Case Note & Summary
The appellant, Cholamandalam MS General Insurance Co. Ltd., filed a first appeal under Section 173 of the Motor Vehicles Act, 1988, against the common judgment and award dated 20.07.2024 passed by the Motor Accident Claims Tribunal, Ahmedabad, in Motor Accident Claim Petition No.332/2018. The Tribunal had partly allowed the claim petition and awarded compensation of Rs.6,21,500/- to the claimants (respondent Nos.1 to 5), who were the legal representatives of the deceased. The deceased died in a motor vehicle accident involving a goods carrying truck. The Insurance Company contended that the deceased was a gratuitous passenger in the goods vehicle, and the insurance policy did not cover the risk of gratuitous passengers. The Tribunal, after appreciating evidence, concluded that the deceased was travelling as a gratuitous passenger and passed an order of 'pay and recover', directing the Insurance Company to pay the compensation to the claimants and then recover the amount from the insured. The Insurance Company appealed, arguing that it should be exonerated from liability entirely. The claimants opposed the appeal, submitting that they were third parties and had nothing to do with any breach of policy conditions. The High Court heard both sides and examined the record. The Court noted that the Tribunal had correctly found the deceased to be a gratuitous passenger based on evidence. However, the Court held that the Insurance Company's statutory duty under Section 149 of the Motor Vehicles Act to satisfy the award against a third party remains, even if there is a breach of policy conditions. The Court relied on the Supreme Court's decision in Shamanna vs. Oriental Insurance Co. Ltd., (2018) 9 SCC 650, which reiterated the principle of 'pay and recover'. The Court dismissed the appeal, upholding the Tribunal's order of pay and recover, and directed the Insurance Company to pay the compensation and then recover the amount from the insured.
Headnote
A) Motor Accident Claims - Pay and Recover - Gratuitous Passenger - Section 149, 166, 173 Motor Vehicles Act, 1988 - The Insurance Company appealed against the Tribunal's order directing it to pay compensation and then recover from the insured, contending that the deceased was a gratuitous passenger in a goods vehicle and the policy did not cover such risk. The High Court held that the Tribunal had rightly found the deceased to be a gratuitous passenger and passed the order of pay and recover. The Court reiterated that the insurer's statutory duty under Section 149 to satisfy the award against a third party remains, and the principle of pay and recover applies even if there is a breach of policy conditions. The appeal was dismissed. (Paras 1-6) B) Motor Accident Claims - Third Party Rights - Statutory Duty of Insurer - Section 149 Motor Vehicles Act, 1988 - The Court held that an insurance policy is a statutory contract for the benefit of third parties. The victim of a motor vehicle accident is a third party, and it is the statutory duty of the insurer to satisfy the award. The principle of 'pay and recover' has been reiterated by the Supreme Court in Shamanna vs. Oriental Insurance Co. Ltd., (2018) 9 SCC 650. The insurer must pay the award and then recover the amount from the insured. (Paras 5-6)
Issue of Consideration
Whether the Insurance Company can be exonerated from liability or whether the order of 'pay and recover' is justified when the deceased was a gratuitous passenger in a goods vehicle.
Final Decision
The High Court dismissed the appeal and upheld the Tribunal's order of 'pay and recover'. The Insurance Company is directed to pay the compensation amount to the claimants and then recover the same from the insured in accordance with law.
Law Points
- Pay and recover principle
- statutory duty of insurer to third party
- breach of policy conditions does not exonerate insurer from third-party liability
- Section 149 Motor Vehicles Act
- 1988
