The 'pay and recover' principle ensures that third-party victims of motor accidents receive compensation despite policy breaches (such as unauthorized passengers or invalid licenses), requiring the insurer to satisfy the award first and subsequently recover the amount from the vehicle owner.

ORAL JUDGMENT

1. The present appeals under Section 173 of the Motor Vehicles Act, 1988 has been filed by the appellant-insurance company challenging the judgment and award dated 27.06.2025 passed by the Motor Accident Claims Tribunal (Auxi.), Dhari at Amreli, in Motor Accident Claim Petition Nos. 277 of 2018, judgment and award dated 03.10.2023 passed by the Motor Accident Claims Tribunal (Main), Areli in MACP No.155 of 2014 and 156 of 2014, whereby the learned Tribunal has allowed the claim petition.

2. Heard learned advocate for the appellant. Though served, none appears for the respondents.

3. The brief facts of the case are that a vehicular accident occurred on 02.02.2014 at about 7:30 a.m. on Tulshishyam–Dhari Road near village Hirava, in which the deceased lost his life due to rash and negligent driving of the offending vehicle. The deceased was aged about 42 years and was earning approximately Rs.6,000/– per month as an agricultural labourer. The claimants also incurred expenses towards funeral rites and, on these grounds, claimed compensation along with interest and costs..

4. Learned advocate for the appellant submits that the learned Tribunal committed an error in not properly appreciating the fact that the deceased was travelling as an unauthorized passenger in the insured vehicle, which was a goods vehicle having a seating capacity of only one person, namely the driver. It is contended that, contrary to the terms of the insurance policy, several passengers were travelling in the vehicle. Since the vehicle was a goods carriage, carriage of passengers was not permitted and the risk of such passengers was not covered under the policy. Thus, there was a clear breach of the terms and conditions of the policy, and the insurance company ought to have been exonerated from liability. It is further submitted that the driver of the offending vehicle did not possess a valid and effective driving licence at the relevant time. However, the learned Tribunal ignored this material evidence and nonetheless awarded compensation to the claimants by applying the principle of “pay and recover”. Therefore, it is urged that the present appeals deserve to be allowed.

5. Upon hearing the learned advocate for the appellant, it emerges that the appeals are confined to a limited issue, namely, whether the learned Tribunal erred in applying the principle of “pay and recover”.

6. It is an undisputed fact that the deceased died in a vehicular accident. It is also not in dispute that the offending vehicle was being driven by the driver at the relevant time. The version of the claimant is duly supported by the documentary evidence on record, namely the FIR and the panchnama. Further, the sworn testimony of the claimant has not been controverted by the owner or the driver of the offending vehicle, either by cross-examination or by stepping into the witness box. Upon perusal of the evidence on record, it clearly transpires that the accident occurred and, as a result thereof, the deceased sustained fatal injuries leading to his death. There is a direct nexus between the vehicular accident and the death of the deceased. Consequently, it stands established that the accident occurred due to rash and negligent driving on the part of the driver of the offending vehicle.

7. Having perused the FIR, it clearly emerges that the vehicle in question, though a private/goods vehicle, was used for hire and reward and that the deceased was travelling after paying fare. This fact is specifically mentioned in the FIR, which has also been rel