Authority: Supreme Court of India, Civil Appellate Jurisdiction

Order Date: July 20, 2026

Case Overview

  • Parties: Oriental Insurance Co. Ltd. (appellant‑insurer) vs. Durg Roadways Private Limited & others (respondents – vehicle owner and claimants).
  • Background: A bus bearing registration No. CG‑07‑LP‑0344, owned by Durg Roadways Pvt. Ltd., was permitted (Special Permit No. 130/2010 dated 23‑Jul‑2010, valid 26‑Jul‑2010 to 15‑Aug‑2010) to travel from Durg to Nepal for a religious tour. The vehicle collided with a hill in Nepal, killing three persons – driver Riaz Khan, Harish Yadav, and an unnamed third victim.
  • Claim: The wife, children and mother of the deceased Harish Yadav filed a claim for Rs 48,99,776. The IVth Additional Motor Accident Claims Tribunal, Durg awarded Rs 32,67,000 with 6% interest from 22‑Oct‑2011, directing the vehicle owner to pay.
  • High Court Decision: The High Court set aside the Tribunal award and held the insurer, Oriental Insurance, liable to pay the amount, relying on the Punjab & Haryana High Court judgment Anil Kumar v. Roop Kumar Sharma.
  • Issues before the Supreme Court:

1. Whether the accident occurring outside India is covered by the motor insurance policy in the absence of the additional premium required under General Regulation 4 of the India Motor Tariff 2002 (IMT).

2. Whether the driver’s licence authorised driving in Nepal.

  • Policy Clauses Examined:
  • Geographical Area: India (no extension mentioned).
  • Limitation as to Use: “The Policy covers use only under a permit within the meaning of the Motor Vehicles Act, 1988…”.
  • Legal Reasoning:
  • The special permit issued by the Additional Regional Transport Authority qualifies as a “permit” under Section 2(31) of the Motor Vehicles Act (MVA), satisfying the “Limitation as to Use” clause.
  • The “Geographical Area” clause does not negate coverage when a valid permit authorises foreign travel; the insurer would have needed an explicit exclusion to deny liability.
  • The court applied the contra proferentem rule, interpreting ambiguous policy language in favour of the insured.
  • The non‑obstante clause in Section 147(5) of the MVA overrides any conflicting regulation, including GR.4 of the IMT, rendering the lack of additional premium irrelevant.
  • Section 139 and Section 149 of the MVA give extra‑territorial effect and obligate insurers to honour foreign judgments, supporting coverage for accidents in Nepal.
  • The driver possessed a valid Indian driving licence; Nepalese border authorities verified it, and the Treaty of Peace and Friendship (31‑Jul‑1950) recognises such licences.
  • Regulatory Updates Cited:
  • IRDAI notification dated 20‑Mar‑2024 de‑notified the IMT, effective 01‑Apr‑2024.
  • Inter‑Country Transport Vehicles Rules, 2021 provide a framework for Indian vehicles travelling abroad, mandating valid insurance but not specifying policy extensions.
  • Court’s Observations: Ambiguities in standard‑form motor insurance policies cause delays and hardship for claimants; insurers often exploit vague wording.

Final Outcome

  • The appeal is dismissed. Oriental Insurance Co. Ltd. must pay the Tribunal‑determined amount of Rs 32,67,000 plus the stipulated interest to the claimants.
  • Payment must be deposited within four weeks of the order; if already deposited, it shall be released to the respondents.
  • The respondents’ counsel must furnish the claimants’ bank account details to the appellant’s counsel.
  • The order is to be communicated to the IRDAI for consideration of the suggestions made in paragraph 28 (clear cross‑border coverage language and a master circular).

Topics: Motor Insurance Liability, Cross‑border Accident Coverage