The Honourable Supreme Court considered the consequence of the absence of a valid driving licence for the driver in National Insurance Co. Ltd. v. Swaran Singh [2004(1) KLT 781(SC)]. The law laid down by the Honourable Supreme Court contains in paragraph 102(vi) of the judgment which reads as follows:-

“Even where the insurer is able to prove breach on the part of the insured concerning the policy condition regarding holding of a valid licence by the driver or his qualification to drive during the relevant period, the insurer would not be allowed to avoid its liability towards insured unless the said breach or breaches of the condition of driving licence is/are so fundamental as are found to have contributed to the cause of the accident.”

“The finding entered by the Tribunals concerned is only regarding want of badge/ authorisation for the driver to drive the transport/goods vehicle involved. There is also no finding that the absence of such badge/authorisation in any way contributed to the cause of the accident. Hence the breach cannot be said to be fundamental as well. That by itself cannot exonerate the insurance company from its liability to the third parties (claimants) or, give it a right of recovery of the amount from the insured. The insurers are bound to indemnify the insured. Contention of the insurance companies either that it is not liable, or that it is entitled to recover the amount of compensation from the insured on payment of the same to the claimants cannot be accepted.”