Full Judgment Text
2025 INSC 1219
Non-Reportable
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
Special Leave Petition (C) No.6117 of 2020
Amudhavalli & Ors.
…Petitioners
Versus
HDFC Ergo General Insurance
Company Ltd. & Ors. …Respondents
O R D E R
1. The issue agitated here is that which comes up frequently
before this Court; on the question of ‘pay and recover’, the
appellants before this Court being either the claimants or the
owner of the offending vehicle, depending upon whether the
amounts were paid by the insurance company or not. In the
instant case, the claimants who have not received the award
amounts are before this Court.
2. The Tribunal made the award after computing the
compensation for the death of the husband of the first petitioner
and mulcted the liability on the insurance company, brushing
Signature Not Verified
Digitally signed by
POOJA SHARMA
Date: 2025.10.11
15:09:46 IST
Reason:
aside the contention that the insured vehicle is a goods vehicle,
Page 1 of 6
SLP (C) No.6117 of 2020
and the deceased was a travelling passenger on fare. An
appeal was filed before the High Court by the insurance
company which resulted in the impugned judgment, which
assailed both the quantum and the liability to indemnify the
insured, the latter ground raised on the breach of conditions of
policy, when the goods vehicle carried passengers on fare. The
quantum as awarded by the Tribunal was confirmed by the
High Court. However, the pay and recovery directed by the
Tribunal was set aside.
3. Mr. Mohan Raj, learned counsel for the petitioners relied
on two decisions of this Court in Manager, National Insurance
1
Company Ltd. v. Saju P. Paul and Anr. and Shamanna and
Another Vs. Divisional Manager, Oriental. Insurance
2
Company Limited and Others .
4. Mr. Joy Basu, learned Senior Counsel appearing for the
insurance company, however, pointed out that the earlier view
regarding a third-party coverage to a goods vehicle, including
the gratuitous passengers has been reversed by this Court in
1
(2013) 2 SCC 41
2
(2018) 9 SCC 650
Page 2 of 6
SLP (C) No.6117 of 2020
3
New India Assurance Co. Ltd. v. Asha Rani . In the present
case, there is a clear admission that the deceased had travelled
in a vehicle on payment of fare.
5. We cannot but observe that the witness of the claimants,
PW-2, who was also an eye-witness stated unequivocally before
the Tribunal that while the deceased and others were standing
at the bus stand, the offending vehicle which was a three
wheeler, came to the spot and the deceased and others
travelled in it as passengers after paying fare. The deposition
clearly absolves the liability of the insurance company to
indemnify the owner. The goods vehicle is not allowed to carry
passengers, unless he is the owner of the goods carried therein
or his authorised representative.
6. Now the only issue is as to whether, the insurance
company should be directed to pay the amounts and then
recover it from the owner, which measure this Court adopted
in various cases to avoid hardship to the claimants.
7. A reading of Saju P. Paul (supra) would indicate that
therein the injured/claimant was travelling in a vehicle as a
3
(2003) 2 SCC 223
Page 3 of 6
SLP (C) No.6117 of 2020
spare driver, as contended by the claimant himself. The
claimant was stated to be the driver of another vehicle of the
owner, and a spare driver was not covered under a third-party
insurance policy which along with the third-party coverage
included only the driver and cleaner of the vehicle.
8. In considering the measure of pay and recover, this Court
in Saju P. Paul (supra) noticed a number of decisions where
such measure was employed. National Insurance Co. Ltd. v.
4
Baljit Kaur and Others was a case in which the Tribunal and
the High Court proceeded in terms of the decisions of this Court
5
in New India Assurance Company v. Satpal Singh and Others
which was overruled in Asha Rani (supra). Since the Tribunal
and the High Court had allowed the compensation based on
Satpal Singh (supra), the measure of pay and recover was
adopted in the said case. National Insurance Co. Ltd. v.
6
Challa Bharathamma & Ors. is yet another case in which ‘pay
and recover’ was ordered. Therein the breach of condition of
policy was projected insofar as the vehicle having not been
4
(2004) 2 SCC 1
5
(2000) 1 SCC 237
6
(2004) 8 SCC 517
Page 4 of 6
SLP (C) No.6117 of 2020
covered by a permit to ply for hire or reward. The finding of the
High Court as to the absence of permit not leading to violation
of policy condition, was reversed by this Court. Therein also
the measure of pay and recover was adopted.
9. National Insurance Company Limited v. Kaushalaya
7
Devi and Others was a case in which an identical condition of
gratuitous passenger being carried in a good carriage vehicle
had resulted in the liability being mulcted on the owner and the
insurer absolved of its liability to indemnify. Therein it was
directed that the amount deposited by the insurer if withdrawn,
it would be recovered from the owner and if not returned, it
would be refunded to the insurance company, and the
claimants would be entitled to proceed against the owner for
recovery of the award amounts.
10. This is a case in which there was a fundamental breach
noticed and the deceased claimant, being a person who
travelled in the goods carriage after paying fare, the damages
for his death was not entitled to be indemnified by the insurer.
There was no amount deposited or paid by the insurance
7
(2008) 8 SCC 246
Page 5 of 6
SLP (C) No.6117 of 2020
company. In the above circumstances, we find absolutely no
reason to interfere with the order of the High Court, especially,
when it was passed before Satpal Singh’s case (supra) which
stood overruled in Asha Rani (supra). Shamanna (supra) was
a case in which the driver did not have a valid driving licence
at the time of the accident in which the pay and recover
direction was issued, relying on the decision in National
8
Insurance Co. Ltd. v. Swaran Singh and Others .
11. The Special Leave Petition is dismissed.
12. Pending application, if any, shall stand disposed of.
………….……………………. J.
(K. VINOD CHANDRAN)
………….……………………. J.
(N. V. ANJARIA)
New Delhi;
September 26, 2025.
8
(2004) 3 SCC 297
Page 6 of 6
SLP (C) No.6117 of 2020
Non-Reportable
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
Special Leave Petition (C) No.6117 of 2020
Amudhavalli & Ors.
…Petitioners
Versus
HDFC Ergo General Insurance
Company Ltd. & Ors. …Respondents
O R D E R
1. The issue agitated here is that which comes up frequently
before this Court; on the question of ‘pay and recover’, the
appellants before this Court being either the claimants or the
owner of the offending vehicle, depending upon whether the
amounts were paid by the insurance company or not. In the
instant case, the claimants who have not received the award
amounts are before this Court.
2. The Tribunal made the award after computing the
compensation for the death of the husband of the first petitioner
and mulcted the liability on the insurance company, brushing
Signature Not Verified
Digitally signed by
POOJA SHARMA
Date: 2025.10.11
15:09:46 IST
Reason:
aside the contention that the insured vehicle is a goods vehicle,
Page 1 of 6
SLP (C) No.6117 of 2020
and the deceased was a travelling passenger on fare. An
appeal was filed before the High Court by the insurance
company which resulted in the impugned judgment, which
assailed both the quantum and the liability to indemnify the
insured, the latter ground raised on the breach of conditions of
policy, when the goods vehicle carried passengers on fare. The
quantum as awarded by the Tribunal was confirmed by the
High Court. However, the pay and recovery directed by the
Tribunal was set aside.
3. Mr. Mohan Raj, learned counsel for the petitioners relied
on two decisions of this Court in Manager, National Insurance
1
Company Ltd. v. Saju P. Paul and Anr. and Shamanna and
Another Vs. Divisional Manager, Oriental. Insurance
2
Company Limited and Others .
4. Mr. Joy Basu, learned Senior Counsel appearing for the
insurance company, however, pointed out that the earlier view
regarding a third-party coverage to a goods vehicle, including
the gratuitous passengers has been reversed by this Court in
1
(2013) 2 SCC 41
2
(2018) 9 SCC 650
Page 2 of 6
SLP (C) No.6117 of 2020
3
New India Assurance Co. Ltd. v. Asha Rani . In the present
case, there is a clear admission that the deceased had travelled
in a vehicle on payment of fare.
5. We cannot but observe that the witness of the claimants,
PW-2, who was also an eye-witness stated unequivocally before
the Tribunal that while the deceased and others were standing
at the bus stand, the offending vehicle which was a three
wheeler, came to the spot and the deceased and others
travelled in it as passengers after paying fare. The deposition
clearly absolves the liability of the insurance company to
indemnify the owner. The goods vehicle is not allowed to carry
passengers, unless he is the owner of the goods carried therein
or his authorised representative.
6. Now the only issue is as to whether, the insurance
company should be directed to pay the amounts and then
recover it from the owner, which measure this Court adopted
in various cases to avoid hardship to the claimants.
7. A reading of Saju P. Paul (supra) would indicate that
therein the injured/claimant was travelling in a vehicle as a
3
(2003) 2 SCC 223
Page 3 of 6
SLP (C) No.6117 of 2020
spare driver, as contended by the claimant himself. The
claimant was stated to be the driver of another vehicle of the
owner, and a spare driver was not covered under a third-party
insurance policy which along with the third-party coverage
included only the driver and cleaner of the vehicle.
8. In considering the measure of pay and recover, this Court
in Saju P. Paul (supra) noticed a number of decisions where
such measure was employed. National Insurance Co. Ltd. v.
4
Baljit Kaur and Others was a case in which the Tribunal and
the High Court proceeded in terms of the decisions of this Court
5
in New India Assurance Company v. Satpal Singh and Others
which was overruled in Asha Rani (supra). Since the Tribunal
and the High Court had allowed the compensation based on
Satpal Singh (supra), the measure of pay and recover was
adopted in the said case. National Insurance Co. Ltd. v.
6
Challa Bharathamma & Ors. is yet another case in which ‘pay
and recover’ was ordered. Therein the breach of condition of
policy was projected insofar as the vehicle having not been
4
(2004) 2 SCC 1
5
(2000) 1 SCC 237
6
(2004) 8 SCC 517
Page 4 of 6
SLP (C) No.6117 of 2020
covered by a permit to ply for hire or reward. The finding of the
High Court as to the absence of permit not leading to violation
of policy condition, was reversed by this Court. Therein also
the measure of pay and recover was adopted.
9. National Insurance Company Limited v. Kaushalaya
7
Devi and Others was a case in which an identical condition of
gratuitous passenger being carried in a good carriage vehicle
had resulted in the liability being mulcted on the owner and the
insurer absolved of its liability to indemnify. Therein it was
directed that the amount deposited by the insurer if withdrawn,
it would be recovered from the owner and if not returned, it
would be refunded to the insurance company, and the
claimants would be entitled to proceed against the owner for
recovery of the award amounts.
10. This is a case in which there was a fundamental breach
noticed and the deceased claimant, being a person who
travelled in the goods carriage after paying fare, the damages
for his death was not entitled to be indemnified by the insurer.
There was no amount deposited or paid by the insurance
7
(2008) 8 SCC 246
Page 5 of 6
SLP (C) No.6117 of 2020
company. In the above circumstances, we find absolutely no
reason to interfere with the order of the High Court, especially,
when it was passed before Satpal Singh’s case (supra) which
stood overruled in Asha Rani (supra). Shamanna (supra) was
a case in which the driver did not have a valid driving licence
at the time of the accident in which the pay and recover
direction was issued, relying on the decision in National
8
Insurance Co. Ltd. v. Swaran Singh and Others .
11. The Special Leave Petition is dismissed.
12. Pending application, if any, shall stand disposed of.
………….……………………. J.
(K. VINOD CHANDRAN)
………….……………………. J.
(N. V. ANJARIA)
New Delhi;
September 26, 2025.
8
(2004) 3 SCC 297
Page 6 of 6
SLP (C) No.6117 of 2020