How to decide a claim petition, where insurer has taken a defence of violation of 'Permit'

 

How to decide a claim petition, where insurer has taken a

defence of violation of 'Permit'

In some claim petitions, insurer takes defence of violation

and/or breach of 'Permit'. To understand legal position, some

examples with the case law are required to be taken into

consideration. Some examples and findings of the Hon'ble High

Courts are as under:

1.Insurer seeks to avoid its liability on the ground that

offending vehicle was being plied without valid permit. It has

come on record that insurer had insured the said vehicle

without there being valid permit. Therefore, it is held that it

is the duty of Insurer to verify the fact that permit of vehicle

was valid or not at the time of insuring the vehicle and, as

insurer having insured the vehicle without valid permit, it

cannot seek exemption from liability. This has been held by

Hon'ble Uttarakhand High Court in the case of U.I.I.Com. v/s

Prakashi Devi, reported in 2011 ACJ 1683.

2. Insurer seeks to avoid its liability on the ground that owner of

‘Taxi’, which hit the pedestrians had violated terms of policy,

as ‘Taxi’ could not have been used in a public place after

expiry of permit. It has come on record that policy was valid.

Even it was not the case of Insurer that passengers were

being carried for hire and reward and policy did not cover the

case of Third Party. It was therefore, held that victim did not

suffer injuries while travelling in the ‘Taxi’ for hire or reward

and mere expiry of permit would not absolve Insurer to pay

compensation, as no provision of the Act is shown by Insurer

to point out that owner of ‘Taxi’ was under legal obligation,

not to ply ‘Taxi’ after the expiry of permit. This has been held

by Hon'ble Kerala High Court in the case of Sethunath v/s

John Varghese, reported in 2011 ACJ 2242.

3. Truck was loaded with coal and carrying 12 passengers,

capsized. Truck was insured covering driver, cleaner and 6

coolies. Insurer contended that truck was over loaded as it

was carrying more that 8 persons and further contended that

there is breach of policy. It is held that Insurer has failed to

show that carrying more number of coolies would be treated

as breach of policy and, it has been further held that if at all

there is any breach of policy, it is not so fundamental as to

put end to the contract totally. Finally Insurer was directed to

satisfy the highest six awards of coolies. This has been held

by Hon'ble Bombay High Court in the case of Sanjay v/s

Sukhiyabai, reported in 2012 ACJ 287.

4. Truck hit a person standing on roadside and he sustained

grievous injuries. Tribunal found that Truck was being plied

without valid permit and owner of the Truck has committed

breach of the terms and condition of policy. After holding

this, Tribunal directed insurer to pay compensation and then

recover from the owner. This award of Tribunal was

challenged before the Hon'ble High Court. Hon'ble High

Court, after relying upon the several Judgments of Hon'ble

Apex Court, has held that award of Tribunal is just and

proper and directions of Tribunal against insurer to 'pay and

recover' is just and proper. This has been held by Hon'ble

Allahabad High Court (DB) in the case of N.I. Com. v/s

Radhey Shyam, reported in 2013 ACJ 788.

5. Mini bus being plied on the route for which it had no permit.

It is also found that in the said bus 13 passengers travelling

against the permit of 12 passengers. Held that there is

violation of insurance policy and Insurer held not responsible

but order of 'pay and recover' is passed. This has been held by

Hon'ble Himachal Pradesh High Court in the case of N.I.

Com. v/s Balbir Singh, reported in 2013 ACJ 1008.

2. The interpretation of contravention of condition of permit

envisaged under Section 66 of the M.V. Act and the

contravention of condition/s of permit came up for

consideration before the Hon'ble Apex Court in State of

Maharastra v/s Nanden parrebhani, reported in (2000) 2 SCC

69, albeit in a different context. In the said case, the police had

seized certain vehicles for carrying passengers in excess of the

numbers permitted by the condition of permit issued by the

Transport Authority. The action was challenged by the

Association of Transporters by virtue of a writ petition before the

Hon'ble Aurangabad Bench of Hon'ble Bombay High Court. The

Hon'ble High Court analyzed the different provisions of the M.

V. Act, and the Rules framed thereunder and on consideration of

the same came to the conclusion that it is not each and every

violation of the condition of the permit which would authorize

the seizure and detention of the vehicle under Section 207 (1) of

the M.V. Act. It was held that it was only when the condition of

permit relating to the route on which or the area in which or the

purpose for which the vehicle was used, is violated, the vehicle

could be seized by the Authorities. The Appeal filed by the State

of Maharastra was dismissed by the Hon'ble Supreme Court. The

contention raised on behalf of the State of Maharastra that

carrying passengers more than prescribed by the permit could be

construed to be violation, was rejected. The Supreme Court

relied upon the report in Kanailal Sur v/s Paramnidhi Sadhu

Khan, reported in (1958) 1 SCR 360 and held as under:"

If the words used are capable of one construction only then it

would not be open to the Courts to adopt any other

hypothetical construction on the ground that such construction

is more consistent with the alleged object and policy of the Act.

The intention of the legislature is required to be gathered from

the language used and, therefore, a construction, which

requires for its support with additional substitution of words or

which results in rejection of words as meaningless has to be

avoided. Bearing in mind, the aforesaid principles of

construction of statute and on examining the provisions of

Section 207 of the M.V. Act, which has been quoted earlier, we

have no doubt in our mind that the police officer would be

authorised to detain a vehicle, if he has reason to believe that

the vehicle has been or is being used in contravention of Section

3 or Section 4 or Section 39 or without the permit required

under Subsection

(1) of Section 66 or in contravention of any

condition of such permit relating to the route on which or the

area in which or the purpose for which the vehicle may be used.

In the case in hand, we are not concerned with the

contravention of Section 3 or Section 4 or Section 39 or SubMACP

section (1) of Section 66 and we are only concerned with the

question of contravention of the condition of permit. Reading

the provisions as it is, the conclusion is irresistible that the

condition of permit relating to the route on which or the area

in which or the purpose for which the vehicle could be used if

contravened, would only authorise the police officer to detain

the vehicle and not each and every condition of permit on being

violated or contravened, the police officer would be entitled to

detain the vehicle. According to the learned Counsel, appearing

for the State of Maharashtra, the expression "purpose for which

the vehicle may be used" could be construed to mean that when

the vehicle is found to be carrying passengers more than the

number prescribed in the permit, the purpose of user is

otherwise. We are unable to accede to this contention as in our

opinion, the purpose would only refer to a contingency when a

vehicle having a permit of stage carriage is used as a contract

carriage or vice versa or where a vehicle having a permit for

stage carriage or contract carriage is used as a goods vehicle

and vice versa. But carrying passengers more than the number

specified in the permit will not be a violation of the purpose for

which the permit is granted. If the legislature really wanted to

confer power of detention on the police officer for violation of

any condition of the permit, then there would not have been the

necessity of adding the expression "relating to the route on

which or the area in which or the purpose for which the vehicle

may be used". The user of the aforesaid expression cannot be

ignored nor can it be said to be a tautology. We have also seen

the Form of permit (From P.Co. T.), meant in respect of a

tourist vehicle, which is issued under Rule 72(1)(ix) and Rule

74(6) of the Maharashtra Motor Vehicles Rules, 1989. On

seeing the different columns, we are unable to accede to the

contention of the learned Counsel appearing for the State of

Maharashtra, that carrying passengers beyond the number

mentioned in Column 5, indicating the seating capacity, would

be a violation of the conditions of permit relating to either the

route or the area or the purpose for which the permit is

granted. In this view of the matter, we see no infirmity with the

conclusion arrived at by the Hon'ble High Court in the

impugned judgment and the detention of the vehicles has

rightly been held to be unauthorised and consequently, the

compensation awarded cannot be said to be without

jurisdiction......…"

2.1. Although, the interpretation of Section 207 of M.V. Act was

done by Hon'ble Apex Court in a different context, but same

would apply to Clause (c) to Section 149 (2) (a) (i) of the Act.

3 Thus, if a vehicle has been or is being used in contravention

of Section 3 or Section 4 or Section 39 or without the permit

required under Subsection

(1) of Section 66 or in contravention

of any condition of such permit relating to the route on which or

the area in which or the purpose for which the vehicle may be

used, if contravened, would amount to violation of permit and

not every contravention or violation of condition of permit

issued by the Transport Authority would amount to violation of

permit.

4 From the above referred ratios, it becomes clear that it is for

the insurer to verify before insuring the vehicle, as to whether

vehicle is having valid permit or not and, if insurer having

insured the vehicle without valid permit, it cannot seek

exemption from liability afterwards.

5 If it is found that owner has violated terms of the policy,

Tribunal can pass an order exonerating insurer but may also

pass and order of 'pay and recover'.

6 Recently Hon'ble Supreme Court in the case of Amrit Paul

Singh v/s. Tata AIG G I Com., reported in 2018 ACJ 1768 (SC)

has held that when there is no permit, IC can be exonerated but

order of Pay and Recover can be passed.

Therefore, the crux is, when IC has proved that there was no

permit, IC can't be held responsible to indemnify the Insured but

Tribunal can pass an order of Pay and Recover.