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Judgment
Hasmukh D. Suthar, J
The present appeal under Section 173 of the Motor Vehicles Act, 1988 has been filed by the appellant-insurance company challenging the judgment and award dated 04.10.2022 passed by the Motor Accident Claims Tribunal, Rajkot in Motor Accident Claim Petition Nos. 852 of 2016, whereby the learned Tribunal has allowed the claim petition.
Heard learned advocates for the respective parties. Though served, none appears for the respondent No.2.
The brief facts of the present claim petitions are that On 25.05.2016, at about 4:00 p.m., the minor claimant was playing on the road in Vadvajdi Village when the driver of the tractor suddenly reversed the vehicle at high speed and ran over the tractor wheel on the abdomen of the injured applicant, as a result of which the minor applicant sustained serious injuries. An FIR in respect of the said incident was registered at Lodhika Police Station vide I-C.R. No. 23 of 2016..
The learned advocate for the appellant–insurance company has preferred the present appeal on the ground that the learned Tribunal committed an error in passing the impugned judgment and fastening liability upon the insurance company, as the owner of the vehicle did not possess a valid permit to use the insured vehicle for commercial purposes. The RTO Officer was examined and proved that once a trolley is attached to a tractor, its use becomes commercial and requires prior permission. Thus, a material breach of the policy conditions was established, and therefore, the insurance company cannot be held liable. However, the learned Tribunal ignored this material evidence, awarded compensation to the claimant, and passed an order of “pay and recover”. Hence, the present appeal deserves to be allowed.
The learned advocate for the respondent has opposed the appeal and submitted that the Tribunal has committed no error. The deceased was a third party and had no concern with the terms of the policy. As the policy was valid on the date of the accident, the insurance company is liable to satisfy the award.
Having heard the learned advocates for the respective parties, it appears that the main contention of the learned advocate for the appellant is that, on the date of the accident, the trolley attached to the tractor did not possess a valid permit to ply on the road. The quantum of compensation is not disputed, and the appeal is confined only to the issue of liability on the ground of validity of the permit.
It appears that to substantiate the said defence, an officer of the RTO was examined, who deposed that the permit of the said vehicle was valid from 20.04.2009 to 19.04.2014 and thereafter from 12.12.2026 to 11.01.2027. As the accident occurred on 25.05.2016, the learned Tribunal concluded that there was no valid permit to ply the trolley on the date of the accident and, consequently, held that there was an apparent breach of the conditions under Section 149 of the Motor Vehicles Act. On the basis of the said finding, the insurance company was directed to first pay the compensation and was granted liberty to recover the same from original opponent No.1.
It is pertinent to note that the claimant is a third party and has no concern with any alleged breach of policy conditions. The contractual relationship exists only between the insurer and the insured. Even as per the law laid down by the Hon’ble Supreme Court in Royal Sundaram Insurance Co. Ltd. v. Shrimati Honnamma, AIR 2025 SC 2641, once a trolley is attached to a tractor, it becomes a single vehicle. Since the trolley is pulled by the tractor, the liability of the insurer of the tractor would also extend to the accident. Merely because the trolley did not possess a permit cannot be a ground to entertain the present appeal.
In view of the above, this Court is of the considered view that the learned Tribunal has not committed any error in fastening the liability upon the insurance company on a “pay and recover”. In this regard, this Court deems it fit to refer to the law laid down by the Hon’ble Supreme Court in Shamanna vs. Oriental Insurance Co. Ltd., (2018) 9 SCC 650, wherein, considering Sections 147 and 149 of the MV Act, it has been held that in the case of a third-party victim of a motor accident, it is the duty of the insurer to satisfy the award, and the principle of “pay and recover” has been summarized. It is held that even if the driver had no valid driving licence and there was a breach of policy condition, the High Court ought not to interfere with the Tribunal’s order of “pay and recover”. If the insurance company pays any amount, the mode of recovery is also provided, giving the insurer liberty to initiate proceedings before the executing Court concerned for recovery from the owner. The claimant being a third party has nothing to do with the terms and conditions of the policy.
This Court deems it fit to refer to the decisions of the Hon’ble Supreme Court in K. Nagendra vs. New India Insurance Co. Ltd., 2025 SCC OnLine SC 2297, and Rama Bai vs. Amit Minerals, 2025 INSC 1162, the learned Tribunal has not committed any error in applying the principle of “pay and recover”. This principle ensures that the victim is not deprived of compensation due to disputes between the owner and insurer, and at the same time, preserves the right of the insurer to recover the excess amount from the owner, thereby maintaining fairness and accountability in the Motor Accident Compensation system.
11 In view of the judgments of the Hon’ble Supreme Court in Rambabu Tiwari v. United India Insurance Co., (2008) 8 SCC 165; K. Nagendra v. New India Insurance Co. Ltd., 2025 SCC OnLine SC 2297; Parminder Singh v. New India Assurance Co. Ltd., (2019) 7 SCC 217; and Chatha Service Station v. Lalmati Devi, 2025 INSC 468, Rama Bai vs. Amit Minerals, 2025 INSC 1162, the learned Tribunal has not committed any error in applying the principle of “pay and recover”. This principle ensures that the victim is not deprived of compensation due to disputes between the owner and insurer, and at the same time, preserves the right of the insurer to recover the excess amount from the owner, thereby maintaining fairness and accountability in the Motor Accident Compensation system.
This Court also deems it fit to refer to the order dated 02.12.2025 passed in United India Insurance Co. Ltd. v. Minor Shobhaben Madhubhai Patadia & Ors., First Appeal No. 3885 of 2025, wherein the “pay and recover” direction was held just and judgment of Hon’ble Apex Court in the case of United India Insurance Company Ltd. vs. K.M. Poonam, (2015) 15 SCC 297.
It is needless to state that if the insurance company satisfies the award, it will not be required to file a separate suit or independent proceedings for recovery, as it may recover the excess amount from the owner of the vehicle in the same execution proceedings. In this regard, reference may be made to\ Oriental Insurance Co. Ltd. vs. Nanjappan, (2004) 13 SCC 224 .
In view of the above, the submissions advanced by the learned advocate for the appellant are not sustainable, and the learned Tribunal has not committed any error. Therefore, no interference is called for by this Court and hence, the present z
As the entire awarded amount of compensation has already been deposited, the same shall be disbursed in favour of the claimants and/or their guardians through RTGS, after proper verification. The bank account details shall be furnished by the learned advocate for the claimants to the Nazir Department of the concerned Tribunal. The court fees, if any, payable by the claimants shall be deducted from the said amount, and the remaining compensation shall be disbursed in favour of the claimants on due verification within a period of two weeks thereafter.
Record and proceedings, if any, be sent back to the concerned Tribunal forthwith. Pending civil applications, if any, shall stand disposed of accordingly.