Insurers Cannot Deny Claims for Non-Renewal of State Permit
The Supreme Court has ruled that insurers cannot deny claims solely due to the non-renewal of a state permit if a valid national permit is in place. The Court emphasized that if a vehicle catches fire within its registered state, non-payment of authorization fees for a state permit does not invalidate the insurance claim.
National Permit Remains Valid Despite State Permit Lapse
A bench comprising Justices B.V. Nagarathna and S.C. Sharma delivered the judgment in a case where the appellant’s truck, registered in Bihar, caught fire on June 8, 2014, due to an electrical short circuit. The insurance company had denied the claim. They argued that the truck’s national permit had expired because the authorization fee for the state permit was not renewed beyond October 14, 2013.
The appellant had initially filed a complaint with the State Consumer Disputes Redressal Commission, Bihar. They ruled in his favor and directed the insurer to settle the claim. However, the National Consumer Disputes Redressal Commission (NCDRC) later overturned this decision. They stated that the insurance claim was invalid due to the absence of a valid state permit. The appellant then took the case to the Supreme Court.
State Permit Fees Not Required for Use Within Registered State
The Supreme Court ruled that the national permit for the truck was valid from October 14, 2012, to October 13, 2017. Since the truck caught fire within Bihar, the Court clarified that the authorization fee for the state permit was only required if the vehicle operated outside its registered state.
The Court rejected the insurance company’s argument that non-payment of the state permit authorization fee invalidated the national permit. It held that a national permit remains valid even if the state permit fees are unpaid. As long as the vehicle operates within its registered state.
Insurance Company’s Argument Dismissed
The insurance company contended that the state permit was not renewed beyond October 14, 2013. The national permit could not be considered valid. However, the Supreme Court ruled that this reasoning was incorrect. The insurance company could not deny the claim on such a basis.
The Court observed:
“The national permit is certainly valid up to October 13, 2017. The authorization fee was required to be paid only when the truck was moving out of Bihar. Since the truck caught fire within Bihar, the insurer could not have rejected the claim on such a frivolous ground.”
Final Verdict: Appeal Allowed, Insurance Claim Upheld
The Supreme Court overturned the NCDRC’s decision and reinstated the State Commission’s ruling, allowing the appellant’s insurance claim. The Court emphasized that the insurance company had no valid reason to reject the claim. The truck was used within its registered state with a valid national permit.
This judgment sets an important precedent, ensuring that insurance claims cannot be denied. Even if this is based on technicalities when a valid national permit exists.
