9 October 2025 Legal Updates

MOTOR ACCIDENT CLAIMS | FAKE LICENSE BY DRIVER DOESN'T ABSOLVE INSURER UNLESS VEHICLE OWNER KNOWINGLY ALLOWED BREACH: SUPREME COURT

(a) Case Title:

• Hind Samachar Ltd. (Delhi Unit) v. National Insurance Company Ltd. & Ors.

(b) Court:

• Supreme Court of India

(c) Date of Decision:

• October 08, 2025

(d) Bench:

• Justice K. Vinod Chandran and Justice N.V. Anjaria

Facts of the Case

• A truck owned by Hind Samachar Ltd. collided with a Matador van at an intersection on January 26, 1993, at 2:00 AM. The accident resulted in nine deaths and two injuries among passengers in the van. Both vehicles were found to be compositely negligent at a 75:25 ratio (truck: van).
• The insurance company that insured the truck paid compensation to the claimants but sought recovery from the truck owner on the ground that the truck driver had produced a fake driving licence, which allegedly constituted a breach of insurance policy conditions.

Key Issues

• Whether the insurance company could recover the compensation amount from the vehicle owner when the driver's licence was found to be fake?
• Whether the owner had failed to exercise due diligence in employing/entrusting the vehicle to a driver with a fake licence?

Court's Observations

• On Fake Licence: Two different licences were produced - one by police and another by the owner. The driving licence register from DTO Gurdaspur showed multiple interpolations and inconsistencies. However, a certificate from DTO Gurdaspur confirmed that the licence was validly issued and later renewed.
• On Owner's Diligence: The owner had produced the driving licence and a renewal certificate before the Tribunal. There was no evidence that the owner knew the licence was fake at the time of employment/entrustment. The insurance company made only bland suggestions of collusion without substantive evidence.
• On Burden of Proof: The insurance company must prove that the insured deliberately committed a breach by knowingly entrusting the vehicle to a driver with a fake licence. An owner employing a driver can only examine the licence produced and is not expected to verify authenticity from the licensing authority.

Legal Principles Established

• Insurer's Liability: Even if a driving licence is fake, the insurance company is liable to pay compensation unless they prove the insured deliberately breached the policy by knowingly entrusting the vehicle to an unlicensed driver.
• Burden on Insurer: The insurance company must establish breach on the part of the insured, not merely that the licence was fake.
• No Duty of Verification: Vehicle owners are not required to verify the authenticity of driving licences from the issuing authority - examining the licence produced by the driver is sufficient due diligence.
• Collusion Must Be Proved: Mere production of a licence by the employer (rather than the driver) does not establish collusion, especially when the owner is a company acting through representatives.

Judgment

The Supreme Court allowed the appeals and set aside the High Court's "pay and recovery" directions. The insurance company was not entitled to recover the compensation amount from the vehicle owner, as there was no proof of deliberate breach or lack of due diligence by the owner.

CRIMINAL COURT CANNOT REVIEW OR RECALL ITS JUDGMENT EXCEPT TO CORRECT CLERICAL ERRORS: SUPREME COURT

(a) Case Title:

• State of Rajasthan v. Parmeshwar Ramlal Joshi and Others

(b) Court:

• Supreme Court of India

(c) Date of Decision:

• October 8, 2025

(d) Bench:

• Justice Vikram Nath and Justice Sandeep Mehta

Facts of the Case

The respondent-complainant, Parmeshwar Ramlal Joshi, was involved in granite mining business in Bhilwara, Rajasthan. He alleged that a former Revenue Minister (Ramlal Jat) threatened him over a business dispute related to mining shares, claiming he would use his political influence and connections with senior police officials to harm him. The complainant filed multiple FIRs, but alleged that investigations were not being conducted fairly due to political interference.

The complainant approached the Rajasthan High Court twice:

• First, he filed a Criminal Writ Petition seeking transfer of investigation to CBI, which he withdrew and was dismissed on October 23, 2024.
• Shortly after, he filed a Miscellaneous Petition under Section 528 BNSS (equivalent to Section 482 CrPC) with identical prayers.

High Court's Actions

• January 16, 2025: The High Court disposed of the miscellaneous petition by directing the complainant to submit a representation to the Superintendent of Police for fair investigation, refusing to transfer investigation to CBI.
• January 24, 2025: The complainant filed an application claiming "clerical mistake" in the earlier order. The High Court recalled its own order, calling it an inadvertent error due to heavy workload.
• February 4, 2025: The High Court transferred the investigation to CBI.

Supreme Court's Decision

The Supreme Court quashed both orders dated January 24, 2025 and February 4, 2025, holding that:

Key Legal Principles

• No Power of Review in Criminal Courts: Criminal courts have no inherent power to review or recall their own judgments except to correct clerical/arithmetical errors under Section 403 BNSS (earlier Section 362 CrPC).
• Inherent Powers Cannot Override Statutory Bars: The inherent jurisdiction under Section 528 BNSS (Section 482 CrPC) cannot be used to circumvent the bar on review. The Court emphasized that inherent powers cannot be exercised to do what is specifically prohibited by law.
• No Clerical Error Existed: The order dated January 16, 2025 was a reasoned order passed after considering all facts. There was no clerical or inadvertent mistake that could justify its recall.
• Bar on Successive Petitions: Once the writ petition with identical prayers was dismissed, filing another petition under a different provision (Section 528 BNSS) with the same prayers was impermissible without any change in circumstances.
• Change of Label, Not Substance: The attempt to repackage the same prayer under inherent jurisdiction was merely a change in label, not substance.

Holding

The appeals filed by the State of Rajasthan were allowed. The High Court's orders transferring investigation to CBI were quashed. However, the complainant was given liberty to challenge the earlier orders (dated October 23, 2024 and January 16, 2025) through appropriate legal remedies.

RIGHT TO SEEK ARBITRATION NOT LOST JUST BECAUSE ARBITRATION CLAUSE BECAME INOPERABLE DUE TO STATUTORY AMENDMENT: SUPREME COURT

(a) Case Title:

• Offshore Infrastructures Limited v. M/s Bharat Petroleum Corporation Limited

(b) Court:

• Supreme Court of India

(c) Date of Decision:

• October 7, 2025

(d) Bench:

• Justice Dipankar Datta and Justice Augustine George Masih

Facts

Offshore Infrastructures Limited (Appellant) was awarded a contract by Bharat Petroleum Corporation Limited (Respondent) for construction work at Bina Refinery in December 2016. The work was completed in January 2018, and the final bill was raised on March 20, 2018. The Appellant issued a "No Claim Certificate" on October 3, 2018. However, disputes arose over outstanding payments, and the Appellant sought arbitration in June 2021.

1. Legal Issues:

• Whether a court can appoint an arbitrator when the arbitration clause designates a person who has become ineligible due to statutory amendments?
• Whether the application for appointment of arbitrator was filed within the limitation period?

2. Appellant's Arguments:

• Limitation period begins only after a valid arbitration notice is issued and refused. Part payment made in June 2019 extended the limitation period. COVID-19 extension order excluded the period from March 15, 2020 to February 28, 2022 from limitation computation

3. Respondent's Arguments:

• Limitation began from the date the final bill became due (April 21, 2018). Since the arbitration clause became invalid due to 2015 amendments to the Arbitration Act, the entire arbitration mechanism ceased to exist.

Supreme Court's Decision

• Issue 1 - Power to Appoint Arbitrator: The Court held that when an arbitration clause designates a person who becomes ineligible due to Section 12(5) of the Arbitration and Conciliation Act, 1996 (as amended in 2015), the court has the power to appoint an independent arbitrator. The core arbitration agreement remains valid even if the appointment mechanism becomes inoperative. The amendment was intended to ensure neutrality, not to defeat arbitration altogether.
• Issue 2 - Limitation Period: The Court held that generally, limitation begins when the final bill becomes due. In this case, limitation would have started from April 21, 2018. The application filed on March 15, 2022 would normally be time-barred. However, applying the COVID-19 extension order, the period from March 15, 2020 to February 28, 2022 must be excluded. With this exclusion, the application was filed within the limitation period.

Outcome

The Supreme Court allowed the appeals, set aside the High Court's orders, and directed the Delhi International Arbitration Centre to appoint an arbitrator to resolve the dispute.

Legal Principles (Ratio Decidendi)

• Arbitration clauses must be interpreted purposively, not literally, to enable parties to pursue dispute resolution
• Ineligibility of named arbitrators due to statutory amendments does not render the entire arbitration agreement void
• Courts have power under Section 11(6) to appoint independent arbitrators when the contractual mechanism becomes inoperative
• COVID-19 extension orders must be considered while computing limitation periods for arbitration applications