The 'Pay and Recover' principle applies to insurance companies even under 'Liability Only Policies' for gratuitous passengers, and delay in filing an FIR does not automatically invalidate a motor accident claim provided no fabrication is evident.

Judgment on Board

1. The appellant/insurance company has preferred this appeal under Section 173 of the Motor Vehicles Act, 1988 calling in question the legality, validity and correctness of the impugned award dated 26.11.2019 passed by learned Additional Motor Accident Claims Tribunal, Pratappur, District Surajpur, (for short “the Claims Tribunal”) in Claim Case No.14/2019 by which the Claims Tribunal after having held that the deceased was traveling in the offending vehicle as gratuitous passenger in breach of policy and further held that the principle of “pay and recover” would apply and directed the insurance company to first pay the amount of compensation and thereafter recover the same from the owner of the vehicle.

2. Mr. Sudhir Agrawal, learned counsel for the insurance company, submits that the deceased was traveling in the offending vehicle as gratuitous passenger and the policy Ex.NA-2 was liability only policy only for third party and the person who was traveling in the vehicle was gratuitous passenger was not third party, therefore, the principle of “pay and recover” would not apply. He would strongly rely upon the decision rendered by the Supreme Court in the matter of Sri Ranga Naik v. The United India Insurance Company Limited & Anr.¹SLP(C) NOS. 12499-12500/2021 decided on 08.04.2026. He would further submit that the FIR was lodged with a delay of 108 days and the deceased died after 78 days of the accident, therefore, it could not be held that the deceased was died on account of accident occurred in the offending vehicle.

3. Mr. Pavas Sharma, learned counsel appearing for the respondents No.4 & 5 (owner & driver), would support the impugned award and relied upon the decisions of the Supreme Court in the matters of Kaminiben & Ors. v. The Oriental Insurance Company Limited & Ors.²2026 LiveLaw (SC) 174 and Sunita & Ors. v. United India Insurance Co. Ltd. & Ors.³2025 INSC 867

4. I have heard learned counsel appearing for the parties, considered their rival submissions made herein-above and gone through the records meticulously.

5. The learned Claims Tribunal, after appreciating the oral and documentary evidence on record, has clearly recorded a finding in para 18 of the award that the deceased was traveling in the offending vehicle as gratuitous passenger and, therefore, there is breach in terms of policy. It is not in dispute that the policy was Liability Only/ Act Only Policy and deceased was gratuitous passenger and no premium was paid to cover the gratuitous passenger traveling therein and there was no coverage.

6. In this regard, the decision rendered by the Supreme Court in the matter of Sunita (supra) may be noticed herein in which the Supreme Court in para 13 held that even in the case of “Liability Only Policy” where no premium was paid to cover the gratuitous passenger traveling therein, the principle of “Pay & Recover” would apply and held in paras 13, 14, 15, 16, 17 & 18 as under :

“13. Adverting to the facts in hand, from a bare perusal of the record, it is borne that the vehicle in question was insured with “Liability Only Policy” and no premium was paid to cover the driver, owner, or a gratuitous passenger travelling therein. However, even then, in our view, the Courts below erred in holding that the Insurance Company is not liable to pay the compensation to the claimant-appellants, for the principle of “Pay and Recover” ought to have been invoked. As such, we are inclined to interfere with the above findings of the Courts below.

14. We must advert