UNITED INDIA INSURANCE COMPANY LTD. versus LEHRU AND ORS.

UNITED INDIA INSURANCE COMPANY LTD. versus LEHRU AND ORS.

Where the owner has satisfied himself that the driver has a licence which on the face of it looks genuine, and the driver is competent to drive, there would be no breach of section 149(2)(a)(ii). The Insurance Company would not be absolved of liability even if licence is ultimately found fake unless insurer proves insured knew or noticed the licence was fake and still permitted driving. Insurer must pay compensation to innocent third parties and can recover from insured only if deliberate breach is proven.

Parties
Appellant: United India Insurance Company Ltd.; Respondents: Lehru and Ors.
Jurisdiction
India
Judgment Date
28 February 2003
Procedural Posture
Civil Appeal / Appeal From High Court Judgment Dated 5.12.2000 in F.a.o. No. 2828 of 2000
Outcome
Appeal dismissed with costs.
Legal Topics
Third Party Liability, Fake Driving Licence, Compulsory Insurance, Motor Accident Claims, Insurer's Liability, Compensation
Motor Vehicles Insurance Law Tort Law Third Party Liability Fake Driving Licence Compulsory Insurance Motor Accident Claims Insurer's Liability +1 more

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Parties

United India Insurance Company Ltd.

Appellant

Lehru and Ors.

Respondents

Procedural Posture

Civil Appeal / Appeal From High Court Judgment Dated 5.12.2000 in F.a.o. No. 2828 of 2000

Legal Issues

  1. 1 Whether an Insurance Company can avoid liability on the ground that the driver held a fake licence.
  2. 2 Whether the insurer is exonerated if the licence turns out to be fake, even when owner acted in good faith.

Ratio Decidendi

Where the owner has satisfied himself that the driver has a licence which on the face of it looks genuine, and the driver is competent to drive, there would be no breach of section 149(2)(a)(ii). The Insurance Company would not be absolved of liability even if licence is ultimately found fake unless insurer proves insured knew or noticed the licence was fake and still permitted driving. Insurer must pay compensation to innocent third parties and can recover from insured only if deliberate breach is proven.

Court Disposition

Appeal dismissed with costs.

Orders

  • Costs of Rs. 20,000 to be shared equally between claimants and insured; costs in addition to those awarded by the Motor Accidents Claim Tribunal.
  • Amount deposited allowed to be withdrawn by claimants (respondent Nos. 1 to 11).