Failure to produce a valid fitness certificate establishes policy breach, triggering pay-and-recover.

Manish Dubey died from injuries sustained in a collision involving a Tata Tipper insured by the appellant.

His mother, wife and son obtained an award of ₹61,53,240 with interest under Section 166 of the Motor Vehicles Act, 1988.

The Tribunal found no breach of the policy conditions.

The insurer appealed, contending that the vehicle had no valid fitness certificate; the owner and driver had not produced one despite the insurer’s pleadings, cross-examination and application seeking its production

Whether the failure to produce a valid fitness certificate established a breach of the insurance policy conditions

Whether, despite that breach, the insurer was required to pay the claimants first and could then recover the amount from the vehicle’s owner and driver

Under Section 166 of the Motor Vehicles Act, 1988, claimants may seek compensation for death arising from a motor accident; an appeal against the award lies under Section 173.

Under National Insurance Co. Ltd. v. Swaran Singh, the insurer relying on a policy defence must establish the defence and breach by the vehicle owner.

Kamala Mangalal Vayani v. United India Insurance Co. Ltd. holds that, once insurance cover is established, claimants are not required to prove the vehicle’s regulatory compliance; the burden shifts to the insurer to establish its defence.

Amrit Paul Singh v. Tata AIG General Insurance Co. Ltd. supports a pay-and-recover direction where the insured vehicle’s permit-related breach is established.

Relying also on Pareed Pillai v. Oriental Insurance Co. Ltd., the Court treated absence of a valid fitness certificate at the time of the accident as a breach of policy conditions.

The insurer pleaded that the vehicle lacked a fitness certificate, questioned the owner-driver about its non-production, and sought an order compelling its production.

The owner-driver produced no certificate, and the seizure memo did not record seizure of one.

The Court held that, in these circumstances, the insurer had discharged its burden and that the Tribunal erred in finding no breach.

However, because the vehicle was insured and the claimants were entitled to the award, the appropriate remedy was pay and recover: the insurer must satisfy the award first and may then recover from the owner and driver.

The finding that there was no breach of the policy conditions was set aside, and the insurer was held entitled to recover the compensation from the registered owner and driver.

The insurer was nevertheless directed to pay the awarded compensation to the claimants first