Insurance company is not liable to pay Compensation if the Driver does not possess a Valid Driving Licence

The Hon’ble Supreme Court of India in Beli Ram V. Rajinder Kumar and Anr. [CIVIL APPEAL NOS. 7220-7221 OF 2011] held that an Insurance Company cannot be made liable in the event there was an expired licence held by the driver who was driving his employer’s insured vehicle.

The three-judge bench comprising of Hon’ble Justices Sanjay Kishan Kaul, Aniruddha Bose and Krishna Murari were examining the question of “whether an insured employer would be absolved of liability in a case where his employee drives a vehicle owned by the employer and meets with an accident while holding an expired driving licence.”

The Hon’ble court observed that “We are of the view that once the basic care of verifying the driving licence has to be taken by the employer, though a detailed enquiry may not be necessary, the owner of the vehicle would know the validity of the driving licence as is set out in the licence itself. It cannot be said that thereafter he can wash his hands off the responsibility of not checking up whether the driver has renewed the licence. It is not a case where a licence has not been renewed for a short period of time, say a month, as was considered in the case of Swaran Singh where the benefit was given to a third party by burdening the insurance company. The licence in the instant case, has not been renewed for a period of three years and that too in respect of commercial vehicle like a truck. The appellant showed gross negligence in verifying the same.”

The Hon’ble Court referred to Delhi High Court judgment in the case Tata AIG General Insurance Co. Ltd. v. Akansha & Ors where the onus to prove that there was no breach of insurance policy was shifted to the owner/insured after the insurance company showed that valid licence did not exist on the day of the accident.

A similar position was taken by the The Allahabad High Court in The Oriental Insurance Co. Ltd. v Manoj Kumar & Ors where the High Court opined that the “owner was supposed to be aware that the driving licence of the driver had expired and, thus, it was held that it was the duty of the owner to have ensured that the driver gets the licence renewed within time.

The third judgment Hon’ble Supreme Court placed reliance on was Himachal Pradesh High Court’s verdict in the National Insurance Co. Ltd. v. Hem Raj & Ors where the driver was said to not hold a duly valid licence considering that the licence had been expired and was not renewed in thirty days.

It was held by the Hon’ble Court that When we turn to the facts of the present case there is almost an identical situation where the appellant has permitted to let the first respondent driver drive the truck with an expired licence for almost three (3) years. It is clearly a case of lack of reasonable care to see that the employee gets his licence renewed, further, if the original licence is verified, certainly the employer would know when the licence expires. And here it was a commercial vehicle being a truck. The appellant has to, thus, bear responsibility and consequent liability of permitting the driver to drive with an expired licence over a period of three (3) years.”

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