The Supreme Court on Thursday said that insurance companies are not liable to pay compensation for accidents if the driver’s licence was not valid or not renewed at the time of the incident.
Event Context
The Motor Accidents Claim Tribunal (MACT) originally held that the insurer, Reliance General Insurance Co Ltd, was not liable because the driver’s licence had expired long before the accident and was only renewed much later.
However, the high court reversed this, accepting a letter from a licensing official which claimed that licence records for the period between 2007 and 2010 were “lost” due to a technical error during a data transfer between IT companies.
The high court ordered the insurer to pay a revised compensation of over ₹1.08 crore.
The top court scrutinised the evidence and found the high court’s reliance on the “missing data” theory to be flawed.
While the court absolved the insurance company of final liability, it protected the claimants.
Under the ‘Pay and Recover’ principle, the bench directed the insurance company to satisfy the award to the claimants first and then recover the entire amount from the vehicle owner and the driver.
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However, the bench said that it cannot be oblivious to the fact that asking a driver or an owner to pay such a large amount is a humongous burden upon them.
“It may throw into disarray their entire lives all because the driver and the owner did not take adequate precaution to ensure that there was no break in the validity of the driving licence. Had that been done, the burden would not have fallen upon them, and the appellant-insurer would have been bound to honour the award.
“In our view, this underscores the importance of the driving licence. It is a document that certifies the ability to drive on the road, and so it stands to reason that all drivers should have it,” the bench said, while asking the Centre and the states to undertake nationwide awareness campaigns.
Team Analysis
The top court set aside a Punjab and Haryana High Court order that had fastened liability on the insurer.
The matter arose from a 2009 accident where a vehicle driven by Om Parkash hit a two-wheeler.
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Match Outlook
The top court said that an insurance company could not be saddled with the liability if the offending vehicle was driven without a valid driving licence.
Referring to the issue of vehicles being driven without valid licences, the top court said that it leads to a situation where a driver or an owner or both will have to pay huge amounts as compensation in accident cases, and called for a nationwide campaign to make citizens aware.
A bench comprising Justices Sanjay Karol and N Kotiswar Singh asked the Union Ministry of Road, Transport and Highways and state transport departments to run a nationwide campaign to promote road safety and strengthen compliance with traffic laws.
It asked them to undertake extensive awareness drives through social media and other platforms while streamlining the issuance and renewal of driving licences.
The court also stressed the need for urgent reforms in regulating driving schools, improving their affordability, and making licensing applications and tests accessible in regional languages.
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“The Ministry of Road, Transport and Highways, Government of India, as also the respective counterparts of the states should, we may suggest, undertake campaigns through all mediums such as awareness drives, social media, etc to drive home this importance; introduce measures to ensure strict compliance; and also streamline the process of issuance/ renewal of licences.
“Other issues such as regulation of driving schools, the affordability thereof, and accessibility in terms of regional languages, when it comes to applications and tests, etc also need urgent attention,” Justice Karol, who authored the judgment, said.
