Full Judgment Text
2025 INSC 1301
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 013509 OF 2025
(Arising out of SLP (C) No. 8434/2023)
AKULA NARAYANA …APPELLANT (S)
VERSUS
THE ORIENTAL INSURANCE COMPANY
LIMITED & ANR.
…RESPONDENT (S)
J U D G M E N T
MANOJ MISRA, J.
1. Leave granted.
2. This is Claimant’s appeal against the judgment and
order of the High Court for the State of Telangana at
1
Hyderabad dated 08.06.2022 whereby the High Court
allowed the appeal of the first-respondent (i.e., the
Insurer) and set aside the award passed by the Motor
2
Accidents Tribunal to the extent it made the insurer
liable along with the owner of the vehicle to pay
compensation to the appellant.
Signature Not Verified
Digitally signed by
CHETAN ARORA
Date: 2025.11.10
16:59:53 IST
Reason:
1
The High Court
2
The Tribunal
Civil Appeal @ SLP (C) No. 8434/2023 Page 1 of 6
3. There is no dispute parties regarding liability of
inter se
the second respondent (i.e., owner of the vehicle with
which accident was caused). There is also no dispute
that the vehicle was insured with the first respondent.
The only dispute is whether the insurer should have
been absolved totally from its liability to pay the
compensation or that the insurer should have been
directed to pay and recover the same from the vehicle
owner.
4. The Tribunal its award dated 29.04.2021 held first
vide
and second respondent (i.e., insurer and owner,
respectively) jointly and severally liable for the
compensation payable to the claimant. Tribunal’s
conclusion in that behalf rests on the statement of
administrative manager of the insurer, made during
cross-examination, that insurer had collected additional
premium for carrying conductor and cleaner. Based on
that, the Tribunal concluded that since the owner had
paid additional premium, the deceased, a passenger in
the vehicle, would be a third party in terms of the policy.
5. The High Court on an appeal by the insurer held that
though the insurer might have collected additional
Civil Appeal @ SLP (C) No. 8434/2023 Page 2 of 6
premium for driver, conductor and cleaner, the policy
would not cover the risk of any other person or
passenger. Besides that, the vehicle being a five-seater
was carrying nine persons, therefore, there was a clear
breach of the terms and conditions of the policy and as
such the insurer cannot be held liable.
6. Aggrieved by the order of the High Court, the claimant
is before us because it finds it difficult to recover the
compensation from the vehicle owner.
7. We have heard learned counsel for the parties.
8. The learned counsel for the appellant submitted that it
is a clear case where additional premium was collected
by the insurer for covering the risk of driver, conductor
and cleaner. The claim was in respect of death of one
person and therefore, even though the policy may not
cover the risk of passengers, it covered the risk of at least
three persons which may or may not be passengers. In
support of its submission, the learned counsel for the
appellant has placed reliance on a decision of this Court
in Mata Ram versus National Insurance Company
Civil Appeal @ SLP (C) No. 8434/2023 Page 3 of 6
3
Limited & Another . In the alternative, the learned
counsel for the appellant submitted that since the
insurer had taken additional premium to cover risk of
three persons who travel in the vehicle, even if there has
been a violation of the policy conditions, the insurer
cannot be relieved of its liability to make good the
compensation though it may recover the same from the
owner in light of the pay and recover principle recognized
by this Court in National Insurance Company Limited
4
versus Swaran Singh and Shamanna & Anr. versus
Divisional Manager, Oriental Insurance Company
5
Limited & Others .
9. Per contra, learned counsel for the insurer submitted
that the policy in question was a statutory policy; a
gratuitous passenger, other than driver, conductor and
cleaner, is not a third party and, therefore, the insurer
would not be liable. In addition, the vehicle was a five-
seater vehicle, admittedly carrying nine passengers,
there was thus breach of condition of insurance. As
such the insurer cannot be held liable. Hence, no
3
( 2018) 18 SCC 289
4
(2004) 3 SCC 297
5
(2018) 9 SCC 650
Civil Appeal @ SLP (C) No. 8434/2023 Page 4 of 6
interference with the judgment of the High Court is
called for.
10. We have considered the rival submissions and have
perused the materials on record including the decisions
cited before us.
11. At the outset, we may observe that there is no appeal by
the insured against High Court’s order holding him not
entitled to the benefit of insurance. In such
circumstances, we have only to consider whether the
High Court should have completely absolved the insurer
of its liability or ought to have directed the insurer to pay
with liberty to recover the same from the vehicle owner.
12. Where the contract of insurance is not disputed, even on
breach of insurance conditions, this Court had allowed
recovery of compensation from the insurer by giving
right to the insurer to recover the same from the vehicle
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owner . The pay and recover principle has been
consistently followed even though it was doubted in a
reference which remained unanswered. Taking a
conspectus of various pronouncements, this Court
6
See decisions cited in Footnote 4 and 5.
Civil Appeal @ SLP (C) No. 8434/2023 Page 5 of 6
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recently in Rama Bai v. Amit Minerals again applied
the said principle and while allowing the appeal of the
claimant directed that the insurance company shall
satisfy the award and may recover from the insured.
Following the aforesaid decisions, we deem it
appropriate to allow the appeal by directing that the first
respondent (i.e., the insurer) shall satisfy the award,
though, however, it can recover the amount so paid from
the insured (i.e., owner of the vehicle).
13. The appeal stands allowed to the aforesaid extent.
14. Pending application(s) if any, shall stand disposed of.
…............................................. J.
(Sanjay Karol)
................................................ J.
(Manoj Misra)
New Delhi;
November 10, 2025
7
2025 SCC OnLine SC 2067
Civil Appeal @ SLP (C) No. 8434/2023 Page 6 of 6