Case Note & Summary
The appellant, Cholamandalam MS General Insurance Co. Ltd., filed appeals under Section 173 of the Motor Vehicles Act, 1988, against a common judgment and award dated 20.07.2024 passed by the Motor Accident Claims Tribunal, Ahmedabad, in Motor Accident Claim Petition No. 334/2018. The Tribunal had partly allowed the claim petition and awarded compensation of Rs.10,29,000/- to the claimants, who are 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, which was not covered under the insurance policy, and therefore the company should be exonerated from liability. The Tribunal, however, found that the deceased was indeed a gratuitous passenger and that there was a breach of policy conditions, but it 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 against this order, arguing that the Tribunal erred in not exonerating it completely. The claimants opposed the appeal, submitting that they are third parties and should not be affected by the breach of policy between the insurer and the insured. The High Court heard both sides and perused the record. It noted that the Tribunal had correctly appreciated the evidence and concluded that the deceased was a gratuitous passenger. However, the Court held that the Insurance Company is statutorily bound under Section 150 of the Motor Vehicles Act to satisfy the award to third party claimants, regardless of any breach of policy conditions. The principle of 'pay and recover' was upheld, relying on the Supreme Court decision in Shamanna vs. Oriental Insurance Co. Ltd., (2018) 9 SCC 650. The Court found no error in the Tribunal's order and dismissed the appeals, confirming the direction to pay and recover.
Headnote
A) Motor Accident Claims - Gratuitous Passenger - Pay and Recover - Sections 147, 149, 150 Motor Vehicles Act, 1988 - The Tribunal found the deceased was a gratuitous passenger in a goods vehicle, a breach of policy conditions. The Insurance Company sought exoneration. The High Court held that the insurer is statutorily bound to satisfy the award to third party claimants under Section 150 of the MV Act, and the breach of policy conditions only entitles the insurer to recover the amount from the insured. The order of 'pay and recover' was upheld. (Paras 6-7) B) Motor Accident Claims - Third Party Rights - Statutory Duty of Insurer - Section 150 Motor Vehicles Act, 1988 - The Court reiterated that 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' applies even if there is a fundamental breach of policy conditions, as per the decision in Shamanna vs. Oriental Insurance Co. Ltd., (2018) 9 SCC 650. (Paras 6-7)
Issue of Consideration
Whether the Insurance Company can be exonerated from liability to pay compensation to third party claimants when the deceased was a gratuitous passenger in a goods vehicle, or whether the principle of 'pay and recover' applies.
Final Decision
Appeals dismissed. The order of the Motor Accident Claims Tribunal directing the Insurance Company to pay compensation to the claimants and then recover the amount from the insured (pay and recover) is upheld.
Law Points
- Pay and recover principle
- Statutory duty of insurer to third party
- Breach of policy conditions does not absolve insurer from liability to third party
- Section 150 Motor Vehicles Act
- 1988
