Employers have a duty to ensure that drivers maintain valid licenses; failing to do so constitutes a breach of insurance policy terms, relieving insurance companies from liability for claims.

JUDGMENT :

PANKAJ JAIN, J.

1. Insurance company is in appeal against order dated 02.11.2023 passed by Commissioner Circle IV, Gurugram under Employees Compensation Act, 1923.

2. Though, the Tribunal has returned the finding that the driver was not possessing a valid driving license on the date of accident, but the appellant-insurance company has been held liable to pay compensation at the first instance and thereafter to recover from the employer.

3. Insurance company is aggrieved of the observations made by Commissioner to the effect that they have been directed to pay compensation. Reliance is being placed on ratio of law laid down by Supreme Court in the case of Beli Ram vs. Rajinder Kumar and another 2020 AIR (Supreme Court) 4453

4. Counsel for the respondents-claimants submits that in the present case, the license expired on 31.03.2022 and the date of accident is 23.05.2022. Thus, it is not a case wherein there was a long time gap. Reliance is being placed upon observations made by Supreme Court in para 15 of the Beli Ram’s case (supra) which read as under:-

“15. We are of the view that once the basic care of verifying the driving licence has to be taken by the employer, though a detailed enquiry may not be necessary, the owner of the vehicle would know the validity of the driving licence as is set out in the licence itself. It cannot be said that thereafter he can wash his hands off the responsibility of not checking up whether the driver has renewed the licence. It is not a case where a licence has not been renewed for a short period of time, say a month, as was considered in the case of Swaran Singh5 where the benefit was given to a third party by burdening the insurance company. The licence in the instant case, has not been renewed for a period of three years and that too in respect of commercial vehicle like a truck. The appellant showed gross negligence in verifying the same.”

5. In the considered opinion of this Court, the observations made in para 15 ibid, is not the ratio and thus, cannot be held to be binding precedents. Ratio of law has been laid down in para 17 to para 23 which reads as under:-

17. We now turn to the views of some of the High Courts, which have come to our notice on our own research.

18. The Delhi High Court in Tata AIG General Insurance Co. Ltd. v. Akansha & Ors., 2015 SCC OnLine 6758 : (2015) 2 TAC 52 found that the driving licence having expired led to the natural finding that there was no valid driving licence on the date of the accident. The initial onus was discharged by the insurance company in view of the licence not being valid on the date of the accident. The onus, thereafter, shifted to the owner/insured to prove that he had taken sufficient steps to ensure that there was no breach of the terms and conditions of the insurance policy. Since no evidence had been led in this behalf, a presumption was drawn that there was willful and conscious breach of the terms and conditions of the insurance policy.

19. The Allahabad High Court in The Oriental Insurance Co. Ltd. v. Manoj Kumar & Ors., (2015) 111 ALR 275 (authrotised by Krishna Murari, J., as he then was) again dealt with the case of an expired driving licence. The endeavour to rely on the principle set forth in a fake licence case was held not applicable in the case of an expired licence since the owner was supposed to be aware that the driving licence of the driver had expired and, thus, it was held that it was the duty of the owner to have ensured that the driver gets the licence renewed within time. In the absence of a valid driving licence, the vehicle was being driven in breach of the condition of the policy, requiring