An insurer cannot avoid liability for a licence defect absent a breach attributable to the insured.

On the intervening night of 27–28 January 2009, Shiv Kumar alias Shiv Ram Sunar was travelling in a truck that fell into a gorge near Kainchi Dham; he later died from his injuries.

His wife and minor children brought a claim under Section 163-A of the Motor Vehicles Act, 1988.

The Tribunal awarded them ₹4,30,000 with interest at 7% per annum and made the insurer liable.

The insurer appealed, alleging that the deceased was an uncovered gratuitous passenger, the truck lacked valid documents, and the driver lacked the required licence.

1. Whether the insurer established that the truck lacked a valid permit or that the driver’s licence deficiency amounted to a breach of policy conditions sufficient to avoid liability.

2. Whether the insurer established that the deceased was an unauthorised gratuitous passenger excluded from coverage.

3. Whether the Tribunal’s award and fastening of liability on the insurer warranted appellate interference.

Section 163-A of the Motor Vehicles Act provides for a claim on the statutory basis described by the Court, without requiring proof of the driver’s negligence.

Under National Insurance Co. Ltd. v. Swaran Singh, (2004) 3 SCC 297, the insurer must establish a breach of the policy condition attributable to the insured; the mere absence or invalidity of a driving licence does not, by itself, avoid the insurer’s liability.

The insurer must also establish, on cogent evidence, the alleged policy breach or exclusion on which it relies.

The permit on record covered the accident date, and the insurer did not prove that the truck was being operated without a valid permit.

Although the driver’s licence was not valid for a heavy goods vehicle, the owner testified that he had checked the licence and had previously seen the driver operate trucks; the evidence did not establish a wilful breach or failure to exercise reasonable care.

The insurer likewise failed to prove that the deceased was an unauthorised gratuitous passenger; the owner’s account was that the deceased was a labourer of the goods owner.

The Court therefore found no sufficient basis to disturb the Tribunal’s allocation of liability.

The insurer was directed to deposit the remaining ₹80,000, with the awarded interest, within one month after receiving the certified judgment; the amount already deposited, with accrued interest, was to be released to the claimants, subject to adjustment of any amount already released.