The Oriental Insurance Co. Ltd. vs Durg Roadways Private Limited
- Court
- Supreme Court
2026 INSC 722
NON-REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO OF 2026
(@ Special Leave Petition (Civil) No.20645 of 2025)
THE ORIENTAL INSURANCE
CO. LTD. … APPELLANT(S)
VERSUS
DURG ROADWAYS PRIVATE
LIMITED & ORS. …RESPONDENT(S)
O R D E R
SANJAY KAROL J.
1. Leave Granted.
2. Oriental Insurance Co. Ltd., (appellant-insurer) in this
th
appeal, takes exception to the judgment and order dated 4
Signature Not Verified
Digitally signed by
RAJNI MUKHI February 2025 passed in MAC No.1292 of 2015 by the High
Date: 2026.07.20
16:36:03 IST
Reason:
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Court of Chhattisgarh, Bilaspur whereby setting aside the
th
award dated 30 March 2015 of the IVth Additional Motor
1
Accident Claims Tribunal, Durg (C.G.) in Claim Case
No.1886 of 2011, Durg. Now the liability stands fastened
upon the appellant herein, in connection with the accident of
2
the vehicle bearing no. CG/07-LP/0344 , which was bound
from Durg to certain destinations in Nepal, for a religious tour
and while it was on its way, suffered a collision with a hill, as
a result thereof, three persons including the driver ‘Riaz
Khan’, Harish Yadav and one other unnamed victim, died.
3. Before the Tribunal were the wife, children and mother
of deceased Harish Yadav seeking compensation of
Rs.48,99,776/-. Having considered the evidence presented,
compensation totaling Rs.32,67,000/- was held payable to the
claimants. The owner of the vehicle, the respondent herein,
was directed to pay the said amount along with 6% interest
nd
from the date of institution of the claim petition i.e., 22
October 2011. It is this question of liability that is up for
adjudication in this appeal, after, on an appeal presented by
the respondent, the High Court in terms of the impugned
judgment held the insurer liable to pay the said amount instead
of the owner. While doing so, it relied on the judgment of
1
‘Tribunal’
2
‘Offending Vehicle’
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Punjab and Haryana High Court titled Anil Kumar v. Roop
3
Kumar Sharma , which was followed by different High
Courts of the country.
4. Heard learned counsel for the parties and perused the
record.
5. At the outset, we may note that we are deciding this
appeal in the following undisputed, attending facts:
(i) The Offending Vehicle bearing Bus No. CG-
07/LP-0344 was duly registered in India;
(ii) Before the journey commenced the Respondent-
Owner obtained special permit bearing No. 130/2010
dated 23rd July 2010 from the Additional Regional
Transport Authority, Durg issued under Section 88(8)
4
of the Motor Vehicles Act 1988 . This permit expressly
authorised the offending vehicle to travel to areas in
Nepal;
3
2017 SCC OnLine P&H 6400
4
MVA
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(iii) The driver of the Offending Vehicle held a valid
driving license issued by a competent licensing
authority in India;
(iv) The Respondent-Owner had obtained a policy of
motor insurance bearing Policy No.
th
192500/31/2011/1545 dated 16 May 2010 from the
appellant-Insurance Company;
(v) When the vehicle reached India-Nepal border, all
relevant documents including driving license of the
driver were properly verified by the competent
authorities. Post such verification, the Bhansar Pragna
Patra and Indian Tourist Passenger Checking Card
were issued;
(vi) Existence of Treaty of Peace and Friendship
between the Government of India and Government of
st
Nepal dated 31 July 1950 which grants inter-alia same
privileges to the nationals of both the countries in the
matter of movement.
6. Following issues fall for our consideration:
6.1 Whether the accident which occurred outside
India will be covered by the Insurance Policy issued
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5
under the Motor Vehicles Act 1988 in the absence of
any payment of additional premium as required by
6
General Regulation 4 of the India Motor Tariff 2002 ?
6.2 Whether the driving license possessed by the
driver authorized him to drive the vehicle in Nepal at
the time of the incident?
7. It is trite in law to say that the insurance policy is a
7
contract between the insured and the insurer. It is a well-
recognized principle of construction of contract that the
contract must be read as a whole to determine the intent of the
parties. The same principle extends to contract of insurance
also; thus, policy as a whole should be seen, not a particular
clause in isolation. Also, different clauses of the contract have
to be read harmoniously and one cannot cherry pick one
clause to base their claim on it, while rejecting other clauses
of the document. This Court in National Insurance Co. Ltd.
8
v. Chief Electoral Officer , and Export Credit Guarantee
9
Corpn. of India Ltd. v. Garg Sons International held that
5
MVA
6
IMT
7
Oriental Insurance Co. Ltd. v. Sony Cheriyan, (1999) 6 SCC 451;
Shivram Chandra Jagarnath Cold Storage v. New India Assurance
Co. Ltd., (2022) 4 SCC 539
8
(2023) 6 SCC 441
9
(2014) 1 SCC 686
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the insurance contract must be read as a whole and every
attempt should be made to harmonise the terms thereof.
8. The argument advanced by the appellant-insurer
primarily focuses on the clause which deals with
“ Geographical Area ” while simply ignoring another clause
“ Limitation as to Use ”. It is pertinent to extract relevant
clauses of Insurance Policy:
“ Geographical Area: India”
“ Area of Extension: [Blank/Nil]”
“ Limitation as to Use: The Policy covers use only
under a permit within the meaning of the Motor
Vehicles Act, 1988, or such a carriage falling under
Section 66(3) of the Motor Vehicles Act, 1988.”
9. The clause “ Limitations as to Use ” covers vehicles
which are used under a ‘ permit’ within the meaning of the
MVA. The word ‘permit’ is defined under Section 2(31) of
the MVA as follows:
“permit’ means a permit issued by a State or Regional
Transport Authority or an authority prescribed in this
behalf under this Act authorising the use of a motor
vehicle as a transport vehicle;”
10. As already noted supra, a special permit has been
issued by the Additional Regional Transport Authority, Durg,
Chattisgarh, which specifically authorized the plying of
offending vehicle on the Durg-Nepal route. The relevant
portion thereof is extracted hereunder:
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“SPECIAL PERMIT REGARDING CONTRACT
VEHICLE
…
It is hereby certified that the vehicle having-
(one) Engine No....ZNH567969
(two) Chassis No....NXE667745
(three) Registration Mark CG07LP 0344
Registering Authority: Addi. RTO Durg,
Registered by and Shree: Durg Roadways Pvt. Ltd. (CG)
(permanent address):G.E.Road- Durg
Permanent Permit under the ownership of.....
(Type (PSV) 35+1) issued by the Transport Durg (CG)
Authority to such /person/ persons, the particulars of
which are given below-
………..
Durg to Nepal Via Bhilai, Raipur, Bhilai, Raipur,
Bilashpur, Ambikapur, wadurf nagar, Vindhyachal,
Banarash, Ayyodhyya, Sonali border, Nepal (Pokhra),
Nepal(Kathmandu), Nepal (Kathmandu Manokarana)
Return Raksho Border, Sultanganj, Kumarshar,
Avarkhiya, Gudiyari, Deodhar, Washukinath, Return
Durg.
This permit is valid from 26.07.2010 to 15.08.2010.
…………”
11. A cumulative reading of the definition of permit and
this special permit reveals the following crucial points, which
in turn establish that this special permit falls within the
definition of Section 2(31) and thus the offending vehicle was,
at the time of the accident, being used under a “ permit ” within
the meaning of the MVA:
(a) the special permit was issued by a State or
Regional Transport Authority... under the Act ;
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(b) the heading of this special permit indicates that it
authorised the use of the offending vehicle as a
‘ transport vehicle’ .
12. The Insurance Policy provided coverage for use under
a ‘ permit’ . The clause “ Limitations as to Use ” is cast in
general and unqualified terms; and does not impose any
geographical limitation as to its use. Once this permit is
issued, the insurance company will cover the vehicles having
valid permit irrespective of their geographical location where
they are plied. Thus, by inserting this clause, the insurance
companies restricted its coverage to only one condition, that
is the existence of a permit under the Act.
13. However, we make it clear that the existence of this
clause does not render the clause “ Geographical Area ”
redundant. It will continue to cover those cases where the
offending vehicle operates without a permit that extends to a
foreign territory. Had the vehicle not possessed the permit as
required by the MVA, this clause could have been invoked by
the appellant-insurer to deny the coverage outside India. But
since a permit existed that specifically authorised travel to
Nepal, the “ Limitations as to Use ” clause, by its own terms,
provided coverage for that use.
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14. The appellant-insurer ought to have expressly
mentioned that their policy would not cover any area outside
the territory of India even with a permit. It should have
effectively and clearly communicated the terms of contract as
the terms are unilaterally drafted by the insurer only.
Essentially, “ Cover what you want. Exclude what you want.
But make sure you do it clearly. Sloppy drafting could cost
10
you something .” Since specific geographical exclusion is not
expressly provided for, the appellant’s contention cannot be
accepted. Here only we may observe that the vehicle in
question was lawfully allowed to travel outside India and into
Nepal. The authorities at the International Border Post, only
after being satisfied with all compliances of law allowed it to
cross the border. Also, when the clauses are such that there is
scope of interpreting the insurance policy, in multiple ways
then the interpretation which aligns with the beneficial
purposes of the MVA should be adopted.
15. This Court in Syed Mehaboob v. New India Assurance
11
Co. Ltd. observed:
13. The Motor Vehicles Act of 1988 is a beneficent
legislation intended to place the claimant in the same
position that he was before the accident and to
compensate him for his loss. Thus, it should be
10
Mark C. Rahdert, "Reasonable Expectations Revisited," 5 Conn. Ins. L.J. 107, 117
(1998)
11
(2011) 11 SCC 625
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interpreted liberally so as to achieve the maximum
benefit .
12
[ See : Ningamma v. United India Insurance Co. Ltd . ; K.
13
Ramya v. National Insurance Co. Ltd . ; Nidhi Bhargava v.
14
National Insurance Co. Ltd .
16. Keeping with the beneficial intent, it is a well settled
position of law that in case of any ambiguity, the
interpretation that favours the insured must be adopted i.e. the
rule of contra proferentem . Reference can be made to United
15
India Insurance Co. Ltd. v. Pushpalaya Printers , which
was followed in Sangrur Sales Corpn. v. United India
16
Insurance Co. Ltd . :
6. … It is also settled position in law that if there is any
ambiguity or a term is capable of two possible
interpretations, one beneficial to the insured should be
accepted consistent with the purpose for which the
policy is taken, namely, to cover the risk on the
happening of certain event…”
17. Another argument pressed by the appellant-insurer is
that as per the General Regulation 4 (GR.4) of the IMT
additional premium as required by the Regulation, which was
not paid, thus policy was limited to India only. The relevant
extract of the Regulation is:
12
(2009) 13 SCC 710
13
2022 SCC OnLine SC 1338
14
2025 SCC OnLine SC 872
15
(2004) 3 SCC 694
16
(2020) 16 SCC 292
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“ The Geographical Area of Motor Policies may be
extended to include:
i. Bangladesh
ii. Bhutan
iii. Nepal
iv. Pakistan
v. Sri Lanka
vi. Maldives
as the case may be, by charging a flat additional
premium, as stated below for a period not exceeding 12
months:
For Package Policy….. Rs. 500/- per vehicle,
irrespective of the class of
vehicle.
For policies other than
Package Policy
Rs. 100/- per vehicle,
irrespective of the class of
vehicle.
For such extensions Endorsement IMT 1 is to be used.””
18. The IMT, including GR.4 and the IMT-1 endorsement
requirement, is a regulatory instrument and these are binding
regulations issued under Part II-B ( now repealed ) of the
Insurance Act, 1938 by the Tariff Advisory Committee.
19. At this juncture, it is important to refer to sub-section
(5) of Section 147:
“Notwithstanding anything contained in any law for the
time being in force, an insurer issuing a policy of
insurance under this section shall be liable to indemnify
the person or classes of persons specified in the policy in
respect of any liability which the policy purports to cover
in the case of that person or those classes of persons .”
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20. It, being a non-obstante clause, imposes liability on the
insurance company to indemnify any person or classes of
persons specified in the policy for any liability that the policy
purports to cover, irrespective of anything contained in any
other law for the time being in force. The relevance of a non-
obstante clause is well settled in law.
17
20.1 In Mohd. Abdul Samad v. State of Telangana ,
B.V. Nagarathna J. held:
“82. A non obstante clause is usually appended to a
section in the beginning with a view to give the enacting
part of the section, in case of a conflict, an overriding
effect over the provision or the Act mentioned in the non
obstante clause. In other words, in spite of the provision
or the Act mentioned in the non obstante clause, the
enactment following it will have its full operation or that
the provisions embraced in the non obstante clause will
not be an impediment for the operation of the enactment.
Thus, a non obstante clause is a legislative device used
by a Parliament or legislature sometimes to give an
overriding effect to what has been specified in the
enacting part of a section in case of a conflict with what
is contained in the non obstante clause as stated above.
83. Further, a non obstante clause has to be distinguished
from the expression “ subject to ” where the latter would
convey the idea of a provision yielding place to another
provision or other provisions to which it is made subject
to. Also, the expression “ notwithstanding anything in
any other law ” in a section of an Act has to be contrasted
with the use of the expression “ notwithstanding anything
contained in this Act ”, which has to be construed to take
away the effect of any provision of that particular Act in
which the section occurs but it cannot take away the
effect of any other law. [Source : Principles of Statutory
Interpretation by Justice G.P. Singh, 15th Edn., Chapter
5.4, p. 284.]”
17
(2025) 2 SCC 49
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18
20.2 In A.G. Varadarajulu v. State of T.N . , while
referring to the eleven-judge bench in Madhav Rao Jivaji
19
Rao Scindia v. Union of India a co-ordinate Bench of
this Court observed:
16. It is well settled that while dealing with a non
obstante clause under which the legislature wants to
give overriding effect to a section, the court must try
to find out the extent to which the legislature had
intended to give one provision overriding effect over
another provision. Such intention of the legislature in
this behalf is to be gathered from the enacting part of
the section. In Aswini Kumar Ghose v. Arabinda
Bose [(1952) 2 SCC 237 : AIR 1952 SC 369 : 1953
SCR 1] Patanjali Sastri, J. observed:
“The enacting part of a statute must,
where it is clear, be taken to control the
non obstante clause where both cannot be
read harmoniously;”
In Madhav Rao Scindia v. Union of India [(1971) 1
SCC 85] (SCC at p. 139) Hidayatullah, C.J. observed
that the non obstante clause is no doubt a very potent
clause intended to exclude every consideration
arising from other provisions of the same statute or
other statute but “for that reason alone we must
determine the scope” of that provision strictly. When
the section containing the said clause does not refer to
any particular provisions which it intends to override
but refers to the provisions of the statute generally, it
is not permissible to hold that it excludes the whole
Act and stands all alone by itself. “A search has,
therefore, to be made with a view to determining
which provision answers the description and which
does not.”
18
(1998) 4 SCC 231
19
(1971) 1 SCC 85
C.A.No…of 2026 @ SLP(C)No.20645 of 2025 Page 13 of 21
Thus, the existence of non-obstante clause under Section
147(5) MVA clearly overrides the regulations. In the
attending facts and circumstances, the non-payment of
additional premium would not vitiate the permit and other
relevant documents.
21. In terms of extra territorial operation of MVA, we may
refer to Article 245 of the Constitution of India, clause 2
whereof, provides that no laws made by the Parliament shall
be deemed to be invalid on the ground that it would have extra
territorial operation. MVA is also an act enacted by
Parliament. Legislators while drafting MVA were cognizant
of the situations that may arise in terms of its geographical
operation and thus gave it an extra territorial effect. Such
intention is evident from the following Sections:
“139. Power of Central Government to make rules .—
(1) The Central Government may, by notification in the
Official Gazette, make rules for all or any of the
following purposes, namely:—
(a) the grant and authentication of travelling passes,
certificates or authorisations to persons temporarily
taking motor vehicles out of India to any place outside
India or to persons temporarily proceeding out of
India to any place outside India and desiring to drive
a motor vehicle during their absence from India;…
(2) For the purpose of facilitating and regulating the
services of motor vehicles operating between India and
any other country under any reciprocal arrangement and
carrying passengers or goods or both by road for hire or
reward, the Central Government may, by notification in
the Official Gazette, make rules with respect to all or any
C.A.No…of 2026 @ SLP(C)No.20645 of 2025 Page 14 of 21
of the following matters, namely:—
…
(b) the conditions subject to which motor
vehicles may be taken from any place in India
to any place outside India;
…
149. Duty of insurers to satisfy judgments and
awards against persons insured in respect of third
party risks - (3) Where any such judgment as is referred
to in sub-section (1) is obtained from a Court in a
reciprocating country and in the case of a foreign
judgment is, by virtue of the provisions of section 13 of
the Code of Civil Procedure, 1908 (5 of 1908) conclusive
as to any matter adjudicated upon by it, the insurer
(being an insurer registered under the Insurance Act,
1938 (4 of 1938) and whether or not he is registered
under the corresponding law of the reciprocating
country) shall be liable to the person entitled to the
benefit of the decree in the manner and to the extent
specified in sub-section (1), as if the judgment were
given by a Court in India:…”
Thus, the provisions of MVA will be applicable whether the
accident took place in India or in Nepal.
Section 139 provides power to the Government to make
rules to grant a person authorization to take their vehicle out
of India temporarily. Section 149 mandates insurers to oblige
by foreign jurisdictions as though they were given by a Court
in India. From a reading of both the Sections, it becomes clear
that the statute is intended to be applicable regardless of
whether the accident took place in India or in Nepal.
22. At the cost of repetition, we say that the existence of
clause ‘ Limitations as to use ’ covers the vehicles which have
C.A.No…of 2026 @ SLP(C)No.20645 of 2025 Page 15 of 21
valid permit and since the offending vehicle did have one, it
will be covered by the policy irrespective of whether it was
plying within or outside India. In view of Section147(5) of the
MVA, the binding nature of GR.4 and IMT-1, will be
overridden by the statutory requirement of this Section.
23. Now, we may deal with the argument advanced by the
appellant-insurer that Riaz (since deceased) did not possess a
valid driving license authorizing him to drive in Nepal, which
would constitute a breach of Insurance Policy. Driving license
is defined under Section 3 MVA, which reads as under:
“No person shall drive a motor vehicle in any public
place unless he holds an effective driving licence
issued to him authorising him to drive the vehicle;
and no person shall so drive a transport vehicle
[other than 3[a motor cab or motor cycle] hired for
his own use or rented under any scheme made under
sub-section (2) of section 75] unless his driving
licence specifically entitles him so to do.”
24. The insurance policy provides that a person driving
must hold an effective driving license at the time of accident
and must not be disqualified from holding or obtaining such a
licence. Riaz held a valid driving license on the date of the
incident, as is concurrently recorded by both the Courts
below. The fact that the documents issued by the Nepal
Government including the Indian Tourist Passenger Checking
Card and the Bhansar Pragna Patra, records the driver's name
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and his driving licence number shows that the Nepal
Authorities verified his driving license and did not raise any
objection with respect to its validity. Thus, this argument of
the appellant-insurer has no force. Even in Bhansar Pragna
Patra, the Registration number of the offending vehicle i.e.,
the Bus was also specifically mentioned.
25. Furthermore, Article 7 of the Treaty of Peace and
Friendship between India and Nepal, signed on 31st July
1950, grants nationals of one country the same privileges as
nationals of the other “in the matters of residence, ownership
of property, participation in trade and commerce, movement
and other privileges of a similar nature” . Authorizations and
licenses carried by Indian nationals, including a valid driving
license, issued in India, are recognized for the purposes of
such movement. Appellant-insurer has not adduced any
evidence to show that the driving license possessed by the
driver and verified by the Authorities was not valid in Nepal.
In that view of the matter, there is no reason why liability
should not be fastened upon them.
26. The dispute in question pertains to the year 2010 but
two recent developments which have taken place in the realm
of cross-border insurance coverage need to be discussed.
First , the IRDAI, with the need to liberalise the insurance
C.A.No…of 2026 @ SLP(C)No.20645 of 2025 Page 17 of 21
20 th
market, through its notification dated 20 March 2024,
declared the IMT to be " entirely de-notified and no longer in
force effective 01.04.2024 ”, meaning thereby that the IMT
2002 no longer occupies the field. Second , the Inter-Country
Transport Vehicles Rules, 2021 now provide a structured
legal framework for Indian vehicles to travel to other
countries under valid inter-country permits. It mandates that
an inter-country vehicle should have a valid insurance policy,
but it does not explicitly deal with extension of a domestic
policy to the country in which such vehicle is going to ply.
27. It appears that there is, as of today, no clear statute, or
binding precedent, or regulatory clarification, in force which
clarifies the extension of insurance policies for cross-border
travel. This uncertainty causes hurdles in deciding motor
accident claims timely and efficiently, thereby affecting the
claimants the most.
28. The main root cause of this issue is the language of the
policy and the manner in which these standard-form contracts
20
F. No.: IRDAI//Gen Insurance/Tariff/13/207/2024;
https://irdai.gov.in/en/notifications?p_p_id=com_irdai_document_media_IRDAIDoc
umentMediaPortlet&p_p_lifecycle=0&p_p_state=normal&p_p_mode=view&_com_i
rdai_document_media_IRDAIDocumentMediaPortlet_delta=8&_com_irdai_docume
nt_media_IRDAIDocumentMediaPortlet_orderByCol=title&_com_irdai_document_
media_IRDAIDocumentMediaPortlet_orderByType=asc&_com_irdai_document_me
dia_IRDAIDocumentMediaPortlet_resetCur=false&_com_irdai_document_media_I
RDAIDocumentMediaPortlet_cur=6
C.A.No…of 2026 @ SLP(C)No.20645 of 2025 Page 18 of 21
are drafted by the insurers. When the party with all the
drafting power writes an ambiguous policy, it is the ordinary
policyholder who suffers. Insurers have, in many cases,
exploited this ambiguity, either to escape liability which they
should rightfully bear, or, conversely, found themselves
burdened with the liability they never intended to assume,
simply because their policy language was sloppy. Hence, the
Court deems it appropriate to issue certain suggestions:
(i) The language adopted in the policy should be
clear and unambiguous and every policy, if it is meant
to cover any extra territorial jurisdiction, must be
clearly mentioned;
(ii) If cross-border coverage is excluded, the policy
must say so explicitly and must inform the insured of
the need to obtain separate endorsement before
travelling inter-country. The insurer should
communicate this requirement of extending coverage,
as in the case of separate health insurance policies that
are undertaken while travelling abroad, as it is
possible that an average consumer may be unaware of
the rigours of law; and
(iii) IRDAI is advised to consider issuing a master
circular standardising cross-border coverage clauses
C.A.No…of 2026 @ SLP(C)No.20645 of 2025 Page 19 of 21
across all motor insurance policies.
29. Before parting with the matter, we may observe that in
certain cases that have come up before this Court, including
the present one, the tone tenor and extent of the orders passed
by the concerned Tribunals has caused us considerable
disturbance. In this case for example, the Tribunal elaborately
recorded the submissions and evidence. However, its
correlation with the facts of the case and effect of this
correlation on the end result was lacking. The Tribunals are
bodies that people approach, seeking compensation as a
consequence of either accidents or deaths, both being entirely
unwelcome scenarios. Then, it is only to be expected of the
Tribunals that whatever their conclusion be, the same must be
supported by adequate and clear reasoning. It is a matter of
reality that at least one of the parties to such a dispute takes
the matter in appeal to a higher forum. The clearer the
reasoning and higher the fidelity to the judgments and orders
passed by this Court in as much as it is the law that applies to
the entirety of the country, the large gap between the date of
institution and the date of disposal of such claim petitions will
see reduction, as also the number of appeals.
30. The appeal is dismissed. The amount determined by the
Tribunal along with the stipulated interest is held to be
payable by the appellant-insurer to the claimants.
C.A.No…of 2026 @ SLP(C)No.20645 of 2025 Page 20 of 21
31. The said amount, if not already paid, shall be deposited
within a period of four weeks from the date of pronouncement
of this order. Let the amount be directly remitted into the bank
account of the claimants. The particulars of the bank account
are to be immediately supplied by the learned counsel for the
respondents to the learned counsel for the appellant. If,
however, the amount already stands deposited before the
concerned forum, the same shall be released in favour of the
respondents along with the accrued interest thereon.
32. Pending application(s), if any, shall stand disposed of.
A copy of this order be communicated to the IRDAI for doing
the needful in terms of the suggestions made in paragraph 28
of this order.
…………………………………….……….. J.
(SANJAY KAROL )
..…………………………………………….. J.
(NONGMEIKAPAM KOTISWAR SINGH)
New Delhi;
July 20, 2026
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