The Supreme Court held that merely proving a driver’s licence is fake does not absolve the insurer unless it is established that the vehicle owner knowingly breached the duty of due diligence in employing the driver. Absent proof of such breach, the insurer remains liable to third parties and cannot recover from the owner under a “pay and recover” order.
Facts Of The Case:
The accident occurred on January 26, 1993, at 2:00 AM at an intersection, involving a collision between a truck and a Matador van. The Matador van was carrying ten passengers, including the driver. Tragically, nine persons lost their lives in the accident, while two sustained injuries. Claims were filed before the Motor Accident Claims Tribunal by the injured and the legal heirs of the deceased passengers, as well as for the damage caused to the Matador van. The Tribunal found composite negligence on the part of both drivers, apportioning liability at 75% (truck driver) and 25% (Matador van driver). The compensation was ordered to be paid by the respective insurers. The insurance company of the truck, however, contested its liability, alleging that the truck driver possessed a fake driving licence and sought a “pay and recover” order against the truck owner. The High Court allowed this plea, concluding there was collusion between the owner and the driver. The truck owner, Hind Samachar Ltd., appealed to the Supreme Court against this “pay and recover” directive.
Procedural History:
The case originated with claim petitions filed before the Motor Accident Claims Tribunal by the victims of the accident. The Tribunal determined compensation and held both drivers compositely negligent, directing the insurers to pay. The truck’s insurer appealed to the High Court, challenging its liability on the ground of the driver’s fake licence and seeking “pay and recovery” rights against the truck owner. The High Court allowed the insurer’s appeal, modifying the Tribunal’s order to grant such recovery rights. Aggrieved by this “pay and recover” direction, the truck owner filed the present civil appeals before the Supreme Court, which culminated in the impugned judgment.
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Court Observation:
The Supreme Court made several key observations. It found no evidence that the truck owner had failed in its duty of due diligence at the time of employing the driver or entrusting the vehicle. The Court noted that an owner is only expected to examine the driving licence produced and is not required to verify its authenticity with the licensing authority. Merely producing a fake licence or the owner submitting it in court does not, by itself, prove collusion or a wilful breach of the insurance policy. The Court held that the insurer’s failure to plead and prove the insured’s conscious breach was fatal to its claim for recovery rights against the owner.
Final Decision & Judgement:
The Supreme Court allowed the appeals filed by the truck owner. It set aside the “pay and recover” order granted by the High Court in favour of the insurance company. Consequently, the insurer is barred from recovering the awarded compensation amounts from the appellant-owner. The Court upheld the Tribunal’s determination of liability and compensation, which had been modified by the High Court on quantum, leaving those aspects undisturbed. The insurer remains liable to indemnify the third-party claimants directly.
Case Details:
Case Title: Hind Samachar Ltd. (Delhi Unit) vs National Insurance Company Ltd. & Ors. Citation: 2025 INSC 1204 Appeal Number: Civil Appeal Nos. 12442-12446 of 2024 Date of Judgement: October 08, 2025 Judges/Justices Name: Justice K. Vinod Chandran and Justice N. V. Anjaria
Download The Judgement Here