Insurance - Pay and recover applies on non-registration of the vehicle at the time of accident
Himachal Pradesh High Court Upholds "Pay and Recover" Principle in Unregistered Vehicle Accident Case. Insurer to Compensate Third-Party Claims Despite Fundamental Breach, Allowed Recovery from Deceased Owner's Estate
In a significant ruling, the Himachal Pradesh High Court has upheld the Motor Accident Claims Tribunal's decision applying the "pay and recover" principle in a case where a vehicle involved in an accident was not registered at the time of the incident. The judgment, delivered by Justice Satyen Vaidya, addressed the appeal filed by New India Assurance Company Limited against the tribunal's award dated June 11, 2019, related to the fatal accident involving a Maruti car driven by the deceased Kapil.
The case originated from an accident on February 6, 2017, resulting in the deaths of Kapil and Naveen, the son and brother of the claimants. Despite the vehicle's non-registration-a fundamental breach of the insurance policy-Justice Vaidya ruled that the insurer is liable to pay compensation to the claimants initially and may subsequently recover the amount from the deceased owner's estate as inherited by his legal heir, respondent No. 4.
This decision aligns with the precedent established in similar cases, acknowledging the insurer's liability in third-party claims despite policy breaches, to ensure justice for accident victims. The court referred to several judgments, including National Insurance Company Limited v. Kamal Kishore, emphasizing the distinction between claims by vehicle owners and third-party claims, thereby justifying the application of the "pay and recover" principle.
The legal counsel for the insurer, Raman Sethi, argued against the liability citing Supreme Court precedents and questioned the tribunal's limitation on recovery rights. However, the court dismissed these objections, clarifying that recovery must comply with legal standards.
The judgment reaffirms the judiciary's commitment to balancing policy enforcement with equitable treatment of third-party claims, providing a pathway for insurers to fulfill obligations while retaining recovery rights through legal channels.
Bottom Line:
Principle of pay and recover applied despite fundamental breach of insurance policy due to non-registration of the vehicle at the time of accident - Compensation awarded for third-party claims.
Statutory provision(s): Motor Vehicles Act, 1988 Sections 39, 43, 173
New India Assurance Company Limited v. Karam Chand, (Himachal Pradesh) : Law Finder Doc Id # 2782485
