An insurance claim cannot be denied stating that the vehicle was driven by a driver possessing a fake license, in the absence of proven willful negligence by the insured in verifying the genuineness of the license: SC

Approach of Art.136 Cannot Be Adopted While Deciding Petitions by The High Court Under Art.227: SC

The Division bench of the Supreme Court comprising of Justice Navin Sinha and Justice Krishna Murari recently held that an insurance claim cannot be denied on the ground that the vehicle was driven by a driver possessing a fake driving license, in the absence of proven willful negligence by the insured in verifying the genuineness of the license. The Division bench said, “While the insurer can certainly take the defence that the license 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 license or was guilty of willful breach of the conditions of the insurance policy or the contract of insurance lies on the insurer.”

Prior facts

In this particular case the claimant was denied insurance by the insurance company, on the ground that the driver driving the claimant’s vehicle did not possess a valid driver’s license. The insurance company contended that in the absence of a valid and effective driving license with the driver, there would be a fundamental breach of the terms and conditions of the insurance policy. Hence, the claim of the claimant was not payable. In response to this, the claimant argued that he employed the driver after taking all reasonable diligence to ascertain whether he possessed a valid driver’s license or not, by checking the documents in connection  with the matter.

Key features

  • Claim cannot be rejected only on the ground that the vehicle was driven by a driver possessing a fake driving license.
  • There is a necessity to establish willful breach of the conditions of the policy.

The Supreme Court’s verdict

The Division bench of the Supreme Court comprising of Justice Navin Sinha and Justice Krishna Murari found that the question was already answered in the case of United India Insurance Co. Ltd. v. Lehru & Ors., where the Court held that insurance company cannot avoid liability only on the ground that the person driving the vehicle at the time of the accident was not holding a valid driving license. The bench also noted that willful breach of conditions of the policy is to be established.

The Court further cited the case of National Insurance Co. Ltd. v. Swaran Singh & Ors., where the Court held, “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.”

The Court however pointed out that, if the owner of the vehicle was aware and had knowledge that the driver didn’t have a license and still permitted him to drive the vehicle, the insurance company will not be liable. But in the present case, the claimant had no reason to doubt the genuineness of the license carried by the driver. Hence, the Apex Court decided in favour of the claimant and held, “It is not the contention of the Respondent/ Insurance Company that the Appellant/complainant is guilty of willful negligence while employing the driver… The respondent/ Insurance Company is held liable to indemnify the appellant.”

Edited by J. Madonna Jephi

Approved & Published – Sakshi Raje

Reference

1. Nirmal Kothari v. United India Insurance Co Ltd., Civil Appeal no. 1999-2000 of 2020.

Sanjivan Chakraborty
I'm Sanjivan Chakraborty pursuing B.A.LL.B (Hons.) at National Law University and Judicial Academy, Assam. Amused by the subject every ambit of legal study regals me. Mostly occupied with research-based studies and works. Other than law only volleyball and football can divert my attention."