UNITED INDIA INSURANCE COMPANY LTD. versus LEHRU AND ORS.

Citation: [2003] 2 S.C.R. 495 · Decided: 28-02-2003 · Supreme Court of India · Bench: S.N. VARIAVA, B.N. AGRAWAL · Disposal: Dismissed
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Judgment (excerpt)

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UNITED INDIA INSURANCE COMPANY LTD. 
A 
v. 
LEHRU AND ORS. 
FEBRUARY 28, 2003 
[S.N. VARIAVA AND B.N. AGRAWAL, JJ.] 
B 
Motor Vehicles Act, 1988: 
Ss. I 49(2)(a)(ii) and (7)-Car accident-Compensation-Insurance 
Company Ql'Oiding its liability on the ground that licence of the driver was C 
fake-Held, where che owner has satisfied himself that the driver has a licence 
which on the face of it looks genuine, and the driver is competent to drive 'the 
vehicle', there would be no breach ofs.149(2)(a)(ii)-The Insurance Company 
would not then be absolved of liabilil)r-lf it ultimately turn~ out that the 
licence was fake, the Insurance Company would continue to remain liable D 
unless they prove that the owner/insured was aware or had noticed that the 
licence was fake and still permitted that person to drive-More importantly 
even in such a case the Insurance Company would remain liable to the innocent 
third party, but it may be able to recover from the insured 
Skandia Insurance Co. Ltd v. Kokilaben Chandravadan and Ors., (1987) E 
2 SCC 654; Sohan Lal Passi v. P. Sesh Reddy and Ors., (1996] 5 SCC 21 
and New India Assurance Co. Shim/av. Kam/a and Ors., (2001) 4 SCC:342 
relied on. 
British India General Insurance Co. Ltd v. Captain Itbar Singh and 
Ors., [1960) 1 SCR 168, referred to. 
F 
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 1959 of 2003 . 
From the Judgment and Order dated 5.12.2000 of the Punjab and 
Haryana High Court in F.A.0. No. 2828 of 2000. 
Vishnu Mehra and B.K. Satija for the Appellant. 
S.K. Bansal, Mrs. Savitri Bansal, Dharam Bir Raj Vohra, Gagan Gupta 
and S.S. Khanduja for the Respondents. 
495 
G 
H 
496 
SUPREME COURT REPORTS 
(2003] 2 S.C.R. 
A 
Tile following Order of the Court was delivered : 
Leave granted 
Heard parties. 
B 
This appeal is against a judgment of the High Court dated 5.12.2000. 
By this appeal, the Insurance Company seeks to avoid its liability on 
the ground that the licence of the driver of the car was a fake license. As is 
. indicated hereafter .the question whether an· Insurance Company can avoid 
liability to a third party who is involved in the accident is no longer res 
C integra. It is fully covered by decisions of this Court. We find that in spite 
of the point being fully covered, in a large number of matters the Insurance 
Companies are still seeking to get out of fiability to third parties on the 
ground that the licence was fake. We have noticed that many matters are still 
being brought to this Court on this point. It is therefore necessary to again 
D reiterate the legal position. In this case the Appellants have not even been 
able to prove that the licence was fake. Yet they have deprived the claimants 
of use of the money for all these years by filing unnecessary appeals. 
In this case, the driver, at time of accident was one Janu s/o Kallu. 
During trial he filed, before the Motor Accident Claims Tribunal his original 
E licence. The licence bore number 9195/MTR/96P dated 15th May, 1989. The 
Appellant - Insurance Company sought to prove that a licence bearing No. 
5 l 95/MTR/96P had been i~sued in the name of one Kalpana Gupta and not 
in the name of the Driver. The Insurance Company get produced records of 
the concerned RTO for the year 1996. They made no efforts to get produced 
F 
concerned records of 1989. To be noted that the year 1989 comes before 
1996. Therefore even presuming there was some confusion whether the number 
of the licence was 5195 or 9195, still the records of 1989 were requin:d to 
be produced. It is clear that the licence issued on 15th May, 1989 had nothing 
to do with the licence, if any, issued to Kalpana Gupta in 1996. If anything 
the licence issued in 1996 could have been a renewal of a fake licence. The 
G Motor Accident Claims Tribunal did not accept that the licence was fake. It 
held that, even if the licence was fake, the law was that Insurance Company 
was liable to pay the compensation as they had failed to prove that the 
insured had deliberately committed any breach of any condition. 
The Appellants then filed an Appeal before the High Court The High 
H Court dismissed the Appeal without going into the question whether the 
r ).., 
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UNITED INDIA INSURANCE COMPANY LTD. v. LEHRU 
497 
licence was fake or not. The High Court held that even if the licence was A 
fake, the settled law was that the Insurance Company had to first pay to the 
claimants and they could then recover from the own·er, if in law they
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