Gujarat High Court
The New India Assurance Company Ltd vs Dhaniben Keshavbhai Patni (Lhs Of Decd. ... on 27 November, 2025
NEUTRAL CITATION
C/FA/3930/2025 ORDER DATED: 27/11/2025
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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/FIRST APPEAL NO. 3930 of 2025
With
CIVIL APPLICATION (FOR STAY) NO. 1 of 2025
In R/FIRST APPEAL NO. 3930 of 2025
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THE NEW INDIA ASSURANCE COMPANY LTD.
Versus
DHANIBEN KESHAVBHAI PATNI (LHS OF DECD. KESHAVBHAI
KANJIBHAI PATNI) & ORS.
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Appearance:
MS DIMPLE A THAKER(6838) for the Appellant(s) No. 1
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CORAM:HONOURABLE MR. JUSTICE HASMUKH D. SUTHAR
Date : 27/11/2025
ORAL ORDER
[1.0] This appeal under Section 173 of the Motor Vehicles Act, 1988 has been preferred by the appellant-original opponent No.2 - The New India Assurance Company Ltd. against the judgment and award dated 30.04.2025 passed by the Motor Accident Claims Tribunal (Auxi.), Ahmedabad (for short referred to as "learned Tribunal") in Motor Accident Claim Petition No.1264 of 2013, wherein the learned Tribunal has partly allowed the claim petition of original claimant and awarded compensation of Rs.8,68,800/- with interest at the rate of 9% per annum from the date of the claim petition to be paid by the appellant herein - insurance company and owner of the offending vehicle.
[2.0] Heard learned advocate for the appellant.
[3.0] The brief facts of the present claim petition are that on the date and time of the accident, when the deceased was going on motorcycle of respondent No.5 as a pillion rider and when they reached near Padmanath Cross Road, one cow came across the bike of the respondent No.5 and as a result, the bike was slipped and accident Page 1 of 8 Uploaded by SUCHITKUMAR PATEL(HC01083) on Fri Nov 28 2025 Downloaded on : Tue Dec 02 21:27:22 IST 2025 NEUTRAL CITATION C/FA/3930/2025 ORDER DATED: 27/11/2025 undefined took place. In the said accident, the deceased sustained serious injuries and during the treatment, he died on 11.09.2012. Hence, the claimants preferred claim petition and the Tribunal was pleased to award compensation of Rs.8,68,800/- to the original claimant. Being aggrieved and dissatisfied by the impugned judgment and award, present appeal is filed by the Insurance Company of the offending vehicle.
[4.0] Learned advocate for the appellant has submitted that the Tribunal has committed an error in fastening liability on the Insurance Company despite the evidence produced on record that the driver of motorcycle was not having the driving license. Insurance Company was able to prove willful breach of the policy and terms and conditions under Section 149(2)(a)(ii) of the Act. It is also submitted that, even as per the limited defense available to the Insurance Company under Section 149(2) of the Act, the ground of no valid license is a statutory defense and once proved, it entitles the insurer to avoid liability. Hence, the tribunal has committed an error in applying the principle of "pay and recover". Once no driving license does exist, then question does not arise to pass an order of pay and recover. Such rule be applied only in the case of technical irregularities, such as expired license or minor deviations, not in completely illegal acts such as allowing an unlicensed person to drive. In view of aforesaid facts, she has requested to allow the present appeal.
[5.0] Having heard learned advocate appearing for the appellant and going through the material placed on record, it appears that the Tribunal has not committed any error and considered all aspects and came to the conclusion that on the date of accident, driver of motorcycle was not holding valid and effective license. To saddle with Page 2 of 8 Uploaded by SUCHITKUMAR PATEL(HC01083) on Fri Nov 28 2025 Downloaded on : Tue Dec 02 21:27:22 IST 2025 NEUTRAL CITATION C/FA/3930/2025 ORDER DATED: 27/11/2025 undefined the liability of the Insurance Company, the Tribunal has assigned reasons in the judgment and award more particularly in para 23. The Tribunal has observed that from the testimony of witness Shri Kuldipkumar Naranbhai Thakkar, Asst. Motor Vehicle Inspector, RTO Patan at Exh:37 and extract of Driving License of respondent No.5 is produced at Exh:40, it appears that on 10.09.2012, the respondent No.5 - driver of Motorcycle was not holding valid and effective license and license of respondent No.5 was issued on 21.05.2015 for motorcycle with gear and three wheeler for non transport and license validity is from 21.05.2015 to 31.05.2017. Here in the case on hand, the deceased was third party and coverage of Insurance Company below Exh:41 is not in dispute.
[6.0] In view of above, the Tribunal was pleased to hold that on the date of accident, the driver of motorcycle was not having valid driving license to drive offending vehicle, which amounts to violation of terms and conditions of the insurance policy and was pleased to pass an order that insurance company shall firstly pay the compensation to the original claimant and then shall recover the same from the owner of the offending vehicle. At this stage, it is appropriate to refer to the decision of the Hon'ble Supreme Court in the case of National Insurance Co. Ltd. vs. Swaran Singh reported in (2004) 3 SCC 297 wherein the Hon'ble Supreme Court in paragraph 83 has observed as under:
"83. Sub-section (5) of Section 149 which imposes a liability on the insurer must also be given its full effect. The insurance company may not be liable to satisfy the decree and, therefore, its liability may be zero but it does mean that it did not have initial liability at all. Thus, if the insurance company is made liable to pay any amount, it can recover the entire amount paid to the third party on behalf of the assured . If this interpretation is not given to the beneficent provisions of the Act having regard to its purport and object, we fail to see a situation where beneficent provisions can be given effect to. Sub-section (7) of Section 149 of the Act, to which pointed attention of the Court has been drawn by the learned counsel for the petitioner, which is in negative language may now be noticed. The said provision must be read with sub-section (1) thereof. The right to avoid liability in terms of sub- section (2) of Section 149 is Page 3 of 8 Uploaded by SUCHITKUMAR PATEL(HC01083) on Fri Nov 28 2025 Downloaded on : Tue Dec 02 21:27:22 IST 2025 NEUTRAL CITATION C/FA/3930/2025 ORDER DATED: 27/11/2025 undefined restricted as has been discussed hereinbefore. It is one thing to say that the insurance companies are entitled to raise a defence but it is another thing to say that despite the fact that its defence has been accepted having regard to the facts and circumstances of the case, the Tribunal has power to direct them to satisfy the decree at the first instance and then direct recovery of the same from the owner. These two matters stand apart and require contextual reading.
102- the summary of our findings to the various issues as raised in these petitions are as follows:
(i) Chapter XI of the Motor Vehicles Act, 1988 providing compulsory insurance of vehicles against third party risks is a social welfare legislation to extend relief by compensation to victims of accidents caused by use of motor vehicles.
The provisions of compulsory insurance coverage of all vehicles are with this paramount object and the provisions of the Act have to be so interpreted as to effectuate the said object.
(ii) Insurer is entitled to raise a defence in a claim petition filed under Section 163 A or Section 166 of the Motor Vehicles Act, 1988 inter alia in terms of Section 149(2)(a)(ii) of the said Act.
(iii) The breach of policy condition e.g., disqualification of driver or invalid driving licence of the driver, as contained in sub-section (2)(a)(ii) of Section 149, have to be proved to have been committed by the insured for avoiding liability by the insurer. Mere absence, fake or invalid driving licence or disqualification of the driver for driving at the relevant time, are not in themselves defences available to the insurer against either the insured or the third parties. To avoid its liability towards insured, the insurer has to prove that the insured was guilty of negligence and failed to exercise reasonable care in the matter of fulfilling the condition of the policy regarding use of vehicles by duly licensed driver or one who was not disqualified to drive at the relevant time.
(iv) The insurance companies are, however, with a view to avoid their liability must not only establish the available defence(s) raised in the said proceedings but must also establish 'breach' on the part of the owner of the vehicle; the burden of proof wherefor would be on them.
(v) The court cannot lay down any criteria as to how said burden would be discharged, inasmuch as the same would depend upon the facts and circumstance of each case.
(vi) Even where the insurer is able to prove breach on the part of the insured concerning the policy condition regarding holding of a valid licence by the driver or his qualification to drive during the relevant period, the insurer would not be allowed to avoid its liability towards insured unless the said breach or breaches on the condition of driving licence is/ are so fundamental as are found to have contributed to the cause of the accident. The Tribunals in interpreting the policy conditions would apply "the rule of main purpose" and the concept of "fundamental breach" to allow defences available to the insured under Section 149(2) of the Act.
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(vii) The question as to whether the owner has taken reasonable care to find out as to whether the driving licence produced by the driver, (a fake one or otherwise), does not fulfil the requirements of law or not will have to be determined in each case.
(viii) If a vehicle at the time of accident was driven by a person having a learner's licence, the insurance companies would be liable to satisfy the decree.
(ix) The claims tribunal constituted under Section 165 read with Section 168 is empowered to adjudicate all claims in respect of the accidents involving death or of bodily injury or damage to property of third party arising in use of motor vehicle. The said power of the tribunal is not restricted to decide the claims inter se between claimant or claimants on one side and insured, insurer and driver on the other. In the course of adjudicating the claim for compensation and to decide the availability of defence or defences to the insurer, the Tribunal has necessarily the power and jurisdiction to decide disputes inter se between insurer and the insured. The decision rendered on the claims and disputes inter se between the insurer and insured in the course of adjudication of claim for compensation by the claimants and the award made thereon is enforceable and executable in the same manner as provided in Section 174 of the Act for enforcement and execution of the award in favour of the claimants.
(x) Where on adjudication of the claim under the Act the tribunal arrives at a conclusion that the insurer has satisfactorily proved its defence in accordance with the provisions of Section 149(2) read with sub-section (7), as interpreted by this Court above, the Tribunal can direct that the insurer is liable to be reimbursed by the insured for the compensation and other amounts which it has been compelled to pay to the third party under the award of the tribunal.
Such determination of claim by the Tribunal will be enforceable and the money found due to the insurer from the insured will be recoverable on a certificate issued by the tribunal to the Collector in the same manner under Section 174 of the Act as arrears of land revenue. The certificate will be issued for the recovery as arrears of land revenue only if, as required by sub-section (3) of Section 168 of the Act the insured fails to deposit the amount awarded in favour of the insurer within thirty days from the date of announcement of the award by the tribunal.
(xi) The provisions contained in sub-section (4) with proviso thereunder and sub-section (5) which are intended to cover specified contingencies mentioned therein to enable the insurer to recover amount paid under the contract of insurance on behalf of the insured can be taken recourse of by the Tribunal and be extended to claims and defences of insurer against insured by relegating them to the remedy before regular court in cases where on given facts and circumstances adjudication of their claims inter se might delay the adjudication of the claims of the victims."
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The said authority is also followed by the Hon'ble Apex Court once again in the case of Shamanna vs. Oriental Insurance Co. Ltd. reported in (2018) 9 SCC 650 wherein, considering sections 147 and 149 of the MV Act, third party victim of the motor vehicle accident is passed and it is the duty of the insurer to satisfy the award and principle of "pay and recover" is summarized wherein it is held that if the driver had no valid driving license and that there was breach of policy condition, the High Court ought not to have interfered with the order passed by the Tribunal of 'pay and recover'. If the insurance company has paid any amount, then mode of recovery is also provided and insurance company has a liberty to initiate proceeding before the executing Court concerned, if dispute is between the insurer and the owner. Herein, the claimant is a third party and he has nothing to do with the said terms and conditions of the insurance policy. Hence, in view of the decision of the Hon'ble Supreme Court in the cases of Parminder Singh Vs. New India Assurance Co. Ltd., reported in 2019 (7) SCC 217, Anu Bhanvara and Others vs. Iffco Tokio General Insurance Company Limited and Others reported in (2020) 20 SCC 632; Sunita & Ors. United India Insurance Co. Ltd. & Ors., Rama Bai vs. M/s. Amit Minerals reported in 2025 INSC 1162 and Chatha Service Station Vs. Lalmati Devi, reported in 2025 INSC 468, learned Tribunal has not committed any error in passing the order of 'pay and recover'.
[7.0] Further, in view of the decision of the Hon'ble Supreme Court in the case of K. Nagendra vs. New India Insurance Co. Ltd. reported in 2025 SCC OnLine SC 2297, decision relied on by the learned advocate for the appellant in the case of Harishbhai Dayabhai Bharaniya (Supra) and Babulal Mohanbhai Vala (Supra) would not avail any assistance to the learned advocate for the appellant - insurance Page 6 of 8 Uploaded by SUCHITKUMAR PATEL(HC01083) on Fri Nov 28 2025 Downloaded on : Tue Dec 02 21:27:22 IST 2025 NEUTRAL CITATION C/FA/3930/2025 ORDER DATED: 27/11/2025 undefined company.
[8.0] As the Hon'ble Supreme Court has re-affirmed the social welfare intent behind the MV Act. The principle or order of "To Pay and Recover" embodies judicial empathy ensuring victims are not left uncompensated due to dispute between owner and insurer. At the same time, considering the contractual accountability, owner who breaches the condition of cannot escape financial responsibility as insurers retain the right to recover paid sum to claimant. The dual balance of justice for victim and fairness for insurers strenghthen integrity of Motor Vehicles Accident Compensation system.
[9.0] In wake of aforesaid conspectus, no interference is called for by this Court and hence, present First Appeal stands dismissed at admission stage.
[10.0] The appellant - insurance company is directed to deposit the entire amount of compensation as awarded by the learned Motor Accident Claims Tribunal (Auxi.), Ahmedabad in Motor Accident Claim Petition No.1264 of 2013 vide the impugned judgment and award dated 30.04.2025 alongwith accrued interest at the rate of 9% per annum on the said amount within a period of four weeks from the date of receipt of this order with the Tribunal.
[11.0] After deposit of the amount of compensation by the appellant - insurance company, the same shall be disbursed in favour of the claimants through RTGS, after proper verification. The bank account details shall be furnished by the learned advocate for the claimant to the Nazir Department of the learned Tribunal concerned. The Court fees, if any, payable by the claimants on compensation be deducted Page 7 of 8 Uploaded by SUCHITKUMAR PATEL(HC01083) on Fri Nov 28 2025 Downloaded on : Tue Dec 02 21:27:22 IST 2025 NEUTRAL CITATION C/FA/3930/2025 ORDER DATED: 27/11/2025 undefined from the said amount and the remaining amount of compensation be disbursed in favour of the claimants on due verification within a period of two weeks thereafter.
[12.0] Record and proceedings, if any, be sent back to the concerned Tribunal forthwith. Pending civil applications, if any, also shall stand disposed of accordingly.
(HASMUKH D. SUTHAR,J) SUCHIT Page 8 of 8 Uploaded by SUCHITKUMAR PATEL(HC01083) on Fri Nov 28 2025 Downloaded on : Tue Dec 02 21:27:22 IST 2025