The Himachal Pradesh High Court has held that when a transport vehicle is being operated without a valid permit and fitness certificate, the violation of statutory and insurance requirements cannot be treated as merely technical. However, applying the “pay and recover” principle, the Court directed the insurer to first pay the compensation to the claimants and recover the amount from the vehicle owner.
Justice Sushil Kukreja passed the judgment on September 2, 2026, in an appeal filed by Oriental Insurance Company Ltd. against an award of the Motor Accidents Claims Tribunal-II, Chamba.
Background of the Case
The case arose from a road accident on November 11, 2013. Bhupinder, aged 24, was travelling in a Tata Sumo bearing registration number HP-01K-0404 when the vehicle went off the road and fell into a gorge near Kowaji Mor, Shour. Bhupinder died at the spot.
The claimants approached the Tribunal under Section 166 of the Motor Vehicles Act, 1988, seeking compensation. The Tribunal awarded Rs. 8,08,200 with interest at 7.5% per annum and directed the insurance company to indemnify the award.
Oriental Insurance challenged the decision, arguing that the vehicle did not have a valid permit or fitness certificate when the accident occurred.
Court's Observation
The High Court examined the evidence of an RTO official, who stated that the vehicle was registered as a commercial maxi cab. Its fitness certificate was valid only up to July 6, 2005, while its contract carriage permit was valid from August 8, 2003 to August 7, 2008. The accident occurred in November 2013.
The Court noted that Section 66 of the Motor Vehicles Act requires a transport vehicle to have a valid permit for use in a public place, subject to statutory exceptions. It also considered Section 56, under which a transport vehicle must possess a valid fitness certificate.
Referring to the Supreme Court's decisions in National Insurance Co. Ltd. v. Challa Bharathamma and Amrit Paul Singh v. TATA AIG General Insurance Co. Ltd., the Court observed:
"Plying of a vehicle without a permit is an infraction."
The High Court further held that the absence of both permit and fitness certificate amounted to a fundamental violation of the statutory requirements and the insurance policy.
Decision
The Court partly allowed the insurance company's appeal and modified the Tribunal's award. It held that the vehicle owner would ultimately be liable for the compensation because the vehicle was being operated without the required permit and fitness certificate.
At the same time, the Court directed Oriental Insurance Company to first pay the awarded compensation to the claimants. The insurer was granted liberty to recover the amount from the owner of vehicle HP-01K-0404 in accordance with law.
The remaining terms of the Tribunal's award, including the interest component, were left unchanged.
The appeal and pending applications, if any, were accordingly disposed of.
Case Details:
Case Title: Oriental Insurance Co. Ltd. v. Jamana & Ors.
Case Number: FAO (MV) No. 67 of 2017
Judge: Justice Sushil Kukreja
Decision Date: September 2, 2026
