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The Kerala High Court on Thursday held that when the owner of a vehicle is satisfied that the driver has a license and is driving competently, there would be no breach of Section 149(2)(a)(ii) of the Motor Vehicles Act, and hence the Insurance Company would not be absolved from their liability to compensate the victim.

Section 149(2)(a)(ii) of the Motor Vehicles Act

No amount shall be paid by an insurer in respect of any judgement or award unless the insurer received notice through the Court or, as applicable, the Claims Tribunal prior to the commencement of the proceedings, or in respect of such judgement or award so long as execution is stayed thereon pending an appeal; and an insurer to whom notice of the bringing of any such proceedings was given.

(a) that there has been a breach of a specified condition of the policy, being one of the following conditions, namely:—

(ii) It’s a clause which prohibits the use of a vehicle by a named person or persons, anybody who is not properly licenced, or anyone who has been disqualified from holding or acquiring a driver's licence during the term of disqualification


  • According to the factual matrix in the current instance, the appellant was the owner of a stage carrier operated by Santhosh, the second respondent. The National Insurance Co. Ltd. provided car insurance.
  • The 2nd  respondent was operating the vehicle when it was involved in an accident which the Motor Accidents Claims Tribunal, Perumbavoor found to be reckless and negligent. 
  • The insurer argued before the Tribunal that because the owner had given the second respondent control of the car, he had breached the terms and conditions of the policy and was not entitled to indemnification from the Company because he did not possess a valid and effective driver's licence.


  • The Tribunal ordered the Insurance Company to deposit the Rs. 5,66,061/- compensation it had granted the injured. 
  • The Insurance Company was also given permission to reclaim the compensation amount placed by them from both the owner and the driver of the car because the 2nd respondent's driver's licence was discovered to be a fake. 
  • The second respondent was also charged with violating Section 3(1) read with Section 181 of the Motor Vehicles Act on the grounds that it was presumed he did not possess a valid driver's licence because he failed to present one.
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