The High Court of Punjab and Haryana has reaffirmed that when it is established that the driver held a fake licence, the insurance company stands exonerated from liability to pay compensation under the insurance policy. The ruling upholds and applies Supreme Court precedent, making it a binding authority within the jurisdiction and clarifying practical indemnification obligations in motor accident claims.
Summary
| Category | Data |
|---|---|
| Case Name | FAO/737/1999 of NATIONAL INS.CO.LTD. Vs JAGIR KAUR |
| CNR | PHHC010377501999 |
| Date of Registration | 26-04-1999 |
| Decision Date | 29-10-2025 |
| Disposal Nature | ALLOWED |
| Judgment Author | MR. JUSTICE DEEPAK GUPTA |
| Court | High Court of Punjab and Haryana |
| Bench | Single Bench (MR. JUSTICE DEEPAK GUPTA) |
| Precedent Value | Binding on subordinate courts within Punjab and Haryana |
| Overrules / Affirms | Affirms Supreme Court decision in United India Insurance Co. Ltd. vs. Sujata Arora 2013(3) TAC 29 |
| Type of Law | Motor Vehicle Accident Claims / Insurance Law |
| Questions of Law | Whether insurance company is liable to indemnify when it is proved that the driver was holding a fake driving licence at the time of accident |
| Ratio Decidendi |
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| Judgments Relied Upon | United India Insurance Co. Ltd. vs. Sujata Arora 2013(3) TAC 29 |
| Logic / Jurisprudence / Authorities Relied Upon | Requirement of valid driving licence as a condition precedent for insurer’s liability; Distinction between mere negligent driving and lack of valid licence per Supreme Court authority |
| Facts as Summarised by the Court |
|
Practical Impact
| Category | Impact |
|---|---|
| Binding On | All subordinate courts within the jurisdiction of the High Court of Punjab and Haryana |
| Persuasive For | Other High Courts; serves as persuasive authority due to application of Supreme Court precedent |
| Follows | United India Insurance Co. Ltd. vs. Sujata Arora 2013(3) TAC 29 |
What’s New / What Lawyers Should Note
- Reiterates that insurers are exonerated from liability if the driver’s licence is proven fake, regardless of whether there is negligence in driving.
- Clear procedural affirmation: non-participation by owner/driver in commission proceedings does not undermine the authenticity of commission findings, especially when due notice was afforded.
- The insurance company, after compensating the claimants in compliance with an interim tribunal order, retains liberty to recover paid amounts from the owner/driver in cases of proven fake licence.
- Applies and clarifies Supreme Court authority, confirming its direct and binding applicability in similar future claims.
Summary of Legal Reasoning
- The court anchored its decision on the evidentiary finding—via a local commission’s report and the D.T.O. official’s statement—that the driver’s licence was fake.
- The owner’s/driver’s non-participation in commission proceedings, despite proper notice, was held as waiver of their right to contest the findings.
- Citing United India Insurance Co. Ltd. vs. Sujata Arora (Supreme Court), the court reaffirmed that insurance liability hinges on possession of a valid licence, distinct from issues of negligent driving.
- The Tribunal’s rejection of the insurer’s fake licence objection was found legally erroneous, as the Supreme Court already established that validity of licence is a requirement for insurer’s liability.
- Consequently, the insurer is completely exonerated; only owner and driver remain jointly and severally liable to pay the compensation.
- If the insurer has paid in interim compliance, it is permitted to recover from the owner/driver.
Arguments by the Parties
Petitioner (Insurance Company)
- Contended that the driver’s licence (No.F/2931/SB Mokokchung, Nagaland) was proven fake based on the local commission’s report and D.T.O. testimony.
- Asserted that, as per Supreme Court precedent, a fake licence absolves the insurer from liability.
- Submitted that owner/driver had notice and opportunity to participate in commission proceedings but chose not to.
Respondents (Owner/Driver)
- No appearance was made on their behalf during appellate proceedings.
- Earlier, represented but subsequently proceeded ex parte as of 07.03.2025; therefore, no submissions recorded in the judgment.
Factual Background
A fatal road accident occurred on 06.02.1996 involving public bus No.PAB-7056, resulting in the death of Shri Nath and injuries to others. The legal heirs of the deceased and an injured person filed claim petitions before the Motor Accident Claims Tribunal. The insurance company objected to liability, alleging that the driver possessed a fake licence. The Tribunal rejected the insurer’s defence and awarded compensation, holding the insurer liable. On appeal, fresh evidence—including a Local Commission’s investigation and testimony from the D.T.O., Mokokchung—confirmed the licence was fake, prompting reconsideration of the insurer’s liability.
Statutory Analysis
- The judgment discusses the statutory requirement under the Motor Vehicles Act for a driver to hold a valid driving licence as a precondition for the insurer’s liability.
- Applies Supreme Court precedent interpreting this requirement: holding a fake licence constitutes breach of policy condition, automatically absolving the insurer from indemnification.
- No evidence or statutory provision is cited to support liability for insurer in such breaches; the clear legislative intent is reinforced per Supreme Court authority.
Procedural Innovations
- The court records that notice was duly sent to all parties prior to the Local Commissioner’s investigation, affirming due process.
- Rules that non-attendance by the owner/driver/counsel at commission proceedings, after notice, does not invalidate the commission’s findings.
- Confirms insurer’s right to recover paid compensation from the owner/driver where payment was made in compliance with a tribunal order but the insurer is subsequently exonerated.
Alert Indicators
- ✔ Precedent Followed – Supreme Court authority (United India Insurance Co. Ltd. vs. Sujata Arora) applied and affirmed.