Supreme Court Applies Pay & Recover Principle In Motor Accident Case Even Though Offending Vehicle Driver's Licence Was Invalid

The appeal before the Apex Court was preferred by the appellant-claimants challenging the judgment of the Chhattisgarh High Court enhancing the compensation payable to the appellant-claimant and absolving the Insurance Company from the liability to pay the amount, fastening the same on the respondents– driver and the owner.

Referring to the judgments in Shamanna and Another v. Divisional Manager, Oriental Insurance Company Limited and others (2018) and Parminder Singh v. New India Assurance Company Limited and Others (2019), the Division Bench of Justice K. Vinod Chandran and Justice N.V. Anjaria stated, “The submission on part of the appellant that the High Court ought to have applied the “pay and recover” principle rests on the decision of this Court in Shamanna (supra) and Parminder Singh (supra). In Shamanna (supra) this Court dealt with the claim of compensation by third party victim of the motor accident. In para 5 of the judgment, this Court referred to its own earlier decision in National Insurance Co. Ltd. v. Swaran Singh and Others to reiterate that the insurer has to pay the compensation amount payable to the third party and the insurance company may recover the same thereafter from the insured.”

Factual Background

The appeal was filed by the mother of one Nand Kumar, who died in a vehicular accident that took place in the year 2011. A truck driven by the first respondent met with an accident with a tractor-trolley. The said Nand Kumar was a conductor in the truck who died succumbing to injuries suffered in the accident. The Motor Accident Claims Tribunal awarded compensation of Rs 3 lakh and ordered the same to be deposited by the driver and the owner.

It was found that the respondent Driver was not holding a valid licence on the date of the accident. In appeal, the High Court enhanced the compensation and fastened the liability to pay the amount on the driver and the owner, while holding that the Insurance Company was entitled to avoid the liability. The appellant claimed that the High Court ought to have applied the doctrine of “pay and recover” requiring the Insurance Company to satisfy the amount of compensation to the claimant and subsequently allow the Insurance Company to recover the amount in accordance with law.

Reasoning

On a perusal of the facts of the case, the Bench noted that on the date of the accident, a valid licence was not held by the driver, and thus it was not legally permissible for him to drive the vehicle on the date of the accident.

Considering that on the date of accident, the driver had no valid license and the licence was not renewed, the Bench held, “The insurance company was entitled to take a valid defence in that regard under Section 149 (2)(a)(ii) as the driver of the offending vehicle was not duly licensed, to avoid its liability to pay the compensation. The conditions in law are satisfied to absolve the insurance company from the payment of compensation.”

Referring to a series of decisions, the Bench held that it would be only proper that the insurer be directed to satisfy the award, which however, can be recovered by the insurer from the insured-owner of the vehicle. Thus, the Bench allowed the appeal.

Cause Title: Rama Bai v. Amit Minerals Through Incharge Officer/ Competent Officer (Case No.: Civil Appeal No. 9669 of 2024)

Appearance

Appellant: AOR Kaustubh Shukla, Advocates Pushpanjali Singh, Praveen Singh

Respondent: Advocates Manish Kumar, Shivam Singh, Shubham Janghu, Ishwar Singh, Yoshit Jain, Ishita Agrwal, Divyansh Mishra, Kumar Saurav, AOR Gopal Singh

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