INSURANCE CLAIM CAN NOT BE REJECTED ON THE GROUND OF NON AVAILABILITY OF REGISTRATION CERTIFICATE, ROUTE PERMIT, AND FITNESS CERTIFICATE FOR THE VEHICLE INVOLVED IN AN ACCIDENT – J&K HC

In a significant ruling, the High Court of Jammu & Kashmir and Ladakh at Srinagar has invalidated the repudiation of an insurance claim by the National Insurance Company Ltd. The Court held that the grounds cited by the insurance company – lack of registration certificate, route permit, and fitness certificate for the vehicle involved in an accident – were not valid. The judgment, pronounced by Hon’ble the Chief Justice N. Kotiswar Singh and Hon’ble Ms. Justice Moksha Khajuria Kazmi, has far-reaching implications for insurance claims in similar cases.

The dispute arose when M/S Rash Builders Civil Contractors and Suppliers sought indemnification for damages caused to their vehicle in an accident. The insurance company had repudiated the claim on the basis that the vehicle was plied without the necessary vehicular documents. However, the Court examined each ground individually and concluded that the repudiation was unjust.

Regarding the lack of a registration certificate, the Court accepted the temporary registration certificate issued for the vehicle and dismissed the insurance company’s argument. In the words of the Court, “The said ground taken by the Insurance Company to deny the claim was not permissible.”

The Court further analyzed the requirement of a route permit and invoked Section 66(3)(j) of the Motor Vehicles Act, 1988. It observed that since the vehicle was not used for commercial purposes and was being moved for safe custody after purchase, no route permit was necessary. The Court held, “If the vehicle was used without carrying passengers or goods for which it was meant to be used, but merely was being shifted from one place to another place… the requirement of a route permit does not apply.”

On the issue of the fitness certificate, the Court emphasized that for a newly purchased vehicle, the fitness certificate is deemed to be included in the temporary registration certificate. The Court declared, “Fitness certificate would be implicit in the temporary registration certificate issued to a brand new vehicle.”

The Court also scrutinized the insurance company’s contention that the vehicle was carrying more passengers than permitted. It found that the insurance company had failed to provide evidence supporting this claim and had not made specific allegations in their repudiation letter. The Court held that no inference could be drawn without specific averments and ruled in favor of the insured, stating, “When two views are possible, the one which is favorable to the insured must be preferred.”

Date of Decision: 15th June 2023

National Insurance Company Ltd. thr. Its  vs M/S Rash Builders