since a
prosecution was pending against him. In any event, the
vicarious liability to satisfy the damages caused by the
negligence of the employee is on the employer, the later of
whom has to contest the matter. Not only was the driving
licence, as issued to the driver produced, but, a certificate
showing its further renewal was also produced. In fact, we
specifically notice that the renewal made is not an automatic
renewal which has to be carried out within 30 days of the
expiry of a driving licence, as per the Motor Vehicles Act and
the Rules made thereunder. Herein the validity period of the
licence, originally issued expired on 04.04.1994 and the
renewal was on 11.08.1994.
18. We find absolutely no reason to sustain the order of the
High Court, mulcting the liability on the owner of the truck.
We set aside the order of the High Court, insofar as the rights
of recovery of the award amounts granted to the insurer. The
other directions, as issued by the Tribunal and modified by
the High Court, including determination of the award
amounts would stand undisturbed.
19. The appeals stand allowed.
20. Pending application, if any, shall stand disposed of.
………….……………………. J.
(K. VINOD CHANDRAN)
………….……………………. J.
(N. V. ANJARIA)
NEW DELHI;
OCTOBER 08, 2025.
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