How to decide a claim petition, where insurer has taken a defence of violation of 'Permit' under motor vehicles Act:-

             

            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.

 

            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 Sub­

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. "

 

           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.

 

            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.

            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.

 

            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'.

 

            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.