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Insurer Has No Liability Once There Is Breach Of Condition Of Insurance Policy

The Supreme Court, in MS Middle High School Vs HDFC Ergo General Insurance Co Ltd, has upheld a high court judgment which held that once there is breach of condition of insurance policy, the liability cannot be fastened on the insurer.

The Punjab and Haryana High Court relying on the judgement of theSupreme court in National Insurance Company Limited vs Challa Bharathamma and Others, (2004) 8 SCC 517, New India Assurance Company Limited vs Asha Rani & Ors., (2003) 2 SCC 223 and National Insurance Company Limited vs Nicolleta Rohtagi & Ors., (2002) 7 SCC 456. had affirmed the findings of the tribunal that the  offending vehicle did not possess a permit and that constituted breach of condition in insurance policy. The said judgment was assailed through a special leave petition.

Dismissing the SLP, the Supreme Court also observed that the contrary view in a judgment of full bench of Kerala High Court, in the case titled Augustine VM vs Ayyappankutty and Ors, is disapproved to the extent holding that insurer was liable even if there was breach of conditions of policy.

In Augustine VM case, the full bench had held that the insurer cannot claim exoneration from its liability to indemnify the owner of a vehicle in respect of injuries to third parties if the vehicle gets involved in the accident after the expiry of period of validity of fitness certificate or permit, merely on account of such technical violations.

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