November 4, 2023 In Uncategorized



A two-Judge bench of the Supreme Court comprising of Justice C. T. Ravikumar and Justice Sanjay Kumar passed an Order dated 30.10.2023 in IFFCO Tokio General Insurance Co. Ltd. Vs. Geeta Devi and others in Special Leave Petition (C) No. 19992 Of 2023 rejected the plea of the Insurer that there was breach of policy by Owner and held that insurer cannot be absolved of liability and is liable to pay the Compensation.


i) That, one, Mr. Dharambir suffered fatal injuries on 09.05.2010, when a tempo vehicle bearing registration no. HR69D-0246, driven in a rash and negligent manner, hit his motorcycle. His dependents i.e., his parents, widow and children approached the Motor Accidents Claims Tribunal, Rohini Court, Delhi under Section 140 of Motor Vehicle Act, 1988 (“Act”) (Liability to pay compensation in certain cases on the principle of no fault) and Section 166 of the Act (Application for compensation), seeking compensation.

ii) The driver of the vehicle, Mr. Ujay Pal, Mr. Netra Pal Singh, the Owner of the vehicle died during the pendency of this case and was represented by his legal representatives, i.e., his mother, widow and minor son and the Insurance Company IFFCO Tokio General Insurance Co. Ltd, the Petitioner, were the Respondents in MAC Petition No. 4415 of 2016 claim Petition filed by the Owner of the vehicle.

iii) The Tribunal, by Award dated 06.07.2018, made the Insurance Company liable to pay an amount of Rs. 13,70,000/- as Compensation with interest.

iv) However, the records reflect that the driver Ujay Pal had produced the driving license issued at Mathura at the time of his employment and it was only after the accident that it came to light that the said license was not genuine.

v) That, the widow of Netra Pal Singh, stated before the Tribunal that her husband told her that her husband had taken the driving skill test after the driving license was produced by Ujay Pal before employing him as a driver. However, the record clerk from the RTO at Mathura testified that, as per their record, the license produced by Ujay Pal was fake as that license number belonged to some other person.

vi) The Tribunal, then opined that the Petitioner Insurance Company would not be liable to pay the Compensation. That, the Company was directed to deposit the Awarded amount with the liberty to recover the same from the present Owners of the Tempo.

vii) Aggrieved by the same the Vehicle Owners filed an Appeal APP. No. 914 of 2019 before the Delhi High Court.

viii) The High Court opined that the Petitioner Insurance Company had neither pleaded nor proved the deceased vehicle owner did not take adequate steps to verify the genuineness of the driving license and in the absence of such plea on its part, the Tribunal could not have concluded that there was a breach of the terms and conditions of the Insurance policy. The High Court held vide Order dated 11.05.2023 that the Petitioner Insurance Company had no right to recover the Compensation from the vehicle Owners.

ix) Aggrieved by the Order dated 11.05.2023 of the Hon’ble High Court of Delhi, the Petitioner- Insurance Company filed Special Leave Petition (C) No. 19992 Of 2023 before the Supreme Court.


The Supreme Court vide Order dated 11.10.2023 made the following observations

1) The Supreme Court held that no person employing a driver would undertake any verification exercise and would be satisfied with the production of a license issued by a seemingly competent authority, the validity of which is not expired.

2) Further the Apex Court held that it is impracticable for every person employing a driver to expect the transport authority concerned to verify and confirm whether the driving license produced by the driver is a valid and genuine one.

3) That, no such mandatory condition is provided in any car insurance policy and it is not open to the Petitioner-Insurance Company, which also did not prescribe such a stringent condition, to cite the failure of the deceased vehicle Owner to get Ujay Pal’s driving licence checked with the RTO as a reason to disclaim liability under the Insurance Policy.

4) That it is an unrealistic condition that every person employing a driver must get the driving licence of such driver verified and confirmed by the RTO concerned, irrespective of the actual necessity to do so.

5) The Apex Court relied on the Judgment of Skandia Insurance Co. Ltd. vs. Kokilaben Chandravadan and others(1987)2 SCC 654 wherein the Supreme Court in the context of Section 96(2)(b)(ii) (Duty of insurers to satisfy)of the Motor Vehicles Act, 1939, which is similar with Section 149(2)(a)(ii) (Settlement by insurance company and procedure therefor) of the Act of 1988, observed as under:

‘14. Section 96(2)(b)(ii) extends immunity to the insurance company if a breach is committed of the condition excluding driving by a named person or persons or by any person who is not duly licensed, or by any person who has been disqualified from holding or obtaining a driving licence during the period of disqualification. The expression ‘breach’ is of great significance. The dictionary meaning of ‘breach’ is ‘infringement or violation of a promise or obligation’ (see Collins English Dictionary). It is therefore abundantly clear that the insurer will have to establish that the insured is guilty of an infringement or violation of a promise that a person who is duly licensed will have to be in charge of the vehicle. The very concept of infringement or violation of the promise that the expression ‘breach’ carries within itself induces an inference that the violation or infringement on the part of the promisor must be a wilful infringement or violation. If the insured is not at all at fault and has not done anything he should not have done or is not amiss in any respect how can it be conscientiously posited that he has committed a breach? It is only when the insured himself places the vehicle in charge of a person who does not hold a driving licence, that it can be said that he is ‘guilty’ of the breach of the promise that the vehicle will be driven by a licensed Driver. It must be established by the insurance company that the breach was on the part of the insured and that it was the insured who was guilty of violating the promise or infringement of the contract. Unless the insured is at fault and is guilty of a breach the insurer cannot escape from the obligation to indemnify the insured and successfully contend that he is exonerated having regard to the fact that the promisor (the insured) committed a breach of his promise. Not when some mishap occurs by some mischance. When the insured has done everything within his power inasmuch as he has engaged a licensed Driver and has placed the vehicle in charge of a licensed Driver, with the express or implied mandate to drive himself, it cannot be said that the insured is guilty of any breach.’

6) Further in Ram Chandra Singh vs. Rajaram and others (2018) 8 SCC 799 the issue before the Supreme Court was whether an insurance company could be absolved of liability on the ground that the insured vehicle was being driven by a person who did not have a valid driving licence at the time of the accident. The Apex Court in the above matter found that no attempt was made to ascertain whether the owner was aware of the fake driving licence possessed by the driver and held that it is only if the owner was aware of the fact that the licence was fake but still permitted such driver to drive the vehicle that the insurer would stand absolved. The Supreme Court held that the mere fact that the driving licence was fake, would not absolve the insurer.

7) Thereafter, the Supreme Court applying the above principles to the case in hand held that the Petitioner-Insurance Company did not raise the plea that the owner of the vehicle allowed Ujay Pal to drive the vehicle knowing that his licence was fake.

8) Further, the insurance policy did not require the vehicle owner to undertake verification of the driving licence of the driver of the vehicle by getting the same confirmed with the RTO.

9) Therefore, the claim of the Petitioner-Insurance Company that it has the right to recover the Compensation from the Owners of the vehicle, owing to a willful breach of the condition of the insurance policy, to ensure that the vehicle was driven by a licenced driver, is without pleading and proof.


The Supreme Court held that as the Petitioner- Insurance Company failed to prove the wilful breach on the part of the said vehicle owner, the Petitioner- Insurance Company has no right to recover the Compensation amount from the present Owners of the vehicle. The Order passed by the Hon’ble High Court of Delhi dated stands and the Special Leave Petition is dismissed.


Kartik Khandekar


The Indian Lawyer

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