Insurance Claim Cannot Be Repudiated If Driver Applied For Licence Renewal Within One Year: Punjab Consumer Commission
Pranav B Prem
The Punjab State Consumer Disputes Redressal Commission, Chandigarh, comprising Justice Daya Chaudhary (President) and Vishav Kant Garg (Member), has held that even though the transport endorsement on the driver’s licence had expired on the date of the accident, the insurance claim could not be repudiated solely on this ground since the driver had applied for renewal within the one-year statutory period under Section 15(1) of the Motor Vehicles Act, 1988. The Commission ruled that the lapse could not be attributed to the vehicle owner and therefore, the insurer was not justified in repudiating the claim in entirety. The Commission upheld the District Commission’s direction to settle the claim on a non-standard basis.
Background
The complainant, Gurpreet Singh, is the son of late Jagtar Singh, who owned the insured truck bearing registration number PB-23T-3331. The truck was insured with New India Assurance for the period from 16.02.2017 to 15.02.2018 with an IDV of ₹27,00,000. On 21.09.2017, the truck met with a serious accident near Village Shivar, Pothulanadugu in Andhra Pradesh. Harvinder Singh was driving the truck at the time, and in the collision, Jagtar Singh—the owner—died at the spot. An FIR was registered under Sections 304A and 337 of the IPC. Following the accident, a claim was filed with the insurer. However, the insurer repudiated the claim vide letter dated 27.09.2018 on the ground that the driver’s transport-vehicle licence had expired on 18.12.2016, and therefore, he was not holding a valid licence to drive the truck on the date of the accident. Aggrieved by the repudiation, the complainant filed a consumer complaint before the District Consumer Disputes Redressal Commission, Fatehgarh Sahib, alleging deficiency in service. The District Commission partly allowed the complaint and directed the insurer to pay ₹20,25,000 (75% of IDV) along with 8% interest from the date of filing of the complaint, besides ₹20,000 as composite compensation.
Arguments
On appeal before the State Commission, the insurer reiterated that the claim had been correctly repudiated as the driver did not possess a valid transport-vehicle licence on the date of accident. It argued that violation of policy conditions disentitled the complainant from receiving any insurance payout and further contended that as the truck was a total loss, salvage should vest in the insurer in case any payment is directed.
The complainant countered that his father had employed Harvinder Singh nearly five years prior and the driver routinely operated the truck. The driver held a licence valid up to 17.12.2030 for non-transport vehicles and had applied for renewal of the transport endorsement within 10–11 months of expiry. Therefore, it was argued that the complainant’s father had exercised due diligence and could not be penalised for a lapse not attributable to him.
Findings and Decision
The State Commission noted that the sole issue for adjudication was whether the owner was at fault for permitting the driver to operate the truck though his transport licence had expired on the date of the accident. Referring to Section 15(1) of the Motor Vehicles Act, the Commission held that the licensing authority is mandated to renew the licence when an application is made within one year before or after the date of expiry. The driver’s application for renewal, made within 10–11 months of expiry, was therefore within the permissible statutory window.
The Commission observed that the complainant’s father had engaged a driver who was holding a licence that appeared valid on its face, and there was no evidence of negligence on the owner’s part. It remarked that it would be unreasonable to place an obligation on employers to verify renewal status repeatedly once a licence appears genuine at initial engagement. Regarding salvage, the Commission accepted the insurer’s contention that once a non-standard settlement is ordered for a total-loss vehicle, the salvage and ownership of the vehicle must transfer to the insurer.
The appeal was partly allowed, not on the question of liability—which remained upheld against the insurer—but only to the extent of directing the complainant to transfer the truck and hand over salvage at the time of receiving the claim amount. The monetary relief granted by the District Commission was affirmed in full.
Cause Title: New India Assurance Co. Ltd. v. Gurpreet Singh
Case No: First Appeal No. 358 of 2024
Coram: Justice Daya Chaudhary (President), Vishav Kant Garg (Member)
