Amudhavalli vs Hdfc Ergo General Insurance Co. Ltd

2025 INSC 1219 Non-Reportable

IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

Special Leave Petition (C) No.6117 of 2020

Amudhavalli & Ors. …Petitioners Versus HDFC Ergo General Insurance Company Ltd. & Ors. …Respondents

ORDER

1. The issue agitated here is that which comes up frequently

before this Court; on the question of ‘pay and recover’, the

appellants before this Court being either the claimants or the

owner of the offending vehicle, depending upon whether the

amounts were paid by the insurance company or not. In the

instant case, the claimants who have not received the award

amounts are before this Court.

2. The Tribunal made the award after computing the

compensation for the death of the husband of the first petitioner

Signature Not Verified and mulcted the liability on the insurance company, brushing Digitally signed by POOJA SHARMA Date: 2025.10.11 15:09:46 IST Reason: aside the contention that the insured vehicle is a goods vehicle,

Page 1 of 6 SLP (C) No.6117 of 2020 and the deceased was a travelling passenger on fare. An

appeal was filed before the High Court by the insurance

company which resulted in the impugned judgment, which

assailed both the quantum and the liability to indemnify the

insured, the latter ground raised on the breach of conditions of

policy, when the goods vehicle carried passengers on fare. The

quantum as awarded by the Tribunal was confirmed by the

High Court. However, the pay and recovery directed by the

Tribunal was set aside.

3. Mr. Mohan Raj, learned counsel for the petitioners relied

on two decisions of this Court in Manager, National Insurance

Company Ltd. v. Saju P. Paul and Anr.1 and Shamanna and

Another Vs. Divisional Manager, Oriental. Insurance

Company Limited and Others2.

4. Mr. Joy Basu, learned Senior Counsel appearing for the

insurance company, however, pointed out that the earlier view

regarding a third-party coverage to a goods vehicle, including

the gratuitous passengers has been reversed by this Court in

1 (2013) 2 SCC 41 2 (2018) 9 SCC 650 Page 2 of 6 SLP (C) No.6117 of 2020 New India Assurance Co. Ltd. v. Asha Rani3. In the present

case, there is a clear admission that the deceased had travelled

in a vehicle on payment of fare.

5. We cannot but observe that the witness of the claimants,

PW-2, who was also an eye-witness stated unequivocally before

the Tribunal that while the deceased and others were standing

at the bus stand, the offending vehicle which was a three

wheeler, came to the spot and the deceased and others

travelled in it as passengers after paying fare. The deposition

clearly absolves the liability of the insurance company to

indemnify the owner. The goods vehicle is not allowed to carry

passengers, unless he is the owner of the goods carried therein

or his authorised representative.

6. Now the only issue is as to whether, the insurance

company should be directed to pay the amounts and then

recover it from the owner, which measure this Court adopted

in various cases to avoid hardship to the claimants.

7. A reading of Saju P. Paul (supra) would indicate that

therein the injured/claimant was travelling in a vehicle as a

3 (2003) 2 SCC 223 Page 3 of 6 SLP (C) No.6117 of 2020 spare driver, as contended by the claimant himself. The

claimant was stated to be the driver of another vehicle of the

owner, and a spare driver was not covered under a third-party

insurance policy which along with the third-party coverage

included only the driver and cleaner of the vehicle.

8. In considering the measure of pay and recover, this Court

in Saju P. Paul (supra) noticed a number of decisions where

such measure was employed. National Insurance Co. Ltd. v.

Baljit Kaur and Others4 was a case in which the Tribunal and

the High Court proceeded in terms of the decisions of this Court

in New India Assurance Company v. Satpal Singh and Others5

which was overruled in Asha Rani (supra). Since the Tribunal

and the High Court had allowed the compensation based on

Satpal Singh (supra), the measure of pay and recover was

adopted in the said case. National Insurance Co. Ltd. v.

Challa Bharathamma & Ors.6 is yet another case in which ‘pay

and recover’ was ordered. Therein the breach of condition of

policy was projected insofar as the vehicle having not been

4 (2004) 2 SCC 1 5 (2000) 1 SCC 237 6 (2004) 8 SCC 517 Page 4 of 6 SLP (C) No.6117 of 2020 covered by a permit to ply for hire or reward. The finding of the

High Court as to the absence of permit not leading to violation

of policy condition, was reversed by this Court. Therein also

the measure of pay and recover was adopted.

9. National Insurance Company Limited v. Kaushalaya

Devi and Others7 was a case in which an identical condition of

gratuitous passenger being carried in a good carriage vehicle

had resulted in the liability being mulcted on the owner and the

insurer absolved of its liability to indemnify. Therein it was

directed that the amount deposited by the insurer if withdrawn,

it would be recovered from the owner and if not returned, it

would be refunded to the insurance company, and the

claimants would be entitled to proceed against the owner for

recovery of the award amounts.

10. This is a case in which there was a fundamental breach

noticed and the deceased claimant, being a person who

travelled in the goods carriage after paying fare, the damages

for his death was not entitled to be indemnified by the insurer.

There was no amount deposited or paid by the insurance

7 (2008) 8 SCC 246 Page 5 of 6 SLP (C) No.6117 of 2020 company. In the above circumstances, we find absolutely no

reason to interfere with the order of the High Court, especially,

when it was passed before Satpal Singh’s case (supra) which

stood overruled in Asha Rani (supra). Shamanna (supra) was

a case in which the driver did not have a valid driving licence

at the time of the accident in which the pay and recover

direction was issued, relying on the decision in National

Insurance Co. Ltd. v. Swaran Singh and Others8.

11. The Special Leave Petition is dismissed.

12. Pending application, if any, shall stand disposed of.

………….……………………. J.

(K. VINOD CHANDRAN)

………….……………………. J.

(N. V. ANJARIA) New Delhi;

September 26, 2025.

8 (2004) 3 SCC 297 Page 6 of 6 SLP (C) No.6117 of 2020