AMRIT PAUL SINGH & ANR.versusTATA AIG GENERAL INSURANCE CO. LTD. & ORS.

838                       [2018]
               SUPREME COURT     6 S.C.R. 838
                              REPORTS                        [2018] 6 S.C.R.


A                        AMRIT PAUL SINGH & ANR.
                                         v.
            TATA AIG GENERAL INSURANCE CO. LTD. & ORS.
                          (Civil Appeal No.2253 of 2018)
B                                 MAY 17, 2018
             [DIPAK MISRA, CJI AND A.M. KHANWILKAR, J.]
             Motor Vehicles Act, 1988 – s.166 – Fatal accident – Truck of
      appellant No.2 hit the motorcycle of the victim as a result of which
      victim sustained multiple injuries and died – Claim for compensation
C
      before the MACT – Tribunal held that the insurer was not liable,
      however, directed the amount of compensation with interest to be
      paid by the insurer with direction to recover the same from the owner
      and driver of the vehicle – Held: It is clear from the materials brought
      on record that the vehicle at the time of accident did not have a
D     permit – Use of a vehicle in a place without a permit is a fundamental
      statutory infraction – Nothing was brought on record by the insured
      to prove that he had permit of the vehicle – In such a situation, the
      onus cannot be cast on the insurer – Therefore, the tribunal as well
      as the High Court had rightly directed the insurer to pay the
      compensation amount to the claimants with interest with stipulation
E
      that the insurer shall be entitled to recover the same from the owner
      and the driver – Doctrines/Principles – Pay and recover principle.
            Dismissing the appeal, the Court
            HELD: The insurer had taken the plea that the vehicle in
F     question had no permit. The existence of a permit of any nature
      is a matter of documentary evidence. Nothing has been brought
      on record by the insured to prove that he had a permit of the
      vehicle. In such a situation, the onus cannot be cast on the insurer.
      Therefore, the tribunal as well as the High Court had directed
      the insurer to pay the compensation amount to the claimants with
G     interest with the stipulation that the insurer shall be entitled to
      recover the same from the owner and the driver. The said
      directions are in consonance with the principles stated in Swaran
      Singh and other cases pertaining to pay and recover principle.
      [Para 23] [851-F-H]
H
                                        838
     AMRIT PAUL SINGH & ANR. v. TATA AIG GENERAL                       839
             INSURANCE CO. LTD. & ORS.

      National Insurance Co. Ltd v. Swaran Singh and Others            A
      (2004) 3 SCC 297 : [2004] 1 SCR 180 – relied on.
      National Insurance Co. Ltd. v. Challa Bharathamma and
      Others (2004) 8 SCC 517 : [2004] 4 Suppl. SCR
      587 ; Ashok Kumar Khemaka v. Oriental Insurance
      Company Ltd. and Others 2014 (3) RCR (Civil) 1018 ;              B
      National Insurance Company Limited v. Kamlesh Kaur
      and Others 2006 (3) RCR (Civil) 634 ; Moti Ram v.
      ICICI Lombard and Others 2015 ACJ 1793 ; United
      India Insurance Co. Limited v. Lehru (2003) 3 SCC
      338 : [2003] 2 SCR 495 ; Lakhmi Chand v. Reliance
      General Insurance (2016) 3 SCC 100 ; Oriental                    C
      Insurance Co. Ltd. v. Meena Variyal and Others (2007)
      5 SCC 428 : [2007] 4 SCR 641 ; HDFC Bank Limited
      v. Reshma and Others (2015) 3 SCC 679 ; Purnya Kala
      Devi v. State of Assam and Others (2014) 14 SCC 142
      – referred to.                                                   D
                       Case Law Reference
[2004] 4 Suppl. SCR 587          referred to          Para 3
2014 (3) RCR (Civil) 101         referred to          Para 4
2006 (3) RCR (Civil) 634          referred to         Para 4           E
2015 ACJ 1793                     referred to         Para 4
[2004] 1 SCR 180                  relied on           Para 12
[2003] 2 SCR 495                  referred to         Para 15
(2016) 3 SCC 100                  referred to         Para 18
                                                                       F
[2007] 4 SCR 641                  referred to         Para 18
(2015) 3 SCC 679                  referred to         Para 19
(2014) 14 SCC 142                 referred to         Para 19


      CIVIL APPELLATE JURISDICTION: Civil Appeal No. 2253              G
of 2018.
      From the Judgment and Order dated 10.08.2016 of the High Court
of Punjab and Haryana at Chandigarh in FAO No.1702/2016.

                                                                       H
840                SUPREME COURT REPORTS                      [2018] 6 S.C.R.


A           Sudhir Walia, Ms. Niharika Ahluwalia, Abhishek Atrey, Advs. for
      the Appellants.
           Amit Kumar Singh, Mrs. K. Enatoli Sema, Advs. for the
      Respondents.
                The Judgment of the Court was delivered by
B
             DIPAK MISRA, CJI 1. The legal representatives of the
      deceased, Jagir Singh, the husband of the second respondent, preferred
      a claim petition being MACT Case No. 70 of 2013 under Section 166 of
      the Motor Vehicles Act, 1988 (for brevity, ‘the Act’) before the Motor
      Accident Claims Tribunal, Pathankot (for short, ‘the tribunal’) claiming
C     compensation to the tune of Rs. 36,00,000/-. The claim petition was filed
      on the basis that on 19.02.2013, Jagir Singh was travelling to Pathankot
      on his motor cycle and at that juncture, the offending truck bearing
      temporary registration No. PB-06-6894 belonging to the appellant No. 2
      driven in a rash and negligent manner hit the motor cycle of the deceased
D     as a result of which he sustained multiple injuries, and eventually,
      succumbed to the same when being taken to the hospital. The claim put
      forth was sought to be sustained on many a basis which need not be
      adverted to.
             2. The insurer, the first respondent herein, opposed the claim on
E     the ground that the vehicle in question was driven in violation of the
      terms of the insurance policy and further the driver was not having a
      valid and effective driving license and, therefore, it was not obliged to
      indemnify the insured. That apart, a stand was taken that the vehicle did
      not have the permit on the date of the accident. On behalf of the owner
      of the vehicle and driver, assertions were made that the vehicle was
F     insured with the first respondent as per the insurance policy, that the
      vehicle was registered and the driver had the requisite driving licence.
      Additionally, copy of the route permit of the offending truck was brought
      on record.
             3. The tribunal noted that the vehicle was purchased in September
G     2012 and insured on 20.12.2012. It was registered on 26.02.2013. The
      accident, as stated earlier, occurred on 19.02.2013. The tribunal, placing
      reliance on the decision rendered by this Court in National Insurance
      Co. Ltd. v. Challa Bharathamma and others1, held that the insurer
      1
          (2004) 8 SCC 517
H
      AMRIT PAUL SINGH & ANR. v. TATA AIG GENERAL                              841
      INSURANCE CO. LTD. & ORS. [DIPAK MISRA, CJI]

was not liable and proceeded to quantify the amount of compensation            A
and determined the same at Rs. 15,63,120/-. The tribunal directed the
amount to be paid by the insurer along with interest at the rate of 9%
from the date of award till its realisation and recover the same from the
owner and driver of the vehicle. A further direction was given for
attachment of the truck in question till the award was satisfied.
                                                                               B
       4. The award dated 20.11.2014 passed by the tribunal was
challenged in FAO No. 1702 of 2016 before the High Court of Punjab
and Haryana at Chandigarh. It was contended in appeal that the appellant
No. 2, the owner of the offending vehicle, had deposited the necessary
fees along with application on 19.02.2013 for issue of route permit and
the same was issued on 27.02.2013. It was further urged that when the          C
owner of the vehicle had already submitted the documents in the transport
office for grant of permit along with the requisite fees, the tribunal was
in error in holding that the vehicle was being plied without a valid permit.
In support of the submissions, reliance was placed upon Ashok Kumar
Khemaka v. Oriental Insurance Company Ltd. and other2, National                D
Insurance Company Limited v. Kamlesh Kaur and others3 and Moti
Ram v. ICICI Lombard and others4.
       5. The High Court scrutinized Annexure A-1 which was filed to
justify the stand that the application for issue of the route permit was
made to the competent authority and, on a scrutiny of the same, came to        E
hold that the owner had not been able to establish that he had submitted
the application for issue of permit before the accident. Referring to
Section 66 of the Act and placing reliance on Challa Bharathamma
case, the High Court opined that even assuming that the owner had
already applied for grant of the permit before the accident, the same
would not entitle the owner to ply the vehicle. It is worthy to note that      F
the learned single Judge distinguished the decisions cited before him
and, resultantly, confirmed the award of the tribunal.
      6. We have heard Mr. Sudhir Walia, learned counsel for the
appellants, and Mr. Amit Kumar Singh, learned counsel for the
respondent-insurer.                                                            G
       7. The conclusions recorded by the tribunal and further confirmed
by the High Court clearly show that the accident occurred on 19.02.2013
2
  2014 (3) RCR (Civil) 1018
3
  2006 (3) RCR (Civil) 634
4
  2015 ACJ 1793                                                                H
842             SUPREME COURT REPORTS                            [2018] 6 S.C.R.


A     and the competent authority issued the permit on 27.02.2013. In this
      regard, Sections 2(28) and 2(31) of the Act that define “motor vehicle”
      or “vehicle” and “permit” are reproduced below:-
             “(28) “motor vehicle” or “vehicle” means any mechanically
             propelled vehicle adapted for use upon roads whether the power
B            of propulsion is transmitted thereto from an external or internal
             source and includes a chassis to which a body has not been attached
             and a trailer; but does not include a vehicle running upon fixed
             rails or a vehicle of a special type adapted for use only in a factory
             or in any other enclosed premises or a vehicle having less than
             four wheels fitted with engine capacity of not exceeding twenty-
C            five cubic centimetres;
             (31) “permit” means a permit issued by a State or Regional
             Transport Authority or an authority prescribed in this behalf under
             this Act authorising the use of a motor vehicle as a transport
             vehicle;”
D
             On a perusal of both the definitions, it is quite clear that a permit
      has to be issued by the competent authority under the Act for use of a
      motor vehicle as a transport vehicle. The emphasis is on the words “use”
      as well as “transport vehicle”.

E            8. Section 2(47) states that “transport vehicle” means a public
      service vehicle, a goods carriage, an educational institution bus or a private
      service vehicle. Section 66 stipulates necessity for permits. Sub-section
      (1) thereof provides that no owner of a motor vehicle shall use or permit
      the use of the vehicle as a transport vehicle in any public place, whether
      or not such vehicle is actually carrying any passengers or goods save in
F     accordance with the conditions of a permit granted or countersigned by
      a Regional or State Transport Authority or any prescribed authority.
      Various provisos have been appended to the main provision stipulating
      conditions for use of the vehicle and purpose of carriage of goods vehicle.
      Sub-section (2) states that the holder of a goods carriage permit may
G     use the vehicle for the drawing of any trailer or semi-trailer not owned
      by him, subject to such conditions as may be prescribed. It is necessary
      to mention here that a proviso has been added by Act 54 of 1994 with
      effect from 14.11.1994 allowing the holder of a permit of any articulated
      vehicle to use the prime-mover of that articulated vehicle for any other
      semi-trailer. Section 2(2) defines “articulated vehicle” to mean a motor
H     vehicle to which a semi-trailer is attached.
     AMRIT PAUL SINGH & ANR. v. TATA AIG GENERAL                                843
     INSURANCE CO. LTD. & ORS. [DIPAK MISRA, CJI]

        9. It is apt to note here that sub-section (3) of Section 66 carves     A
out certain exceptions to sub-section (1). The relevant part of sub-section
(3) is extracted below:-
      “(3) The provisions of sub-section (1) shall not apply—
      (a) to any transport vehicle owned by the Central Government or
      a State Government and used for Government purposes                       B
      unconnected with any commercial enterprise;
      (b) to any transport vehicle owned by a local authority or by a
      person acting under contract with a local authority and used solely
      for road cleansing, road watering or conservancy purposes;
                                                                                C
      (c) to any transport vehicle used solely for police, fire brigade or
      ambulance purposes;
      (d) to any transport vehicle used solely for the conveyance of
      corpses and the mourners accompanying the corpses;
      (e) to any transport vehicle used for towing a disabled vehicle or        D
      for removing goods from a disabled vehicle to a place of safety;
      (f) to any transport vehicle used for any other public purpose as
      may be prescribed by the State Government in this behalf;
      (g) to any transport vehicle used by a person who manufactures
                                                                                E
      or deals in motor vehicles or builds bodies for attachment to chassis,
      solely for such purposes and in accordance with such conditions
      as the Central Government may, by notification in the Official
      Gazette, specify in this behalf;
      (h)        x                x                  x                 x
                                                                                F
      (i) to any goods vehicle, the gross vehicle weight of which does
      not exceed 3,000 kilograms;
      (j) subject to such conditions as the Central Government may, by
      notification in the Official Gazette, specify, to any transport vehicle
      purchased in one State and proceeding to a place, situated in that        G
      State or in any other State, without carrying any passenger or
      goods;
      (k) to any transport vehicle which has been temporarily registered
      under section 43 while proceeding empty to any place for the
      purpose of registration of the vehicle;
                                                                                H
844                SUPREME COURT REPORTS                          [2018] 6 S.C.R.


A            (l)        x                 x                 x                  x
             (m) to any transport vehicle which, owing to flood, earthquake or
             any other natural calamity, obstruction on road, or unforeseen
             circumstances, is required to be diverted through any other route,
             whether within or outside the State, with a view to enabling it to
B            reach its destination;
             (n) to any transport vehicle used for such purposes as the Central
             or State Government may, by order, specify;
             (o) to any transport vehicle which is subject to a hire-purchase,
             lease or hypothecation agreement and which owing to the default
C            of the owner has been taken possession of by or on behalf of the
             person with whom the owner has entered into such agreement, to
             enable such motor vehicle to reach its destination; or
             (p) to any transport vehicle while proceeding empty to any place
             for purpose of repair.”
D
             10. In the case at hand, the findings would show that the appellant
      No. 2 did not have a permit for the vehicle. There is no dispute that the
      vehicle initially had a temporary registration and eventually the permanent
      registration. It is the stand of the appellants that the tribunal and the
      High Court did not appreciate that the chasis of the vehicle was sent to
E     the body where the body of the truck was fabricated and when the
      vehicle was driven out of the work shop at which point of time it met
      with an accident. A contention has been made that the insurance policy
      was in force at the relevant time and, hence, the insurer is legally obliged
      to indemnify the insured. A distinction has to be made between “route
F     permit” and “permit” in the context of Section 149 of the Act. Section
      149(2) provides the grounds that can be taken as defence by the insurer.
      It enables the insurer to defend on the ground that there has been breach
      of a specific condition of the policy, namely, (i) a condition that excludes
      the use of the vehicle, - (a) for hire or reward, where the vehicle is, on
      the date of the contract of insurance, a vehicle not covered by a permit
G     to ply for hire or reward, or (b) for organized racing and speed testing, or
      (c) for a purpose not allowed by the permit under which the vehicle is
      used, where the vehicle is a transport vehicle, or (d) without side-car
      being attached where the vehicle is a motor cycle. That apart, it also
      entitles the insurer to raise the issue pertaining to a condition that excludes
H
         AMRIT PAUL SINGH & ANR. v. TATA AIG GENERAL                              845
         INSURANCE CO. LTD. & ORS. [DIPAK MISRA, CJI]

driving by a named person or persons or by any person who is not duly             A
licensed or by any person who has been disqualified for holding or obtaining
a driving licence during the period of disqualification or that excludes
liability for injury caused or contributed to by conditions of war, civil war,
riot or civil commotion. A further defence that can be availed of by the
insurer is that the policy is void on the ground that it has been obtained
                                                                                  B
by non-disclosure of the material fact or by representation of act which
is false in the material particular.
       11. On a perusal of the written statement filed by the owner and
the driver, it is evident that the factum of accident having been caused
by the vehicle in question had been denied. That apart, there is also a
denial of liability that relates to the manner in which the accident had          C
occurred as alleged in the claim petition. It was the specific assertion of
the insurer before the tribunal that the vehicle was running in contravention
of the provisions of the Act, for it did not possess a route permit. The
tribunal, on the basis of the materials brought on record to the effect that
the route permit was issued on 27.02.2013 and the accident occurred on            D
19.02.2013, returned a finding that the vehicle in question did not have
the permit. As stated earlier, the High Court has affirmed the same.
       12. Learned counsel for the appellants would submit that in the
obtaining factual matrix, the breach would not exonerate the insurer
from satisfying the judgment and an award in terms of Section 149 of              E
the Act. He has drawn inspiration from the decision of a three-Judge
Bench in National Insurance Co. Ltd v. Swaran Singh and others 5.
In the said case, the Court was dealing with the interpretation of Section
149(2)(a)(ii) vis-à-vis the proviso appended to sub-sections (4) and (5)
of Section 149 of the Act. The issue centrally pertained to the necessity
of having a driving licence. After adverting to various provisions, the           F
Court also delved into the fundamental concept of third party right. Regard
being had to the nature of the beneficial legislation, the Court observed:-
          “39. The question as to whether an insurer can avoid its liability in
          the event it raises a defence as envisaged in sub-section (2) of
          Section 149 of the Act corresponding to sub-section (2) of Section      G
          96 of the Motor Vehicles Act, 1939 had been the subject-matter
          of decisions in a large number of cases.”

5
    (2004) 3 SCC 297
                                                                                  H
846                SUPREME COURT REPORTS                                 [2018] 6 S.C.R.


A            13. The Court posed the question as to whether an insurer can
      avoid its liability in the event it raised the defence as envisaged in sub-
      section (2) of Section 149 of the Act corresponding to sub-section (2) of
      Section 96 of the Motor Vehicles Act, 1939. The Court analysed the
      language employed in sub-section (2) of Section 149, specifically clause
      (a), and, after scrutinizing the same and referring to various authorities,
B
      opined:-
             “69. The proposition of law is no longer res integra that the person
             who alleges breach must prove the same. The insurance company
             is, thus, required to establish the said breach by cogent evidence.
             In the event the insurance company fails to prove that there has
C            been breach of conditions of policy on the part of the insured, the
             insurance company cannot be absolved of its liability. (See Sohan
             Lal Passi6)
             70. Apart from the above, we do not intend to lay down anything
             further i.e. degree of proof which would satisfy the aforementioned
D            requirement inasmuch as the same would indisputably depend upon
             the facts and circumstances of each case. It will also depend
             upon the terms of contract of insurance. Each case may pose a
             different problem which must be resolved having regard to a large
             number of factors governing the case including conduct of parties
             as regards duty to inform, correct disclosure, suppression, fraud
E            on the insurer etc. It will also depend upon the fact as to who is
             the owner of the vehicle and the circumstances in which the vehicle
             was being driven by a person having no valid and effective licence.
             No hard-and-fast rule can, therefor, be laid down. If in a given
             case there exists sufficient material to draw an adverse inference
F            against either the insurer or the insured, the Tribunal may do so.
             The parties alleging breach must be held to have succeeded in
             establishing the breach of conditions of the contract of insurance,
             on the part of the insurer by discharging its burden of proof. The
             Tribunal, there cannot be any doubt, must arrive at a finding on
             the basis of the materials available on records.
G
             71. In the aforementioned backdrop, the provisions of sub-sections
             (4) and (5) of Section 149 of the Motor Vehicles Act, 1988 may
             be considered as to the liability of the insurer to satisfy the decree
             at the first instance.
                       x                    x                        x
H     6
          Sohan Lal Passi v. P. Sesh Reddy and others, (1996) 5 SCC 21
     AMRIT PAUL SINGH & ANR. v. TATA AIG GENERAL                                847
     INSURANCE CO. LTD. & ORS. [DIPAK MISRA, CJI]

      83. Sub-section (5) of Section 149 which imposes a liability on the       A
      insurer must also be given its full effect. The insurance company
      may not be liable to satisfy the decree and, therefore, its liability
      may be zero but it does not mean that it did not have initial liability
      at all. Thus, if the insurance company is made liable to pay any
      amount, it can recover the entire amount paid to the third party on
                                                                                B
      behalf of the assured. If this interpretation is not given to the
      beneficent provisions of the Act having regard to its purport and
      object, we fail to see a situation where beneficent provisions can
      be given effect to. Sub-section (7) of Section 149 of the Act, to
      which pointed attention of the Court has been drawn by the learned
      counsel for the petitioner, which is in negative language may now         C
      be noticed. The said provision must be read with sub-section (1)
      thereof. The right to avoid liability in terms of sub-section (2) of
      Section 149 is restricted as has been discussed hereinbefore. It is
      one thing to say that the insurance companies are entitled to raise
      a defence but it is another thing to say that despite the fact that its
                                                                                D
      defence has been accepted having regard to the facts and
      circumstances of the case, the Tribunal has power to direct them
      to satisfy the decree at the first instance and then direct recovery
      of the same from the owner. These two matters stand apart and
      require contextual reading.”
                                                      [Emphasis supplied]       E

       14. We may fruitfully note that the three-Judge Bench adverted
to situations where the driver does not have a licence and the same has
been allowed to be driven by the owner of the vehicle by such person,
the insurer would be entitled to succeed in defence and avoid liability,
but the position would be different where the disputed question of fact         F
arises as to whether the driver had a valid licence and where the owner
of the vehicle committed a breach of the terms of the contract of insurance
as also the provisions of the Act by consciously allowing any person to
drive a vehicle who did not have a valid driving licence.
      15. The Court held that if, on facts, it is found that the accident       G
was caused solely because of some other unforeseen or intervening
causes like mechanical failures and similar other causes having no nexus
with the driver not possessing the requisite type of licence, the insurer

                                                                                H
848                SUPREME COURT REPORTS                             [2018] 6 S.C.R.


A     will not be allowed to avoid its liability merely for technical breach of
      conditions concerning driving licence. That apart, minor and
      inconsequential deviations with regard to licensing conditions would not
      constitute sufficient ground to deny the benefit of coverage of insurance
      to third parties. The other category of cases that the Court addressed to
      included cases where the licence of the driver is found to be fake. In
B
      that context, the Court expressed its general agreement with United
      India Insurance Co. Limited v. Lehru7 and stated thus:-
                “92. … In Lehru case the matter has been considered in some
                detail. We are in general agreement with the approach of the
                Bench but we intend to point out that the observations made therein
C               must be understood to have been made in the light of the
                requirements of the law in terms whereof the insurer is to establish
                wilful breach on the part of the insured and not for the purpose of
                its disentitlement from raising any defence or for the owners to
                be absolved from any liability whatsoever ..”
D            16. The three-Judge Bench summed up its conclusions and we
      think it appropriate to reproduce the relevant part of the same:-
                “110. (iii) The breach of policy condition e.g. disqualification of
                the driver or invalid driving licence of the driver, as contained in
                sub-section (2)(a)(ii) of Section 149, has to be proved to have
E               been committed by the insured for avoiding liability by the insurer.
                Mere absence, fake or invalid driving licence or disqualification
                of the driver for driving at the relevant time, are not in themselves
                defences available to the insurer against either the insured or the
                third parties. To avoid its liability towards the insured, the insurer
F               has to prove that the insured was guilty of negligence and failed
                to exercise reasonable care in the matter of fulfilling the condition
                of the policy regarding use of vehicles by a duly licensed driver or
                one who was not disqualified to drive at the relevant time.
                      x               x              x                 x
G               (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 the insured unless the said breach or breaches on the
      7
          (2003) 3 SCC 338
H
      AMRIT PAUL SINGH & ANR. v. TATA AIG GENERAL                                 849
      INSURANCE CO. LTD. & ORS. [DIPAK MISRA, CJI]

       condition of driving licence is/are so fundamental as are found to         A
       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 “fundamental breach” to allow
       defences available to the insurer under Section 149(2) of the Act.
       (vii) The question, as to whether the owner has taken reasonable           B
       care to find out as to whether the driving licence produced by the
       driver (a fake one or otherwise), does not fulfil the requirements
       of law or not will have to be determined in each case.”
        17. Learned counsel for the appellants would submit that there
has been no fundamental breach of the policy conditions. In this context,         C
we may profitably refer to the decision in Challa Bharathamma (supra)
wherein a two-Judge Bench squarely dealt with the absence of a permit
and ruled that plying a vehicle without a permit is an infraction and insurer
is not liable.
       18. In Lakhmi Chand v. Reliance General Insurance 8, the                   D
Court was concerned with an order passed by the National Consumer
Disputes Redressal Commission (NCDRC) that had declined the relief
to the petitioner therein. The insurer in the said case had taken the plea
that the complainant had violated the terms and conditions of the policy,
for five passengers were travelling in the goods carrying vehicle at the
time of the accident, whereas the permitted seating capacity of the motor         E
vehicle of the appellant was only 1 + 1. The two-Judge Bench referred
to Oriental Insurance Co. Ltd. v. Meena Variyal and others9 and
expressed the view that in order to avoid liability, the insurer must establish
that there was breach on the part of the insured.
       19. The obtaining fact situation is sought to be equated with the          F
factual score in the said case. In this regard, it is useful to refer to the
Bench decision in HDFC Bank Limited v. Reshma and others10. The
issue that arose before the Court was whether the financier was liable
to pay the compensation or it was the liability of the borrower. The
tribunal had returned the finding that the duty of the financier was to see       G
that the borrower did not neglect to get the vehicle insured and, therefore,
it was jointly and severally liable along with the owner. The High Court
8
  (2016) 3 SCC 100
9
  (2007) 5 SCC 428
10
   (2015) 3 SCC 679
                                                                                  H
850                SUPREME COURT REPORTS                           [2018] 6 S.C.R.


A     had concurred with the said conclusion. The Court referred to Purnya
      Kala Devi v. State of Assam and other111 that has dealt with the
      definition of the term “owner” as contained in Section 2(30) of the Act.
      In the said case, the vehicle in question was under the requisition of the
      State of Assam under the provisions of law. In that context, the Court
      has expressed that:-
B
                “16. … The High Court failed to appreciate that at the relevant
                time the offending vehicle was under the requisition of Respondent
                1 State of Assam under the provisions of the Assam Act.
                Therefore, Respondent 1 was squarely covered under the definition
                of ‘owner’ as contained in Section 2(30) of the 1988 Act. The
C               High Court failed to appreciate the underlying legislative intention
                in including in the definition of ‘owner’ a person in possession of
                a vehicle either under an agreement of lease or agreement of
                hypothecation or under a hire-purchase agreement to the effect
                that a person in control and possession of the vehicle should be
D               construed as the ‘owner’ and not alone the registered owner. The
                High Court further failed to appreciate the legislative intention
                that the registered owner of the vehicle should not be held liable if
                the vehicle was not in his possession and control. The High Court
                also failed to appreciate that Section 146 of the 1988 Act requires
                that no person shall use or cause or allow any other person to use
E               a motor vehicle in a public place without an insurance policy
                meeting the requirements of Chapter XI of the 1988 Act and the
                State Government has violated the statutory provisions of the 1988
                Act.”
            20. Be it noted, in the said case, the liability was fixed on the State
F     keeping in view the legislative intention behind Section 146 of the Act,
      no person shall use or cause or allow any other person to use a motor
      vehicle in a public place without an insurance policy as that is the
      mandatory statutory requirement under the Act. Emphasis was laid on
      possession and control of the vehicle and accordingly liability was fixed
G     on the State of Assam.
            21. In HDFC Bank Limited (supra), the three-Judge Bench
      opined that the hypothecation agreement did not convey that the appellant
      financier had become the owner and was in control and possession of
      11
           (2014) 14 SCC 142
H
      AMRIT PAUL SINGH & ANR. v. TATA AIG GENERAL                                 851
      INSURANCE CO. LTD. & ORS. [DIPAK MISRA, CJI]

the vehicle. It was the absolute fault of the respondent No. 2 to take the        A
vehicle from the dealer without full payment of the insurance, more so
when nothing had been brought on record that the said fact was known
to the appellant financier or that it was done in collusion with the financier.
       22. The Court held that when the intention of the legislature is
quite clear to the effect that a registered owner of the vehicle should not       B
be held liable if the vehicle is not in his possession and control and there
was evidence on record that the respondent No. 2, plied the vehicle
without the insurance in violation of the statutory provision contained in
Section 146 of the Act, the High Court could not have mulcted the liability
on the financier and finally, the financer was absolved of the liability.
                                                                                  C
       23. In the case at hand, it is clearly demonstrable from the materials
brought on record that the vehicle at the time of the accident did not
have a permit. The appellants had taken the stand that the vehicle was
not involved in the accident. That apart, they had not stated whether the
vehicle had temporary permit or any other kind of permit. The exceptions
that have been carved out under Section 66 of the Act, needless to                D
emphasise, are to be pleaded and proved. The exceptions cannot be
taken aid of in the course of an argument to seek absolution from liability.
Use of a vehicle in a public place without a permit is a fundamental
statutory infraction. We are disposed to think so in view of the series of
exceptions carved out in Section 66. The said situations cannot be equated        E
with absence of licence or a fake licence or a licence for different kind
of vehicle, or, for that matter, violation of a condition of carrying more
number of passengers. Therefore, the principles laid down in Swaran
Singh (supra) and Lakhmi Chand (supra) in that regard would not be
applicable to the case at hand. That apart, the insurer had taken the plea
that the vehicle in question had no permit. It does not require the wisdom        F
of the “Tripitaka”, that the existence of a permit of any nature is a matter
of documentary evidence. Nothing has been brought on record by the
insured to prove that he had a permit of the vehicle. In such a situation,
the onus cannot be cast on the insurer. Therefore, the tribunal as well as
the High Court had directed the insurer was required to pay the                   G
compensation amount to the claimants with interest with the stipulation
that the insurer shall be entitled to recover the same from the owner and
the driver. The said directions are in consonance with the principles
stated in Swaran Singh (supra) and other cases pertaining to pay and
recover principle.
                                                                                  H
852                SUPREME COURT REPORTS                    [2018] 6 S.C.R.


A            24. In view of the aforesaid analysis, we do not perceive any
      merit in the appeal and, accordingly, the same stands dismissed without
      any order as to costs.


      Ankit Gyan                                               Appeal dismissed.
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