ORIENTAL INSURANCE COMPANY vs LABH SINGH

( 2026:HHC:37353 )
IN THE HIGH COURT OF HIMACHAL PRADESH AT SHIMLA
High Court of H.P.
FAO (MV) No. 53 of 2016
Reserved on: 10.08.2026
Date of decision: 02 .09.2026
Date of uploading on website:
02.09.2026
________________________________________________
Oriental Insurance Co. Ltd. …..Appellant
Versus
Surtu & Ors. ……Respondents
________________________________________________
Coram
The Hon'ble Mr. Justice Sushil Kukreja, Judge.
1
Whether approved for reporting?
________________________________________________
For the appellant: Mr. Deepak Gupta, Senior
Advocate with Ms. Meera Devi,
Advocate.
For the respondents: Mr. Parveen Chauhan,
Advocate, for respondents No.
1(a) to 1(e) & 2.
Mr. Naveen K. Bhardwaj,
Advocate, for respondent No. 3.
Sushil Kukreja, Judge
The instant appeal has been filed by the
appellant/Insurance Company, who was respondent No. 2
before the learned Motor Accidents Claims Tribunal Chamba
Division Chamba, H.P. (hereinafter referred to as “the
learned Tribunal”) under Section 173 of the Motor Vehicles
Act, 1988 (for short “the Act’) against impugned award, dated
1
Whether reporters of Local Papers may be allowed to see the judgment?
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08.10.2015, passed by the learned Tribunal, whereby Claim
High Court of H.P.
Petition No. 109/2013 (486/2013), filed by the petitioners,
under Section 166 of the Act, was allowed with costs and
they were held entitled for compensation in the sum of Rs.
7,79,000/- alongwith interest at the rate of 9% per annum
from the date of filing of the petition till its realization and
respondent No. 2, being insurer, was directed to indemnify
the award.
2. The brief facts of the case are that on
11.11.2013, Suresh (since deceased) was travelling in
vehicle bearing registration No. HP-01K-0404 (Tata Sumo),
being driven by deceased Raj Kumar. When the aforesaid
vehicle reached at place Kowaji Mor near Shour, its driver
could not keep control over the same and it went off the road
and rolled down into a gorge, as a result of which, Suresh
died on the spot. According to the petitioners, the accident
had taken place due to the rash and negligent driving of the
driver of the vehicle. It has been further averred that at the
time of accident, the deceased was 23 years old and used to
work as agriculturist and labourer and was earning Rs.
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12,000/- per month. Hence, they filed the claim petition
High Court of H.P.
under Section 166 of MV Act seeking compensation to the
tune of Rs. 15,00,000/-.
3. Respondent No. 1 contested the claim petition by
filing reply and took preliminary objections qua
maintainability and cause of action. On merits, though he
admitted the ownership of vehicle No. HP-01K-0404,
however he denied that the vehicle ever met with any
accident. It has been stated that as per FIR and police
investigation, it was vehicle No. HP-01C-0404, which met
with an accident. He also denied that the deceased was
travelling in the vehicle at the relevant time. It has further
been stated that vehicle No. HP-01K-0404 was duly insured
with respondent No. 2 at the time of accident and in case the
petitioners are held entitled to any compensation, respondent
No. 2/Insurance Company would be liable to pay the same.
4. Respondent No. 2/Insurance Company in its
reply took preliminary objections qua maintainability, non-
joinder of necessary parties, the driver of the offending
vehicle was not holding a valid driving licence, offending
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vehicle was not being driven in accordance with the terms
High Court of H.P.
and conditions of the Insurance Policy, the vehicle was being
plied without valid registration and fitness certificate and also
without any valid route permit. On merits, averments made in
the claim petition have been denied and it has been stated
that the amount claimed is excessive and without any basis.
5. In rejoinders, contents of the replies filed by
respondents No. 1 & 2 have been denied and that of the
petition are reasserted and reaffirmed.
6. On 13.10.2014, the learned Tribunal below had
framed the following issues for consideration and
adjudication:
“1. Whether on 11.11.2013 at about 6:00 P.M. at
Kuwaji Mor Shour, Tehsil Pangi, deceased
Suresh died due to rash and negligent
driving of vehicle No. HP-01K-0404 by its
driver, as alleged? OPP
2. If issue No. 1 is proved in affirmative, as to
what amount of compensation the
petitioners are entitled to and from whom?
OPP
3. Whether the petition is not maintainable?
OPR 1 & 2
4. Whether the petitioners have no cause of
action to file the present petition? OPR-1
5. Whether the driver of the offending vehicle
was not holding a valid and effective driving
licence at the time of accident? OPR-2
6. Whether the vehicle in question was being
driven without fitness certificate and route
permit, as alleged?
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7. Whether the petitioners have not come to
the Court with clean hands, as alleged?
OPR-2
8. Relief.”

7. After the parties led evidence and after hearing
High Court of H.P.
the learned counsel for the parties, the petition was allowed
with costs and the petitioners were held entitled for
compensation in the sum of Rs. 7,79,000/- alongwith interest
at the rate of 9% per annum from the date of filing of the
petition till its realization and respondent No. 2, being insurer,
was directed to indemnify the award.
8. Feeling aggrieved and dissatisfied, the
appellant/Insurance Company preferred the instant appeal
against the impugned award dated 08.10.2015.
9. I have heard the learned Senior counsel for the
appellant, learned counsel for the respondents and carefully
examined the entire record.
10. The learned Senior Counsel appearing on behalf
of the appellant contended that the offending vehicle was
being plied in violation of the terms and conditions of
Insurance Policy, inasmuch as at the time of accident, the
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offending vehicle was not having a valid fitness certificate
High Court of H.P.
and route permit, therefore the learned Tribunal below has
erroneously fastened the liability on the appellant/Insurance
company.
11. Conversely, the learned counsel for the
respondents supported the impugned award and prayed for
dismissal of the instant appeal.
12. Admittedly, the vehicle in question was a
transport vehicle. Therefore, the first question which arises
for consideration before this Court is as to whether the owner
could have plied the vehicle in question, which was
registered as a transport vehicle in a public place without
permit.
13. Any motor vehicle, as defined under Section 2
(28) of the Act, requires to be registered in terms of Section
39 for putting the same on road, subject to the riders
mentioned therein and the exception carved out in the
proviso in the case of a dealer. If such vehicle is to be used
as a 'transport vehicle' as defined under Section 2 (47) , it is
mandatory that it should have a valid 'Permit' as defined
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under Section 2 (31) of the Act, in view of the mandate under
High Court of H.P.
Section 66 (stipulating the necessity for permit), subject to
the exception under sub section 3.
14. Necessity to have a 'Permit' for plying the vehicle
as a 'transport vehicle' is stipulated under Section 66 of the
Act, which mentions in unequivocal terms, that 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 actually carries any passengers or goods, save in
accordance with the conditions of Permit granted or
countersigned by a Regional or State Transport Authority or
any such other authority authorising the use of vehicle in that
place in the manner in which the vehicle is being used,
subject to exemption carved out under sub-section (3) of
Section 66 of the Act.
1 5. The issue as to the absence of a valid Permit to a
transport vehicle was the subject matter of consideration
before the Apex Court in National Insurance Company Ltd. Vs.
Challa Bharathamma & Ors, (2004) 8 SCC 517, held that plying of
a vehicle without a permit is an infraction. The relevant portion
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of the judgment is reproduced as under:
High Court of H.P.
“12. The 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
on a better pedestal vis-à-vis one who has a permit, but
has violated any condition thereof. Plying of a vehicle
without a permit is 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 the
insurer. The High Court was, therefore, not justified in
holding the insurer liable.
13. The residual question is what would be the
appropriate direction. Considering the beneficial object of
the Act, it would be proper for the insurer to satisfy the
award, though in law it has no liability. In some cases the
insurer has been given the option and liberty to recover
the amount from the insured. For the purpose of
recovering the amount paid from the owner, the insurer
shall not be required to file a suit. It may initiate a
proceeding before the executing court concerned as if
the dispute between the insurer and the owner was the
subject-matter of determination before the Tribunal and
the issue is decided against the owner and in favour of
the insurer. Before release of the amount to the
claimants, owner of the offending vehicle shall furnish
security for the entire amount which the insurer will pay
to the claimants. The offending vehicle shall be attached,
as a part of the security. If necessity arises the executing
court shall take assistance of the Regional Transport
Authority concerned. The executing court shall pass
appropriate orders in accordance with law as to the
manner in which the owner of the vehicle shall make
payment to the insurer. In case there is any default it
shall be open to the executing court to direct realisation
by disposal of the securities to be furnished or from any
other property or properties of the owner of the vehicle
i.e. the insured. In the instant case, considering the
quantum involved, we leave it to the discretion of the
insurer to decide whether it would take steps for recovery
of the amount from the insured.”
16. The question whether absence of valid Permit to
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a transport vehicle at the time of accident is a 'fundamental
High Court of H.P.
breach' or a 'technical breach' had come up for consideration
again before the Apex Court in Amrit Paul Singh and Another
Vs. TATA AIG General Insurance Company Limited and Others ,
(2018) 7 SCC 558 wherein it has been held that use of such
vehicle in a public place without a permit is a fundamental
statutory infraction. Relevant portion of Amrit Paul Singh’s
case (supra) reads as under:-
“24. In the case at hand, it is clearly demonstrable
from the materials brought on record that the vehicle at
the time of the accident did not have a permit. The
appellants had taken the stand that the vehicle was
not involved in the accident. That apart, they had not
stated whether the vehicle had temporary permit or
any other kind of permit. The exceptions that have
been carved out under Section 66 of the Act, needless to
emphasise, are to be pleaded and proved. The
exceptions cannot be taken aid of in the course of an
argument to seek absolution from liability. Use of a
vehicle in a public place without a permit is a
fundamental statutory infraction. We are disposed to
think so in view of the series of exceptions carved out in
Section 66 . The said situations cannot be equated with
absence of licence or a fake licence or a licence for
different kind of vehicle, or, for that matter, violation of a
condition of carrying more number of passengers.
Therefore, the principles laid down in Swaran Singh (supra)
and Lakhmi Chand (supra) in that regard would not be
applicable to the case at hand. That apart, the insurer
had taken the plea that the vehicle in question had no
permit. It does not require the wisdom of the “Tripitaka”,
that the existence of a permit of any nature is a matter of
documentary evidence. Nothing has been brought on
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record by the insured to prove that he had a permit of
the vehicle. In such a situation, the onus cannot be cast
on the insurer. Therefore, the tribunal as well as the High
Court had directed the insurer was required to pay the
compensation amount to the claimants with interest with
the stipulation that the insurer shall be entitled to recover
the same from the owner and the driver. The said
directions are in consonance with the principles stated in
Swaran Singh (supra) and other cases pertaining to pay
and recover principle.”
17. In the instant case, in support of this plea, the
High Court of H.P.
respondent/Insurance Company has examined Ashok
Kumar, Data Operator from the Office of RTO Kullu, as RW-
1, who deposed that vehicle No. HP-01K-0404 has been
registered as commercial maxi cab, the fitness whereof was
valid till 06.07.2005 and its contract carriage permit was valid
w.e.f. 08.08.2003 to 07.08.2008. Admittedly the date of
accident was 11.11.2013. Since the vehicle in question was
a transport vehicle and was being plied without permit at the
time of the accident and the owner had neither pleaded nor
proved the exceptions as have been carved out under
Section 66 of the Act, it can safely be held that on the date of
accident, the vehicle in question was being plied in violation
of the terms and conditions of the Insurance Policy, as plying
of a transport vehicle in a public place without permit is
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fundamental statutory infraction.
High Court of H.P.
18. Now the next question which arises for
consideration before this Court is as to whether the vehicle in
question, which admittedly was a transport vehicle, could
have been plied without a valid fitness certificate. Learned
counsel for the insurance company submitted that non-
availability of the fitness certificate is like non-registration of
the vehicle, which disentitles the owner to permit the use of
any such vehicle. As discussed above, RW-1 has deposed
that the fitness certificate of the offending vehicle was valid
till 06.07.2005. The date of accident was 11.11.2013,
meaning thereby that the offending vehicle was being plied
without fitness certificate.
19. At this stage, it would be relevant to reproduce
Sections 39 & 56 of the Motor Vehicles Act, 1988 and the
same are reproduced hereunder, for ready reference:-
"39. Necessity for registration.
No person shall drive any motor vehicle and no owner of a
motor vehicle shall cause or permit the vehicle to be driven in
any public place or in any other place unless the vehicle is
registered in accordance with this Chapter and the certificate
of registration of the vehicle has (8 of 16) not been suspended
or cancelled and the vehicle carries a registration mark
displayed in the prescribed manner.
Provided that nothing in this section shall apply to motor
vehicle in possession of a dealer subject to such conditions as
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may be prescribed by the Central Government.
High Court of H.P.
56. Certificate of fitness of transport vehicles
(1) Subject to the provisions of sections 59 and 60, a transport
vehicle shall not be deemed to be validly registered for the
purposes of section 39, unless it carries a certificate of fitness
in such form containing such particulars and information as
may be prescribed by the Central Government, issued by the
prescribed authority, or by an authorized testing station
mentioned in sub-section (2), to the effect that the vehicle
complies for the time being with all the requirements of this Act
and the rules made thereunder:
Provided that where the prescribed authority or the
authorized testing station refuses to issue such certificate, it
shall supply the owner of the vehicle with its reasons in writing
for such refusal.
Provided further that no certificate of fitness shall be
granted to a vehicle, after such date as may be notified by the
Central Government, unless such vehicle has been tested at
an automated testing station.
(2) The "authorized testing station" referred to in sub-section
(1) means any facility, including automated testing facilities,
authorized by the State Government, where fitness testing may
be conducted in accordance with the rules made by the
Central Government for recognition, regulation and control of
such stations.
(3) Subject to the provisions of sub-section (4), a certificate of
fitness shall remain effective for such period as may be
prescribed by the Central Governmen t having regard to the
objects of this Act.
(4) The prescribed authority may for reasons to be recorded in
writing cancel a certificate of fitness at any time, if satisfied that
the vehicle to which it relates no longer complies with all the
requirements of this Act and the rules made thereunder; and
on such cancellation the certificate of registration of the vehicle
and any permit granted in respect of the vehicle under Chapter
V shall be deemed to be suspended until a new certificate of
fitness has been obtained.
Provided that no such cancellation shall be made by
the prescribed authority unless -
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(a) such prescribed authority holds such technical qualification
as may be prescribed by the Central Government and where
the prescribed authority does not hold the technical
qualification, such cancellation is made on the basis of the
report of an officer having such qualification;
High Court of H.P.
(b) the reasons recorded in writing cancelling a certificate of
fitness are confirmed by an authorized testing station chosen
by the owner of the vehicle whose certificate of fitness is
sought to be cancelled:
Provided further that if the cancellation is confirmed by the
authorized testing station, the cost of undertaking the test shall
be borne by the owner of the vehicle being tested and in the
alternative by the prescribed authority.
(5) A certificate of fitness issued under this Act shall, while it
remains effective, be valid throughout India.
(6) All transport vehicles with a valid certificate of fitness
issued under this section shall carry, on their bodies, in a clear
and visible manner such distinguishing mark as may be
prescribed by the Central Government
(7) Subject to such conditions as the Central Government
may prescribe, the provisions of this section may be extended
to non-transport vehicles.”
20. Thus a conjoint reading of the aforesaid
provisions as contained in the Motor Vehicles Act, 1988
makes it amply clear that in case of a transport vehicle,
unless it carries a valid certificate of fitness in accordance
with law, no person is entitled to drive a transport vehicle and
the owner of the transport vehicle is not entitled to cause or
permit the vehicle to be driven in any public place or any
other place. Therefore, a transport vehicle which is
registered under Section 39 can be driven or plied on road
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only if it possesses a valid fitness certificate; if it is not having
High Court of H.P.
a valid fitness certificate, it shall be deemed to be an
unregistered motor vehicle. Thus, a transport vehicle which
is duly registered under Section 39 of the Act is of no use,
unless it carries a certificate of fitness, and as provided in
sub-section (1) of Section 56, it becomes an unregistered
motor vehicle.
21. In a judgment rendered by the full Bench of
Kerala High Court in Pareed Pillai Vs. Oriental Insurance Co.
Ltd., AIR 2019 Kerala 9,
it has been held that when a transport
vehicle is not having Permit or Fitness Certificate, nobody
can drive such vehicle and no owner can permit the use of
any such vehicle compromising with the lives, limbs and
properties of the passengers. Relevant portion of this
judgment reads as under:-
"13. Fitness of the vehicle to be plied on the road as a
'transport vehicle' is very important, especially in relation to the
lives and limbs of the persons travelling in the vehicle, the
pedestrians, other vehicles and properties of persons who are
also using the road. It is with this intent, that a specific
provision has been incorporated under the Statute as Section
84 , prescribing the general conditions attached to all permits.
Clause (a) of Section 84 reads as follows :
84. General conditions attaching to all permits-
The following shall be conditions of every permit-
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(a) that the vehicle to which the permit relates carries
valid certificate of fitness issued under Section 56
and is at all times so maintained as to comply with
the requirements of this Act and the rules made
thereunder;
High Court of H.P.
xxx xxx xxx
16. Importance of the fitness/road worthiness of a vehicle,
right from the time of registration of the vehicle, is further
discernible from Rule 47 of the Central Motor Vehicles Rules
1989 [referred to as Central Rules]. The said Rule deals with
application for registration of motor vehicles, which, among
other things, stipulates that it shall be accompanied by various
documents. Under sub-rule (1) (g), it is mandatory to produce
road worthiness certificate in Form 22 from the manufacturers
[Form 22A from the body builders]. On completing the
formalities/procedures, 'Certificate of Registration' is to be
issued in terms of Rule 48 of the Central Rules in Form
23/23A, as the case may be. The said Rule contains a proviso,
insisting that, when Certificate of Registration pertains to a
transport vehicle, it shall be handed over to the registered
owner only after recording the Certificate of Fitness in Form
38. Validity of the Certificate of Fitness is only to the extent as
envisaged under Rule 62 of the Central Rules, which
mandates, as per the proviso, that the renewal of a Fitness
Certificate shall be made only after the Inspecting Officer or
MACA No. 2030 of 2015 and connected cases authorised
Testing Station as referred to in sub Section 1 of Section 56 of
the Act has carried out the test specified in the table given
therein.
17. The stipulations under the above provisions clearly
substantiate the importance and necessity to have a valid
Fitness Certificate to the transport vehicle at all times. The
above prescription converges on the point that Certificate of
Registration, existence of valid Permit and availability of
Fitness Certificate, all throughout, are closely interlinked in the
case of a transport vehicle and one requirement cannot be
segregated from the other. The transport vehicle should be
completely fit and road worthy, to be plied on the road, which
otherwise may cause threat to the lives and limbs of
passengers and the general public, apart from damage to
property. Only if the transport vehicle is having valid Fitness
Certificate, would the necessary Permit be issued in terms of
Section 66 of the Act and by virtue of the mandate under
Section 56 of the Act, no transport vehicle without Fitness
Certificate will be deemed as a validly registered vehicle for
the purpose of Section 39 of the Act, which stipulates that
nobody shall drive or cause the motor vehicle to be driven
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without valid registration in public place or such other place, as
the case may be. These requirements are quite 'fundamental'
in MACA No. 2030 of 2015 and connected cases nature;
unlike a case where a transport vehicle carrying more
passengers than the permitted capacity or a goods carriage
carrying excess quantity of goods than the permitted extent or
a case where a transport vehicle was plying through a
deviated route than the one shown in the route permit which
instances could rather (15 of 16) be branded as 'technical
violations'. In other words, when a transport vehicle is not
having a Fitness Certificate, it will be deemed as having no
Certificate of Registration and when such vehicle is not having
Permit or Fitness Certificate, nobody can drive such vehicle
and no owner can permit the use of any such vehicle
compromising with the lives, limbs, properties of the
passengers/general public. Obviously, since the safety of
passengers and general public was of serious concern and
consideration for the law makers, appropriate and adequate
measures were taken by incorporating relevant provisions in
the Statute, also pointing out the circumstances which would
constitute offence; providing adequate penalty. This being the
position, such lapse, if any, can only be regarded as a
fundamental breach and not a technical breach and any
interpretation to the contrary, will only negate the intention of
the law makers."
High Court of H.P.
22. In the instant case also the offending vehicle was
being plied without permit as well as fitness certificate.
Accordingly, it is held that since the offending vehicle was not
having permit and fitness certificate on the date of the
accident, therefore, the terms and conditions of the
insurance policy were violated. Therefore, the tribunal below
has erroneously fastened the liability on the
appellant/Insurance Company whereas the owner of the
offending vehicle should have been made liable to make the
payment of compensation. However, in the light of the
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judgments passed by the Supreme Court in the cases of
High Court of H.P.
Amrit Paul Singh Vs. TATA AIG General Insurance Co. Ltd.,
reported in (2018) 7 SCC 558 and Shamanna and another Vs.
Divisional Manager, the Oriental Insurance Co. Ltd. and others ,
reported in (2018) 9 SCC 650, it is held that the Insurance
Company shall pay the compensation amount to the
petitioners with liberty to recover the same from the owner.
23. Consequently, in view of detailed discussion made
here-in-above and the law laid down by the Hon'ble Apex
Court, the present appeal is partly allowed and the
impugned award dated 08.10.2015, passed by the learned
Tribunal below, is modified to the extent that the owner shall
be liable to make payment of compensation to the
petitioners. However, the amount of compensation shall be
first paid to the petitioners by the appellant/Insurance
Company, who shall be entitled to recover the same from
respondent No. 1/owner of the offending vehicle bearing
registration No. HP-01K-0404, in accordance with law. The
remaining part and terms of the impugned award, including
the interest component, shall remain the same.
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24. The appeal stands disposed of in the above
High Court of H.P.
terms, so also the pending application(s), if any.

( Sushil Kukreja )
Judge

September 02, 2026
(raman)
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