Vehicle owners held responsible for ensuring driver’s license renewal; Insurers granted 'pay and recover' rights if license expires

The accident occurred on October 14, 2009, involving a two-wheeler and an offending vehicle driven by Respondent No. 1 (Om Parkash) and owned by Respondent No. 2

The Motor Accident Claims Tribunal (MACT) awarded compensation but exonerated the Appellant-insurer, finding that the driver lacked a valid license on the accident date based on contradictory testimony from licensing officials

On appeal, the High Court reversed this, holding the insurer liable after relying on a communication (Ex. RW3/B) from the Motor Licensing Office stating that a "technical error" during data transfer caused a loss of records for the period 2007–2010

The insurer appealed to the Supreme Court, contesting its liability

1. Whether the driver of the offending vehicle possessed a valid driving license on the date of the accident to fasten liability upon the insurer

The Court applied Sections 3 and 5 of the Motor Vehicles Act (MVA), which mandate the necessity of an effective driving license and hold owners responsible for ensuring drivers are duly licensed

Regarding evidence, the Court invoked Sections 61–65 of the Indian Evidence Act (IEA), establishing that documents must be proved by primary evidence unless specific exceptions for secondary evidence are met

It relied on Beli Ram v. Rajinder Kumar (2022) and National Insurance Co. Ltd. v. Hem Raj (2011), which hold that an owner’s failure to verify the renewal of a driver’s license constitutes a breach of policy terms, absolving the insurer of primary liability

The Court observed that while the driver claimed his license was valid through a "technical error" explanation by a Licensing Officer (RW3), no official records corroborated the loss of data or the status of the license during the 2007–2010 gap

Under Section 65 of the IEA, secondary evidence (the officer's oral statement and the letter Ex. RW3/B) was inadmissible because the "factual foundation" for the loss of original primary records was not satisfactorily established through official logs

Furthermore, the fact that the driver paid a "penalty" for renewal after the accident period strongly indicated a lapse in the license's validity

The Court noted that the owner failed to testify or prove he took reasonable care to verify the license's renewal

Consequently, the High Court erred by prioritizing unreliable oral testimony over the missing official documentation required to prove a valid license

The Supreme Court allowed the appeal, setting aside the High Court's finding and restoring the Tribunal's decision that the insurer is not liable. However, to protect the claimants, the Court applied the principle of "pay and recover," directing the appellant-insurer to pay the compensation to the claimants first and subsequently recover the same from the driver and owner

The Court further suggested government-led awareness campaigns regarding the necessity of timely license renewals