2025:UHC:7278 1 REPORTABLE HIGH COURT OF UTTARAKHAND AT NAINITAL Appeal From Order No. 548 of 2013 19 August, 2025 Jawahar Lal Agarwal -Appellant Versus Harish Singh Kalakoti & another --Respondents ---------------------------------------------------------------------- Presence:- Mr. Bhupendra Singh, learned counsel for the appellant (appeared through V.C.). Mr. H.O. Bhakuni, learned counsel for respondent no.1. Mr. Siddharth Bisht, learned counsel for respondent no.2. ---------------------------------------------------------------------- Hon'ble Pankaj Purohit, 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 14.08.2013, passed by the Motor Accident Claims Tribunal/learned Additional District Judge, Nainital in M.A.C.P. Case No.154 of 2011, Harish Chand Kalakoti vs. Jawahar Lal Agarwal & others, whereby the Tribunal awarded a sum of Rs.1,30,562/- against the appellant herein. 2. Brief facts of the case are that on 09.04.2011, the respondent no.1-claimant was standing near Inspiration Public School, Kathgodam, and was talking with his friend Sunit Sharma. At that time, the driver of Vehicle No.UA-04A/1994, driving at high speed, recklessly and negligently, hit the respondent no.1- claimant, who was standing on the roadside, due to which he sustained serious injuries. Owing to the severity of the injuries, he was admitted to Krishna 2025:UHC:7278 2 Hospital and Research Centre, Haldwani, where he underwent treatment. He remained admitted in the said hospital from 09.04.2011 to 23.04.2011. An amount of Rs.1,60,000 was spent on his treatment. Due to the injuries sustained in the accident, he suffered physical and mental agony. The accident was reported by the his father at Kathgodam Police Station. Accordingly, respondent no.1-claimant moved a claim petition before the MACT for compensation of Rs.20,00,000/- (Twenty Lakhs). 3. The appellant (the 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. It is further stated in the written statement that the incident occurred due to the negligence of the respondent no.1-claimant. 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 no.2, driver of the vehicle, namely, Mukesh Kumar denied most of the contents of the claim petition. But, he has admitted that on the date of accident, he was having a valid and effective licence and the accident had occurred due to sudden road crossing by the petitioner-claimant. 5. 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 2025:UHC:7278 3 insurance company is not liable for making any payment. It was the own fault of the respondent no.1-claimant due to which incident had occurred and the driver had no role to play. 6. On the basis of the pleadings of the parties, three issues were framed:- (i) Whether on 09.04.2011, while the claimant was standing near Inspiration Public School, Kathgodam and talking with his friend Sumit Sharma, the driver of Truck No. UA 04A/1994, driving the vehicle rashly and negligently, hit the claimant who was standing on the roadside, due to which the claimant, Harish Singh, suffered serious injuries? (ii) 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? 7. Learned Tribunal decided the claim petition by awarding a sum of Rs.1,30,562/- 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. The licence produced and held by the driver was never issued from the office of RTA, Haldwani. 8. I have heard learned counsel for the parties and carefully gone through the entire material available 2025:UHC:7278 4 on record. 9. Learned counsel for the appellant 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. The appellant insured was never negligent while employing Mukesh Kumar as a driver. 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”. 10. Learned counsel for the insurance company has also been heard, who could not satisfy as to why the insurance company is not liable in this matter to pay the amount of compensation. 11. 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. 12. 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, named Mukesh Kumar. 13. Although, this issue has been decided against the vehicle owner. 14. 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) 2025:UHC:7278 5 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 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. 15. In effect and in consequence, the petitioner- insurance company cannot blithely claim that the deceased vehicle owner did not conduct due diligence while employing Mukesh Kumar as a driver, by now insisting upon a condition which was neither prescribed in the statute nor in the insurance policy. More so, 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. 16. In the present case, the Insurance Company seeks to evade its liability solely on the ground that the 2025:UHC:7278 6 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.” 17. The Hon’ble Supreme Court further clarified that the insurer must establish by cogent evidence that there was a fundamental breach in the terms and conditions of the insurance policy, and that such breach was wilful and intentional on the part of the insured. 18. 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. 2025:UHC:7278 7 19. 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” 20. This provision gives the insurer a statutory defense to avoid liability on the ground of breach of policy conditions relating to the DL. 21. 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 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. 22. 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 2025:UHC:7278 8 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-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.” 23. 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. 24. 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. 25. 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 14.08.2013, passed by the Motor Accident Claims Tribunal/learned Additional District Judge, Nainital in M.A.C.P. Case No.154 of 2011, Harish Chand Kalakoti vs. Jawahar Lal Agarwal & others, stands modified to this extent. The statutory amount deposited by the appellant-owner before this Court be remitted to 2025:UHC:7278 9 the learned MACT/Additional District Judge, Nainital to be refunded to the appellant-owner forthwith. 26. Pending application, if any, stands disposed of accordingly. (Pankaj Purohit, J.) 19.08.2025 AK