The principle of pay and recover, as established in the case of National Insurance Co. Ltd. Versus Challa Bharthamma and Others (2004) 8 SCC 517, and subsequent judgments, holds that the insurer should satisfy the award, though in law it has no liability.

ORDER

1. This appeal has been filed by the appellant New India Assurance Company Limited, assailing the judgment dated 30.11.2015 in relation to finding on issue No.3 whereunder the Tribunal although, has exonerated the Assurance Company due to alleged breach of condition of insurance policy, however, the Assurance Company has been directed to first pay the compensation to the claimants and then allowed, to recover the same from the owner and driver of the vehicle.

2. The appellant New India Assurance Company has deposited the entire compensation amount, in compliance of the interim order dated 19.04.2017 passed in the present appeal.

3. Notices were issued. The respondent-claimant has been served. Though, the notices of respondent Nos.2 and 3, driver and owner are not yet served.

4. The claimant has filed an application for vacation of stay order and for seeking disbursement of the compensation amount deposited by the Insurance Company.

5. On the joint request of counsel of the appellant and the respondent-claimant, the appeal is heard finally though without affecting the rights of respondent Nos.2 and 3, if any.

6. In the present appeal, the findings in relation to issue No.3 have been assailed on the ground that on the date of accident i.e. 30.01.2010, the vehicle in question was not having a valid and effective permit. As a matter of fact the vehicle in question Tempo No. RJ-02-PA-0713, plying from Khairthal to Kishangarhbas met with an accident and the permit for the said vehicle was only for the route from Leyland factory to Bakhtal Chowki and not for the route from Khairthal to Kishangarhbas. This factual aspect has been taken into account by the Tribunal and having no permit for the route, where the accident occurred, the same was found in breach of condition of the Insurance Policy. As such the Insurance Company has been exonerated from the liability to indemnify the award. However on the principal of pay and recover and further to ensure compliance of the payment of compensation to the claimant, it has been observed that the Insurance Company would pay the compensation awarded in favour of the claimant, however it would be entitled to recover the compensation from the owner and driver of the vehicle.

7. Counsel for the appellant New India Assurance Company contends that ones the Tribunal has recorded a finding in favour of the Insurance Company that due to having no valid permit for the route where the accident occurred, there is a breach of the condition of policy, then the Insurance Company should not have been directed to pay the compensation and then to recover from the owner and driver of the vehicle. The contention of the appellant is that the Insurance Company ought to have been exonerated from making payment of compensation at all. The counsel for the appellant submits that on this ground alone, the findings on issue No.3 are liable to be reversed and Insurance Company should be exonerated without passing any order to pay and recover.

8. The counsel appearing for the respondent-claimant has argued that the issue raised by the counsel for the appellant in the present appeal has already been settled by the Hon’ble Supreme Court In case of National Insurance Co. Ltd. Versus Challa Bharthamma and Others. Reported in (2004) 8 SCC 517. It has categorically been held in the judgment that the Motor Vehicle Act, 1988 is a beneficial piece of legislation, it is proper for the insurer to satisfy the award, though in law it has no liability. In the case of Challa Bharthamma (supra), the Hon’ble Supreme Court has considered the similar issue and after dealing with the provisions of Sections 66 & 149(2) of the Act of 1988, it has been observed as under:-

"12. High Court was of the view that since there was no permit, the question of violation of any condition thereof does not arise. The view is clearly fallacious. A person without permit to ply a vehicle cannot be placed at a better pedestal vis-a-vis one who has a permit, but has