Delhi Consumer Commission Orders Insurer to Pay ₹ 5.89 Lakh Despite Driver’s ‘Fake’ Licence

Consumer Commission: The Delhi State Consumer Disputes Redressal Commission has upheld an order directing a private insurer to reimburse Rs 5,89,427 to an SUV owner, ruling that a driver’s licence being subsequently found fake does not by itself justify rejection of an own-damage motor insurance claim.

The bench, comprising commission president Justice Sangita Dhingra Sehgal and judicial member Pinki, delivered the order on September 10 while dismissing an appeal filed by the insurer against a November 13, 2017 order of the District Consumer Disputes Redressal Forum (West).

Consumer Commission: The Accident and the Claim

The dispute traces back to February 20, 2010, when the complainant’s SUV, insured with the private insurer for the period June 30, 2009, to June 29, 2010, met with an accident while being driven by Surender Singh, the owner’s appointed driver. The vehicle was heavily damaged, and the owner, Ramesh Dalal, had it repaired at a cost of Rs 5,89,427.

According to the commission’s order, Dalal had appointed Singh as his driver after verifying his driving licence and satisfying himself that Singh was duly licensed. When Dalal approached the insurer for repair costs following the accident, the claim was rejected on the ground that Singh’s licence was fake.

Dalal subsequently paid for the repairs himself and moved the district consumer forum, seeking reimbursement along with compensation for harassment, inconvenience, mental agony and litigation costs.

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Consumer Commission: District Forum’s Findings and the Insurer’s Appeal

The district forum had accepted Dalal’s contention that he had taken reasonable steps to verify the driver’s licence before employment, and directed the insurer to pay Rs 5,89,427 with 9 per cent annual interest from the date of filing of the complaint until realisation, along with Rs 1 lakh towards harassment, inconvenience, tension, mental agony and litigation.

The insurer challenged this order before the state commission, citing an investigation report dated May 26, 2010, along with what it described as verification from the concerned transport authority, to argue that Singh’s licence was fake. The insurer contended that the policy required the vehicle to be driven by a person holding a valid and effective driving licence, and that using the vehicle with a fake licence amounted to a breach of this condition. It further argued that provisions applicable to third-party claims could not be extended in the same way to an own-damage claim made by the insured.

Dalal, in response, argued that the insurer had not properly established the licence was fake, pointing out that neither the surveyor or investigator, nor a competent official from the licensing authority, had been examined before the district forum.

Consumer Commission: Commission’s Ruling

The state commission held that the insurer had failed to establish that Dalal knew the licence was fake or had knowingly permitted an improperly licensed driver to operate the vehicle. “Merely because the licence was subsequently found to be fake, the claim of the Respondent (Dalal) could not have been rejected,” the commission stated in its order, adding that the existence of a policy condition regarding a valid driving licence does not by itself establish a wilful breach by the insured.

The commission observed that where a licence produced by a driver appears genuine and the driver is competent to drive, the vehicle owner cannot ordinarily be expected to independently verify it with transport authorities. It ruled that even where a licence is later found to be fake, an insurer cannot avoid liability unless it is shown that the owner had knowledge of this and still permitted the driver to operate the vehicle.

Finding no error or illegality in the district forum’s order, the state commission dismissed the insurer’s appeal and directed payment of Rs 5,89,427 with 9 per cent annual interest from the date of filing of the complaint until realisation, along with Rs 1 lakh in compensation.

Individuals with consumer-related grievances may contact their state’s consumer helpline (Delhi: 1800-11-4000) or the National Consumer Helpline at 1915.

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