Absence of a valid fitness certificate constitutes a fundamental policy breach, attracting the doctrine of pay and recover.

The claimants (Respondents No. 1 & 2) were awarded compensation of ₹9,26,800 by the Motor Accident Claims Tribunal, Kondagaon, in Claim Case No. 38/2017

The Tribunal fastened liability on the Appellant (Insurance Company) despite finding that the owner of the offending vehicle (Respondent No. 4) lacked a valid fitness certificate at the time of the accident

The Tribunal relied on the Single Bench decision in National Insurance Company Limited v. Ghanaram Sahu to hold the insurer liable

The Insurance Company appealed, seeking exoneration based on the fundamental breach of policy conditions

1. Whether the absence of a valid fitness certificate for an offending vehicle constitutes a fundamental breach of policy conditions exonerating the Insurance Company from liability

2. Whether the doctrine of "pay and recover" is applicable when a vehicle is plied without a valid fitness certificate

The Court primarily considered Section 149 of the Motor Vehicles Act regarding statutory defenses for insurers

The Division Bench precedent of the Chhattisgarh High Court in Adesh Kumar v. Smt. Satarupa Bai Yadav (2020:CGHC:18660-DB), which incorporated the Kerala High Court Full Bench decision in Ramankutty v. Pareed Pillai, establishing that plying a vehicle without a fitness certificate is a fundamental breach of policy

The Court applied the "pay and recover" doctrine as settled by the Supreme Court in Amrit Paul Singh v. Tata AIG General Insurance Company Limited (2018) 7 SCC 558

The Court observed that while the Claims Tribunal relied on Ghanaram Sahu to hold the insurer liable, the subsequent Division Bench ruling in Adesh Kumar is the binding authority

The Division Bench clearly held that the absence of a fitness certificate represents a fundamental breach

Applying this to the present facts, the Court confirmed that the owner (Respondent No. 4) violated policy conditions

Following the equitable principles laid down in Amrit Paul Singh, the Court reasoned that the insurer's statutory obligation to third parties remains, though they are entitled to reimbursement from the tortfeasor

It held that while the lack of a fitness certificate is a fundamental breach, the Insurance Company must first deposit the entire compensation amount plus interest for the claimants and is subsequently authorized to recover the same from the owner and driver of the offending vehicle in accordance with law