Page 55 - Insurance Times June 2024

After reviewing the Marine Insurance Act of 1963, the Court Company filed a petition with the Apex Court, contesting
concluded that if a ship is sent to sea in an unfit state and the Delhi High Court's ruling that set aside the Motor
the insured party knows about it, the insurer will not be held Accident Claims Tribunal's decision awarding the insurance
responsible for any losses. In this case, the classification company the right to claim damages. The Court noted that
certificate from a classification society is significant since it no evidence had been filed to support the claim that the
certifies that the ship complies with particular operating and owner should have obtained the driver's license from the
safety requirements. The Court explained that the very relevant transport authorities.
foundation of the Classification Certificate is jeopardized if
defects in a vessel were not reported to the Classification About the case
On Monday, October 30, the Supreme Court ruled that an
Society before the issuance of a certificate and it is later
found that these defects were concealed and warranty insurance company cannot argue that it is exempt from
liability in a car accident claim simply because the owner of
conditions were not met.
the vehicle failed to confirm the validity of the driver who
The Court stated that there is no proof that the engine was hired. According to the Court, the insurance company
replacement had been waived prior to granting the current bears the burden of demonstrating that the owner of the
insurance policy, despite the insurer knowing that repairs vehicle failed to use reasonable diligence in verifying the
had been made and a trip was scheduled because of the driver's license. It would be impractical to ask every
waiting period for an engine replacement. Consequently, individual hiring a driver to check that the driver's driver's
there was no express or implied indication of waiver when license is valid and authentic, according to a bench
the insurance firm provided the policy using the Class comprising Justices CT Ravikumar and Sanjay Kumar.
Certification.
The Appellant Insurance Company filed a petition with the
The court emphasized that parties concerned must operate Apex Court in this case, contesting the Delhi High Court's
in good faith in order to preserve the integrity of the ruling that set aside the Motor Accident Claims Tribunal's
contract, underscoring the fundamental role that trust and decision awarding the Insurance Company the right to claim
transparency play in policy issuance. The appellant might damages. Angry after being denied the ability to recoup
have notified the respondent that the advance receipt was from the car owner, the insurance company appealed the
not being used, the court points out. When the engine decision to the Supreme Court. The incident in question
crankshaft became available, this may have been combined included a Tempo driven rashly and negligently, resulting in
with an offer to repay the money or a mutual agreement an accident where a victim sustained fatal injuries. The
to keep the money for later use. According to the court, injured person's dependents filed a compensation claim with
taking such an open and honest stance would have given the Motor Vehicle Claims Tribunal. The Tribunal determined
the appellant a rightful stage on which to make their that the car owner's violation of the insurance policy's terms
and conditions would release the insurance company from
argument.
liability.
Supreme Court: The vehicle owner's Before the Apex Court, the insurance company contended
that it was exempt from liability because the car's owner
failure to verify the driver's license does had neglected to confirm the validity of the driver's license,
not give the insurer the right to recover. which turned out to be a fake. The Motor Vehicle Act, 1988's
Section 149(2)(a)(ii) and the relevant insurance policy's
Case Title: IFFCO Tokio General Insurance Co. "Driver Clause" do not require the owner of an insured
Ltd. V. Geeta Devi and others., Special Leave vehicle to typically obtain the driver's license from the
relevant transport authorities and have it verified. This was
Petition (C) No. 19992 of 2023
noted by the Court.
Summary The Court noted that no evidence had been filed to support
The Supreme Court has ruled that an insurance company the claim that the owner of the car should have had the
cannot be exempt from liability in a car accident claim relevant transport authority verify the driver's license. The
simply because the owner failed to confirm the driver's Court noted that because the insurance company was unable
validity. The court ruled that the insurance company must to demonstrate a deliberate violation by the car owner, it
demonstrate that the owner failed to use reasonable would not be able to collect the full amount of compensation
diligence in verifying the driver's license. The Insurance from the owners of the vehicle.

50 June 2024 The Insurance Times