The insurer's liability to indemnify remains unchanged despite amendments to the Motor Vehicles Act, preserving the 'PAY & RECOVER' principle.

Order :

1. Learned counsel for the appellant submits that admittedly, the driver of the vehicle in question was possessing a license for a light motor vehicle whereas he was driving a motorcycle. Meaning thereby, he was not authorized to drive the category of vehicle for which he did not possess a valid license.

2. Learned counsel submits that as the proviso attached to sub- section 4 of Section 149 of the Motor Vehicles Act, 1988 (hereinafter referred to as the ‘Act of 1988’) has been omitted and has been replaced by Section 150 vide the Motor Vehicles (Amendment) Act, 2019, the liability of the insurer to pay and its right to recover the amount from the owner has been taken away and the same would now not survive in relation to accidents occurring after 01.04.2022.

3. In support of his submission, learned counsel relied upon the interim order dated 07.03.2024 passed by the Madras High Court in ICICI Lombard General Insurance Co. Ltd Vs. Archana & Ors.; CMP No.5313/2024 in CMA No.534/2024 wherein the Court framed the following question:

“Whether the Tribunal was right in directing the Insurance Company to pay the award amount and giving it liberty to recover it from the Insured, in the light of the fact that the amended Section 150 as it stands today does not permit such course of action, in view of the fact that the proviso to Sub-Section 4 of Section 149 is no longer in the statute book and the fact that the sub-Section 4 of Section 150, as amended, is not in pari materia with the original sub- Section 4 of Section 149, in as much as the defences that are available to the Insurance Company have been enlarged by the deletion of Clause (b) of sub- Section 2 occurring as in Section 149(4) as it stood prior to the amendment.”

4. However, in the recent judgment of ICICI Lombard General Insurance Co. Ltd Vs. Smt. Arti Devi & Ors; First Appeal from Order No.1780/2024 (decided on 31.01.2025), the Allahabad High Court while dealing with the same issue held as under:

“38. The Court, therefore, holds that mere omission of proviso attached to sub-section (4) of Section 149 of Motor Vehicles Act, 1988 after its replacement by Section 150 of Motor Vehicles (Amendment) Act, 2019 (32 of 2019), neither takes away the liability of the insurer to pay the claimants nor its right to recover the said amount from the owner. The law to this effect remains intact and unaffected by Amendment Act, 2019 and, hence, insurer shall continue to indemnify the owner’s risk in relation to accidents taking place after 01.04.2022 and “PAY & RECOVER” principle will still continue to govern the field advancing social object of the Statute protecting third party interest. Principle of law laid down by the Supreme Court in National Insurance Company Limited vs. Swaran Singh and others, JT 2004 (1) SC 109 has not lost its significance and binding effect despite omission of proviso. Held accordingly.”

5. In view of the above, list the matter on 13.02.2025.