Insurer Cannot Recover Accident Compensation From Truck Owner After P&H HC Confirms Driver Held A Valid Licence

The appeals arose from a common MACT award dated 4 March 2006, which granted compensation to an injured claimant and to the legal heirs of a deceased scooter rider.

The Tribunal directed the insurer to pay the awards but granted it recovery rights against the truck owner, reasoning that the driver had not produced a driving licence.

The owner, who had been proceeded against ex parte, challenged the award and the Tribunal’s subsequent refusal to set aside the ex parte award.

In appeal, he produced licence records and verification from the Licensing Authority showing that the driver held a valid and effective licence on the accident date; the insurer also filed a verification report confirming the licence

Under National Insurance Co. Ltd. v. Swaran Singh, (2004) 3 SCC 297, an insurer seeking to avoid liability for breach of a policy condition concerning the driver’s licence must establish a fundamental breach; the owner’s conscious negligence or lack of due diligence is relevant to that inquiry.

The Court also relied on Ram Avtar v. United India Insurance Co. Ltd., 2010 (2) RCR (Civil) 441, for the proposition that a valid licence produced at the appellate stage under Order XLI Rule 27 CPC can defeat recovery rights granted to the insurer.

The Tribunal’s recovery direction rested on the driver’s failure to appear and produce a licence, from which it inferred that he had none.

The appellate record, however, included licence documents and Licensing Authority verification establishing that the licence was valid and effective on the accident date; the insurer’s own verification report was also consistent with that finding.

Accordingly, the basis for treating the policy condition as breached—and for granting recovery rights against the owner—was no longer sustainable.

The Court did not otherwise disturb the compensation awards.

United India Insurance Co. Ltd. was held solely liable to satisfy the compensation awards.

Any amount recovered from the owner during the proceedings was directed to be refunded by the insurer within two months.