Case Note & Summary
The appeal arises from a motor accident claim where a vehicle bearing registration CG/07-LP/0342, owned by Durg Roadways Private Limited, was involved in a collision with a hill while on a religious tour from Durg to Nepal. Three persons, including driver Riaz Khan and Harish Yadav, died. The claimants, wife, children, and mother of Harish Yadav, sought compensation of Rs.48,99,776/-. The Motor Accident Claims Tribunal, Durg, awarded Rs.32,67,000/- with 6% interest from the date of petition, holding the owner liable. On appeal by the owner, the High Court of Chhattisgarh reversed the Tribunal's order and held the insurer, Oriental Insurance Co. Ltd., liable, relying on Anil Kumar v. Roop Kumar Sharma. The insurer appealed to the Supreme Court. The Supreme Court examined whether the use of the vehicle without a valid permit for travel to Nepal constituted a fundamental breach of the insurance policy. The Court noted that the policy specifically excluded use outside India without a valid permit. Since the vehicle was used for a religious tour to Nepal without a permit, the breach was fundamental. The Court held that the insurer is not liable to pay compensation, but in the interest of justice, directed the insurer to pay the awarded amount to the claimants and then recover it from the owner. The appeal was allowed, setting aside the High Court's judgment and restoring the Tribunal's award with the modification that the insurer shall pay and recover.
Headnote
A) Motor Accident Claims - Insurance - Fundamental Breach - Section 149(2)(a)(i)(c) Motor Vehicles Act, 1988 - Use of vehicle without valid permit for travel to Nepal constitutes a fundamental breach of policy conditions, absolving insurer of liability to pay compensation to third parties - Held that the insurer is not liable to pay compensation, but may be directed to pay and recover from the owner (Paras 5-10).
Issue of Consideration
Whether the insurer is liable to pay compensation when the insured vehicle was used without a valid permit for a religious tour to Nepal, constituting a fundamental breach of the policy conditions.
Final Decision
Appeal allowed. High Court judgment set aside. Tribunal's award restored with modification: insurer to pay the awarded amount to claimants and then recover the same from the owner in accordance with law.
Law Points
- Fundamental breach of insurance policy
- unauthorized use of vehicle
- insurer's liability exclusion
- Section 149(2)(a)(i)(c) Motor Vehicles Act
- 1988
- pay and recover principle
