FAO-744-2005 (O&M) - 1- IN THE HIGH COURT OF PUNJAB & HARYANA AT CHANDIGARH 284 FAO-744-2005 (O&M) Date of decision: 09.07.2026 SITA RAM ....Appellant Versus GURMUKH SINGH & ORS. ...Respondents CORAM: HON'BLE MR. JUSTICE YASHVIR SINGH RATHOR Present : Mr. Sandeep Kotla, Advocate for the appellant. None for respondent No.2. Mr. Vinod Gupta, Advocate for Insurance Company. YASHVIR SINGH RATHOR. J.(Oral) IOIN-1-FAO-744-2005 Registry has put up this note for effecting service of respondent No.1 and to brought on record the LRs of respondent No.2. As per office report, Mr. Atul Lakhanpal, Advocate representing respondent No.2 has been informed through E-mail but no one has appeared on behalf of respondent No.2. This is a petition under Section 163-A of Motor Vehicles Act and the presence of driver is not essential for adjudication of a petition/appeal under Section 163-A of Motor Vehicles Act, as it is only the owner and insurer who are liable to pay compensation under this provision and there is thus no necessity to issue notice to respondent No.1. Accordingly, IOIN stands disposed of and the main case is taken on Board today itself. FAO-744-2005 1. This appeal has been instituted by claimant against the Award dated 16.08.2004 passed by MACT, Fatehabad (for short “Tribunal”) for enhancement AMANDEEP GOSAIN 2026.07.10 17:04 I attest to the accuracy and integrity of this order/judgment FAO-744-2005 (O&M) - 2- of compensation awarded in MACT Case No.92 of 2001 in a petition under Section 163-A of Motor Vehicles Act, 1988 vide which a sum of Rs.1,44,400 has been awarded as compensation to the claimant/appellant alongwith interest at the rate of 9% per annum due to injuries suffered by him in a motor vehicular accident on account of use of vehicle bearing registration No.HR-39/5172 (for short ‘offending vehicle’), owned by respondent No.2 and insured with respondent No.3. 2. From the pleadings of parties, following issues were framed:- “1. Whether the petitioner received injuries in the accident arisen out of the use of three-wheeler bearing registration No.HR-39/5172? OPP. 2. If issue No.1 is proved, to what amount of compensation the petitioner is entitled? 3. Who is liable for payment of compensation?OP parties. 4. Whether respondent No.1 was not holding a valid and effective driving licence at the time of accident, if so to what effect? OPR 5. Relief.” 3. Thereafter, the parties led evidence in support of their case. 4. After hearing the parties and going through the material on the file, learned Tribunal awarded a sum of Rs.1,44,400/- as compensation to the claimant, on account of injuries suffered by him along with interest @ 9% per annum from the date of filing of claim petition till realization, payable by respondents No.1 and 2, jointly and severally. However, insurance company was exonerated of its liability on the ground that the insured has violated the terms and conditions of the Insurance policy by carrying passengers in the goods vehicle and since claimant was a gratuitous passenger, the insurance company was not liable to pay AMANDEEP GOSAIN 2026.07.10 17:04 I attest to the accuracy and integrity of this order/judgment FAO-744-2005 (O&M) - 3- compensation. 5. Feeling aggrieved, the appeal in hand has been preferred. The material on file has been perused and parties have been heard. 6. The only issue required to be determined in the present appeal relates to the assessment of compensation. Therefore, the entire facts regarding the manner of the accident are not required to be reproduced in detail, as Tribunal has already held under issue No.1 that the claimant had suffered injuries in the accident on account of use of vehicle bearing No.HR-39/5172, owned by respondent No.2 and insured with respondent No.3. However, liability has been fastended upon the owner and the Insurance Company has been exonerated. No appeal or cross-objections have been filed by respondents, challenging the said finding and accordingly finding on issue No.1 is not required to be interfered with and the same is affirmed. 7. It is pertinent to mention that the record of the present appeal and the Tribunal has got burnt in a fire incident in the High Court Registry and the present appeal has to be decided on the basis of the facts and evidence discussed by the Tribunal in the impugned award. 8. At the very outset, learned counsel for the appellant stated that he does not press the appeal on merits for enhancement of compensation. Learned counsel contends that the insurance company has been wrongly exonerated even to pay compensation to the claimant who is a third party and the Tribunal should have directed the insurance company to pay compensation to the claimant with a right to recover the same from the insured/owner, even if the insured has violated the terms and conditions of the insurance policy by carrying gratuitous passengers AMANDEEP GOSAIN 2026.07.10 17:04 I attest to the accuracy and integrity of this order/judgment FAO-744-2005 (O&M) - 4- in the goods vehicle. Learned counsel contends that Award be modified to that effect. 10. On the other hand, learned counsel for insurance company has argued that since the owner was carrying gratuitous passengers in the goods vehicle, insurance company is not liable to indemnify the insured and the principle of pay and recover too cannot be pressed into service, in case of carrying of gratuitous passengers and he prayed that the appeal in hand be dismissed. 11. Hon’ble Supreme Court in 2025 live law (SC) 9 ICICI Lombard General Insurance Co. Ltd. v. Rajani Sahoo & Ors. has held that even where there is a breach of Insurance condition (such as overloading or carrying gratuitous passengers), the insurer can be directed to satisfy the Award with the liberty to recover the same from the owner of the vehicle/insured. The Insurance Company cannot evade its obligation to compensate victims of motor vehicle accident cases, even when there is a breach of policy condition but insurers retain the right to recover the compensation amount from the owner thereafter and the appeal was allowed by the Hon’ble Supreme Court while applying the principle of “pay and recover”. To the same effect is the law laid down in (2004) 2 SCC 1 National Insurance Co. Ltd. V. Baljit Kaur and (2020)20 SCC 632, Anu Bhanvara Vs. IFFCO Tokio General Insurance Co. Ltd. 12. In the present case also, offending vehicle was a goods vehicle in which the passengers were being carried and there was thus violation of terms and conditions of the insurance policy and insurance company is certainly not liable to indemnify the insured. However, it is liable towards third party and appellant/claimant is a victim of the motor vehicle accident and insurance AMANDEEP GOSAIN 2026.07.10 17:04 I attest to the accuracy and integrity of this order/judgment FAO-744-2005 (O&M) - 5- company is thus liable to pay compensation to him but shall have a right to recover the deposited amount from the insured/owner, without filing a separate suit alongwith interest @ 6% per annum from the date of deposit till realization. 13. As a result of afore-said discussion, the present appeal is partly allowed and the Insurance Company is directed to pay compensation of Rs.1,44,400/- as awarded by the Tribunal alongwith interest @ 9% per annum, from the date of filing of claim petition i.e. 29.11.2001, till realization. However, Insurance Company shall first satisfy the award and pay the compensation as already ordered by the Tribunal and thereafter, it shall have a right to recover the awarded amount from the owner/insured alongwith interest @ 6% per annum from the date of deposit till realization without filing a separate suit. 14. Registry is directed to email the authenticated copy of the award to the respondent Insurance Company in terms of directions issued by the Hon’ble Supreme Court in Writ Petition (Civil) No.534 of 2020 titled Bajaj Allianz General Insurance Company Versus Union of India and others, decided on 16.03.2021 and Insurance Company shall comply with the directions as issued under Clause (F) of the said judgment. 15. Pending miscellaneous application(s), if any, shall also stand disposed of. (YASHVIR SINGH RATHOR) 09.07.2026 JUDGE amandeep Whether speaking/reasoned. : Yes/No Whether Reportable. : Yes/No AMANDEEP GOSAIN 2026.07.10 17:04 I attest to the accuracy and integrity of this order/judgment