NATIONAL INSURANCE CO. LTD. versus CHALLA UPENDRA RAO AND ORS.

Citation: [2004] SUPP. 4 S.C.R. 587 · Decided: 21-09-2004 · Supreme Court of India · Bench: ARIJIT PASAYAT · Disposal: Leave Granted & Disposed off

Judgment (excerpt)

NATIONAL INSURANCE CO. LTD. 
A 
v. 
CHALLA UPENDRA RAO AND ORS. 
SEPTEMBER 21, 2004 
[ARIJIT PASAYAT AND C.K. THAKKER, JJ.] 
B 
Motor Vehicles Act, 1988: 
Section 149(2)-Claim petition-Resisting of-Statutory defences 
available to the Insurer-Held: Are confined only to those available under 
C 
s. 149(2). 
Section 149(2)(b)(i)(a)-Driving of vehicle-Without permit to ply-
For hire or reward-High Court was of the view that since there was no 
permit, the question of violation of any condition thereof did not arise-
Correctness of-Held: High Court's view is clearly fallacious-Plying of a 
D 
vehicle without a permit is an infraction-A person without a permit to ply 
a vehicle cannot be placed at a better pedestal vis-a-vis one who has a 
permit, but has violated any condition thereof-Therefore, in terms of 
S.149(2) insurer has a defence to resist the claim petition on account of the 
absence of permit. 
E 
Sections 149(2), 168, 169 and 17 ~!aims petition-Insurer established 
its statutory defence under S. 149(2)-However, High Court held insurer 
liable to indemnify. the award-Correctness of-Held: High Court not 
justified in holding the insurer liable-Insurer has the option to recover the 
amount paid from the insured-Mode of recovery and execution-Explained. 
F 
Three persons were traveling in an auto rickshaw, which met with 
an accident. Two persons lost their lives while one was seriously injured. 
The legal representatives of the two deceased persons filed claim petitions 
while the injured filed a separate petition claiming compensation in 
terms of Section 166 of the Motor Vehicles Act, 1988. The auto rickshaw 
in question belonged to the insured. The insurer resisted the claim on 
the ground that the insured had not obtained a permit to ply the vehicle 
and, therefore, in terms of the policy of insurance the insurer had no 
liability. The Motor Vehicles Accident Claims Tribunal accepted the 
G 
plea. It however, held that the insurer was liable to pay the compensation 
H · 
587 
A 
B 
c 
D 
E 
F 
G 
H 
588 
SUPREME COURT REPORTS [2004) SUPP. 4 S.C.R. 
which was fixed at a certain amount in the case of death, while in the 
case of the injured's claim a certain sum was directed to be paid. The 
High Court by the impugned judgment held that the insurer was liab.le 
to indemnify the award. Hence the appeals. 
Disposing of the appeals, the Court 
HELD: 1. The statutory defences, which are available to the insurer 
to contest the claim, are-confined to those provided in Section 149(2) of 
the Motor Vehicles Act, 1988. [595-H) 
New India Assurance ,Co. Ltd v. Asha Rani, (2003) 2 SCC 223 and 
National Insurance Co. Ltd v. Nicolletta Rohtagi, (2002) 7 SCC 456, relied 
on. 
2. The High Court was of the view that since there was no permit, the 
question of violation of any condition therea-f does not arise. The view is 
clearly fallacious. A person without a permit to ply a vehicle cannot be 
placed at a better pedestal vis-a-vis !-me who has a permit, but has violated 
any condition thereof. Plying of a vehicle without a permit is an infraction. 
Therefore, in terms of Section 149(2) of the Act a 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 the insurer. The High Court was, therefore, 
not justified in holding the insurer lia.ble. (596-A, BJ 
3. Considering the beneficial object Of the Act, it would be proper 
for the insurer to satisfy the award, though in' law it has no liability. In 
some cases the insurer has been given the option and liberty to recover 
the amount from the insured. For the purpose of recovering the amount 
paid from the owner, the insurer shall not be required to file a suit. lt 
may initiate a proceeding before the concerned Executing Court as if 
the dispute between the insurer and the owner was the subject matter 
of determination before the Tribunal and the issue is decided against the 
owner and in favour of the insurer. Before release of tbe amount to the 
claimants, the owner of the offending vehicle shall furnish security for 
the entire amount, which the insurer is required to pay to the claimants. 
Th·e offending vehicle shall be attached, as part of the security: If necessify 
arises the Ex.ecuting Court shall take the assi~tance of the concerned 
Regional ·Transport Authority. The Executing .Court shall pass 
NATIONAL INSURANCE 

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