Summary
| Category | Data |
|---|---|
| Court | Supreme Court of India |
| Case Number | C.A. No.-013066-013067 – 2025 |
| Diary Number | 8617/2023 |
| Judge Name | HON’BLE MR. JUSTICE SANJAY KAROL |
| Bench | HON’BLE MR. JUSTICE SANJAY KAROL; HON’BLE MR. JUSTICE NONGMEIKAPAM KOTISWAR SINGH |
| Precedent Value | Binding |
| Overrules / Affirms | Affirms existing “pay and recover” precedents |
| Type of Law | Motor Vehicles Act / Insurance Law |
| Questions of Law | Whether deviation from a prescribed permit route affects an insurer’s liability to compensate third-party victims and whether the “pay and recover” principle applies in such cases. |
| Ratio Decidendi | The Court held that an insurer’s statutory obligation under Section 149(5) of the Motor Vehicles Act arises despite deviation from the permitted route. Denying compensation to the victim on account of permit limits would be contrary to the purpose of the Act. However, the insurer may invoke the “pay and recover” mechanism to recoup any sum paid from the insured for breach of policy conditions. This approach balances the rights of accident victims with the contractual interests of the insurer. |
| Judgments Relied Upon |
|
| Logic / Jurisprudence / Authorities Relied Upon by the Court | Application of the “pay and recover” principle under Section 149(5) of the Motor Vehicles Act; interpretation of permit-route conditions as contractual limits; balancing victims’ right to timely compensation against insurers’ right to indemnity; requirement that exceptions under Section 66 be pleaded and proved. |
| Facts as Summarised by the Court | On 7 October 2014 a bus deviating from its Bengaluru–Mysore permit route fatally struck a motorcyclist in Channapatna. Dependents claimed ₹50 lakh; the Tribunal awarded ₹18.86 lakh. The High Court enhanced the award to ₹31.84 lakh. The insurer challenged liability on ground of route deviation. The High Court applied the “pay and recover” principle, directing the insurer to satisfy the award and recover from the bus owner for policy breach. |
Practical Impact
| Category | Impact |
|---|---|
| Binding On | All subordinate courts |
| Persuasive For | Other High Courts and Motor Accident Claims Tribunals |
| Follows |
|
What’s New / What Lawyers Should Note
- Confirms that deviation from the insured vehicle’s prescribed permit route does not extinguish an insurer’s statutory duty to compensate victims under Section 149.
- Reaffirms that the insurer may invoke the “pay and recover” mechanism: pay the award first, then recover the amount from the insured for policy breach.
- Clarifies that conditions of carriage or route in a permit are contractual limits subject to recoupment, not absolute bars to liability.
- Emphasises that any exception under Section 66 of the Motor Vehicles Act (such as absence or deviation of permit) must be pleaded and proved by the insured.
Summary of Legal Reasoning
- Purpose of Statutory Liability: The Motor Vehicles Act aims to ensure prompt compensation to accident victims, irrespective of permit deviations.
- “Pay and Recover” Doctrine: Under Section 149(5), the insurer has an initial obligation to pay third-party claims; Section 149(7) permits recovery from the insured if policy conditions are breached.
- Balancing Interests: Denying compensation due to permit limits would frustrate the Act’s beneficent object; allowing recovery protects insurers’ contractual rights.
- Precedential Foundation: The Court applied and extended principles from Swaran Singh, Kamla, Parminder Singh, S. Iyyapan and Chatha Service Station.
- Application to Route Deviation: A deviation from the permitted route is treated akin to other policy violations—insurer pays first, then recovers.
Arguments by the Parties
Petitioner
- The Tribunal undervalued the deceased’s income and prospects; compensation should be enhanced to Rs. 31.84 lakh as correctly assessed by the High Court.
Respondent
- The bus deviated from its permit route and entered Channapatna without authorization, thereby falling outside the policy’s coverage and negating liability to pay.
Factual Background
On 7 October 2014, a bus operating under a Bengaluru–Mysore permit deviated into Channapatna and collided with a motorcyclist, killing him. His dependents lodged a claim petition for ₹50 lakh under the Motor Vehicles Act. The Tribunal awarded ₹18.86 lakh; the High Court enhanced it to ₹31.84 lakh. The insurer challenged liability on the basis that the accident occurred outside the permitted route. The High Court applied the “pay and recover” principle, directing the insurer to satisfy the award and recover from the owner.
Statutory Analysis
- Section 149(5) MV Act: Imposes a primary liability on insurers to satisfy awards to third parties.
- Section 149(7) MV Act: Enables insurers to recover amounts paid if the insured breached policy conditions.
- Section 66 MV Act: Enumerates exceptions (e.g., absence of permit), which must be pleaded and proved by the insured.
- Permit Conditions: Route restrictions in a permit constitute contractual boundaries of coverage, not absolute bars to victims’ rights.
Alert Indicators
- ✔ Precedent Followed – The decision affirms and applies established “pay and recover” jurisprudence under the Motor Vehicles Act.