In a judgment pronounced on October 29, 2025, the Supreme Court dismissed an appeal filed by K. Nagendra, the owner of a bus involved in a fatal road accident in Channapatna, Karnataka. The Court upheld the Karnataka High Court’s order applying the “pay and recover” principle-directing the insurance company to first compensate the victims’ family and then recover the amount from the bus owner.
Background
The case arose from a 2014 road accident that claimed the life of Srinivasa alias Murthy, who was struck by a bus driven rashly and negligently. His dependents approached the Motor Accident Claims Tribunal (MACT) seeking ₹50 lakh in compensation, asserting he was the family’s sole breadwinner and earned ₹15,000 per month from a small business.
The tribunal initially awarded ₹18.86 lakh with 6% annual interest, taking his notional income at ₹8,000 per month. Dissatisfied, the deceased’s family appealed for enhancement, while the insurance company contested liability, arguing that the bus was operating outside its permitted route.
In 2019, the Karnataka High Court reassessed the deceased’s income and raised the compensation to ₹31.84 lakh, but agreed that the bus had deviated from its approved Bengaluru–Mysuru route. The court ordered the insurer to “pay and recover” to compensate the victims first and reclaim the amount from the owner.
Court’s Observations
A Bench of Justice Sanjay Karol and Justice Prashant Kumar Mishra examined whether the deviation from the bus route invalidated the insurance company’s liability. The judges reviewed multiple precedents, including National Insurance Co. Ltd. v. Swaran Singh (2004) and Amrit Paul v. TATA AIG (2018), which laid down the contours of the pay and recover principle.
“The purpose of an insurance policy is to protect the victim from being deprived of compensation due to technicalities,” the Bench observed. “To deny the dependents relief merely because the accident occurred outside the permitted route would be offensive to justice.”
At the same time, the Court balanced this view by reaffirming that insurers cannot be burdened with liabilities that fall beyond the agreed terms. “The contract defines the four corners within which an insurance policy operates. To compel the insurer to pay for risks outside this scope would be equally unfair,” Justice Karol noted.
Decision
Concluding the case, the Supreme Court upheld the High Court’s ruling and confirmed that the pay and recover principle rightly applied. The insurer must satisfy the compensation award and then recover the amount from the bus owner, K. Nagendra.
The Bench stated, “Balancing the rights of the victims with those of the insurer, we find no reason to interfere with the High Court’s order.” The appeals were dismissed without costs.
Case: K. Nagendra vs The New India Insurance Co. Ltd. & Others (2025)
Case Type: Civil Appeal (arising out of SLP (C) Nos. 7139–7140 of 2023)
Court: Supreme Court of India, Civil Appellate Jurisdiction
Bench: Justice Sanjay Karol and Justice Prashant Kumar Mishra
Date of Judgment: October 29, 2025