No-permit use of transport vehicle is a fundamental breach; insurer may be directed to pay first and recover later.

Use of a transport vehicle in a public place without a valid permit was treated as a fundamental breach of the statutory scheme under the Motor Vehicles Act, because Section 66 permits such use only in accordance with a valid permit or a statutory exception. The Court distinguished absence of permit from other policy-condition breaches and held that principles relating to driving-licence violations do not govern a no-permit case. As the insured failed to prove any valid permit or applicable exception, the insurer was not absolved and the pay-and-recover direction requiring satisfaction of the third-party award first was upheld.

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Issues: Whether an insurer can avoid liability where a transport vehicle was being used without a permit on the date of the accident and whether such breach is a fundamental statutory infraction so as to sustain a pay-and-recover direction.

Analysis: A permit under the Act authorises the use of a motor vehicle as a transport vehicle, and Section 66 prohibits such use in a public place unless it is in accordance with a valid permit, subject only to the statutory exceptions. The vehicle involved in the accident had no permit on the date of the accident, the permit having been issued only later. The distinction between absence of permit and other breaches of policy conditions was material. The principles governing breach of driving licence conditions do not control a case of plying a transport vehicle without permit, because the absence of permit goes to the root of the statutory permission to use the vehicle as a transport vehicle. The insured failed to establish any valid permit or any applicable exception under Section 66, and the insurer had specifically pleaded absence of permit. In these circumstances, the breach was held to be fundamental.

Conclusion: The insurer was not liable to be absolved, and the direction requiring it to satisfy the award first and recover the amount from the owner and driver was upheld. The appeal was dismissed.

Ratio Decidendi: Use of a transport vehicle in a public place without a valid permit is a fundamental breach of the statutory scheme under the Motor Vehicles Act, and where the insured fails to prove a permit or a statutory exception, the insurer may be directed to satisfy the third-party award and recover the amount from the insured.

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