The Rest of the Motor Vehicles Act III: Permits and State Undertakings

And note section 150(2)(a)(i)(A) and (C): an insurer may plead a policy condition excluding use for hire or reward where the vehicle had no permit to ply for hire or reward, or use for a purpose not allowed by the permit. Chapter V is where those permits come from.

Chapter VI: State transport undertakings

• Section 97. "Road transport service" means a service of motor vehicles carrying passengers or goods or both by road for hire or reward.
• Section 98. The Chapter overrides Chapter V and any other law or instrument inconsistent with it.
• Section 99. Where a State Government is of opinion that it is necessary in the public interest, for an efficient, adequate, economical and properly co-ordinated road transport service, a proposal may be prepared and published in respect of road transport services generally or of a particular class.
• Section 100. Objections to the proposal, and their consideration.
• Section 101. Operation of additional services by a State transport undertaking in certain circumstances.
• Section 102. Cancellation or modification of a scheme.
• Section 103. Issue of permits to State transport undertakings.
• Section 104. Restriction on the grant of permits in respect of a notified area or notified route.
• Section 105. Principles and method of determining compensation and its payment.
• Section 106. Disposal of articles found in vehicles.
• Sections 107 and 108. Rules by the State Government, and certain of its powers exercisable by the Central Government.

The nationalisation scheme in sections 99 to 104 is why so many motor accident claims in the reports are against a State Road Transport Corporation. Gujarat State Road Transport Corporation v. Ramanbhai Prabhatbhai, AIR 1987 SC 1690, is one such claim, and it is the case that settled how widely "legal representative" is read under section 166.

Where this touches the claim

Vicarious liability. A State transport undertaking is an employer, and the ordinary principles of chapter [Vicarious Liability of the State] and chapter [Course of Employment] apply to it.

The insurer's defence. Use without a permit, or contrary to the permit, is a listed ground under section 150(2)(a)(i); but on National Insurance Co. Ltd v. Swaran Singh, (2004) 3 SCC 297, the insurer must still prove a breach by the insured, fundamental enough to have contributed to the accident.

No contracting out. Section 92 voids contracts restrictive of liability, and section 147(1)(b)(ii) compels cover for passengers of a transport vehicle other than gratuitous passengers of a goods vehicle.

A worked example

Ganesh owns a private car covered by an ordinary private-car policy. He begins carrying passengers for a fare on a fixed route, and one of them is injured in a collision.

Has he contravened Chapter V? Yes. Section 66(1) forbids the owner of a motor vehicle to use it, or permit its use, as a transport vehicle in any public place except in accordance with the conditions of a permit granted or countersigned by a Regional or State Transport Authority.

Can the passenger claim? Yes, before the Claims Tribunal under section 166, and the fixed sum under section 164 is payable without proof of fault.

Can the insurer avoid liability? It may plead the condition allowed by section 150(2)(a)(i)(A), excluding use for hire or reward where the vehicle was not covered by a permit to ply for hire or reward. On National Insurance Co. Ltd v. Swaran Singh, (2004) 3 SCC 297, it must prove the breach was the insured's and fundamental enough to have contributed to the accident, and the Tribunal may still direct it to pay the passenger and recover from Ganesh.

Could Ganesh's ticket have said that he accepts no liability? No. Section 92 voids contracts restrictive of liability.

And if the route had been notified for a State transport undertaking? Section 104 restricts the grant of permits in respect of a notified area or notified route, so no permit could have been granted to him for it at all.

Quick revision

1. Section 66: no use of a vehicle as a transport vehicle in a public place except under a permit granted or countersigned by a Regional or State Transport Authority.
2. Sections 68 to 80: the Transport Authorities and the applications for and grant of stage carriage, contract carriage, private service vehicle and goods carriage permits, with the motor cab rental scheme in section 75.
3. Sections 81 to 88A: duration, renewal, transfer, replacement, general conditions, form, cancellation and suspension, temporary permits, validation outside the region, and Central Government schemes for national, multimodal and inter-State transport.
4. Sections 89 to 96: appeals and revision, hours of work of drivers, voidance of contracts restrictive of liability, licensing of agents, canvassers and aggregators, the bar on civil courts, and State rules.
5. Section 97: road transport service means carriage of passengers or goods by road for hire or reward. Section 98: the Chapter overrides Chapter V.
6. Sections 99 to 105: publication of a proposal, objections, additional services, cancellation or modification of a scheme, permits to the undertaking, restriction of permits on a notified route or area, and compensation.
7. Sections 106 to 108: articles found in vehicles, State rules, and certain powers exercisable by the Central Government.

Test yourself

1. What is the scheme of control of transport vehicles under Chapter V, and how does it bear on an insurer's defence? Section 66 provides that 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 it is actually carrying passengers or goods, save in accordance with the conditions of a permit granted or countersigned by a Regional or State Transport Authority or a prescribed authority; provisos allow a stage carriage permit to authorise use as a contract carriage and, in stated circumstances, as a goods carriage. Sections 68 to 80 constitute the Transport Authorities and provide for applications for and the grant of stage carriage, contract carriage, private service vehicle and goods carriage permits; sections 81 to 88A for duration, renewal, transfer, replacement, general conditions, form, cancellation, suspension, temporary permits, validation outside the region of grant, and Central Government schemes for national, multimodal and inter-State transport; and sections 89 to 96 for appeals and revision, restriction of the hours of work of drivers, voidance of contracts restrictive of liability, the licensing of agents, canvassers and aggregators, the bar on the jurisdiction of civil courts, and State rules.

The bearing on a claim is through section 150(2)(a)(i), which permits an insurer to rely on a policy condition excluding the use of the vehicle for hire or reward where the vehicle was not covered by a permit to ply for hire or reward, or for a purpose not allowed by the permit in the case of a transport vehicle. Even then, on National Insurance Co. Ltd v. Swaran Singh, (2004) 3 SCC 297, the insurer must prove a breach by the insured and one so fundamental as to have contributed to the cause of the accident, and it may in any event be directed to satisfy the award and recover from the insured.