Kaushalpati Pandey v. New India Ass. Co. Ltd.

1. These appeals impugn the award of compensation dated 17.01.2019 passed by the learned MACT in Suit Nos. 111/17& 236/17,insofar as the right to recover the paid compensation amount has been granted to Signature NotVeritled DigilalivsignoLvlAMLaSH KUMAR y Signini!Date:!1.11.2020 I[7]:')0:0I —' 2020:DHC:3974 the insurer. The fitness certificate of the insured vehicle lapsed on 05.01.2017. The accident occurred on 22.01.2017, on which date there was no fitness certificate nor had an application been made for its renewal prior to the accident. The fitness certificate was subsequently revalidated/renewed only on 08.02.2017, i.e., more than a month after its lapse.' The insurance policy clearly stipulated that the vehicle must always be plied with a valid fitness certificate. That condition not being met;the insurer was right in seeking to repudiate the claim. However,under the policy ofpay and recover,the insurer was asked to first pay and then recover the said monies from the vehicle owner.

2. The leamed counsel for the appellant submits that non-possession ofa fitness certificate is not a ground of defence under Section 149(2)'of the Motor Vehicles Act, 1988.

3. The Court is ofthe view that the issue concerns a fundamental breach ofthe insurance contract. An insurer issues a policy in the strict terms stipulated therein. Its undertaking to indemnify possible losses, is linked to the premium charged, which in turn is based on complex actuarial expertise. The conditions imposed in the policy are rooted in constant prudent measures to be observed to minimise losses. Fitness Certificate for a motor vehicle is one such prudent measure. For a policy holder to say that the policy will cover the insurer de hors the specific conditions imposed therein, would be to negate the fundamentals ofthe contract.

4. Furthermore,a Full Beneh ofthe High Court ofKerala in RamankuUy

V. Pareed Pillai, 2018 SCC OnLine Ker 3542, MACA.No. 1414 of

DigitallysiiuiCi^vXAMLliSH KUMAR " ■ y Signinu Date:!1.11.2020 17:40:01 —' 2013, has held that non-possession of a fitness certificate was a foundational breach of the contract as well as a breach of statutory provisions. Therefore,the policy would not extend to a compensation claim where the fitness certificate of the insured vehicle was not available.It held inter alia as under:

1. Does the lawdeclared by a Full Bench of this Court in Augustine V.M. v. Ayyappankutty @ Mani,[2015 (2)KLT139]stand correct in declaring that, the absence of 'Permit' or 'Fitness Certificate' to the transport vehicle is only a 'technical breach'and not a 'fundamental breach', in sofar as it stands contrary to the law declared by the Apex Court in National Insurance Company v. Challa Bharathamma,[2004 (3) KLT 454][name ofthe case has been subsequently corrected as per the Official Corrigendum No. F.3/Ed.B.J./96/2004 dated 01.12.2004 as National Insurance Company v. Challa Upendra Rao [(2004)8see517)].For having not made even a reference to the decision ofthe Apex Court, is not the above verdict liable to be declared as 'per incurium'? Has the Full Bench considered all the relevant provisions under the Motor Vehicles Act, 1998,[referred to as the 'Act'for short], as to the necessityfor having a 'Fitness Certificate'to the vehicle (in view of public safety), the necessity to have valid 'Permit, necessity to have 'Certificate ofRegistration'to ply _ the vehicle and 'deemed absence of Registration', if the vehicle is not having a valid Permit/Fitness Certificate as envisaged underSection 56ofthe M.V. Act?" These were the questions raised and referred by a Division Bench ofthis Court asper the reference order dated 23.12.2015, pointing out, the necessity to have the matter considered by a Bench ofappropriate strength.

14. Fitness ofthe vehicle to be plied on the road as a 'transport vehicle' is very important, especially in relation to the lives and limbs ofthepersons travelling in the vehicle, the pedestrians, other vehicles and properties ofpersons Signatiyre NotVerified Digitallysmncd By^AMLESH KUMAR Signing Date:1 1.11.2020 € who are also using the road. It is with this intent, that a specific provision has been incorporated under the Statute as Section 84, prescribing the general, conditions attached to allpermits. Clause(a)ofSection 84reads asfollows:

84. General conditions attaching to all permits-The followingshall be conditions ofeverypermit— (a) that the vehicle to which the permit relates carries valid certificate offitness issued under section 56 and is at all times so maintaind as to comply with the requirements of this Act and the rules made thereunder;

15. It is pertinent to note, that power is conferred upon the Transport Authority who has granted the 'Permit' to cancel the Permit or suspend the same on the grounds specified under Section 86; among which Clause (a) is in respect ofthe breach involving any conditions specified in Section 84 or any condition contained in the Permit. Section 86(l)(a) and (c), to the extent, it is relevant here, is extracted below:

86. Cancellation andsuspension ofpermits— (1) The Transport Authority which granted a permit may cancel the permit or may suspend itfor such period as it thinicsfit— (a)on the breach ofany condition specified in section 84or ofany condition contained in thepermit,or (b)xxxxx

(c) if the holder of the permit ceases to own the vehicle covered by thepermit, or

16. As mentioned above,fitness of a vehicle, to be used as a transport vehicle, is ofparamountimportance. The necessity to have 'Fitness Certificate' is prescribed under Section 56 ofthe Act. Sub-section (I) ofSection 56 clearly stipulates that, a transport vehicle[subject to theprovisions ofSection 59(power tofix the age limit ofmotor vehicle) and Section 60(registration ofthe vehicles belonging to the Central Government)] shall not be deemed to be validly Digitallysmncd By^AMLESH KUMAR Signing Date:!!.!I.202U registeredfor the purpose ofSection 39, unless it carries a 'Certificate ofFitness' as prescribed. By virtue ofSection 84(a), as mentioned already, it is a mandatojy requirement ofeveiy Permit, that the vehicle to which the Permit relates, shall carry valid 'Certificate of Fitness' issued under Section 56 at all time, absence ofwhich will automatically lead to a situation that the vehicle will not be deemed as having a Permit[ifit is not having a 'Fitness Certificate'on a given date]. Using a motor vehicle in an unsafe condition in any publicplace itselfis an offence under Section 190 of the Act. Separate penalty is prescribed under Section 192 for driving or using the motor vehicle in contravention of Section 39 ofthe Act[i.e. without registration]; which at the first instance by fine upto Rs. 5000/- [not less than Rs. 2000/-]andfor the second orsubsequent offences, it may be with imprisonment, which may extend to one year orfine iipto Rs. 10,000/-[not less than Rs. 5000/-]or with both; of course, conferringpower upon the Court to impose a lesser punishment,for reasons,to be recorded. Similarly, separate punishment is providedfor using vehicles without 'Permit' asprovided under Section 192A [first offence withfine upto Rs. 5000/- which shall not be less than Rs. 2000/- andfor any subsequent offence with imprisonment upto one year [which shall not be less than 3 months or withfine upto Rs. 10,000/- which shall not be less than Rs. 5000/-] or with both; here again conferring power on the Court to impose lesser punishment,for reasons to be recorded. Reference is made to the above provisions only to illustrate the utmost requirement to have a valid 'Registration, Permit and Fitness Certificate'

18. The stipulations under the above provisions clearly substantiate the importance and necessity to have a valid Fitness Certificate to the transport vehicle at all times. The above prescription converges on the point that Certificate of Registration, existence of valid Permit and availability ofFitness Certificate, all throughout, are closely Interlinked In the case of a transport vehicle and one Signature^ot^Verified AMLESH Digilallvsmimi^y^A KUMAR • y sigiic^Bv^A requirement cannot be segregated from the other. The transport vehicle should, be completelyfit and road worthy, to beplied on the road, which otherwise may cause threat to the lives and limbs ofpassengers and the general public, apartfrom damage to property. OnlyIfthe transport vehicle is having valid Fitness Certificate, would the necessary Permit be issued In terms ofSection 66 ofthe Act and by virtue of the mandate ■ under Section 56 of the Act, no transport vehicle withoutFitness Certificate will be deemed as a validly registered vehiclefor the purpose ofSection 39 ofthe Act, which stipulates that nobody shall drive or cause the motor vehicle to be driven without valid registration in public place or such other place, as the case may be. These requirements are quite fundamental' in nature; unlike a case where a transport vehicle carrying more passengers than the permitted capacity or a goods carriage canying excess quantity ofgoods than the permitted extent or a case where a transport vehicle was plying through a deviated route than the one shown in the route permit which instances could rather be branded as 'technical violations'. In other words, when a transport vehicle is not having a Fitness Certificate, it will be deemed as having no Certificate of Registration and when such vehicle is not havingPermit or Fitness Certificate, nobody can drive such vehicle and no owner can permit the use ofany such vehicle compromising with the lives, limbs, properties oj the passengers/general public. Obviously, since the safety of passengers and general public was ofserious concern and considerationfor the law makers, appropriate and adequate measures were taken byincorporating relevantprovisions in the Statute, alsopointing out the circumstances which would constitute offence; providing adequate penalt}>. This being the position, such lapse, ifany, can only be regarded as a fundamental breach and not a technical breach and any interpretation to the contrary, will only negate the intention ofthe law makers.

22. The question whether absence ofvalid Permit to a Digiliilly smncclBv^AMLESH KUMAR ^ ' Signing Date;11.11.2020 • 17:40:01 transport vehicle at the time ofaccident is a fundamental breach' or a 'technical breach' had come up for consideration again before the Apex Court recently in Amrit paul Singh v. TATA AIG GeneralInsurance Co. Ltd.,[2018 (3)KHC197]. Thefactual matrix in the said case is that, the rider ofthe motor cycle,was knocked down to death by the offending truck on 19.02.2013, which led to the claim petition preferred by the legal heirs. The claim was resisted by the insurer, mainly contending that there was violation of policy conditions in sofar as the offending truck was not having a valid Permit and the driver was not having a valid driving licence. Based on the materials on record and placing reliance on the verdictpassed by the Apex Court in Challa Upendra Rao's case[citedsupra], the Tribunal, after fixing the quantum ofcompensation, directed the insurer to satis]'the same, with liberty to have it recoveredfrom the insured. The saidfinding and reasoning came to be affirmed by the High Court, in turn leading to theproceedings before the Apex Court. After exhaustive discussion on the relevant provisions oflaw including Section 2(28), 2(31), 2(47), 66, 149 and 166ofthe M.V. Act1988 and the variousfiidgments rendered by the Apex Court at different points of time, including in National Insurance Co. Ltd. v. Swaran Singh [(2004)3see 297]and Challa Upendra Rao's case[cited supra], the Apex Court held that the offending truck was not having a validPermiton the date ofaccident; which was not a technical breach to attract the dictum in Swaran Singhs' case[citedsupra][where also right ofrecoveiy was held as conferred,on the insurer,once the breach was established by the insurer]. It was also observed that, it was not a case where any ofthe exceptions undersub-section(3)ofSection 66 was attracted andfurther that, existence ofa Permit of any nature was matter ofdocumentary evidence. The Bench held that the exceptions carved out under Section 66(3) of the Act are to be pleaded and proved by the insured/owner and this burden cannot be shifted to the shoulders o]the insurer. It has accordingly been declared that, the use o]a transport vehicle in a public place without Permit is a Digilallysiuiicd Bv^AMLBSH KUMAR ^ X Signing Date:!1.11.2020 i[7]:40;01 ' fundamental/statutory infraction and the principles laid down in Swaran Singh's case [cited supra] and Lakshmi Chand v. Reliance General Insurance[(2016) 3 SCC 100] cannot be applicable in this regard. The Apex Court held, in such circumstances, that the verdict passed by the High Court affirming the stand of the Tribunal directing the insurer to satisfy the liability and. to have it recoveredfrom the owner/insured was in consonance with the principles stated in Swaran Singh's case[cited supra]and other cases pertaining to 'pay and recoverprinciple'.From the above, it is quite evident that the law stands settled by the Apex Court asper the decision Challa Upendra Rao'case[cited supra] and the latest ruling in AmritpauTs case[cited supra]. This being the position, the dictum laid down by the Full Bench ofthis Court in Augustine V.M. v. Ayyappankutty @ Mani [cited supra] holding that the absence of valid Permit or Fitness Certificate is not a fundamental breach, but a technical breach and that no right ofrecovery can be given to the insurer is not at all correct. It accordingly stands overruled. Consequently, the dictum in Tharas case [cited supra] is restored and the contrary view expressed in Sethunaths case[citedsupra]stands declared as incorrect."