Whether Insurance company can reject the claim if the vehicle owner has not paid the authorization fee to obtain national permit as on the date of loss?

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Shubham Budhiraja[1]

A took an insurance for its truck operating in the state of Bihar and outstation. During the course of insurance period, the truck caught fire on account of short circuit. The Insurance company repudiated the claim on the ground that vehicle was not having national permit as on date of loss because authorization fee was not paid. The State Commission allowed the claim basis the Nitin Khandelwal case and directed to settle the claim on non-standard basis. The Hon’ble NCDRC in appeal set aside the order basis that Nitin Khandelwal does not apply because that was a theft case whereas this is a fire accident case. The Hon’ble Supreme Court held as under[2]:

 

1.    The authorization fee was required to be paid only when the truck was moving out of State of Bihar as it was registered in the State of Bihar and the truck caught fire on account of short-circuit on 08.06.2014 in the State of Bihar itself and, therefore, insurance company could not have repudiated the claim on such a frivolous ground.

 

2.    The permit in question was issued by the competent authority in Bihar and, therefore, there was no requirement of paying authorization fee when the truck was being used in the State of Bihar and as per the terms and conditions of the National Permit, authorization fee was required to be paid only when the truck was moving out of State of Bihar

 

 


[1] Advocate, Delhi High Court [LLB, ACS, BCOM(H)], Budhirajalawchambers@gmail.com

[2] Shri Binod Kumar Singh v. National Insurance Company Limited, SLP (Civil) No. 13060 of 2020

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