Is Insurance Company Liable, if Driver had Expired License? SC Answers

On 23rd September 2020, a three-judges bench of the Supreme Court comprising Justice Sanjay Kishan Kaushal, Justice Aniruddha Bose and Justice Krishna Murari passed their Judgement in a Workmen Compensation matter deciding the liability of Insurance Company where the Driver of Insured had expired driving License.

Brief Facts of the case Beli Ram vs Rajinder Kumar & Ors area s follows:-

The First respondent, in this case, was employed by the appellant as a driver of a commercial truck. On 20.05.1999 he met with an accident and because of which he was left with a 20% disability.

The First Respondent instituted a suit under Workmen’s Compensation Act, 1923 before the Commissioner, Sadar, Bilaspur on 17.2.1999 and sought a compensation of Rs. 50000 from the appellant and the second respondent ( the insurer company ). 

The commissioner passed an order granting Rs. 94,464/- for the injuries suffered and Rs.67,313/- towards medical expenses of the first respondent. An interest was levied as well to the tune of 9% to be paid to the first respondent from the date of filing of the application till the date of payment. The insurer company was directed to pay the compensation amount while the appellant ( owner of the truck) was directed to pay the interest amount.

All the parties in the present suit filed an Appeal in the High Court on various grounds. One ground that was taken up by the insurer was that the driving licence held by respondent no.1 had expired three years before the date of the accident. The Hon’ble High Court considered this submission and the insurer company was absolved of its liability. The Court directed the owner (appellant) to pay the compensation, penalty of 50 per cent of the amount of compensation and the interest and the amount totalled to Rs 1,99,287.

A review petition was filed by the parties which were dismissed on 08.07.2009

The issue before the Supreme Court

The question of law that was placed before the Hon’ble Supreme Court was whether an insured (owner of vehicle) would be absolved of its liability if a valid driving license held by a person gainfully employed under him had expired.

Proceedings before the Supreme Court

The petitioner placed reliance on Supreme Court Judgement in Nirmala Kothari v. United India Insurance Company Limited, where it has held that if the insured has taken reasonable care in cross-checking the validity of a driver’s licence, then he should be absolved of liability.

The Supreme Court referred to three Judgements of various High Court of India to settle the issue in this case:-

  1. Delhi High Court Judgement in Tata AIG General Insurance Co. Ltd. v. Akansha & Ors. where it was held that if there was no valid licence on the date of the accident, then the insurance company should be absolved of its liability and the insured/ owner should prove that the terms of insurance policy were not breached.
  1. In the case Oriental Insurance co vs Manoj Kumar, the Allahabad High Court held that “in the case of an expired licence since the owner was supposed to be aware that the driving licence of the driver had expired and, thus, it was held that it was the duty of the owner to have ensured that the driver gets the licence renewed within time. In the absence of a valid driving licence, the vehicle was being driven in breach of the condition of the policy.”
  1. The Himachal Pradesh High Court’s Judgement in National Insurance Co. Ltd. v. Hem Raj & Ors It was held that in case of an expired license, a driver should have got it renewed within 30 days. If it has not been done, the driver cannot claim that the license should be renewed retrospectively. It was also held in this case that the owner must check if the license has expired or not.

The decision of the Court

Ultimately it was held that the owner of the truck did not take reasonable care in checking, if his employee had a valid driving licence. In this case, the employee was driving a commercial truck for over three years with an expired driving licence. 

As per the Court “The appellant has to, thus, bear responsibility and consequent liability of permitting the driver to drive with an expired licence over a period of three (3) years”

The appeals were summarily dismissed.

Case Details-

Case Title: Beli Ram vs Rajinder Kumar & Ors

Case No.: CIVIL APPEAL NOS. 7220-7221 OF 2011

Date of Judgment: 23.09.2020

Quorum: Justice Sanjay Kishan Kaushal, Justice Aniruddha Bose and Justice Krishna Murari

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