United Insurance Company Ltd vs B Ugandar

THE Tata Sumo vehicle of respondent registered as Taxi Cab was insured with petitioner Corporation for a period of one year commencing from 11.11 .2000. It so happened that on 12.10.2001, while vehicle was taken by one Mr R.C. Prasad on hire, it met with an accident, colliding with tanker-lorry. The accident was so severe that while six occupants died, rest two survived persons sustained injuries. Vehicle being insured with Insurance Corporation, petitioner company was informed for assessment of damages. A Surveyor was deputed who examined damaged vehicle, assessed damages and submitted report. Respondent too, obtained quotation for repair of vehicle and his estimate for repairs was Rs. 5,74,500. Submitting quotation for repairs to Insurance Company, damages were claimed. However, Insurance Company repudiated claim which persuaded respondent to approach District Forum, for appropriate relief. Two-fold contentions were raised on behalf of petitioner Corporation, firstly that dispute being not a consumer dispute and secondly that when vehicle in question met with an accident, fitness certificate had already elapsed. Carriage of passengers on transport vehicle beyond sanctioned capacity was also taken to be a defence for dismissal of complaint. District Forum, analyzing evidence and taking into consideration pleadings of parties, negating contentions raised on behalf of petitioner Corporation, accepted claim, directing petitioner Corporation to pay a sum of Rs. 1,35,000 to respondent along with interest @ 12% p.a. from the date of repudiation of claim. Litigation cost of Rs. 4,000 was also awarded by District Forum. All these contentions which were also raised in Appeal did not find favour with State Commission and appeal was accordingly dismissed.

CONTENTIONS raised before Fora below are sought to be reiterated before us holding that since vehicle in question was a taxi-cab and thus a transport vehicle, it cannot ply on public road without satisfying relevant provisions of the M.V. Act, 1988, as for permit, fitness and registration of vehicle. State Commission did not find flaw with complaint, holding respondent to be a ''consumer'' assigning sound reasonings. While referring to provision of Section 56(1) of the M.V. Act, 1988 which are in following terms, learned Counsel for petitioner company would state that since vehicle was plying on a public road without current certificate of fitness, by legal fiction, vehicle be deemed to be without valid registration. "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 .... to the effect that the vehicle complies for the time being with all the requirements of this Act and the rules made thereunder."

TRUE it is that significance of holding a valid fitness certificate to ply vehicle on public road has been reiterated in provisions of Section 84 of M.V. Act, 1988 which requires that vehicle permit and valid certificate of fitness under Section 56 of M.V. Act is required to be maintained so as to comply with requirements of this Act and rules made thereunder. We are not oblivious of provisions of Section 66 also which enjoins that no owner of a motor vehicle shall use or permit use of vehicle as a transport vehicle in public place whether or not such vehicle is actually carrying any passenger or goods save in accordance with conditions of a permit granted or countersigned by a regional or state transport authority or any prescribed authority.

WE have referred these provision of the Act, as for rejection of claim, provision of these sections have been taken as a defence. Carriage of passengers beyond sanctioned capacity was also a defence for rejection of claim of respondent. Admittedly, due observations and fulfilment of terms and conditions of policy are condition precedent to fasten liability against insurer under policy.

AS noticed earlier, claim of respondent was repudiated by Insurance Company also on ground of respondent having violated policy conditions in the matter of carriage of passengers in vehicle. Admittedly, sanctioned capacity of vehicle was six persons against which there were eight occupants in vehicle. The presence of eight occupants in vehicle cannot possibly be disputed for the simple reason that out of eight passengers, six died, while two survived having suffered injuries. Though taking status of carriage of eight passengers against sanctioned capacity of six would not be construed as major violation or breach of conditions of policy, as merely lifting a person or two or three cannot be said to be a fundamental breach that owners should in all events be denied indemnification. The Hon''ble Apex Court almost in similar circumstances while dealing with issue in case of B.V. Nagaraju v. Oriental Insurance Company Ltd., Division Office Hassan, reported in II (1996) CPJ 28 (SC)=I (1997) ACC 123 (SC), held as follows: "The National Commission went for the strict construction of the exclusion clause. The reasoning that the extra passengers being carried in the goods vehicle could not have contributed in any manner, to the occurring of the accident, was barely noticed and rejected sans any plausible account, even when the claim confirming the damage to the vehicle only was limited in nature. We, thus, are of the view that in according with the Skandia''s case, the aforesaid exclusion term of the insurance policy must be read down so as to serve the main purpose of the policy, that is, to indemnify the damage caused to the vehicle, which we hereby do."

HENCE, the controversy raised by Insurance Company about use of vehicle contrary to the terms and conditions of policy as for capacity of vehicle for sitting of passengers had been set at rest following decision of Hon''ble Apex Court referred to above (supra). Though two-Member Bench of this Commission, in a similar matter of violation of provisions of M.V. Act, 1988 for plying vehicle without valid fitness certificate held repudiation of claim to be valid, however, as company was willing to grant insured amount on an ex gratia basis, regard being had to the situation and also that vehicle carrying school children had suffered damages, Insurance Company was directed to pay insured amount to the respondent/complainant. Almost in the same backdrop when a claim was repudiated by Insurance Company for there being no valid certificate of fitness, a three-Member Bench of this Commission in case of G. Kotha Inachiar v. United India Insurance Company Ltd., reported in IV (2007) CPJ 347 (NC), held repudiation bad and directed Insurance Company to honour claim of petitioner/complainant. However, for appreciation of ratio of decision of case of G. Kotha Inachiar v. United India Insurance Company Ltd. (supra), we may notice that in that case though insured was having fitness certificate with regard to vehicle till 30.5.1995, there was no fitness certificate beyond the aforesaid period and during this very period the accident took place on 22.6.1995. National Commission for holding repudiation of claim, took into notice the short period beyond which the vehicle did not have fitness certificate and also there being inspection report of RTO that vehicle was in good condition for it being plied at the time of accident.

A combined and harmonious reading of provision of Section 84 of M.V. Act read with Sections 39, 59 and 60 would show that transport vehicle was required to have a fitness certificate impliedly for safety of passengers or goods. These are statutory requirements of M.V. Act, 1988 in violation of which, vehicle was put to use on road. Authority of Insurance Company to resist claim of the insured taking recourse to provisions of Section 149(2)(a)(i) was held to be valid by Hon''ble Apex Court in case of National Insurance Company Ltd. v. Challa Bharathamma and Ors., V (2004) SLT 825=III (2004) ACC 292 (SC)=(2004) 8 SCC 517, there being violation of statutory requirements of the Act. Fora below was in error in upholding claim by respondent, which is not sustainable. Revision petition in the circumstances succeeds, however, with no order as to cost. Revision Petition allowed.