[Cites 11, Cited by 0]
Madhya Pradesh High Court
The Oriental Insurance Company Ltd vs Rekhi Jaiswal on 24 March, 2026
NEUTRAL CITATION NO. 2026:MPHC-JBP:24310
1 MA-1663-2017
IN THE HIGH COURT OF MADHYA PRADESH
AT JABALPUR
BEFORE
HON'BLE SHRI JUSTICE RATNESH CHANDRA SINGH BISEN
ON THE 24th OF MARCH, 2026
MISC. APPEAL No. 1663 of 2017
THE ORIENTAL INSURANCE COMPANY LTD
Versus
REKHI JAISWAL AND OTHERS
Appearance:
Shri Somesh Shukla - Advocate for the appellant/Insurance Company.
Shri Ashok Kumar Singh - Advocate for respondent No.2.
Shri Ashish Rawat - Advocate for respondent No.1 through video
conferencing.
ORDER
Appellant has filed this appeal under Section 173(1) of Motor Vehicle
Act, 1988 challenging award dated 29.04.2017 passed by XI Additional
Member, Motor Accident Claims Tribunal, Jabalpur in Claim Case
No.127/2013.
2. Learned counsel appearing for appellant submitted that the
impugned award passed by the Learned Claims Tribunal is contrary to law
and facts on record, as the Tribunal has erroneously fastened liability upon
the Appellant despite clear findings that the offending vehicle was being
plied without a valid permit on the date of the accident, which constitutes a
fundamental breach of the terms and conditions of the insurance policy;
therefore, in view of such violation, the Appellant Insurance Company
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cannot be held liable to indemnify the insured, and the direction to "pay and
recover" has been wrongly applied without proper appreciation of the
evidence and legal position rendering the impugned award unsustainable, and
hence, the same deserves to be set aside to the extent it holds the appellant
liable.
3. Learned counsel appearing for appellant/Insurance Company further
submitted that Tribunal has passed the impugned award relying on the
judgment passed in National Insurance Company v. Chhalla Bharthamma &
others; AIR 2004 S.C. 4882 and National Insurance Co. Ltd. v. Durgesh
Kumar Sahu; 2015 (2) A.C.C.D. 1062 (M.P.) and directed that the
appellant/Insurance Company shall pay the award to the claimant and then
recover it from the respondent No.1 which is improper. In para 13 of the
award issue No.2 is decided in which it is stated that on the date of accident
offending bus bearing registration No.MP-20-PA-0553 was not having valid
permit. Thus, the bus was driven in violation of terms and condition of
insurance policy, therefore, the issue No.2 was not proved. In these
circumstances, insurance company cannot be held liable to pay the amount,
therefore, appeal may be allowed and insurance company be exonerated from
depositing the award amount.
4. Learned counsel appearing for appellant No.1 filed cross-objection
and submitted that the direction issued by the learned Motor Accident Claims
Tribunal, Jabalpur, permitting the Appellant-Insurance Company to recover
the awarded amount from Respondent No.1 is wholly unjustified, illegal, and
contrary to settled principles of law, inasmuch as there was no breach of any
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policy condition on the part of Respondent No. 1 at the time of the accident
dated 24.02.2013; the vehicle was being operated with a valid and effective
permit and in compliance with all statutory requirements, and therefore, in
the absence of any proven violation, the grant of recovery rights in favour of
the insurer is unsustainable and liable to be set aside or suitably modified in
the interest of justice.
5. Heard the counsel for the parties and perused the record.
6. The issue involved in this appeal has already been decided by t he
Hon'ble Supreme Court in para 7, 8, 9 and 10 of the judgment dated
29.10.2025 passed in K. Nagendra v. The New India Insurance Co. Ltd. and
others, (Arising out of SLP (C) Nos.7139-7140 of 2023); reported in 2025
SCC OnLine SC 2297, which are quoted as under:-
"7. Before going to the exact issue involved in this case, it would
be appropriate to refer to certain judgments which will set out the
instances in which this Court has approved the application of the
above-mentioned principle. It is on that benchmark that we will
proceed to examine the correctness of the High Court's
conclusions.
7.1 In National Insurance Co. Ltd. v. Swaran Singh, ((2004) 3
SCC 297) a bench of 3 learned Judges of this Court observed thus:
"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 not 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
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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."
[This judgment was followed in Shamanna v. Oriental Insurance
Co. Ltd., (2018) 9 SCC 650]
(emphasis supplied)
7.2 K.T Thomas J., in New India Assurance Co. v. Kamla , (2001)
4 SCC 342 stated the position of law succinctly, thus:
"25.... The insurer and the insured are bound by the
conditions enumerated in the policy and the insurer is
not liable to the insured if there is violation of any
policy condition. But the insurer who is made statutorily
liable to pay compensation to third parties on account of
the certificate of insurance issued shall be entitled to
recover from the insured the amount paid to the third
parties, if there was any breach of policy conditions on
account of the vehicle being driven without a valid
driving licence. Learned counsel for the insured
contended that it is enough if he establishes that he
made all due enquiries and believed bona fide that
the driver employed by him had a valid driving licence,
in which case there was no breach of the policy
condition. As we have not decided on that contention it
is open to the insured to raise it before the Claims
Tribunal. In the present case, if the Insurance Company
succeeds in establishing that there was breach of the
policy condition, the Claims Tribunal shall direct
the insured to pay that amount to the insurer. In default
the insurer shall be allowed to recover that amount
(which the insurer is directed to pay to the claimant
third parties) from the insured person.
7.3 In Parminder Singh v. New India Assurance Co. Ltd ., (2019) 7
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SCC 217, this Court approved the application of this principle in
cases where the driver of the offending vehicle does not possess a
valid driving license.
7.4 In S. Iyyapan v. United India Insurance Co. Ltd. , (2013) 7
SCC 62, it was held that if at the time of accident, there is a
discrepancy in the vehicle being dofven by the driver and the
endorsement on the driver's license (i.e., the kind of vehicle said
driver is permitted to operate) then, in such a case, pay and recover
shall be permitted.
7.5 In M/s Chatha Service Station v. Lalmati Devi & Ors., (2025)
SCC OnLine SC 756, it was held that when a vehicle involved in
an accident is found to be carrying certain goods which it was not
authorized to as per law (in the instant case hazardous goods
within the meaning of Rule 9 of Central Motor Vehicles Rules,
1989) the insurance company while would be required to
compensate the victim of the accident, it shall be entitled to
recover the amount so paid from the holder of the
insurance policy.
8. Now, let us consider the instant case. The record reveals that the
offending vehicle did not have the permit to enter Channapatna
City, where the accident took place. This position is not in dispute.
Unquestionably, therefore, the terms of the permit have been
deviated.
9. The purpose of an insurance policy in the present context is to
shield the owner/operator from direct liability when such an
unforeseen/unfortunate incident takes place. To deny the
victim/dependents of the victim compensation simply because the
accident took place outside the bounds of the permit and,
therefore, is outside the purview of the insurance policy, would be
offensive to the sense of justice, for the accident itself is for no
fault of his. Then, the Insurance Company most certainly ought to
pay.
10. At the same time though, when an Insurance Company takes
on a policy and accepts payments of premium in pursuance
thereto, it agrees to do so within certain bounds. The contract lays
down the four corners within which such an insurance policy
would operate. If that is the case, to expect the insurer to pay
compensation to a third party, which is clearly outside the bounds
of the said agreement would be unfair. Balancing the need
for payment of compensation to the victim vis-à-vis the interests
of the insurer, the order of the High Court applying the pay and
recover principle, in our considered view, is entirely justified and
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requires no interference"
7. In the light of aforesaid law laid down by Hon'ble Supreme Court,
the argument advanced by the appellant/Insurance Company is not
acceptable. The Tribunal has rightly passed the award of "pay and recover"
and directed the appellant/Insurance Company to pay the awarded amount
and recover the said amount from respondent No.1.
8. As regards the cross-objection filed on behalf of Respondent No. 1,
it is contended that there was no breach of the policy conditions and,
therefore, the award passed by the Tribunal directing the appellant/Insurance
Company to recover the awarded amount from Respondent No.1 is illegal
and unsustainable in law. It is further submitted that the permit had been duly
issued by the RTO in respect of the vehicle (bus) bearing Registration No.
MP-20-PA-0553, and that only the route was changed; hence, there was no
violation of the terms of the insurance policy.
9. The aforesaid submission made in cross-objection by respondent
No.1 is not acceptable because from perusal of the award passed by the
Tribunal and its record it reveals that although a permit had been issued in
favour of the vehicle belonging to Respondent No.1, the said permit did not
authorize operation for Devlapar to Nagpur route. Consequently, the permit
cannot be said to be valid for the said route. Hence, the cross-objection filed
by Respondent No.1 stands rejected.
10. In view of the aforesaid discussion and the aforesaid law laid down
by the Hon'ble Supreme Court, this Court is of the considered opinion that
there is no merit in the present case, and the award passed by the Tribunal
does not warrant any interference.
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11. Accordingly, the miscellaneous appeal filed by the
appellant/Insurance Company is dismissed, and the award passed by the
Tribunal is hereby affirmed..
12. Record of the Tribunal be sent back immediately.
(RATNESH CHANDRA SINGH BISEN)
JUDGE
sp/-
