The present appeal has been filed by appellant owner, under Section 173 of the Motor Vehicles Act, 1988, (for short "the Act, 1988") against the judgment and award dated 27.11.2019, passed by the Motor Accident Claims Tribunal/ First Additional District Judge, Nainital in M.A.C.P. No.04 of 2018, Trilok Singh and another vs. Mohd. Abbas and another, whereby the Tribunal awarded a sum of Rs.5,16,000/- and gave a liberty to the respondent no.2 to recover the amount of compensation from the owner of the vehicle (appellant herein).

2. Brief facts of the case are that on 25.03.2012, at approximately 9:00 p.m., Khim Singh (deceased) was riding his motorcycle number UA-06H-1776 near the 1 2025:UHC:8369 Karbala turn at Gadarpur Kelakheda Road. At that time, a truck number UK-04E-9756, driven by a driver at high speed and recklessly and negligently, struck the motorcycle from behind due to which he sustained serious injuries and died on the spot. After receiving information about the accident, the police prepared an inquest report and conducted a post-mortem of the deceased Khim Singh. Accordingly, claimants moved a claim petition before the MACT for compensation of Rs.10,00,000/-.

3. The appellant (owner of the vehicle) has filed his written statement, stating that the amount of compensation has been claimed in an inflated manner and without any basis. On the fateful day, the vehicle was insured with the National Insurance Company and was being driven by a person holding a valid and effective driving licence.

4. Respondent-Insurance Company also filed its written statement wherein it was stated that the information of the accident was not given to the Insurance Company as per the provisions of the Act, 1988. On the fateful day, the vehicle was not being driven by a driver having valid licence for which the condition of Insurance policy has been violated and hence, the insurance company is not liable for making any payment.

5. On the basis of the pleadings of the parties, three issues were framed:-

6. Learned Tribunal decided the claim petition by awarding a sum of Rs.5,16,000/- and fastened the liability to pay compensation on the respondent-vehicle owner for the reason that it came to the conclusion that at the time of accident the driver of the offending vehicle was not holding a valid and effective licence.

7. Heard learned counsel for the parties and carefully gone through the entire material available on record.

8. Learned counsel for the appellant/owner has emphatically argued that the offending vehicle, on the fateful day, was being driven by its driver, who was having a valid and effective driving licence. The learned Tribunal has erred in law in transferring the liability of claim upon the vehicle owner. He took reasonable care in employing him as a driver as he was holding a valid and effective licence which later on during trial found to be a fake one. Thus, this case would not fall within "fundamental breach of condition of policy".

9. Learned counsel for the insurance company has also been heard, who could not satisfy as to why the 3 2025:UHC:8369 insurance company is not liable in this matter to pay the amount of compensation.

10. In order to adjudicate the issue whether the driver of the offending vehicle was having a valid and effective licence or not, issue no.2 was framed by the Tribunal to this effect.

11. The Insurance Company got the verification of the licence produced by the driver and as per report received, it was reported that the licence had not been issued to the driver of the vehicle.

12. Although, this issue has been decided against the vehicle owner.

13. As regards the contention that the driver of the vehicle was not duly licensed as he possessed a fake license, it may be noted that neither Section 149(2)(a)(ii) of the Act of 1988 nor the 'Driver Clause' in the subject 5 insurance policy provide that the owner of the insured vehicle must, as a rule, get the driving licence of the person employed as a driver for the said vehicle verified and checked with the concerned transport authorities. Generally, and as a matter of course, no person employing a driver would undertake such a verification exercise and would be satisfied with the production of a licence issued by a seemingly competent authority, the validity of which has not expired. It would be wholly impracticable for every person employing a driver to expect the transport authority concerned to verify and confirm whether the driving licence produced by that driver is a valid and genuine one, subject to just exceptions. In fact, no such mandatory condition is provided in any insurance policy and it is not open to the petitioner-insurance company, which also did not 4 2025:UHC:8369 prescribe such a stringent condition, to cite the failure of the deceased vehicle owner to get claimant's driving licence checked with the RTO as a reason to disclaim liability under the insurance policy.

14. In the present case, the Insurance Company seeks to evade its liability solely on the ground that the driver of the offending vehicle, did not possess a valid Driving Licence. On that basis, it contends that the owner alone should be made liable for payment of compensation. However, the said contention does not hold merit in view of the settled legal position laid down by the Hon'ble Supreme Court in the case National Insurance Co. Ltd. vs. Swaran Singh and others ; reported in (2004) 3 SCC 297. In the summary of findings (iii), the Hon'ble Court held that:

15. The Hon'ble Supreme Court further clarified that the insurer must establish by cogent evidence that 5 2025:UHC:8369 there was a fundamental breach in the terms and conditions of the insurance policy, and that such breach was willful and intentional on the part of the insured.

16. The burden, therefore, lies on the Insurance Company to establish that the insured (i.e. the owner appellant herein) was guilty of committing such a fundamental breach in terms of the policy. In the present case, the Insurance Company has failed to discharge this burden by leading any reliable or cogent evidence to establish that the owner knowingly allowed a person without a valid Driving Licence to drive a vehicle or acted in conscious disregard of the policy conditions.

17. The legal backing for this position is found in Section 149 (2)(a)(ii) of the Motor Vehicles Act, 1988 which states as under:

18. This provision gives the insurer a statutory defense to avoid liability on the ground of breach of policy conditions relating to the DL.

19. However, the judicial interpretation of this provision, as enunciated by the Hon'ble Supreme Court in the case of Swaran Singh (Supra) and subsequent judgments, adds a crucial requirement: the insurer must prove that the insured was guilty of a willful and fundamental breach of the insurer policy terms. The breach must be shown to be conscious and intentional on the part of the insured. It is, therefore, not an automatic bar to the insurer's liability simply because the 6 2025:UHC:8369 driver lacked a valid licence at the time of the accident. Mere absence or invalidity of the licence does not relieve the insurer from liability unless it is established the insured deliberately and knowingly violated the terms of the policy.

20. The Hon'ble Supreme Court has also recognized the practical difficulties faced by employers or vehicle owners in verifying the genuineness of the driver's licence before employment. This position has been reiterated recently in IFFCO Tokio General Insurance Company Ltd. Vs. Geeta Devi & others ; reported in 2023 SCC Online SC 1398 in para 8, wherein the Hon'be Supreme Court observed:-

21. These principles clearly apply to the facts of the present case. There is no evidence to show that the owner was aware of the licence being fake or invalid or that he failed to exercise reasonable care.

22. In light of the above discussion and settled law, it is held that the Insurance Company has failed to prove any fundamental breach in terms of the insurance policy by the insured. Therefore, the liability to pay compensation is fastened upon the insurance company.

23. Accordingly, the appeal filed by the vehicle owner is allowed. The liability to pay the compensation is fastened upon the respondent no.2-National Insurance Company Limited. Accordingly, the impugned judgment and order dated 27.11.2019, passed by the Motor Accident Claims Tribunal/ First Additional District Judge, Nainital in M.A.C.P. No.04 of 2018, Trilok Singh and another vs. Mohd. Abbas and another, stands modified to this extent. The statutory amount deposited by the appellant-owner before this Court be remitted to the learned MACT/ First Additional District Judge, Nainital to be refunded to the appellant-owner forthwith.

24. Pending application, if any, stands disposed of accordingly.

(Alok Mahra, J.) 18.09.2025 BS BALWANT Digitally signed by BALWANT SINGH DN: c=IN, o=HIGH COURT OF UTTARAKHAND, ou=HIGH COURT OF UTTARAKHAND, 2.5.4.20=fbbd191c8bdb8b16e8ca7937deaf72a17c02fe2eacbf28cdf4ba SINGH 7ce8640c5820, postalCode=263001, st=UTTARAKHAND, serialNumber=04E141DF4614F9A4D5F48346EB553DE5185F418755DC 00A7A13C14A680C3FA90, cn=BALWANT SINGH Date: 2025.09.22 12:09:45 +05'30' 8