The New India Assurance Company Limited v. Managing Director, KSRTC

# **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** **THE HONOURABLE MR.JUSTICE N.NAGARESH** **MONDAY, THE 15TH DAY OF JUNE 2020 / 25TH JYAISHTA, 1942** **MACA.No.4219 OF 2019(B)** **AGAINST THE AWARD DATED 30-11-2018 IN OP(MV) 1552/2015 OF** **MOTOR ACCIDENT CLAIMS TRIBUNAL, IRINJALAKUDA** ## **APPELLANT/3RD RESPONDENT:** **THE NEW INDIA ASSURANCE COMPANY LIMITED, THAMPANOOR, NOW REPRESENTED BY ITS MANAGER, REGIONAL OFFICE, M.G.ROAD, KOCHI- 11.** **BY ADV. SRI.MATHEWS JACOB (SR.)** ## **RESPONDENT/1ST RESPONDENT:** **MANAGING DIRECTOR, KSRTC, FORT,THIRUVANANTHAPURAM,PIN - 695 023.** **R1 BY ADV. SRI.P.C.CHACKO(PARATHANAM)** **THIS MOTOR ACCIDENT CLAIMS APPEAL HAVING BEEN FINALLY HEARD ON 01-06-2020, THE COURT ON 15-06-2020 DELIVERED THE FOLLOWING:** MACA No.4219/2019 2 ## **[CR]** ## **J U D G M E N T** ~ ~ ~ ~ ~ ~ ~ ~ ~ ## _**Dated this the 15[th] day of June, 2020**_ Though the appellant-insurer challenges the Award in OP(MV) No.1552/2015 dated 30.11.2018, of the Motor Accidents Claims Tribunal, Irinjalakuda in favour the petitioner-claimant in the OP(MV), the contestation in this appeal under Section 173 of the Motor Vehicles Act, 1988 is between the appellant-insurer and the respondentManaging Director, KSRTC, who is the owner of the offending vehicle. 2. Discarding unnecessary details, the crucial facts emerging from the pleadings are as follows:- MACA No.4219/2019 3 On 01.09.2015, when the petitioner in OP(MV) (hereafter referred to as 'the claimant' for clarity) was walking through a public road, a KSRTC bus bearing No.KL-15-8346 driven by the 2[nd] respondent-Driver in OP(MV) hit the petitioner, resulting in injuries. The Claimant sought ₹3,00,000/- as compensation. The respondentManaging Director, KSRTC filed written statement denying the nature of injuries, period of treatment, disability suffered by the claimant, his age, occupation and income. The appellant-insurer also filed written statement, in which the appellant contended _inter alia_ that the offending Bus was being plied without a valid permit and fitness certificate. 3. Appreciating the evidence on record, the Tribunal concluded that the accident happened as a result of the rash and negligent driving of the KSRTC Bus. On the question of violation of policy conditions, the Tribunal found that the offending vehicle had Ext.B9 permit with validity MACA No.4219/2019 4 from 22.06.2010 to 21.06.2015 and the Bus being one operated by a State Transport Undertaking and the route in which accident occurred being a nationalised one, periodical renewal of the permit is not required. The Tribunal held that there is no violation of policy condition. The Tribunal consequently passed an Award granting ₹1,56,800/- as compensation. The respondent-Managing Director, KSRTC, the Driver and the appellant-insurer were held jointly and severally liable to compensate the Claimant. The appellant-insurer challenges the findings of the Tribunal on the liability of the insurer. 4. The learned Standing Counsel for the appellant argued that before the Tribunal, while admitting insurance coverage, the appellant had specifically alleged that the vehicle had no valid permit or fitness certificate. Ext.B9 permit was valid from 22.06.2010 to 21.06.2015 only. The accident was on 09.09.2015. The period of validity of the MACA No.4219/2019 5 subsequent Ext.B3 permit is from 05.10.2015 to 04.10.2020. Ext.B6 permit of which validity is from 17.06.2015 to 16.06.2020, was granted to another vehicle bearing registration No.KL-15-7550. It is therefore obvious that the offending Bus had no valid permit to ply and the Tribunal committed a palpable mistake in arriving at a conclusion that valid permit is not necessary. 5. The absence of a valid permit for a transport vehicle is a fundamental breach and not a technical breach of policy condition and hence the Insurance Company has a right to recovery from the insured. The Tribunal ought to have given at least recovery right to the appellant, contended the learned Standing Counsel for the insurer. 6. The learned Standing Counsel relied on the judgment in _**National Insurance Co. Ltd. v. Challa Bharathamma and others** [2004 (3) KLT 454 (SC)]_ and argued that plying of a vehicle without valid permit is an MACA No.4219/2019 6 infraction on policy conditions and in terms of Section 149(2) of the Motor Vehicles Act, 1988, defence is available to the insurer. In such circumstances, when the insurer is made liable to pay to the claimant, a right to recover the amount from the owner of the vehicle should be granted to the insurer. The learned Standing Counsel for the appellant arduously argued that the respondent should be directed to furnish security to the insurer for the Award amount and the offending vehicle should be attached as a part of security. 7. The learned Standing Counsel for the respondent-Managing Director, KSRTC submitted that Ext.B9 permit in respect of the vehicle was for a period up to 21.07.2015 and in view of Ext.B5 Government Order, KSRTC is entitled to operate on the notified route even without renewal of permit. The place Mapranam where accident occurred was on Thrissur - Kodungallur public road which is a part of a notified route. Section 103 of the MACA No.4219/2019 7 Motor Vehicles Act gives an inviolable right to State Transport Undertakings in notified areas and on notified routes, to get permits. 8. The learned Standing Counsel for the respondent relied on Section 101 of the Motor Vehicles Act, 1988 to contend that the KSRTC has a legal right to operate services in notified routes in public interest on special occasions, and to operate such additional service, the KSRTC need to give only an intimation to the concerned Transport Authority. The KSRTC had given prompt intimation in respect of use of the offending vehicle, to the authorities as evidenced by Ext.B7. The respondent, therefore, has not violated any policy conditions and the appeal of the insurer is intended only to duck out of their liability. 9. I have heard the learned Standing Counsel for the appellant and the respondent. The issues which arise MACA No.4219/2019 8 for consideration in this appeal are (1) Whether the Claims Tribunal was right in holding that the offending vehicle had a valid permit on the date of accident, (2) Whether Section 101 of the Motor Vehicles Act would justify the action of the respondent in plying the offending vehicle without a valid and current permit, and (3) whether failure or omission on the part of the respondent to renew a permit, will invalidate the permit on the expiry of permit period. 10. To decide on the validity of permit of the offending vehicle, the following facts are relevant:- (1) Government of Kerala issued letter dated 19.06.1999 to the Transport Commissioner to pass orders allowing to dispense with the practice of periodical renewal of permits granted to KSRTC (Ext.B5). (2) The offending Bus BL-15-8346 had valid permit from 26.02.2010 to 21.07.2015 (Ext.B9). (3) Another KSRTC Bus KL-15-7550 plying in the same route had valid permit from 17.06.2015 to 16.06.2020 MACA No.4219/2019 9 covering the date of accident (Ext.B6). (4) The KSRTC sent communication on 01.09.2015 to the RTO that since vehicle KL-15-7550 cannot be operated, vehicle KL-15-8346 would be operated invoking Section 101 of MV Act (Ext.B7). (5) The accident occurred on 01.09.2015. (6) The offending Bus KL-15-8346 is covered by a permit subsequently from 05.10.2015 to 04.10.2020 (Ext.B3). With respect to liability of the appellant-insurer, the Clause relating to “Limitations as to Use” laid down in Ext.B10 policy document is relevant, which is as follows:- “The policy covers dues only under a permit within the meaning of the MV Act, 1988 or such a carriage falling under Sub-Section (3) of 66 of the MV Act, 1988. The policy does not cover dues for : (a) Organised racing (b) Speed test.” 11. Let us now examine the sustainability of the arguments on either side, with reference to the provisions MACA No.4219/2019 10 and scheme of the Motor Vehicles Act, 1988. Chapter V of the Motor Vehicles Act, 1988 deals with Control of Transport Vehicles in general. Section 66 provides for the necessity of permits and states that no owner of a motor vehicle shall use or permit the use of a vehicle as a transport vehicle in any public place, save in accordance with the conditions of permit granted or countersigned by a Regional or State Transport Authority or any prescribed authority authorising him to the use of the vehicle in that place. Section 70 provides for the contents of an application for obtaining a stage carriage permit. As per Section 70, the application shall contain the route or routes or the area or areas to which the application relates. As per Section 72, a Regional Transport Authority may grant a stage carriage permit with modifications, if necessary, or refuse to grant such a permit. Section 81 of the Act, 1988 provides for duration and renewal of permits. The duration of a permit other than a MACA No.4219/2019 11 temporary permit, is fixed as five years. Sub-Section (2) of Section 81 states that a permit may be renewed on an application made not less than 15 days before the date of its expiry. If holder of a permit wants replacement of vehicles, such replacement can be done only with the permission of the authority which granted the permission, in view of Section 83. Under Section 87, a Regional Transport Authority or the State Transport Authority may grant temporary permits to be effective for a limited period which shall not exceed four months, to authorise the use of transport vehicle temporarily, for specified reasons. 12. Chapter VI of the Motor Vehicles Act, 1988 makes special provisions for State Transport Undertakings (hereinafter referred to as 'the STUs' for short). Section 98 states that the provisions of Chapter VI and the rules and orders made thereunder shall have effect notwithstanding anything inconsistent therewith contained in Chapter V or in MACA No.4219/2019 12 any other law for the time being in force or in any instrument having effect by virtue of any such law. From Section 98, it is clear that provisions of Chapter VI providing for separate provisions for control of transport vehicles by STUs, would supersede the provision of Chapter V, in case of inconsistency. 13. Section 99 provides for preparation and publication of proposal regarding Road Transport Service of a STU. It enables the State Government to formulate a Scheme to nationalise Road Transport Services to be operated by STUs. Ext.B8 Scheme produced in this appeal would show that the accident occurred in a route notified under a Scheme framed under Section 99. 14. Sections 101 and 103 of the Act, 1988 are crucial to decide the issues involved in this case. Section 101 reads as follows:- MACA No.4219/2019 13 ## “ **Section 101: Operation of additional services by a State transport undertaking in certain circumstances.--** Notwithstanding anything contained in Section 87, a State transport undertaking may, in the public interest operate additional services for the conveyance of the passengers on special occasions such as to and from fairs and religious gatherings: Provided that the State transport undertaking shall inform about the operation of such additional services to the concerned Transport Authority without delay.” Section 103(1) relating to issue of permits to State Transport Undertakings reads as follows:- ## “ **Section 103: Issue of permits to State transport undertakings.--** (1) Where, in pursuance of an approved scheme, any State transport undertaking applies in such manner as may be prescribed by the State Government in this behalf for a stage carriage permit or a goods carriage permit or a contract carriage permit in respect of a notified area or notified route, the State Transport Authority in any case where the said area or route lies in more than one region and the Regional Transport Authority in any other case **shall issue** such permit to the State transport undertaking, notwithstanding anything to the contrary contained in Chapter V.” (Emphasis supplied) MACA No.4219/2019 14 The issues in this case are to be examined with reference to the legislative intent discernible from the above provisions. 15. One argument of the Standing Counsel for respondent is that as on 01.09.2015, a KSRTC Bus bearing registration No.KL-15-7550 plying in the same route had a valid permit, but since that particular vehicle could not be operated on that day, the respondents sent a communication to the RTO intimating their intention to operate the offending vehicle bearing registration No.KL-158346. The intimation is produced as Ext.B7. The Standing Counsel submits that such temporary arrangement was made under Section 101 of the Act, 1988. Section 101 of the Act provides that notwithstanding anything contained in Section 87, a STU may, in public interest operate additional services for the conveyance of the passengers on special occasions such as to and from fares and religious MACA No.4219/2019 15 gatherings, provided the STU informs about the operation of such additional services to the concerned transport authority, without delay. 16. A reading of Section 101 would indicate that the said provision is intended to dispense with temporary permits for STUs, for running additional services. Such additional services for the conveyance of passengers can be undertaken only on special occasions like fares and religious gatherings. Of course, such operations may not be limited to fares and religious gatherings only. On any special occasion, a STU can invoke Section 101. But, the provision would indicate that Section 101 can be invoked only to run “additional services”. In the present case, the respondent was not running any additional service, but was substituting a vehicle in respect of an existing service. Therefore, Section 101 cannot be relied upon by the respondent to justify the use of the offending vehicles on MACA No.4219/2019 16 the date of accident. The argument of the learned Standing Counsel for the respondent relying on Section 101, therefore cannot be accepted. 17. The second contention of the respondent is that in view of special provisions made in Chapter VI of the Act, 1988, permits once issued to the respondent would remain valid even after the period of permit. From Sections 66 and 72 of the Act, it is clear that a permit is indispensable for the use of a motor vehicle as a stage carriage vehicle. Chapter V does not dispense with the requirement of a permit even in the case of a STU. But, at the same time, while Section 81 mandates renewal of a permit granted under Chapter V, the special provisions relating to STUs contained in Chapter VI do not speak of renewal of permits granted to STUs. As far as STUs are concerned, the Act gives them monopoly to ply stage carriages in the notified areas or route or part thereof under a Scheme to the partial or complete exclusion MACA No.4219/2019 17 of others. Section 103 in effect grants an unbridled right to the STUs to get stage carriage permits in notified areas. Section 103 mandates that where, in pursuance of any approved Scheme, any STU applies for a stage carriage permit in respect of a notified area or route, the STA and the RTA, as the case may be, _shall issue_ such permits to the STU, notwithstanding anything to the contrary contained in Chapter V. A reading of the afore statutory provisions would show that though the Act, 1988 mandates possession of a permit even for STUs to ply stage carriages, as far as notified routes or areas are concerned, an STU has a right to get permits as provided in the Scheme, from the Transport Authorities. 18. It has to be noted that in the repealed Motor Vehicles Act, 1939, Section 68F(1E) required that where a STU applies for renewal of permit within the period stipulated in Section 58(2A), the STA or RTA, as the case MACA No.4219/2019 18 may be, shall renew such permit notwithstanding anything contained in Chapter IV. Similar provision is absent in Chapter VI of the Motor Vehicles Act, 1988. The Hon'ble Apex Court in _**U.P. State Transport Corporation v. Regional Transport Authority and Others** [(1998) 7 SCC 436]_ considered the question whether an STU need to renew permits. The question was considered under the repealed Motor Vehicles Act, 1939 and under U.P. Motor Vehicles Rules, 1940. Rule 10(4) of the U.P. Rules laid down that a permit issued to the Corporation (STU) is to remain valid till the scheme remains in force. After adverting to Sections 68B and 68F(1E) of the Act, 1939 and Rule 10(4) of the UP Motor Vehicles Rules, 1940, the Apex Court held that a combined reading of Section 68B, 68F(1E) and Rule 10 shows that in so far as notified routes are concerned, for which the Corporation has an exclusive right to ply their vehicles under the scheme, the duration of MACA No.4219/2019 19 permit obtained by the Corporation for plying those vehicles is co-terminus with the life of the scheme. A provision similar to Section 68F(1E) of the Act, 1939 is absent in the Act, 1988. 19. In _**Gajraj Singh and others v. State Transport Appellate Tribunal and others** [(1997) 1 SCC 650]_ , the Apex Court was considering the legality of permits originally issued under the Act, 1939 and renewed after the promulgation of Act, 1988. The Hon'ble Apex Court elaborately considered the provisions contained in both the Acts and observed in paragraph 52, as follows:- “As far as the STU is concerned, they having had the monopoly to ply stage carriages, goods carriages, contract carriages or special services in the notified areas or route or part thereof under the scheme, it was thought unnecessary to bother them to obtain renewal of permits for stage carriages etc. Section 101 itself provides for such an intention. Resultantly, the Legislature appears to have obviated the need to obtain periodical renewals of permits for stage carriages etc. run by the STU. Parliament was aware of the need to obtain the MACA No.4219/2019 20 renewal of permits by the STU under Section 68F(IF) of the Repealed Act and absence of such a provision in the Act is further eloquent and selfexplanatory.” In the light of the afore observations of the Hon'ble Apex Court and in view of the non-incorporation by the legislature, of a Clause requiring renewal of permits by STUs in the Motor Vehicles Act, 1988, it has to be held that the Motor Vehicles Act, 1988 dispensed with the requirement of renewal of permits issued to STUs in notified areas/routes, as long as a Scheme is in existence. Ext.B5 letter dated 19.06.1999 issued by the Government of Kerala requiring the Transport Commissioner to pass orders to dispense with the practice of periodical renewal of permits granted to the KSRTC, would also make the position clear. 20. As far as the offending vehicle in the present MACA is concerned, Ext.B9 would show that it had a valid permit from 26.02.2010 to 21.07.2015. The Scheme MACA No.4219/2019 21 notifying the routes and areas, is still in force. Therefore, even in the absence of a renewal of permit in respect of the offending KSRTC Bus, it has to be treated that the vehicle had valid permit even on the date of accident. Obtaining a further permit (Ext.B3) for the offending vehicle for the period from 05.10.2015 to 04.10.2020, therefore is of no consequence. In the circumstances, the finding of the Tribunal as regards existence of a valid permit for the offending vehicle is liable to be upheld. The MACA filed by the appellant therefore fails and consequently, it is dismissed. Sd/- **N. NAGARESH, JUDGE** aks/10/06/2020