Offending Tempo Was Driven Without Permit, But It's Not Fundamental Breach Of Insurance Policy: Jharkhand HC Dismisses Insurance Company's Appeal Against MACT's 'Pay & Recover' Direction

The Jharkhand High Court recently dismissed an appeal filed by Bajaj Allianz General Insurance, which challenged an award of Rs. 50,90,176 granted as compensation to the family of a deceased lawyer who was killed in a road accident.

The Court reaffirmed that non-compliance with vehicle permit regulations does not amount to a fundamental breach of an insurance policy.

The Bench of Justice Subhash Chand ruled that the Motor Accident Claims Tribunal (MACT) was correct in its finding that the driver of the offending vehicle held a valid driving license and the insurance policy was effective at the time of the accident. However, the vehicle was being operated without a valid route permit. Despite this, the court upheld the tribunal's directive for the insurance company to pay the compensation and recover the amount from the vehicle's owner.

"In this case the learned Tribunal has held that the driver of the offending vehicle was also having the valid and effective driving licence and the insurance was also valid and effective on the date of accident; but the very offending Tempo was plied without permit. As such, the ultimate liability would be of the owner and the Insurance Company has been directed to pay the compensation amount with the liberty to recover the same from the owner. The same can be done by the learned Tribunal because there was no fundamental breach of the terms and conditions of the insurance policy," the Bench noted.

The Court said, "The learned tribunal had directed the appellant Insurance Company to pay and recover the compensation on the ground that the said offending Tempo was driven without permit. Breach of the insurance policy which is one of the breach of condition of the policy but cannot be accepted as a fundamental breach of insurance policy. In view of the above, the direction of pay and recover the compensation amount is justified to meet the ends of justice by the learned Tribunal under the facts and circumstances as narrated hereinabove."

The case involved a fatal accident near the Bhowra Taxi Stand in Jharkhand, where a Tempo, driven recklessly, collided with a lawyer, who later succumbed to his injuries in hospital. An FIR was lodged under Sections 279 and 304(A) of the IPC, and two eyewitnesses confirmed the driver's negligence during the investigation. The deceased, aged 34, left behind his wife, two minor children, and his parents. The family had claimed Rs. 89,90,000 in compensation.

The insurance company argued that the deceased was not covered under the policy as the vehicle was operated without a permit, asserting this as a breach of the insurance contract. However, the court dismissed this argument, emphasizing that the absence of a vehicle permit does not constitute a fundamental breach under insurance law.

The Court also addressed the delay in filing the FIR, noting that while it raised doubts, it was not fatal to the claim. Furthermore, it emphasized that motor accident claims are based on the preponderance of probabilities rather than the strict evidentiary standards applied in criminal cases. "...taking into consideration the eye-witness account and the F.I.R., charge sheet, and the postmortem report, the factum of accident is very much proved. There cannot be any doubt in regard to the fake claim as alleged by the learned Counsel for the appellant," the Court said. 

Ultimately, the Court upheld the MACT's decision, directing Bajaj Allianz to pay the compensation with interest and granted it the right to recover the amount from the vehicle owner. The statutory amount of Rs. 25,000, if already paid, was ordered to be adjusted against the total compensation amount.

"In view of critical analysis of the evidence on record as stated herein above, this Misc. Appeal deserves to be dismissed. This Misc. Appeal is hereby dismissed. The impugned Award is confirmed. The statutory amount of Rs. 25,000/- if paid shall be in the amount of the compensation to be paid and recover," the Court ordered. 

Cause Title: Bajaj Allianz General Insurance Co. Ltd v. Munni Kumari & Ors. [M.A. No. 294 of 2023]

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