1. This First Appeal From Order has been filed by the Oriental Insurance Company Limited (for short 'Company') under Section 173 of the Motor Vehicles Act, 1988 (for short 'Act') challenging the judgment and award dated 30.8.2013 passed by the Motor Accident Claims Tribunal/ Additional District Judge, Court No.9, Lucknow in Motor Accident Claim Petition No. 344 of 2011 (Smt. Roop Rani v. Pawan Kumar and another) whereby and whereunder the Tribunal has awarded compensation of Rs.1,32,272 along with interest at the rate of 6% per annum.
2. Smt. Roop Rani, the claimant in the original claim, and respondent no. 1 herein, filed a claim petition. According to her, on 8.3.2011, she was going from Mullahi Khera to her village Rahimpur. While she was waiting for a tempo near Scooter India Crossing, at about 10:30 AM, a DCM Truck No. UP 17A 8562 hit her, as a result of which, she suffered grievous injuries and she became 100% invalid.
3. Pawan Kumar, respondent no. 2 herein, admitted that he was the owner and driver of the offending vehicle. He denied the factum of accident. It was, however, asserted on his behalf, that the vehicle was insured with the Oriental Insurance Company Ltd as per the insurance policy, and that the vehicle was registered and he had the requisite driving licence. The insurer, the appellant 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 that the driver was not having a valid and effective driving licence and, therefore, it was not obliged to indemnify the insured.
4. The Tribunal after taking into account the oral and documentary evidence on record held that the claimant was entitled to compensation of Rs. 1,32,272 along with 6% interest from the date of accident till the time of actual payment. While allowing the claim petition the Tribunal categorically held that, on the date of the accident, the respondent no.2 did not have a valid fitness certificate for the offending vehicle. The Tribunal, however, held that the absence of a fitness certificate was not one of the defences available to the Insurer under Section 149 of the Act and that the insurer had not led any evidence to establish that the offending vehicle was not fit for plying. In the circumstances, it was held that the Insurer could not be absolved of its liability to indemnify the insured and accordingly directed the appellant to indemnify the respondent no. 2. The relevant portion of the judgment is extracted below:
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(emphasis supplied)
5. The appeal has been taken up for hearing in the revised list. The respondent no. 2 though served, remains unrepresented.
6. In support of the appeal, Sri Rajeev Misra, the learned counsel for the appellant has contended that plying a vehicle without a valid fitness certificate is a breach of a specific condition of the insurance policy and the Tribunal has grossly erred in holding otherwise. The counsel has submitted that in the absence of a valid fitness certificate, the indemnification of the claimants is the responsibility of the owner of the vehicle involved in the accident.
7. Sri R.P. Singh, the learned counsel for the claimant-respondent no. 1 has supported the impugned award and has, in the alternative, contended that the claimants should not be made to suffer for the inter se dispute between the appellant and respondent no. 2 with respect to their liability to pay the amount of compensation to the claimants. According to the learned counsel, the amount of compensation as directed by the Tribunal has to be released to the claimants and the appellant can realise the said amount from the owner of the vehicle in accordance with law.
8. Sections 2(28), 2(31) and 2(47) of the Act that define "motor vehicle" or "vehicle", "permit" and "transport vehicle" are reproduced below:
"2.(28) "motor vehicle" or "vehicle" means any mechanically propelled vehicle adapted for use upon roads whether the power of propulsion is transmitted thereto from an external or internal source and includes a chassis to which a body has not been attached and a trailer; but does not include a vehicle running upon fixed rails or a vehicle of a special type adapted for use only in a factory or in any other enclosed premises or a vehicle having less than four wheels fitted with engine capacity of not exceeding twenty-five cubic centimetres;
* * * (31) "permit" means a permit issued by a State or Regional Transport Authority or an authority prescribed in this behalf under this Act authorising the use of a motor vehicle as a transport vehicle * * * (47) "transport vehicle" means a public service vehicle, a goods carriage, an educational institution bus or private service vehicle.
9. Section 147 of the Act prescribes the requirements of policies and limits of liabilities whereas section 149 deals with the duty of insurer to satisfy judgments and awards against persons insured in respect of third-party risks. Sub-section (2) of Section 149 is extracted below:
"149. Duty of insurers to satisfy judgments and awards against persons insured in respect of third party risks.--
(1) .....
(2) No sum shall be payable by an insurer under sub-section (1) in respect of any judgment or award unless, before the commencement of the proceedings in which the judgment or award is given the insurer had notice through the Court or, as the case may be, the Claims Tribunal of the bringing of the proceedings, or in respect of such judgment or award so long as execution is stayed thereon pending an appeal; and an insurer to whom notice of the bringing of any such proceedings is so given shall be entitled to be made a party thereto and to defend the action on any of the following grounds, namely:--
(a) that there has been a breach of a specified condition of the policy, being one of the following conditions, namely:--
(i) a condition excluding 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 organised 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; or
(ii) a condition excluding 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
(iii) a condition excluding liability for injury caused or contributed to by conditions of war, civil war, riot or civil commotion; or
(b) that the policy is void on the ground that it was obtained by the non-disclosure of a material fact or by a representation of fact which was false in some material particular."
10. The grounds available to an insurer to contest the claim of the injured or heirs of the deceased, when it is only a noticee and not a party, are enumerated in sub-section (2) of Section 149 of the Act, whereas, under Section 170 of the Act, the insurer gets a right to contest the claim on all or any of the grounds that are available to the insured. In United India Insurance Co. Ltd. v. Shila Datta, (2011) 10 SCC 509, the Apex Court has held that if the insurer is only a noticee, it can only raise such of those grounds as are permissible in law under Section 149(2). But if he is a party-respondent, it can raise, not only those grounds which are available under Section 149(2), but also all other grounds that are available to a person against whom a claim is made.
11. Section 149(2)(a)(i) relates to a vehicle not covered by a permit to ply for hire or reward. Use of a vehicle in a public place without a permit or in violation of any condition thereof is a fundamental breach and in that contingency liability cannot be cast upon the insurer.
12. As per Section 39 of the Act a motor vehicle as defined under section 2(28) of the Act has to be compulsorily registered in accordance with the provisions of the Act before it is plied in a public place. Section 39 of the Act reads as under:
Section 39. Necessity for registration. - No person shall drive any motor vehicle and no owner of a motor vehicle shall cause or permit the vehicle to be driven in any public place or in any other place unless the vehicle is registered in accordance with this Chapter and the certificate of registration of the vehicle has not been suspended or cancelled and the vehicle carries a registration mark displayed in the prescribed manner:
Provided that nothing in this section shall apply to a motor vehicle in possession of a dealer subject to such conditions as may be prescribed by the Central Government.
(emphasis supplied)
13. Section 56 of the Act lays down that without a valid fitness certificate, a transport vehicle shall be deemed to be without registration. Relevant portion of section 56 reads as under:
Section 56. Certificate of fitness of transport vehicles. -
(1) Subject to the provisions of sections 59 and 60, a transport vehicle shall not be deemed to be validly registered for the purposes of section 39, unless it carries a certificate of fitness in such form containing such particulars and information as may be prescribed by the Central Government, issued by the prescribed authority, or by an authorised testing station mentioned in sub-section (2), to the effect that the vehicle complies for the time being with all the requirements of this Act and the rules made thereunder:
(emphasis supplied)
14. In Narinder Singh v. New India Assurance Co. Ltd., (2014) 9 SCC 324 the Apex Court has held that the use of a motor vehicle in a public place without any registration is a fundamental breach of the terms and conditions of a policy contract. Paragraph 12 of the said report is extracted below:
"12. Indisputably, a temporary registration was granted in respect of the vehicle in question, which had expired on 11-1-2006 and the alleged accident took place on 2-2-2006 when the vehicle was without any registration. Nothing has been brought on record by the appellant to show that before or after 11-1-2006, when the period of temporary registration expired, the appellant, owner of the vehicle, either applied for permanent registration as contemplated under Section 39 of the Act or made any application for extension of period as temporary registration on the ground of some special reasons. In our view, therefore, using a vehicle on the public road without any registration is not only an offence punishable under Section 192 of the Motor Vehicles Act but also a fundamental breach of the terms and conditions of policy contract."
(emphasis supplied)
15. As per section 66 of the Act a vehicle defined under Section 2(28) of the Act can only be used as a "transport vehicle" as defined under Section 2(47) of the Act, only if it has a "permit" as defined under Section 2(31) of the Act. Sub-section (3) of Section 66 of the Act carves out certain exceptions to sub-section (1). Relevant portion of Section 66 of the Act reads as under:
66. Necessity for permits.--(1) No owner of a motor vehicle shall use or permit the use of the vehicle as a transport vehicle in any public place whether or not such vehicle is actually carrying any passengers or goods save in accordance with the conditions of a permit granted or countersigned by a Regional or State Transport Authority or any prescribed authority authorising him the use of the vehicle in that place in the manner in which the vehicle is being used.
(emphasis supplied)
16. Section 84 of the Act lays down the general conditions attaching to all permits. As per Sub-section (a) of Section 84 of the Act every vehicle having a permit should have a valid certificate of fitness at all times. Relevant portion of section 84 reads as under:
Section 84. General conditions attaching to all permits. - The following shall be conditions of every permit--
(a) that the vehicle to which the permit relates carries valid certificate of fitness issued under section 56 and is at all times so maintained as to comply with the requirements of this Act and the rules made thereunder;
(emphasis supplied)
17. In National Insurance Co. Ltd. v. Challa Upendra Rao, (2004) 8 SCC 517, the Apex Court observed as under:
"12. The High Court was of the view that since there was no permit, the question of violation of any condition thereof does not arise. The view is clearly fallacious. A person without permit to ply a vehicle cannot be placed on a better pedestal vis-à-vis one who has a permit, but has violated any condition thereof. Plying of a vehicle without a permit is an infraction. Therefore, in terms of Section 149(2) defence is available to the insurer on that aspect. The acceptability of the stand is a matter of adjudication. The question of policy being operative had no relevance for the issue regarding liability of the insurer. The High Court was, therefore, not justified in holding the insurer liable."
(emphasis supplied)
18. In Amrit Paul Singh v. TATA AIG General Insurance Co. Ltd., (2018) 7 SCC 558 the Apex Court following Challa Upendra Rao (supra) has held that plying of a transport vehicle in a public place without a permit is a fundamental breach. Paragraph 12 of the said report being relevant is extracted below:
"24. 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 and Lakhmi Chand 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 that 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 and other cases pertaining to pay and recover principle."
(emphasis supplied)
19. In Ramankutty and another v. Pareed Pillai and another, 2018 SCC Online Ker 3542, a 5 Judge Bench of the Kerala High Court considered the question as to whether the absence of ''Permit' or ''Fitness Certificate' relating to a transport vehicle is only a ''technical breach' or a ''fundamental breach'. The Bench relying upon the dictum of the Apex Court in the case of Challa Upendra Rao held it to be a ''fundamental breach'. Paragraphs 16, 17 and 18 of the said report is extracted below:
"16. As mentioned above, fitness of a vehicle, to be used as a transport vehicle, is of paramount importance. The necessity to have ''Fitness Certificate' is prescribed under Section 56 of the Act. Sub-section (1) of Section 56 clearly stipulates that, a transport vehicle [subject to the provisions of Section 59 (power to fix the age limit of motor vehicle) and Section 60 (registration of the vehicles belonging to the Central Government)] shall not be deemed to be validly registered for the purpose of Section 39, unless it carries a ''Certificate of Fitness' as prescribed. By virtue of Section 84(a), as mentioned already, it is a mandatory requirement of every Permit, that the vehicle to which the Permit relates, shall carry valid ''Certificate of Fitness' issued under Section 56 at all time, absence of which will automatically lead to a situation that the vehicle will not be deemed as having a Permit [if it is not having a ''Fitness Certificate' on a given date]. Using a motor vehicle in an unsafe condition in any public place itself is an offence under Section 190 of the Act. Separate penalty is prescribed under Section 192 for driving or using the motor vehicle in contravention of Section 39 of the Act [i.e. without registration]; which at the first instance by fine upto Rs. 5000/- [not less than Rs. 2000/-] and for the second or subsequent offences, it may be with imprisonment, which may extend to one year or fine upto Rs. 10,000/- [not less than Rs. 5000/-] or with both; of course, conferring power upon the Court to impose a lesser punishment, for reasons to be recorded. Similarly, separate punishment is provided for using vehicles without ''Permit' as provided under Section 192A [first offence with fine upto Rs. 5000/- which shall not be less than Rs. 2000/- and for any subsequent offence with imprisonment upto one year [which shall not be less than 3 months or with fine upto Rs. 10,000/- which shall not be less than Rs. 5000/-] or with both; here again conferring power on the Court to impose lesser punishment, for reasons to be recorded. Reference is made to the above provisions only to illustrate the utmost requirement to have a valid ''Registration, Permit and Fitness Certificate'.
17. Importance of the fitness/road worthiness of a vehicle, right from the time of registration of the vehicle, is further discernible from Rule 47 of the Central Motor Vehicles Rules 1989 [referred to as Central Rules]. The said Rule deals with application for registration of motor vehicles, which, among other things, stipulates that it shall be accompanied by various documents. Under sub-rule (1)(g), it is mandatory to produce road worthiness certificate in Form 22 from the manufacturers [Form 22A from the body builders]. On completing the formalities/procedures, ''Certificate of Registration' is to be issued in terms of Rule 48 of the Central Rules in Form 23/23A, as the case may be. The said Rule contains a proviso, insisting that, when Certificate of Registration pertains to a transport vehicle, it shall be handed over to the registered owner only after recording the Certificate of Fitness in Form 38. Validity of the Certificate of Fitness is only to the extent as envisaged under Rule 62 of the Central Rules, which mandates, as per the proviso, that the renewal of a Fitness Certificate shall be made only after the Inspecting Officer or authorised Testing Station as referred to in sub Section 1 of Section 56 of the Act has carried out the test specified in the table given therein.
18. The stipulations under the above provisions clearly substantiate the importance and necessity to have a valid Fitness Certificate to the transport vehicle at all times. The above prescription converges on the point that Certificate of Registration, existence of valid Permit and availability of Fitness Certificate, all throughout, are closely Interlinked. In the case of a transport vehicle and one requirement cannot be segregated from the other. The transport vehicle should be completely fit and road worthy, to be plied on the road, which otherwise may cause threat to the lives and limbs of passengers and the general public, apart from damage to property. Only If the transport vehicle is having valid Fitness Certificate, would the necessary Permit be issued In terms of Section 66 of the Act and by virtue of the mandate under Section 56 of the Act, no transport vehicle without Fitness Certificate will be deemed as a validly registered vehicle for the purpose of Section 39 of the Act, which stipulates that nobody shall drive or cause the motor vehicle to be driven without valid registration in public place or such other place, as the case may be. These requirements are quite ''fundamental' in nature; unlike a case where a transport vehicle carrying more passengers than the permitted capacity or a goods carriage carrying excess quantity of goods than the permitted extent or a case where a transport vehicle was plying through a deviated route than the one shown in the route permit which instances could rather be branded as ''technical violations'. In other words, when a transport vehicle is not having a Fitness Certificate, it will be deemed as having no Certificate of Registration and when such vehicle is not having Permit or Fitness Certificate, nobody can drive such vehicle and no owner can permit the use of any such vehicle compromising with the lives, limbs, properties of the passengers/general public. Obviously, since the safety of passengers and general public was of serious concern and consideration for the law makers, appropriate and adequate measures were taken by incorporating relevant provisions in the Statute, also pointing out the circumstances which would constitute offence; providing adequate penalty. This being the position, such lapse, if any, can only be regarded as a fundamental breach and not a technical breach and any interpretation to the contrary, will only negate the intention of the law makers.
(emphasis supplied)
20. The facts of the present case have to be examined in the light of the above-settled proposition of law. The conclusion recorded by the Tribunal clearly shows that the accident occurred on 8.3.2011 and the respondent no. 2 failed to establish that on the date of accident the offending vehicle had a valid fitness certificate. It is not the case of the insured that the offending vehicle was covered by any of the exceptions mentioned in sub-section (3) of Section 66 of the Act. In the circumstances, in view of the settled legal position that absence of a fitness certificate amounts to the absence of a valid permit, the offending vehicle, in the present case, would be deemed to be without registration and without a valid permit and as such the liability cannot be imposed upon the insurer. The impugned award directing the appellant to pay the compensation is set aside.
21. The question now remains as to the direction to be issued in this case. Doctrine of "pay and recover" was considered by the Apex Court in the case of National Insurance Co. Ltd. v. Swaran Singh, (2004) 3 SCC 297. In the said case, the Apex Court examined the liability of the insurance company in case of breach of policy condition and held that in case of third-party risks, the insurer had to indemnify the compensation amount payable to the third-party and the insurance company may recover the same from the insured.
22. The view expressed in Swaran Singh (supra) has been followed by the Apex Court in National Insurance Co. Ltd. v. Laxmi Narain Dhut, (2007) 3 SCC 700, Premkumari v. Prahlad Dev (2008) 3 SCC 193. In Laxmi Narain Dhutt (supra) the Apex Court held as under:
"5. The decision in Swaran Singh case has no application to cases other than third-party risks and in case of third-party risks the insurer has to indemnify the amount and if so advised, to recover the same from the insured."
23. In view of the above there is no reason to deviate from the doctrine of "pay and recover" in the present case.
24. So far as the recovery of the amount from the owner of the vehicle is concerned, the insurance company shall recover as held in the decision in Oriental Insurance Co. Ltd. v. Nanjappan, (2004) 13 SCC 224 wherein the Apex Court held as under:
"8. ... For the purpose of recovering the same from the insured, the insurer shall not be required to file a suit. It may initiate a proceeding before the executing court concerned as if the dispute between the insurer and the owner was the subject-matter of determination before the Tribunal and the issue is decided against the owner and in favour of the insurer."
25. In view of the above discussion, the appeal is partly allowed. The impugned award directing the appellant to indemnify the owner - respondent no. 2 is set aside. The appellant is directed to pay the compensation along with accrued interest to the claimant-respondent no.1 and recover the same from the owner.
26. No order as to cost.
Order Date :- 26.11.2019 Pradeep/-