Fitness Certificate Implicit In Temporary Registration Certificate For New Vehicles: Jammu & Kashmir High Court

The Jammu and Kashmir & Ladakh High Court has held that a fitness certificate is implicitly included in the temporary registration certificate issued to a brand-new vehicle and hence repudiating an insurance claim solely based on the absence of a fitness certificate is not sustainable in law.

“…The object behind the requirement of a fitness certificate under Section 56 of the Act and sheer common sense, we cannot contemplate the sale of any brand-new vehicle, which is not otherwise fit. The sale of a brand-new vehicle itself implies that it is fit. It is only after the due course of time, and use of the vehicle, the requirement of fitness becomes relevant. Therefore, the issuance of temporary registration for a brand-new vehicle implies that for the said period of registration, the vehicle is fit”, Chief Justice N. Kotiswar Singh & Justice Moksha Khajuria Kazmi observed.

The case centred around an appeal filed by an insurance company challenging an award issued by the J&K State Consumer Disputes Redressal Commission directing the insurance company to pay compensation for the damage sustained by a vehicle owned by the claimant. The insurance company had earlier rejected the claim, citing various grounds, including the lack of a fitness certificate.

Assailing the award the appellant-Insurance Company contended that the claim was repudiated due to the absence of a fitness certificate, as well as the vehicle being used in violation of the insurance policy. They further argued that the vehicle was carrying more passengers than permitted and lacked a route permit.

On the other hand, the Respondent-claimant's counsel vehemently argued that the absence of a fitness certificate should not lead to the repudiation of the claim and submitted that the vehicle had a temporary registration certificate, which was deemed sufficient evidence of its fitness. Respondents further contended that the vehicle was being transferred for safe custody, not for commercial use, and therefore did not require a route permit.

After examining Sections 59 and 60 of Motor Vehicle Act the bench observed that a fitness certificate is closely connected to the registration certificate and that a temporary registration certificate is issued for newly purchased vehicles, implicitly indicating the vehicle's fitness.

“As a corollary, if the vehicle is registered it will be presumed that it also has a fitness certificate otherwise the certificate of registration of vehicle would not have been issued," the bench reasoned.

Referring to previous judgments of the apex court and the underlying object of the requirement for a fitness certificate, the court emphasized that the sale of a brand-new vehicle itself implies its fitness and insisting on a fitness certificate for a newly purchased vehicle would be illogical and absurd.

“…The issuance of temporary registration for a brand-new vehicle implies that for the said period of registration, the vehicle is fit. Hence, there will not be any requirement for a fitness certificate for a brand new vehicle till the validity of the temporary registration certificate which is usually for a month after the purchase of the vehicle. Any other view, would not only be illogical and incongruent, but will also tantamount to stretching the provisions of law relating to fitness of vehicles beyond reasonable limits”, the bench maintained.

Addressing the other grounds raised by the insurance company, such as the lack of a route permit and the alleged violation of the insurance policy, the court said that a route permit was not necessary as the vehicle was being shifted for safe custody and was not carrying passengers or goods.

“...In view of the provisions of Section 66 (3) (j) of the Motor Vehicles Act, 1988, route permit will not be necessary as the vehicle was not engaged in any commercial or official use and was not carrying any passengers or goods, but was merely being shifted to the office of the claimant for safe custody after the vehicle was purchased”, the court underscored.

In light of its findings, the court dismissed the appeal and held that the insurance company was liable to honour the claim.

Case Title: National Insurance Company Ltd. thr. Its Divisional Manager and Anr Vs M/S Rash Builders Civil Contractors and Suppliers thr. its Manager

Citation: 2023 LiveLaw (JKL) 179

Click Here To Read/Download Judgment