Harish Chand Kalakoti v. Jawahar Lal Agarwal others, whereby the Tribunal awarded a sum of Rs

confirm whether the driving licence produced by that driver is a valid and genuine one, subject to just exceptions. In fact, no such mandatory condition is provided in any insurance policy and it is not open to the petitioner-insurance company, which also did not prescribe such a stringent condition, to cite the failure of the deceased vehicle owner to get claimant’s driving licence checked with the RTO as a reason to disclaim liability under the insurance policy.

15. In effect and in consequence, the petitioner- insurance company cannot blithely claim that the deceased vehicle owner did not conduct due diligence while employing Mukesh Kumar as a driver, by now insisting upon a condition which was neither prescribed in the statute nor in the insurance policy. More so, an unrealistic condition that every person employing a driver must get the driving licence of such driver verified and confirmed by the RTO concerned, irrespective of the actual necessity to do so.

16. In the present case, the Insurance Company seeks to evade its liability solely on the ground that the 5 driver of the offending vehicle, did not possess a valid Driving Licence. On that basis, it contends that the owner alone should be made liable for payment of compensation. However, the said contention does not hold merit in view of the settled legal position laid down by the Hon’ble Supreme Court in the case National Insurance Co. Ltd. vs. Swaran Singh and others; reported in (2004) 3 SCC 297. In the summary of findings (iii), the Hon’ble Court held that: condition of policy invalid driving “110.(iii) The breach e.g. disqualification of the driver or invalid driving licence of the driver, as contained in sub-section (2)(a)(ii) of Section 149, has to be proved to have been committed by the insured for avoiding liability by the insurer. Mere absence, disqualification of the driver for driving at the relevant time, are not in themselves defences available to the insurer against either the insured or the third parties. To avoid its liability towards the insured, the insurer has to prove that the insured was guilty of negligence and failed to exercise reasonable care in the matter of fulfilling the condition of the policy regarding use of vehicles by a duly licensed driver or one who was not disqualified to drive at the relevant time.” licence

17. The Hon’ble Supreme Court further clarified that the insurer must establish by cogent evidence that there was a fundamental breach in the terms and conditions of the insurance policy, and that such breach was wilful and intentional on the part of the insured.

18. The burden, therefore, lies on the Insurance Company to establish that the insured (i.e. the owner- appellant herein) was guilty of committing such a fundamental breach in terms of the policy. In the present case, the Insurance Company has failed to discharge this burden by leading any reliable or cogent evidence to establish that the owner knowingly allowed a person without a valid Driving Licence to drive a vehicle or acted in conscious disregard of the policy conditions. 6

19. The legal backing for this position is found in Section 149 (2)(a)(ii) of the Motor Vehicles Act, 1988 which states as under: “149 (2)(a)(ii) a condition excluding driving by a named person or persons or by any person who is not duly licensed, or by any person who has been disqualified for holding or obtaining a driving licence during the period of disqualification; or”

20. This provision gives the insurer a statutory defense to avoid liability on the ground of breach of policy conditions relating to the DL.

21. However, the judicial interpretation of this provision, as enunciated by the Hon’ble Supreme Court in the case of Swaran Singh (Supra) and subsequent judgments, adds a crucial requirement: the insurer must prove that the insured was guilty of a willful and fundamental breach of the insurer policy terms. The breach must be shown to be conscious and intentional on the part of the insured. It is, therefore, not an automatic bar to the insurer’s liability simply because the driver lacked a valid licence at the time of the accident. Mere absence or invalidity of the licence does not relieve the insurer from liability unless it is established the insured deliberately and knowingly violated the terms of the policy.

22. The Hon’ble Supreme Court has also recognized the practical difficulties faced by employers or vehicle owners in verifying the genuineness of the driver’s licence before employment. This position has been reiterated recently in IFFCO Tokio General Insurance Company Ltd. Vs. Geeta Devi & others; reported in 2023 SCC Online SC 1398 in para 8, wherein the Hon’be Supreme Court observed:- “8. As regards the contention that the driver of the 7 vehicle was not duly licensed as he possessed a fake license, it may be noted that neither Section 149(2)(a)(ii) of the Act of 1988 nor the ‘Driver Clause’ in the subject insurance policy provide that the owner of the insured vehicle must, as a rule, get the driving licence of the person employed as a driver for the said vehicle verified and checked with the concerned transport authorities. Generally, and as a matter of course, no person employing a driver would undertake such a verification exercise and would be satisfied with the production of a licence issued by a seemingly competent authority, the validity of which has not expired. It would be wholly impracticable for every person employing a driver to expect the transport authority concerned to verify and confirm whether the driving licence produced by that driver is a valid and genuine one, subject to just exceptions. In fact, no such mandatory condition is provided in any car insurance policy and it is not open to the petitioner-insurance company, which also did not prescribe such a stringent condition, to cite the failure of the deceased vehicle owner to get Ujay Pal's driving licence checked with the RTO as a reason to disclaim liability under the insurance policy.”

23. These principles clearly apply to the facts of the present case. There is no evidence to show that the owner was aware of the licence being fake or invalid or that he failed to exercise reasonable care.

24. In light of the above discussion and settled law, it is held that the Insurance Company has failed to prove any fundamental breach in terms of the insurance policy by the insured. Therefore, the liability to pay compensation is fastened upon the insurance company.

25. Accordingly, the appeal filed by the vehicle owner is allowed. The liability to pay the compensation is fastened upon the respondent no.2-National Insurance Company Limited. Accordingly, the impugned judgment and order dated 14.08.2013, passed by the Motor Accident Claims Tribunal/learned Additional District Judge, Nainital in M.A.C.P. Case No.154 of 2011, Harish Chand Kalakoti vs. Jawahar Lal Agarwal & others, stands modified to this extent. The statutory amount deposited by the appellant-owner before this Court be remitted to 8 the learned MACT/Additional District Judge, Nainital to be refunded to the appellant-owner forthwith.

26. Pending application, if any, stands disposed of accordingly. AK (Pankaj Purohit, J.) 19.08.2025 9