The Delhi High Court has held that where the offending vehicle is a passenger-carrying commercial vehicle, the owner is under a higher duty of due diligence to verify the authenticity of the driver’s licence from the competent licensing authority. If the insurer proves that the licence was fake and the commercial owner failed to carry out such verification, the insurer remains liable to satisfy the award vis-à-vis the claimant, but becomes entitled to recovery rights against the owner.
The Court clarified that for passenger-carrying commercial vehicles, merely taking a driving test or relying on past employer feedback is not enough; the owner must verify the driver’s licence from the competent licensing authority, failing which the insurer can recover the compensation amount from the owner after satisfying the award.
On this reasoning, the High Court granted recovery rights to the insurance company against respondent no. 3, the owner of the vehicle. The Court further directed that, in terms of its earlier order dated 21 May 2019, 70% of the awarded amount had already been released, and the balance amount as per the revised compensation should be released to the claimant.
A Single Judge Bench of Justice Anish Dayal noted that the law requires the insurer to prove two things: first, that the driving licence was fake at the time of the accident; and second, that the owner did not exercise due diligence in verifying it. A key observation of the Court was that the standard of due diligence is not the same for all vehicle owners. A private vehicle owner may not have the same administrative capacity as a commercial fleet operator or a public authority. But a commercial operator running passenger vehicles has a much higher responsibility because such vehicles carry members of the public.
The Court made it clear that for commercial fleet operators, merely taking a driving test is not enough. They are expected to undertake a complete verification process and verify the authenticity of the driver’s licence from the competent licensing authority before entrusting a commercial passenger vehicle to the driver. The Court also noted the evidence of the RTO official from Faridabad, who stated that there was no official record of the driver’s licence and that the licence had never been issued by that authority. This supported the insurer’s case that the licence was fake.
Applying these principles, the High Court found that the owner of the commercial vehicle had not shown that any real steps were taken to verify the licence. The Court held that relying on a driving test or on the previous employer’s word could not satisfy the higher standard of diligence required from a commercial fleet operator.
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Briefly, an appeal was filed by Oriental Insurance against a MACT award dated 6 June 2018, read with the order dated 24 July 2018. The insurer however, was not disputing the accident compensation as such, but was challenging the denial of recovery rights against the driver and the owner of the offending vehicle. The accident took place on 30 December 2012 at about 8:15 p.m. when respondent no. 1 was standing on the road and was hit by an Innova car. The vehicle was being driven by respondent no. 2 and owned by respondent no. 3, M/s Raj Tours and Travels, which was a commercial tour operator. The injured claimant suffered grievous injuries in the accident.
Before the High Court, the insurance company sought recovery rights on the ground that the driver of the offending vehicle was holding a fake driving licence. The insurer relied on the verification report of the licence, which showed that the licence of Mukesh Kumar Yadav, the driver, was fake. The insurance company also examined a witness who deposed that the company’s investigator had verified that no such licence had ever been issued by the Faridabad Licensing Authority.
The owner’s proprietor, Om Prakash, stated that he had taken the driver’s driving test before employing him and had also relied on the driver’s previous employer, who had vouched for his ability. However, there was no material to show that the owner had actually got the licence verified from the competent authority before allowing the driver to drive a passenger-carrying commercial vehicle.
