IFFCO TOKIO GENERAL INSURANCE CO. LTD.versusGEETA DEVI AND OTHERS

                  [2023] 14 S.C.R. 62 : 2023 INSC 954



                            CASE DETAILS

         IFFCO TOKIO GENERAL INSURANCE CO. LTD.
                                     v.
                     GEETA DEVI AND OTHERS
             (Special Leave Petition (C) No. 19992 of 2023)
                           OCTOBER 30, 2023
          [C.T. RAVIKUMAR AND SANJAY KUMAR, JJ.]

                             HEADNOTES

       Issue for consideration: After motor vehicle accident, it came to
light that the driver of the vehicle had fake driving licence. The High Court
opined that the petitioner-insurance company had neither pleaded nor proved
that the deceased vehicle owner did not take adequate steps to verify the
genuineness of the driving licence and in the absence of such a plea on its
part, the Tribunal could not have concluded that there was a breach of the
terms and conditions of the insurance policy. Whether order of the High
Court justified.
      Motor Vehicle Act, 1988 – Tempo Vehicle driven in rash and
negligent manner hit motorcycle of the victim – Victim died – Dependents
sought compensation – The Tribunal awarded them compensation and
found that the driver of the Tempo had a fake driving licence and opined
that the petitioner-insurance company would not be liable to pay the
compensation – Tribunal awarded liberty to the petitioner-insurance
company to recover the same from owners of the Tempo – However, the
High Court held that the petitioner-insurance company did not have the
right to recover the compensation from the vehicle owners – Propriety:
      Held: The petitioner-insurance company did not raise the plea that the
owner of the vehicle allowed the said driver to drive the vehicle knowing
that his licence was fake – Its stand was that the accident had occurred
due to the negligence of the victim himself – Further, the insurance policy
did not require the vehicle owner to undertake verification of the driving
licence of the driver of the vehicle by getting the same confirmed with the
RTO – Therefore, the claim of the petitioner-insurance company that it
                                      62
      IFFCO TOKIO GENERAL INSURANCE CO. LTD. v.                            63
                     GEETA DEVI

has the right to recover the compensation from the owners of the vehicle,
owing to a willful breach of the condition of the insurance policy, viz., to
ensure that the vehicle was driven by a licenced driver, is without pleading
and proof – Also, once a seemingly valid driving licence is produced by a
person employed to drive a vehicle, unless such licence is demonstrably
fake on the face of it, warranting any sensible employer to make inquiries
as to its genuineness, or when the period of the licence has already expired,
or there is some other reason to entertain a genuine doubt as to its validity,
the burden is upon the insurance company to prove that there was a failure
on the part of the vehicle owner in carrying out due diligence apropos such
driving licence before employing that person to drive the vehicle – Presently,
no evidence has been placed on record whereby an inference could be drawn
that the deceased vehicle owner ought to have gotten driving licence of the
said driver verified – Therefore, it was for the petitioner-insurance company
to prove willful breach on the part of the said vehicle owner – As no such
exercise was undertaken, the petitioner-insurance company would have no
right to recover the compensation amount from the present owners of the
vehicle. [Paras 14 and 15]

      LISTS OF CITATIONS AND OTHER REFERENCES

     Skandia Insurance Co. Ltd. vs. Kokilaben Chandravadan and other
(1987) 2 SCC 654 : [1987] 2 SCR 752; Sohan Lal Passi vs. P. Sesh Reddy
and others (1996) 5 SCC 21 : [1996] 3 Suppl. SCR 647; National Insurance
Co. Ltd. vs. Swaran Singh and others (2004) 3 SCC 297: [2004] 1 SCR 180;
United India Insurance Co. Ltd. vs. Lehru and others (2003) 3 SCC 338 :
[2003] 2 SCR 495; Ram Chandra Singh vs. Rajaram and others (2018) 8
SCC 799 : [2018] 9 SCR 1083 – relied on.
       OTHER CASE DETAILS INCLUDING IMPUGNED
              ORDER AND APPEARANCES

    CIVIL APPELLATE JURISDICTION : Special Leave Petition (C)
No.19992 of 2023.
     From the Judgment and Order dated 11.05.2023 of the High Court of
Delhi at New Delhi in MACAPP No.914 of 2019.
64           SUPREME COURT REPORTS                          [2023] 14 S.C.R.


     Appearances:
     Shivam Singh, Sahil Bhatia, Gopal Singh, Advs. for the Petitioner.
       JUDGMENT / ORDER OF THE SUPREME COURT

                                  ORDER

     SANJAY KUMAR, J.
      1. IFFCO Tokio General Insurance Co. Ltd. seeks to assail the order
dated 11.05.2023 of the Delhi High Court in MAC. APP. No. 914 of 2019.
Thereby, the High Court reversed the Award dated 06.07.2018 passed by the
Motor Accident Claims Tribunal, Rohini Courts, Delhi, in MAC Petition No.
4415 of 2016, to the extent it granted the right of recovery to the petitioner-
insurance company. Aggrieved by the denial of such right of recovery, the
petitioner-insurance company is before this Court.
       2. Facts, to the extent germane, may be noted: One Dharambir suffered
fatal injuries on 09.05.2010, when the Tempo vehicle bearing Registration
No. HR69D-0246, driven in a rash and negligent manner, hit his motorcycle.
His dependents, viz., his parents, widow and children, approached the Motor
Accident Claims Tribunal, Rohini Courts, Delhi, under Sections 140 and
166 of the Motor Vehicles Act, 1988 (for brevity, ‘the Act of 1988’), seeking
compensation. Ujay Pal, the driver of the Tempo vehicle; Netra Pal Singh,
the owner of the vehicle, who died during the pendency of the case and was
represented by his legal representatives, viz., his mother, widow and minor
son; and the petitioner-insurance company were arrayed as the respondents
in their claim petition. By Award dated 06.07.2018, the Tribunal held in
their favour and awarded them a sum of ₹13,70,000/- as compensation with
interest. However, the Tribunal found that the driver of the Tempo had a
fake driving licence and opined that the petitioner-insurance company would
not be liable to pay the compensation. The Tribunal, therefore, directed the
petitioner-insurance company to deposit the awarded amount with liberty
to recover the same from the present owners of the Tempo. Aggrieved by
this finding, the owners of the vehicle filed an appeal in MAC. APP. No.
914 of 2019 before the Delhi High Court, resulting in the impugned order
dated 11.05.2023.
      IFFCO TOKIO GENERAL INSURANCE CO. LTD. v.                              65
             GEETA DEVI [SANJAY KUMAR, J.]

      3. The record reflects that Ujay Pal, the driver of the vehicle, had
produced a driving licence issued at Mathura at the time of his employment
and it was only after the accident that it came to light that the said licence
was not a genuine one. The widow of Netra Pal Singh, the deceased vehicle
owner, stated before the Tribunal that her husband had told her he had taken a
driving skill test after seeing the driving licence produced by Ujay Pal, before
employing him as a driver. However, the Record Clerk from the ARTO,
Mathura, testified that, as per their record, the licence produced by Ujay
Pal was fake as that licence number related to some other person. In view
of this evidence, the Tribunal held that the petitioner-insurance company
would not be liable, owing to a breach of the terms and conditions of the
insurance policy by the vehicle owner, and granted the right of recovery
to the petitioner-insurance company. However, in appeal, the High Court
opined that the petitioner-insurance company had neither pleaded nor proved
that the deceased vehicle owner did not take adequate steps to verify the
genuineness of the driving licence and in the absence of such a plea on its
part, the Tribunal could not have concluded that there was a breach of the
terms and conditions of the insurance policy. The High Court, therefore,
held that the petitioner-insurance company did not have the right to recover
the compensation from the vehicle owners.
      4. It would be apposite at this stage to note the statutory milieu
pertinent to this case. Section 149 of the Act of 1988, to the extent relevant,
reads as under: -
     ‘149. Duty of insurers to satisfy judgments and awards against persons
     insured in respect of third party risks. -
     (1) …..
     (2) No sum shall be payable by an insurer under sub-section (1) in
     respect of any judgment or award unless, before the commencement of
     the proceedings in which the judgment or award is given the insurer had
     notice through the Court or, as the case may be, the Claims Tribunal of
     the bringing of the proceedings,……; and an insurer to whom notice of
     the bringing of any such proceedings is so given shall be entitled to be
     made a party thereto and to defend the action on any of the following
     grounds, namely:-
66           SUPREME COURT REPORTS                          [2023] 14 S.C.R.


           (a) that there has been a breach of a specified condition of the
           policy, being one of the following conditions, namely: -
                 (i) …...; or
                 (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………….’
      5. On behalf of the petitioner-insurance company, it was argued that
the hearsay evidence of the widow of the vehicle owner was accepted as
the biblical truth by the High Court without any corroboration thereof. This
argument was advanced in the context of the deceased vehicle owner having
taken a driving skill test of Ujay Pal prior to his employment as a driver. It
is pointed out that his widow admitted that she had not seen any such test
being taken and that her late husband had merely told her so and, further,
the inescapable fact also remains that the driving licence of Ujay Pal, the
driver of the vehicle, was a fake one.
      6. The argument with respect to the driving skill test does not merit
acceptance as the insurance policy in question admittedly did not postulate
that a driving skill test should compulsorily be taken before employing a
chauffeur to drive the insured vehicle. The relevant condition in the insurance
policy, titled ‘Driver Clause’, reads as follows:
     ‘Any person including insured: provided that the person driving holds
     an effective driving licence at the time of the accident and is not
     disqualified from holding or obtaining such a licence.’
      There is, thus, no mandate in the statutory provision or the above clause
that a driving skill test should be undertaken without fail before employing
a driver. Therefore, it is not open to the petitioner-insurance company to
cite the same as a breach of the terms and conditions of the policy. In fact,
there was no such term or condition in the policy.
     7. 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) of the Act of 1988 nor the ‘Driver Clause’ in the subject
      IFFCO TOKIO GENERAL INSURANCE CO. LTD. v.                             67
             GEETA DEVI [SANJAY KUMAR, J.]

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.
      8. In effect and in consequence, the petitioner-insurance company
cannot blithely claim that the deceased vehicle owner did not conduct due
diligence while employing Ujay Pal 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.
       9. Useful reference in this regard may be made to Skandia Insurance
Co. Ltd. vs. Kokilaben Chandravadan and others1, wherein this Court, in
the context of Section 96(2)(b)(ii) of the Motor Vehicles Act, 1939, which
is in pari materia with Section 149(2)(a)(ii) of the Act of 1988, observed as
under: -
           ‘14. Section 96(2)(b)(ii) extends immunity to the insurance
           company if a breach is committed of the 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
           from holding or obtaining a driving licence during the period of
           disqualification. The expression ‘breach’ is of great significance.


1   (1987) 2 SCC 654
68            SUPREME COURT REPORTS                          [2023] 14 S.C.R.


            The dictionary meaning of ‘breach’ is ‘infringement or violation
            of a promise or obligation’ (see Collins English Dictionary). It is
            therefore abundantly clear that the insurer will have to establish
            that the insured is guilty of an infringement or violation of a
            promise that a person who is duly licensed will have to be in
            charge of the vehicle. The very concept of infringement or
            violation of the promise that the expression ‘breach’ carries within
            itself induces an inference that the violation or infringement
            on the part of the promisor must be a wilful infringement or
            violation. If the insured is not at all at fault and has not done
            anything he should not have done or is not amiss in any respect
            how can it be conscientiously posited that he has committed a
            breach? It is only when the insured himself places the vehicle
            in charge of a person who does not hold a driving licence, that it
            can be said that he is ‘guilty’ of the breach of the promise that the
            vehicle will be driven by a licensed Driver. It must be established
            by the insurance company that the breach was on the part of the
            insured and that it was the insured who was guilty of violating
            the promise or infringement of the contract. Unless the insured is
            at fault and is guilty of a breach the insurer cannot escape from
            the obligation to indemnify the insured and successfully contend
            that he is exonerated having regard to the fact that the promisor
            (the insured) committed a breach of his promise. Not when
            some mishap occurs by some mischance. When the insured has
            done everything within his power inasmuch as he has engaged a
            licensed Driver and has placed the vehicle in charge of a licensed
            Driver, with the express or implied mandate to drive himself, it
            cannot be said that the insured is guilty of any breach.’
     10. The correctness of the aforesaid decision was considered by a
3-Judge Bench of this Court in Sohan Lal Passi vs. P. Sesh Reddy and
others2 and it was duly approved, with the following observations: -
      ‘In other words, once there has been a contravention of the condition
      prescribed in sub-section (2)(b)(ii) of Section 96, the person insured


2    (1996) 5 SCC 21
      IFFCO TOKIO GENERAL INSURANCE CO. LTD. v.                             69
             GEETA DEVI [SANJAY KUMAR, J.]

     shall not be entitled to the benefit of sub-section (1) of Section 96.
     According to us, Section 96(2)(b)(ii) should not be interpreted in
     a technical manner. Sub-section (2) of Section 96 only enables the
     insurance company to defend itself in respect of the liability to pay
     compensation on any of the grounds mentioned in sub-section (2)
     including that there has been a contravention of the condition excluding
     the vehicle being driven by any person who is not duly licensed. This
     bar on the face of it operates on the person insured. If the person who
     has got the vehicle insured has allowed the vehicle to be driven by a
     person who is not duly licensed then only that clause shall be attracted.
     In a case where the person who has got insured the vehicle with the
     insurance company, has appointed a duly licensed Driver and if the
     accident takes place when the vehicle is being driven by a person not
     duly licensed on the basis of the authority of the Driver duly authorised
     to drive the vehicle whether the insurance company in that event shall
     be absolved from its liability? The expression ‘breach’ occurring in
     Section 96(2)(b) means infringement or violation of a promise or
     obligation. As such the insurance company will have to establish that
     the insured was guilty of an infringement or violation of a promise. The
     insurer has also to satisfy the Tribunal or the court that such violation
     or infringement on the part of the insured was wilful. If the insured
     has taken all precautions by appointing a duly licensed Driver to drive
     the vehicle in question and it has not been established that it was the
     insured who allowed the vehicle to be driven by a person not duly
     licensed, then the insurance company cannot repudiate its statutory
     liability under sub-section (1) of Section 96.’
      11. Thereafter, in National Insurance Co. Ltd. vs. Swaran Singh and
others3, a 3-Judge Bench of this Court dealt with the interpretation of Section
149 of the Act of 1988. The cases before the Bench involved, amongst others,
instances where the driving licence produced by the driver or owner of the
vehicle was a fake one. The Bench noted that Section 149(2)(a) opened
with the words: ‘that there has been a breach of a specified condition of the
policy’, which would imply that the insurer’s defence of the action would



3   (2004) 3 SCC 297
70            SUPREME COURT REPORTS                         [2023] 14 S.C.R.


depend upon the terms of the policy. It was observed that an insurance
company which wished to avoid its liability is not only required to show
that the conditions laid down in Section 149 (2)(a) or (b) are satisfied but is
further required to establish that there has been a breach on the part of the
insured. Such a breach on the part of the insured must be established by the
insurer to show that the insured used or caused or permitted to be used the
insured vehicle in breach of the provisions. The Bench went on to state that
where the insurer, relying upon the violation of law by the assured, takes
exception to pay the assured or a third party, it must prove a willful violation
of the law by the assured. Noting that the proposition of law is no longer res
integra that the person who alleges breach must prove the same, the Bench
observed that an insurance company would be required to establish the said
breach by cogent evidence and in the event an insurance company fails to
prove that there has been breach of the conditions of the policy on the part
of the insured, such an insurance company cannot be absolved of its liability.
      12. Further, in the context of cases where the driver’s licence was
found to be fake, the Bench observed that the question would be whether
the insurer could prove that the owner was guilty of willful breach of the
conditions of the insurance policy. It was pointed out that the defence to
the effect that the licence held by the person driving the vehicle was a fake
one would be available to the insurance company 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 would have to be determined in each case.
The earlier decision in United India Insurance Co. Ltd. vs. Lehru and
others4 was considered and the Bench observed that the ratio therein must
not be read to mean that an owner of a vehicle can, under no circumstances,
have any duty to make an inquiry with regard to the genuineness of the
driving licence and the same would again be a question which would arise
for consideration in each individual case. The argument that the decision in
Lehru (supra) meant that, for all intent and purport, the right of the insurer
to raise a defence that the licence was fake was taken away was, however,
rejected as not being correct and it was held that such a defence can certainly
be raised, but it will be for the insurer to prove that the insured did not take



4    (2003) 3 SCC 338
     IFFCO TOKIO GENERAL INSURANCE CO. LTD. v.                             71
            GEETA DEVI [SANJAY KUMAR, J.]

adequate care and caution to verify the genuineness or otherwise of the
licence held by the driver. The findings summed up by the Bench, to the
extent presently relevant, are as under:
     ‘(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.
     (iv) Insurance companies, however, with a view to avoid their liability
     must not only establish the available defence(s) raised in the said
     proceedings but must also establish “breach” on the part of the owner
     of the vehicle; the burden of proof wherefor would be on them.
     (v) The court cannot lay down any criteria as to how the said burden
     would be discharged, inasmuch as the same would depend upon the
     facts and circumstances of each case.
     (vi) Even where the insurer is able to prove breach on the part of the
     insured concerning the policy condition regarding holding of a valid
     licence by the driver or his qualification to drive during the relevant
     period, the insurer would not be allowed to avoid its liability towards
     the insured unless the said breach or breaches on the condition of
     driving licence is/are so fundamental as are found to have contributed
     to the cause of the accident. The Tribunals in interpreting the policy
     conditions would apply “the rule of main purpose” and the concept of
     “fundamental breach” to allow defences available to the insurer under
     Section 149(2) of the Act.
     (vii) The question, as to whether the owner has taken reasonable care
     to find out as to whether the driving licence produced by the driver (a
72            SUPREME COURT REPORTS                         [2023] 14 S.C.R.


      fake one or otherwise), does not fulfil the requirements of law or not
      will have to be determined in each case.’
      13. More recently, in Ram Chandra Singh vs. Rajaram and others5,
the issue before this Court was whether an insurance company could be
absolved of liability on the ground that the insured vehicle was being driven
by a person who did not have a valid driving licence at the time of the
accident. This Court found that no attempt was made to ascertain whether
the owner was aware of the fake driving licence possessed by the driver
and held that it is only if the owner was aware of the fact that the licence
was fake but still permitted such driver to drive the vehicle that the insurer
would stand absolved. It was unequivocally held that the mere fact that the
driving licence was fake, per se, would not absolve the insurer.
      14. Applying the aforestated edicts to the case on hand, it may be noted
that the petitioner-insurance company did not even raise the plea that the
owner of the vehicle allowed Ujay Pal to drive the vehicle knowing that
his licence was fake. Its stand was that the accident had occurred due to
the negligence of the victim himself. Further, the insurance policy did not
require the vehicle owner to undertake verification of the driving licence
of the driver of the vehicle by getting the same confirmed with the RTO.
Therefore, the claim of the petitioner-insurance company that it has the
right to recover the compensation from the owners of the vehicle, owing to
a willful breach of the condition of the insurance policy, viz., to ensure that
the vehicle was driven by a licenced driver, is without pleading and proof.
      15. As already pointed out supra, once a seemingly valid driving licence
is produced by a person employed to drive a vehicle, unless such licence
is demonstrably fake on the face of it, warranting any sensible employer
to make inquiries as to its genuineness, or when the period of the licence
has already expired, or there is some other reason to entertain a genuine
doubt as to its validity, the burden is upon the insurance company to prove
that there was a failure on the part of the vehicle owner in carrying out due
diligence apropos such driving licence before employing that person to
drive the vehicle. Presently, no evidence has been placed on record whereby
an inference could be drawn that the deceased vehicle owner ought to


5    (2018) 8 SCC 799
      IFFCO TOKIO GENERAL INSURANCE CO. LTD. v.                              73
             GEETA DEVI [SANJAY KUMAR, J.]

have gotten verified Ujay Pal’s driving licence. Therefore, it was for the
petitioner-insurance company to prove willful breach on the part of the said
vehicle owner. As no such exercise was undertaken, the petitioner-insurance
company would have no right to recover the compensation amount from
the present owners of the vehicle. The impugned order passed by the Delhi
High Court holding to that effect, therefore, does not brook interference
either on facts or in law.
      16. These legal propositions being so well settled, it is indeed shocking
that insurance companies deem it appropriate to raise such pleas as a matter
of course, without reference to the facts of the given case and/or the evidence
available therein, and also consider it necessary to carry such matters in
appeal till the last forum, unmindful of the wastage of valuable curial time
and effort!
      The special leave petition is accordingly dismissed.


Headnotes prepared by:                                            SLP dismissed.
Ankit Gyan