Supreme Court: Fake License By Driver Doesn't Absolve Insurer in motor accident claim petition Unless Vehicle Owner Knowingly Allowed Breach

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.

Citation: 2025 INSC 1204

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Supreme Court: The owner cannot be expected to verify the genuineness of the driving licence with the licensing authority before hiring the services of the driver, unless required by Insurance

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. {Para 8}

 IN THE SUPREME COURT OF INDIA

Civil Appeal No. 8276 of 2009

Decided On: 26.08.2013

Pepsu Road Transport Corporation Vs. National Insurance Company

Hon'ble Judges/Coram:

Gyan Sudha Misra and Kurian Joseph, JJ.

Author: Kurian Joseph, J.

Citation: (2013) 10 SCC 217, MANU/SC/0877/2013.

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Whether claimant can be denied compensation under motor accident if driving license of driver was fake?

 In authority National Insurance Company Limited v. Geeta Bhat & Ors. MANU/SC/7390/2008 : 2008 (3) R.C.R. (Civil) page 44, the Hon'ble Apex Court has held that owner of the vehicle despite taking reasonable care might have not been able to find out as to whether the licence was fake one or not. It has been further stated that owner is not expected to verify the genuineness thereof from the Transport authorities. The Hon'ble Apex Court in authority In authority United India Insurance Co. Ltd. v. Lehru and Ors. case (supra), the Hon'ble Apex Court has held as under:--

"20. When an owner is hiring a driver he will therefore have to check whether the driver has a driving licence. If the driver produces a driving licence which on the face of its looks genuine, the owner is not expected to find out whether the licence has in fact been issued by a competent authority or not. The owner would then take the test of the driver. If he finds that the driver is competence to drive the vehicle, he will hire the driver. We find it rather strange that Insurance companies expect owners to make enquires with RTO's, which are spread all over the country, whether the driving licence shown to them is valid or not. Thus where the owner has satisfied himself that the driver has a licence and is driving competently there would be no breach of section 149(2)(a)(ii). The Insurance Company would not then be absolved of liability. If it ultimately turns out that the licence was fake the Insurance Company would continue to remain liable unless they prove that the owner/insured was aware or had noticed that the licence was fake and still permitted that person to drive. More importantly even in such a case the Insurance Company would remain liable to the innocent third party, but it may be able to recover from the Insured. Thus is the law which had been laid down in Skandia's, Sohan Lal Passi's and Kamla's case. We are in full agreement with the views expressed therein and see no reason to take a different view."

20. The Tribunal has not gone into this aspect that Insurance Company has failed to prove the fact that there was willful default on the part of the appellant. The expectation from the owner is not that he/she should verify the validity of the licence from licensing Authority. Each case has to be decided on its on peculiar facts and circumstances. In the present case, appellant has employed the driver after taking his driving test and after going through the driving licence. Various renewal endorsements were found to be valid. So, I have no hesitation in holding that the Insurance Company has failed to prove that there was willful default on the part of the appellant and consequently the finding on issue No. 4 stands reversed and it is held that Insurance Company has failed to prove this issue and the same stands decided against the Insurance Company and in favour of the appellant.

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH

FAO Nos. 856 of 2013 (O&M) and 1108 of 2013

Decided On: 15.07.2015

 Parveen Chawla and Ors.  Vs. Shakuntla Rani and Ors.

Coram:Karam Chand Puri, J.

 Citation: 2016ACJ535, 2016(1)ALLMR80, 2016(1)RCR(Civil)187

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