Akula Narayana vs The Oriental Insurance Company Limited

IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 013509 OF 2025 (Arising out of SLP (C) No. 8434/2023)

AKULA NARAYANA …APPELLANT (S)

VERSUS

THE ORIENTAL INSURANCE COMPANY LIMITED & ANR. …RESPONDENT (S)

JUDGMENT

MANOJ MISRA, J.

1. Leave granted.

2. This is Claimant’s appeal against the judgment and

order of the High Court for the State of Telangana at

Hyderabad1 dated 08.06.2022 whereby the High Court

allowed the appeal of the first-respondent (i.e., the

Insurer) and set aside the award passed by the Motor

Accidents Tribunal2 to the extent it made the insurer

liable along with the owner of the vehicle to pay

compensation to the appellant.

Signature Not Verified Digitally signed by CHETAN ARORA Date: 2025.11.10 16:59:53 IST Reason: 1 The High Court 2 The Tribunal

Civil Appeal @ SLP (C) No. 8434/2023 Page 1 of 6

3. There is no dispute inter se parties regarding liability of

the second respondent (i.e., owner of the vehicle with

which accident was caused). There is also no dispute

that the vehicle was insured with the first respondent.

The only dispute is whether the insurer should have

been absolved totally from its liability to pay the

compensation or that the insurer should have been

directed to pay and recover the same from the vehicle

owner.

4. The Tribunal vide its award dated 29.04.2021 held first

and second respondent (i.e., insurer and owner,

respectively) jointly and severally liable for the

compensation payable to the claimant. Tribunal’s

conclusion in that behalf rests on the statement of

administrative manager of the insurer, made during

cross-examination, that insurer had collected additional

premium for carrying conductor and cleaner. Based on

that, the Tribunal concluded that since the owner had

paid additional premium, the deceased, a passenger in

the vehicle, would be a third party in terms of the policy.

5. The High Court on an appeal by the insurer held that

though the insurer might have collected additional

Civil Appeal @ SLP (C) No. 8434/2023 Page 2 of 6 premium for driver, conductor and cleaner, the policy

would not cover the risk of any other person or

passenger. Besides that, the vehicle being a five-seater

was carrying nine persons, therefore, there was a clear

breach of the terms and conditions of the policy and as

such the insurer cannot be held liable.

6. Aggrieved by the order of the High Court, the claimant

is before us because it finds it difficult to recover the

compensation from the vehicle owner.

7. We have heard learned counsel for the parties.

8. The learned counsel for the appellant submitted that it

is a clear case where additional premium was collected

by the insurer for covering the risk of driver, conductor

and cleaner. The claim was in respect of death of one

person and therefore, even though the policy may not

cover the risk of passengers, it covered the risk of at least

three persons which may or may not be passengers. In

support of its submission, the learned counsel for the

appellant has placed reliance on a decision of this Court

in Mata Ram versus National Insurance Company

Civil Appeal @ SLP (C) No. 8434/2023 Page 3 of 6 Limited & Another3. In the alternative, the learned

counsel for the appellant submitted that since the

insurer had taken additional premium to cover risk of

three persons who travel in the vehicle, even if there has

been a violation of the policy conditions, the insurer

cannot be relieved of its liability to make good the

compensation though it may recover the same from the

owner in light of the pay and recover principle recognized

by this Court in National Insurance Company Limited

versus Swaran Singh4 and Shamanna & Anr. versus

Divisional Manager, Oriental Insurance Company

Limited & Others5.

9. Per contra, learned counsel for the insurer submitted

that the policy in question was a statutory policy; a

gratuitous passenger, other than driver, conductor and

cleaner, is not a third party and, therefore, the insurer

would not be liable. In addition, the vehicle was a five-

seater vehicle, admittedly carrying nine passengers,

there was thus breach of condition of insurance. As

such the insurer cannot be held liable. Hence, no

3 (2018) 18 SCC 289 4 (2004) 3 SCC 297 5 (2018) 9 SCC 650

Civil Appeal @ SLP (C) No. 8434/2023 Page 4 of 6 interference with the judgment of the High Court is

called for.

10. We have considered the rival submissions and have

perused the materials on record including the decisions

cited before us.

11. At the outset, we may observe that there is no appeal by

the insured against High Court’s order holding him not

entitled to the benefit of insurance. In such

circumstances, we have only to consider whether the

High Court should have completely absolved the insurer

of its liability or ought to have directed the insurer to pay

with liberty to recover the same from the vehicle owner.

12. 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

owner6. The pay and recover principle has been

consistently followed even though it was doubted in a

reference which remained unanswered. Taking a

conspectus of various pronouncements, this Court

6 See decisions cited in Footnote 4 and 5.

Civil Appeal @ SLP (C) No. 8434/2023 Page 5 of 6 recently in Rama Bai v. Amit Minerals7 again applied

the said principle and while allowing the appeal of the

claimant directed that the insurance company shall

satisfy the award and may recover from the insured.

Following the aforesaid decisions, we deem it

appropriate to allow the appeal by directing that 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).

13. The appeal stands allowed to the aforesaid extent.

14. Pending application(s) if any, shall stand disposed of.

….............................................J. (Sanjay Karol)

................................................J. (Manoj Misra)

New Delhi;

November 10, 2025

7 2025 SCC OnLine SC 2067

Civil Appeal @ SLP (C) No. 8434/2023 Page 6 of 6