Cholamandalam Ms General Insurance Co. ... vs Ashokkumarsingh Kunwarsingh Thakur ... on 22 January, 2026

                                                                                                                 NEUTRAL CITATION




                            C/FA/1266/2025                                     JUDGMENT DATED: 22/01/2026

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                        IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
                                               R/FIRST APPEAL NO. 1266 of 2025

                       FOR APPROVAL AND SIGNATURE:
                       HONOURABLE MR. JUSTICE HASMUKH D. SUTHAR
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                                Approved for Reporting             Yes         No
                                                                                √
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                               CHOLAMANDALAM MS GENERAL INSURANCE CO. LTD.
                                                      Versus
                          ASHOKKUMARSINGH KUNWARSINGH THAKUR (BHADORIA) & ORS.
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                       Appearance:
                       MR RATHIN P RAVAL(5013) for the Appellant(s) No. 1
                       MR KIRAN C MEHTA(2718) for the Defendant(s) No. 1,2,3,4,5
                       NOTICE UNSERVED for the Defendant(s) No. 6
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                         CORAM:HONOURABLE MR. JUSTICE HASMUKH D. SUTHAR

                                                           Date : 22/01/2026
                                                           ORAL JUDGMENT

[1.0] Being aggrieved and dissatisfied with the common judgment and award dated 20.07.2024 passed by the Motor Accident Claims Tribunal Ahmedabad, in Motor Accident Claim Petition No.332/2018, filed under Section 166 of the Motor Vehicles Act, 1988 (for short, "the MV Act"), the appellant - Insurance Company prefers appeal under Section 173 of the Motor Vehicles Act, 1988, whereby, the Tribunal has been pleased to partly allow the claim petition and awarded compensation of Rs.6,21,500/-.

[2.0] Heard Mr. Rathin P. Raval, learned advocate for the appellant- Insurance Company and Mr. Kiran Mehta, learned advocate appearing for respondent Nos.1 to 5.

[3.0] Learned counsel for the appellant has submitted that the Tribunal failed to consider the evidence and facts produced on record and falsely

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saddled the liability on the insurance company and passed an order of pay and recover as the deceased unauthorized passenger in a vehicle as the policy does not cover the risk of gratutious passenger. Deposition of Legal Officer is produced at Exh:42 and policy at Exh:43 though accepted the defense of the insurance company, committed an error in passing the order of pay and recover. Hence, present appeal may be allowed as prayed for.

[4.0] Learned counsel for the original claimants has opposed the present appeal and submitted that the Tribunal has not committed any error in passing the order of pay and recover. The claimants are third party and they have nothing to do with any breach of the policy, which in fact is a matter between the insurer and insurance Company. Therefore, the Tribunal has rightly passed an order of pay and recover in favour of the insurance company.

[5.0] The appeal is filed on the ground of liability. The claimants led the evidence before the Tribunal and after appreciating the evidence, the Tribunal came to the conclusion that offending vehicle truck being goods carrying vehicle and there was no any evidence produced on record that the deceased was travelling as gratuitous passenger to unload and load the goods and came to the conclusion that the deceased was travelling as a gratutious passenger and has been pleased to pass an order of pay and recover. Perusing the record, the claimants are third party though there is fundamental breach of the policy, right to recover is granted in favour of the Insurance Company and as per Section 150 of the Act, Insurance Company is duty bound to satisfy the award against the third party.

[6.0] Having heard learned counsel for the respective parties and perusing material placed on record, it appears that the Tribunal has not committed any error in considering the evidence produced on record to award just compensation. Hence, appeal is considered only on the part of "pay and

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recovery". The Insurance Company has submitted that on the ground of violation of the terms and conditions of the insurance policy, it is required to be exonerated from its liability. However, an insurance policy is a statutory contract entered into between the insurer and the insured for the benefit of third parties. The aforesaid ratio has also been followed by the Hon'ble Apex Court in Shamanna vs. Oriental Insurance Co. Ltd., (2018) 9 SCC 650, wherein, while considering Sections 147 and 149 of the Motor Vehicles Act, it has been held that the victim of a motor vehicle accident is a third party, and it is the statutory duty of the insurer to satisfy the award. The principle of "pay and recover" has been reiterated, holding that if the driver had no valid driving licence and there was a breach of policy conditions, the High Court ought not to interfere with the order of "pay and recover" passed by the Tribunal. If the Insurance Company has paid any amount, the mode of recovery is also provided, and the insurer has the liberty to initiate proceedings before the executing Court concerned, if the dispute is between the insurer and the owner. In the present case, the claimants are third party and has no concern with the inter se terms and conditions of the insurance policy. Hence, in view of the decisions of the Hon'ble Supreme Court in Anu Bhanvara & Ors. vs. IFFCO Tokio General Insurance Co. Ltd. & Ors., (2020) 20 SCC 632; Sunita & Ors. vs. United India Insurance Co. Ltd. & Ors.; and Rama Bai vs. M/s. Amit Minerals, 2025 INSC 1162, the learned Tribunal has not committed any error in awarding compensation.

[7.0] Further, this Court deems it fit to refer to the judgment of the Hon'ble Apex Court in Sadhna Tomar v. Ashok Kushwaha, 2025 SCJ 414, wherein the Tribunal was pleased to pass an award of compensation in favour of the claimant, holding that the Insurance Company shall pay the amount of compensation to the claimant and thereafter recover the same from the driver and owner of the offending vehicle, who were held jointly and severally liable, relying on the decision in Swaran Singh (Supra). The

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said view was affirmed by the High Court, and the order of "pay and recover" was also upheld by the Hon'ble Apex Court. In view of the above, the learned Tribunal has not committed any error in passing the order of "pay and recover".

[8.0] The Hon'ble Supreme Court in the cases of Shamanna (Supra), Rama Bai (Supra), and Swaran Singh (Supra) has consistently held that the insurer must first pay the compensation amount to the third party and may thereafter recover the same from the insured. Even though the insurer is entitled to raise a valid defence regarding the driver not possessing a valid driving licence under Section 149(2)(a)(ii) to avoid liability, and even if the conditions of law are satisfied to absolve the insurer from paying the compensation, the doctrine of "pay and recover" continues to apply.

[9.0] In view of the judgment of the Hon'ble Supreme Court in Rambabu Tiwari vs. United India Insurance Co., (2008) 8 SCC 165, wherein the Court exonerated the Insurance Company from liability for breach of policy conditions but refused to interfere with the order of "pay and recover", the direction issued by the learned Tribunal in the present case also does not warrant any interference.

[10.0] In view of the reliance placed by the learned advocate for the appellant, no assistance can be derived by the appellant-Insurance Company, as the Hon'ble Supreme Court has reaffirmed the social welfare intent underlying the Motor Vehicles Act. The principle or order of "pay and recover" embodies judicial empathy, ensuring that victims are not left uncompensated due to disputes between the owner and the insurer. At the same time, considering contractual accountability, an owner who breaches the conditions of the policy cannot escape financial responsibility, as insurers retain the right to recover the amount paid to the claimant. This dual balance justice to the victim and fairness to the insurer strengthens the

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integrity of the Motor Vehicles accident compensation system.

[11.0] As regards the authority relied upon by the learned advocate for the appellant, in view of several judgments wherein the Hon'ble Apex Court has passed order in the case of Shamanna (Supra), Parminder Singh v. New India Assurance Company Limited, (2019) 7 SCC 217, the learned Tribunal has not committed any error. The authorities relied upon by the learned advocate for the appellant nowhere refer to the case of Shamanna (Supra).

[12.0] In view of the above, the Hon'ble Apex Court has already decided the issue in Swaran Singh (Supra). Considering the subsequent pronouncements discussing the scope of the 'pay and recover' order and the benevolent object of the legislation, as earlier explained, the principle of 'pay and recover' reflects judicial empathy ensuring that victims are not left uncompensated due to disputes between the owner and the insurer. Therefore, the argument canvassed by the learned advocate for the appellant regarding contractual accountability is not acceptable and Tribunal has not committed any error in passing the order of "pay and recover".

[13.0] The appellant-Insurance Company is directed to pay the amount of compensation determined by the Tribunal, with liberty to recover the same from the owner of the offending vehicle in accordance with law. In view of the law laid down by the Hon'ble Apex Court in Oriental Insurance Co. Ltd. v. Nanjappan, (2004) 13 SCC 224, it is always open for the Insurance Company to recover the amount from owner by initiating appropriate proceedings before the Executing Court, without being required to file a separate suit. While passing the order of "pay and recover", the Tribunal shall issue appropriate directions to protect the interest of the Insurance Company, as directed by the Hon'ble Apex Court in

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Nanjappan (Supra), subject to suitable conditions and safeguards.

[14.0] In view of the above conspectus, no interference is called for in order passed by the learned Tribunal of "pay and recover". Accordingly, present First Appeal stands dismissed.

[15.0] The appellant - insurance company is directed to deposit the entire amount of compensation as awarded by the learned Tribunal in the impugned judgment and award alongwith accrued interest on the said amount within a period of FOUR WEEKS from the date of receipt of this judgment with the learned Tribunal.

[16.0] 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 claimants 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 claimants on due verification.

[17.0] Record and proceedings, if any, be sent back to the concerned Tribunal forthwith.

Sd/-

(HASMUKH D. SUTHAR, J.)

Ajay