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Oriental Insurance Co. Ltd. v. Durg Roadways Private Limited

Civil Appeal · 2026 INSC 722Decided 20 Jul 2026
Civil Appeal (arising out of SLP(C) No.20645 of 2025)
Justice Sanjay Karol · Justice Nongmeikapam Kotiswar Singh · Justice Augustine George Masih

Background

A bus owned by Durg Roadways, travelling from Durg (Chhattisgarh) to Nepal on a religious tour under a special permit, collided with a hill, killing the driver and two passengers, including one Harish Yadav. Harish Yadav's family won compensation of about Rs. 32.67 lakh from the Motor Accident Claims Tribunal against the bus owner, but the High Court later shifted this liability onto the insurer, Oriental Insurance, which then appealed to the Supreme Court arguing the policy did not cover accidents outside India without extra premium.

Decision Breakdown

The Supreme Court dismissed the insurer's appeal. It held that the policy's "Limitations as to Use" clause covered any vehicle plying under a valid permit issued under the Motor Vehicles Act, with no geographical restriction, and the bus held a valid special permit authorising travel to Nepal. Non-payment of the extra premium required by an insurance-tariff regulation could not defeat coverage because Section 147(5) of the Motor Vehicles Act (a non-obstante/overriding clause) trumps such regulations, and the driver's license was verified and accepted at the Nepal border. The Court also invoked the rule that ambiguous insurance contracts must be read in favour of the insured (contra proferentem) and issued suggestions to IRDAI to standardise clearer cross-border coverage language in motor policies.

Lesson Learnt

An insurance policy must be read as a whole, not clause-by-clause in isolation, and if the insurer's drafting is ambiguous the benefit goes to the policyholder; a vehicle carrying a valid permit for travel outside India can remain covered by a standard Indian motor policy even without a separate cross-border premium, depending on how the specific clauses are worded.

Official source (sci.gov.in)View Judgment (PDF)

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