The Supreme Court has held that an insurance company cannot be fastened with liability to satisfy a motor accident compensation award where the driver fails to legally establish, through reliable official records, that he held a valid driving licence on the date of the accident. Setting aside the Punjab and Haryana High Court's judgment, the Court restored the finding that the insurer was not liable to bear the final burden of compensation. However, to protect the claimants, it directed that the principle of "pay and recover" would apply, allowing the insurer to recover the amount from the driver and the vehicle owner after making payment.
Background of the Case
The case arose out of a road accident that occurred on 14 October 2009, in which a vehicle driven by Om Parkash collided with a two-wheeler. The fact that the accident resulted from rash and negligent driving was not disputed before the Court. The dispute centred on whether the driver possessed a valid driving licence on the date of the accident.
The Motor Accident Claims Tribunal awarded compensation of ₹86.95 lakh with interest but held that the insurer, Reliance General Insurance Company Ltd., was not liable because the driver did not establish that he had a valid licence on the relevant date. Liability was therefore placed on the driver and the owner.
The Punjab and Haryana High Court later reversed that finding, relying on evidence suggesting that the licence had remained valid despite gaps in official digital records. It enhanced the compensation to ₹1.08 crore with interest and directed the insurer to satisfy the award. Aggrieved by that decision, the insurer approached the Supreme Court.
What the Supreme Court Considered
The Bench of Justice Sanjay Karol and Justice Nongmeikapam Kotiswar Singh noted that the only issue before it was whether the driver possessed a valid driving licence on the date of the accident. The answer to that question would determine whether the High Court's judgment could stand.
The driver relied upon a letter issued by the Motor Licensing Office stating that records relating to the period between 2007 and 2010 were unavailable because of a technical error during migration of data between software systems. The communication further stated that the non-availability of records should not be treated as indicating that the licence was invalid.
The Supreme Court, however, examined whether that communication and the oral testimony of the licensing officer were sufficient in law to prove the validity of the licence.
Court's Observations
The Court reiterated that where the validity of an official document is in dispute, it must ordinarily be proved through primary evidence, namely the official records themselves. Referring to settled principles under the law of evidence, the Bench observed that secondary evidence is admissible only when the legal requirements for its admission are first established.
Examining the evidence on record, the Court found that the licensing authority had not produced any official material explaining the alleged loss of data or demonstrating how the missing records were reconstructed. The Bench noted that if the authority was able to produce certain records relating to the driver, it could equally have produced official material proving the alleged gap in the database.
The Court observed:
"When in question was an official document... we fail to understand the undue importance which is placed by the High Court on the statement of RW3."
It further found that the High Court had overlooked contradictions between the oral testimony of the licensing officer and the documentary record produced before the Tribunal.
Another circumstance that weighed with the Court was the payment of a penalty for delayed renewal. The Bench observed that if the licence had remained continuously valid, there was no satisfactory explanation for why a penalty had been levied for the intervening period.
Responsibility of the Vehicle Owner
The Supreme Court also reiterated the responsibility cast upon vehicle owners under the Motor Vehicles Act. Referring to its earlier decisions, it observed that an owner must not only verify a driver's licence at the time of employment but must also exercise reasonable care to ensure that the licence is renewed before its expiry.
In the present case, the owner did not enter the witness box to establish that reasonable steps had been taken to verify or monitor the validity of the driver's licence.
Supreme Court's Decision
Allowing the appeals, the Supreme Court held that the material relied upon before the High Court was insufficient to legally establish that the driver held a valid driving licence on the date of the accident. Consequently, the insurer could not be held liable to satisfy the award on that basis.
Since the compensation amount had already been directed to be released to the claimants, the Court applied the principle of "pay and recover." It permitted the insurer to recover the amount from the driver and the vehicle owner in accordance with law.
Before concluding, the Bench observed that the financial burden falling upon drivers and owners in such situations can be severe. It suggested that the Ministry of Road Transport and Highways and the States undertake awareness campaigns on the importance of maintaining valid driving licences and streamline the licence issuance and renewal process.
The appeals were accordingly allowed and all pending applications were disposed of.
Case Details
Case Title: Reliance General Insurance Company Ltd. v. Om Parkash & Ors.
Case Number: Civil Appeal Nos. of 2026 (Arising out of SLP(C) Nos. 6743-6744 of 2023)
Judge: Justice Sanjay Karol and Justice Nongmeikapam Kotiswar Singh
Decision Date: July 30, 2026
