Uttarakhand High Court
Dated: 18Th September vs M/S National Insurance Company Ltd. And ... on 18 September, 2025
2025:UHC:8369
IN THE HIGH COURT OF UTTARAKHAND AT
NAINITAL
Appeal From Order No.166 of 2020
Dated: 18th September, 2025
Mohd. Abbas ........Appellant
Versus
M/s National Insurance Company Ltd. and others
......... Respondents
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Presence:-
Ms. Suriaya Naz, learned counsel holding brief of Mr. Lalit Sharma,
learned counsel for the appellant.
Mr. Siddhartha Bisht, learned counsel for respondent no.1.
Mr. Devesh Kandpal, learned counsel holding brief of Mr. Chitrarth
Kandpal, learned counsel for respondent no.2.
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Hon'ble Alok Mahra, J.
The present appeal has been filed by appellant
owner, under Section 173 of the Motor Vehicles Act,
1988, (for short "the Act, 1988") against the judgment
and award dated 27.11.2019, passed by the Motor
Accident Claims Tribunal/ First Additional District
Judge, Nainital in M.A.C.P. No.04 of 2018, Trilok Singh
and another vs. Mohd. Abbas and another, whereby the
Tribunal awarded a sum of Rs.5,16,000/- and gave a
liberty to the respondent no.2 to recover the amount of
compensation from the owner of the vehicle (appellant
herein).
2. Brief facts of the case are that on 25.03.2012,
at approximately 9:00 p.m., Khim Singh (deceased) was
riding his motorcycle number UA-06H-1776 near the
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Karbala turn at Gadarpur Kelakheda Road. At that time,
a truck number UK-04E-9756, driven by a driver at high
speed and recklessly and negligently, struck the
motorcycle from behind due to which he sustained
serious injuries and died on the spot. After receiving
information about the accident, the police prepared an
inquest report and conducted a post-mortem of the
deceased Khim Singh. Accordingly, claimants moved a
claim petition before the MACT for compensation of
Rs.10,00,000/-.
3. The appellant (owner of the vehicle) has filed
his written statement, stating that the amount of
compensation has been claimed in an inflated manner
and without any basis. On the fateful day, the vehicle
was insured with the National Insurance Company and
was being driven by a person holding a valid and effective
driving licence.
4. Respondent-Insurance Company also filed its
written statement wherein it was stated that the
information of the accident was not given to the
Insurance Company as per the provisions of the Act,
1988. On the fateful day, the vehicle was not being driven
by a driver having valid licence for which the condition of
Insurance policy has been violated and hence, the
insurance company is not liable for making any payment.
5. On the basis of the pleadings of the parties,
three issues were framed:-
(i) Whether on 25.03.2012 at 9.00 pm, near Karbala
turn on Gadarpur Kelakheda Road, Khim Singh
was going on his motorcycle number UA 06H-1776,
when the driver of truck number UK 04E-9756
coming from behind, by driving the truck rashly and
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negligently, hit the motorcycle from behind, due to
which the motorcyclist Khim Singh suffered serious
injuries and died on the spot due to the serious
injuries sustained in the said accident?
(i) Whether on the aforesaid date, time and place,
the driver of the offending vehicle was not having a
valid driving licence and whether the truck was not
being driven as per the conditions of the insurance,
if so, then it affects?
(iii) To what relief the petitioner-claimant is entitled
to get?
6. Learned Tribunal decided the claim petition by
awarding a sum of Rs.5,16,000/- and fastened the
liability to pay compensation on the respondent-vehicle
owner for the reason that it came to the conclusion that
at the time of accident the driver of the offending vehicle
was not holding a valid and effective licence.
7. Heard learned counsel for the parties and
carefully gone through the entire material available on
record.
8. Learned counsel for the appellant/owner has
emphatically argued that the offending vehicle, on the
fateful day, was being driven by its driver, who was
having a valid and effective driving licence. The learned
Tribunal has erred in law in transferring the liability of
claim upon the vehicle owner. He took reasonable care in
employing him as a driver as he was holding a valid and
effective licence which later on during trial found to be a
fake one. Thus, this case would not fall within
"fundamental breach of condition of policy".
9. Learned counsel for the insurance company
has also been heard, who could not satisfy as to why the
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insurance company is not liable in this matter to pay the
amount of compensation.
10. In order to adjudicate the issue whether the
driver of the offending vehicle was having a valid and
effective licence or not, issue no.2 was framed by the
Tribunal to this effect.
11. The Insurance Company got the verification of
the licence produced by the driver and as per report
received, it was reported that the licence had not been
issued to the driver of the vehicle.
12. Although, this issue has been decided against
the vehicle owner.
13. As regards the contention that the driver of the
vehicle was not duly licensed as he possessed a fake
license, it may be noted that neither Section 149(2)(a)(ii)
of the Act of 1988 nor the 'Driver Clause' in the subject 5
insurance policy provide that the owner of the insured
vehicle must, as a rule, get the driving licence of the
person employed as a driver for the said vehicle verified
and checked with the concerned transport authorities.
Generally, and as a matter of course, no person
employing a driver would undertake such a verification
exercise and would be satisfied with the production of a
licence issued by a seemingly competent authority, the
validity of which has not expired. It would be wholly
impracticable for every person employing a driver to
expect the transport authority concerned to verify and
confirm whether the driving licence produced by that
driver is a valid and genuine one, subject to just
exceptions. In fact, no such mandatory condition is
provided in any insurance policy and it is not open to the
petitioner-insurance company, which also did not
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prescribe such a stringent condition, to cite the failure of
the deceased vehicle owner to get claimant's driving
licence checked with the RTO as a reason to disclaim
liability under the insurance policy.
14. In the present case, the Insurance Company
seeks to evade its liability solely on the ground that the
driver of the offending vehicle, did not possess a valid
Driving Licence. On that basis, it contends that the
owner alone should be made liable for payment of
compensation. However, the said contention does not
hold merit in view of the settled legal position laid down
by the Hon'ble Supreme Court in the case National
Insurance Co. Ltd. vs. Swaran Singh and others; reported
in (2004) 3 SCC 297. In the summary of findings (iii), the
Hon'ble Court held that:
"110.(iii) The breach of policy condition e.g.
disqualification of the driver or invalid driving
licence of the driver, as contained in sub-section
(2)(a)(ii) of Section 149, has to be proved to have
been committed by the insured for avoiding liability
by the insurer. Mere absence, fake or invalid driving
licence 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 third parties. 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."
15. The Hon'ble Supreme Court further clarified
that the insurer must establish by cogent evidence that
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there was a fundamental breach in the terms and
conditions of the insurance policy, and that such breach
was willful and intentional on the part of the insured.
16. The burden, therefore, lies on the Insurance
Company to establish that the insured (i.e. the owner
appellant herein) was guilty of committing such a
fundamental breach in terms of the policy. In the present
case, the Insurance Company has failed to discharge this
burden by leading any reliable or cogent evidence to
establish that the owner knowingly allowed a person
without a valid Driving Licence to drive a vehicle or acted
in conscious disregard of the policy conditions.
17. The legal backing for this position is found in
Section 149 (2)(a)(ii) of the Motor Vehicles Act, 1988
which states as under:
"149 (2)(a)(ii) a 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 for holding or obtaining a driving
licence during the period of disqualification; or"
18. This provision gives the insurer a statutory
defense to avoid liability on the ground of breach of policy
conditions relating to the DL.
19. However, the judicial interpretation of this
provision, as enunciated by the Hon'ble Supreme Court
in the case of Swaran Singh (Supra) and subsequent
judgments, adds a crucial requirement: the insurer must
prove that the insured was guilty of a willful and
fundamental breach of the insurer policy terms. The
breach must be shown to be conscious and intentional
on the part of the insured. It is, therefore, not an
automatic bar to the insurer's liability simply because the
2025:UHC:8369
driver lacked a valid licence at the time of the accident.
Mere absence or invalidity of the licence does not relieve
the insurer from liability unless it is established the
insured deliberately and knowingly violated the terms of
the policy.
20. The Hon'ble Supreme Court has also
recognized the practical difficulties faced by employers or
vehicle owners in verifying the genuineness of the driver's
licence before employment. This position has been
reiterated recently in IFFCO Tokio General Insurance
Company Ltd. Vs. Geeta Devi & others; reported in 2023
SCC Online SC 1398 in para 8, wherein the Hon'be
Supreme Court observed:-
"8. As regards the contention that the driver of the
vehicle was not duly licensed as he possessed a
fake license, it may be noted that neither Section
149(2)(a)(ii) of the Act of 1988 nor the 'Driver
Clause' in the subject insurance policy provide that
the owner of the insured vehicle must, as a rule, get
the driving licence of the person employed as a
driver for the said vehicle verified and checked with
the concerned transport authorities. Generally, and
as a matter of course, no person employing a driver
would undertake such a verification exercise and
would be satisfied with the production of a licence
issued by a seemingly competent authority, the
validity of which has not expired. It would be
wholly impracticable for every person employing a
driver to expect the transport authority concerned to
verify and confirm whether the driving licence
produced by that driver is a valid and genuine one,
subject to just exceptions. In fact, no such
mandatory condition is provided in any car
insurance policy and it is not open to the petitioner-
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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."
21. These principles clearly apply to the facts of
the present case. There is no evidence to show that the
owner was aware of the licence being fake or invalid or
that he failed to exercise reasonable care.
22. In light of the above discussion and settled
law, it is held that the Insurance Company has failed to
prove any fundamental breach in terms of the insurance
policy by the insured. Therefore, the liability to pay
compensation is fastened upon the insurance company.
23. Accordingly, the appeal filed by the vehicle
owner is allowed. The liability to pay the compensation is
fastened upon the respondent no.2-National Insurance
Company Limited. Accordingly, the impugned judgment
and order dated 27.11.2019, passed by the Motor
Accident Claims Tribunal/ First Additional District
Judge, Nainital in M.A.C.P. No.04 of 2018, Trilok Singh
and another vs. Mohd. Abbas and another, stands
modified to this extent. The statutory amount deposited
by the appellant-owner before this Court be remitted to
the learned MACT/ First Additional District Judge,
Nainital to be refunded to the appellant-owner forthwith.
24. Pending application, if any, stands disposed of
accordingly.
(Alok Mahra, J.)
18.09.2025
BS
BALWANT Digitally signed by BALWANT SINGH
DN: c=IN, o=HIGH COURT OF UTTARAKHAND, ou=HIGH COURT OF
UTTARAKHAND,
2.5.4.20=fbbd191c8bdb8b16e8ca7937deaf72a17c02fe2eacbf28cdf4ba
SINGH
7ce8640c5820, postalCode=263001, st=UTTARAKHAND,
serialNumber=04E141DF4614F9A4D5F48346EB553DE5185F418755DC
00A7A13C14A680C3FA90, cn=BALWANT SINGH
Date: 2025.09.22 12:09:45 +05'30'
