- 1 -

IN THE HIGH COURT OF KARNATAKA AT BENGALURU

DATED THIS THE 7TH DAY OF NOVEMBER, 2016

BEFORE

THE HON’BLE MRS.JUSTICE S.SUJATHA

M.F.A.No.1201/2011 [MV] BETWEEN : DURUGAMMA D/O. YALLAMMA AGED ABOUT 10 YEARS MINOR, REP: NATURAL GUARDIAN MOTHER YELLAMMA W/O. PASALU ERANNA, COOLIE AGED ABOUT 37 YEARS R/O. MARADIHALLI VILLAGE AIMANGALA HOBLI HIRIYUR TALUK CHITRADURGA DISTRICT ...APPELLANT (BY SRI HARISH N.R. FOR SRI B.M.SIDDAPPA, ADVS.) AND : 1. S.G.NARESH, S/O. GOVINDAPPA AGED ABOUT 22 YEARS DRIVER OF AUTO, NARENAL VILLAGE J.N.KOTE POST, HIRIYUR TALUK CHITRADURGA DISTRICT

(DELETED AS PER ORDER DATED 06.06.2011)

2. SRI S.M.GOVINDAPPA S/O. MALLAPPA, MAJOR OWNER OF AUTO RICKSHAW NARENAL VILLAGE, J.N.KOTE HIRIYUR TALUK CHITRADURGA DISTRICT

R

- 2 -

3. THE MANAGER CHORAMANDALAM M.S.GENERAL INSURANCE COMPANY LIMITED HEAD OFFICE: DHARE HOUSE 2ND FLOOR, N-66, NSC BOSE ROAD CHENNAI – 600 001 …RESPONDENTS (BY SRI SPOORTHY HEGDE, ADV. FOR R2, SRI O. MAHESH, ADV. FOR R3, R1 DELETED VIDE ORDER DATED 06.06.2011) THIS M.F.A. IS FILED UNDER SECTION 173(1) OF M.V.ACT AGAINST THE JUDGMENT AND AWARD DATED 27.11.2010 PASSED IN MVC.NO.78/2009 ON THE FILE OF THE SENIOR CIVIL JUDGE AND MEMBER ADDITIONAL MACT, HIRIYUR, PARTLY ALLOWING THE CLAIM PETITION FOR COMPENSATION AND SEEKING ENHANCEMENT OF COMPENSATION. THIS M.F.A. HAVING BEEN RESERVED FOR ORDERS ON 5.10.2016, COMING ON FOR PRONOUNCEMENT OF JUDGMENT, THIS DAY, THE COURT DELIVERED THE FOLLOWING:

J U D G M E N T

The judgment and award passed by the Motor

Accident Claims Tribunal at Hiriyur (‘the Tribunal’ for

short) in MVC No.78/2009, is assailed by the claimant

in this appeal, whereby, the Tribunal awarded total

compensation of Rs.69,100/- with interest, considering

the claim of the injured – claimant, alleging actionable

negligence of the driver of the Auto Rickshaw bearing

Registration No.KA-16/A-5286 (offending vehicle), as

- 3 -

the cause for the road traffic accident which occurred

on 03.08.2008 while the claimant was proceeding with

her father on Maradihally to Gollarahatty road, as a

pedestrian. The insurer was absolved from the liability

since the offending vehicle was plying outside the

permitted limits of Chitradurga town violating the

permit conditions, as such the liability was fastened on

the registered owner of the offending vehicle.

2. Learned Counsel Sri Harish N.R., appearing

for the appellant would contend that the claimant was a

minor represented through natural guardian – mother,

instituted the claim petition seeking compensation for

the bodily injuries sustained in the road traffic accident

which occurred on 03.08.2008 owing to the negligence

of the driver of the offending vehicle duly insured with

the insurer-Respondent No.3 herein. However, the

Tribunal grossly erred in exonerating the insurer and

saddling the liability on the registered owner of the

- 4 -

offending vehicle - respondent No.2 herein. The learned

Counsel submits that no statutory defence is available

to the insurer under Section 149 (2) of the Motor

Vehicles Act, 1988 (‘the Act’ for short) in much as

deviation of route permit. He would contend that

deviation in route permit would amount to violation of

terms and conditions of the insurance policy but would

not exonerate the liability of the insurer to indemnify

the insured. It is vehemently contended that the vehicle

was being used for sanctioned purpose and if any

condition was violated, that would be the breach of

conditions of permit amenable to punitive action but

cannot be said to be used for the purpose for which it

was not authorized by the permit. The learned Counsel

distinguishing the judgment of Hon’ble Apex Court in

the case of NATIONAL INSURANCE CO. LTD. VS.

CHALLA BHARATHAMMA AND OTHERS reported in

2004 AIR SCW 5301 would contend that Hon’ble Apex

Court rendered said judgment in the context of vehicle

- 5 -

plying on the road without a valid permit which cannot

be applied to the vehicle with permit. Thus, it is

contended that merely because the accident took place

outside the limits as mentioned in the permit that itself

would not amount to violation of insurance policy. In

support of his contention, the learned Counsel placed

reliance on the following judgments:

a. K.V.THIMMEGOWDA VS. KAMALAMMA

(ILR 1991 KAR 4127)

b. UNITED INDIA INSURANCE CO. LTD.

AND OTHERS VS. CHANDAMMA AND

OTHERS (ILR 2000 KAR 1302)

c. NEW INDIA ASSURANCE CO. LTD.,

BANGALORE VS. PAPAIAH AND

OTHERS (2005 AIR KANT R 1678)

d. DIVISIONAL MANAGER, NATIONAL

INSURANCE COMPANY LIMITED, HUBLI

VS. SMT. LAXMAWWA AND OTHERS

(2010 ACJ 1406)

- 6 -

e. RELIANCE GENERAL INSURANCE CO.

LTD. VS. DEVIBAI AND ANOTHER

[(2015 (2) AKR 827]

f. REHMAT BEE AND OTHERS VS.

LIYAQAT ALI AND ANOTHER (M.F.A.

NO.30274/2010, DD 20.08.2014)

g. NATIONAL INSURANCE CO. LTD., VS.

N.SIDDAIAH (M.F.A.No.9791/2010, DD

03.04.2013)

h. BRANCH MANAGER, NATIONAL

INSURANCE CO. LTD., VS. ANANDAPPA

AND OTHERS (M.F.A.No.5450/2010, DD

09.04.2013)

The learned counsel further seeks for

enhancement of compensation.

3. Per contra, Sri O. Mahesh, learned Counsel

appearing for the insurer placing reliance on Section 66

of the Act would contend that, Necessity for permits

contemplates that no owner of a motor vehicle shall use

or permit the use of the vehicle as a transport vehicle in

- 7 -

any public place, the use of the vehicle in that place in

the manner in which the vehicle is being used. The

learned Counsel submits that Section 149(2)(a)(i)(c) of

the Act is the statutory defence available to the insurer.

Admittedly, the vehicle in question had the permit to ply

within the town limits of Chitradurga town and at the

time of the accident, it was plying within Aimangala

Hobli, Hiriyur Taluk, outside the town limits of

Chitradurga town, which was in violation of Section 66

of the Act. It is not only violation of Section 66 of the

Act, but violation of the terms and conditions of the

insurance policy. In support of his contentions, the

learned Counsel placed reliance on the following

judgments:

a. NATIONAL INSURANCE CO. LTD. VS.

CHALLA BHARATHAMMA AND OTHERS

(2004 AIR SCW 5301),

b. B. T. VENKATESH VS. SRI JAGADEESH

KUMAR AND OTHERS (M.F.A.

NO.9582/2007, DD 24.08.2012)

- 8 -

c. SMT. KEMPAMMA VS. RAMESH AND

ANOTHER (M.F.A. NO.7723/2011 DD

08.10.2013)

d. ORIENTAL INSURANCE CO. LTD. VS.

K.C.PAPANNA AND ANOTHER (M.F.A.

NO.8742/2008, DD 09.10.2012)

4. Heard the learned Counsel for the parties

and perused the material on record.

5. It is apt to refer to the relevant provisions of

the Act. Section 149 (2) (a) (i) (c) of the Act reads as

follows:

(a) that there has been a breach of a specified

condition of the policy, being one of the following

conditions, namely:-

(i) a condition excluding the use of the

vehicle -

“(a) xxxx

(b) xxxx

(c): for a purpose not allowed

by the permit under which the

- 9 -

vehicle is used, where the

vehicle is a transport vehicle, or

(d) xxxx ”

Section 66(1) of the Act reads as follows:

“Section 66: Necessity for permits:

(1) 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 accordance

with the conditions of a permit granted or

countersigned by a Regional or State

Transport Authority or any prescribed

authority authorizing him the use of the

vehicle in that place in the manner in

which the vehicle is being used:”

Section 149 (7) of the Act indicates the manner in

which Subsection 2 of Section 149 has to be

interpreted.

“Section 149 (7) : No insurer to whom the

notice referred to in sub-section (2) or sub-

section (3) has been given shall be entitled to

- 10 -

avoid his liability to any person entitled to the

benefit of any such judgment or award as is

referred to in sub-section (1) or in such

judgment as is referred to in sub-section (3)

otherwise than in the manner provided for in

sub-section (2) or in the corresponding law of

the reciprocating country, as the case may

be.”

6. Thus, it is clear that the insurer can avoid

its liability only on the statutory defences enumerated

in Subsection 2 of the Section 149 of the Act.

7. In this background, the Judgments relied

upon by the learned Counsel appearing for the parties

are examined.

8. In THIMMEGOWDA’S case [supra], the

Division Bench of this Court while considering the

question whether the insurance company is liable to

pay compensation in respect of the injury to or death of

a third party, caused by the motor accident by a motor

- 11 -

vehicle, which is a stage carriage while plying or being

used lawfully otherwise than as a stage carriage, at a

public place, even if such place does not lie on the route

in respect of which it is permitted to operate as a stage

carriage, has held that an insurance company is liable

to pay compensation even in such cases.

9. In the case of CHANDAMMA [supra],

considering the relevant provisions of the Act and on

consideration of the relevant conditions in the policy of

insurance, the Division Bench of this Court has held

thus,

“6. Admittedly, the ground spelt out

under sub-clauses (b), (c) and (d) of clause

(a)(i) and the ground under clause (b)

of Section 149(2) are not applicable to the

defence of insurers in these cases. On the

other hand, an attempt had been made for

the insurers to bring their cases within the

purview of the defence ground envisaged in

sub-clause (a) of sub-section (2)(a)(i). This

ground is also not available to them for the

- 12 -

reason that, admittedly, each of the offending

vehicles was covered by a valid permit to

carry passengers for hire or reward as they

were "public service vehicles". Merely because

these vehicles were stated to have stopped

and picked up passengers on the permitted

route, presumably in breach of their permit

condition, that by itself does not constitute a

statutory defence available in sub-section

(2)(a)(i)(a) of Section 149. In fact, Section

149(2) of the New Act i.e., Act of 1988,

corresponds to Section 96(2) of the Old Act

i.e., Act of 1939. The same defence grounds

as are contained in Section 149(2) of the New

Act were existing as the defence grounds

under sub-section (2)(b) and (c) of Section 96

of the Old Act. Similar question had arisen for

consideration of the Division Bench of this

Court in the case of K.V. Thimmegowda v

Kamalamma' and the same had been

answered holding:

"An Insurance Company is liable to pay

compensation in respect of the injury to

or death of a third party, caused by a

- 13 -

motor accident by a motor vehicle, which

is a stage carriage while plying or being

used lawfully otherwise than as a stage

carriage, at a public place, even if such

public place does not lie on the route in

respect of which it is permitted to

operate as a stage carriage".

Therefore, in law the appellants/petitioners-

insurers are not exempt from their liability to

pay compensation under their respective 'Act

Policies' by mere reason of 'contract carriages'

in question being plied as 'stage carriages' in

breach of their permit condition since such a

defence plea is not permissible under sub-

section (2) of Section 149 of the Act. If the said

vehicles were found to have been plying in

breach of their permits condition, it is open for

the concerned authorities under the Act to

take appropriate action as is permissible

under other provisions thereof viz., Sections

86, 177and 192, as the case may be.

Therefore, we find the contention of the

learned Counsel for appellants/writ

- 14 -

petitioners without force and weight and the

appeals are, therefore, bound to fail.”

10. In PAPAIAH’s case [supra], placing reliance

on the Judgment of the Hon’ble Apex Court in CHALLA

BHARATHAMMA’s case [supra], it was observed thus:

10. Thus, in view of the settled

position of law as laid down by the Apex

Court in the cases referred to above, we are of

the considered opinion that even if the

Insurance Company is not liable, yet, having

regard to the object of the Motor Insurance

Company Act and the victims being the third

parties, the Insurance Company, though not

liable, has to pay the compensation awarded

to the claimants and the course open to it is to

initiate proceedings against the insured

before the very same Tribunal and take

necessary steps to recover the amount

awarded by the Tribunal from the insured.

11. The Judgment in the case of ‘NATIONAL

INSURANCE CO. LTD., vs. SIDDAIAH AND ANOTHER’

- 15 -

rendered in MFA No.9791/2010 [DD-3.4.2013]

distinguishing the Judgment of the Hon’ble Apex Court

in CHALLA BHARATHAMMA’s case [supra], had

observed that the insured had permit to ply the auto

rickshaw. However, he had violated the route

conditions of permit. Therefore, it cannot be said that

vehicle was used for a purpose not allowed by permit. It

was held that CHALLA BHARATHAMMA’s case [supra],

was rendered in the context where the insured vehicle

had plied without there being a permit. Similar view

was taken in the case of ‘‘NATIONAL INSURANCE CO.

LTD., vs. ANANDAPPA’ rendered in MFA No.5450/2010

[DD-9.4.2013]. In B.T. VENKATESH’s case [supra], the

Division Bench of this Court observed that so far as

fastening the liability on insurance company is

concerned, the findings of the Tribunal is clear that,

there is violation of the policy conditions by the driver

and the owner of the offending auto rickshaw which is

insured with the third respondent/insurance company.

- 16 -

The earlier Judgment of the Division Bench was not

referred to in B.T. VENKATESH’s case [supra]. It was

purely on the facts of that case the Judgment was

rendered. In the case of SMT. KEMPAMMA [supra], it

was observed that in view of the Judgment of the

Hon’ble Apex Court in the case of CHALLA

BHARATHAMMA [supra], it cannot be said that the

words used in clause [c] of Section 149[2][a][1] has to be

read in the context of ‘use of vehicle’ and not relating to

violation of permit condition. It is held that violation of

the permit condition is the defence available to the

insurer, thus accepted the plea put forward by the

insurer, namely, it is entitled to contend violation of

permit condition as a ground to stave of its liability,

thereby finding of the Tribunal in absolving the insurer

of its liability was upheld. In the case of REHMAT BEE

AND OTHERS [supra], placing reliance on the

Judgment of this Court in THIMMEGOWDA and

CHANDAMMA [supra], distinguished the Division

- 17 -

Bench Judgment of B.T. VENKATESH and held that the

Division Bench Judgment of THIMMEGOWDA and

CHANDAMMA [supra] are applicable. It is held that

deviation of route permit would not absolve the liability

of the insurer since the same does not come with in the

purview of Section 149[2] of the Act.

12. In the background of these Judgments, the

factual matrix of the present case is analysed.

13. Admittedly, the offending vehicle had the

permit to ply within the jurisdiction of Chitradurga.

Exhibit.R2 the permit issued by RTO, Chitradurga

clearly establishes that the permit was issued for plying

of the offending vehicle only within the town limits of

Chitradurga. It means that the offending vehicle was

not allowed to ply exceeding the route permit. The

accident in question occurred within the jurisdictional

limits of Aimangala Hobli, Hiriyur Taluk, outside the

town limits of Chitradurga.

- 18 -

14. Now the first question would be whether the

deviation of route would fall under Section 149[2][a][i][c]

of the Act. To examine this, in the light of the

Judgments referred to supra, it is apt to refer to the

phrase ‘for a purpose not allowed by the permit’. The

next question would be whether ‘for a purpose not

allowed by the permit’ would include violation of the

terms and conditions of the permit. To analyze this

aspect, it would be beneficial to refer to the definition

clause of ‘permit’ under Section 2[31] of the Act which

defines ‘permit’ as under:

“permit” means a permit issued by a

State or Regional Transport Authority or an

authority prescribed in this behalf under this

Act authorizing the use of a motor vehicle as a

transport vehicle.

Permit is issued to a transport vehicle. Section 66 of

the Act contemplates the necessity for permit.

Section 72 of the Act provides for grant of stage carriage

- 19 -

permit whereby the Regional Transport Authority, if it

decides to grant a stage carriage permit, may grant the

permit for a stage carriage of a specified description and

may, subject to any rule that may be made under the

Act, attach to the permit any one or more of the

conditions which are 24 in number. Section 74 deals

with grant of contract carriage permit. The condition

attached to the permit under Section 74 are about 13 in

number. Section 75 deals with scheme for renting of

motor cabs. Section 76 deals with application for

private service vehicle permit. Section 76[3]

contemplates that the Regional Transport Authority if it

decides to grant the permit may, subject to any rules

that may be made under this Act, attach to the permit

any one or more of the conditions which are 7 in

number. Similarly, Sections 77, 78 and 79 deals with

grant of goods carriage permit. The conditions that

could be attached for granting goods carriage permit are

about 9 in number.

- 20 -

15. Consequences of violation of permit

condition are contemplated in Section 86 of the Act

where the permit can be cancelled, penalty can be

imposed under Section 192-A of the Act. Section 207(1)

of the Act contemplates power to detain vehicles used

without certificate of registration permit, etc which

reads thus:

“207. Power to detain vehicles used

without certificate of registration permit, etc.—

(1) Any police officer or other person

authorised in this behalf by the State

Government may, if he has reason to believe

that a motor vehicle has been or is being used

in contravention of the provisions of section 3

or section 4 or section 39 or without the

permit required by sub-section (1) of section

66 or in contravention or any condition of

such permit relating to the route on which or

the area in which or the purpose for which the

vehicle may be used, seize and detain the

vehicle, in the prescribed manner and for this

purpose take or cause to be taken any steps

- 21 -

he may consider proper for the temporary

safe custody of the vehicle: Provided that

where any such officer or person has reason

to believe that a motor vehicle has been or is

being used in contravention of section 3 or

section 4 or without the permit required by

sub-section (1) of section 66 he may, instead

of seizing the vehicle, seize the certificate of

registration of the vehicle and shall issue an

acknowledgment in respect thereof.

(emphasis supplied)

16. Section 207 empowers any police officer or

other authorized person to seize and detain the vehicle

for the contraventions of sections 3 or section 4 or

section 39 or without the permit required by sub-

section [1] of section 66 or in contravention or any

condition of such permit relating to the route on which

or the area in which or the purpose for which the vehicle

may be used.

- 22 -

17. It is beneficial to refer to this provision only

to ascertain the intention of the legislature in employing

the words ‘the purpose for which the vehicle may be

used’. There are different kinds of contravention of the

permit. One of it is relating to the route on which or the

area in which the vehicle may be used. The purpose for

which the vehicle may be used is distinguishable from

the terms and conditions of the permit. Utmost, route

on which or the area in which the vehicle may be used

is one of the terms and conditions of the permit. But, it

cannot be construed as the purpose for which the

vehicle may be used. The Hon’ble Apex Court while

considering this aspect relating to section 207 of the

Act, in the case of ‘STATE OF MAHARASHTRA AND

OTHERS vs. NANDED-PARBHANI Z.L.B.M.V.

OPERATOR SANGH’ reported in 2000 [2] SCC 69 has

observed thus:

“According to the learned counsel

appearing for the State of Maharashtra the

- 23 -

expression “purpose for which the vehicle

may be used” could be construed to mean

that when the vehicle is found to be carrying

passengers more than the number prescribed

in the permit, the purpose of user is

otherwise. We are unable to accede to this

contention as in our opinion, the purpose

would only refer to a contingency when a

vehicle having a permit of a stage carriage is

used as a contract carriage or vice versa or

where a vehicle having a permit for stage

carriage or contract carriage is used as a

goods vehicle and vice versa.”

18. Though this decision is rendered in the

context of Section 207 of the Act, the same would throw

light to interpret the words ‘for a purpose not allowed by

the permit’ under Section 149[2][a][i][c] of the Act.

‘Purpose’ would be construed as stage carriage, contract

carriage, goods carriage, private vehicle, temporary

permit and so on. The terms and conditions attached to

each type of permit cannot be construed as the purpose

for the permit. ‘Purpose’ and ‘the terms of conditions’

- 24 -

are two different aspects. The legislature in its wisdom

thought it fit to restrict the defence available under

Section 149[2][a][i][c] of the Act ‘for a purpose not

allowed by the permit’ and not for ‘violation of any terms

and conditions of the permit’. For example, if a vehicle

holding goods carriage permit is carrying passengers or

vice-versa. Then, it can be held that the vehicle holding

goods carriage permit is being used for a purpose not

allowed by the permit. The breach of conditions of the

permit would by itself can not be characterised as the

purpose not allowed in the permit. In CHALLA

BHARATHAMMA’s case [supra], the Hon’ble Apex Court

has held thus:

“12. High Court was of the view that

since there was no permit, the question of

violation of any condition thereof does not

arise. The view is clearly fallacious. A person

without 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. Plying of a vehicle without a permit is

- 25 -

an infraction. Therefore, in terms of Section

149(2) 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 insurer. High Court was,

therefore, not justified in holding the insurer

liable.”

The said judgment is rendered in the context of ‘no

permit’. The motor vehicle not possessing a permit

means the vehicle was not permitted to ply in the public

place or in other words, there is infraction of law which

clearly establishes the use of the vehicle for a purpose

not allowed in law. Hence, the said Judgment of

CHALLA BHARATHAMMA’s case [supra] is not

applicable to the facts of the present case.

19. In CHALLA BHARATHAMMA’s case [supra],

their Lordships have referred to the Judgment of the

Hon’ble Apex Court in the case of ‘NEW INDIA

ASSURANCE CO., LTD., vs. ASHA RANI AND OTHERS’

- 26 -

reported in [2003 [2] SCC 223] wherein it was observed

as follows:

“We may consider the matter from another

angle. Section 149[2] of the 1988 Act enables

the insurers to raise defences against the

claim of the claimants. In terms of clause [c]

of sub-section [2] of section 149 of the Act one

of the defences which is available to the

insurer is that the vehicle in question has

been used for a purpose not allowed by the

permit under which the vehicle was used.

Such a statutory defence available to the

insurer would be obliterated in view of the

decision of this Court in Satpal Singh’s case

[2000] 1 SCC 237.”

20. In ASHA RANI’s case [supra], the Hon’ble

Apex Court was considering a case of unauthorized

passengers travelling in a goods vehicle. In that

context, it was held that it is one of the defence which is

available to the insurer under section 149[2][a][i][c] of

the Act, whether the vehicle has been used for a

purpose not allowed by the permit under which the

- 27 -

vehicle was used. Hence, the case on hand is

distinguishable from ASHA RANI’s case [supra].

21. For the aforesaid reasons, this Court is of

the considered opinion that the impugned Judgment is

not fit to be sustained in much as the liability aspect is

concerned. The liability fastened on the registered

owner of the vehicle is set aside. The

insurer/respondent No.3 shall be liable to satisfy the

Award.

22. The quantum of compensation awarded by

the Tribunal is just and reasonable, the same remains

undisturbed.

23. In the result, the appeal stands allowed in

terms of the above.

Sd/- JUDGE

nvj, AN/-