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IN THE HIGH COURT OF MADHYA PRADESH AT GWALIOR
G.S. AHLUWALIA
Cholamandalam Ms General Insurance Company Limited – Appellant
Versus
Munni Bai – Respondent
| Table of Content |
|---|
| 1. introduction of the case and context. (Para 1) |
| 2. arguments presented by the insurance company. (Para 2 , 3 , 9) |
| 3. court observations on statutory provisions and their amendments. (Para 4 , 5 , 6 , 7) |
| 4. court's reasoning on pay and recover principle. (Para 8) |
| 5. conclusion of the court dismissing the appeal. (Para 10) |
ORDER :
2. A solitary ground was raised by counsel for the Insurance Company that although the Insurance Company has been exonerated on the ground that the offending vehicle was being driven in violation of the terms and conditions of the insurance policy as the driver of the vehicle was not having valid and effective licence, but the Claims Tribunal has applied the principle of pay and recover. It is submitted that the principle of pay and recover came into force for the first time after the judgment was passed by the Supreme Court in the case of National Insurance Company Limited vs. Swaran Singh and Others, 2004 ACJ 1. Thereafter, Section 149 was renumbered as Section 150 of the Act. It is submitted that earlier proviso to sub-section 4 of Section 149 and sub-section 5 provided for the concept of pay and recover. However, after amendment, the proviso
Insurers remain liable under the principle of pay and recover even if exonerated unless they prove fundamental breaches contributing to the liability.
Insurers are statutorily obligated to satisfy judgments for third-party claims, even if policy conditions are violated, following amendments to the Motor Vehicles Act.
Insurers are statutorily liable to pay compensation to third parties despite breaches of policy conditions unless the insured's negligence is proven to be fundamental.
The insurer remains liable for compensation despite the rider lacking a valid license as the policy was issued before the relevant amendment to the Motor Vehicles Act.
Section 149(2) deals with insurer's right to defend an action on account of breach of policy condition.
An insurer is not liable for compensation if the policy covering third-party risks was not valid at the time of the accident as mandated by the Motor Vehicle Act.
The insurer may exercise the right to recover compensation paid to claimants if it proves that the insured violated policy terms crucial to the cause of the accident.
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