sitemapHome | Registration | Job Portal for CA's | Expert Exchange | Currency Converter | Post Matrimonial Ads | Post Property Ads
News shortcuts: From the Courts | News Headlines | VAT (Value Added Tax) | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing | GST - Goods and Services Tax
Latest Expert Exchange
From the Courts »
 M/s A Daga Royal Arts vs. ITO (ITAT Jaipur)
 Gagan Infraenergy Ltd vs. DCIT (ITAT Delhi)
 PCIT vs. Chawla Interbild Construction Co. Pvt. Ltd (Bombay High Court)
 All India Federation of Tax Practitioners vs. ITO (ITAT Mumbai)
  Suresh M. Jamkhindikar vs. ACIT (Bombay High Court)
  Suresh M. Jamkhindikar vs. ACIT (Bombay High Court)
 Mangammal @ Thulasi vs. T.B. Raju (Supreme Court)
 Mahabir Industries vs. PCIT (Supreme Court)
  Oriental Bank Of Commerce Vs. Additional Commissioner Of Income Tax
  Suresh M. Jamkhindikar vs. ACIT (Bombay High Court)
  Union of India vs. Pirthwi Singh (Supreme Court)

February, 20th 2014

%                      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
                              Respondent No.1.



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

present appeal.

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.

MAC.APP.708/2012                                           Page 6 of 7
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

MAC.APP.708/2012                                           Page 7 of 7
Home | About Us | Terms and Conditions | Contact Us
Copyright 2018 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Content Management System development CMS development Content Management Solutions CMS Solutions Content Management Services CMS Services CMS Software

Transfer Pricing | International Taxation | Business Consulting | Corporate Compliance and Consulting | Assurance and Risk Advisory | Indirect Taxes | Direct Taxes | Transaction Advisory | Regular Compliance and Reporting | Tax Assessments | International Taxation Advisory | Capital Structuring | Withholding tax advisory | Expatriate Tax Reporting | Litigation | Badges | Club Badges | Seals | Military Insignias | Emblems | Family Crest | Software Development India | Software Development Company | SEO Company | Web Application Development | MLM Software | MLM Solutions