Case Title: Shri Binod Kumar Singh Versus National Insurance Company Ltd.
Citation : 2025 LiveLaw (SC) 171
The Supreme Court held that insurers cannot deny claims solely due to non-renewal of a state permit if a valid national permit is in place. The Court clarified that if a vehicle catches fire within its registered state, non-payment of authorization fees for a state permit would not invalidate the claim.
The Court added that the authorization fee for renewal of state permit is only necessary when the vehicle is moved outside the State. Since the vehicle caught fire in its registered state (Bihar), the insurance company cannot deny the claim citing lack of renewal of state permit when national permit is in existence.
The Court rejected the insurance company’s argument that non-payment of authorization fees for the state permit invalidates the existing national permit for securing insurance claims. Instead, it said that a National Permit remains valid even if an authorization fee is not paid, provided the vehicle is used within its home state
A bench of Justices B.V. Nagarathna and S.C. Sharma heard the case in which the appellant’s insurance claim for his Bihar-registered truck, which caught fire on June 8, 2014, due to an electrical short circuit during the policy’s validity, was denied by the insurance company on the grounds that the truck’s national permit had expired and was not renewed.
The Appellant filed a complaint before the State Consumer Disputes Redressal Commission, Bihar, Patna, which directed the Respondent to settle the claims of the Appellant.
In an appeal, the National Consumer Disputes Redressal Commission (NCDRC) overturned the State Consumer Forum’s decision holding that the insurance claim cannot be allowed in the absence of any valid permit.
Following this, the Appellant appealed to the Supreme Court.
Before the Supreme Court, the appellant argued that the All India Permit (National Permit) was issued with having validity period with effect from 14.10.2012 to 13.10.2017, and for the State of Bihar, the permit was in force from 13.10.2012 to 13.10.2013 meaning thereby, on the date the truck caught fire on 08.06.2014, there was a valid National Permit in existence.
Opposing the appellant’s claim, the insurance company argued that while the national permit fee was paid for the period from 13.10.2012 to 13.10.2017, the authorization fee for the state permit was not paid beyond 14.10.2013. Therefore, they contended that without the renewal of the state permit, the national permit could not be considered valid.
Upon hearing parties at length, the judgment authored by Justice SC Sharma noted that because the national permit of the Appellant’s truck was valid, the insurance company could not deny the claim merely because the authorization fees for the state permit were not paid.
Noting that the incident took place in the vehicle’s registered state and having a valid national permit during the insurance period, the Court stressed that the lack of an updated authorization fee for a state permit did not invalidate the national permit.
“This Court has carefully gone through the permit which is on record and the National Permit is certainly valid up to 13.10.2017. The authorization fee was required to be paid only when the truck was moving out of State of Bihar as it was registered in the State of Bihar and the truck caught fire on account of short-circuit on 08.06.2014 in the State of Bihar itself and, therefore, the respondent company could not have repudiated the claim on such a frivolous ground. The permit in question was issued by the competent authority in Bihar and, therefore, there was no requirement of paying authorization fee when the truck was being used in the State of Bihar and as per the terms and conditions of the National Permit, authorization fee was required to be paid only when the truck was moving out of State of Bihar.”, the court observed.
“Thus, in the considered opinion of this Court, the appellant was certainly entitled for the insurance claim as held by the State Commission and, therefore, the order passed by the National Commission, dated 19.08.2020, deserves to be set aside and is accordingly set aside.”, the court added.
Accordingly, the appeal was allowed.
