NIRMALA KOTHARIversusUNITED INDIA INSURANCE CO. LTD.

                         [2020] 3 S.C.R. 1189                              1189


                       NIRMALA KOTHARI                                     A
                                   v.
             UNITED INDIA INSURANCE CO. LTD.
                (Civil Appeal Nos. 1999-2000 of 2020)
                          MARCH 04, 2020                                   B
        [NAVIN SINHA AND KRISHNA MURARI, JJ.]
       Motor Vehicles Act, 1988 – s.149(2)(a)(ii) – Fatal accident –
Insurance claim – Repudiation of claim on the ground that driver
did not possess proper driving licence at the time of accident which
                                                                           C
amounted to breach of conditions under s.149(2)(a) – Plea of
insurance company that the driving licence purported to have been
issued by the licencing authority, Sheikh Sarai, Delhi could not be
verified as the concerned officer of the licencing authority deposed
that the record of the licence was not available with them – Held:
While hiring a driver, an employer is expected to verify if the driver     D
has a driving licence – If the driver produces a licence which on
the face of it looks genuine, the employer is not expected to further
investigate into the authenticity of the licence unless there is a cause
to believe otherwise – If the employer finds the driver to be competent
to drive the vehicle and has satisfied himself that the driver has a
                                                                           E
driving licence, there would be no breach of s.149(2)(a)(ii) and the
Insurance Company would be liable under the policy – It would be
unreasonable to place a high onus on the insured to make enquiries
with RTOs all over the country to ascertain the veracity of the driving
licence – If, however, Insurance Company is able to prove that the
owner/insured was aware or had notice that the licence was fake            F
or invalid and still permitted the person to drive, the insurance
company would no longer continue to be liable – In the instant
case, complainant employed the driver after checking his driving
licence – It was not the contention of the Insurance Company that
the complainant is guilty of wilful negligence while employing the
                                                                           G
driver – The driver had been driving competently and there was no
reason for the complainant to doubt the veracity of the driver’s
licence – Insurance company is liable to indemnify the appellant-
owner of vehicle.

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                                 1189
1190            SUPREME COURT REPORTS                      [2020] 3 S.C.R.


 A           Allowing the appeals, the Court
              HELD: 1.1 Breach of conditions under Section 149(2)(a)
       of the Motor Vehicles Act, 1988 absolves the insurer of its liability
       to the insured. Section 149(2)(a)(ii) deals with the conditions
       regarding driving licence. In case the vehicle at the time of
 B     accident is driven by a person who is not duly licenced or by a
       person who has been disqualified from holding or obtaining a
       driving licence during the period of disqualification, the insurer
       is not liable for compensation. In the instant case it is a matter of
       fact that no record of the licence bearing no. P03041288753070
       was found with the licensing authority. [Para 7][1192-H;
 C     1193-A-B]
              1.2 While the insurer can certainly take the defence that
       the licence of the driver of the car at the time of accident was
       invalid/fake however the onus of proving that the insured did not
       take adequate care and caution to verify the genuineness of the
 D     licence or was guilty of willful breach of the conditions of the
       insurance policy or the contract of insurance lies on the insurer.
       [Para 9][1194-D-E]
             National Insurance Co. Ltd. v. Swaran Singh & Ors.
             (2004) 3 SCC 297 : [2004] 1 SCR 180 – relied on.
 E
             Pepsu RTC v. National Insurance Co. (2013) 10 SCC
             217 : [2013] 9 SCR 266 – held inapplicable.
             United India Insurance Co. Ltd. v. Lehru & Ors. (2003)
             3 SCC 338 : [2003] 2 SCR 495 – referred to.
 F                            Case Law Reference
       [2003] 2 SCR 495         referred to                Para 8
       [2013] 9 SCR 266         held inapplicable          Para 8
       [2004] 1 SCR 180         relied on                  Para 10
 G           CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 1999-
       2000 of 2020.
             From the Judgment and Order dated 06.02.2018 of National
       Consumer Dispute Redressal Commission in Revision Petition No. 2835
       of 2015 and Revision Petition No. 3053 of 2016.
 H
             NIRMALA KOTHARI v. UNITED INDIA                                  1191
                   INSURANCE CO. LTD.

      Jasmeet Singh, Ms. Rusheet Saluja, Saif Ali, Satyendra Mani             A
Tripathi and Pushpendra Singh Bhadoriya, Advs. for the Appellant.
      Ms. Suman Bagga, Ms. Manjeet Chawla and Karri Venkata Reddy,
Advs. for the Respondent.
      The Judgment of the Court was delivered by
                                                                              B
      KRISHNA MURARI, J.
      1. Leave granted.
      2. The Appellant/Complainant, Nirmala Kothari’s husband, Vinod
Ray Kothari was owner of a Hyundai Elantra vehicle, registration no.
RJ36CA 0111, which was insured with the Insurance Company for a               C
sum of Rs.5,00,000/- .
        3. The said vehicle met with an accident with a tractor bearing
no. HR38K 3216, on 06.06.2010 as a result of which the Appellant’s
husband, Vinod Ray Kothari, who was the owner of the car, and his
daughter died and the vehicle was damaged. The driver of the vehicle,         D
Dharmendra Singh Chauhan got an FIR registered with the police. The
Respondent/ Insurance Company, on intimation having been given to
them, appointed a spot surveyor, and also a regular surveyor to carry out
survey in the matter, but the claim was rejected by them vide their letter
dated 28.03.2011. The Respondent/ Insurance Company stated in the
                                                                              E
repudiation letter that the driver Dharmendra Singh Chauhan did not
have a proper driving licence at the time of the accident. The licence
produced by him, alleged to have been procured from the office of the
licencing authority, Sheikh Sarai, Delhi could not be verified, as the
concerned officer of the transport department returned their letter with
the endorsement that the record pertaining to the said licence was not        F
available. Alleging deficiency on the part of the Respondent/ Insurance
Company, the complainant filed a consumer complaint, seeking directions
to the Respondent/Insurance Company to pay the Insured declared value
(IDV) i.e. a sum of Rs. 5,00,000/- alongwith interest @ 9% per annum
from the date of filing the complaint till payment and also to pay a sum of
                                                                              G
Rs. 50,000/- as compensation for mental agony and Rs. 11,000/- as
litigation cost. The District Forum vide their order dated 30.05.2012,
allowed the said consumer complaint and directed payment of an amount
of Rs. 3,57,500/- to the complainant, as assessed by the surveyor
alongwith interest @ 9% p.a. and cost of litigation of Rs. 2,500/-. Being
aggrieved against the said order of the District Forum, the Respondent/       H
1192            SUPREME COURT REPORTS                           [2020] 3 S.C.R.


 A     Insurance Company challenged the same by way of appeal before the
       State Commission, but the said appeal having been dismissed vide
       impugned order dated 18.09.2015, the Respondent/ Insurance Company
       came before National Commission by way of the Revision Petition No.
       2835/2015.
 B             4. The complaint no. 227/2012 had been filed by the same
       complainant Nirmala Kothari, against the Respondent/Insurance
       Company, requesting for compensation of Rs. 2,00,000/- as accident
       claim with interest @ 9% per annum and compensation of Rs. 20,000/-
       for mental agony and Rs. 11,000/- for cost of litigation. The Respondent/
       Insurance Company repudiated the said claim also vide their letter dated
 C     14.02.2012 on the same ground that Dharmendra Singh Chauhan, the
       driver of the vehicle did not possess a valid and effective driving licence
       at the time of the accident in question.
              5. The consumer complaint no. 227/2012 was also allowed by the
       District Forum, vide order dated 28.02.2013 and the Respondent/
 D     Insurance Company was directed to pay an amount of Rs. 2,00,000/-
       for personal accident claim along with interest @ 9% per annum from
       the date of filing the complaint and the cost of litigation of Rs. 2,500/-.
       Being aggrieved against the said order of the District Forum, the
       Respondent/ Insurance Company challenged the same by way of appeal
 E     no. 366/2013 before the State Commission. The said appeal having been
       dismissed vide impugned order dated 01.08.2016, the Respondent/
       Insurance Company came before the National Commission by way of
       the Revision Petition No. 3053/2016. The National Commission absolved
       the Respondent/ Insurance Comapany of its liability since no record of
       the licence of the Driver was found with the licencing authority. Thus,
 F     aggrieved the Appellant/Complainant has come up in appeal.
              6. It is the case of the Respondent/ Insurance Company that in
       the absence of a valid and effective driving licence with the driver, there
       was fundamental breach of the terms and conditions of the insurance
       policy in question and hence, the claim made by the Appellant/
 G     Complainant was not payable. Whereas, it is argued by the Appellant/
       Complainant that at the time of employing the driver, the documents like
       driving licence etc. are generally checked but no one usually verifies the
       genuineness of the same.
             7. Breach of conditions under Section 149(2)(a) of the Motor
 H     Vehicles Act, 1988 absolves the insurer of its liability to the insured.
               NIRMALA KOTHARI v. UNITED INDIA                                  1193
            INSURANCE CO. LTD. [KRISHNA MURARI, J.]

Section 149(2)(a)(ii) deals with the conditions regarding driving licence.      A
In case the vehicle at the time of accident is driven by a person who is
not duly licenced or by a person who has been disqualified from holding
or obtaining a driving licence during the period of disqualification, the
insurer is not liable for compensation. In the instant case it is a matter of
fact that no record of the licence bearing no. P03041288753070 was
                                                                                B
found with the licensing authority.
       8. Having set forth the facts of the present case, the question of
law that arises for consideration is what is the extent of care/diligence
expected of the employer/insured while employing a driver? To answer
this question, we shall advert to the legal position regarding the liability
of the Insurance Company when the driver of the offending vehicle               C
possessed an invalid/fake driving licence. In the case of United India
Insurance Co. Ltd. vs. Lehru & Ors.1 a two Judge Bench of this court
has taken the view that the Insurance Company cannot be permitted to
avoid its liability on the ground that the person driving the vehicle at the
time of the accident was not duly licenced. It was further held that the        D
willful breach of the conditions of the policy should be established. The
law with this respect has been discussed in detail in the case of Pepsu
RTC vs. National Insurance Co. 2 We may extract the relevant
paragraph from the Judgment: (Pepsu case, SCC pp. 223-24, para10)
          “In a claim for compensation, it is certainly open to the insurer     E
          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,       F
          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         G
          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

1
    (2003) 3 SCC 338 : 2003 SCC (Cri) 641
2
    (2013) 10 SCC 217                                                           H
1194                SUPREME COURT REPORTS                        [2020] 3 S.C.R.


 A               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
 B
                 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
 C               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.”
              9. While the insurer can certainly take the defence that the licence
 D     of the driver of the car at the time of accident was invalid/fake however
       the onus of proving that the insured did not take adequate care and
       caution to verify the genuineness of the licence or was guilty of willful
       breach of the conditions of the insurance policy or the contract of
       insurance lies on the insurer.
 E             10. The view taken by the National Commission that the law as
       settled in the Pepsu case (Supra) is not applicable in the present matter
       as it related to third-party claim is erroneous. It has been categorically
       held in the case of National Insurance Co. Ltd. vs. Swaran Singh &
       Ors.3(SCC pp.341, para 110) that,

 F               “110. (iii)…Mere absence, fake or invalid driving licence or
                 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
 G               care in the matter of fulfilling the condition of the policy
                 regarding use of vehicles by a duly licenced driver or one
                 who was not disqualified to drive at the relevant time.”
              11. While hiring a driver the employer is expected to verify if the
       driver has a driving licence. If the driver produces a licence which on
 H     3
           (2004) 3 SCC 297 : 2004 SCC (Cri) 733
             NIRMALA KOTHARI v. UNITED INDIA                                   1195
          INSURANCE CO. LTD. [KRISHNA MURARI, J.]

the face of it looks genuine, the employer is not expected to further          A
investigate into the authenticity of the licence unless there is cause to
believe otherwise. If the employer finds the driver to be competent to
drive the vehicle and has satisfied himself that the driver has a driving
licence there would be no breach of Section 149(2)(a)(ii) and the
Insurance Company would be liable under the policy. It would be
                                                                               B
unreasonable to place such a high onus on the insured to make enquiries
with RTOs all over the country to ascertain the veracity of the driving
licence. However, if the Insurance Company is able to prove that the
owner/insured was aware or had notice that the licence was fake or
invalid and still permitted the person to drive, the insurance company
would no longer continue to be liable.                                         C
       12. On facts, in the instant case, the Appellant/Complainant had
employed the Driver, Dharmendra Singh as driver after checking his
driving licence. The driving licence was purported to have been issued
by the licencing authority, Sheikh Sarai, Delhi, however, the same could
not be verified as the concerned officer of the licencing authority deposed    D
that the record of the licence was not available with them. It is not the
contention of the Respondent/ Insurance Company that the Appellant/
complainant is guilty of willful negligence while employing the driver.
The driver had been driving competently and there was no reason for
the Appellant/Complainant to doubt the veracity of the driver’s licence.
In view of above facts and circumstances, the impugned judgment is not         E
liable to be sustained and is hereby set aside. The appeals accordingly
stand allowed. The respondent/ Insurance Company is held liable to
indemnify the appellant.

                                                                               F
Devika Gujral                                               Appeals allowed.




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