Punjab and Haryana High Court Holds Insurer Liable for Compensation

Introduction

In an important ruling with significant implications for motor accident compensation claims, the Punjab and Haryana High Court has held that a driver’s licence continues to remain valid for a period of 30 days after its expiry, and that during this interregnum period, the insurer cannot escape liability on the ground of an invalid driving licence.

The judgment in National Insurance Company Limited v. Satbir and Others (2025: PHHC: 163083) reinforces the statutory protection afforded under the Motor Vehicles Act, 1988, and clarifies a recurring dispute raised by insurance companies in claim proceedings.

Factual Background

The case arose out of a motor accident claim where the offending vehicle was admittedly insured with the appellant, National Insurance Company Limited. The claimants sought compensation under the Motor Vehicles Act, alleging rash and negligent driving.

The insurance company resisted liability on the ground that the driver’s driving licence had expired prior to the date of the accident, contending that the driver was not holding a valid and effective licence at the relevant time.

The Motor Accident Claims Tribunal rejected this contention and fastened liability upon the insurer. Aggrieved, the insurance company approached the Punjab and Haryana High Court.

Legal Issue Before the Court

Whether the insurer can avoid liability when the driving licence of the driver had expired shortly before the accident, but the accident occurred within 30 days of such expiry.

Statutory Framework

The Court examined Section 15 of the Motor Vehicles Act, 1988, which governs renewal of driving licences. The provision stipulates that if an application for renewal is made within 30 days of expiry, the licence shall be renewed with effect from the date of its expiry.

This statutory grace period ensures continuity of validity and prevents penal consequences arising from minor delays in renewal.

Findings of the High Court

• A driving licence does not become invalid immediately upon expiry.
• The statutory scheme provides a 30-day window during which the licence is deemed effective.
• If the accident occurs within this period, the driver cannot be treated as unlicensed.
• The defence raised did not constitute a fundamental breach of policy conditions.

Rejection of Insurer’s Defence

The Court observed that the insurer failed to establish that the driver was disqualified from holding a licence or that the licence had been revoked. Mere expiry, followed by renewal within the permissible period, does not defeat a third-party claim.

The High Court reiterated that insurance defences must be interpreted strictly, particularly where third-party rights are involved.

Significance of the Judgment

• Protects accident victims from technical objections by insurers.
• Clarifies the legal position on licence expiry and renewal grace periods.
• Reinforces statutory protections over policy conditions.
• Discourages mechanical defences lacking proof of actual breach.

Consistency with Established Jurisprudence

The judgment aligns with settled jurisprudence holding that the Motor Vehicles Act is compensatory in nature, minor procedural lapses should not defeat claims, and the burden lies on insurers to prove a fundamental breach.