1989 (8) TMI 363 - SC - Indian Laws

Insurance not liable for unlicensed driver accidents; owner solely responsible under Motor Vehicles Act.

Kashiram Yadav and Anr. Versus Oriental Fire and General Insurance Co. and Ors.

The Supreme Court affirmed the High Court's decision holding the owner of an insured vehicle solely liable for compensation in an accident caused by an ... - Issues: Liability of owner of insured vehicle for accident caused by unlicensed driver, Liability of insurer to indemnify owner against judgment.In this judgment, the Supreme Court addressed the issue of the liability of the owner of an insured vehicle for an accident caused by the negligence of an unlicensed driver. The case involved a constable being knocked down by a tractor driven by an unlicensed driver, leading to a claim for compensation by the constable's family against the owner of the vehicle and the insurer. The Tribunal found that the accident occurred due to the negligent driving of the unlicensed driver and held the owner solely liable for compensation since the driver did not have a valid license. The High Court affirmed this decision, focusing on the liability of the insurer to indemnify the owner against the judgment. The Tribunal awarded compensation, which was not challenged before the Supreme Court.The Court examined Section 96 of the Motor Vehicles Act, 1939, which imposes a duty on the insurer to satisfy judgments against insured persons for third-party risks. The exception to this liability is outlined in sub-section 2(b), stating that the insurer is not liable if there has been a breach of specified policy conditions, such as the vehicle being driven by an unlicensed person. The Court emphasized that if there is a breach of this condition, the insurer is not obligated to indemnify the owner against the judgment.The appellants argued that the insurer should still be liable to pay the compensation, citing a previous case where the insured was not found at fault for entrusting the vehicle to a licensed driver. However, the Court distinguished the present case, emphasizing that the owner failed to prove that the vehicle was being driven by a licensed driver at the time of the accident. The Court reiterated that the insurer cannot be held liable if there is a breach of the policy condition regarding the driver's license.Ultimately, the Court dismissed the appeal, stating that the insurer's obligation to indemnify the owner was discharged as the owner failed to prove that the vehicle was being driven by a licensed driver and had also falsely claimed to have sold the vehicle to a third party. The Court clarified that in such circumstances, the insurer cannot be held responsible, and the decision in the previous case cited by the appellants did not apply. The appeal was therefore dismissed, and no costs were awarded in the case.