The Kerala High Court has observed that the owner of the offending vehicle, who bonafide believed the driving licence of the driver as a genuine one, is not liable to restitute the compensation amount paid by the Insurance Company.

The Single Bench of Justice Sophy Thomas noted thus "Since the owner was not aware of the fact that the driving licence produced by the driver was a fake one, she is not liable to compensate the victim and so, the insurer cannot proceed against the owner."

In this case, as the driving license of the driver of the offending vehicle was found fake, the Insurance Company was permitted by the Tribunal to recover the compensation amount deposited by them from owner and driver of the car.

Aggrieved by this, the vehicle owner approached Kerala High Court.

Advocate P. Deepak appeared for the appellant whereas Advocate P.G. Ganappan represented the Insurer.

The Court observed that "In the case on hand, even the insurer does not have a case that the owner was aware of the fact that the driving licence of the 2nd respondent was a fake one. From the available evidence, there is every reason to think that the owner believed the renewed licence of the 2nd respondent as a genuine one, as it was from a local RTO."

The Court held that the owner of the vehicle was not expected to enquire into the genuineness of that document from the original place of its issuance.

"Since the appellant/owner was not aware of the fact that the 2nd respondent was having a fake driving licence, she cannot be mulcted with the liability to restitute the Insurance Company. According to her, the accident itself was caused due to the rash and negligent driving of the offending vehicle by the 2nd respondent, and he is the person primarily responsible to compensate the victim.", the Court held.

On the contention of the insurer that they cannot recover the amount from the driver as there is no privity of contract between the insurer and the driver, the Court placed reliance on its judgment in Oriental Insurance Company Ltd. vs. Sivan and noted that the driver is not a stranger to the contract of insurance between the Insurance Company and the owner of the vehicle and there is a quasi contract between the driver and the insurer.

"Since the offending vehicle was duly insured with the 3rd respondent/insurer, as far as an innocent third party is concerned, primarily, the insurer has to compensate him and they can recover the sum from the driver, as there is quasi contract between the driver and the insurer.", the Court held.

The Court allowed the appeal and set aside the impugned award to the extent it permitted recovery of the compensation amount from the appellant-owner.

Cause Title- Aisha v. Xavier & Ors.

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