Liability to third parties persists under "pay and recover" principle despite expired fitness certificate.

On January 9, 2022, a Bolero Pick-Up (TN 57 BZ 5627) driven by the first respondent struck and killed Jeyachandran while he was standing near Vanjipalayam Privu

The claimants (widow, minor children, and parents) sought compensation under Section 166 of the Motor Vehicles Act, 1988

The appellant Insurance Company contested liability, arguing that the vehicle’s Fitness Certificate (FC) had expired on December 28, 2021—twelve days prior to the accident—constituting a fundamental breach of policy conditions

The Motor Accident Claims Tribunal, Dharapuram, ordered the Insurance Company to pay the compensation and subsequently recover it from the owner ("Pay and Recover")

The appellant challenged this liability before the High Court

1. Whether the lack of a valid Fitness Certificate at the time of the accident absolves the Insurance Company of the liability to pay compensation to a third party

2. Whether the "Pay and Recover" principle is applicable in cases involving a statutory refraction such as an expired Fitness Certificate

Section 173 of the Motor Vehicles Act, 1988, regarding appeals

The principle that non-possession of a Fitness Certificate is a "fundamental statutory refraction," as established in The Commissioner v. K. Marayammal (2024)

The "Pay and Recover" doctrine applied in C.M.A (MD) No. 685 of 2015, which protects third-party claimants despite policy violations by the insured

The Court acknowledged that the Fitness Certificate (Ex.P6) had indeed expired on December 28, 2021, while the accident occurred on January 9, 2022

While affirming that driving without an FC is a statutory violation that technically absolves the insurer of final liability, the Court prioritized the socio-economic status of the claimants. It noted that the deceased was a third party and the sole breadwinner for a family including two minor children

Since the vehicle had previously held a valid FC until just days before the accident, the Court reasoned that the deviation was not so gross as to deny immediate relief to the victims. Consequently, it found the Tribunal’s application of the "Pay and Recover" method to be a proper exercise of equitable jurisdiction to ensure third-party indemnification while preserving the insurer’s right to seek reimbursement from the tortfeasor

The Court held that the "Pay and Recover" method was appropriate given the facts of the case, directing the Insurance Company to pay the claimants first and then recover the amount from the vehicle owner due to the breach of policy conditions regarding the Fitness Certificate

All connected miscellaneous petitions were closed without costs