Motor Accident Claim | Insurers Must Compensate Victims Despite Policy Breach, Can Recover From Vehicle Owner : Supreme Court
The Supreme Court reiterated that insurance companies cannot evade their obligation to compensate victims in motor accident cases, even when there is a breach of a policy condition. The Court clarified that insurers retain the right to recover the compensation amount from the vehicle owner thereafter. “Where the contract of insurance is not disputed, even on breach of insurance...
The Supreme Court reiterated that insurance companies cannot evade their obligation to compensate victims in motor accident cases, even when there is a breach of a policy condition. The Court clarified that insurers retain the right to recover the compensation amount from the vehicle owner thereafter.
“Where the contract of insurance is not disputed, even on breach of insurance conditions, this Court had allowed recovery of compensation from the insurer by giving right to the insurer to recover the same from the vehicle owner”, observed a bench of Justices Sanjay Karol and Manoj Misra while allowing a claimant's appeal and setting aside the Telangana High Court's order that had denied compensation solely because the deceased was travelling in a five-seater vehicle carrying nine passengers, which was held to be a violation of the insurance policy terms.
The Court said that indeed there was a breach of policy conditions, as the vehicle was carrying more than five persons; however, relying on its consistent jurisprudence, the bench emphasized the "pay and recover" principle, stating that the insurance company can recover the compensation paid by it from the vehicle owner.
"the first respondent (i.e., the insurer) shall satisfy the award, though, however, it can recover the amount so paid from the insured (i.e., owner of the vehicle).", the court said underscoring that the claimant's can't be denied claim based on such technical policy violations, as no wrong was committed by the deceased passenger, but the insurance company can recover the paid compensation amount from the negligent vehicle owner.
Cause Title: AKULA NARAYANA vs. THE ORIENTAL INSURANCE COMPANY LIMITED & ANR.
Citation : 2025 LiveLaw (SC) 1095
Appearance:
For Petitioner(s) : Mr. R. Anand Padmanabhan, Sr. Adv. Mr. R. Santhana Krishnan, Adv. Ms. Ruchi Arya, Adv. Mr. Krishna Kumar Singh, AOR
For Respondent(s) : Mr. Ajay Singh, Adv. Mr. Ajay Kumar Rai, Adv. Mr. Lokesh Kumar Choudhary, AOR Mr. Shubham Singh, Adv. Mr. Ashish Panwar, Adv. Ms. Mukteshwari Shukla, Adv.