VASHRAMBHAI VAGHJIBHAI BAVALIYA vs ASHOKBHAI RAMJIBHAI RATHOD

C/FA/3819/2025 (GJHC240098342025) JUDGMENT DATED: 03/09/2026
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/FIRST APPEAL NO. 3819 of 2025

FOR APPROVAL AND SIGNATURE:


HONOURABLE MR. JUSTICE J. C. DOSHI

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Approved for Reporting Yes No
Yes
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VASHRAMBHAI VAGHJIBHAI BAVALIYA & ORS.
Versus
ASHOKBHAI RAMJIBHAI RATHOD & ANR.
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Appearance:
NISHIT A BHALODI(9597) for the Appellant(s) No. 1,2,3
K K MAGHNANI(7543) for the Defendant(s) No. 1
MR K B MAGHNANI(9673) for the Defendant(s) No. 1
MS KIRTI S PATHAK(9966) for the Defendant(s) No. 2
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CORAM: HONOURABLE MR. JUSTICE J. C. DOSHI

Date : 03/09/2026

JUDGMENT
1. This appeal is filed under Section 173 of the Motor Vehicles
Act, 1988 (in short “the Act”) by the appellant/s challenging the
judgment and order dated 06.12.2023 passed in MACP No.1608
of 2012, whereby the learned Tribunal granted compensation of
Rs.2,76,167/- with interest at the rate of 9% per annum from
the date of the claim petition till realisation from opponent nos.1
only and opponent no.2 was exonerated from their liability.
2. The facts, as recorded, are that on 22.12.2012, while
deceased – Vanitaben was travelling with her goods sitting in
Rickshaw Engine No.3293840, chasis No.1208337. The driver of
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C/FA/3819/2025 (GJHC240098342025) JUDGMENT DATED: 03/09/2026
the said rickshaw was driving his vehicle in rash and negligent
manner and when it reached near Khodiya Hotel, Sagani village,
within jurisdiction of Chotila Police Station, cow came across
road, thereby, driver lost control over steering and turned turtle.
As a result, deceased sustained injuries and succumbed to
same. The claimants filed claim petition claiming compensation
of Rs.7,00,000/-.
3. After considering evidence, learned Tribunal assessed
compensation of Rs.2,76,167/- with interest at the rate of 9%
p.a. from the date of claim petition till realization of amount from
opponent no.1 only and exonerated opponent no.2 from liability.
4. Being aggrieved by the said award, the appellant –
claimants preferred the present appeal.
5. Having considered the submissions of learned advocates
for both sides, two issues arose for consideration:
“5.1. Whether, in the facts of the present case, the insurance
company can be held directly liable, or whether a direction
of the nature of pay and recover ought to be passed on
account of a breach of the terms and conditions of the
policy?
5.2. Whether, in a case filed under Section 163A, the
amendment to the Motor Vehicles Act introducing Section
164 would apply retrospectively?”
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C/FA/3819/2025 (GJHC240098342025) JUDGMENT DATED: 03/09/2026
6. On the first issue being for the principle of pay and recover,
learned advocate for the insurance company relied upon the
judgment of the Hon’ble Apex Court in case of Bharatbhai
Shamjibhai Jambucha v. Mukeshbhai Usmanbhai Desai, 2025
JX (Guj) 802 . For the retrospective effect of amendment in
section 163A, learned advocate for the claimant/s relied upon
the judgment of the Hon’ble Apex Court in case of New India
Assurance Co. Ltd. Vs. Urmila Halder, 2024 JX (SC) 1154 for
the proposition that the amendment introduced by Section 164
to the Motor Vehicles Act, being a beneficial piece of legislation,
must be given retrospective effect.
7. It appears that the facts, supported by the evidence on
record, duly proved that the deceased, on unfortunate day, was
travelling in rickshaw and that, since the rickshaw was being
driven at excessive speed, it capsized, resulting in the death of
the deceased.
8. The deceased was traveling in the Rickshaw with goods,
thereby, the facts are suffice to hold that there was a breach of
terms and conditions of the policy. It is to be noted that
deceased was third party to the contract of insurance and risk of
third party is mandatorily covered in policy. Insurance company
did not led any evidence to prove that appellant was traveling as
gratuitous passenger. Rather what is established that the
claimant along with other persons were travelling in the goods
vehicle. I see no error in the findings of the learned Tribunal to
exonerate the insurance company as it is established that the
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C/FA/3819/2025 (GJHC240098342025) JUDGMENT DATED: 03/09/2026
claimant was travelling as gratuitous passengers in the goods
vehicle and that breaches the terms and conditions of the policy.
9. Evidence on record indicates that the claimant was
travelling as gratuitous passengers.
10. Nonetheless, having regard to the judgment in case of
Bharatbhai Shamjibhai Jambucha (supra) in which this Court
had, with reference to paragraphs 8, 9, and 10 thereof, referred
to the slew of pronouncements and held that order of pay and
recover deserves to be passed. Para 8 to 10 reads as under:-
“ 8 . Evidence on record indicates that the claimants were
travelling as gratuitous passengers along with their goods.
In the fact situation, Co-ordinate Bench of this Court in the
case of United India Insurance Co. Ltd. v/s. Fatmaben
Ismailbhai and Ors. [First Appeal No.1915 of 2006], refereed
judgment of Shamanna v. Oriental Insurance Co. Ltd.,
(2018) 9 SCC 650, Manuara Khatun v. Rajesh Kr.
Singh, (2017) 4 SCC 796 and Shivaraj V/s Rajendra
and another reported in 2018 ACJ 2755 to pass order of
pay and recover. The issue raised in this appeals are
governed by said judgments. Out of above judgments, let
refer judgment in the case of Shamanna v. Oriental
Insurance Co. Ltd., (2018) 9 SCC 650, it is held in
paragraphs 12 to 14 as under:
“12. The above reference in Parvathneni case [ National
Insurance Co. Ltd. v. Parvathneni, (2009) 8 SCC 785 :
(2009) 3 SCC (Civ) 568 : (2009) 3 SCC (Cri) 943 ] has
been disposed of on 17-9-2013 [National Insurance Co. Ltd.
v. Parvathneni, (2018) 9 SCC 657] by the three- Judge Bench
keeping the questions of law open to be decided in an
appropriate case.
13. Since the reference to the larger Bench in Parvathneni
case [National Insurance Co. Ltd. v. Parvathneni, (2009) 8
SCC 785 : (2009) 3 SCC (Civ) 568 : (2009) 3 SCC (Cri) 943]
has been disposed of by keeping the questions of law open
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C/FA/3819/2025 (GJHC240098342025) JUDGMENT DATED: 03/09/2026
to be decided in an appropriate case, presently the decision
in Swaran Singh case [ National Insurance Co. Ltd. v.
Swaran Singh, (2004) 3 SCC 297 : 2004 SCC (Cri) 733 ]
followed in Laxmi Narain Dhut [ National Insurance Co.
Ltd. v. Laxmi Narain Dhut, (2007) 3 SCC 700 : (2007) 2
SCC (Cri) 142 ] and other cases hold the field. The award
passed by the Tribunal directing the insurance company to
pay the compensation amount awarded to the claimants
and thereafter, recover the same from the owner of the
vehicle in question, is in accordance with the judgment
passed by this Court in Swaran Singh [National Insurance
Co. Ltd. v. Swaran Singh, (2004) 3 SCC 297 : 2004 SCC (Cri)
733] and Laxmi Narain Dhut [National Insurance Co. Ltd. v.
Laxmi Narain Dhut, (2007) 3 SCC 700 : (2007) 2 SCC (Cri)
142] cases. While so, in our view, the High Court ought not
to have interfered with the award passed by the Tribunal
directing the first respondent to pay and recover from the
owner of the vehicle. The impugned judgment [Shamanna v.
Laxman, 2016 SCC OnLine Kar 6928] of the High Court
exonerating the insurance company from its liability and
directing the claimants to recover the compensation from the
owner of the vehicle is set aside and the award passed by
the Tribunal is restored.
14. So far as the recovery of the amount from the owner of
the vehicle, the insurance company shall recover as held in
the decision in Oriental Insurance Co. Ltd. v. Nanjappan [
Oriental Insurance Co. Ltd. v. Nanjappan, (2004) 13
SCC 224 : 2005 SCC (Cri) 148 ] wherein this Court held
that : (SCC p. 226, para 8)
“8. … For the purpose of recovering the same from the
insured, the insurer shall not be required to file a suit. It may
initiate a proceeding before the executing court concerned as
if the dispute between the insurer and the owner was the
subject-matter of determination before the Tribunal and the
issue is decided against the owner and in favour of the
insurer.”
9. With profit I may refer judgment in the case of Manuara
Khatun v. Rajesh Kr. Singh, (2017) 4 SCC 796 , it is
held in paragraphs 15 to 16 as under:
"15. This question also fell for consideration recently in
National Insurance Co. Ltd. v. Saju P. Paul [ National
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C/FA/3819/2025 (GJHC240098342025) JUDGMENT DATED: 03/09/2026
Insurance Co. Ltd. v. Saju P. Paul, (2013) 2 SCC 41 :
(2013) 1 SCC (Civ) 968 : (2013) 1 SCC (Cri) 812 : (2013)
1 SCC (L&S) 399 ] wherein this Court took note of entire
previous case law on the subject mentioned above and
examined the question in the context of Section 147 of the
Act. While allowing the appeal filed by the insurance
company by reversing the judgment [ Saju P. Paul v.
National Insurance Co., 2011 SCC OnLine Ker 3791 :
2012 ACJ 1852 ] of the High Court, it was held on facts
that since the victim was travelling in offending vehicle as
“gratuitous passenger” and hence, the insurance company
cannot be held liable to suffer the liability arising out of
accident on the strength of the insurance policy. However,
this Court keeping in view the benevolent object of the Act
and other relevant factors arising in the case, issued the
directions against the insurance company to pay the
awarded sum to the claimants and then to recover the said
sum from the insured in the same proceedings by applying
the principle of “pay and recover”.
16. R.M. Lodha, J. (as his Lordship then was and later
became CJI) speaking for the Bench held in paras 20 and 26
as under : (Saju P. Paul case [National Insurance Co. Ltd. v.
Saju P. Paul, (2013) 2 SCC 41 : (2013) 1 SCC (Civ) 968 :
(2013) 1 SCC (Cri) 812 : (2013) 1 SCC (L&S) 399] , SCC pp.
52 & 55).
“20. The next question that arises for consideration is
whether in the peculiar facts of this case a direction could be
issued to the Insurance Company to first satisfy the
awarded amount in favour of the claimant and recover the
same from the owner of the vehicle (Respondent 2 herein).
26. The pendency of consideration of the above questions by
a larger Bench does not mean that the course that was
followed in Baljit Kaur [ National Insurance Co. Ltd. v
Baljit Kaur, (2004) 2 SCC 1 : 2004 SCC (Cri) 370 ] and
Challa Upendra Rao [ National Insurance Co. Ltd. v.
Challa Upendra Rao, (2004) 8 SCC 517 : 2005 SCC (Cri)
357 ] should not be followed, more so in a peculiar fact
situation of this case. In the present case, the accident
occurred in 1993. At that time, the claimant was 28 years
old. He is now about 48 years. The claimant was a driver on
heavy vehicle and due to the accident he has been rendered
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C/FA/3819/2025 (GJHC240098342025) JUDGMENT DATED: 03/09/2026
permanently disabled. He has not been able to get
compensation so far due to the stay order passed by this
Court. He cannot be compelled to struggle further for
recovery of the amount. The Insurance Company has
already deposited the entire awarded amount pursuant to
the order of this Court passed on 1-8-2011 [National
Insurance Co. Ltd. v. Saju P. Paul [National Insurance Co.
Ltd. v. Saju P. Paul, (2013) 2 SCC 41, 55 (footnote 14)] ] and
the said amount has been invested in a fixed deposit
account. Having regard to these peculiar facts of the case in
hand, we are satisfied that the claimant (Respondent 1) may
be allowed to withdraw the amount deposited by the
Insurance Company before this Court along with accrued
interest. The Insurance Company (the appellant) thereafter
may recover the amount so paid from the owner (Respondent
2 herein). The recovery of the amount by the Insurance
Company from the owner shall be made by following the
procedure as laid down by this Court in Challa Upendra Rao
[National Insurance Co. Ltd. v. Challa Upendra Rao, (2004) 8
SCC 517 : 2005 SCC (Cri) 357] .”
10. However, noticeably, the claimants are third party and
were travelling as gratuitous passengers along with their
goods in the errant vehicle truck. Goods vehicle was used for
the purpose of carrying passengers which would be
antithetical to the terms of insurance policy, since the
claimants were third party, the claimants cannot suffer on
such technicalities to pay compensation whether by owner
or insurance company. The contract of policy on record is
comprehensive policy and insured the vehicle, risk of the
owner of vehicle is covered. Thus it is case to follow law laid
down in the case of Shamanna (supra) and Manuara
Khatun (supra) to pass order pay and recover.”
11. On the second issue, it is found that the same was duly
covered by the judgment of the Hon’ble Apex Court in case of
Urmila Halder (supra) , which holds that the amendment to a
beneficial piece of legislation must be given retrospective effect.
12. Section 163A of the Motor Vehicles Act has been replaced
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by Section 164, introducing a fixed compensation of Rs.
5,00,000/- in death cases, and that the Hon’ble Apex Court had
held that this amendment would apply even where the accident
occurred before the amendment came into force. Relevant para
of the judgment is 6 to 10, which read as under:-
“6. Reliance was placed on the last line of the notification,
which indicates that the said amendment would come
into force from the date of publication in the official
Gazette, which is 22nd May, 2018. It was submitted that
as the accident had occurred on 11th December, 2004,
the benefit of such amendment could not be granted to
the respondent. In support of this contention, learned
counsel referred to and relied upon various decisions of
this Court in Padma Srinivasan Vs. Premier
Insurance Company Limited, [(1982) 1 SCC 613];
Shyam Sunder and Others vs. Ram Kumar and
Another, [(2001) 8 SCC 24]; Nasiruddin and Others
Vs. Sita Ram Agarwal, [(2003) 2 SCC 577] and
Panchi Devi Vs. State of Rajasthan and Others,
[(2009) 2 SCC 589] .
7. It was further contended that the present case is
covered by the policy under which the payment is made
and the same crystallized on the date the same was
entered into and subsequent developments would not
alter the rights and liabilities of the parties. Thus, the
contention was that the appellant would not be liable to
pay any further than what it was obliged to pay under
the Act prior to coming of the amendment on 22nd May,
2018.
8. Learned counsel for the respondent submitted that the
High Court has rightly taken a view that it is merely a
procedural amendment which has to be given
retrospective effect and it is nothing substantive so as to
affect the merits of the issue.
9. Having considered the matter, we do not find any
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C/FA/3819/2025 (GJHC240098342025) JUDGMENT DATED: 03/09/2026
reason to interfere with the judgment impugned. With
regard to the judgments of this Court relied upon by
learned counsel for the appellant, having gone through
the same we find that they are distinguishable from the
facts of the present case and thus, the ratio of those
cases would not apply in the present case.
10. The order of the High Court is well discussed and we
agree with the view taken. We may, however, add that a
beneficial legislation would necessarily entail the benefit
to be passed on to the claimant in the absence of any
specific bar to the same. In the present case, the liability
of the appellant-Insurance Company has not been
interfered with. Only the computational mode and the
modality have been further clarified, which rightly has
been noted by the High Court and accordingly, the claim
has been enhanced to Rs. 5,00,000/- (Rupees Five
Lakhs). As 50% of the compensation amount was stayed
by this Court, the same be paid to the respondent in
terms of the impugned judgment within eight weeks.”
13. Applying the aforesaid dictum, the following order is
passed:
13.1 The appeal filed by the appellants - claimants is partly
allowed.
13.2 The judgment of the learned Tribunal is modified to the
extent that the claimant/s shall be entitled to the fixed
compensation of Rs. 5,00,000/-, together with interest at 9% per
annum from the date of the claim petition till realization.
13.3 Opponent No.1 shall be liable to pay the compensation.
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13.4 In the first instance, Opponent No.2, the insurance
company shall satisfy the award, and shall be entitled to recover
the said amount of compensation from Opponent No.1 by
executing this order.
13.5 Opponent no.2 – Insurance Company deposit entire
amount of the compensation including interest and cost before
the learned Tribunal within 12 weeks from today and it shall be
entitled to recover the same from the owner of the vehicle.
13.6 Upon deposit of amount, the Tribunal shall disburse the
entire awarded amount including amount lying in the FDR
and/or with the Tribunal, with accrued interest thereon, if any,
to the claimants by account payee cheque / NEFT / RTGS, after
proper verification and after following due procedure.
13.7 While making the payment, the Tribunal shall deduct
the courts fees, if not paid, in accordance with rules/law.
14. Registry is directed to return back the R & P, if any, to the
concerned Tribunal forthwith.
(J. C. DOSHI,J)
SATISH
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