AMAR SINGH v. NEW INDIA ASSURANCE CO. LTD. & 2 ORS.

Section 21(b) of Consumer Protection Act, 1986. Referred to rulings in United India Insurance v. Lehru, National Insurance v. Swaran Singh, Nirmala Kothari v. UIIC, Rishi Pal Singh v. NIAC and Iffco Tokio v. Geeta Devi.

Case Laws Referred:

No case laws were referred in the order.

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Full Text of Judgment:

4. Aggrieved by the Order of the District Forum, the Insurance Company filed an Appeal before the State Commission. The State Commission allowed the Appeal, set aside the award given by the District Forum and dismissed the Complaint.

5. I have heard the Learned Counsel for both the parties and perused the material available on record.

6. The Learned Counsel of the Petitioner/ Complainant argued that the claim of the Complainant was repudiated on the ground of fake license of the driver. The Petitioner had checked the driving license of the driver at the time of employing him. He relied on two Orders of the Hon’ble Supreme Court in United India Insurance Co. Ltd. v. Lehru, (2003) 3SCC 338, decided on 28.02.2003 and
National Insurance Co. Ltd. v. Swaran Singh, (2004) 3 SCC 297, decided on 05.01.2004, wherein the Insurance Company was held liable even after it was found that the license was fake. He argued that the Order of the District Forum iswell reasoned and justified and therefore must be upheld.

7. The Learned Counsel of the Insurance Company argued that the driving license was forged and therefore the Insurance Company was justified in repudiating the claim vide letterdated 21.12.2012. The State Commission has not erred in dismissing the Complaint and thus the Revision Petition must be dismissed.

8. After going through the Orders of the State Commission, District Forum and the grounds, arguments raised in the present Revision Petition. I am of the view that the central issue revolves around whether the Insurance Company was justified in repudiating the claimof the Petitioner/ Complainant on the ground of fake driving license and whether there was willful negligence on the part of the Petitioner/ Complainant at the time of employing the Driver in not finding out the veracity of the licence. The State Commission in para 9 of its Order on the basis of the affidavit filed by the Complainant concluded that Complainant hadnot looked into the genuineness of the license of the driver at the time of employing him.Further, the driving license of the driver was found to be fake after verification done at theoffice of DTO, Hoshiarpur. I disagree with the observation made by the State Commission onthe basis of the Affidavit of the Complainant as the Complainant in its affidavit had stated that the driving license is genuine which means he believed that the driving license of the driver was not fake in the first instance at the time of employing him. The Hon’ble SupremeCourt in United India Insurance Co. Ltd. v. Lehru (supra) had held that the owner of avehicle when he hires a driver, he has to check the driving license and if it looks genuine onthe face of it than the owner is not expected to find out whether the license in fact has been issued by a competent authority. The relevant portion of the Order reads as under:
“When an owner is hiring a driver he will therefore have to check whether the driver has a driving licence. If the driver produces a driving licence which on the face of it looks genuine, the owner is not expected to find out whether the licence has in fact been issued by a competent authority or not. The owner would then take the test of the driver. If he finds that the driver is competent to drive the vehicle, he will hire the driver. We find it rather strange that Insurance Companies expect owners to makeenquiries with RTOs, which are spread all over the country, whether the driving licence shown to them is valid or not. Thus where the owner has satisfied himself that the driver has a licence and is driving competently there would be no breach of Section 149(2)(a)(ii). The Insurance Company would not then be absolved of liability. If it ultimately turns out that the licence was fake the Insurance Company would continue to remain liable unless they prove that the owner/insured was aware or had noticed that the licence was fake and still permitted that person to drive. More importantly even in such a case the Insurance Company would remain liable to the innocent third party, but it may be able to recover from the insured. This is the lawwhich has been laid down in Skandia [(1987) 2 SCC 654], Sohan Lal Passi [(1996) 5SCC 21: 1996 SCC (Cri) 871] and Kamla [(2001) 4 SCC 342: 2001 SCC (Cri) 701] cases. We are in full agreement with the views expressed therein and see no reason totake a different view.”

“110. (iii)…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 orthe third parties. To avoid its liability towards the insured, the insurer hasto 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 licenced driver or one who was not disqualified to drive at the relevant time.” 11. While hiring a driver the employer is expected to verify if the driver hasa driving licence. If the driver produces a licence which on the face of it looks genuine, the employer is not expected to further investigate into the authenticity of the licence unless there is cause to believe otherwise. If the employer finds the driver to be competent to drive the vehicle and has satisfied himself that the driver has a driving licence there would be no breach of Section 149(2)(a)(ii) and the Insurance Company would be liable under the policy. It would be unreasonable to place such a high onus on the insured to make enquiries with RTOs all over the country to ascertain the veracity of the driving licence. However, if the Insurance Company is able to prove that the owner/insured was aware or had notice that the licence was fake or invalid and still permitted the person to drive, the insurance company would no longer continue to be liable. 12. On facts, in the instant case, the Appellant/Complainant had employed the Driver, Dharmendra Singh as driver after checking his driving licence. Thedriving licence was purported to have been issued by the licencing authority, Sheikh Sarai, Delhi, however, the same could not be verified as the concerned officer of the licencing authority deposed that the record of the licence was not available with them. It is not the contention of the Respondent/ Insurance Company that the Appellant/complainant is guilty of willful negligence while employing the driver. The driver had been driving competently and there was no reason for the Appellant/Complainant to doubt the veracity of the driver’s licence. In view of above facts and circumstances, the impugned judgment is notliable to be sustained and is hereby set aside. The appeals accordingly standallowed. The respondent/ Insurance Company is held liable to indemnify the appellant. 16. The Hon’ble Supreme Court in a recent Order in Rishi Pal Singh Vs. New India Assurance Co. Ltd. (Civil Appeal No.4919 of 2022) decided on 26.07.2022 has held as under:- 7. To appreciate the contention of the appellant, the observations of this Courtin Lehru (supra) have been reproduced as under: “20. When an owner is hiring a driver he will therefore have to check whether the driver has a driving licence. If the driver produces a driving licence which on the face of it looks genuine, the owner is not expected to find out whether the licence has in fact been issued by a competent authority or not. The owner would then take the test of the driver. If  he finds that the driver is competent to drive the vehicle, he will hire the driver. We find it rather strange that insurance companies expect owners to make enquiries with RTOs, which are spread all over the country, whether the driving licence shown to them is valid or not. Thus where the owner has satisfied himself  that the driver has a licence and is driving competently there would be no breach of Section 149(2)(a)(ii). The insurance company would not then be absolved of liability. If it ultimately turns out that the licence was fake, the insurance company would continue to remain liable unless they prove that the owner/insured was aware or had noticed that the licence was fake and still permitted that person to drive. More importantly, even in such a case the insurance company would remain liable to the innocent third party, but it may beable to recover from the insured. This is the law which has been laiddown in Skandia [(1987) 2 SCC 654] , Sohan Lal Passi [(1996) 5 SCC 21: 1996 SCC (Cri) 871] and Kamla [(2001) 4 SCC 342 : 2001 SCC (Cri)701] cases. We are in full agreement with the views expressed therein and see no reason to take a different view.” 8. The issue has been examined by a larger Bench in Swaran Singh (supra) wherein it was argued that the observations in Lehru were in conflict with the earlier judgment in New India Assurance Co. v. Kamla and Ors. 4. This Courtheld as under: “92. It may be true as has been contended on behalf of the petitioner that a fake or forged licence is as good as no licence but the question herein, as noticed herein before, is whether the insurer must prove that the owner was guilty of the wilful breach of the conditions of the insurance policy orthe contract of insurance. In Lehru case [(2003) 3 SCC 338 : 2003 SCC(Cri) 614] the matter has been considered in some detail. We are in general agreement with the approach of the Bench but we intend to point out that the observations made therein must be understood to have been made in the light of the requirements of the law in terms where of the insurer is to establish wilful breach on the part of the insured and not for the purpose of its disentitlement from raising any defence or for the owners to be absolved from any liability whatsoever. We would be dealingin some detail with this aspect of the matter a little later.

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99. So far as the purported conflict in the judgments of  Kamla [(2001) 4SCC 342 : 2001 SCC (Cri) 701] and Lehru [(2003) 3 SCC 338 : 2003SCC (Cri) 614] is concerned, we may wish to point out that the defence tothe effect that the licence held by the person driving the vehicle was afake one, would be available to the insurance companies, but whether despite the same, the plea of default on the part of the owner has been established or not would be a question which will have to be determined in each case. 100. This Court, however, in Lehru [(2003) 3 SCC 338: 2003 SCC (Cri)614] must not be read to mean that an owner of a vehicle can under no circumstances have any duty to make any enquiry in this respect. Thesame, however, would again be a question which would arise for consideration in each individual case.”

11. In view of the discussion above, I am of the view that the Order of the District Forum is well reasoned and justified. It has relied on the Surveyor’s Report, which assessed the lossas Rs. 1,98,706/- for the repairs. The Surveyor’s Report is crucial in any insurance claim and needs to be given due weightage. The Order of the State Commission, in view of discussion above is illegal and irregular as it does not take into account the law laid down by the Hon’ble Supreme Court in matter relating to alleged fake licence. Accordingly, it needs to beset aside.

12. In view of the aforesaid discussion, the Revision Petition is allowed and the Order ofthe State Commission is set aside. The Order of the District Forum is upheld.