Plying a vehicle without a permit is an infraction. Therefore, in terms of Section 149(2) M. V. Act, 1988 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.
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High Court was, therefore, not justified in holding the insurer liable, held Supreme Court of India in the case of National Insurance Company. Ltd. v. Chella Bharathamma. Since then, in motor TP claims, insurer resorted to frame an issue on permit in addition to driving licence to dispute liability while defending cases before Tribunal.
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A vehicle engaged by a group consisting of various peoples for a pilgrimage tour in the States of Karnataka and Tamil Nadu met with an accident on 27/07/1990 causing various death and injuries to the occupants. That the said vehicle is insured vide a Comprehensive Commercial Vehicle Insurance Policy from 31/03/1990 to 30/03/1991
Kamala Mangalal Vayani and others filed five applications for compensation before the Tribunal against death of Mangalal Vayani and injury to some of the occupants of the said vehicle. The owner-cum-driver had remained ex parte The Tribunal by a common judgment dated 16.5.1996 awarded Rs.21,61,965/- as compensation towards death of one Mangalal and in the rest four cases relate to injuries sustained awarded Rs.84,000/-, Rs.80,000/-, Rs.84,000/- and Rs.1,01,000/- respectively, as compensation, to be paid by the owner and insurer jointly and severally.
The insurer challenged the award by way of an appeal in Madras High Court contending that the insured vehicle did not have a permit to operate as a public service vehicle. Since, the insurance policy covered the use of the vehicle only under a `permit’ within the meaning of Motor Vehicles Act, 1988 or such a carriage falling under sub-section (3) of section 66 of the said Act; and that as the permit was not produced, the insurer could not be made liable.
The High Court, by its common judgment dated 5.10.2001 accepted the said contentions and set aside the judgment and awards of the Tribunal insofar as it made the insurer liable.
Being aggrieved, the claimants preferred an appeal before the Supreme Court of India.
On considering the facts, circumstances and evidence on record the Court held that the schedule to the insurance policy shows that the owner of the vehicle had paid in addition to the basic premium, additional premium to cover liability in respect of ten passengers as also the driver.
Once it was established that the vehicle was comprehensively insured with the insurer to cover the passenger risk, the burden to prove that it was not liable in spite of such a policy, shifted to the insurer.
It is further held that the claimants are not expected to prove that the vehicle had a valid permit, nor prove that the owner of the vehicle did not commit breach of any of the terms of the policy. It is for the insurer who denies its liability under the policy, to establish that in spite of the comprehensive insurance policy issued by it, it is not liable on account of the requirements of the policy not being fulfilled.
In this case, the insurer produced a certified copy of the proceedings of the Registering Authority and Assistant Regional Transport Authority, Bangalore, dated 7.7.1990 to show that the application for registration of the vehicle filed by the third respondent was rejected with an observation that it was open to the applicant to apply for registration in the appropriate class.
But that only proved that on 7.7.1990, the vehicle did not have a permit. But that does not prove that the vehicle did not have a permit on 27.7.1990, when the accident occurred.
In the circumstances, it was for the insurer to apply to the concerned transport authority for a certificate to show the date on which the permit was granted and that as on the date of the accident, the vehicle did not have a permit, and produce the same as evidence.
It failed to do so. On the contrary, the High Court committed an error in expecting the claimants to prove that the vehicle possessed a valid permit.
In view of the above the Apex Court held that there was no justification for the High Court to interfere with the judgment and awards of the Tribunal in the absence of relevant evidence and set aside the order of the High Court and restored the judgment and awards of the Tribunal.
However, the Court made it clear that the present Judgment will not come in the way of the insurer proceeding against the owner and recovering the amount paid by it to the claimants, in the event of the insurer being able to establish, in any suit it may choose to file against the owner, that there was violation or breach of the conditions of the insurance policy or that the vehicle was not covered by a permit on the date of the accident.
Thus now the law is well settled to the effect that onus to prove that the insured vehicle was being driven without a valid permit at the material time of accident is squarely on the Insurance Company which should be proved by way of obtaining necessary certificate from the concerned RTA and filing the same before the concerned Tribunal. Hence, mere allegation by insurer without necessary certificate from RTA shall be of no use.
As decided by the Supreme Court of India in the case of Civil Appeal No. 8221 to 8225 of 2002 between KAMALA MANGALAL VAYANI & ORS. v. M/S. UNITED INDIA INSURANCE CO. LTD.
 By Mr. M. K. Das, Published in The Insurance Times, October, 2010
