Harry Clarke collapsed while at the wheel of the bin lorry in the city centre in December 2014. The vehicle crashed into pedestrians and killed six people.
In a opinion issued by the Court of Session on Thursday, Lord Ericht ruled First Bus had not provided a reference about Harry Clarke and rejected the council’s case.
In a 36-page ruling, the judge said: “As I have found on the facts that the defender did not provide a reference to the pursuer for Mr Clarke, the pursuer’s case fails.”
Lord Ericht said: "A number of claims were intimated to the pursuer by those injured and the families of those killed.
"The pursuer reached settlements with the claimants, but now seeks to recover the amount paid under these settlements (including legal costs and expenses) from the defender, a previous employer of Mr Clarke, on the ground of the defender’s negligence in providing an employment reference to the pursuer.
"The sum sued for in this action in respect of the settled claims is £6,555,872.”
The council had claimed First Bus provided a reference for Mr Clarke that did not include details of the driver’s past sickness record, including losing consciousness at the wheel of a bus four years before the fatal crash.
The local authority’s legal team argued that had that information been contained in the reference, it would not have employed him because of the risk.
However, Lord Ericht ruled: "The problem for the pursuer is that it has not produced the reference.
"It could not find the reference, or any copy of it, in either its paper file or electronic records.
"Nor does any copy of the reference exist in the defender’s files and records.
"No witness remembers seeing the reference or what it said.”
Erin McQuade, 18, and her grandparents Jack Sweeney, 68, and Lorraine Sweeney, 69, from Dumbarton, Stephenie Tait, 29, and Jacqueline Morton, 51, both from Glasgow; and Gillian Ewing, 52, from Edinburgh, died in the crash.
A further 15 people were injured when the lorry veered out of control, travelling along the pavement in Queen Street before crashing into the side of the Millennium Hotel in George Square.
A spokesman for the city council said: “The case was taken by our insurers, rather than by the council itself and we’ll await their comments on the judgement.”
A spokesperson for First Bus said: “We acknowledge the judgement released today and are pleased that the court has reached the decision that First Bus conducted its operations in an appropriate and professional manner.
"We trust that the matter can now be brought to a close.
“At this time, it is important to remember the events in December 2014 and the people and families that suffered as a result of this terrible incident.”
Lord Ericht said he reserved the issue of expenses.