Summary
| Category | Data |
|---|---|
| Court | Supreme Court of India |
| Case Number | C.A. No.-013509-013509 – 2025 |
| Diary Number | 7778/2023 |
| Judge Name | HON’BLE MR. JUSTICE MANOJ MISRA |
| Bench | HON’BLE MR. JUSTICE MANOJ MISRA & HON’BLE MR. JUSTICE UJJAL BHUYAN |
| Precedent Value | Binding on subordinate courts and tribunals |
| Overrules / Affirms | Affirms pay-and-recover principle; reverses High Court’s absolution of insurer |
| Type of Law | Motor accident compensation / insurance law |
| Questions of Law | Whether an insurer can be directed to satisfy a motor accident award and recover the amount from the insured despite breach of policy conditions |
| Ratio Decidendi | In motor accident claims, even where policy conditions are breached, an insurer who has accepted premiums for specified risks cannot be fully exonerated; the pay-and-recover principle entitles the claimant to have the insurer satisfy the award while preserving the insurer’s right to recover from the insured. |
| Judgments Relied Upon |
|
| Logic / Jurisprudence / Authorities Relied Upon by the Court | Conspectus of pronouncements on the pay-and-recover principle; contractual validity of insurance for third-party protection despite policy breaches; insurer’s right of recovery preserved. |
| Facts as Summarised by the Court | A five-seater vehicle, insured by the respondent, carried nine persons and caused a fatal accident. The Motor Accidents Tribunal held insurer and owner jointly liable based on additional premium for driver, conductor and cleaner. The High Court reversed insurer’s liability on policy-breach grounds. The claimant appealed. |
Practical Impact
| Category | Impact |
|---|---|
| Binding On | All subordinate courts and tribunals deciding motor accident claims |
| Persuasive For | High Courts |
| Overrules | High Court’s judgment exonerating the insurer based on policy breach |
| Follows |
|
What’s New / What Lawyers Should Note
- Confirms that the pay-and-recover principle applies even when policy conditions are breached by overloading.
- Clarifies that acceptance of additional premium for covering specific personnel (driver, conductor, cleaner) cannot absolve the insurer from liability for third-party claims.
- Empowers claimants to enforce immediate satisfaction of awards by insurers, while preserving insurers’ recovery rights.
- Reaffirms binding effect of Rama Bai (2025) and earlier precedents on pay-and-recover in motor accident claims.
Summary of Legal Reasoning
- The High Court erred in fully absolving the insurer despite acceptance of additional premium.
- A valid contract of insurance remains enforceable for third-party protection even if policy conditions are breached.
- The pay-and-recover principle, consistently endorsed by this Court, mandates that insurers satisfy awards first.
- Upon payment, insurers retain the contractual right to recover the compensated amount from the insured.
- Applying precedents (Mata Ram, Swaran Singh, Shamanna, Rama Bai), the Supreme Court directed the insurer to satisfy the award and recover from the insured.
Arguments by the Parties
Petitioner
- Insurer collected additional premium covering risk for driver, conductor and cleaner.
- The death of the passenger falls within those covered risks.
- Pay-and-recover principle entitles the claimant to have insurer satisfy the award with a right of recovery.
Respondent
- Gratuitous passengers (other than driver, conductor, cleaner) are not third parties under the policy.
- Vehicle’s seating capacity was exceeded, breaching policy terms.
- Policy breach absolves the insurer from liability for excess passengers.
Factual Background
A five-seater vehicle insured by the first respondent carried nine persons when it met with an accident causing a passenger’s death. The Motor Accidents Tribunal held both the insurer and the owner jointly liable, relying on the insurer’s acceptance of additional premium for driver, conductor and cleaner. The High Court allowed the insurer’s appeal, absolving it on grounds of policy breach. The claimant appealed to the Supreme Court.
Dissenting / Concurring Opinion Summary
No dissent; the judgment was delivered unanimously by the two-judge bench.
Alert Indicators
- ✔ Precedent Followed