Application of 'Pay and Recover' Doctrine Despite Insurance Company Exoneration and Enhancement of Compensation Based on Income

The case arises from a motor vehicle accident on January 5, 2018, resulting in the death of Birbal Prasad Yadav and one Heeraram.

The widow and sons of the deceased (claimants) filed for compensation. The 2nd Additional Motor Accident Claims Tribunal, Bilaspur, awarded ₹7,78,750/- via an order dated April 30, 2019.

Both parties appealed: the Insurance Company sought exoneration from liability, while the claimants sought enhancement of the compensation amount.

1. Whether the principle of "pay and recover" should be applied to the Insurance Company in alignment with related precedents arising from the same accident.

2. Whether the compensation awarded by the Claims Tribunal was just and proper or required enhancement based on the deceased's income and legal guidelines.

The Court applied the doctrine of "pay and recover," a principle where the insurer is directed to satisfy the award to third parties first and subsequently recover the amount from the owner if policy conditions were breached.

It relied on the coordinate Bench precedent in Branch Manager, New India Assurance Co. Ltd. v. Pawan Saay Others (MAC No. 51/2021), which dealt with the same accident.

For quantum assessment, the Court applied standardized calculations for future prospects (25%), deduction for personal expenses (1/4th), and multipliers (14) consistent with established Motor Accident Claims jurisprudence.

The Court noted that in the companion case of Heeraram (who died in the same accident), the Insurance Company was exonerated but ordered to "pay and recover," a decision upheld by the High Court in April 2026. Consequently, the Court found it fit to apply the same principle here.

Regarding the quantum, the Court found the Tribunal's assessment of monthly income (₹4,500/-) inadequate and revised it to ₹7,800/-. The Court recalculated the dependency by adding 25% for future prospects and applying a 1/4th deduction for a family of four, resulting in a significantly higher base for the multiplier of 14.

Additionally, it adjusted the conventional heads, including spousal, filial, and parental consortium, to meet modern judicial standards.

The Court held that the Insurance Company must first pay the additional amount of ₹6,14,750/- with 6% interest per annum to the claimants within 45 days and is thereafter entitled to recover the same from the vehicle owner. All other conditions of the original tribunal award remained intact.