The High Court of Uttarakhand has unequivocally reaffirmed that even if a vehicle was not insured on the date of accident, the insurer may still be required to pay compensation to a third-party victim under the “pay and recover” principle, in line with Supreme Court precedent. This holding upholds existing law and is binding on subordinate courts and tribunals dealing with third-party insurance claims.
Summary
| Category | Data |
|---|---|
| Case Name | AO/109/2022 of THE UNITED INDIA INSURANCE COMPANY LTD. Vs RACHNA |
| CNR | UKHC010044972022 |
| Date of Registration | 11-04-2022 |
| Decision Date | 30-10-2025 |
| Disposal Nature | DISMISSED |
| Judgment Author | Hon’ble Mr. Justice Alok Mahra |
| Court | High Court of Uttarakhand at Nainital |
| Precedent Value | Binding on subordinate courts and Motor Accident Claims Tribunals (MACTs) |
| Overrules / Affirms | Affirms established Supreme Court precedent |
| Type of Law | Motor Vehicle Insurance / Compensation |
| Questions of Law | Whether insurer can be directed to pay third-party compensation when policy is void or lapsed on accident date. |
| Ratio Decidendi |
Even where a vehicle is not insured on the accident date, the insurer must satisfy third-party compensation awards and may subsequently recover from the vehicle owner. The rationale is rooted in the statutory objective of protecting third-party victims regardless of disputes between the insurer and insured. This “pay and recover” method, as interpreted by the Supreme Court in Inderjit Kaur and Rula, ensures prompt relief to victims while safeguarding insurers’ right to recoup. There is no illegality in the Tribunal’s application of this principle. |
| Judgments Relied Upon |
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| Logic / Jurisprudence / Authorities Relied Upon by the Court | The statutory intention of Chapter XI, Motor Vehicles Act, is to shield third parties from insurer-insured disputes; third parties’ rights against insurers are not affected by lapses between insured and insurer. |
| Facts as Summarised by the Court | Claimant’s daughter died in a road accident caused by a truck; FIR was lodged, policy had expired/lapsed; Tribunal awarded compensation and directed insurer to “pay and recover.” |
Practical Impact
| Category | Impact |
|---|---|
| Binding On | Subordinate courts and Motor Accident Claims Tribunals in Uttarakhand |
| Persuasive For | Other High Courts, insurance litigation nationally |
| Follows | Supreme Court rulings: Inderjit Kaur (1998), New India Assurance v. Rula (2000) |
What’s New / What Lawyers Should Note
- Reaffirms that insurers may be directed to pay compensation even if the vehicle was uninsured/invalid policy on date of accident and later recover from owner.
- Tribunal decisions applying “pay and recover” for third-party victims, even with policy lapse, are in accordance with settled law.
- The insurer’s arguments about absence of valid insurance are not sufficient to defeat “pay and recover” orders.
- Strong reliance upon and reiteration of Supreme Court precedents – a robust defence for claimants and a warning for insurers contesting such awards.
Summary of Legal Reasoning
- The Court perused the Tribunal record and noted express reliance on Supreme Court judgments: Oriental Insurance Co. Ltd. v. Inderjit Kaur and New India Assurance Co. Ltd. v. Rula.
- It was reiterated that Chapter XI of the Motor Vehicles Act aims to ensure that third-party victims receive prompt compensation.
- The rights of third parties are not dependent on insurer-insured payment disputes or the status of premium/payment.
- Section 149, Motor Vehicles Act, empowers courts/tribunals to direct insurers to satisfy awards and recover amounts from owners if policy defences succeed.
- The Tribunal’s direction to the Insurance Company to “pay and recover” is legally correct and justified by the statutory objective and Supreme Court authority.
- The appeal was dismissed for lack of merit; the Tribunal’s award and procedure were upheld entirely.
Arguments by the Parties
Petitioner (Insurance Company):
- The Tribunal erred in directing a “pay and recover” order as the vehicle was uninsured on the date of accident.
- Liability should rest solely on the offending vehicle’s owner.
Respondent:
- No appearance; no submissions recorded.
Factual Background
On 21.11.2018, the claimant, her daughter, and relatives were returning home when their car was struck by a rashly-driven truck, resulting in the claimant’s daughter’s death and injuries to others. An FIR was lodged. The deceased was a working young woman supporting her family. The insurance policy for the offending truck was not in force on the accident date. The Tribunal awarded compensation with a “pay and recover” direction against the insurer.
Statutory Analysis
- Sections 146, 147(5), and 149(1), Motor Vehicles Act, 1988 were analyzed.
- Section 146 prohibits driving a vehicle without insurance; Section 149 empowers courts to direct payment to third parties by insurer before recovery from owner.
- The statutory interpretation centered on protecting third-party claimants irrespective of insurer-insured contractual lapses.
Alert Indicators
- ✔ Precedent Followed – Supreme Court rulings affirmed; settled law applied without deviation.