Pepsu Road Transport Corporation Vs National Insurance Company

The question involved in this matter was :

Whether Breach of conditions under Section 149(2)(a) of the Motor Vehicles Act, 1988 absolves the insurer of its liability to the insured. Section 149(2)(a)(ii) deals with the conditions regarding driving license. In case the vehicle at the time of accident is driven by a person who is not duly licensed or by a person who has been disqualified from holding or obtaining a driving license during the period of disqualification, the insurer is not liable for the compensation.

Supreme Court held that:

As far as the owner of the vehicle is concerned, when he hires a driver, he has to check whether driver has a valid driving license. Thereafter he has to satisfy himself as to the competence of the driver. If satisfied in that regard also, it can be said that the owner has taken reasonable care in employing a person who is qualified and competent to drive the vehicle. The owner cannot be expected to go beyond that, to the extent of verifying genuineness of the driving license with the licensing authority before hiring the services of the driver.

However the situation would be different if at the time of insurance of the vehicle or thereafter the insurance company requires the owner of the vehicle to have the license duly verified from the licensing authority or if the attention of the owner of vehicle is otherwise invited to the allegation that the license issued to the driver employed by him is a fake one and yet the owner does not take appropriate action for verification of the matter regarding the genuineness of the license from the licensing authority. If despite such information with the owner that the license possessed by his driver is fake, no action is taken by the insured for appropriate verification, then the insured will be at fault and, in such circumstances the Insurance Company is not liable for compensation