An insurance company cannot evade liability for third-party compensation claims due to a fake driving license held by the driver unless it proves that the vehicle owner had knowledge of the fraud or failed to exercise reasonable due diligence at the time of hiring.

Meenakshi Madan Rai, J.

1. The Claimants/Respondents No.1 to 3 herein were granted compensation of ₹ 5,00,000/- (Rupees five lakhs) only, vide the impugned Judgment, dated 12-08-2024, by the Learned Motor Accidents Claims Tribunal, Gangtok, Sikkim (hereinafter, the “MACT”), in MACT Case No.26 of 2022 (Hasmukh Pannalal Punamiya and Others vs. The Branch Manager, National Insurance Co. Ltd. And Another), under Section 164(1) of the Motor Vehicles Act, 1988 (hereinafter, the “MV Act”), along with interest @ 6% per annum, from the date of filing of the Claim Petition, i.e., 16-12-2022, till full realisation.

2. The Appellant is before this Court assailing the award on grounds that, the driving licence of the driver of the vehicle in accident, who was also a fatality thereof, had a fake driving licence which is proved by the report of one Suparna Dey, Additional Regional Transport Officer (ARTO), Siliguri, West Bengal. As per the report, the data concerning the driving licence of late Somi Biswakarma was not found in their office. That, as the ARTO, Siliguri, who is the licensing authority, has no records of issuance of licence to the deceased driver, the licence is found to be fake and driving with such a licence was in violation of the policy of insurance. That, in the said circumstance, the Respondents No.1 to 3, who were the Claimants before the Learned MACT, are not entitled to the compensation.

3. Per contra, Learned Counsel for the Respondents No.1 to 3 contended that Respondent No.4 the owner of the vehicle had employed the driver after duly checking his driving licence and his driving competence and being thus satisfied, he engaged him. That, the Learned MACT has correctly relied on the decision of the Supreme Court, wherein it was held that, if the owner was satisfied that the driver had a licence and was driving competently, there would be no breach of insurance policy. That, the Insurance Company in such a situation, would not be absolved of their liability.

4. Learned Counsel for the Respondent No.4 made no specific submissions.

5. I have given due consideration to the rival contentions of Learned Counsel for the parties.

6. A summation of the facts is that, the Claimants, Respondents No.1 and 2 are the paternal uncles and Respondent No.3 is the paternal married aunt of the deceased Devanshi Suresh Punamiya, who along with the other occupants of the vehicle in accident were proceeding to Lachung, North Sikkim, on 28-05-

2022. At around 09.30 p.m., on reaching a place, “Khedum”, in Mangan District, the vehicle veered of the road to approximately 700 feet below the road. The victim met her demise along with her father, mother, sister and cousin including the driver on the spot. The deceased child was a ten year old student. It is not in dispute that the vehicle was insured with the Appellant-Company and the insurance policy was valid at the time of the accident. It is now no more res integra that when an owner is hiring a driver he has to check the driving licence produced by the driver. If on the face of it the licence looks genuine, the owner is not expected to carry out a roving enquiry into its authenticity or otherwise. All that the owner is concerned with is the competence of the driver to drive the vehicle on which ground he can engage him. The Supreme Court in United India Insurance Co. Ltd. vs. Lehru and Others ¹ observed inter alia that;

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