The High Court of Chhattisgarh holds that, following Supreme Court precedent, the “pay and recover” principle applies even in motor accident claims involving gratuitous passengers in goods vehicles; the insurer must first pay compensation and can then recover the amount from the owner and driver. This clarifies and affirms existing law, providing binding guidance for future claims in similar contexts.
Summary
| Category | Data |
|---|---|
| Case Name | MAC/655/2023 of SMT. LEELA PAL Vs SHYAM LAL BANJARE |
| CNR | CGHC010129962023 |
| Date of Registration | 25-04-2023 |
| Decision Date | 30-10-2025 |
| Disposal Nature | DISPOSED OFF |
| Judgment Author | HON’BLE SHRI JUSTICE SANJAY K. AGRAWAL |
| Court | High Court Of Chhattisgarh |
| Bench | Single Bench – Hon’ble Shri Justice Sanjay K. Agrawal |
| Precedent Value | Binding on subordinate courts in Chhattisgarh; persuasive elsewhere |
| Overrules / Affirms | Affirms Supreme Court precedents, particularly Anu Bhanvara v. Iffco Tokio General Insurance Co. Ltd. |
| Type of Law | Motor accident claims; insurance law |
| Questions of Law | Whether, in case of a gratuitous passenger in a goods vehicle, the insurance company is liable to pay compensation and recover the same from owner/driver |
| Ratio Decidendi |
The court, relying on the Supreme Court’s decision in Anu Bhanvara, held that even for gratuitous passengers in goods vehicles, the “pay and recover” principle applies: the insurer must satisfy the awarded compensation to victims, then recover that sum in equal proportion from the driver and owner. The bench enhanced compensation after correcting the monthly income as per minimum wages and recalculated accordingly. Supreme Court authorities on compensation calculation and insurance liability were meticulously followed. The decision reaffirms the applicability and scope of “pay and recover” in gratuitous passenger claims. |
| Judgments Relied Upon |
|
| Logic / Jurisprudence / Authorities Relied Upon by the Court | Supreme Court decisions emphasizing “pay and recover,” minimum wage rules for accident compensation; application of compensation heads established in prior rulings. |
| Facts as Summarised by the Court |
The appellants, wife and son of Ganesh Pal (deceased), sought enhanced compensation for his death in a motor accident while traveling as a gratuitous passenger in a goods vehicle (truck). The Claims Tribunal awarded compensation, but the income used for calculation was contested. The claimants sought a higher figure as per minimum wage notification and application of “pay and recover” against the insurance company, which was opposed by the insurer. The High Court enhanced the compensation and directed the insurance company to pay and recover. |
Practical Impact
| Category | Impact |
|---|---|
| Binding On | All subordinate courts in Chhattisgarh |
| Persuasive For | Other High Courts, Motor Accident Claims Tribunals, and as an authority in motor accident insurance law across other jurisdictions |
| Follows |
|
What’s New / What Lawyers Should Note
- Confirms that the “pay and recover” principle applies even for gratuitous passengers in goods vehicles, following Supreme Court direction.
- High Courts must direct insurers to pay compensation first and then permit recovery from the owner and driver (50% each), even when insurance policies typically exclude coverage for gratuitous passengers.
- Compensation calculations must use notified minimum wages, not arbitrary lower figures, when proven by the claimant’s occupation.
- Lawyers representing claimants can cite this for expediting compensation payment, even in cases involving gratuitous passengers.
- Insurers can pursue recovery actions from owner/driver post-payment without the need to challenge the compensation award itself.
Summary of Legal Reasoning
- The court noted the deceased was a gratuitous passenger in a goods vehicle and that the Claims Tribunal applied a lower monthly income figure than that set by minimum wage law.
- On compensation calculation, the court referred extensively to Supreme Court precedents: National Insurance Co. Ltd. v. Pranay Sethi, Sarla Verma, and Magma General Insurance, ensuring that heads such as future prospects, consortium, and minimum wage rates were correctly applied.
- On insurer liability, the court closely followed the Supreme Court’s ruling in Anu Bhanvara, which established that in cases of gratuitous passengers, even though the insurance company is not liable under the terms of the policy, the court may direct the insurer to pay compensation and recover it from the vehicle owner and driver (“pay and recover”).
- The judgment quotes from Anu Bhanvara and traces the conflict of earlier authorities cited by both sides, distinguishing cases where insurers were held not liable and confirming that the “pay and recover” principle now governs even for gratuitous passengers.
- Applying this, the court directed the insurance company to pay the compensation within 45 days, subject to its right to recover 50% each from the owner and driver.
Arguments by the Parties
Petitioner (Appellants/Claimants):
- Argued that Supreme Court decision in Anu Bhanvara applies for gratuitous passengers, enabling “pay and recover.”
- Claimed the deceased’s earnings should be reckoned as per notified minimum wages (₹ 9,230 per month), not the lower figure used by the Tribunal.
- Sought enhancement of compensation and application of “pay and recover” against the insurer.
Respondent (Insurance Company):
- Opposed enhancement.
- Supported the impugned award.
- Contended that as the deceased was a gratuitous passenger, the insurer had no liability to pay compensation.
Factual Background
The deceased, Ganesh Pal, died in a motor accident while traveling as a gratuitous passenger in a goods vehicle (truck). His wife and son sought compensation, arguing that as he was employed as a Hamal, his income should be assessed at the official minimum wage. The Claims Tribunal awarded compensation based on a lower income and declined to apply the “pay and recover” principle to the insurance company. The High Court was called upon to determine correct compensation and the proper party liable for initial payment.
Statutory Analysis
- Interpreted Section 173 of the Motor Vehicles Act, 1988 (appellate jurisdiction over compensation awards).
- Applied minimum wage notifications for calculating income for grant of just compensation under the Motor Vehicles Act.
- Discussed the judicially created “pay and recover” doctrine—no express statutory provision, but recognized by the Supreme Court to fill policy gaps and protect victims when insurance formally excludes liability.
Alert Indicators
- ✔ Precedent Followed – Supreme Court’s Anu Bhanvara “pay and recover” principle was affirmed and applied.