1 IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA FAO No.62 of 2022 Date of Decision : 24.07.2026 Labh Singh …… Appellant Versus National Insurance Company Limited and others ……Respondents Coram: The Hon’ble Mr. Justice Bipin Chander Negi, Judge Whether approved for reporting?1 For the Appellant : Mr. Sardavinder Goyal and Mr. Sarwinder Goel, Advocates, through video conferencing. For the Respondents : Mr. Deepak Bhasin, Senior Advocate with Mr. Sambhav Bhasin, Advocate, for respondent No.1. Mr. Balvinder Singh, Advocate, vice Mr. Naresh Kaul, Advocate, for respondent No.2. Bipin Chander Negi, Judge (oral) By way of the present appeal, the appellant has challenged the impugned award dated 04.03.2014, passed by the learned Motor Accident Claims Tribunal-1, Kangra at Dharamshala, Himachal Pradesh. 2. The appellant in the case at hand is the registered owner of the ill-fated vehicle. The accident in the case at hand is stated to have taken place at Rait, situated in Tehsil Shahpur, District Kangra on 15.07.2003 at about 8:50 a.m. The claimant in the 1 Whether reporters of Local Papers may be allowed to see the judgment? 2 case at hand (respondent No. 4 herein) is stated to have sustained injuries in the said accident, caused by the Driver (respondent No. 3 herein) of the truck bearing registration No.PB-10AE-9991. The claim petition was instituted on 16.11.2004. 3. Response to the claim petition was filed by the Insurance Company, and the same is dated 31.05.2007. In the response so filed, an objection has been taken at the very outset, as a preliminary objection qua the non-supply of the documents like Insurance Policy, Registration Certificate, Route Permit, and Fitness Certificate of the vehicle involved in the accident, i.e., vehicle bearing No. PB-10AE-9991, and also the Driving Licence of the Driver (respondent No. 3). Further, the petition was stated to be bad for non-joinder of necessary parties, as the registered owner had not been impleaded. 4. Besides the aforesaid, preliminary objections were taken to the effect that the Driver in question (respondent No. 3 both before the Tribunal as well as in the present appeal) was not holding a valid Driving Licence, and the vehicle did not have a valid Registration Certificate, Fitness Certificate, and Route Permit at the time of the accident in the case at hand. 3 5. From a perusal of the record of the Motor Accident Claims Tribunal, it is evident that vide order dated 20.09.2007, the present appellant/registered owner had been impleaded as respondent No. 4 therein. Subsequent thereto, vide order dated 12.03.2008, the present appellant had been proceeded against ex- parte. 6. In the aforesaid facts and attending circumstances, the Insurance Company, in the case at hand, had preferred an application under Section 170 of the Motor Vehicles Act, seeking permission to contest the petition on the grounds available to the owner of the offending vehicle, since the owner of the offending vehicle had been proceeded against ex-parte vide order dated 12.03.2008. 7. Response thereto was filed both by the claimant and by respondents No. 2 & 3. In the response filed to the application by respondents No. 2 & 3, it has categorically been admitted that the vehicle was purchased by respondent No. 2, however, the same could not be transferred in the name of respondent No. 2. 8. To the response so filed, replication was filed by the Insurance Company, wherein it was categorically asserted that respondent No. 4 before the MACT was the registered owner as per the Registration Certificate, and the insurance had also been taken 4 out in the name of Labh Singh (present appellant/ respondent No. 4 before the MACT). It was further mentioned in the application that despite being served, the said individual had been proceeded against ex-parte on 12.03.2008. 9. The said application was allowed vide order dated 05.07.2008, and the Insurance Company had been permitted to contest the claim petition on grounds available to the owner of the offending vehicle. 10. Besides the Insurance Company, respondent Nos. 2 and 3 (respondent Nos. 2 and 3 before the MACT, and before this Court in the appeal) had filed a separate reply. The reply in terms of order dated 08.12.2006 was taken on record by the MACT. In terms of the order dated 08.12.2006, the matter was posted for supply of documents on 11.01.2007. On 05.04.2007, copies of Insurance Certificate and Route Permit were supplied to the Insurance Company by respondents No. 2 and 3. 11. In the reply so filed, an objection was taken with respect to the maintainability of the claim petition. Other than the aforesaid, locus standi of the claimant to file the claim petition before the Tribunal was also assailed. The accident in question was totally denied. A categoric defence was taken by respondents No. 2 & 3 to the effect that while the vehicle was passing, a stone had come 5 under the tyre of the vehicle which had skidded towards the claimant and had hit the claimant. The injury caused to the claimant was alleged to have been caused by such stone. 12. Rejoinder to the reply filed by respondent Nos. 2 & 3 was also filed, in which contents of the claim petition were reiterated and those of the contrary were denied. It was categorically re- asserted that the accident had taken place on the said date and the injury had been caused to the claimant. 13. From a perusal of the record, it is evident that vide order dated 23.04.2011, respondent No. 3 before the MACT (respondent No. 3 in the present appeal) had also been proceeded against ex- parte before the Motor Accident Claims Tribunal. Issues were framed on 21.10.2011. The same have been reproduced in the impugned judgment. 14. Post framing of issues, both parties led evidence. Insofar as the claim of present respondent No.4/claimant before the MACT is concerned, besides examining herself, three other witnesses were got examined. One of the witnesses examined was Ms. Pamila Kumari (PW-3), Police Official, who had placed on record the FIR bearing No. 119/2003, under Sections 279, 337 of the Indian Penal Code, dated 15.07.2003, qua the incident, wherein on account of the rash and negligent driving of the offending vehicle 6 in the case at hand the claimant had sustained injuries. Other than the aforesaid, Dr. Sushil Kumar, Chief Medical Officer (CMO), had appeared as PW-4 on behalf of the claimant. 15. Respondent No. 3 before the Motor Accidents Claims Tribunal had filed an application for appointment of a Local Commissioner for recording the statement of dealing Clerk from the Office of the Secretary, RTO Patiala. The said application had been moved in the backdrop of the fact that the aforesaid witness had been summoned, but the summons could not be served. The said prayer was allowed vide order dated 23.09.2013. One Shri Nitin Paul, Advocate, was appointed as a Local Commissioner to visit RTO Patiala and record the statement of the dealing Clerk of the Office of the Secretary, RTO Patiala, in the presence of the counsels. 16. Shri Dharamjeet Singh, Clerk, Office of the Secretary, Regional Transport Authority, Pathankot, Punjab, was examined on commission. He stated that the Route Permit in the case at hand (Exhibit R-1), qua truck No. PB-10AE-9991, was valid for the period 21.04.2003 to 20.10.2003 for the States of Punjab, Haryana, Delhi, Uttar Pradesh, Bihar, and West Bengal. 17. Besides the aforesaid, the Insurance Company (respondent No. 1 before the MACT and before this Court) had filed 7 an application under Order 26 Rule 4 read with Order 11 Rule 1 of the Civil Procedure Code for issuance of interrogatories on 14.11.2013 in order to record the statement of the Licencing Clerk, Office of the District Transport Officer, East Champaran, Motihari, Bihar. The said application was allowed. Reference along with interrogatories was sent to the District Judge, Motihari, Bihar, with a request to get the statement of the Licencing Clerk, Office of the District Transport Officer, East Champaran, Motihari, Bihar, recorded by appointing a Local Commissioner. 18. The Driving Licence of respondent No. 3 had been placed on record as Exhibit RW-1/A. The statement of the said official was recorded on commission through the District Judge, East Champaran, Motihari, Bihar. In his statement, he categorically stated that the Driving Licence (Exhibit RW-1/A) had not been issued by the said office. The statement is placed on record as Exhibit R-7 and the report of the Local Commissioner has been placed on record as Exhibit R-6. 19. Post appreciation of evidence, the claimant was held entitled for a compensation to the tune of Rs. 2,30,000/- on account of rash and negligent driving of the truck bearing No.PB-10AE-9991. In so far as the Driving Licence in the case at hand is concerned, the same was found to be fake. The vehicle in question was held to be 8 not having any Route Permit to drive within the territory of Himachal Pradesh. In the aforesaid facts and attending circumstances, liability was fastened on the Insurance Company with the right to pay and recover the same from the present appellant and respondent No. 3 before this Court. 20. In so far as the appellant is concerned, only three contentions have been raised on behalf of the appellant. The first and the foremost contention raised is that the vehicle in the case at hand stood sold by the present appellant to respondent No. 2. The same has been admitted in the Sapurdari application filed before the appropriate Court for release of the vehicle. 21. In this respect, attention of the Court has been invited to the relevant record which has been placed on record by RW-1 Sunita Sharma, posted as the Record Keeper in the Court of Civil Judge (Senior Division), Kangra at Dharamshala. The said witness had produced the record of Criminal Case No. 60-II/2003, titled as State of Himachal Pradesh vs. Umesh Prasad Yadav. 22. The other contention raised is with respect to the fake Driving Licence in the case at hand. Contention raised is that the Insurance Company was required to establish that despite being aware of the fake Driving Licence, the services of the Driver in the case at hand were engaged. Having not done so, it cannot be said 9 that there was a breach of the insurance policy in the case at hand by the insured (owner) & hence the Insurance Company cannot be absolved to pay compensation on this account. 23. In so far as the Route Permit is concerned, a faint attempt has been made for showing that there was a valid permit to drive the vehicle in the case at hand within the State of Himachal Pradesh. 24. Per contra, learned counsel appearing on behalf of the Insurance Company has pointed out that in so far as the Motor Vehicles Act, 1988 is concerned, for transfer of ownership, there exists a specific provision, namely Section 50 of the Act. Post transfer, in accordance with the provision, the transferee/new owner can apply for transfer of insurance policy in terms of Section 157 of the Motor Vehicles Act. It is contended that where a particular provision prescribes a particular way of doing a particular thing, then the same is mandatory and is mandatorily required to be followed. 25. In so far as the question of Driving Licence is concerned, learned counsel appearing on behalf of the Insurance Company has pleaded that mere proof of the fact that the Driving Licence was fake in the case at hand is sufficient to fasten the liability on the Insurance Company. 10 26. In so far as the Route Permit is concerned, reliance has been placed upon the decision of the Hon’ble Apex Court in National Insurance Co. Ltd. vs. Challa Upendra Rao and others, (2004) 8 SCC 517; Amrit Paul Singh and Another vs. Tata AIG General Insurance Company Limited and Others, (2018) 7 SCC 558 (paragraphs 10, 11, and 14), and K. Nagendra vs. New India Insurance Co. Ltd. and others, 2025 SCC OnLine 2297, to point out that non-existence of a route permit would be an infraction of the insurance contract. 27. Insofar as the first contention raised by the appellant qua sale of the vehicle, in the case at hand, to respondent No.2 is concerned, suffice it to state that in the application preferred under Section 170 of the Motor Vehicles Act by the Insurance Company, wherein permission to contest the claim petition on the grounds available to the owner of the offending vehicle were concerned, since the owner of the vehicle had been proceeded against ex parte, a response there to had been filed by respondents No.2 and 3. In the response filed, it had been categorically admitted that the vehicle had been purchased by respondent No.2, however, the same could not be transferred in the name of respondent No.2. 28. For a legal and valid transfer of the vehicle, in the case at hand, provisions of Section 50 read with Section 157 of the Motor 11 Vehicles Act had to be complied with mandatorily. In the absence of such compliance, it is the registered owner of the vehicle who is liable to pay the compensation on account of the death or bodily injury caused in an accident by the motor vehicle qua which it is claimed that it has been sold but the registration still exists in the name of the alleged seller. In the case at hand, at the time of the accident, the registered owner was the present appellant (respondent No.4 before he MACT). Hence, the contention of the appellant that the offending vehicle, in the case at hand, which had been impounded by the police post accident, had been handed over to respondent No.2 on an order passed on a Supurdari application filed before the appropriate Court for release of the vehicle by respondent No.2, is of no avail. Reference in this respect can be gainfully made to the decision of the Hon’ble Apex Court, in Prakash Chand Daga vs. Saveta Sharma and others, 2019 (2) SCC 747. Relevant extract whereof reads as under:- “5. It is true that in terms of Section 50 of the Act, the transfer of a vehicle ought to be registered within 30 days of the sale. Section 50(1) of the Act obliges the transferor to report the fact of transfer within 14 days of the transfer. In case the vehicle is sold outside State, the period within which the transfer ought to be reported gets extended. On the other hand, the transferee is also obliged to report the transfer to the registering authority within whose jurisdiction the transferee has the residence or place of business where the vehicle is normally kept. Section 50 thus prescribes 12 timelines within which the transferor and the transferee are required to report the factum of transfer. As per Sub-Section 3 of said Section 50, if there be failure to report the fact of transfer, fine could be imposed and an action under Section 177 could Prakash Chand Daga vs. Saveta Sharma & Ors. thereafter be taken if there is failure to pay the amount of fine. These timelines and obligations are only to facilitate the reporting of the transfer. It is not as if that if an accident occurs within the period prescribed for reporting said transfer, the transferor is absolved of the liability. 6. Chapter XII of the Act deals with Claims Tribunals and as to how applications for compensation are to be preferred and dealt with. While considering such claims, the Claims Tribunal, in case of an accident is required to specify the amount which shall be paid by the insurer or owner or driver of the vehicle involved in the accident or whether such amount be paid by all or any of them, as the case may be. It is well settled that for the purposes of fixing such liability the concept of ownership has to be understood in terms of specific definition of ‘owner’ as defined in Section 2(30) of the Act. 7. In Pushpa alias Leela and Ors. Vs. Shakuntala and Ors. 2 the vehicle in question belonged to one Jitender Gupta who was its registered owner. He sold said vehicle to one Salig Ram on 02.02.1993 and gave its possession to the transferee. Despite said sale, the change of ownership was not entered in the Certificate of Registration. The earlier insurance policy having expired, the transferee took out fresh insurance policy in the name of original owner Jitender Gupta. In an accident that took place on 07.05.1994 two persons lost 2 (2011)2 SCC 240 Prakash Chand Daga vs. Saveta Sharma & Ors. their lives. The heirs and legal representatives lodged separate claims and an issue arose as to who was liable as owner. The submissions that Jitender Gupta, the registered owner had no control over the vehicle and the possession and control of the vehicle was in the 13 hands of the transferee and as such no liability could be fastened on the transferor were rejected by this Court. It was observed in para 11 as under: “11. It is undeniable that notwithstanding the sale of the vehicle neither the transferor Jitender Gupta nor the transferee Salig Ram took any step for the change of the name of the owner in the certificate of registration of the vehicle. In view of this omission Jitender Gupta must be deemed to continue as the owner of the vehicle for the purposes of the Act, even though under the civil law he ceased to be its owner after its sale on 2.2.1993.” 8. In the decision in Naveen Kumar (supra) the legal position was adverted to and this Court observed as under: “13. The consistent thread of reasoning which emerges from the above decisions is that in view of the definition of the expression “owner” in Section 2(30), it is the person in whose name the motor vehicle stands registered who, for the purposes of the Act, would be treated as the “owner”. However, where a person is a minor, the guardian of the minor would be treated as the owner. Where a motor vehicle is subject to an agreement of hire purchase, lease or hypothecation, the person in possession of the vehicle under that agreement is treated as the owner. In a situation such as the present where the registered owner has purported to transfer the vehicle but Prakash Chand Daga vs. Saveta Sharma & Ors. continues to be reflected in the records of the Registering Authority as the owner of the vehicle, he would not stand absolved of liability. Parliament has consciously introduced the definition of the expression “owner” in Section 2(30), making a departure from the provisions of Section 2(19) in the 14 earlier 1939 Act. The principle underlying the provisions of Section 2(30) is that the victim of a motor accident or, in the case of a death, the legal heirs of the deceased victim should not be left in a state of uncertainty. A claimant for compensation ought not to be burdened with following a trail of successive transfers, which are not registered with the Registering Authority. To hold otherwise would be to defeat the salutary object and purpose of the Act. Hence, the interpretation to be placed must facilitate the fulfilment of the object of the law. In the present case, the first respondent was the “owner” of the vehicle involved in the accident within the meaning of Section 2(30). The liability to pay compensation stands fastened upon him. Admittedly, the vehicle was uninsured. The High Court has proceeded upon a misconstruction of the judgments of this Court in Reshma (2015)3 SCC 679 and Purnya Kala Devi (2014) 14 SCC 142. 14. The submission of the petitioner is that a failure to intimate the transfer will only result in a fine under Section 50(3) but will not invalidate the transfer of the vehicle. In T.V. Jose (2001)8 SCC 748, this Court observed that there can be transfer of title by payment of consideration and delivery of the car. But for the purposes of the Act, the person whose name is reflected in the records of the Registering Authority is the owner. The owner within the meaning of Section 2(30) is liable to compensate. The mandate of the law must be fulfilled.” 9. The law is thus well settled and can be summarised: - 15 4. Even though in law there would be a transfer of ownership of the vehicle, that, by itself, would not absolve the party, in whose name the vehicle stands in RTO records, from liability to a third person … … … Merely because the vehicle was transferred does not mean that such registered owner stands absolved of his liability to a third person. So long as his name continues in RTO records, he remains liable to a third person.” 29. Insofar as the second contention raised with respect to the fake Driving Licence is concerned, it would be appropriate to state that a contract of insurance is entered into between the Insurance Company and the owner (insured). A fundamental breach of the insurance contract can be only made by either of the parties entering into the contract. A Driver engaged to drive the offending vehicle qua which there exists an insurance, not being a party to the contract of insurance cannot breach the insurance contract. Hence, once it is alleged that the Driving Licence of the Driver engaged to drive the offending vehicle which stood insured with the Insurance Company had a fake licence that in itself would not be sufficient to breach the contract entered into between the Insurance Company and the owner (insured). The Insurance Company in such a situation would have to establish that the services of the Driver had been engaged by the insured (owner) despite being aware of the fact that Driving Licence of the Driver so 16 engaged was fake. Therefore, in the case at hand, once it had been established by the evidence on record that the Transport Authority, East Champaran, Motihari, Bihar alleged to have issued the Driving Licence (Ex.PW-1/A) to respondent No.3, had not issued the said licence, it was incumbent upon the Insurance Company to establish that the factum of the licence being fake, was known to the owner (insurer) despite being aware of the same, the owner (insurer) still engaged the services of the Driver, i.e. respondent No.3. For at the time of engaging the services of the Driver, the owner is not required to examine the antecedents of the driving licence shown by the driver prior to his engagement. In view of the aforesaid, the contention raised by the appellant has force and, therefore, it is accepted. (See Skandia Insurance Co. Limited vs. Kokilaben Chandravadan and others, 1987 (2) SCC 654, paras 12 to 14) 30. I have perused the Route Permit (Ex.R-1) placed on record qua truck bearing No.PB-10AE-9991. From a perusal of the same, it is evident that the same had been issued for the period w.e.f. 21.04.2003 to 20.10.2003 for the States of Punjab, Haryana, Delhi, Uttar Pradesh, Bihar, and West Bengal. Hence, the same was being plied within the territory of Himachal Pradesh without any valid Route Permit. 17 31 In this regard, reference can gainfully be made to the decision of the Hon’ble Apex Court in National Insurance Co. Ltd. vs. Challa Upendra Rao and others, (2004) 8 SCC 517. The relevant extract, whereof, reads as follows:- “High Court was of the view that since there was no permit, the question of violation of any condition thereof does not arise. The view is clearly fallacious. A person without permit to ply a vehicle cannot be placed at a better pedestal vis-`-vis one who has a permit, but has violated any condition thereof. Plying of a vehicle without a permit is an infraction. Therefore, in terms of Section 149(2) defence is available to the insurer on that aspect. The acceptability of the stand is a matter of adjudication. The question of policy being operative had no relevance for the issue regarding liability of insurer. High Court was, therefore, not justified in holding the insurer liable.” 32. Besides the aforesaid, reference can also be made to the decision of the Hon’ble Supreme Court in Amrit Paul Singh and Another vs. Tata AIG General Insurance Company Limited and Others, (2018) 7 SCC 558. The relevant extract, whereof, reads as follows:- “ 24. In the case at hand, it is clearly demonstrable from the materials brought on record that the vehicle at the time of the accident did not have a permit. The appellants had taken the stand that the vehicle was not involved in the accident. That apart, they had not stated whether the vehicle had temporary permit or any other kind of permit. The exceptions that have been carved out under Section 66 of the Act, needless to emphasise, are to be pleaded 18 and proved. The exceptions cannot be taken aid of in the course of an argument to seek absolution from liability. Use of a vehicle in a public place without a permit is a fundamental statutory infraction. We are disposed to think so in view of the series of exceptions carved out in Section 66. The said situations cannot be equated with absence of licence or a fake licence or a licence for different kind of vehicle, or, for that matter, violation of a condition of carrying more number of passengers. Therefore, the principles laid down in Swaran Singh and Lakhmi Chand in that regard would not be applicable to the case at hand. That apart, the insurer had taken the plea that the vehicle in question had no permit. It does not require the wisdom of the "Tripitaka", that the existence of a permit of any nature is a matter of documentary evidence. Nothing has been brought on record by the insured to prove that he had a permit of the vehicle. In such a situation, the onus cannot be cast on the insurer. Therefore, the Tribunal as well as the High Court had directed that the insurer was required to pay the compensation amount to the claimants with interest with the stipulation that the insurer shall be entitled to recover the same from the owner and the driver. The said directions are in consonance with the principles stated in Swaran Singh and other cases pertaining to pay and recover principle.” 33. Deviation from the prescribed Route Permit, as per the permit granted by the State Transport Authority would not impact the liability of the Insurance Company to pay in the first instance and then recovery from the owner. “Pay and Recover Principle” , in this respect has been highlighted in the decision of the Hon’ble 19 Supreme Court, in K. Nagendra vs. New India Insurance Co. Ltd. and others, 2025 SCC OnLine 2297, in the following manner:- “ 5.3 The High Court directed the Insurance Company to satisfy the award as passed by the Tribunal and granted the right to recover the amount from the owner of the bus, i.e, the Appellant herein. 6. The question that comes up for consideration before this Court in these appeals is whether any deviation from the prescribed route as per the permit granted by the state transportation authority, would impact on the liability of the Insurance Company for any accident which may take place while the vehicle is on such a deviated route. An answer to this question would by itself justify the correctness or lack thereof, of the order of the High Court which employs the ‘pay and recover’ principle. 7. Before going to the exact issue involved in this case, it would be appropriate to refer to certain judgments which will set out the instances in which this Court has approved the application of the above-mentioned principle. It is on that benchmark that we will proceed to examine the correctness of the High Court’s conclusions. 7.1 In National Insurance Co. Ltd. v. Swaran Singh (2004) 3 SCC 297 , a bench of 3 learned Judges of this Court observed thus: “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 20 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 sub-section (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.” [This judgment was followed in Shamanna v. Oriental Insurance Co. Ltd.3 ] (emphasis supplied) 7.2 K.T Thomas J., in New India Assurance (2018) 9 SCC 650] Co. v. Kamla , stated the position of law succinctly, thus: “25…. 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 21 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. 7.3 In Parminder Singh v. New India Assurance Co. Ltd.5, this Court approved the application of this principle in cases where the driver of the offending vehicle does not possess a valid driving license. 7.4 In S. Iyyapan v. United India Insurance Co. Ltd.6, it was held that if at the time of accident, there is a discrepancy in the vehicle being dofven by the driver and the endorsement on the driver’s license (i.e., the kind of vehicle said driver is permitted to operate) then, in such a case, pay and recover shall be permitted. 7.5 In M/s Chatha Service Station v. Lalmati Devi & Ors7 it was held that when a vehicle involved in an accident is found to be carrying certain goods which it was not authorized to as per law (in the instant case hazardous goods within the meaning of Rule 9 of Central Motor Vehicles Rules, 1989) the insurance company while would be required to compensate the victim of the accident, it shall 22 be entitled to recover the amount so paid from the holder of the insurance policy. 8. Now, let us consider the instant case. The record reveals that the offending vehicle did not have the permit to enter Channapatna City, where the accident took place. This position is not in dispute. Unquestionably, therefore, (2013) 7 SCC 62 2025 SCC OnLine SC 756  the terms of the permit have been deviated. 9. The purpose of an insurance policy in the present context is to shield the owner/operator from direct liability when such an unforeseen/unfortunate incident takes place. To deny the victim/dependents of the victim compensation simply because the accident took place outside the bounds of the permit and, therefore, is outside the purview of the insurance policy, would be offensive to the sense of justice, for the accident itself is for no fault of his. Then, the Insurance Company most certainly ought to pay. 10. At the same time though, when an Insurance Company takes on a policy and accepts payments of premium in pursuance thereto, it agrees to do so within certain bounds. The contract lays down the four corners within which such an insurance policy would operate. If that is the case, to expect the insurer to pay compensation to a third party, which is clearly outside the bounds of the said agreement would be unfair. Balancing the need for payment of compensation to the victim vis-à-vis the interests of the insurer, the order of the High Court applying the pay and recover principle, in our considered view, is entirely justified and requires no interference.” 34. In view of the aforesaid, the findings given by the Motor Accident Claims Tribunal of pay and recover on account of breach of 23 the insurance contract in the case at hand, on account of the fact that the Driver did not possess a valid Driving Licence, is set aside for the reasons detailed supra. 35. On all other aspects raised, the appeal is dismissed and the impugned award dated 04.03.2014, passed by the learned Motor Accident Claims Tribunal-1, Kangra at Dharamshala, Himachal Pradesh, is upheld. (Bipin Chander Negi) July 24, 2026 (KS) Judge