Who is liable to pay compensation to employee with expired driver's licence in an accident? Supreme Court answers

The Supreme Court on Wednesday held that liability for compensation cannot be fastened on an insurance company when the driver of a vehicle involved in an accident does not have a valid driving licence (Beli Ram v. Rajinder Kumar and anr)..The Supreme Court Bench of Justices Sanjay Kishan Kaul, Aniruddha Bose and Krishna Murari was considering the question of whether an insured employer would be absolved of liability in a case where his employee drives a vehicle owned by the employer and meets with an accident while holding an expired driving licence..In this case, the Respondent was gainfully employed with the Appellant and had suffered 20 per cent permanent disability after meeting with an accident while driving a truck owned by his employer. .As such, the employee-Respondent filed a petition under the Workmen's Compensation Act and sought compensation while also adding the insurance company that had insured the vehicle in the array of parties..The Respondent was granted an award and the insurance company was directed to pay the compensation amount while the employer was directed to pay the interest..When all the parties filed their appeals against this award before the High Court for various reasons, one of the primary contentions that was raised was that of Respondent's expired driving licence. It was pointed out that the Respondent had been driving his employer's vehicle for as many as three years on an expired licence..This led to the High Court absolving the Insurance company's liability in the issue and fastening the liability on the employer noting that there was a material breach of the insurance policy..This brought the employer to the Supreme Court in appeal raising the sole question of liability and whether the same stands absolved for an insurer in case of an expired driving licence..The Supreme Court notes that it has been unable to trace out any precedent laid down by the Supreme Court on this issue. However, the Apex Court had the benefit of a number of High Court judgments on this aspect of law..It was argued before the Court that the employer, as an insured, had taken due care at the time of employing the respondent to ensure that he held a valid driving licence. However, the renewal of the licence ought to have been the responsibility of the respondent, it was pleaded by the Appellant. The Court however observed,."We are of the view that once the basic care of verifying the driving licence has to be taken by the employer, though a detailed enquiry may not be necessary, the owner of the vehicle would know the validity of the driving licence as is set out in the licence itself. It cannot be said that thereafter he can wash his hands off the responsibility of not checking up whether the driver has renewed the licence.".Having said so, the Court also underlined that the claimant in the case, that is the workman who suffered disability, was negligent to the extent of not renewing the licence. However, the case before the Court was that of the Workmen's Compensation Act and not that of the Motor Vehicles Act, the Court added..The Court referred to a Delhi High Court judgment in the case Tata AIG General Insurance Co. Ltd. v. Akansha & Ors where the onus to prove that there was no breach of insurance policy was shifted to the owner/insured after the insurance company showed that valid licence did not exist on the day of the accident..A similar position was taken by the The Allahabad High Court in The Oriental Insurance Co. Ltd. v Manoj Kumar & Ors where the High Court opined that the "owner was supposed to be aware that the driving licence of the driver had expired and, thus, it was held that it was the duty of the owner to have ensured that the driver gets the licence renewed within time.".In this case, too, the insurance company was absolved from liability on there being a breach of the insurance policy..The third judgment Supreme Court placed reliance on was Himachal Pradesh High Court's verdict in the National Insurance Co. Ltd. v. Hem Raj & Ors where the driver was said to not hold a duly valid licence considering that the licence had been expired and was not renewed in thirty days. ."The conclusion, thus, was that the driver, who permits his licence to expire and does not get it renewed till after the accident, cannot claim that it should be deemed that the licence is renewed retrospectively," the Supreme Court summarises the High Court's findings..In the Himachal Pradesh High Court ruling, however, the High Court said that on account of the MV Act being a beneficial legislation, it has to be interpreted in favour of the claimant in the event two interpretations are possible. However, the same cannot be used against insurance companies and as such, sympathy can be shown towards the person suffering in the accident and not the owner of the vehicle..The Supreme Court agreed with this finding of the High Court remarking that this view taken by the Himachal Pradesh High Court sets out the legal position lucidly..The findings of all the three judgments cited put forth the legal position in such cases where the insurance company cannot be held liable in case there has been breach of insurance policy and the owner or the insured would have the responsibility to ensure that all regulations are followed..In the instant case, too, the Supreme Court said that it was the responsibility of the employer to ensure that the valid licence was renewed when it expired especially since the workman was engaged in driving a commercial vehicle..Since the instant case is a matter under the Workmen's Compensation Act and not the MV Act, the consequences do not flow to the Respondent who suffered the accident and who was also negligent to the extent of not renewing his licence. .Since there is no third-party claim and no other person suffered in the accident, the Respondent was not held liable by the Court which proceeded to dismiss the appeal and effectively upholding the liability fastened on to the employer in the case who was the insured party and the owner of the vehicle..Read Judgment: