Insurer must satisfy the compensation award first, with liberty to recover from the tractor owner.

On 5 August 2007, the claimant was travelling on the mudguard of a tractor when it overturned, causing him serious injuries.

He sought compensation of ₹2,00,000.

The Motor Accident Claims Tribunal partly allowed his claim, awarding ₹1,01,340 with 9% annual interest, but exonerated the insurer because the claimant was an unauthorised passenger and his presence breached the policy conditions.

The claimant appealed against the insurer’s exoneration.

Whether, despite the claimant’s status as an unauthorised passenger and the breach of the insurance policy, the insurer should be directed to satisfy the award first, with liberty to recover the amount from the tractor owner-cum-driver.

The Court relied on Shivraj v. Rajendra & Another, 2018 ACJ 2755, where the Supreme Court held that, in the circumstances of that case, the insurer should pay the compensation to the claimant and may recover it from the tractor owner.

The Court applied this “pay and recover” principle notwithstanding the insurer’s defence that the claimant’s presence on the tractor breached the policy conditions.

No specific statutory provision was cited in the judgment.

The Tribunal had found that the tractor was insured for the driver alone, that the claimant was not the driver, and that the insurer had not collected a premium for a passenger or labourer; it therefore held the owner-cum-driver liable and exonerated the insurer.

The High Court accepted that the Tribunal’s liability findings disclosed no error apart from its failure to apply Shivraj.

Because that Supreme Court decision required the insurer to satisfy the award first, with recovery available against the tractor owner, the Court held that the claimant was entitled to that relief.

The Tribunal’s award was set aside only insofar as it exonerated the insurer.

The insurer was directed to deposit the compensation, together with 9% annual interest and proportionate costs, before the Tribunal within eight weeks; it may then recover the amount from the owner-cum-driver by executing the High Court’s judgment.

The remainder of the Tribunal’s award was confirmed.