The Supreme Court on Tuesday ordered that the insurance company in a Chhattisgarh road accident case must first pay compensation to the victim’s family and then recover the amount from the truck owner. The bench of Justices K. Vinod Chandran and N.V. Anjaria gave relief to appellant Rama Bai, mother of the deceased, by applying the “pay and recover” principle even though the driver lacked a valid licence at the time of the fatal mishap.
Background
The case arose from a tragic collision on 13 October 2011 near Raipur. Nand Kumar, a young truck conductor, died when the vehicle he was travelling in hit a tractor-trolley. The local Motor Accident Claims Tribunal had initially granted his parents Rs 3 lakh compensation, fixing liability on the truck’s driver and owner after finding the driver’s licence had expired. The Chhattisgarh High Court later increased the amount to Rs 5.33 lakh with 7% annual interest but kept the insurance company out of the payment loop, citing the absence of a valid licence.
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Court’s Observations
During arguments, counsel for Rama Bai urged the apex court to enforce the “pay and recover” doctrine. He relied on earlier Supreme Court rulings such as Shamanna vs Oriental Insurance and Parminder Singh vs New India Assurance, where insurers were asked to pay victims first despite technical breaches, and then reclaim the money from the vehicle owner.
The insurance company countered by citing later judgments questioning the legality of that doctrine, pointing out that if a driver had no licence, the policy was breached and the insurer should not pay at all.
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The bench examined a string of precedents. Justice Anjaria noted, “In a series of decisions, this Court has applied the principle to protect innocent claimants. It is only proper that the insurer satisfy the award and recover the amount from the insured-owner.”
The judges observed that the driver’s licence had indeed lapsed between June 2010 and November 2011, proving he was unlicensed on the accident date. Yet, they stressed that victims should not suffer for procedural lapses between the owner and the insurer.
Decision
Allowing the appeal, the Supreme Court ordered the insurance company to immediately release the enhanced compensation of Rs 5.33 lakh with interest to Rama Bai. “The insurer shall be entitled to recover the same from the owner of the vehicle,” the court ruled, bringing the long legal tussle to a close.
Case Title: Rama Bai vs. Amit Minerals & Others – Supreme Court on Pay-and-Recover Principle
Decision Date: 24 September 2025
