Gujarat High Court
The New India Assurance Company Ltd vs Keshubhai Babubhai Halpatti on 21 November, 2025
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C/FA/3900/2025 ORDER DATED: 21/11/2025
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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/FIRST APPEAL NO. 3900 of 2025
With
CIVIL APPLICATION (FOR STAY) NO. 1 of 2025
In R/FIRST APPEAL NO. 3900 of 2025
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THE NEW INDIA ASSURANCE COMPANY LTD.
Versus
KESHUBHAI BABUBHAI HALPATTI & ANR.
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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 : 21/11/2025
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 25.11.2024 passed by the learned Motor Accident Claims
Tribunal (Auxi.), Ahmedabad (for short referred to as "learned
Tribunal") in Motor Accident Claim Petition No.235 of 2019 under
Section 166 of the Motor Vehicles Act, 1988 (for short referred to as
"MV Act") wherein the learned Tribunal has partly allowed the claim
petition of respondent No.1 - original claimant and awarded
compensation of Rs.9,24,000/- 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 the
accident took place on 12.08.2018, when the claimant was driving his
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motorcycle at moderate speed from Bhilad to Vapi and when he
reached on Highway No.48, Truck bearing registration No.MH-46-BB-
7868 came being driven by its driver in full speed and in rash and
negligent manner and hit the motorcycle pursuant to which the
original claimant sustained severe injuries including fractures and
original claimant became permanently disabled and his leg was
amputated. Hence, the claimant preferred claim petition and the
learned Tribunal was pleased to award compensation of Rs.9,24,000/-
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
learned Tribunal has committed an error in not appreciating the fact
that the appellant - insurance company was able to prove that on the
date of accident, the driver of the offending vehicle was not having
the driving license and hence, though there was breach of policy, the
insurance company was exonerated and order of pay and recover is
passed, which is not permissible. Herein, the owner of the offending
vehicle is required to be saddled with the liability as he had handed
over the offending vehicle to the driver though he was not having the
driving license. Herein, the breach of condition of insurance policy is
estabilshed. The Regional Transport Officer is also examined and in
absence of valid and effective license with the driver of the offending
vehicle, the insurance company cannot be saddled with the liability
and the learned Tribunal was not having any jurisdiction to pass an
order of pay and recover. Herein, the owner of the offending vehicle
has failed to show any due diligence and to exercise reasonable care
to verify the license of the driver. Despite the issuance of legal notice,
neither the insurer nor the driver has produced any driving license.
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Hence, the learned Tribunal has committed an error in passing the
order to pay and recover. She has relied on the decision of the
coordinate Bench of this Court in the case of New India Assurance
Company Limited vs. Harishbhai Dayabhai Bharaniya reported in
2019(3) GLR 1749 and in the case of National Insurance Company
Limited Through its Ahmedabad Regional Office vs. Babulal
Mohanbhai Vala reported in 2022 JX (Guj) 896 and submitted that in
case of breach of sections 3 and 10 of the MV Act, the insurance
company cannot be held responsible to pay the compensation. This is
not a case of no effective or valid license but this is a case of 'no
license' and there is a difference between 'no effective or valid
license' and 'no license'. In view of aforesaid facts, she has requested
to allow the present appeal.
[5.0] Having heard learned advocate appearing for the appellant, it
appears that present appeal is filed on the limited issue that the
learned Tribunal has committed an error in passing the order of pay
and recover though it has exonerated the insurance company. Learned
Tribunal on the point of liability to pay the compensation has come to
conclusion that on account of negligent driving on the part of driver of
offending vehicle i.e. Truck No.MH-46-BB-7868, accident took place
and on the fateful day, insurance coverage was available and vehicle
was insured with appellant - insurance company. But the vehicle was
being driven by its driver who was not holding valid and effective
license to drive the vehicle. In this regard, witness Ganesh Krishna
Aangre, Senior Clerk of RTO, Thane was examined and he has deposed
that his office has not issued any license. Further, it appears that
notice was issued to the driver and owner of the offending vehicle to
produce the driving license but they have failed to produce the same.
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In view of above, the learned Tribunal was pleased to hold that on the
date of accident, the driver of the offending vehicle was not having
valid driving license to drive the 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 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."
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
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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. 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'.
[5.1] 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
company 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
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integrity of Motor Vehicles Accident Compensation system.
[6.0] In wake of aforesaid conspectus, no interference is called for by
this Court and hence, present First Appeal stands dismissed at
admission stage.
[7.0] 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.235 of 2019 vide the impugned judgment and award
dated 25.11.2024 alongwith accrued interest at the rate of 9% per
annum on the said amount within a period of six weeks from the date
of receipt of this order with the learned Tribunal.
[8.0] After deposit of the amount of compensation by the appellant -
insurance company, the same shall be disbursed in favour of the
claimant and/or her guardian and father 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 claimant 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.
[9.0] 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.)
Ajay
