Delhi High Court Upholds Insurance Company's Right to Recover Compensation for Accidents Beyond Permitted Routes

In a significant ruling, the Delhi High Court has clarified that insurance companies can recover compensation paid to claimants in motor accident cases from the owner of a transport vehicle if the vehicle lacks a valid permit or is operating outside the permitted route. This judgment, delivered by Justice Navin Chawla in the case of Gurmeet Singh Vs The New India Assurance Company Ltd & Ors, underscores the insurance company's right to seek reimbursement under such circumstances.

The case revolved around an appeal by a vehicle owner against a Motor Accidents Claims Tribunal (MACT) decision. The MACT had granted The New India Assurance Company the authority to recover compensation from the vehicle owner due to the absence of a permit to drive the vehicle in Delhi at the time of the accident.

The vehicle owner contested this decision, arguing that driving the vehicle beyond the route of the permit didn't fundamentally breach the insurance policy conditions. The High Court's decision primarily examined whether an insurance company can claim compensation from a vehicle owner if an accident occurs beyond the authorized route specified under Section 66 of the Motor Vehicles Act.

Justice Chawla scrutinized the relevant provisions of the Motor Vehicles Act and concluded that adhering to an authorized route was a fundamental and essential condition of a permit. Therefore, driving a vehicle outside the stipulated area or route constituted a fundamental breach of the insurance policy.

The High Court referred to the Supreme Court's decision in Gohar Mohammed v. Uttar Pradesh State Road Transport Corporation and Others, emphasizing that even with a valid permit, the vehicle owner could be held responsible for an accident if the vehicle operates on a route where the permit isn't applicable. 

Justice Chawla dismissed the vehicle owner's appeal, stating that the vehicle, which had a valid permit only for Uttar Pradesh and not Delhi, was operating without a valid permit at the time of the accident. This decision aligns with recent judgments and underscores the insurance company's right to recover compensation in cases of permit violations.

Advocates Rachit Mittal, Megha Tyagi, Parish Mishra, and Adarsh Srivastava represented the appellant (vehicle owner) in this case.

Author: Anushka Taraniya

News Writer, MIT ADT University