In a significant ruling, the Karnataka High Court has clarified that insurance companies cannot be held responsible for paying accident compensation under the Workmen's Compensation Act if the employer failed to ensure the driver possessed a valid driving licence. The court placed the entire liability on the employer, emphasizing their fundamental duty of verification.
The Tragic 2008 Accident and Initial Ruling
The case stems from a tragic incident in 2008 during the rainy season. A school bus belonging to Balma English Medium School in Mangaluru's Thenkulipady, driven by Badruddin, fell into the Phalguni River. The accident occurred after the driver had picked up schoolchildren from Ulaibettu village, resulting in the deaths of Badruddin and several children.
When Badruddin's family sought compensation, the Commissioner for Employees Compensation in 2015 ruled that the school management, as the employer and vehicle owner, was solely liable. The commissioner ordered a compensation of Rs 5.38 lakh with 12% interest from the accident date. The insurance company, Bajaj Allianz General Insurance, was absolved because Badruddin's driving licence had expired two months before the accident, violating the insurance policy terms.
High Court Upholds Commissioner's Decision
The school management challenged this order before the Karnataka High Court in 2017. However, in an order dated December 19, a bench of Justice K Manmadha dismissed the appeal and upheld the commissioner's ruling.
The court noted a critical lack of evidence. "(Witness) has categorically denied that Badruddin was holding a valid and effective driving licence to drive the school bus... the claimants have failed to produce any documentary evidence in support of the same," the order stated. The school's claims about the licence's validity were found unsubstantiated.
Legal Precedent and Employer's Responsibility
Justice Manmadha's bench referred to the Supreme Court judgment in Beli Ram v Rajinder Kumar and another. The bench observed that this precedent reinforces the principle that the employer bears the responsibility to ensure their driver holds a valid and effective licence.
Failure to perform this basic check constitutes a clear breach of insurance policy conditions, which automatically absolves the insurer of any liability for compensation. The court firmly placed the onus of due diligence on the employer, not the insurance provider.
With these observations, the Karnataka High Court confirmed that the school management is solely liable to pay the compensation of Rs 5.38 lakh plus interest to the driver's family. This judgment serves as a stern reminder to all employers, particularly those operating transport services, to rigorously verify and maintain records of their drivers' licence validity to avoid similar liabilities.
