Insurer must satisfy the award for an unauthorized passenger first, then recover from the vehicle owner.

The deceased, Vajesing @ Vajhing Mathurbhai Mohaniya, died when the pickup vehicle in which he was travelling collided with a stationary truck on 11 July 2021. His wife and children claimed compensation under Section 166 of the Motor Vehicles Act, 1988.

The Tribunal awarded Rs. 9,79,684 with 7% annual interest but exonerated the insurer, finding that the deceased was an unauthorised passenger in the vehicle. The claimants appealed under Section 173, seeking an order requiring the insurer to pay the award first and recover it from the vehicle’s owner.

Whether the Tribunal’s finding that the deceased was an unauthorised passenger, and not a conductor or cleaner, warranted interference.

Whether, despite the insurer’s exoneration from liability under the policy, it should be directed to satisfy the award first and recover the amount from the vehicle’s owner.

Section 166 of the Motor Vehicles Act, 1988 provides for a claim for compensation arising from a motor accident, while Section 173 provides for an appeal against an award of the Claims Tribunal.

The Court applied the “pay and recover” principle, relying on Kaminiben & Ors. v. The Oriental Insurance Company Limited & Ors., 2026 LiveLaw (SC) 1174, and the Supreme Court authorities discussed there, including Manuara Khatun and National Insurance Co. Ltd. v. Saju P. Paul, (2013) 2 SCC 41. Under that principle, in an appropriate case, an insurer may be directed to satisfy the award for the claimants’ benefit and then recover the amount from the insured, even where the insurer is not ultimately liable under the policy.

The Tribunal relied on the FIR, which described the deceased as travelling in the pickup with the driver and another passenger, and on the absence of reliable evidence that he was employed as a conductor or cleaner. The High Court found no perversity in the resulting finding that he was an unauthorised passenger and did not disturb it.

However, applying Kaminiben and the authorities it discussed, the Court held that the insurer’s exoneration did not preclude a direction to pay the claimants first and recover from the owner in the same proceedings.

The Tribunal was directed to disburse the compensation to the claimants, subject to any necessary disbursement order and deduction of court fees; the remaining directions of the Tribunal were left unchanged.