CITY WATER SUPPLIER Vs. THE NEW INDIA ASSURANCE CO. LTD.
February, 20th 2014
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Judgment delivered on 12th February, 2014
+ MAC.APP. 708/2012
CITY WATER SUPPLIER ..... Appellant
Represented by: Mr. S.C. Singhal, Advocate.
THE NEW INDIA ASSURANCE CO. LTD. ..... Respondent
Represented by: Mr. Amit Kumar Singh and
Ms. K. Enatoli, Advocates for
HON'BLE MR. JUSTICE SURESH KAIT
SURESH KAIT, J.
1. The present appeal has been preferred against the impugned award
dated 14.05.2012, whereby the learned Tribunal granted compensation for a
sum of Rs.5,06,100/- with interest at the rate of 9% per annum from the date
of filing of the petition till realization of the amount.
2. The appellant is the owner of the offending vehicle and is aggrieved
with the direction passed by the ld. Tribunal that the permit Ex.R2W1/2 was
only for State of Haryana, however, there was no permit to ply the offending
MAC.APP.708/2012 Page 1 of 7
vehicle in Delhi. Accordingly, recovery rights were granted in favour of the
respondent No.1/Insurance Company and against the appellant. Hence, the
3. Learned counsel appearing on behalf of the appellant argued that the
owner and the driver of the offending vehicle did not appear before the
Tribunal, therefore, they were proceeded ex-parte. The respondent/Insurance
Company had filed written statement wherein in Para 2 it is stated that the
driver of the offending vehicle was not holding a valid or effective driving
licence or was otherwise disqualified from holding the same, thus, the
Insurance Company will not be liable to pay any compensation.
4. Learned counsel submitted that if after investigation other relevant
facts came to the knowledge of the respondent no1. / insurance company, it
reserves its right to file the amended written statement and sought leave to
take such other defences as are available under Section 149(2) of the Motor
Vehicles Act, 1988.
5. Learned counsel for the appellants further submitted that in the
Insurance Policy (Annexure-4) against the column "Limitation as to use" it
is mentioned that the policy covers use only under a permit within the
MAC.APP.708/2012 Page 2 of 7
meaning of the Motor Vehicles Act, 1988 or such a carriage falling under
Sub-section 3 of Section 66 of the Motor Vehicles Act, 1988.
6. Ld. Counsel argued that the non-compliance of the statutory
provisions alone cannot be a ground for giving recovery rights.
7. On the other hand, learned counsel appearing on behalf of the
respondent No.1/Insurance Company submitted that the appellant examined
Shri Jagbir Singh, its sole Proprietor, as R2W1, and proved original
insurance policy as Ex. R2W1/1 and permit issued by the Government of
Haryana effective from 21.06.2007 to 12.06.2012 as Ex. R2W1/2. As per
the aforesaid permit, the route or area of permit was Haryana State only.
8. He further submitted that on 10.06.2007 at about 10.00 a.m. the
offending vehicle, which is a water tanker No.HR-26-GA0884 belonging to
the appellant, reached at Sector 16A for supply of water to the local
residents. The driver of the offending vehicle parked the vehicle at Sector
16A, 60 feet, main road. At that time, the deceased along with his uncle
Banwari Lal had also gone to take water from the said vehicle and when the
deceased started taking water from the offending vehicle, suddenly, the
driver of the offending vehicle without blowing any horn or giving any
MAC.APP.708/2012 Page 3 of 7
signal or without taking any precaution moved the said tanker at a high
speed, rashly and negligently, as a result of which the deceased was crushed
under the left side rear wheel of the offending vehicle.
9. Ld. Counsel further submitted that there was no permit to ply the
offending vehicle in Delhi, thus, violated the terms and conditions of the
policy, therefore, the ld. Tribunal granted recovery rights against the
10. To strengthen his arguments, ld. Counsel relied upon the decision of
the Supreme Court in National Insurance Co. Ltd. Vs. Challa
Bharathamma and Others (2004) 8 SCC 517 wherein the Apex Court has
held as under:-
12. 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 at a better pedestal vis-`-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
insurer. High Court was, therefore, not justified in
holding the insurer liable.
MAC.APP.708/2012 Page 4 of 7
13. The residual question is what would be the
appropriate direction. Considering the beneficial
object of the Act, it would be proper for the insurer
to satisfy the award, though in law it has no liability.
In some cases the insurer has been given the option
and liberty to recover the amount from the insured.
For the purpose of recovering the amount paid from
the owner, the insurer shall not be required to file a
suit. It may initiate a proceeding before the
concerned Executing Court 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
11. I have heard the learned counsel for the parties.
12. It is legally significant to note the findings of the Apex Court in the
case of National Insurance Co. Ltd. v. Swarn Singh 2004 ACJ 1 , wherein
it is held as under:
"102. The summary of our findings to the various issues as
raised in these petitions are as follows:
(vi) Even where the insurer is able to prove breach on the part
of the insured concerning the policy condition regarding
holding of a valid licence by the driver or his qualification to
drive during the relevant period, the insurer would not be
allowed to avoid its liability towards insured unless the said
breach or breaches on the condition of driving licence is/ are so
fundamental as are found to have contributed to the cause of
the accident. The Tribunals in interpreting the policy conditions
would apply "the rule of main purpose" and the concept of
MAC.APP.708/2012 Page 5 of 7
"fundamental breach" to allow defences available to the
insured under section 149(2) of the Act."
13. In view of the above dictum in Swarn Singh (Supra), the alleged
deviations in the permit are not sufficient to exonerate from the liability.
The stipulations in the insurance policy are interpreted on the basis of two
concepts: rule of main purpose and fundamental breach. Therefore, there is
no wilful breach in terms of the insurance policy.
14. A similar issue came before this Court in the case of New India
Assurance Co. Ltd. Vs. Ram Partap & Ors. MAC. APP. 960/2011. The
facts of the case in hand are similar to this case, therefore, keeping in view
the decision of this Court in the above case; and also the view taken by the
Apex Court in Swarn Singh (Supra), non-permit to ply the vehicle in Delhi
cannot be the basis for grant of recovery rights because the said failure is not
fundamental in nature, whereas it is otherwise, as discussed above.
15. In view of the above, I am of the considered opinion that the ld.
Tribunal has wrongly granted recovery rights against the appellant. The
liability lies on the insurer, i.e, the Insurance Company, to pay the
compensation to the claimants.
16. Accordingly, the present appeal is allowed.
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17. Statutory amount, if any, be released in favour of the appellant.
CM. No.11530/2012 (stay)
With the dismissal of the appeal itself, instant application has become
infructuous and dismissed as infructuous.
SURESH KAIT, J.
FEBRUARY 12, 2014
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