Insurance company can recover compensation from vehicle owner who lacks permit during accident: Delhi High Court

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The Delhi High Court recently held that in motor accident cases, the insurance company would be entitled to recover compensation (paid to the claimants) from a transport vehicle’s owner if the owner does not hold a valid and effective permit when the accident takes place. [Gurmeet Singh Vs The New India Assurance Company Ltd & Ors]
Justice Navin Chawla said that such a right would also be available to the insurance company when the vehicle involved in the accident is being operated at a place for which it does not have a valid permit.

The Court gave the ruling while deciding on an appeal by a vehicle owner against a Motor Accidents Claims Tribunal (MACT) decision.

In the MACT ruling, the New India Assurance Company was given the right to recover compensation from the vehicle owner on the ground that he did not have a permit to drive the vehicle in Delhi on the date of the accident.

Challenging the MACT decision, the vehicle owner argued that plying the vehicle beyond the route of the permit was not a fundamental breach of the conditions of the insurance policy.

The question before the Court was whether the insurance company was entitled to recover compensation from the vehicle owner when the accident occurred at a place beyond the route for which the vehicle had been granted a permit under Section 66 of the Motor Vehicles Act.

After looking into provisions of the Motor Vehicles Act, the Court concluded that “route/area/region” is a prime consideration and an essential condition of a permit. The same is sacrosanct, functional, and fundamental, the Court said.

“Driving of the offending vehicle in an area or on a route which is not permitted by a Permit would, therefore, amount to driving the motor vehicle without a valid Permit and shall be a fundamental breach of the conditions of an insurance policy,” the Court proceeded to hold.

It also referred to recent findings of the Supreme Court in Gohar Mohammed. v. Uttar Pradesh State Road Transport Corporation and Others.

The High Court observed that in the said case, the top court had said that even if there was a valid permit, the vehicle owner would be liable to pay compensation for an accident if the vehicle is plied in a route where the permit is not applicable.

Justice Chawla added that a contrary ruling in an earlier Punjab and Haryana High Court case (in M.S. Middle High School & Anr. v. Usha and Ors), could no longer be treated as good law in view of the subsequent judgments of the Supreme Court.

Justice Chawla, therefore, upheld the New India Assurance Company’s right to recover compensation from the vehicle owner in the present case since the offending vehicle had a valid permit only for Uttar Pradesh and not Delhi.

“This would, therefore, be a case of the offending vehicle being driven without a valid Permit at the time of the accident,” the Court said, while dismissing the vehicle owner’s appeal.

Advocates Rachit Mittal, Megha Tyagi, Parish Mishra and Adarsh Srivastava represented the appellant (vehicle owner).

Advocates Salil Paul, Sahil Paul and Mayank Jain represented the respondent (insurance company).

Advocate Ankit Virmani assisted the Court as amicus curiae.

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