Karnataka High Court
The Divisional Manager, Oriental ... vs Mallappa S/O Allappa Hanasi on 17 March, 2026
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NC: 2026:KHC-D:4262
MFA No. 100182 of 2015
HC-KAR
IN THE HIGH COURT OF KARNATAKA,AT DHARWAD
DATED THIS THE 17TH DAY OF MARCH, 2026
BEFORE
THE HON'BLE MR. JUSTICE B. MURALIDHARA PAI
MISCELLANEOUS FIRST APPEAL NO. 100182 OF 2015 (MV)
BETWEEN:
THE DIVISIONAL MANAGER,
ORIENTAL INSURANCE CO. LTD.,
ENKEY COMPLEX, KESHWAPUR, HUBLI.
NOW REPRESENTED BY ITS
DEPUTY MANAGER,
THE ORIENTAL INSURANCE CO. LTD.,
REGIONAL OFFICE,
IIND FLOOR, SUMANGALA COMPLEX,
LAMINGTON RAOD. HUBLI-580020.
...APPELLANT
(BY SRI. M.Y. KATAGI, ADVOCATE)
AND:
1. MALLAPPA S/O ALLAPPA HANASI,
AGE: 53 YEARS, OCC: AGRICULTURE,
R/O: CHARANTIMATH GARDEN, DHARWAD.
Digitally signed by
YASHAVANT
NARAYANKAR
Location: HIGH 2. YALLAPPA S/O MARUTI SHIRSHETTANAVAR
COURT OF
KARNATAKA
DHARWAD BENCH
AGE: MAJOR, OCC: BUSINESS,
Date: 2026.03.23
11:15:40 +0530 R/O: H.NO.320, RAJNAGAR,
MALLAPUR RAOD, GODASE PLOT, DHARWAD.
(OWNER OF BAJAJ DISCOVER MOTOR CYCLE
BEARING REG.NO.KA-25/EH-5377)
...RESPONDENTS
(BY SRI. B.V. SOMAPUR, ADVOCATE FOR R1;
NOTICE SERVED R2)
THIS MFA IS FILED UNDER SECTION 173(1) OF MOTOR
VEHICLES ACT 1988, PRAYING TO SET ASIDE THE JUDGMENT AND
AWARD DATED 17.10.2014 PASSED IN THE COURT OF FAST TRACK
AND ADDL. M.A.C.T. DHARWAD, AT DHARWAD IN MVC NO.1006/2012
IN THE INTEREST OF JUSTICE AND EQUITY.
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NC: 2026:KHC-D:4262
MFA No. 100182 of 2015
HC-KAR
THIS APPEAL, COMING ON FOR FINAL HEARING, THIS DAY,
JUDGMENT WAS DELIVERED THEREIN AS UNDER:
ORAL JUDGMENT
(PER: THE HON'BLE MR. JUSTICE B. MURALIDHARA PAI) This appeal has been preferred by the insurer of the motorcycle bearing registration No. KA-25-EH-5377, seeking to set aside the judgment and award dated 17.10.2014 rendered in MVC No.1006/2012.
2. The claimant namely Sri Mallappa maintained a petition in MVC No.1006/2012 under Section 166 of the Motor Vehicles Act, seeking compensation of Rs.10,00,000/- for the injuries sustained by him in a road traffic accident occurred on 10.08.2012.
3. The case of the claimant is that on 10.08.2012 at about 12.00 noon, when he was going on his bicycle, near Ayappa Temple in Manikanth Nagar, Dharwad, he suffered a road traffic accident attributable to the rash and negligent riding of the motorcycle bearing No. KA-25-EH-5377, resulting in grievous injuries. In view of the same, he maintained the petition seeking -3- NC: 2026:KHC-D:4262 MFA No. 100182 of 2015 HC-KAR compensation from the owner and insurer of the offending vehicle.
4. On service of notice, Respondent No.2 appeared before the Tribunal and contested the petition. Thereafter, the Tribunal decided the claim petition on merits of the case. The Tribunal attributed negligence to the rider of the motorcycle in question and allowed the claim petition in part holding that the claimant is entitled for compensation of Rs.1,29,646/- together with interest at the rate of 8% per annum from the date of petition till its deposit.
5. The claimant has accepted the award passed by the Tribunal.
6. Respondent No.2 has challenged the impugned award only one the ground that the Tribunal committed grave error in fastening liability of satisfying the award on them, i.e, the insurer, in spite of ample evidence to show breach of policy condition.
7. Sri M.Y.Katagi, learned Counsel for Insurer, vehemently submitted that rider of the motorcycle in question -4- NC: 2026:KHC-D:4262 MFA No. 100182 of 2015 HC-KAR was not holding a driving licence as on the date of accident and thereby the insured committed breach of policy condition. He further submitted that though the Tribunal held that rider of offending vehicle was not holding a driving license, yet directed the insurer to pay the compensation and recover the same from the insured, ignoring Sections 149(5) and 149(7) of the Motor Vehicles Act and as such, impugned judgment and award is liable to be set aside, which has resulted in miscarriage of justice.
8. Per contra, learned Counsel for Claimant supported the finding recorded by the Tribunal and submitted that even if the contention of the insurer is accepted, they are liable to pay the award amount at first instance under 'Pay and Recover' principle and the insurer has not made out any valid ground to interfere or modify the impugned judgment and award.
9. Thus, the short point for determination by this Court is whether the Tribunal erred in directing the insurer to satisfy the award at first instance under the Pay and Recover Principle and recover the same from the insured.
10. As noted above, the Tribunal, while deciding the claim petition, held that the claimant met with a road traffic -5- NC: 2026:KHC-D:4262 MFA No. 100182 of 2015 HC-KAR accident on 10.8.2012 at about 12.00 noon, near Ayyappa Temple in Manikanth Nagar, Dharwad, on account of negligence attributable to rider of motorcycle bearing No. KA-25-EH-5377 and as a result, he sustained injuries. Pursuant to the same, the Tribunal considered other materials placed on record and awarded a total compensation of Rs.1,29,446/- to the claimant together with interest at the rate of 8% per annum.
11. The main contention of the insurer before the Tribunal was that rider of the offending vehicle was not holding a valid and effective driving license as on the date of the accident, thereby the insured violated the terms and conditions of the policy and as such, they are not liable to indemnify the insured by paying the award amount. In support of this contention, the insurer adduced their evidence through RW-1 and produced relevant documents at Ex.R-1 to Ex.R-4. Thus, based on materials available on record even the Tribunal held that "...So, considering the evidence on record I am of the considered opinion that the respondent No.1 has violated the terms and conditions of the insurance policy and therefore respondent No.2 is not liable to pay compensation to petitioner. ...". -6-
NC: 2026:KHC-D:4262 MFA No. 100182 of 2015 HC-KAR
12. Afterwards, the Tribunal relying on decision reported in 2014(4) Kar.L.J. 95 (DB) and such other cases, proceeded to hold that "... since the petitioner who is claiming compensation in this case is a third party, I feel it is just and proper that it would meet ends of justice if respondent No.2 insurer of the offending vehicle is directed to pay the compensation amount awarded to petitioner in this case and then recover the same from respondent No.1 as he has violated the terms and conditions of the insurance policy. ..." and issued direction to the insurer accordingly.
13. It is well settled that insurers remain liable to third- party victims for compensation in motor accident claims, even if the insured breaches policy conditions. This stems from the Act's social welfare intent to protect innocent third parties. Section 149(1) mandates insurers to satisfy judgments or awards against insured persons for third-party risks subject to defenses in Section 149(2). Defenses are narrowly limited to specific breaches like unauthorized use for hire/reward, non- permit plying, or driving by an unlicensed/ disqualified driver with the owner's knowledge or negligence. Other policy -7- NC: 2026:KHC-D:4262 MFA No. 100182 of 2015 HC-KAR conditions have no effect per Section 149(4) regarding third party coverage. Insurers must first pay claimants and then seek reimbursement from the insured, if defenses succeed.
14. In National Insurance Co. Ltd. Vs Swaran Singh, reported in AIR 2004 SC 1531, Hon'ble Apex Court ruled that -
"...Even where the insurer is able to prove breach on the part of the insured concerning the policy condition regarding holding of a valid license 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 license 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 defenses available to the insured under Section 149(2) of the Act. ...".
15. In Pappu and Others Vs Vinod Kumar Lamba and another, reported in (2018) 3 SCC 208, the Hon'ble Apex Court has reiterated the principles laid down in Swaran Singh's Case (referred supra). Similarly, in K. Nagendra Vs New India Assurance Co. Ltd., reported in JT 2025 (14) SC 74 Hon'ble Apex Court held that 'Pay and recover' applies even for -8- NC: 2026:KHC-D:4262 MFA No. 100182 of 2015 HC-KAR route permit violations and technical breaches do not deny third party claims.
16. In the case on hand, the claimant is a third party. The principles laid down in the above referred decisions are squarely applicable to this case. In view of the same, this Court holds that the Tribunal is justified in directing the insurer to satisfy the award at the first instance. Accordingly, the point raised for consideration is answered in the negative.
17. In the result, this Court proceeds to pass the following:
ORDER
(i) The appeal is dismissed.
(ii) Consequently, the judgment and award dated 17.10.2014 passed in MVC No.1006/2012 by learned Presiding Officer, Fast Track Court and Member Additional MACT, Dharwad is confirmed.-9-
NC: 2026:KHC-D:4262 MFA No. 100182 of 2015 HC-KAR
(iii) The amount in deposit, if any, along with trial court record shall be transmitted to the concerned Tribunal forthwith.
Sd/-
(B. MURALIDHARA PAI) JUDGE YAN, CT-CMU LIST NO.: 1 SL NO.: 14