Case Note & Summary
The appellant, Nirmala Kothari, was the wife of Vinod Ray Kothari, who owned a Hyundai Elantra vehicle insured with the respondent, United India Insurance Co. Ltd., for Rs. 5,00,000. On 06.06.2010, the vehicle met with an accident with a tractor, resulting in the death of the owner and his daughter, and damage to the vehicle. The driver, Dharmendra Singh Chauhan, got an FIR registered. The insurance company appointed surveyors but repudiated the claim on 28.03.2011, stating that the driver did not have a proper driving licence at the time of the accident, as the licence could not be verified with the licensing authority. The appellant filed a consumer complaint seeking the insured declared value of Rs. 5,00,000 with interest and compensation. The District Forum allowed the complaint and directed payment of Rs. 3,57,500 as assessed by the surveyor with interest and costs. The insurance company's appeal to the State Commission was dismissed, and the National Commission, in revision, absolved the insurance company of liability on the ground that no record of the driver's licence was found with the licensing authority. Aggrieved, the appellant appealed to the Supreme Court. The legal issue was the extent of care expected of an employer while hiring a driver. The appellant argued that at the time of employing the driver, documents like driving licence are generally checked, but no one usually verifies their genuineness. The respondent contended that the absence of a valid licence constituted a fundamental breach of policy terms. The Supreme Court, relying on precedents including United India Insurance Co. Ltd. v. Lehru and Pepsu RTC v. National Insurance Co., held that the insurer must prove willful breach or negligence by the insured. The employer is only expected to check if the driver has a licence and appears competent; further verification is not required unless there is cause to suspect. Since the insurance company did not allege willful negligence by the appellant, and the driver had been driving competently, the court set aside the National Commission's order and allowed the appeals, holding the insurance company liable to indemnify the appellant.
Headnote
A) Insurance Law - Motor Vehicles Act - Section 149(2)(a)(ii) - Driving Licence - Willful Breach - The insurer must prove that the insured was guilty of willful breach of policy conditions or failed to exercise reasonable care in verifying the driver's licence. Mere fake or invalid licence is not a defence unless the insured had knowledge or notice of the same. (Paras 8-11) B) Insurance Law - Employer's Duty - Verification of Driving Licence - The employer is expected to check if the driver has a driving licence and appears competent. If the licence looks genuine on its face, the employer is not required to further investigate its authenticity with the licensing authority. (Paras 11-12) C) Insurance Law - Burden of Proof - The onus is on the insurer to prove that the insured did not take adequate care or was guilty of willful breach. In the absence of such proof, the insurer is liable. (Paras 9-11)
Issue of Consideration
What is the extent of care/diligence expected of the employer/insured while employing a driver?
Final Decision
The Supreme Court allowed the appeals, set aside the impugned judgment of the National Commission, and held the respondent/Insurance Company liable to indemnify the appellant.
Law Points
- Insurance Law
- Motor Vehicles Act
- 1988
- Section 149(2)(a)(ii)
- Driving Licence
- Willful Breach
- Insurer's Liability
- Burden of Proof
- Employer's Duty of Care
