An insurance company cannot automatically claim a right to recover in motor accident claims solely because the vehicle owner failed to verify the driver's license :- Supreme Court
In a case involving IFFCO Tokio General Insurance Co. Ltd. v. Geeta Devi and others, the Supreme Court clarified that an insurance company cannot avoid liability to pay compensation in a motor vehicle accident claim by arguing that the vehicle owner failed to verify the authenticity of the driver's license of the employed driver. The Court emphasized that the onus is on the insurance company to demonstrate that the vehicle owner neglected to exercise due diligence regarding the driver's license of the employed driver.
The bench, comprising Justice CT Ravikumar and Justice Sanjay Kumar, reasoned that it is impractical to expect every person who employs a driver to independently verify the validity and authenticity of the driver's license, especially when the license appears to be valid. Unless there are clear indications that the license is fake, has expired, or there are other compelling reasons to doubt its validity, the burden rests on the insurance company to prove that the vehicle owner neglected due diligence concerning the driver's license before employing the driver.
The Supreme Court also expressed astonishment at insurance companies pursuing such arguments in court despite well-established legal principles. The Court criticized the tendency of insurance companies to raise such pleas routinely, irrespective of the specific case facts and evidence, and to escalate such matters to the highest judicial forums, causing a waste of judicial time and resources.
In this specific case, the appellant insurance company challenged the Delhi High Court's decision, which overturned the award granted by the Motor Accident Claims Tribunal and denied the insurance company the right to recover from the vehicle owner. The dispute originated from a fatal accident caused by the reckless driving of a Tempo, leading to a compensation claim by the dependents of the deceased victim. The Tribunal ruled that the insurance company was not liable due to an alleged breach of the insurance policy's terms and conditions by the vehicle owner.
The insurance company contended before the Supreme Court that it was not obligated to pay compensation since the vehicle owner did not verify the authenticity of the driver's license, which was ultimately found to be fake.
The Court noted that neither Section 149(2)(a)(ii) of the Motor Vehicle Act, 1988, nor the insurance policy's "Driver Clause" necessitated the vehicle owner to routinely verify the driver's license with the transport authorities. Such a requirement would be impractical for every person hiring a driver. There was no evidence indicating that the vehicle owner should have verified the driver's license with the transport authority. The insurance company failed to establish a willful breach by the vehicle owner, thus relinquishing its right to recover the compensation from the vehicle owners.
The Court concluded that the insurance company could not assert that the vehicle owner failed to conduct due diligence while employing the driver based on an unrealistic condition that was neither mandated by the law nor the insurance policy. Consequently, the Supreme Court declined to interfere with the Delhi High Court's order.