The Supreme Court, comprising a bench of Justice Sanjay Karol and Justice N. Kotiswar Singh, has held that an insurance company cannot be fastened with liability to compensate motor accident victims if the driver of the offending vehicle did not possess a valid driving license on the date of the accident and the alleged loss of official records was not established through primary evidence. Ruling in favour of Reliance General Insurance Company Ltd., the top court set aside a judgment of the High Court of Punjab and Haryana and restored the finding of the Motor Accidents Claim Tribunal (MACT), applying the principle of “pay and recover” to permit the insurer to recover the awarded compensation from the vehicle’s owner and driver.
Background of the Case
The case originates from a road accident on October 14, 2009, when an offending vehicle hit a two-wheeler driven by the claimant. While rash and negligent driving was not in dispute, a controversy arose regarding the driver Om Prakash’s license status on the date of the accident.
The MACT, Panipat, awarded Rs 86,95,947 with 7.5% interest to the claimant, but held only the driver and vehicle owner (Rajinder Singh) liable, exonerating the insurer on the ground that the driver did not hold a valid driving license when the accident occurred.
On appeal, the High Court of Punjab and Haryana reversed this finding, enhanced the total compensation to Rs 1,08,08,909 with 8% interest, and made Reliance General Insurance liable to pay. The High Court relied on a communication issued by a Motor Licensing Officer which stated that due to a technical error during data migration between outsourced vendors (HCL to DIMTS), license renewal records for the period 2007 to 2010 were lost. Aggrieved by being held liable, the insurer appealed to the Supreme Court.
Evidentiary Standards and Validity of Driving License
The Supreme Court observed that the core issue was whether the driver possessed a valid driving license on the date of the accident. Examining the evidence, the court noted that official witness testimony and record extracts established that the license had expired on June 21, 2007, and was renewed only on August 25, 2010, upon payment of a penalty for the intervening period.
Addressing the High Court’s reliance on secondary evidence regarding system data loss, the Supreme Court held that official records must be proved through primary evidence as mandated under Sections 61 to 64 of the Indian Evidence Act, 1872, unless specific conditions under Section 65 are pleaded and proved.
Referring to the Constitution Bench decision in Neeraj Dutta v. State (NCT of Delhi), the bench highlighted:
“Primary evidence is the best evidence and it affords the greatest certainty of the fact in question. Thus, when a particular fact is to be established by production of documentary evidence, there is no scope for leading oral evidence. What is to be produced is the primary evidence i.e. document itself. It is only when the absence of the primary source has been satisfactorily explained that secondary evidence is permissible to prove the contents of documents.”
The court also cited Tharammel Peethambaran v. T. Ushakrishnan, summarizing the legal principles on secondary evidence:
“Primary evidence is the rule, while secondary evidence is an exception admissible only in the absence of primary evidence.”
The bench observed that no official record was produced to demonstrate the actual loss of data or recovery steps taken by the transport department, making the oral assertions and unverified letters insufficient to prove the existence of a valid license during the gap period.
Vehicle Owner’s Responsibility and Retroactive Renewal
The Supreme Court emphasized that payment of a penalty for late renewal confirmed the existence of a gap in validity. Citing Telangana State Level Police Recruitment Board v. Penjarla Vijay Kumar, the court noted:
“The theory that once a licence is renewed, even after a gap, the renewal would operate from a back date implying that the licence was continuing and valid even for and during the interregnum cannot be countenanced…”
The court further observed that the vehicle owner failed to step into the witness box to prove that reasonable precautions were taken to verify the driver’s license status. Reaffirming the principles in Beli Ram v. Rajinder Kumar (which approved National Insurance Co. Ltd. v. Hem Raj), the court held that vehicle owners owe a responsibility to society and cannot wash their hands of checking license renewals.
Decision and Court Suggestions
Allowing the appeal, the Supreme Court held that Reliance General Insurance cannot be made liable to bear the final award amount. To ensure the claimants are not affected, the court applied the “pay and recover” principle, directing that compensation released to the claimants be retained, while granting Reliance General Insurance liberty to recover the full sum from the vehicle owner and driver.
Observing the financial burden that such oversights place on individuals, the court underscored the paramount importance of maintaining a valid driving license and suggested that the Ministry of Road Transport and Highways and state counterparts launch awareness campaigns, streamline renewal processes, regulate driving schools, and ensure test accessibility in regional languages.
Case Title: Reliance General Insurance Company Ltd. v. Om Parkash & Ors.
Case No.: Civil Appeal Nos. of 2026 (Arising out of SLP(C) Nos. 6743-6744 of 2023)
Bench: Justice Sanjay Karol and Justice N. Kotiswar Singh
Date: July 30, 2026
