[Pay & Recover] Insurance Company Not Absolved From Compensating Third Party If Driver Used Fake License At The Time Of Motor Accident: Gauhati HC

The Gauhati High Court has reiterated that mere possession of fake license by the driver at the time of accident does not absolve the liability of the insurance company to pay compensation to the third party.Justice Arun Dev Choudhury relied on Ram Chandra Singh v. Rajaram and Ors. 2018 8 SCC 799 and Shamanna v. The Oriental Insurance Company Limited and Ors. 2018 9 SCC 650 in which the Supreme Court held that mere fact that driving license is fake, per-se, would not absolve the insurer and in that case, the principle of ‘pay and recover’ shall be applicable.In this case, the insurance company had challenged the judgment and award granted by the Motor Accident Claims Tribunal on the ground that the award ought to have been made payable by the owner cum driver of the vehicle as it was established that he was possessing fake driving license. It was the case of the claimant that on 12.04.2011 when she was walking by the side of the road, she was knocked down by the offending vehicle which was coming in a rash and negligent manner from her back side causing her grievous hurt. The court relied upon the ratio laid down by the Supreme Court in PEPSU Road Transport Corporation v. National Insurance Company reported in (2013) 10 SCC 217 in which the Apex Court has stated following principles: It is open to the insurer under Section 149 (2) (a) (ii) to take a defence that the driver of the vehicle involved in the accident was not duly licensed.If such defence is taken, the onus is upon the insurer to prove the same.The owner of a vehicle when hires a driver, he has to check the validity of the driving license and to satisfy himself as to the competent of the driver. The owner cannot be expected to go beyond that, to the extent of verifying the genuineness of the driving license with the licensing authority before hiring the services of the driver. In an event, if, despite having information regarding a fake license, yet the owner does not take appropriate action for verification of the matter, then, insured will be not at fault and in circumstances, insurance company is not liable for compensation. It further relied upon the National Insurance Co. Ltd v. Swaran Singh and Ors. (2004) 3 SCC 297 where it was held that mere absence, fake or invalid driving license 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 3rd parties. Thus it upheld the impugned judgement of the tribunal and observed that this is a fit case whether the principle of pay and order can be directed. Case Title: United India Insurance Company Limited v. Smt. Damyanti Lahkar and Anr.Citation: 2023 LiveLaw (Gau) 13 Click Here to Read/Download Judgment

[Pay & Recover] Insurance Company Not Absolved From Compensating Third Party If Driver Used Fake License At The Time Of Motor Accident: Gauhati HC

Udit Singh

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