Plying a vehicle outside the territorial bounds of its permit is a violation of policy conditions, granting the insurer the right to satisfy the award and subsequently recover the amount from the vehicle owner under the "pay and recover" principle.

JUDGMENT

ANISH DAYAL, J (ORAL)

1. This appeal has been filed by the Insurance Company challenging the impugned award passed by Motor Accidents Claims Tribunal [‘MACT’], Saket Courts, New Delhi in Claim Petition No. 67/2011 on 12th September 2013, awarding compensation to the tune of Rs.3,55,200/- in favour of respondent no.l/claimant, along with interest at the rate of 9% per annum from the date of filing of petition till realization.

2. The accident occurred on 23rd June 2010 at about 5:45 pm at Mehrauli Gurgaon Road Metro Station near Arjun Garh, New Delhi, when respondent no.1/claimant was travelling to his office in Gurgaon from Okhla Phase-II on his motorcycle was hit by a dumper (hereinafter, ‘offending vehicle’) from behind. FIR No. 123/10 was registered and claim petition was filed by respondent no.1/claimant which resulted in the passing of impugned award.

3. Appellant/Insurance Company raised a defence that the offending vehicle had a permit for plying in the State of Haryana, while the accident took place in Delhi, however, the MACT categorically held the appellant/Insurance Company liable to satisfy the compensation amount awarded.

4. Ms. Shruti Jain, counsel for Insurance Company, contends that even though there was a valid permit, for which there was no dispute, conditions of contract i.e. the insurance policy were violated, therefore, right to recovery should have, at least, been granted.

5. In this regard, MACT relied the upon decision of Punjab & Haryana High Court in National Insurance Company Ltd. v. Rajender Giri , 2011 SCC OnLine P&H 14036, which held that driving in another state without a valid permit will not amount to violation of conditions of insurance policy and would not give the insurer a defence under Section 149(2) of Motor Vehicles Act, 1988. Therefore, no right to pay and recover have been granted to appellant/Insurance Company.

6. It is noted that the decision in Rajender Giri (supra) was rendered on 12th October 2011 and relevant paragraph is extracted hereunder:

“15. It would be said that the vehicle had a valid route permit for being plied in the State of Rajasthan but not in Haryana State. The Transport Authority of Rajasthan State had found the vehicle fit for being plied as goods carriage. Therefore, it cannot be said that the vehicle was being plied without a route permit. The violation of bringing the vehicle to the area of State of Haryana without a valid route permit for plying the same in the said State would not amount to violation of the conditions of the insurance policy and would not give the insurer a defence under section 149(2) of the Act. The case before me is not a case where there is no route permit at all. Therefore, the ratio of the decision in National Insurance Co. Ltd.’s case (supra) would not stand attracted to the facts of this case.” (emphasis added)

7. The issue, as per counsel for appellant/Insurance Company, now stands resolved by decision of the Supreme Court in K. Nagendra v. The New India Insurance Co. Ltd. & Ors. (2025) INSC 1270, where the Supreme Court was dealing with a case where permit was issued for a different State, while the accident took place in Channapatna City. The Supreme Court in this context stated as under:

“8. Now, let us consider the instant case. The record reveals that the offending vehicle did not have the permit to enter Channapatna City, where the accident took place. This position is not in dispute. Unquestionably,