Insurance companies cannot deny compensation claims due to permit breaches; they maintain rights of recovery against vehicle owners while proper methods must be utilized for dependency calculations.

1. The Insurance Company is an appeal against the judgment and award of compensation in M.V. Case No. 16 of 2010 by which a liability has been fixed on the Insurance Company to pay the compensation amount of Rs. 19,66,000/- @ 9% simple interest per annum under Section 166 of the Motor Vehicle Act.

2. Challenge to award is on two scores:

Firstly, it is argued that under the conventional head Rs.2,30,000/- and the simple interest @ 9% per annum has been awarded on the total compensation amount, which is not in accordance with the ratio as laid down by the Hon’ble Apex Court in National Insurance Company Limited vs. Pranay Sethi , reported in (2017) 16 SCC 680 .

The second limb of argument is that the offending vehicle was plying without a valid permit and the vehicle in question was a commercial vehicle and, therefore, it was a breach of term of insurance policy in terms of Section 149(2) of the Motor Vehicle Act.

3. Learned counsel appearing on behalf of the owner of the vehicle submits that the vehicle was plying without any valid permit was not raised before the Tribunal, and no issue regarding it was framed and, therefore, the owner of the vehicle had no opportunity to lead evidence on this issue.

4. Having considered the submissions advanced on behalf of both sides, and on perusal of the materials on record, it is evident that the appellant-Insurance Company had taken specific plea in para-18 of the written statement, that the offending vehicle in question was plying without any statutory permit resulting in breach of terms and conditions of insurance policy. Despite specific averment made by the appellant-Insurance Company, no evidence was led on behalf of owner of the vehicle to show that the vehicle was a commercial vehicle. From Ext.-8, which is a certificate of the insurance of passenger carrying commercial vehicle of Mahindra Savari Jeep bearing registration No. JH 03C-0069, it is evident that the vehicle in question was a commercial vehicle for which there is mandatory requirement of permit issued by the competent authority for plying on public roads.

5. In this view of the matter, there was a breach of terms and conditions of insurance policy. However, this cannot be a ground to deny the claim of the claimants and the Insurance Company can only have a right of recovery on payment of compensation amount to the claimants.

6. With regard to the quantum of compensation, the amount awarded under the conventional head is reduced to Rs. 84,000/- from Rs. 2,30,000/-. Also learned Tribunal has erred in making loss of expense by taking 1/3^rd whereas the number of dependents are five and, therefore, it should be 1/4^th as loss of dependency. The final compensation amount will work out as under:

Since Rs.50,000/- was awarded as interim compensation, therefore, the Insurance Company is liable to pay to the claimants total compensation of Rs.29,82,400/- with interest @ of 6% per annum from the date of claim application. The Insurance Company shall have a right of recovery against the owner of the vehicle.

This Misc. Appeal stands disposed of.

Pending, I.A. if any stands disposed of.

The statutory amount, which was deposited before this Court at the time of filing of this appeal, shall