A) ABSTRACT / HEADNOTE

Shri Binod Kumar Singh v. National Insurance Company Ltd., [2025] 2 S.C.R. 521 : 2025 INSC 154 The appellant’s goods-carrying truck insured with the respondent caught fire on 08.06.2014 during the currency of the policy. The State Consumer Disputes Redressal Commission (Bihar) directed settlement on a non-standard basis relying on National Insurance Co. v. Nitin Khandelwal (Criminal Appeal No. 8463/2014). The National Commission set aside that direction, holding that absence of a valid national permit (on account of alleged non-payment of authorization fee) disentitled the insured to claim.

Before this Court it was demonstrated that a valid All India (National) Permit was in force up to 13.10.2017, and that the requirement of paying an authorization fee arose only when the vehicle moved outside Bihar. The truck caught fire within Bihar; the permit had been lawfully issued by the competent Bihar authority; therefore the purported non-deposit of the authorization fee could not vitiate the permit for intra-state use on the date of loss. The Supreme Court allowed the appeal, set aside the National Commission’s order, directed the insurer to process and pay the claim with interest @ 9% p.a. from the date of complaint before the State Commission until actual payment, and allowed 60 days for compliance.

Keywords: National permit; authorization fee; insurance claim; repudiation; non-standard basis; interest on claim.

B) CASE DETAILS

C) INTRODUCTION AND BACKGROUND OF JUDGEMENT

The dispute arises from repudiation of an insurance claim where the insurer contended absence of a valid national permit on account of non-deposit of the authorization fee. The truck, registered in Bihar and insured for the period 18.09.2013 to 17.09.2014, caught fire on 08.06.2014 due to a short circuit. The insured pursued remedy under consumer protection fora. The State Commission accepted the insured’s claim on a non-standard settlement basis, following National Insurance Co. v. Nitin Khandelwal (referenced in the record), and directed the insurer to settle if other formalities were complied with.

The insurer appealed to the National Commission which reversed the State Commission, relying on Amrit Paul Singh v. TATA AIG (2018) 7 SCC 558 and holding that absence of a valid permit disentitled the insured to relief. The Supreme Court was called upon to examine whether the All India Permit held by the appellant was operative on the date of loss and whether mere non-payment of authorization fee (allegedly beyond a particular date) could invalidate the permit for the truck’s operation within Bihar. The crux before the Court was the interaction between the permit’s terms (and the territorial scope of the fee) and the insurer’s right to repudiate on the ground of an allegedly invalid permit.

The Court examined the permit document, the permit-issuing authority’s competence, and the temporal/territorial operation of the authorization fee clause to determine appellee’s entitlement to claim payment and interest.

D) FACTS OF THE CASE

The appellant owned a TATA truck bearing registration BR-02-Q9220 insured by the respondent National Insurance Company for the policy year 18.09.2013–17.09.2014. On 08.06.2014 the truck was damaged by fire caused by a short circuit while it was within Bihar. The appellant lodged a claim which the insurer repudiated in 2014 on the ground that the vehicle did not possess a valid national permit because the authorization fee had not been paid beyond 14.10.2013. The appellant filed a complaint before the State Consumer Commission (Bihar) which, relying on Nitin Khandelwal, directed settlement on a non-standard basis subject to conditions.

The insurer preferred appeal to the National Commission which reversed the State Commission, concluding that absence of a valid permit disentitled the insured to relief; reliance was placed upon Amrit Paul Singh v. TATA AIG (2018) 7 SCC 558. The appellant produced the All India Permit which on its face bore validity from 14.10.2012 to 13.10.2017, with a Bihar validity window stated as 13.10.2012 to 13.10.2013, and the appellant’s counsel contended that the permit was nonetheless a valid national permit up to 13.10.2017 and that the authorization fee obligation arose only when the truck left Bihar.

The truck caught fire within Bihar on 08.06.2014; thus, according to appellant, the insurer could not legitimately treat non-deposit of authorization fee (relating to inter-state movement beyond Bihar) as a ground to repudiate a claim for an intra-state loss. The National Commission’s reversal led to this appeal.

E) LEGAL ISSUES RAISED

i. Whether the All India (National) Permit held by the appellant was valid on 08.06.2014 for the purposes of insurance cover?
ii. Whether non-deposit of authorization fee (allegedly after 14.10.2013) invalidates the national permit for an intra-state loss occurring in Bihar?
iii. Whether an insurer can repudiate a claim where the vehicle was being used within the State that issued the permit and the permit on its face remained effective?
iv. Whether interest is payable from the date the complaint was filed in the State Commission until actual payment, and at what rate?

F) PETITIONER / APPELLANT’S ARGUMENTS

The counsel for the appellant submitted that the All India Permit was valid up to 13.10.2017 and that the vehicle’s registration in Bihar and the location of loss within Bihar meant no authorization fee was exigible for intra-state operation. It was urged that the permit was issued by the competent Bihar authority and therefore on the date of loss 08.06.2014 the truck enjoyed lawful permit cover. Consequently, repudiation by the insurer on the ground of permit invalidity was frivolous and unjustified. Reliance was placed upon the State Commission’s order directing non-standard settlement and upon the documentary permit itself to show continuity of validity. The appellant further contended entitlement to statutory consumer relief including interest from the date of the State complaint.

G) RESPONDENT’S ARGUMENTS

The counsel for the respondent submitted that the permit’s terms required deposit of an authorization fee beyond 14.10.2013 and since such fee was not paid the national permit was rendered invalid for the relevant period; accordingly insurer was entitled to repudiate. It was argued that Amrit Paul Singh v. TATA AIG supported refusal where validity/authorization conditions were not met. The insurer maintained that permit irregularity went to the root of cover and therefore claim settlement could be refused.

H) JUDGEMENT

The Supreme Court examined the permit document and the factual matrix. The Court observed that the All India Permit on record evidenced validity through 13.10.2017. The Court interpreted the permit terms, paying attention to the territorial operation of the authorization fee clause and the fact of registration in Bihar. On a close reading the authorization fee was exigible when the vehicle moved out of Bihar; there was no requirement to pay such fee for intra-state operations within Bihar. The Court held that because the truck caught fire in Bihar on 08.06.2014 and the permit had been issued by competent Bihar authorities, the absence of a later authorization fee deposit for inter-state movement could not be a ground to repudiate the claim for an intra-state loss.

The Supreme Court therefore reversed the National Commission’s reliance upon Amrit Paul Singh to negate the claim; it restored the State Commission’s direction that the insurer settle the claim (on non-standard terms as applicable), and directed the insurer to process and pay within 60 days from the judgment date. Recognizing the long delay from repudiation in 2014 through orders in 2017 and 2020, the Court ordered payment with interest @ 9% p.a. from the date of filing the complaint before the State Commission until actual payment.

The appeal was allowed; no costs were directed. The decision emphasized textual construction of permit terms, territorial operation of fee obligations, and the impropriety of using an unrelated fee default (tied to inter-state movement) as a pretext to repudiate an intra-state loss occurring within the permit-issuing State.

a. RATIO DECIDENDI

The decisive legal reason is that a national permit issued by the competent authority in Bihar was valid up to 13.10.2017 and that the authorization fee obligation applied only when the vehicle moved outside Bihar. Because the vehicle was registered in Bihar and the loss occurred within Bihar, the insurer could not repudiate the claim on the isolated ground of non-deposit of an authorization fee linked exclusively to inter-state movement. The Court’s ratio rests on the plain terms of the permit, the territorial nexus of the fee condition, and the principle that insurers cannot manufacture coverage exclusions by misreading or over-extending ancillary permit conditions.

b. OBITER DICTA 

The judgment contains observations disfavoring technical repudiations where a loss falls squarely within the territorial and temporal ambit of a permit issued by competent authority. The Court noted that reliance on precedents must account for factual concordance distinguishing Nitin Khandelwal (a theft case) and Amrit Paul Singh (context of permit validity) where factual matrix differed. The obiter indicates judicial reluctance to permit insurers to use peripheral administrative defaults (not causative of the loss) as blanket grounds for repudiation.

c. GUIDELINES

1. Where an All India Permit is on its face valid for the relevant period and is issued by competent authority, insurers must demonstrate a direct and proximate breach of permit conditions that causally relate to the loss before repudiating.

2. An authorization fee linked to inter-state movement cannot be treated as negating permit validity for intra-state losses where the vehicle is registered and the incident occurred in the issuing State.

3. Consumer fora’s directions for non-standard settlement should not be lightly overturned by higher fora unless there is a clear factual and legal basis showing that the permit was invalid in respect of the loss.

4. Insurers should process claims promptly where prima facie documentary evidence (permit, registration, policy) indicates cover; technical or peripheral infractions unconnected to the cause of loss should not justify denial.

5. Interest on delayed payments in consumer claims may be awarded from the date of the State complaint until actual payment; trial courts and commissions should record reasons and compute simple interest rates consistent with precedent (here fixed at 9% p.a.).

I) CONCLUSION & COMMENTS

The Supreme Court’s decision reinforces a fact-sensitive approach when permit validity is invoked to deny insurance liability. The Court appropriately focused on the text of the permit and the territorial connection between the authorization fee and inter-state movement, thereby forestalling a formalistic repudiation. The judgment signals that insurers must align repudiation grounds with both the policy terms and the operative legal status of permits at the time and place of loss. It also underscores the limited utility of precedent if factual matrices differ materially; reliance upon Amrit Paul Singh was rightly distinguished. The award of interest at 9% p.a. from the date of the State complaint is a practical remedy recognizing delay and consumer hardship. For practitioners, the decision is a reminder to scrutinize permit documents and to resist insurer attempts to deploy peripheral administrative defaults as a catch-all defense. The judgment is beneficial to insureds who suffer intra-state losses where national permits have been validly issued by the competent State authority.

J) REFERENCES

a. Important Cases Referred

i. Shri Binod Kumar Singh v. National Insurance Company Ltd., [2025] 2 S.C.R. 521 : 2025 INSC 154.
ii. National Insurance Company v. Nitin Khandelwal, Criminal Appeal No. 8463/2014 (referenced in judgment).
iii. Amrit Paul Singh & Anr. v. TATA AIG General Insurance Co. Ltd. & Ors., (2018) 7 SCC 558 (as relied upon by National Commission).

b. Important Statutes / Instruments Referred

i. All India Permit terms / authorization fee provisions (as set out in the permit annexed to the record).