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IFFCO Tokio General Insurance Co. Ltd. vs. Geeta Devi and Ors.

SLP (C) · 2023 INSC 954Decided 30 Oct 2023
SLP (C) No. 19992 of 2023
C.T. Ravikumar · Sanjay Kumar

Background

A motorcyclist, Dharambir, died after being hit by a Tempo driven rashly by Ujay Pal, who was later found to be holding a fake driving licence. The Motor Accident Claims Tribunal awarded compensation to the deceased's family but held the insurance company was not liable to pay (because the driver's licence was fake) and gave the insurer a right to recover the amount from the vehicle owners. The Delhi High Court reversed this, denying the insurer's right of recovery. The insurance company approached the Supreme Court.

Decision Breakdown

The Court reaffirmed a well-settled line of precedent (Skandia Insurance, Sohan Lal Passi, National Insurance Co. v. Swaran Singh, Ram Chandra Singh) holding that a fake or invalid driving licence, by itself, does not absolve an insurer's liability. To escape liability, the insurance company must affirmatively prove that the vehicle owner was aware the licence was fake, or was negligent in not verifying it, and that this amounted to a wilful breach of the insurance policy conditions. Here, the insurance company had never even pleaded that the owner knowingly allowed a driver with a fake licence to operate the vehicle, and the policy itself did not require the owner to get the driver's licence verified with the RTO. The Court held that ordinarily no employer is expected to conduct a background check on a licence that appears genuine, and dismissed the insurance company's petition, also criticizing insurers for routinely raising such defences without factual basis and wasting judicial time.

Lesson Learnt

An insurance company cannot avoid paying compensation for a motor accident merely because the driver's licence later turns out to be fake: the insurer bears the burden of proving the vehicle owner knowingly or negligently failed to verify the licence, and ordinary reasonable diligence (accepting a licence that looks valid) is enough to protect the owner.

Official source (sci.gov.in)View Judgment (PDF)

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