[Cites 14, Cited by 0]
Gujarat High Court
The United India Insurance Co Ltd vs Varshaben Jitendrakumar Prajapati on 10 December, 2025
NEUTRAL CITATION
C/FA/1411/2022 JUDGMENT DATED: 10/12/2025
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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/FIRST APPEAL NO. 1411 of 2022
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR. JUSTICE HASMUKH D. SUTHAR
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Approved for Reporting Yes No
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THE UNITED INDIA INSURANCE CO LTD
Versus
VARSHABEN JITENDRAKUMAR PRAJAPATI & ORS.
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Appearance:
MR RATHIN P RAVAL(5013) for the Appellant(s) No. 1
NISHIT A BHALODI(9597) for the Defendant(s) No. 1
RULE SERVED for the Defendant(s) No. 2,3
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CORAM:HONOURABLE MR. JUSTICE HASMUKH D. SUTHAR
Date : 10/12/2025
ORAL JUDGMENT
1) By way of present First Appeal under Section 173 of the Motor
Vehicles Act, 1988 (for short "MV Act"), the Insurance Company -
original opponent No.3 has assailed the impugned judgment and
award dated 06.01.2022 in Motor Accident Claim Petition No. 7 of
2021 (Old MACP No.820/2015) passed by the Motor Accident Claims
Tribunal (Aux.), Kheda at Kapadwanj (hereinafter referred to as
"learned Tribunal").
2) Heard learned advocate Mr. Rathin Raval for the appellant and
learned advocate Mr. Nishit Bhalodi appearing for the respondent.
3) The brief facts of the case of the claimant is that on 26.09.2014,
when he was walking cautiously on the left side of the road, at that
time, driver of Activa bearing Registration No.GJ-07-BP-1921 came
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driving at high speed in a rash and negligent manner and hit the
claimant from the rear. As a result of the said impact, the claimant fell
on the road and sustained serious injuries including a fracture.
Pursuant thereto, the original claimant filed MACP seeking
compensation. After recording the evidence, the learned Tribunal has
been pleased to pass the impugned judgment and award and awarded
compensation of Rs.3,58,150/- to the original claimant with a direction
that the present appellant - Insurance Company shall pay the
compensation in favour of the claimant and thereafter the Insurance
Company can recover the amount of compensation from the
opponent No.2 - registered owner of the offending vehicle Activa
bearing registration No.GJ-07-BP-1921. Being aggrieved with the
impugned judgment and award, the learned Tribunal has filed the
present First Appeal.
4) Learned Advocate Mr. Raval for the appellant has assailed the
impugned judgment and award on the ground that once the learned
Tribunal has arrived at the conclusion that there was a fundamental
breach of the policy condition, it committed an error in passing an
order of "pay and recover." It is placed on record that on the date of
the accident, the vehicle was being driven by a minor who did not
possess any valid and effective driving licence. Since the driver did not
have a valid licence, the breach of the policy was proved and the
Insurance Company could not be held liable. The Insurance Company
was duly protected under the provisions of Sections 3 and 5 of the
Motor Vehicles Act. Hence, the learned Tribunal erred in directing the
Insurance Company to pay and recover after having already
exonerated it from liability. Hence, it is prayed that the present appeal
be allowed.
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5) Learned Advocate Mr. Bhalodi appearing for the claimant has
opposed the appeal on the ground that the learned Tribunal has not
committed any error. It is submitted that the claimant is a third party
and has no concern with any alleged breach of the policy conditions.
Being a third party, the claimant is legally entitled to receive
compensation. Hence, he has requested to dismiss the present appeal.
6) Having heard the learned advocates for both parties and
perusing the record, it appears that the learned Tribunal has duly
considered the evidence on record and has awarded just and proper
compensation. Moreover, the quantum of compensation is not
disputed by the appellant-Insurance Company. The only issue raised in
the appeal pertains to the aspect of liability. As the learned Tribunal
came to the conclusion that the driver of the Activa - Opponent No.1 -
was a minor and was not holding any valid and effective driving
licence, the Insurance Company was exonerated from the liability.
Though the learned Tribunal has been pleased to fasten the liability
upon the Insurance Company and directed it to pay and recover.
7) It is apposite to refer to the judgments of the Hon'ble Supreme
Court in Manuara Khatun v. Rajesh Kr. Singh reported in (2017) 4
SCC 796; Rambabu Tiwari v. United India Insurance Co. reported in
(2008) 8 SCC 165 and Chatha Service Station v. Lalmati Devi
reported in 2025 INSC 468, wherein it was held that the insurer was
exonerated for breach of conditions but the direction of "pay and
recover" was upheld and therefore, the direction issued by the
learned Tribunal in the present case requires no interference.
8) Further, 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.
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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
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.
(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."
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
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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 case of 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.; K. Nagendra vs. New India
Insurance Co. Ltd. reported in 2025 SCC OnLine SC 2297 as well as in
the case of Rama Bai vs. M/s. Amit Minerals reported in 2025 INSC
1162, learned Tribunal has not committed any error in passing the
order of 'pay and recover'.
9) 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.
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10) In wake of aforesaid conspectus, no interference is called for by
this Court and hence, present First Appeal stands dismissed. No order
as to costs.
11) The learned Motor Accident Claims Tribunal (Aux.), Kheda at
Kapadwanj is directed to disburse the amount of compensation in
favour of the claimants through RTGS, after proper verification. The
Court fees, if any, payable by the claimants on compensation be
deducted from the said amount and the remaining amount of
compensation be disbursed in favour of the claimant on due
verification within a period of two weeks thereafter.
12) The appellant - insurance company is entitled to recover the
aforesaid amount of compensation from the original opponent No.2 -
owner of Activa No.GJ-7-BP-1921, for the reasons recorded
hereinabove, by filing appropriate proceedings before the learned
Tribunal.
13) 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)
GARVITA
