For & Anr. v. Tata AIG General Insurance Company Limited and others6 held that use

For Appellant For Respondents No.3 & 4 : Mr. Arun Shukla, Advocate. Amicus Curiae : Mr. B.N. Nande & Mr. Abhishek Mishra, Advocates. : Mr. Manoj Paranjpe, Senior Advocate with Mr. Vaibhav A. Goverdhan, Advocate. (MAC No.717/2019) Single Bench:- Hon'ble Shri Justice Sanjay K. Agrawal Judgment on Board 27/07/2026

1. The short question involved in this appeal is, whether the Claims Tribunal is justified in fastening liability upon the Insurance Company after having held that the offending vehicle being the transport vehicle was not having valid permit to ply on road as required under Section 66(1) of the Motor Vehicles Act, 1988 (for short, ‘the MV Act’) on the ground that the transport vehicle was not being used for transporting goods at the time of accident?

2. The aforesaid question of law arises for consideration on the following factual backdrop:-

3. In the intervening night of 12th & 13th of April, 2016, the deceased namely, Manoj Sharma, aged about 24 years at the time of accident, was standing at an under-construction site. While reversing the dumper truck bearing registration No.UP-35/T-7540, respondent No.3 drove the offending vehicle in a rash and negligent manner and dashed the deceased as a result of which deceased Manoj Sharma sustained grievous injuries and died on the spot resulting into filing of claim petition by his parents claiming compensation to the tune of ₹ 1,20,00,000/- jointly and severally against driver, owner and insurer of the vehicle. The Claims Tribunal by its impugned award with regard to liability of the Insurance Company, which this Court is concerned with at present, specifically held by answering issue No.4 (MAC No.717/2019) that on the date of accident, the owner of the vehicle did not have valid permit as required under Section 66(1) of the MV Act to ply the transport vehicle dumper on road, but since the permit was not required in light of the decision of the Uttaranchal High Court in the matter of The New India Assurance Co. Ltd. v. Smt. Veena Joshi & others1, as the transport vehicle was not used for transporting goods, the Insurance Company is liable to pay the amount of compensation, which is sought to be challenged in this miscellaneous appeal.

4. In sum and substance, by the impugned award dated 5-12-2018 passed by the 8th Motor Accident Claims Tribunal, Bilaspur in Claim Case No.482/2016, the learned Claims Tribunal has awarded a total sum of ₹ 9,63,382/- along with interest @ 6% per annum as compensation for the death of deceased Manoj Sharma by fastening liability upon the appellant herein/Insurance Company.

5. Mr. B.N. Nande, learned counsel appearing on behalf of the appellant herein/Insurance Company, would submit that Section 66 of the MV Act is mandatory as the Motor Vehicles Act, 1939, had suffered amendment with effect from 2-3-1970 by which the words “whether or not such vehicle is actually carrying any passenger or goods” were inserted in Section 42 of the said Act of 1939. He would further submit that once the vehicle is being used whether actually carrying goods or not, Section 66(1) of the MV Act would be attracted and valid permit would be necessary to ply the vehicle on road, therefore, 1 2015 SCC OnLine Utt 164 (MAC No.717/2019) the Claims Tribunal relying upon the decision of the Uttaranchal High Court in Smt. Veena Joshi’s case (supra) is absolutely unjustified in holding that since the vehicle was not used for carrying transport goods, Section 66(1) of the MV Act would not be applicable.

6. Mr. Arun Shukla, learned counsel appearing on behalf of respondents No.3 & 4 herein – driver & owner of the offending vehicle, respectively, would support the impugned award and oppose the appeal and submit that the Insurance Company has rightly been held liable.

7. Mr. Manoj Paranjpe, learned Senior Advocate appearing as amicus curiae ably assisted by Mr. Vaibhav A. Goverdhan, would submit that the amendment made in the Motor Vehicles Act, 1939 by the Parliament by Act No.56 of 1969 was intended to plug the loophole and to overcome the interpretation given by the High Courts to Section 42 of the said Act of 1939 in the matters of State of U.P. v. Abdul Latif2 and In re T.V. Moidu3, but after the commencement of the Amendment Act 1969, it was not permissible for any person to ply the vehicle off the route even without carrying any passengers. As such, Section 66 of the MV Act is mandatory unless it falls within the exceptions carved out in Section 66(3) of the MV Act duly pleaded and proved on record. Therefore, the Claims Tribunal is absolutely unjustified in fastening liability upon the Insurance Company after having held that though the offending vehicle did not have valid 2 AIR 1963 Allahabad 229 3 AIR 1960 Madras 265 (MAC No.717/2019) permit, but it was not transporting the goods at the relevant point of time.

8. I have heard learned counsel for the parties and considered their rival submissions made herein-above and also gone through the record with utmost circumspection.

9. The provision relating to necessity for permits was also contained in Section 42 of the Motor Vehicles Act, 1939 repealed by the Motor Vehicles Act, 1988. Sub-section (1) of Section 42 of the Act of 1939 states as under: - “42. Necessity for permits.—(1) No owner of a transport vehicle shall use or permit the use of the vehicle in any public place, save in accordance with the conditions of a permit granted or countersigned by a Regional or Provincial Transport Authority authorising the use of the vehicle in that place in the manner in which the vehicle is being used: Provided that a stage carriage permit shall, subject to any conditions that may be specified in the permit, authorise the use of the vehicle as a contract carriage: Provided further that a stage carriage permit may, subject to any conditions that may be specified in the permit, authorise the use of the vehicle as a goods vehicle either when carrying passengers or not: Provided further that a public carrier’s permit shall, subject to any conditions that may be specified in the permit, authorise the holder to use the vehicle for the carriage of goods for or in connection with a trade or business carried on by him.”

10. As noticed herein-above, in light of the decision of the Allahabad High Court in Abdul Latif’s case (supra) and that of the Madras High Court in T.V. Moidu’s case (supra), the Motor Vehicles Act, 1939 was amended by Act No.56 of 1969, which came into force with (MAC No.717/2019) effect from 2-3-1970 and by the said amendment, the words “whether or not such vehicle is actually carrying any passenger or goods” were inserted in Section 42 of the said Act of 1939. The said amendment was necessitated to fill up the gap and to overcome the interpretation given by the two High Courts, as noticed herein-above, to Section 42 of the said Act of 1939, however, after the commencement of the Amendment Act 1969, it was not permissible for any person to ply the vehicle off the route even without carrying any passengers.

11. In the matter of State of Uttar Pradesh v. Bansraj4, it has been held by the Supreme Court that the prohibition in Section 42 of the Motor Vehicles Act, 1939 is not merely against the use by the owner but against the use contrary to the conditions of the permit of the vehicle itself, and observed in paragraph 7 of the report as under: - “(7) Section 42 is headed “necessity for permits”. The language of the section employs prohibitive or negative words and therefore its legislative intent is that the statute is mandatory. The negative words convey a forbidding of the doing of the act prohibited and from the use by the legislature of the words “no owner of a transport vehicle shall use or permit the use….” in Section 42(1) a total prohibition against user of the vehicle except in accordance with the conditions of the permit is indicated. Further the words “authorizing the use of the vehicle in that place in the manner in which the vehicle is being used” have reference to the transport vehicle itself and not to the owner that is to say Section 42(1) does not only prohibit the owner from using the transport vehicle contrary to the conditions of the permit but there is an express provision in the section that the permit authorises the use of the vehicle in the place and in the manner it is being used, and that it is to be used in accordance with the conditions of the permit. Thus construed Section 42(1) 4 AIR 1959 SC 79 (MAC No.717/2019) contemplates not only prohibition against the user by the owner of the vehicle or his permitting its user in a manner contrary to the conditions of the permit but it also contemplates that the vehicle itself shall be used in the manner authorised by the permit. The prohibition therefore is not merely against the use by the owner but against the use contrary to the conditions of the permit of the vehicle itself.”

12. Thereafter, in the matter of The State of Mysore v. Syed Ibrahim5, it has been held by their Lordships of the Supreme Court that the combined effect of Section 42(1) of the Motor Vehicles Act, 1939 and the definitions of a ‘motor vehicle’, a ‘public service vehicle’ and a ‘transport vehicle’ is that if a motor vehicle is used as a transport vehicle, the owner who so uses it or permits it to be so used is required to obtain the necessary permit, and observed as under: - “(8) The combined effect of S. 42(1) and the definitions of a ‘motor vehicle’, a ‘public service vehicle’ and a ‘transport vehicle’ is that if a motor vehicle is used as a transport vehicle, the owner who so uses it or permits it to be so used is required to obtain the necessary permit. It is the use of the motor vehicle for carrying passengers for hire or reward which determines the application of S. 42(1). Therefore, whenever it is so used without the permit, there is an infringement of the sub-section. If the construction of that sub-section adapted by the High Court of Mysore were correct, it would mean that whereas an owner of a transport vehicle is required to have the permit, the owner of a motor vehicle not constructed or adapted as a transport vehicle can carry with impunity passengers for hire or reward without any permit therefor. Section 42(1) has been enacted for the purpose of controlling vehicles carrying passengers, the object of such control being obviously to ensure safety of passengers. The construction accepted by the Mysore High Court would defeat the object for which the legislature provided such control in the interest of and for the safety of passengers. The view taken by the Mysore High Court with respect is not correct and the view taken by the High Court of Madras is not only correct but is in consonance with the purpose and object of Section 42(1).”

13. The Motor Vehicles Act, 1988 (the MV Act) came into force with effect from 14th October, 1988 and sub-section (1) of Section 66 of the 5 AIR 1967 SC 1424 (MAC No.717/2019) MV Act, which is pari materia to Section 42(1) of the Act of 1939, states as under: - “66. Necessity for permits.—(1) 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 is actually carrying any passengers or goods save in accordance with the conditions of a permit granted or countersigned by a Regional or State Transport Authority or any prescribed authority authorising him the use of the vehicle in that place in the manner in which the vehicle is being used: Provided that a stage carriage permit shall, subject to any conditions that may be specified in the permit, authorise the use of the vehicle as a contract carriage: Provided further that a stage carriage permit may, subject to any conditions that may be specified in the permit, authorise the use of the vehicle as a goods carriage either when carrying passengers or not: Provided also that a goods carriage permit shall, subject to any conditions that may be specified in the permit, authorise the holder to use the vehicle for the carriage of goods for or in connection with a trade or business carried on by him. Provided also that where a transport vehicle has been issued any permit or permits, as well as a licence under this Act, such vehicle may be used either under the permit, or permits, so issued to it, or under such licence, at the discretion of the vehicle owner.”

14. Section 66(1) of the Motor Vehicles Act, 1988 is the verbatim reproduction of Section 42(1) of the Motor Vehicles Act, 1939, as it has been bodily lifted from Section 42(1) of the said Act of 1939. A careful perusal of Section 66(1) of the MV Act would reveal that the above said provision is mandatory in nature, subject to the exceptions carved out in Section 66(3) of the MV Act of 1988 and no owner of a motor vehicle shall use or permit the use of the vehicle as (MAC No.717/2019) a transport vehicle in any public place whether or not such vehicle is actually carrying any passengers or goods save in accordance with the conditions of a permit granted. As such, once the transport vehicle is used in any public place whether or not such transport vehicle is actually carrying any passengers or goods, obtaining of permit is must and is mandatory. However, Section 66 of the MV Act carves out an exception and it has been held that the provisions of sub-section (1) of Section 66 shall not apply by virtue of Section 66(3) of the MV Act which are required to be duly pleaded and established.

15. The Supreme Court in the matter of Amrit Paul Singh and another v. Tata AIG General Insurance Company Limited and others6 held that use of a motor vehicle in a public place without a permit as required under Section 66(1) of the MV Act is a fundamental statutory infraction, and observed as under: - “24. … 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 Singh7 and Lakhmi Chand8 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