‘Suffice it to observe that it is well established that if the owner was aware of the fact that the licence was fake and still permitted the driver to drive the vehicle, then the insurer would stand absolved. However, the mere fact that the driving licence is fake, per se, would not absolve the insurer.’

The Supreme Court has held that the mere fact that the driving licence is fake, per se, would not absolve the insurer and it can only be absolved if it is found that the owner was aware of the fake licence and still permitted the driver to drive the vehicle.

The bench of Chief Justice of India Dipak Misra and Justice AM Khanwilkar was considering an appeal (Rama Chandra Singh vs. Rajaram) against Allahabad High Court order that had absolved the insurer merely on the finding that the driving licence of the driver was fake.

The apex court bench observed that the tribunal and the high court made no attempt to ascertain whether the owner was aware of the fake driving licence possessed by the driver.

The bench also noticed that the high court had referred to the decision in PEPSU Road Transport Corporation v. National Insurance Company, but distinguished it by observing that it was on the facts of that case, where the court opined that there was no evidence to prove that the driving licence produced by the authorities was fake.

The bench said: “That approach, in our opinion, is manifestly wrong. Whereas, even in that case, the Court was called upon to deal with the similar question as is involved in this appeal.”

The bench, referring to various judgments on this subject, observed: “Suffice it to observe that it is well established that if the owner was aware of the fact that the licence was fake and still permitted the driver to drive the vehicle, then the insurer would stand absolved. However, the mere fact that the driving licence is fake, per se, would not absolve the insurer. Indubitably, the High Court noted that the counsel for the appellant did not dispute that the driving licence was found to be fake, but that concession by itself was not sufficient to absolve the insurer.”

The bench then relegated the matter before the high court for fresh consideration only on the question of liability of the owner or of the insurer to pay the compensation amount.