New India Assurance Co. Ltd vs Akali Das & Ors

By consent of parties the appeals are taken up for final disposal as it involved the common questions of law.

Both the appeals are founded on a primary legal point as to whether the Insurance Company is absolved of its liability to pay compensation under the Motor Vehicle Act, 1988, if the offending vehicle was plied without any valid route permit.

We have invited the respective counsels to address before us without venturing to follow the procedures pertaining to bringing the Lower Court Records and filing of the paper books.

We would proceed on an undisputed fact that the offending vehicle did not have the valid route permit on the date of the accident.

Mr. Pahari, learned counsel appearing on behalf of the Insurance Company, submits that Section 66 of the Motor Vehicle Act, 1988 mandates that no owner of a motor vehicle shall use or permit the use of the vehicle as a transport vehicle in any pubic place whether or not such vehicle is actually carrying any passengers or goods save in accordance with the conditions or a permit granted or countersigned by a Regional or State Transport Authority or any prescribed authority and, therefore, the Insurance Company cannot be made responsible to pay the compensation in this regard as the compensation is required to be paid by the owner of the offending vehicle.

It is no doubt true that Section 66 of the Act forbids any owner to ply the motor vehicle as transport vehicle unless the permit is granted by the competent authority. However, sub-section (3) of Section 66 of the Act carves out an exception to the enabling provisions, which could be evident from the opening sentence used therein, clearly suggesting that the provisions contained under sub-section (1) of Section 66 shall not apply in such conditions.

We are not unmindful of the right of the Insurance Company to take a defence available under Section 149 (2) of the said Act, which includes the defence of invalid or no permit to the transport vehicle. There is a distinction between the right to defence and the liability to pay compensation under the said Act. The defence, which is available under the statutory provision, if taken cannot be treated as sacrosanct unless it is proved by cogent and convincing materials brought in course of the evidence. Naturally, if the transport vehicle is plied by the owner without a valid permit, it is definitely a statutory infraction and the consequences provided therefor shall follow.

The identical point came up for consideration before the Supreme Court in case of Amrit Paul Singh & Anr -vs- TATA AIG General Insurance Company Ltd. & Ors reported in 2018 SAR (Civil) 768 and an argument was advanced that there is a clear distinction between a route permit under Section 66 of the Act and the word 'permit' used in Section 149 (2) of the Act. But the Apex Court without answering the same noticed that a Three Judge Bench in case of National Insurance Company Ltd -vs- Swaran Singh and Others reported in 2004 (1) SCC 297 was confronted with the point of invalid driving licence and applied the principles of pay and recover. In penultimate paragraph the Apex Court though did not accept the ratio laid down in Swaran Singh and Others (supra), yet accepted the pay and recover principle as laid down in Swaran Singh and Others in these words :

"23. In the case at hand, it is clearly demonstrable from the materials brought on record that 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 other cases pertaining to pay and recover principle."

The ratio laid down in the above noted decision so emerged is that it is a liability of the owner to pay compensation in the event the vehicle met with an accident causing death or the disability but it is a primary liability of the Insurance Company to pay such compensation and thereafter recover the same from the owner. In the instant case the Tribunal found that the offending vehicle did not have the valid route permit yet the vehicle was being plied in the said route on the date of accident. The Tribunal did not advert to the decision rendered in Amrit Paul Singh & Anr (supra) or the Swaran Singh and Others (supra) which laid down the principle of pay and recover and directed the Insurance Company to pay the compensation to the claimants. Though we do not find the quantum of compensation, so determined by the Tribunal, to be erroneous, irrational or de hors the legal parameters. Yet we find that the Tribunal failed to discharge his duty in not granting liberty to the Insurance Company to recover the compensation to be paid to the claimant from the owner of the vehicle.

The impugned award is modified to the extent that the liberty is granted to the Insurance Company to proceed to execute the award against the owner and recover the amount of compensation paid or to be paid to the claimant thereunder without initiating a fresh proceeding against the owner.

It is now informed to us that the entire amount with interest had already been deposited with the Registrar General of this Court in terms of the orders passed in the instant appeals.

Mr. Pahari further submits that apart from the same a further sum of Rs. 25,000/- being the statutory amount had also been deposited in this Court.

The liberty is granted to the Insurance Company to withdraw the said amount, so deposited, in this Court.

The Insurance Company shall make an application within a week from date and the Registrar General is directed to release the amount, so deposited by the Insurance Company, within a week therefrom.

After withdrawing the amount, the Insurance Company shall transmit the same in the bank account of the claimants electronically provided the particulars whereof is given to Mr. Pahari within a week from date.

The said amount shall be transferred in the manner as indicated above within two weeks from the date of the receipt of the cheque issued in favour of the Insurance Company.

The time limit indicated above are peremptory and mandatory.

With these findings, both the appeals are thus disposed of.

There shall be no order as to costs.

Since both the appeals are disposed of, the connected applications become infructuous and disposed of.