PAY AND RECOVER TO SERVE THE IMMEDIATE NEED OF THE VICTIMS TRAVELLED IN GOODS VEHICLE – AN ANALYSIS By R. SINGGARAVELAN, SENIOR ADVOCATE PRELUDE:- The Hon’ble Apex Court at para 110 (i) under summary of proceedings at page 341 of Swaran Singh reported in (2004) 3 SCC 297 has made clear the purpose of the Motor Vehicles Act,1988 in the following words:-

PAY AND RECOVER TO SERVE THE IMMEDIATE NEED OF THE
VICTIMS TRAVELLED IN GOODS VEHICLE – AN ANALYSIS
By R. SINGGARAVELAN, SENIOR ADVOCATE

PRELUDE:-
The Hon’ble Apex Court at para 110 (i) under summary of proceedings at page 341 of Swaran Singh reported in (2004) 3 SCC 297 has made clear the purpose of the Motor Vehicles Act,1988 in the following words:-
“110. The summary of our findings to the various issues as raised in these petitions is as follows:
(1) Chapter XI of the Motor Vehicles Act, 1988 providing compulsory insurance of vehicles against thirdparty risks is a social welfare legislation to extend relief by compensation to victims of accidents caused by use of motor vehicles. The provisions of compulsory insurance coverage of all vehicles are with this paramount object and the provisions of the Act have to be so interpreted as to effectuate the said object.”

It is equally unavoidable to quote the observations of the Hon’ble
Apex Court on road accidents in India in Sohan Lal Passi reported in (1996) 5 SCC 21 below:-

“10. The road accidents in India have touched a new height. In majority of cases because of the rash and negligent driving, innocent persons become victims of such accidents because of which their dependants in many cases are virtually on the streets. In this background, the question of payment of compensation in respect of motor accidents has assumed great importance for public as well as for courts. Traditionally, before the Court directed payment of tort compensation, it had to be established by the claimants that the accident was due to the fault of the person causing injury or damage. Now from different judicial pronouncements, it shall appear that even in western countries fault is being read and assumed as someone’s negligence or carelessness. The Indian Parliament, being conscious of the magnitude of the plight of the victims of the accidents, have introduced several beneficial provisions to protect the interest of the claimants and to enable them to claim compensation from the owner or the insurance company in connection with the accident.”

CONTENTIONS OF THE INSURANCE COMPANY:-

It is contended that the ‘pay and recover’ ought not to have been ordered as the Insurance Company is not liable to pay the compensation relying upon Asha Rani case reported in (2003) 2 SCC 23 and the Division Bench judgment of our Hon’ble High Court in Bharathi AXA General Insurance Co. Ltd. Vs. Aandi & Others reported in 2018 SCC OnLine Mad 13295, para 45 where it is held that there cannot be any direction for ‘pay and recover’ for the claimants travelled in a goods vehicle. For our convenience it is reproduced below:-
“45. In Oriental Insurance Co. Ltd Vs. Brij Mohan & Ors reported in 2007 (7) SCC 56, the Hon’ble Supreme Court held that the intention of the parliament was that the words “any person” occurring in Section 147 will not cover all persons who are travelling in a goods carriage in any capacity whatsoever. It was also found that the tractor in question was used for nonagricultural purpose, though, it had permit for agricultural purpose only. After having held that the Insurance Company cannot be statutorily made liable, the Hon’ble Supreme Court chose to exercise its power under Article 142 of the Constitution of India to direct the Insurance Company to pay the compensation and gave liberty to it to recover the same from the Insured/ owner of the tractor. We do not think that the said decision could be used as a precedent to enable us to direct the Insurance Company to pay with liberty to recover the compensation in respect of an injury caused to a person who is found to be a gratuitous passenger or a passenger for hire or reward in a goods vehicle.”
It is always contended by the Insurance Company that most of the judgments for ‘pay and recover’ was ordered only in the case of i) fake license Singh Ram (2018) 3 SCC 800, ii) without license (2018) 3 SCC 289 Pappu and Others, iii) no valid license Amrit Paul Singh and Another (2018) 7 SCC 558, iv) want of permit etc. (2018) 8 SCC 492 and v) no valid and effective driving license (2019) 7 SCC 217.
Insurer has contended that the ‘pay and recover’ ordered in the above cases cannot be equated for the travel in a goods vehicle at the time of accident in view of the judgment in Asha Rani case reported in (2003) 2 SCC 223 and the Division Bench Judgment of our High Court in Bharathi AXA General Insurance Co. Ltd. Vs. Aandi & Others reported in 2018 SCC OnLine Mad 13295.
QUESTION:-
Can such a stand be taken on behalf of the Insurance Company distinguishing the travel in ‘goods vehicles’ by the so called gratuitous passengers from all other cases of fake license, no license, expired license, no permit and no valid permit etc. in a country like India surviving out of 80% of the rural population living in villages where the bus facility or frequent bus facility or other transport service facility is still a dream is the moot question to be answered in the light of the subsequent Hon’ble Apex Court judgments in Shamanna and Another reported in AIR 2018 SC 3726 = (2018) 9 SCC 650ed 08.08.2018 clarifying that the Hon’ble Apex Court has left the question of ‘pay and recover’ to be decided in appropriate cases and Anu Bhanvara reported in (2020) 20 SCC 632 dated 09.08.2019 upholding and granting the direction for ‘pay and recover’ for the travel in goods vehicle.
The Act is one of the beneficial legislations and the object of the Act is to pay compensation to the victims of the road accident who due to sudden and unpredictable circumstances met with an accident and thrown on the road lifeless or with the torn tissues and broken parts of the body with the nonstop out flow of blood driving them to fight for the life like dead dogs and animals, on the road hit by the speedy and greedy vehicles.
Can such a beneficial Act meant for compensation to the poor victims be interpreted differently for the travel in goods vehicle alone forgetting the reality prevailing in the rural areas of our country where there is no transport facility at all or no frequent transport facility.
When a vehicle faces an accident, the liability arisen out of the accident because of the damage to the vehicle or the human lives travelled in that vehicle or to the third party is the matter to be decided for the payment of compensation and not the nature of the usage of the vehicle. To put it in other words the accident would not happen due to the travel of passengers in the goods vehicle but due to the rash and negligent a driving of the vehicle or any unforeseen circumstances and hence, the denial of compensation to victims travelled in goods vehicle is unjustifiable.
When a person or group of persons walking on the road sustained injuries because of the rash and negligent driving of the goods vehicle can claim for compensation, the denial of the same for the travellers inside the goods vehicle even by way of pay and recover is out and out irrational and impermissible.
It is trite that the classification sought to be achieved by the interpreters of law to defeat a benefit given by a statute to a class of people must be based on a reasonable classification and there should be a nexus between the attempted classification and the object of the denial of the benefit.
We hope that the reality that the travel of passengers in goods vehicle due to unavoidable circumstances or for the social cause itself cannot be said to be the cause for the accident to deny compensation by the Insurer would soon drive the Courts to fix the liability on the Insurer himself to pay compensation even for such a travel in goods vehicles depending upon the facts and circumstances of the case.
The question now to be answered is as to whether the Pay and Recover also could be denied to them in the wake of various subsequent judgments after Asha Rani reported in (2003) 2 SCC 223.
It is unavoidable to quote the following finding given by the Hon’ble Apex Court on the interpretation of Sections 149 and 96 of the Motor Vehicles Act, 1988 at paras 81, 82 and 83 at pages 334 and 335 of Swaran Singh reported in (2004) 3 SCC 297 immediately in this place though the major portion of the above judgment is reproduced subsequently for the convenience of all concerned with same brief.
“81. The submissions made on behalf of the petitioner may now be noticed. According to the learned counsel, subsection (4) of Section 149 deals with the situation where the insurer in the policy purports to restrict the insurance of the persons insured thereby by reference to any condition other than those in clause (b) of sub-section (2) of Section 149, and in that view of the matter no liability is covered for driving of a vehicle without licence or fake licence. The submission ignores the plain and unequivocal expression used in sub-section (2) of Section 149 as well as the proviso appended thereto. With a view to construe a statute the scheme of the Act has to be taken into consideration. For the said purpose the entire Act has to be read as a whole and then chapter by chapter, section by section and word by word. [See Reserve Bank of India v. Peerless General Finance and Investment Co. Ltd. [(1987) 1 SCC 424] (SCC para 33).]
82. Proviso appended to sub-section (4) of Section 149 is referable only to sub-section (2) of Section 149 of the Act. It is an independent provision and must be read in the context of Section 96(4) of the Motor Vehicles Act, 1939. Furthermore, it is one thing to say that the insurer will be entitled to avoid its liability owing to breach of terms of a contract of insurance but it is another thing to say that the vehicle is not insured at all. If the submission of the learned counsel for the petitioner is accepted, the same would render the proviso to sub-section (4) as well as subsection (5) of Section 149 of the Act otiose; nor can any effective meaning be attributed to the liability clause of the insurance company contained in sub-section (1) of Section 149. The decision in Kamla case [(2001) 4 SCC 342 : 2001 SCC (Cri) 701] has to be read in the aforementioned context.
83. Sub-section (5) of Section 149 which imposes a liability on the insurer must also be given its full effect. The insurance company may not be liable to satisfy the decree and, therefore, its liability may be zero but it does not mean that it did not have initial liability at all. Thus, if the insurance company is made liable to pay any amount, it can recover the entire amount paid to the third party on behalf of the assured. If this interpretation is not given to the beneficent provisions of the Act having regard to its purport and object, we fail to see a situation where beneficent provisions can be given effect to. Sub-section (7) of Section 149 of the Act, to which pointed attention of the Court has been drawn by the learned counsel for the petitioner, which is in negative language may now be noticed. The said provision must be read with sub-section (1) thereof. The right to avoid liability in terms of subsection (2) of Section 149 is restricted as has been discussed hereinbefore. It is one thing to say that the insurance companies are entitled to raise a defence but it is another thing to say that despite the fact that its defence has been accepted having regard to the facts and circumstances of the case, the Tribunal has power to direct them to satisfy the decree at the first instance and then direct recovery of the same from the owner. These two matters stand apart and require contextual reading.”
The immediate perusal of the finding with the reasons of the Apex Court quoted above would clearly convey the message that the Insurer cannot take a different stand even to deny the benefit of ‘Pay and Recover’ for the travellers in a goods vehicle.
Again the Hon’ble Apex Court has given its conclusion at paras 104 to 108 of the above judgment at page 339 and 340 and out of those paras 104, 105 and 107 are relevant and they are reproduced below:-
“104. It is, therefore, evident from the discussions made hereinbefore that the liability of the insurance company to satisfy the decree at the first instance and to recover the awarded amount from the owner or driver thereof has been holding the field for a long time.
105. Apart from the reasons stated hereinbefore, the doctrine of stare decisis persuades us not to deviate from the said principle.
106. It is a well-settled rule of law and should not ordinarily be deviated from. (See Bengal Immunity Co. Ltd. v. State of Bihar [AIR 1955 SC 661 : (1955) 2 SCR 603] , SCR at pp. 630-32, Keshav Mills Co. Ltd. v. CIT [AIR 1965 SC 1636 : (1965) 2 SCR 908] , SCR at pp. 921-22, Union of India v. Raghubir Singh [(1989) 2 SCC 754 : (1989) 3 SCR 316] , SCR at pp. 323, 327, 334, Gannon Dunkerley and Co. v. State of Rajasthan [(1993) 1 SCC 364] , Belgaum Gardeners Coop. Production Supply and Sale Society Ltd. v. State of Karnataka [1993 Supp (1) SCC 96 (1)] and Hanumantappa Krishnappa Mantur v. State of
Karnataka [1992 Supp (2) SCC 213 : 1992 SCC (Cri) 667] .)
107. We may, however, hasten to add that the Tribunal and the court must, however, exercise their jurisdiction to issue such a direction upon consideration of the facts and circumstances of each case and in the event such a direction has been issued, despite arriving at a finding of fact to the effect that the insurer has been able to establish that the insured has committed a breach of contract of insurance as envisaged under sub-clause (ii) of clause (a) of sub-section (2) of Section 149 of the Act, the insurance company shall be entitled to realise the awarded amount from the owner or driver of the vehicle, as the case may be, in execution of the same award having regard to the provisions of Sections 165 and 168 of the Act. However, in the event, having regard to the limited scope of inquiry in the proceedings before the Tribunal it had not been able to do so, the insurance company may initiate a separate action therefor against the owner or the driver of the vehicle or both, as the case may be. Those exceptional cases may arise when the evidence becomes available to or comes to the notice of the insurer at a subsequent stage or for one reason or the other, the insurer was not given an opportunity to defend at all. Such a course of action may also be resorted to when a fraud or collusion between the victim and the owner of the vehicle is detected or comes to the knowledge of the insurer at a later stage.”

From the above conclusions of the Apex Court it is clear that the direction for pay and recover holds the field for a long time and at para 107 it has made further clear the basis for such a direction and in no place it has distinguished the case of goods vehicle from other cases. That apart in Summary of Findings at para 110, even at the outset the Hon’ble Apex Court as the first principle has held as follows:-
“110. (i) Chapter XI of the Motor Vehicles Act, 1988 providing compulsory insurance of vehicles against thirdparty risks is a social welfare legislation to extend relief by compensation to victims of accidents caused by use of motor vehicles. The provisions of compulsory insurance coverage of all vehicles are with this paramount object and the provisions of the Act have to be so interpreted as to effectuate the said object.”
Again at para 110(vi) and (x) it has held as follows:-
(vi) Even where the insurer is able to prove breach on the part of the insured concerning the policy condition regarding holding of a valid licence by the driver or his qualification to drive during the relevant period, the insurer would not be allowed to avoid its liability towards the insured unless the said breach or breaches on the condition of driving licence is/are so fundamental as are found to have contributed to the cause of the accident. The Tribunals in interpreting the policy conditions would apply “the rule of main purpose” and the concept of “fundamental breach” to allow defences available to the insurer under Section 149(2) of the Act.
(x) Where on adjudication of the claim under the Act the Tribunal arrives at a conclusion that the insurer has satisfactorily proved its defence in accordance with the provisions of Section 149(2) read with sub-section (7), as interpreted by this Court above, the Tribunal can direct that the insurer is liable to be reimbursed by the insured for the compensation and other amounts which it has been compelled to pay to the third party under the award of the Tribunal. Such determination of claim by the Tribunal will be enforceable and the money found due to the insurer from the insured will be recoverable on a certificate issued by the Tribunal to the Collector in the same manner under Section 174 of the Act as arrears of land revenue. The certificate will be issued for the recovery as arrears of land revenue only if, as required by sub-section (3) of Section 168 of the Act the insured fails to deposit the amount awarded in favour of the insurer within thirty days from the date of announcement of the award by the Tribunal.”

In the light of what are narrated above only, the question as to whether atleast “Pay and Recover” direction given for the travellers in goods vehicle is to be decided as narrated below:- CONTENTIONS OF THE CLAIMANTS :-
a) Rural Population:-

The travel in ‘goods vehicle’ is not attempted to be justified but reminded that it is unavoidable as even for availing the immediate medical facility the goods vehicle readily available for transporting the agricultural products have to be used in our villages, where agriculture is their source of livelihood.
Only from the background of the reality prevailing in our society ‘pay and recover’ question is required to be approached and answered. The Hon’ble Apex Court and our Courts also by taking note of that reality only fixes the liability on the owner of the goods vehicle and directs the Insurance Company to ‘pay and recover’ from the owner straightaway by filing the certificate in the same court to get the amount from the owner.

b) Inconsistent Decisions solved by the larger Bench in Parvathneni:-

Undoubtedly what holds the field all along consistently is that the Insurance Company is not liable to pay the compensation to the victims of the accident taken place while travelling in a goods vehicle. But as far as the direction to ‘pay and recover’ is concerned even for the accident taken place while travelling in a goods vehicle the law is not consistent upto the date of the decision of the larger Bench in Parvathneni and Another reported in (2018) 9 SCC 657 dated
17.09.2013.
In that decision it is held that ‘pay and recover’ in the case of victims travelled in goods vehicle as evidenced from Shamanna and Another reported in 2018 (9) SCC 650 at paras 7 to 13 the Hon’ble Apex Court has clarified that the question of ‘pay and recover’ is left to be decided in appropriate case. In view of the Hon’ble Apex Court judgment in Asha Rani case and the Division Bench judgment denying the ‘pay and recover’ the legislative history of the Act has to be traced.
LEGISLATIVE HISTORY OF THE MOTOR VEHICLES ACT:-

The legislative history of the Motor Vehicles Act, 1939, 1988 and the amendments are chronologically and historically traced by the Hon’ble Apex Court in Swaran Singh case reported in (2004) 3 SCC 297 in such a beautiful manner reducing the burden of all those who continue their voyage in the deep sea of Interpretation of Motor Vehicles Insurance Laws to catch hold of a golden fish as far as Insurance Company is concerned and atleast a small fish to eat for their sustenance as far as the victims of the Motor Accidents are concerned and the same is reproduced below for our immediate reference:-
“20. The intention of Parliament became further evident when in the Motor Vehicles Act, 1939, a new chapter being Chapter VII-A dealing with insurance of motor vehicles against third-party risks was introduced and the beneficent provisions contained in the Motor Vehicles Act, 1939 were further made liberal by reason of the Motor Vehicles Act, 1988 and the amendments carried out therein from time to time in aid of the third-party claims by way of grant of additional or new rights conferred on the road accident victims.
21. Under the common law a person injured by reason of another person’s wrongdoing had no right of action against insurers who undertook to indemnify the wrongdoer. The first invasion of this principle took place by reason of the Third Parties (Rights against Insurers) Act, 1930. The British Parliament in the light of the aforementioned Act enacted the Road Traffic Act, 1930 which has since been replaced by the Road Traffic Act, 1988.
22. The Third Parties (Rights against Insurers) Act, 1930 was enacted with a view to correct injustice effecting a statutory assignment of the rights of the assured to the injured person as prior thereto the right of a person to be indemnified under a contract of insurance against claims made against him by persons whom he might have injured was one personal to himself, and there was no privity of any sort between the injured person and the insurers. The injured person had no interest either at law or in equity in the insurance money, either before or after it was paid by the insurers to the assured. In a case where the assured became bankrupt and if the injured person had not already obtained judgment and levied execution of his claim for damages, his only right was to move in the bankruptcy or the winding-up proceedings. The beneficial provisions of the aforementioned English statutes were incorporated by the Parliament of India while enacting the Motor Vehicles Act, 1939 which has also since been repealed and replaced by the Motor Vehicles Act, 1988.
23. Concededly, different types of insurance covers are issued containing different nature of contracts of insurance. We are, however, in this batch of cases mainly concerned with third-party right under the policy. Any condition in the insurance policy, whereby the right of the third party is taken away, would be void.
24. Indisputably, such a benefit to a third party was provided under the statute keeping in view the fact that the conditions in the assured’s policy may be of little or no effect in relation to a claim by a person to whom an assured was under a compulsorily insurable liability.
25. In this context, it is necessary to consider as to what is a third-party right. A third-party claim arises when a victim of an accident suffers a bodily injury or death as a result thereof or his property is damaged. An accident is not susceptible to a very precise definition.
26. The popular and ordinary sense of the word was “an unlooked-for mishap or an untoward event which is not expected or designed”.
After tracing the history of the Motor Vehicles Act, the Hon’ble Apex Court in Swaran Singh case held that the direction for ‘pay and recover’ can be given by the Tribunal as it fully within its jurisdiction in appropriate cases and no hard and fast Rule can be laid down.
DISCUSSION:-
Swaran Singh Case – (2004) 3 SCC 297 dated 05.01.2004 a day before the judgment in Baljit Kaur on 06.01.2004:-
A. Contentions of the Insurance Company:-
In Swaran Singh case what were argued by the Insurance Company and the third party claimants are necessarily to be noted and hence paras 14, 15 and 16 are reproduced below:-
“14. Mr Harish Salve and Mr M.L. Verma, learned Senior Counsel appearing on behalf of the Insurer made the following submissions in support of these petitions:
(1) The insurer in terms of sub-section (2) of Section 149 of the Act has an absolute right to raise a defence specified, inter alia, in sub-clause (ii) of clause (a) thereof.
(2) Such a right being clear and unequivocal having regard to the judgment of this Court in National Insurance Co. Ltd. v. Nicolletta Rohtagi [(2002) 7 SCC 456 : 2002 SCC (Cri) 1788] must be allowed to be invoked by the insurer to its full effect. In the proceedings before the Tribunal, the insurers, thus, were entitled to show that the vehicle involved in the accident at the material point of time was driven by a person who was not “duly licensed” or was
“disqualified to hold a licence”.
(3) A person cannot be said to be “duly licensed” unless he has been granted a permanent licence for driving a particular vehicle in terms of the provisions of Chapter II of the Motor Vehicles Act and, thus, a vehicle cannot be held to be driven by a person “duly licensed” therefor if: (a) he does not hold a licence; (b) he holds a fake licence; (c) he holds a licence but the validity thereof has expired; or (d) he does not hold a licence for the type of vehicle which he was driving in terms of Chapter II of the Motor Vehicles Act, 1988; (e) he holds merely a learner’s licence. Reliance in this behalf has been placed on New India Assurance Co. Ltd. v. Mandar Madhav Tambe [(1996) 2 SCC 328 : 1996 SCC (Cri) 307] and United India Insurance Co. Ltd. v. Gian Chand [(1997) 7 SCC 558] .
(4) Once the defence by the insurer is established in the proceedings before the Tribunal, it is bound to discharge the insurer and fix the liability only on the owner and/or the driver of the vehicle.
(5) Once it is held that the insurer has been able to establish its defence, the Tribunal or the court cannot direct the insurance companies to pay the awarded amount to the claimant and in turn recover the same from the owner and the driver of the vehicle.
15. The decisions of this Court in New India Assurance Co.
v. Kamla [(2001) 4 SCC 342 : 2001 SCC (Cri) 701] and United India Insurance Co. Ltd. v. Lehru [(2003) 3 SCC 338 : 2003 SCC (Cri) 614] wherein it has been held that the court is entitled to issue a direction upon the insurer to satisfy the award and thereafter recover the same from the owner of the vehicle, do not lay down the correct law and should be overruled.
B. Contentions of the Claimants in Swaran Singh Case (2004) 3 SCC 297:-
16. The learned counsel appearing on behalf of the respondents, who are third-party claimants on the other hand, submitted:
(i) that Parliament deliberately used two different expressions, “effective licence” in Section 3 and “duly licensed” in sub-section (2) of Section 149 of the Act, which are suggestive of the fact that a driver once licensed, unless he is disqualified, would continue to be a duly licensed person for the purpose of Chapter XI of the Act.
(ii) Thus, once a person has been duly licensed but has not renewed his licence, the same would not come within the purview of Section 149 and thus would not constitute a statutory defence available to the insurer in terms thereof. Only in the event of a lapse of five years from the date of expiry of the licence, may such statutory defence be raised.
(iii) Once a certificate of insurance is issued in terms of the provisions of the Act, the insurer has a liability to satisfy an award. It has been pointed out that a major departure has been made in the 1988 Act insofar as in terms of Section 96(2)(b) of the 1939 Act all the statutory defences were available in terms of sub-section (3) thereof provided that the policy conditions other than those prescribed therein had no effect; whereas in the new Act, Section 149(2)(a) prescribes that the policy is void if it is obtained by non-disclosure of material fact. Section 149(4) confines to only clause (b) and states that the conditions of policy except as mentioned in clause (b) of sub-section (2) are of no effect and, thus, after the amendment, except in cases which are covered under clause (b) of Section 149, the insurance companies are liable to pay to the third parties. In other words, the right of the insurer to avoid the claim of the third party would arise only when the policy is obtained by misrepresentation of material fact and fraud and in no other case.
(iv) Sub-section (1) of Section 149 makes it clear that the insurer should pay first to the third parties and recover the same if they are absolved on any of the grounds specified in sub-section (2) thereof. Reliance, in this connection, has been placed on British India General Insurance Co. Ltd. v. Captain Itbar Singh [AIR 1959 SC 1331 : (1960) 1 SCR 168] and New India
Assurance Co. v. Kamla [(2001) 4 SCC 342 : 2001 SCC (Cri) 701] .
(v) The burden to prove the defence raised by the insurers as regards the question as to whether there has been any breach or violation of policy conditions of the insurance policy has been issued or not, would be upon the insurer.
(vi) The breach on the part of the insured must be a wilful one being of fundamental condition by the insured himself and the burden of proof, therefore, would be on the insurer.
(vii) With a view to avoid its liabilities, it is not sufficient for the insurer to show that the person driving at the time of accident was not duly licensed but it must further be established that there was a breach on the part of the insured. Reliance, in this connection, has been placed on Narcinva V. Kamat v. Alfredo Antonio Doe Martins [(1985) 2 SCC 574 : 1985 SCC (Cri) 274] , Skandia Insurance Co. Ltd. v. Kokilaben Chandravadan [(1987) 2 SCC 654 : AIR 1987 SC 1184] , Sohan Lal Passi v. P. Sesh Reddy [(1996) 5 SCC 21 : 1996 SCC (Cri) 871] and United
India Insurance Co. Ltd. v. Lehru [(2003) 3 SCC 338 : 2003 SCC (Cri) 614] .
Thus in the above paras it is clear as to how the ‘pay and recover’ direction is dealt with. After reproducing the arguments of both the sides the Hon’ble Apex Court entered into a discussion as quoted below:-
Discussion in Swaran Singh case:-

“31. The right of the victim of a road accident to claim compensation is a statutory one. He is a victim of an unforeseen situation. He would not ordinarily have a hand in it. The negligence on the part of the victim may, however, be contributory. He has suffered owing to wrongdoing of others. An accident may ruin an entire family. It may take away the only earning member. An accident may result in the loss of her only son to a mother. An accident may take place for a variety of reasons. The driver of a vehicle may not have a hand in it. He may not be found to be negligent in a given case. Other factors such as unforeseen situation, negligence of the victim, bad road or the action or inaction of any other person may lead to an accident.
32. A person suffering grievous bodily injury may require money for his survival/medical treatment. Statutory compensation paid to the next of kin of the victim of an accident may, thus, bring to a large number of families the only ray of light at the end of the tunnel.
33. In other words, what would also be covered by the contract of insurance vis-à-vis the beneficent statutory provisions like sub-section (2) [sic (1)] of Section 149 of the said Act would be when a death or bodily injury has been caused as a result of the assured’s own voluntary act. Even an unforeseeable result of the assured’s deliberate act may come within the purview of the accident. Even if an accident has occurred due to negligent driving of the assured person, it may not prevent recovery under the policy and certainly thereby a third party would not be non-suited.
34. However, we may notice that in C.M. Jaya case [New India Assurance Co. Ltd. v. C.M. Jaya, (2002) 2 SCC 278 : 2002 SCC (Cri) 325] a Constitution Bench of this Court held that the liability of the insurer will have to be determined having regard to the question as to whether any extra premium is paid or not. It was observed: (SCC p. 285, para 10)
“The said decision cannot be read as laying down that even though the liability of the Insurance Company is limited to the statutory requirement, an unlimited or higher liability can be imposed on it. The liability could be statutory or contractual. A statutory liability cannot be more than what is required under the statute itself. However, there is nothing in Section 95 of the Act [Ed.: The Motor Vehicles Act, 1939] prohibiting the parties from contracting to create unlimited or higher liability to cover wider risk. In such an event, the insurer is bound by the terms of the contract as specified in the policy in regard to unlimited or higher liability, as the case may be. In the absence of such a term or clause in the policy, pursuant to the contract of insurance, a limited statutory liability cannot be expanded to make it unlimited or higher. If it is so done, it amounts to rewriting the statute or the contract of insurance which is not permissible.”
35. For the aforementioned reasons, the provisions contained in Chapter XI of the Motor Vehicles Act, 1988 must be construed in that light.
36. Sub-section (1) of Section 149 casts a liability upon the insurer to pay to the person entitled to the benefit of the decree “as if he were the judgment-debtor”. Although the said liability is subject to the provision of this section, it prefaces with a non obstante clause that the insurer may be entitled to avoid or cancel or may have avoided or cancelled the policy. Furthermore, the statute raises a legal fiction to the effect that for the said purpose the insurer would be deemed to be a judgment-debtor in respect of the liability of the insurer.
37. In Halsbury’s Laws of England, 4th Edn. Reissue, Vol. 25, it is stated:
“743. Benefits conferred on third parties by the Road Traffic Act, 1930.—It was against the background of the Third Parties (Rights against Insurers) Act, 1930 that the Road Traffic Act, 1930 (now replaced by the Road Traffic Act, 1988), was passed. It was realised that, unless some alterations were made in the rights to which the third party was by the first-named Act subrogated, those rights would frequently be of little, if any, value. Accordingly, it was provided that certain conditions in the assured’s policy were to be of no effect in relation to a claim by a person to whom an assured was under a compulsorily insurable liability. The conditions to that extent avoided are any conditions providing (1) that no liability is to arise, or (2) that any liability which has arisen is to cease, in the event of some specified thing being done, or omitted to be done, after the occurrence of the event giving rise to the claim. If, therefore, any admission of liability is made after an accident contrary to a condition in the policy, or if, contrary to a condition in the policy, proper notice of the accident is not given to the insurers, the injured third party is not affected so far as his claim is concerned.”
38. This Court in Nicolletta Rohtagi [(2002) 7 SCC 456 : 2002 SCC (Cri) 1788] which has since been followed in Sadhana Lodh v. National Insurance Co. Ltd. [(2003) 3
SCC 524 : 2003 SCC (Cri) 762 : (2003) 1 SCR 567] in no uncertain terms held that the defence available to an insurance company would be a limited one.
39. The question as to whether an insurer can avoid its liability in the event it raises a defence as envisaged in subsection (2) of Section 149 of the Act corresponding to subsection (2) of Section 96 of the Motor Vehicles Act, 1939 had been the subject-matter of decisions in a large number of cases.
40. It is beyond any doubt or dispute that under Section 149(2) of the Act, an insurer, to whom notice of the bringing of any proceeding for compensation has been given, can defend the action on any of the grounds mentioned therein.
41. However, clause (a) opens with the words “that there has been a breach of a specified condition of the policy”, implying that the insurer’s defence of the action would depend upon the terms of the policy. The said sub-clause contains three conditions of disjunctive character, namely, the insurer can get away from the liability when (a) a named person drives the vehicle; (b) it was being driven by a person who did not have a duly granted licence; and (c) driver is a person disqualified for holding or obtaining a driving licence.
42. We may also take note of the fact that whereas in Section 3 the words used are “effective licence”, it has been differently worded in Section 149(2) i.e. “duly licensed”. If a person does not hold an effective licence as on the date of the accident, he may be liable for prosecution in terms of Section 141 of the Act but Section 149 pertains to insurance as regards third-party risks.
43. A provision of a statute which is penal in nature vis-àvis a provision which is beneficent to a third party must be interpreted differently. It is also well known that the provisions contained in different expressions are ordinarily construed differently.
44. The words “effective licence” used in Section 3, therefore, in our opinion, cannot be imported for subsection (2) of Section 149 of the Motor Vehicles Act. We must also notice that the words “duly licensed” used in subsection (2) of Section 149 are used in the past tense.
45. Thus, a person whose licence is ordinarily renewed in terms of the Motor Vehicles Act and the Rules framed thereunder, despite the fact that during the interregnum period, namely, when the accident took place and the date of expiry of the licence, he did not have a valid licence, he could during the prescribed period apply for renewal thereof and could obtain the same automatically without undergoing any further test or without having been declared unqualified therefor. Proviso appended to Section 14 in unequivocal terms states that the licence remains valid for a period of thirty days from the day of its expiry.”

Again at para 66, the Hon’ble Apex Court has held as follows:-
“66. A bare perusal of the provisions of Section 149 of the Act leads to only one conclusion that the usual rule is that once the assured proves that the accident is covered by the compulsory insurance clause, it is for the insurer to prove that it comes within an exception.”

Again from the above paras 68 to 73 the Hon’ble Apex Court has spoken about the liability and responsibility of the Insurance Company as quoted below:-
“68. In Rukmani v. New India Assurance Co. Ltd. [(1998) 9 SCC 160 : 1999 SCC (Cri) 244 : 1999 ACJ 171] this Court while upholding the defences available to the insurer to the effect that the vehicle in question was not being driven by a person holding a licence, held that the burden of the insurer would not be discharged when the evidence which was brought on record was that the Inspector of Police in his examination-in-chief merely stated:

“My enquiry revealed that the 1st respondent did not produce the licence to drive the abovesaid scooter. The
1st respondent even after my demand did not submit
the licence since he was not having it.” (SCC p. 161, para 3)

69. The proposition of law is no longer res integra that the person who alleges breach must prove the same. The insurance company is, thus, required to establish the said breach by cogent evidence. In the event the insurance company fails to prove that there has been breach of conditions of policy on the part of the insured, the insurance company cannot be absolved of its liability. (See Sohan Lal Passi [(1996) 5 SCC 21 : 1996 SCC (Cri) 871] .)

70. Apart from the above, we do not intend to lay down anything further i.e. degree of proof which would satisfy the aforementioned requirement inasmuch as the same would indisputably depend upon the facts and circumstances of each case. It will also depend upon the terms of contract of insurance. Each case may pose a different problem which must be resolved having regard to a large number of factors governing the case including conduct of parties as regards duty to inform, correct disclosure, suppression, fraud on the insurer etc. It will also depend upon the fact as to who is the owner of the vehicle and the circumstances in which the vehicle was being driven by a person having no valid and effective licence. No hard-and-fast rule can, therefor, be laid down. If in a given case there exists sufficient material to draw an adverse inference against either the insurer or the insured, the Tribunal may do so. The parties alleging breach must be held to have succeeded in establishing the breach of conditions of the contract of insurance, on the part of the insurer by discharging its burden of proof. The Tribunal, there cannot be any doubt, must arrive at a finding on the basis of the materials available on records.
71. In the aforementioned backdrop, the provisions of subsections (4) and (5) of Section 149 of the Motor Vehicles Act, 1988 may be considered as to the liability of the insurer to satisfy the decree at the first instance.
72. A beneficent statute, as is well known, must receive a liberal interpretation. (See Bangalore Water Supply & Sewerage Board v. A. Rajappa [(1978) 2 SCC 213 : 1978 SCC (L&S) 215] , Steel Authority of India Ltd. v. National Union Waterfront Workers [(2001) 7 SCC 1 : 2001 SCC (L&S) 1121] , ITI Ltd. v. Siemens Public Communications Network Ltd. [(2002) 5 SCC 510] , Amrit Bhikaji Kale v. Kashinath Janardhan Trade [(1983) 3 SCC 437] and Kunal Singh v. Union of India [(2003) 4 SCC 524 : 2003 SCC (L&S) 482] .)
73. The liability of the insurer is a statutory one. The liability of the insurer to satisfy the decree passed in favour of a third party is also statutory.”
C. Decision in Swaran Singh case:-
The discussion and the decision arrived from para 75 onwards upto 83 are also relevant and hence they are reproduced below for the cogent reading though they are reproduced in the beginning itself:-
“75. As has been held in Sohan Lal Passi [(1996) 5 SCC 21 : 1996 SCC (Cri) 871] the insurance company cannot shake off its liability to pay the compensation only by saying that at the relevant point of time the vehicle was driven by a person having no licence.
76. Thus, where a liability has been established by a judgment, it is not permissible to look beyond the determination in order to establish the basis of the liability.
77. In United India Insurance Co. Ltd. v. Jaimy [1998 ACJ 1318 (Ker)] it is stated: (ACJ pp. 1324-25, paras 19-22)
“Section 149(2) relates to the liability of the insurer and speaks of a situation in regard to which no sum shall be payable by an insurer in respect of any judgment or award. In the context it is provided that an insurer to whom notice of bringing of any such proceeding is given, could defend the action stated in the said statutory provision. The contention in the context would be found in Section 149(2)(a) in the event of a breach of a specified condition of the policy enabling the insurer to avoid liability in regard thereto. In the process in regard to the right of the insurer to recover the amount from the insured, it would have to be seen by referring to Section 149(4) as to under what circumstances this can be successfully recovered from the insured.
Section 149(4) says that where a certificate of insurance is issued, so much of the said policy as purports to restrict the insurance of the persons insured thereby by referring to any of the conditions mentioned and it is precisely enacted in regard thereto that the liability covered by Section 2(b) as is required to be covered by the policy would not be available. The position is made further clear by the proviso enacting that any sum paid by the insurer in or towards the discharge of any liability of any person who is covered by the policy by virtue of this sub-section shall be recoverable by the insurer from that person.
In other words, Section 149(4) considers the right of the insurance company in regard to reimbursement of the amount paid by them only in the context of a situation other than the one contemplated under Section 149(2)(b). It would mean that except under the situation provided by Section 149(2)(b), the insurer would not be in a position to avoid the liability because he has got rights against the owner under the above provision.
The learned counsel strenuously submitted that this would not be the correct understanding and interpretation of the statutory provisions of Section 149 of the 1988 Act. The learned counsel submitted that to read the statutory provision to understand that the insurance company could only claim from the owner in situations governed by Section 149(2)(b) and to have no right under the said provision with regard to other situations under Section 149(2)(a) would not be the proper reading of the statutory provision. The learned counsel submitted that in fact the provision would have to be meaningfully understood. It is not possible to consider the submission of the learned counsel in the light of the plain language of the statutory provision. It is necessary to emphasise that under the new Act the burden of the insurance company has been made heavier in the context of controlling the need of taking up contentions to legally avoid the liabilities of the insurance company.”
78. The social need of the victim being compensated as enacted by Parliament was the subject-matter of consideration before a three-Judge Bench of this Court as early as in 1959 in British India General Insurance Co. Ltd. v. Captain Itbar Singh [AIR 1959 SC 1331 : (1960) 1 SCR 168] wherein Sarkar, J. speaking for the Bench observed: (AIR p. 1335, para 16)
“16. Again, we find the contention wholly unacceptable. The statute has no doubt created a liability in the insurer to the injured person but the statute has also expressly confined the right to avoid that liability to certain grounds specified in it. It is not for us to add to those grounds and therefore to the statute for reasons of hardship. We are furthermore not convinced that the statute causes any hardship. First, the insurer has the right, provided he has reserved it by the policy, to defend the action in the name of the assured and if he does so, all defences open to the assured can then be urged by him and there is no other defence that he claims to be entitled to urge. He can thus avoid all hardship, if any, by providing for a right to defend the action in the name of the assured and this he has full liberty to do. Secondly, if he has been made to pay something which on the contract of the policy he was not bound to pay, he can under the proviso to sub-section (3) and under sub-section (4) recover it from the assured. It was said that the assured might be a man of straw and the insurer might not be able to recover anything from him. But the answer to that is that it is the insurer’s bad luck. In such circumstances the injured person also would not have been able to recover the damages suffered by him from the assured, the person causing the injuries.”
79. Similar view has been taken in Skandia case [(1987) 2 SCC 654 : AIR 1987 SC 1184] , Sohan Lal Passi case [(1996) 5 SCC 21 : 1996 SCC (Cri) 871] , Kashiram Yadav v. Oriental Fire and General Insurance Co. [(1989) 4 SCC 128 : 1989 ACJ 1078] and several others.
80. In Kamla case [(2001) 4 SCC 342 : 2001 SCC (Cri) 701] a Division Bench of this Court summed up the legal position: (SCC p. 350, para 25)
“25. The position can be summed up thus:
The insurer and the insured are bound by the conditions enumerated in the policy and the insurer is not liable to the insured if there is violation of any policy condition. But the insurer who is made statutorily liable to pay compensation to third parties on account of the certificate of insurance issued shall be entitled to recover from the insured the amount paid to the third parties, if there was any breach of policy conditions on account of the vehicle being driven without a valid driving licence. Learned counsel for the insured contended that it is enough if he establishes that he made all due enquiries and believed bona fide that the driver employed by him had a valid driving licence, in which case there was no breach of the policy condition. As we have not decided on that contention it is open to the insured to raise it before the Claims Tribunal. In the present case, if the Insurance Company succeeds in establishing that there was breach of the policy condition, the Claims Tribunal shall direct the insured to pay that amount to the insurer. In default the insurer shall be allowed to recover that amount (which the insurer is directed to pay to the claimant third parties) from the insured person.”
81. The submissions made on behalf of the petitioner may now be noticed. According to the learned counsel, subsection (4) of Section 149 deals with the situation where the insurer in the policy purports to restrict the insurance of the persons insured thereby by reference to any condition other than those in clause (b) of sub-section (2) of Section 149, and in that view of the matter no liability is covered for driving of a vehicle without licence or fake licence. The submission ignores the plain and unequivocal expression used in sub-section (2) of Section 149 as well as the proviso appended thereto. With a view to construe a statute the scheme of the Act has to be taken into consideration. For the said purpose the entire Act has to be read as a whole and then chapter by chapter, section by section and word by word. [See Reserve Bank of India v. Peerless General Finance and Investment Co. Ltd. [(1987) 1 SCC 424] (SCC para 33).]
82. Proviso appended to sub-section (4) of Section 149 is referable only to sub-section (2) of Section 149 of the Act. It is an independent provision and must be read in the context of Section 96(4) of the Motor Vehicles Act, 1939. Furthermore, it is one thing to say that the insurer will be entitled to avoid its liability owing to breach of terms of a contract of insurance but it is another thing to say that the vehicle is not insured at all. If the submission of the learned counsel for the petitioner is accepted, the same would render the proviso to sub-section (4) as well as subsection (5) of Section 149 of the Act otiose; nor can any effective meaning be attributed to the liability clause of the insurance company contained in sub-section (1) of Section 149. The decision in Kamla case [(2001) 4 SCC 342 : 2001 SCC (Cri) 701] has to be read in the aforementioned context.
83. Sub-section (5) of Section 149 which imposes a liability on the insurer must also be given its full effect. The insurance company may not be liable to satisfy the decree and, therefore, its liability may be zero but it does not mean that it did not have initial liability at all. Thus, if the insurance company is made liable to pay any amount, it can recover the entire amount paid to the third party on behalf of the assured. If this interpretation is not given to the beneficent provisions of the Act having regard to its purport and object, we fail to see a situation where beneficent provisions can be given effect to. Sub-section (7) of Section 149 of the Act, to which pointed attention of the Court has been drawn by the learned counsel for the petitioner, which is in negative language may now be noticed. The said provision must be read with sub-section (1) thereof. The right to avoid liability in terms of subsection (2) of Section 149 is restricted as has been discussed hereinbefore. It is one thing to say that the insurance companies are entitled to raise a defence but it is another thing to say that despite the fact that its defence has been accepted having regard to the facts and circumstances of the case, the Tribunal has power to direct them to satisfy the decree at the first instance and then direct recovery of the same from the owner. These two matters stand apart and require contextual reading.”

D. Conclusion in Swaran Sigh case (2004) 3 SCC 297:-
Finally the Hon’ble Apex Court has concluded from paras 104 to 107 that ‘pay and recover’ can be ordered by the Tribunal taking note of the facts and circumstances of each case and such a direction cannot be lightly interfered with in the following paras:
“104. It is, therefore, evident from the discussions made hereinbefore that the liability of the insurance company to satisfy the decree at the first instance and to recover the awarded amount from the owner or driver thereof has been holding the field for a long time.
105. Apart from the reasons stated hereinbefore, the doctrine of stare decisis persuades us not to deviate from the said principle.
106. It is a well-settled rule of law and should not ordinarily be deviated from. (See Bengal Immunity Co. Ltd. v. State of Bihar [AIR 1955 SC 661 : (1955) 2 SCR 603] , SCR at pp. 630-32, Keshav Mills Co. Ltd. v. CIT [AIR 1965 SC 1636 : (1965) 2 SCR 908] , SCR at pp. 921-22, Union of India v. Raghubir Singh [(1989) 2 SCC 754 : (1989) 3 SCR 316] , SCR at pp. 323, 327, 334, Gannon Dunkerley and Co. v. State of Rajasthan [(1993) 1 SCC 364] , Belgaum Gardeners Coop. Production Supply and Sale Society Ltd. v. State of Karnataka [1993 Supp (1) SCC 96 (1)] and Hanumantappa Krishnappa Mantur v. State of
Karnataka [1992 Supp (2) SCC 213 : 1992 SCC (Cri) 667] .)
107. We may, however, hasten to add that the Tribunal and the court must, however, exercise their jurisdiction to issue such a direction upon consideration of the facts and circumstances of each case and in the event such a direction has been issued, despite arriving at a finding of fact to the effect that the insurer has been able to establish that the insured has committed a breach of contract of insurance as envisaged under sub-clause (ii) of clause (a) of sub-section (2) of Section 149 of the Act, the insurance company shall be entitled to realise the awarded amount from the owner or driver of the vehicle, as the case may be, in execution of the same award having regard to the provisions of Sections 165 and 168 of the Act. However, in the event, having regard to the limited scope of inquiry in the proceedings before the Tribunal it had not been able to do so, the insurance company may initiate a separate action therefor against the owner or the driver of the vehicle or both, as the case may be. Those exceptional cases may arise when the evidence becomes available to or comes to the notice of the insurer at a subsequent stage or for one reason or the other, the insurer was not given an opportunity to defend at all. Such a course of action may also be resorted to when a fraud or collusion between the victim and the owner of the vehicle is detected or comes to the knowledge of the insurer at a later stage.”

From the above decision it is clear that the Hon’ble Apex Court has permitted the ‘pay and recover’ even for the victims travelled in goods vehicles and it has not denied the same to the goods vehicles.
Baljit Kaur (2004) 2 SCC 1 – 06.01.2004 (pay and recover)
On the next day of Swaran Singh, Baljit Kaur decision was rendered on 06.01.2004 but while taking away the liabilities of the Insurance Company for the travellers in goods vehicle it has ordered for ‘pay and recover’ for the goods vehicle also.
The Hon’ble Apex Court in Baljit Kaur and Others reported in (2004) 2 SCC 1 dated 06.01.2004, has considered both Satpal Singh reported in (2000) 1 SCC 237 and New India Assurance Co. Ltd., Vs. Asha Rani (2003) 2 SCC 223 dated 03.12.2002 and held that in view of Section 168 of the Motor Vehicles Act, 1988 the learned Tribunal can very well pass an Award for ‘pay and recover’ even in respect of the victims (both injured and deceased) travelling in a goods vehicle at para 19.
The Hon’ble Apex Court in Baljit Kaur has considered the impact of 1939 Act, 1988 Act and also 1994 Amendment of 1994 on Section 147 of the Motor Vehicles Act, 1988. The facts of the said case discussion and the decision taken in the case are out and out relevant and hence they are reproduced below:-
“3. The first respondent herein preferred a claim petition for compensation before the Motor Accidents Claims Tribunal, Ludhiana (hereinafter referred to as “the Claims Tribunal”), in view of the death of her sixteen-year-old son, Sukhwinder Singh, due to the allegedly reckless driving by the second respondent and driver of the goods vehicle, bearing No. PB10U-8937, on 19-2-1999. It was found by the Claims Tribunal that the victim, who was returning in the truck from a marriage ceremony, died as a result of the rash and negligent driving by the driver of the goods vehicle, the second respondent herein. It was an admitted fact that the said vehicle was insured with the appellant Insurance Company.
4. The Claims Tribunal relying upon the decision of this Court in New India Assurance Co. v. Satpal Singh [(2000) 1 SCC 237 : 2000 SCC (Cri) 130] accepted the claim petition and rejected the contention of the appellant Insurance Company that the vehicle concerned being a goods vehicle, it would not have to incur any liability with respect to passengers transported in the vehicle. It further directed the appellant to pay an amount of Rs. 1,32,000 as compensation, with interest at the rate of 9% from the date of application. The High Court upheld the verdict of the Claims Tribunal on appeal, with the further direction that in the event the owner, the third respondent herein, had committed any breach, the appellant insurer would be entitled to recover the amount of compensation from him.
5. It may be noticed at the outset that the judgment rendered in Satpal Singh case [(2000) 1 SCC 237 : 2000 SCC (Cri) 130] has been subsequently reversed by a three-Judge Bench of this Court in New India Assurance Co. Ltd. v. Asha Rani [(2003) 2 SCC 223 : 2003 SCC (Cri) 493] which was followed in the case of Oriental Insurance Co. Ltd. v. Devireddy Konda
Reddy [(2003) 2 SCC 339 : 2003 SCC (Cri) 540] .
6. Reference in this connection may also be made to National Insurance Co. Ltd. v. Ajit Kumar [(2003) 9 SCC 668 : 2003 SCC (Cri) 1915 : JT (2003) 7 SC 520] .
7. In the case of New India Assurance Co. Ltd. v. Asha Rani [(2003) 2 SCC 223 : 2003 SCC (Cri) 493] it was held that the previous decision in Satpal Singh case [(2000) 1 SCC 237 : 2000 SCC (Cri) 130] was incorrectly rendered, and that the words “any person” as used in Section 147 of the Motor Vehicles Act, 1988, would not include passengers in the goods vehicle, but would rather be confined to the legislative intent to provide for third-party risk. The question in the subsequent judgment in Oriental Insurance Co. Ltd. v. Devireddy Konda Reddy [(2003) 2 SCC 339 : 2003 SCC (Cri) 540] involved, as in the present case, the liability of the insurance company in the event of death caused to a gratuitous passenger travelling in a goods vehicle. The Court held that the Tribunal and the
High Court were not justified in placing reliance upon Satpal Singh case [(2000) 1 SCC 237 : 2000 SCC (Cri) 130] in view of its reversal by Asha Rani [(2003) 2 SCC 223 : 2003 SCC (Cri) 493] and that, accordingly, the insurer would not be liable to pay compensation to the family of the victim who was travelling in a goods vehicle.
8. It was contended by the learned counsel appearing on behalf of the second and third respondents, the driver and owner of the vehicle respectively, that the decisions in Asha Rani case [(2003) 2 SCC 223 : 2003 SCC (Cri) 493] and Konda Reddy case [(2003) 2 SCC 339 : 2003 SCC (Cri) 540] were delivered with respect to the position prevailing prior to the amendment of Section 147 by the Motor Vehicles (Amendment) Act, 1994. As such, the effect of the legislative amendment was not in question in the above cases, and therefore, the law laid down by these decisions would not be considered as binding law in view of coming into force of the said amendment. Since the accident in the present instance occurred in 1999, this Court would now have to consider afresh the impact of the 1994 amendment, and could not consider itself circumscribed by the aforementioned decisions in Asha Rani case [(2003) 2 SCC 223 : 2003 SCC (Cri) 493] and Konda Reddy case [(2003) 2 SCC 339 : 2003 SCC (Cri) 540] both of which involved motor accidents predating the said amendment.
9. It is the submission of the respondent vehicle owner and driver that the insertion, by way of legislative amendment, of the words “including owner of the goods or his authorized representative carried in the vehicle” in Section 147 would result in the inference that gratuitous passengers would as well be covered by the scope of the provision. Any other construction, it was urged by the learned counsel for the second and third respondents, would render the effect of the words “any person” completely redundant.
10. The material portion of the provision contained in Section 147 of the Motor Vehicles Act, 1988, as amended by the Motor Vehicles (Amendment) Act, 1994 reads as follows:
“147. Requirements of policies and limits of liability.—(1) In order to comply with the requirements of this Chapter, a policy of insurance must be a policy which—
(a) ***
(b) insures the person or classes of persons specified in the policy to the extent specified in sub-section (2)—
(i) against any liability which may be incurred by him in respect of the death of or bodily injury to any person, including owner of the goods or his authorized representative carried in the vehicle or damage to any property of a third party caused by or arising out of the use of the vehicle in a public place;
(ii) ***”
(emphasis added)
11. Admittedly, it is incumbent upon a court of law to eschew that interpretation of a statute that would serve to negate its true import, or to render the words of any provision as superfluous. Nonetheless, we find no merit in the above submissions proffered by the learned counsel for the respondent. The effect of the 1994 amendment on Section 147 is unambiguous. Where earlier, the words “any person” could be held not to include the owner of the goods or his authorized representative travelling in the goods vehicle, Parliament has now made it clear that such a construction is no longer possible. The scope of this rationale does not, however, extend to cover the class of cases where gratuitous passengers for whom no insurance policy was envisaged, and for whom no insurance premium was paid, employed the goods vehicle as a medium of conveyance.
12. We find ourselves unable, furthermore, to countenance the contention of the respondents that the words “any person” as used in Section 147 of the Motor Vehicles Act, would be rendered otiose by an interpretation that removed gratuitous passengers from the ambit of the same. It was observed by this Court in the case concerning New India Assurance Co. Ltd. v. Asha Rani [(2003) 2 SCC 223 : 2003
SCC (Cri) 493] that the true purport of the words “any person” is to be found in the liability of the insurer for third-party risk, which was sought to be provided for by the enactment.
13. It is pertinent to note that a statutory liability enjoined upon an owner of the vehicle to compulsorily insure it so as to cover the liability in respect of a person who was travelling in a vehicle pursuant to a contract of employment in terms of proviso (ii) appended to Section 95 of the 1939 Act does not occur in Section 147 of the 1988 Act. The changes effected in the 1988 Act vis-à-vis the 1939 Act as regards definitions of “goods vehicle”, “public service vehicle” and “stage carriage” have also a bearing on the subject inasmuch as the concept of any goods carriage carrying any passenger or any other person was not contemplated.
14. In a situation of this nature, the doctrine of suppression of mischief rule as adumbrated in Heydon’s case [(1584) 3 Co Rep 7a : 76 ER 637] shall apply. Such an amendment was made by Parliament consciously. Having regard to the definition of “goods carriage” vis-à-vis “public service vehicle”, it is clear that whereas the goods carriage carrying any passenger is not contemplated under the 1988 Act as the same must be used solely for carrying the goods.”

Again at Para 17 to 21 the Hon’ble Apex Court while rejecting the liability of the Insurance Company to pay compensation to the victim either injured or deceased at para 21 of the judgment has categorically held that a direction to pay and recover from the owner can be done even in the case of passengers in the goods vehicle in view of Section 168 of the Motor Vehicles Act, 1988 and the said direction being a law under Article 141 of the Constitution of India is not overruled yet and they are reproduced below for our convenience:-
“17. By reason of the 1994 amendment what was added is “including owner of the goods or his authorised representative carried in the vehicle”. The liability of the owner of the vehicle to insure it compulsorily, thus, by reason of the aforementioned amendment included only the owner of the goods or his authorised representative carried in the vehicle besides the third parties. The intention of Parliament, therefore, could not have been that the words “any person” occurring in Section 147 would cover all persons who were travelling in a goods carriage in any capacity whatsoever. If such was the intention, there was no necessity of Parliament to carry out an amendment inasmuch as the expression “any person” contained in sub-clause (i) of clause (b) of sub-section (1) of Section 147 would have included the owner of the goods or his authorised representative besides the passengers who are gratuitous or otherwise.
18. The observations made in this connection by the Court in Asha Rani case [(2003) 2 SCC 223 : 2003 SCC (Cri) 493] to which one of us, Sinha, J., was a party, however, bear repetition: (SCC p. 235, para 26)
“26. In view of the changes in the relevant provisions in the 1988 Act vis-à-vis the 1939 Act, we are of the opinion that the meaning of the words ‘any person’ must also be attributed having regard to the context in which they have been used i.e. ‘a third party’. Keeping in view the provisions of the 1988 Act, we are of the opinion that as the provisions thereof do not enjoin any statutory liability on the owner of a vehicle to get his vehicle insured for any passenger travelling in a goods vehicle, the insurers would not be liable therefor.”
19. In Asha Rani [(2003) 2 SCC 223 : 2003 SCC (Cri) 493] it has been noticed that sub-clause (i) of clause (b) of sub-section (1) of Section 147 of the 1988 Act speaks of liability which may be incurred by the owner of a vehicle in respect of death of or bodily injury to any person or damage to any property of a third party caused by or arising out of the use of the vehicle in a public place. Furthermore, an owner of a passengercarrying vehicle must pay premium for covering the risks of the passengers travelling in the vehicle. The premium in view of the 1994 amendment would only cover a third party as also the owner of the goods or his authorised representative and not any passenger carried in a goods vehicle whether for hire or reward or otherwise.
20. It is, therefore, manifest that in spite of the amendment of 1994, the effect of the provision contained in Section 147 with respect to persons other than the owner of the goods or his authorized representative remains the same. Although the owner of the goods or his authorized representative would now be covered by the policy of insurance in respect of a goods vehicle, it was not the intention of the legislature to provide for the liability of the insurer with respect to passengers, especially gratuitous passengers, who were neither contemplated at the time the contract of insurance was entered into, nor was any premium paid to the extent of the benefit of insurance to such category of people.
21. The upshot of the aforementioned discussions is that instead and in place of the insurer the owner of the vehicle shall be liable to satisfy the decree. The question, however, would be as to whether keeping in view the fact that the law was not clear so long such a direction would be fair and equitable. We do not think so. We, therefore, clarify the legal position which shall have prospective effect. The Tribunal as also the High Court had proceeded in terms of the decision of this Court in Satpal Singh [(2000) 1 SCC 237 : 2000 SCC (Cri) 130] . The said decision has been overruled only in Asha Rani [(2003) 2 SCC 223 : 2003 SCC (Cri) 493] . We, therefore, are of the opinion that the interest of justice will be subserved if the appellant herein is directed to satisfy the awarded amount in favour of the claimant, if not already satisfied, and recover the same from the owner of the vehicle. For the purpose of such recovery, it would not be necessary for the insurer to file a separate suit but it may initiate a proceeding before the executing court as if the dispute between the insurer and the owner was the subject-matter of determination before the Tribunal and the issue is decided against the owner and in favour of the insurer. We have issued the aforementioned directions having regard to the scope and purport of Section 168 of the Motor Vehicles Act, 1988, in terms whereof, it is not only entitled to determine the amount of claim as put forth by the claimant for recovery thereof from the insurer, owner or driver of the vehicle jointly or severally but also the dispute between the insurer on the one hand and the owner or driver of the vehicle involved in the accident inasmuch as can be resolved by the Tribunal in such a proceeding.”

Thus, Baljit Kaur allowed the ‘pay and recover’ without denying the same to the claimants in goods travel.
Like that the Hon’ble Apex Court in Oriental Insurance Co. Ltd. Vs. Brij Mohan & Others (2007) 7 SCC 56, (DB) goods vehicle, paras 3, 8, 12 & 13, also has granted direction for ‘pay and recover’ for the claimants travelled in the goods vehicle in the following paras 3, 8, 12 and 13:-
“3. First respondent Brij Mohan filed the claim petition. He was a labourer. On or about 11-3-1998 he was travelling on a trolley attached to a tractor. There exists a dispute as to whether both the tractor and the trolley were insured or not. It may not be necessary to determine the said question. He was engaged to dig earth from a place known as Shishwalika Rasta. The earth so dug was loaded on the trolley attached to the tractor. The respondent and other workers were returning to the bhatta (brick kiln). He was sitting on the earth loaded on the trolley. The tractor allegedly was being driven rashly and negligently by Hemraj, the driver. He slipped down from the trolley, came under the wheels thereof injuring his gall bladder and left thigh, as a result whereof he suffered grievous injuries.

8. The Tribunal in its award has, inter alia, noticed that the appellant herein had raised a specific defence, namely, the trolley was not insured. It does not appear that the said contention of the appellant had been gone into. There is nothing on record to show that the owner of the tractor had produced any insurance cover in respect of the trolley.
It is furthermore not disputed that the tractor was insured only for the purpose of carrying out agricultural works. The representative of the Insurance Company MrHari Singh Meena on cross-examination merely accepted the suggestion that cutting the earth and levelling the field with earth would be an agricultural work but Respondent 1 himself categorically stated in his claim petition before the Tribunal that the earth had been dug and was being carried in the trolley to the brick kiln. Evidently, the earth was meant to be used only for the purpose of manufacturing bricks. Digging of earth for the purpose of manufacture of bricks indisputably cannot amount to carrying out of the agricultural work.

12. Interpretation of the contracts of insurance in terms of Sections 147 and 149 of the Motor Vehicles Act came up for consideration recently before a Division Bench of this Court in National Insurance Co. Ltd. v. Laxmi NarainDhut
[(2007) 3 SCC 700 : (2007) 2 SCC (Cri) 142 : (2007) 4 Scale
36] wherein it was held : (SCC p. 714, paras 23-24)

“23[24]. As noted above, there is no contractual relation between the third party and the insurer. Because of the statutory intervention in terms of Section 149, the same becomes operative in essence and Section 149 provides complete insulation.

24[25]. In the background of the statutory provisions, one thing is crystal clear i.e. the statute is beneficial one qua the third party. But that benefit cannot be extended to the owner of the offending vehicle. The logic of fake licence has to be considered differently in respect of the third party and in respect of own damage claims.”

It was further observed : (SCC pp. 718-19, paras 33-35)

“33[36]. It is also well settled that to arrive at the intention of the legislation depending on the objects for which the enactment is made, the court can resort to historical, contextual and purposive interpretation leaving textual interpretation aside.

34[37]. Francis Bennion in his book Statutory Interpretation described ‘purposive interpretation’ as under:

‘A purposive construction of an enactment is one which gives effect to the legislative purpose by—

(a) following the literal meaning of the enactment where that meaning is in accordance with the legislative purpose, or

(b) applying a strained meaning where the literal meaning is not in accordance with the legislative purpose.’

35[38]. More often than not, literal interpretation of a statute or a provision of a statute results in absurdity. Therefore, while interpreting statutory provisions, the courts should keep in mind the objectives or purpose for which statute has been enacted. Justice Frankfurter of US Supreme Court in an article titled as ‘Some Reflections on the Reading of Statutes’ (47 Columbia Law Review 527), observed that,
‘legislation has an aim, it seeks to obviate some mischief, to supply an adequacy, to effect a change of policy, to formulate a plan of Government. That aim, that policy is not drawn, like nitrogen, out of the air; it is evidenced in the language of the statutes, as read in the light of other external manifestations of purpose.’ ”
(See also Oriental Insurance Co. Ltd. v. Meena Variyal [(2007) 5 SCC 428 : (2007) 2 SCC (Cri) 527 : (2007) 5 Scale 269] .)
13. However, Respondent 1 is a poor labourer. He had suffered grievous injuries. He had become disabled to a great extent. The amount of compensation awarded in his favour appears to be on a lower side. In the aforementioned situation, although we reject the other contentions of Ms Indu Malhotra, we are inclined to exercise our extraordinary jurisdiction under Article 142 of the Constitution of India so as to direct that the award may be satisfied by the appellant but it would be entitled to realise the same from the owner of the tractor and the trolley where for it would not be necessary for it to initiate any separate proceedings for recovery of the amount as provided for under the Motor Vehicles Act.”

In yet another case called Manager National Insurance Co. Ltd. Vs. Saju P. Paul & Another, (2013) 2 SCC 41 – (DB) dated
03.01.2013 – para 26, the Hon’ble Apex Court has held as follows:-

“26. The pendency of consideration of the above questions by a larger Bench does not mean that the course that was followed in Baljit Kaur [(2004) 2 SCC 1 : 2004 SCC (Cri) 370] and ChallaUpendraRao [(2004) 8 SCC 517 : 2005 SCC (Cri) 357] should not be followed, more so in a peculiar fact situation of this case. In the present case, the accident occurred in 1993. At that time, the claimant was 28 years old. He is now about 48 years. The claimant was a driver on heavy vehicle and due to the accident he has been rendered permanently disabled. He has not been able to get compensation so far due to the stay order passed by this Court. He cannot be compelled to struggle further for recovery of the amount. The Insurance Company has already deposited the entire awarded amount pursuant to the order of this Court passed on 1-8-2011 [National Insurance Co. Ltd. v. Saju P. Paul, SLP (C) No. 20127 of 2011, order dated 18-2011 (SC) wherein it was directed: “Issue notice. Let the entire awarded amount be deposited in this Court within six weeks. On deposit of the aforesaid amount, the same shall be kept in a fixed deposit account initially for a period of six months.”] and the said amount has been invested in a fixed deposit account. Having regard to these peculiar facts of the case in hand, we are satisfied that the claimant (Respondent 1) may be allowed to withdraw the amount deposited by the Insurance Company before this Court along with accrued interest. The Insurance Company (the appellant) thereafter may recover the amount so paid from the owner (Respondent 2 herein). The recovery of the amount by the Insurance Company from the owner shall be made by following the procedure as laid down by this Court in Challa Upendra Rao [(2004) 8 SCC 517 : 2005 SCC (Cri) 357] .”

Thus, the pay and recover is not denied to the victims travelled in the goods vehicle in the above case also.
In yet another decision in Shamanna & Another Vs. Divisional Manager, The Oriental Insurance Co. Ltd. And Others. AIR 2018 SC 3726 = (2018) 9 SCC 650 (No valid driving license), dated 08.08.2018, Parvathaneni larger Bench is referred to and the observation of the Hon’ble Apex Court at Paras 7 to12 are relevant to the issue in hand and hence they are reproduced below:-
“7. As per the decision in Swaran Singh case (goods vehicle) onus is always upon the insurance company to prove that the driver had no valid driving licence and that there was breach of policy conditions. Where the driver did not possess the valid driving licence and there are breach of policy conditions. “pay and recover” can be ordered in case of third party risks. The Tribunal is required to consider as to whether the owner has taken reasonable care to find out as to whether the driving licence produced by the driver, does not . Ltd. v. fulfill the requirements of law or not will have to be determined in each case.
8.The Supreme Court considered the decision of Swaran
Singh case in subsequent decision in National Insurance Co. Ltd. v. LaxmiNarainDhut, 2007(2) R.C.R. (Civil) 345: (2007) 3 SCC 700, wherein this Court held that “the decision in Swaran Singh case has no application to cases other than third party risks and in case of third party risks the insurer has to indemnify the amount and if so advised, to recover the same from the insured”. The same principle was reiterated in PremKumari v. PrahladDev and others, 2008(1) R.C.R.(Civil) 835: (2008) 3 SCC 193.
9. For the sake of completion, we may refer to few judgments where the breach of policy conditions was fundamental and the Supreme Court taking contrary view that the insurance companies were not liable to pay the compensation. In National Insurance Co., Ltd. v. BommithiSubbhayamma and others, 2005(4) R.C.R.(Civil) 829: (2005) 12 SCC 243, the Supreme Court reversed the judgment of Andhra Pradesh High Court in making the insurance company liable for payment of compensation in respect of gratuitous passengers carried in the goods vehicle.
10. In Oriental Insurance Co. Ltd. v. Brij Mohan and others, 2007(3) R.C.R.(Civil) 271: (2007) 7 SCC 56, the claimant was travelling in the trolley attached to tractor carrying earth to brick kiln. It was found that the tractor and the trolley were not used for “agricultural works”, the only purpose for which the tractor was insured, when the claimant sustained the injuries. The Supreme Court though held that the insurance company is not liable to pay compensation, however, invoked the power vested in the Supreme Court under Article 142 of the Constitution of India in directing the insurance company to satisfy the award by paying compensation to the insured/claimant and realise the same from the owner of the tractor.”
(Travelling in a trolley meant for the agricultural purposes is also like travelling in goods vehicles)
11. In the present case, to deny the benefit of ‘pay and recover’, what seems to have substantially weighed with the High Court is the reference to larger Bench made by the two-Judge Bench in National Insurance Co. Ltd. v. Parvathneni and another, 2009 (4) R.C.R. (Civil) 270: (2009) 8 SCC 785 which doubted the correctness of the decisions which in exercise of jurisdiction under Article 142 of the Constitution of India directing insurance company to pay the compensation amount even though insurance company has no liability to pay. In Parvathneni case, the Supreme Court pointed out that Article 142 of the Constitution of India does not cover such type of cases and that “if the insurance company has no liability to pay at all, then, it cannot be compelled by order of the court in exercise of its jurisdiction under Article 142 of the Constitution of India to pay the compensation amount and later on recover it from the owner of the vehicle”. The above reference in Parvathneni case has been disposed of on 17.09.2013 by the three-Judges Bench keeping the questions of law open to be decided in an appropriate case.
12. Since the reference to the larger bench in Parvathneni case has been disposed of by keeping the questions of law open to be decided in an appropriate case, presently the decision in Swaran Singh case followed in LaxmiNarainDhut and other cases hold the field. The award passed by the Tribunal directing the insurance company to pay the compensation amount awarded to the daimants and thereafter, recover the same from the owner of the vehicle in question, is in accordance with the judgment passed by this Court in Swaran Singh and Laxmi Narain Dhut cases. While so, in our view, the High Court ought not to have interfered with the award passed by the Tribunal directing the first respondent to pay and recover from the owner of the vehicle. The impugned judgment of the High Court exonerating the insurance company from its liability and directing the claimants to recover the compensation from the owner of the vehicle is set aside and the award passed by the Tribunal is restored.”
Thus it is clear that the larger Bench by its judgment dated 17.09.2013 which is available has left the question of pay and recover open to be decided in an appropriate case. In view of such an observation insurance company cannot contend that the ‘pay and recover’ is not applicable to the accident occurred while travelling in a goods vehicle relying upon Asha Rani or any other case.
After the above case law in Anu Bhanvara (2020) 20 SCC 632 etc., decided on 09.08.2019 the Hon’ble Apex Court has allowed ‘pay and recover’ even in the case of the travel in goods vehicle available at paras 9 to 12. For our convenience they are quoted below:-
“7. The questions now to be considered by this Court are twofold; firstly, whether the amount of compensation awarded was adequate or not; and secondly, whether the payment of compensation is to be made jointly by the owner and driver of the vehicle, or by the insurer which could thereafter be recovered by the insurer from the owner and driver.
8. Having regard to the respective age of the two claimants and keeping in view that compensation has been awarded on all requisite heads by the High Court, we are of the opinion that no interference is called for with regard to the quantum of compensation awarded to the two claimants.
9. The next question is as to which of the respondents, that is, the owner and driver, or the insurer of the vehicle, would be liable for payment of such compensation. As regard the liability for payment of compensation, it has been contended by the learned counsel for the appellants that since the vehicle was admittedly insured with Respondent 1 insurance company, the principle of pay and recover would be invoked even in case of a gratuitous passenger in a goods vehicle. The insurance company should thus be made liable for the payment of compensation to the appellants and in turn they would have the right to realise/recover the same from the owner and driver of the vehicle. In support of his submission, the learned counsel for the appellants has relied on the following decisions of this Court, namely, Manuara Khatun v. Rajesh Kumar Singh [Manuara Khatun v. Rajesh
Kumar Singh, (2017) 4 SCC 796 : (2017) 2 SCC (Civ) 710 :
(2017) 2 SCC (Cri) 492] , Puttappa v. Rama
Naik [Puttappa v. Rama Naik, 2018 SCC OnLine SC 3496] ; National Insurance Co. Ltd. v. Saju P. Paul [National Insurance Co. Ltd. v. Saju P. Paul, (2013) 2 SCC 41 : (2013) 1
SCC (Civ) 968 : (2013) 1 SCC (Cri) 812 : (2013) 1 SCC (L&S) 399]
; New India Assurance Co. Ltd. v. Vimal Devi [New India Assurance Co. Ltd. v. Vimal Devi, 2010 SCC OnLine SC 49] ; National Insurance Co. Ltd. v. Challa Upendra Rao [National Insurance Co. Ltd. v. Challa Upendra Rao, (2004) 8 SCC 517 : 2005 SCC (Cri) 357] ; New India Assurance Co. Ltd. v. C.M. Jaya [New India Assurance Co. Ltd. v. C.M. Jaya, (2002) 2 SCC 278 : 2002 SCC (Cri) 325] and Amrit Lal Sood v. Kaushalya Devi Thapar [Amrit Lal Sood v. Kaushalya Devi Thapar, (1998) 3 SCC 744] .
10. Per contra, the learned counsel for the respondent insurance company has contended that since the claimants were gratuitous passengers in a goods vehicle, in which case the liability for payment of compensation for death or bodily injury to the passengers of such goods vehicle would not be covered, hence the principle of pay and recover would not apply. It has thus been contended that the order of the High Court is perfectly justified in law and calls for no interference by this Court. In support of her submission, the learned counsel has relied on following decisions, namely, New India Assurance Co. Ltd. v. Asha Rani [New India Assurance Co. Ltd. v. Asha Rani, (2003) 2 SCC 223 : 2003 SCC (Cri) 493] ; National Insurance Co. Ltd. v. Baljit Kaur [National Insurance Co. Ltd. v. Baljit Kaur, (2004) 2 SCC 1 : 2004 SCC (Cri) 370] ; National Insurance Co. Ltd. v. Kaushalaya Devi [National Insurance Co. Ltd. v. Kaushalaya Devi, (2008) 8 SCC 246 : (2008) 3 SCC (Cri) 467] ; National Insurance Co. Ltd. v. Rattani [National Insurance Co. Ltd. v. Rattani, (2009) 2 SCC 75 : (2009) 1 SCC (Civ) 398 : (2009) 1 SCC (Cri) 669] ; National Insurance Co. Ltd. v. Prema Devi [National
Insurance Co. Ltd. v. Prema Devi, (2008) 5 SCC 403 : (2008) 2 SCC (Cri) 627] ; Bharati AXA General Insurance Co. Ltd. v. Aandi [Bharati AXA General Insurance Co. Ltd. v. Aandi, 2018 SCC OnLine Mad 13295 : 2019 ACJ 1975] and Bajaj Allianz General Insurance Co. Ltd. v. Lal Singh [Bajaj Allianz General Insurance Co. Ltd. v. Lal Singh, 2015 SCC OnLine Del 7508] .”
“11. We have heard the learned counsel for the parties and perused the record as well as the various decisions cited by the learned counsel for the parties. The insurance of the vehicle, though as a goods vehicle, is not disputed by the parties. The claimants in the present case are young children who have suffered permanent disability on account of the injuries sustained in the accident. Thus, keeping in view the peculiar facts and circumstances of this case, we are of the considered view that the principle of “pay and recover” should be directed to be invoked in the present case.
12. Accordingly, these appeals are disposed of with the direction that Respondent 1 insurance company shall be liable to pay the awarded compensation to the claimants in both the appeals. However, Respondent 1 insurance company shall have the right to realise the said amount of compensation from Respondents 2 and 3 (driver and owner of the vehicle) in accordance with law.”

Thus, the ‘pay and recover’ is ordered for the victims in goods vehicles also. The Apex Court has held even in 2004 in Swaran Singh dated 05.01.2004 a day before the judgment in Baljit Kaur dated 06.01.2004 that the Insurance Company has to prove that the breach is so fundamental which has caused the accident and the Tribunal is empowered to decide the dispute between the insured and insurer. In view of that the contention of the Insurance Company that the direction for the ‘pay and recover’ given by the Tribunal is wrong is liable to be rejected in limine as it is not the case of the Insurer the very travel in goods vehicle alone is the cause for the accident. Swaran
Sing in declared to held the field in Shammanna reported (2018) 9 SCC 650.
All the above 5 judgments (1) Baljit Kaur reported in (2004) 2 SCC 1, (2) Swaran Singh and Others reported in (2008) 3 SCC 297 (3) Brij Mohan & Others reported in (2007) 7 SCC 56, (4) Saju P.Paul and Another reported in (2013) 2 SCC 41, (5) Anu Bhanvara and Others reported in (2020) 20 SCC 632 do uphold the principle of ‘pay and recover’ for the victims travelled in goods vehicle also and as per the judgment in Shamanna & Others reported in 2018 (9) SCC 650 on
08.08.2018, the pay and recover was left open to be decided in appropriate case by the larger Bench in Parvathneni case reported in (2018) 9 SCC 657 dated 17.09.2013.
The Division Bench Judgment referred to by the Insurer in Bharathi AXA General Insurance Co. Ltd. dated 24.10.2018 has not referred to Parvathneni, Shammanna and Anu Bhanvara and hence it is liable to be ignored in view of the Hon’ble Apex Court Judgments above referred to.
CONCLUSION:-
In case the claimants are poor weavers and the amount awarded is also too small the ‘pay and recover’ can be confirmed following the above law laid down by the Ho’ble Apex Court. The direction for ‘pay and recover’ is absolutely unavoidable when the claimants are very poor and the nature of their injuries has made them immobile and incapable.
At the same time the ‘pay and recover’ need not be ordered for the accident taken place while travelling in a Benz Car or BMW or Audi Car or Land Cruiser (fake license or no license or no permit) as the owner of such car would definitely be financially sound.
That is the reason as to why the Hon’ble Apex Court in Parvathneni case left the question to be decided in appropriate case on 17.09.2013 clarified by the Hon’ble Apex Court in Shamanna and Others dated 08.08.2018. So the contention of the Insurer that the ‘pay and recover’ cannot be at all ordered for the victims travelled in goods vehicle is liable to be rejected in limine as no uniform application of such principle can be adopted in all the cases involving the travel in goods vehicle and also in view of the above five judgments quoted above. Above all the Division Bench Judgment is dated
24.10.2018 and after that only the judgment of the Hon’ble Apex Court dated 01.07.2019 came and the same could not have been considered by our Division Bench at all. Further, the judgment of 3 judges in Parvathneni case reported (2018) 9 SCC 657 dated 17.09.2013 referred to by the Division Bench Judgment of the Hon’ble Apex Court dated 08.08.2018 reported in (2018) 9 SCC 650 in Shamanna case also was not considered.
That apart the Full Bench of our Hon’ble High Court in Nagammal case reported in 2009 (1) CTC 1 at paras 31(iv) to 31(vii) of the judgment has held as follows:-
“31. Thus from an analysis of the statutory provisions as explained by the Supreme Court in various decisions rendered from time to time, the following picture emerges:
(iv) Since there is no statutory requirement to cover the liability in respect of a passenger in a goods vehicle, the principle of “pay and recover” as statutorily recognised in Section 149(4) and Section 149(5), is not applicable ipso facto to such cases and, therefore, ordinarily the Court is not expected to issue such a direction to the Insurance Company to pay to the claimant and thereafter recover from the owner.
(v) Where, by relying upon the decision of the Supreme Court in Satpal Singh’s case, either expressly or even by implication, there has been a direction by the Trial Court to the Insurance Company to pay, the Appellate Court is obviously required to consider as to whether such direction should be set aside in its entirety and the liability should be fastened only on the driver and the owner or whether the Insurance Company should be directed to comply with the direction regarding payment to the claimant and recover thereafter from the owner.
(vi) No such direction can be issued by any Trial Court to the Insurance Company to pay and recover relating to liability in respect of a passenger travelling in a goods vehicle after the decision in Baljit Kaur’s case merely because the date of accident was before such decision. The date of the accident is immaterial. Since the law has been specifically clarified, no Trial Court is expected to decide contrary to such decision.
(vii) Where, however, the matter has already been decided by the Trial Court before the decision in Baljit Kaur’s case, it would be in the discretion of the Appellate Court, depending upon the facts and circumstances of the case, whether the doctrine of “pay and recover” should be applied or as to whether the claimant would be left to recover the amount from the person liable i.e., the driver or the owner, as the case may be. [Para 31]”
32. With the above clarifications, the reference is answered. The learned Single Judge has already categorically held that the claimant was a passenger in a goods vehicle and the contention that he was the owner of the goods travelling in the goods vehicle has not been accepted. The learned Single Judge is now required to consider as to whether in the facts and circumstances of the case, the doctrine of “pay and recover” can be applied even though the liability in respect of a person, who was travelling in a goods vehicle, was not statutorily required to be covered under the policy.”
From the above Full bench Judgment it is clear that ‘pay and recover’ can be ordered in the appropriate case after taking note of the circumstances and the same cannot be ordered ordinarily. The date of the Full Bench decision is 23.12.2008 and the Division Bench decision is 24.10.2018. But the Division Bench at para 46 without referring to the above Full Bench Judgment though it has referred to the same in other place has held as follows:-
“46. The next decision relied upon by Mr.N.Vijayaraghavan in support of his contention that this Court has ample power to direct the Insurance Company to pay the compensation with liberty to recover the same even in respect of a gratuitous passenger in a goods vehicle is National Insurance Company Ltd., Vs. Saju P. Paul reported in 2013 (2) SCC 41. There again the Hon’ble Supreme Court held that the High court was not right in directing the Insurance Company to pay the compensation. In fact, the Hon’ble Supreme Court while dealing with the liability of the Insurance Company to pay the compensation for a spare driver who was travelling in a goods vehicle observed as follows:-
“17. The High Court misconstrued the proviso following sub- Section (1) of Section 147 of the 1988 Act. What is contemplated by the proviso to Section 147(1) is that the policy shall not be required to cover liability in respect of death or bodily injury sustained by an employee arising out of and in the course of his employment other than a liability arising under the Workmen’s Compensation Act, 1923. The claimant was admittedly not driving the vehicle nor he was engaged in driving the said vehicle. Merely because he was travelling in the cabin would not make his case different from any other gratuitous passenger.

18. The impugned judgment is founded on a misconstruction of Section 147. The High Court was wrong in holding that the Insurance Company shall be liable to indemnify the owner of the vehicle and pay the compensation to the claimant as directed in the award by the Tribunal.”

However as already discussed the Hon’ble Apex Court in Parvathneni case Shamanna and Anu Bhanvara has clarified the issue regarding the ‘pay and recover’ and followed Swaran Singh by declaring that it holds the field even as on that date on 08.08.2018.
In view of all it is not fair on the part of the Insurer to deny even the ‘Pay and Recover’ ordered by the Courts for the victims travelled in the ‘Goods Vehicle’ when such a travel is totally unavoidable in the countries like India where there is no transport facility or no frequent transport facility at all in the rural areas in which more than 75% of the population are living. It is always open to the Insurer to realize the reality and accordingly collect the premium too when the good vehicles are registered instead of denying the same to the poor victims thrown on the road on accident like animals with the loss of their bodily parts, bones, flesh and limbs with the abundant bleeding of blood soaking the road simply for the reason that they have chosen the goods vehicle unavoidably.

Dated at Chennai on this 7th day of July 2023

Witten By
R. Singgaravelan, Senior Advocate