The High Court of Karnataka has held illegal the standard insurance policy condition that a transport tractor-trailer used for agricultural activities should not be used for “hire or reward”, observing that such a condition is contrary to Section 149(2) of the Motor Vehicles (MV) Act, 1988.
“If there is a conflict between the MV Act and general provisions of insurance under other enactments in relation to requirement of insurance of motor vehicles, the special provisions and the Rules framed thereunder under the MV Act will prevail,” the Court held, pointing out that Section 28 of the Insurance Regulatory Development Act states that its provisions are not in derogation of any other law in force.
Justice Hanchate Sanjeev Kumar made these observations while allowing appeals filed by the owner of a tractor-trailer, who had challenged a motor accident claims tribunal’s order that had exonerated the insurance company and fastened the entire compensation liability on him for violating the terms of insurance, which barred him from using the tractor-trailer for “hire or reward”.
The Court found that the insurance company had invoked the India Motor Tariff, issued under the IRDA Act, 1999, and Section 64-UC of the Insurance Act, 1938, to impose the condition that the tractor-trailer should not be used for “hire or reward”.
The insurer cannot escape liability by claiming that the insured used the agricultural tractor-trailer, when categorised as a transport vehicle, for “hire or reward” contrary to the policy condition, as such a condition itself is ultra vires Section 149(2) of the Motor Vehicles Act, Rule 141 of the MV Rules and the certificate of insurance issued under Form No. 51 of the Central Motor Vehicles Rules, 1989, the Court said.
