While concurring with the observation of the Tribunal (MACT) that the violation of the permit condition is not a defense for the insurance company to avoid payment of compensation, the Madras High Court held that violation of the permit condition is one of the grounds available to the insurance company to avoid payment of compensation.

However, the Bench of Justice R. Vijaykumar observed that "any violation of policy condition or permit condition would not completely exonerate the insurance company, and the insurance company has to satisfy the award and thereafter, recover the same from the insured by filing execution proceedings in the same claim petition".

Advocate S. Veeranasamy appeared for the Appellant while none appeared for the Respondent before the Court.

In a brief background, when the injured claimant was travelling as a pillion rider in a motorbike, a minibus belonging to the first respondent and insured by the second respondent i.e., Oriental Insurance company, had dashed with the motorbike. Hence, he prayed for compensation of Rs.5 lacs. This was opposed by the first respondent i.e., the owner of the minibus contending that only the rider of the motorbike drove the said vehicle in a rash and negligent manner and hit the minibus. Although the second respondent concurred with the bus driver, however, claimed that for violation of the permit condition, the insurance company would not be liable for any compensation.

The Tribunal (MACT) after considering the evidence, held that the accident occurred only due to rash and negligent driving of the minibus, and the violation of the permit condition was not a defense available to the insurance company under Section 149(2) of the Motor Vehicles Act. Accordingly, the bus owner was exonerated and the liability was fixed upon the insurance company at a total compensation of Rs.1.28 lacs. Hence, the present appeal.

After considering the evidence, the High Court found from a perusal of the motor vehicle inspector's report, that the bike was damaged on its rear side and not on the front side, and therefore, the claimant had established his contention that the minibus had dashed against the rear side of the motorbike and not otherwise.

Therefore, the Tribunal was right in holding that the accident has taken place only due to the rash and negligent driving of the minibus owned by the first respondent, added the Court.

The Bench further noted that the driver of the minibus had contended that the bus was taken through Olikinacheri for the purpose of inspection, whereas, he has taken a different stand that all buses were diverted through Olikinacheri due to the visit of a politician, during his cross-examination.

There were passengers at the time of the accident when the bus was plying through Olikinacheri, in violation of the permit conditions, added the Bench.

Accordingly, finding that the quantum of the award in the claim petition was based upon the disability certificate and medical bill, the High Court refused to interfere in the quantum of compensation awarded by the Tribunal and added that the second respondent is liable to satisfy the award and thereafter, can recover the same from the first respondent in the claim petition.

Cause Title: Oriental Insurance Company Ltd. v. Krishnan and Anr.

Click here to read /download the Judgment