Case: AMRIT PAUL SINGH Vs. TATA AIG GENERAL INSURANCE CO. LTD

1. The legal representatives of the deceased, Jagir Singh, the husband of the second Respondent, preferred a claim petition being MACT Case No. 70 of 2013 Under Section 166 of the Motor Vehicles Act, 1988 (for brevity, the Act) before the Motor Accident Claims Tribunal, Pathankot (for short, the tribunal) claiming compensation to the tune of Rs. 36,00,000/-. The claim petition was filed on the basis that on 19.02.2013, Jagir Singh was travelling to Pathankot on his motor cycle and at that juncture, the offending truck bearing temporary registration No. PB-06-6894 belonging to the Appellant No. 2 driven in a rash and negligent manner hit the motor cycle of the deceased as a result of which he sustained multiple injuries, and eventually, succumbed to the same when being taken to the hospital. The claim put forth was sought to be sustained on many a basis which need not be adverted to2. The insurer, the first Respondent herein, opposed the claim on the ground that the vehicle in question was driven in violation of the terms of the insurance policy and further the driver was not having a valid and effective driving license and, therefore, it was not obliged to indemnify the insured. That apart, a stand was taken that the vehicle did not have the permit on the date of the accident. On behalf of the owner of the vehicle and driver, assertions were made that the vehicle was insured with the first Respondent as per the insurance policy, that the vehicle was registered and the driver had the requisite driving licence. Additionally, copy of the route permit of the offending truck was brought on record3. The tribunal noted that the vehicle was purchased in September 2012 and insured on 20.12.2012. It was registered on 26.02.2013. The accident, as stated earlier, occurred on 19.02.2013. The tribunal, placing reliance on the decision rendered by this Court in National Insurance Co. Ltd. v. Challa Bharathamma and Ors. (2004) 8 SCC 517 , held that the insurer was not liable and proceeded to quantify the amount of compensation and determined the same at Rs. 15,63,120/-. The tribunal directed the amount to be paid by the insurer along with interest at the rate of 9% from the date of award till its realisation and recover the same from the owner and driver of the vehicle. A further direction was given for attachment of the truck in question till the award was satisfied4. The award dated 20.11.2014 passed by the tribunal was challenged in FAO No. 1702 of 2016 before the High Court of Punjab and Haryana at Chandigarh. It was contended in appeal that the Appellant No. 2, the owner of the offending vehicle, had deposited the necessary fees along with application on 19.02.2013 for issue of route permit and the same was issued on 27.02.2013. It was further urged that when the owner of the vehicle had already submitted the documents in the transport office for grant of permit along with the requisite fees, the tribunal was in error in holding that the vehicle was being plied without a valid permit. In support of the submissions, reliance was placed upon Ashok Kumar Khemaka v. Oriental Insurance Co. Ltd. and Ors. 2014 (3) RCR (Civil) 1018 , National Insurance Company Limited v. Kamlesh Kaur and Ors. 2006 (3) RCR (Civil) 634  and Moti Ram v. ICICI Lombard and Ors. 2015 ACJ 17935. The High Court scrutinized Annexure A-1 which was filed to justify the stand that the application for issue of the route permit was made to the competent authority and, on a scrutiny of the same, came to hold that the owner had not been able to establish that he had submitted the application for issue of permit before the accident. Referring to Section 66 of the Act and placing reliance on Challa Bharathamma case, the High Court opined that even assuming that the owner had already applied for grant of the permit before the accident, the same would not entitle the owner to ply the vehicle. It is worthy to note that the learned single Judge distinguished the decisions cited before him and, resultantly, confirmed the award of the tribunal.

Reasoning: On a perusal of both the definitions, it is quite clear that a permit has to be issued by the competent authority under the Act for use of a motor vehicle as a transport vehicle. The emphasis is on the words use as well as transport vehicle.10. In the case at hand, the findings would show that the Appellant No. 2 did not have a permit for the vehicle. There is no dispute that the vehicle initially had a temporary registration and eventually the permanent registration.A distinction has to be made between route permit and permit in the context of Section 149 of the Act. Section 149(2) provides the grounds that can be taken as defence by the insurer. It enables the insurer to defend on the ground that there has been breach of a specific condition of the policy, namely, (i) a condition that excludes the use of the vehicle,-(a) for hire or reward, where the vehicle is, on the date of the contract of insurance, a vehicle not covered by a permit to ply for hire or reward, or (b) for organized racing and speed testing, or (c) for a purpose not allowed by the permit under which the vehicle is used, where the vehicle is a transport vehicle, or (d) without side-car being attached where the vehicle is a motor cycle. That apart, it also entitles the insurer to raise the issue pertaining to a condition that excludes driving by a named person or persons or by any person who is not duly licensed or by any person who has been disqualified for holding or obtaining a driving licence during the period of disqualification or that excludes liability for injury caused or contributed to by conditions of war, civil war, riot or civil commotion. A further defence that can be availed of by the insurer is that the policy is void on the ground that it has been obtained by non-disclosure of the material fact or by representation of act which is false in the material particular.11. On a perusal of the written statement filed by the owner and the driver, it is evident that the factum of accident having been caused by the vehicle in question had been denied. That apart, there is also a denial of liability that relates to the manner in which the accident had occurred as alleged in the claim petition.14. We may fruitfully note that the three-Judge Bench adverted to situations where the driver does not have a licence and the same has been allowed to be driven by the owner of the vehicle by such person, the insurer would be entitled to succeed in defence and avoid liability, but the position would be different where the disputed question of fact arises as to whether the driver had a valid licence and where the owner of the vehicle committed a breach of the terms of the contract of insurance as also the provisions of the Act by consciously allowing any person to drive a vehicle who did not have a valid driving licence15. The Court held that if, on facts, it is found that the accident was caused solely because of some other unforeseen or intervening causes like mechanical failures and similar other causes having no nexus with the driver not possessing the requisite type of licence, the insurer will not be allowed to avoid its liability merely for technical breach of conditions concerning driving licence. That apart, minor and inconsequential deviations with regard to licensing conditions would not constitute sufficient ground to deny the benefit of coverage of insurance to third parties. The other category of cases that the Court addressed to included cases where the licence of the driver is found to be fake.16. The three-Judge Bench summed up its conclusions and we think it appropriate to reproduce the relevant part of the same:(vi) 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 the insured unless the said breach or breaches on the condition of driving licence is/are so fundamental as are found to have contributed to the cause of the accident. The Tribunals in interpreting the policy conditions would apply the Rule of main purpose and the concept of fundamental breach to allow defences available to the insurer Under Section 149(2) of the Act(vii) The question, as to whether the owner has taken reasonable care to find out as to whether the driving licence produced by the driver (a fake one or otherwise), does not fulfil the requirements of law or not will have to be determined in each case.In this context, we may profitably refer to the decision in Challa Bharathamma (supra) wherein a two-Judge Bench squarely dealt with the absence of a permit and ruled that plying a vehicle without a permit is an infraction and insurer is not liable.18. In Lakhmi Chand v. Reliance General Insurance (2016) 3 SCC 100 , the Court was concerned with an order passed by the National Consumer Disputes Redressal Commission (NCDRC) that had declined the relief to the Petitioner therein. The insurer in the said case had taken the plea that the complainant had violated the terms and conditions of the policy, for five passengers were travelling in the goods carrying vehicle at the time of the accident, whereas the permitted seating capacity of the motor vehicle of the Appellant was only 1 + 1. The two-Judge Bench referred to Oriental Insurance Co. Ltd. v. Meena Variyal and Ors. (2007) 5 SCC 428  and expressed the view that in order to avoid liability, the insurer must establish that there was breach on the part of the insured.21. In HDFC Bank Limited (supra), the three-Judge Bench opined that the hypothecation agreement did not convey that the Appellant financier had become the owner and was in control and possession of the vehicle. It was the absolute fault of the Respondent No. 2 to take the vehicle from the dealer without full payment of the insurance, more so when nothing had been brought on record that the said fact was known to the Appellant financier or that it was done in collusion with the financier22. The Court held that when the intention of the legislature is quite clear to the effect that a registered owner of the vehicle should not be held liable if the vehicle is not in his possession and control and there was evidence on record that the Respondent No. 2, plied the vehicle without the insurance in violation of the statutory provision contained in Section 146 of the Act, the High Court could not have mulcted the liability on the financier and finally, the financer was absolved of the liability23. In the case at hand, it is clearly demonstrable from the materials brought on record that the vehicle at the time of the accident did not have a permit. The Appellants had taken the stand that the vehicle was not involved in the accident. That apart, they had not stated whether the vehicle had temporary permit or any other kind of permit. The exceptions that have been carved out Under Section 66 of the Act, needless to emphasise, are to be pleaded and proved. The exceptions cannot be taken aid of in the course of an argument to seek absolution from liability. Use of a vehicle in a public place without a permit is a fundamental statutory infraction. We are disposed to think so in view of the series of exceptions carved out in Section 66. The said situations cannot be equated with absence of licence or a fake licence or a licence for different kind of vehicle, or, for that matter, violation of a condition of carrying more number of passengers. Therefore, the principles laid down in Swaran Singh (supra) and Lakhmi Chand (supra) in that regard would not be applicable to the case at hand. That apart, the insurer had taken the plea that the vehicle in question had no permit. It does not require the wisdom of the Tripitaka, that the existence of a permit of any nature is a matter of documentary evidence. Nothing has been brought on record by the insured to prove that he had a permit of the vehicle. In such a situation, the onus cannot be cast on the insurer. Therefore, the tribunal as well as the High Court had directed the insurer was required to pay the compensation amount to the claimants with interest with the stipulation that the insurer shall be entitled to recover the same from the owner and the driver. The said directions are in consonance with the principles stated in Swaran Singh (supra) and Ors. cases pertaining to pay and recover principle.19. The obtaining fact situation is sought to be equated with the factual score in the said case. In this regard, it is useful to refer to the Bench decision in HDFC Bank Limited v. Reshma and Ors. (2015) 3 SCC 679. The issue that arose before the Court was whether the financier was liable to pay the compensation or it was the liability of the borrower. The tribunal had returned the finding that the duty of the financier was to see that the borrower did not neglect to get the vehicle insured and, therefore, it was jointly and severally liable along with the owner. The High Court had concurred with the said conclusion. The Court referred to Purnya Kala Devi v. State of Assam and Ors. (2014) 14 SCC 142  that has dealt with the definition of the term owner as contained in Section 2(30) of the Act. In the said case, the vehicle in question was under the requisition of the State of Assam under the provisions of law. In that context, the Court has expressed that:16. ... The High Court failed to appreciate that at the relevant time the offending vehicle was under the requisition of Respondent 1 State of Assam under the provisions of the Assam Act. Therefore, Respondent 1 was squarely covered under the definition of owner as contained in Section 2(30) of the 1988 Act. The High Court failed to appreciate the underlying legislative intention in including in the definition of owner a person in possession of a vehicle either under an agreement of lease or agreement of hypothecation or under a hire-purchase agreement to the effect that a person in control and possession of the vehicle should be construed as the owner and not alone the registered owner. The High Court further failed to appreciate the legislative intention that the registered owner of the vehicle should not be held liable if the vehicle was not in his possession and control. The High Court also failed to appreciate that Section 146 of the 1988 Act requires that no person shall use or cause or allow any other person to use a motor vehicle in a public place without an insurance policy meeting the requirements of Chapter XI of the 1988 Act and the State Government has violated the statutory provisions of the 1988 Act.20. Be it noted, in the said case, the liability was fixed on the State keeping in view the legislative intention behind Section 146 of the Act, no person shall use or cause or allow any other person to use a motor vehicle in a public place without an insurance policy as that is the mandatory statutory requirement under the Act. Emphasis was laid on possession and control of the vehicle and accordingly liability was fixed on the State of Assam.