Insurer remains liable for a fake driving licence absent proof of the owner’s wilful breach.

Kishori Lal, aged 29 years, died in a motor vehicle accident on 30 March 2015 when Maruti-800 vehicle No. HP-06A-4881, in which he was travelling, rolled into a gorge near Bhutti Kainchi, Naula, Kumarsain, allegedly due to rash and negligent driving.

An FIR was registered and the deceased’s mother, Jotu Devi, filed a claim petition under Section 166 of the Motor Vehicles Act, 1988, claiming compensation of ₹15,00,000 on the basis that the deceased was a mason earning ₹15,000 per month.

The Motor Accident Claims Tribunal allowed the claim and awarded ₹11,73,000 with interest at 9% per annum, fastening liability on the Insurance Company.

In appeal under Section 173 of the Motor Vehicles Act, the Insurance Company contended that the driver possessed a fake driving licence issued in the name of the Nagaland licensing authority and that the insurer should therefore be exonerated.

It also challenged the multiplier and the quantum of compensation.

The claimant supported the award and sought enhancement.

Whether the Insurance Company proved that the driver did not possess a valid and effective driving licence and that the vehicle owner had committed a wilful breach of the insurance policy conditions?

Whether the compensation awarded by the Tribunal required modification with respect to the deceased’s income, future prospects, deduction for personal expenses, multiplier, conventional heads and interest?

The Court applied Sections 149(2)(a)(ii), 166 and 173 of the Motor Vehicles Act, 1988.

Under Section 149(2)(a)(ii), an insurer seeking exoneration on the ground of an invalid or fake driving licence must prove not merely the invalidity of the licence but also a wilful breach by the insured.

Relying on National Insurance Co. Ltd. v. Swaran Singh, United India Insurance Co. Ltd. v. Lehru, Nirmala Kothari v. United India Insurance Co. Ltd., Rishi Pal Singh v. New India Assurance Co. Ltd. and Pappu v. Vinod Kumar Lamba, the Court held that an owner who verifies a licence that appears genuine and satisfies himself regarding the driver’s competence is not expected to independently verify it with licensing authorities; a fake licence alone does not establish wilful breach.

Even where a breach is proved, the insurer may ordinarily be directed to pay the claimant and recover the amount from the owner or driver, depending on the facts.

For computation of compensation, the Court applied Sarla Verma v. Delhi Transport Corporation for the multiplier and deduction for personal expenses, National Insurance Co. Ltd. v. Pranay Sethi for future prospects and conventional heads, and Magma General Insurance Co. Ltd. v. Nanu Ram for parental consortium.

The Insurance Company relied principally on the investigator’s evidence and an RTI communication stating that no record of the driver’s licence was available with the Tuensang, Nagaland authority.

However, the investigator neither produced the original licensing-authority record nor established the authenticity and issuance of the communication.

Further, the insurer voluntarily closed its evidence and gave up the concerned licensing authority’s witness despite the witness being included in its list; consequently, it could not later contend that it had been denied an opportunity to prove the defence.

The owner had produced a copy of the driver’s licence, indicating that he had taken at least a prima facie precaution before permitting the driver to operate the vehicle.

The insurer did not examine the owner to establish that he knew the licence was fake or invalid and nevertheless allowed the driver to drive.

The evidence was therefore insufficient to prove wilful breach, and the Tribunal’s finding on the insurer’s liability was upheld.

On quantum, the Court accepted the deceased’s age as 29 years on the basis of the Parivar Register.

It added 40% towards future prospects, deducted 50% for personal expenses since the deceased was a bachelor, and applied multiplier 17.

The Court further awarded amounts under loss of estate, funeral expenses and loss of consortium in accordance with the applicable precedents.

The Court declined to exonerate the Insurance Company because it failed to prove that the vehicle owner had knowingly and wilfully breached the policy by permitting a person with a fake or invalid licence to drive.

The compensation was recalculated as follows: ₹9,99,600 for loss of contribution, ₹15,000 for loss of estate, ₹15,000 for funeral expenses and ₹40,000 for loss of consortium, totalling ₹10,69,600.

The interest rate was reduced from 9% to 7.5% per annum.

The Tribunal’s award was modified accordingly, and the pending applications, if any, were disposed of.