1 CGHC010374222019 2026:CGHC:31849 AFR HIGH COURT OF CHHATTISGARH AT BILASPUR MAC No. 2321 of 2019 The Oriental Insurance Company Limited Through Divisional Manager, Jail Road, Kutchery Chowk, Raipur Chhattisgarh. ( Insurence Company Of Truck Number M. H. 04 F. J. 5902), District : Raipur, Chhattisgarh ... Appellant(s) versus 1 - Kumari Preeti Nishad D/o Bodhram Nishad Aged About 20 Years Perma- nent Address, Village - Aamgaon, Thana Masturi, District - Bilaspur Chhattis- garh. Present Address - Village Dabanbod, Post Mohbhatta, Thana Bhata- para ( Village ) District - Balodabazar - Bhatapara Chhattisgarh. ( Claimant ), District : Balodabazar-Bhathapara, Chhattisgarh 2 - Mohammad Safi S/o Mohammad Sadique, Resident - Dafnipura, Thana Karanja, District - Vasim ( Maharastra ) ( Driver Of Truck Number M. H. 04 F . J. 5902) (Driver ), Maharashtra 3 - Aziz Khan S/o Mohammad Khan, Resident Village Kinhi, Rakde, Thana Karanja, District - Vasim ( Maharastra ) ( Registered Owner Of Truck Number M. H. 04 F. J. 5902) (Owner ), Maharashtra --- Respondent(s) For Petitioner : Mr. Sudhir Agrawal along with Ms. Prenana Agrawal, Advocate For Respondents No. 1 : Mr. S.P. Sannat on behalf of Mr. Basant Kaiwartya, advocate For Respondent No. 2 & 3 None Hon’ble Shri Sanjay K. Agrawal, Judge Order on Board 27.07.2026 1. This appeal has been filed by the appellant/Insurance Company under Section 173 of the Motor Vehicles Act, 1988 (for short “Act of 1988”) challening the impugned award dated 23.07.2019 passed by the Addi- 2 tional Motor Accident Claims Tribunal Bhatapara, District Baloda Bazar Bhatapara, Chhattisgarh (for short “Claims Tribunal”) in Claim Case No. H-36/2016. 2. The learned counsel for the appellant submits that the Tribunal has erred in fastening joint and several liability upon the Insurance Com- pany despite the admitted fact that the offending truck bearing registra- tion No. MH-04 FJ-5902 did not possess a valid permit to operate in the State of Chhattisgarh. 3. Learned counsel for the appellant would further submit that the permit available on record clearly established that it was valid only within the State of Maharashtra. The Tribunal itself recorded a categorical finding in paragraph 17 of the award that the permit was effective only for Ma- harashtra and that no permit had been issued for the place of accident, namely Pendri Mod, Tarenga Road, Police Station Bhatapara (Rural), District Baloda Bazar, Chhattisgarh. It is further submitted that the owner and driver, though they filed a joint written statement, failed to enter the witness box or produce any valid permit authorizing operation of the vehicle in Chhattisgarh. The permit seized during police investi- gation was valid only up to 03.12.2018, and no additional permit was produced. The appellant's witness, Rajeshwar Dahariya, specifically deposed that in the absence of a valid permit for operation outside Ma- harashtra, the vehicle was being operated in violation of the policy con- ditions and, therefore, the Insurance Company was not liable to indem- nify the insured. Therefore, in view of the law laid down by the Supreme Court in Amrit Paul Singh and Others v. TATA AIG General 3 Insurance Co. Ltd. and Others1 and K. Nagendra v. The New India Assurance Co. Ltd. and Others2, the Tribunal erred in fastening liabil- ity upon the appellant–Insurance Company and, at the most, ought to have applied the principle of pay and recover. 4. Learned counsel for respondents would oppose the prayer made by learned counsel for the appellant. 5. I have heard learned counsel for the parties, considered their rival sub- missions made herein-above and gone through the records minutely. 6. The question involved in the present appeal is whether the Insurance Company can be fastened with liability to satisfy the award when the offending goods vehicle, though insured, was being plied in the State of Chhattisgarh without a valid permit, the permit on record being valid only for the State of Maharashtra, thereby constituting a breach of the policy conditions.? 7. The material available on record establishes that the offending goods vehicle was being operated in the State of Chhattisgarh, whereas the permit produced on record was valid only for the State of Maharashtra. The owner and driver failed to produce any valid permit authorizing the vehicle to ply in Chhattisgarh, despite the specific plea raised by the In- surance Company. Thus, there was a clear breach of the permit condi- tions as well as the terms of the insurance policy. 1 (2018) 7 SCC 558 2 2025 INSC 1270 4 8. The Supreme Court in K. Nagendra (supra), has held that where the offending vehicle is plied beyond the territorial limits of its permit, the terms of the permit stand violated. However, since the victim is an inno- cent third party, the insurer cannot avoid its statutory obligation to sat- isfy the award. At the same time, the insurer cannot be made to suffer the consequences of a breach committed by the insured. Balancing these competing interests, the Supreme Court upheld the application of the "pay and recover" principle. For ready reference, paragraph 8 to 9 reproduced hereinunder:- 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 acci- dent took place. This position is not in dispute. Un- questionably, therefore,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 inci- dent takes place. To deny the victim/dependents of the victim compensation simply because the acci- dent took place outside the bounds of the permit and, therefore, is outside the purview of the insur- ance policy, would be offensive to the sense of jus- tice, 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 in- surer 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. 5 9. The issue involved in the present appeal is no longer res integra as in the matter of Amrit Paul Singh (supra) the Supreme Court has clearly stated that use of vehicle in public place without a valid permit is a fun- damental statutory infraction and observed as under:- 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 appel- lants had taken the stand that the vehicle was not in- volved 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 empha- sise, areto be pleaded 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 statu- tory 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 li- cence 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 [National Insur- anceCo. Ltd. v. Swaran Singh, (2004) 3 SCC 297 : 2004 SCC (Cri) 733] and Lakhmi Chand [Lakhmi Chand v. Reliance General Insurance, (2016) 3 SCC 100 : (2016) 2 SCC (Civ) 45] in that regard would not be applicable to the case at hand. That apart, the in- surer 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 6 onus cannot be cast on the insurer. Therefore, the Tri- bunal 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, (2004) 3 SCC 297 : 2004 SCC (Cri) 733] and other cases pertaining to pay and recover principle.” 10.Taking into consideration the principles of law laid down by the Supreme Court in Amrit Paul (supra) and K. Nagendra (supra), this Court is of the considered opinion that, although the offending vehicle was being plied in the State of Chhattisgarh without a valid permit and there was a breach of the permit conditions, the interest of the innocent third-party claimant deserves to be protected. Accordingly, the appel- lant–Insurance Company shall satisfy the award in the first instance and shall thereafter be entitled to recover the amount from the owner and driver of the offending vehicle (respondents No. 2 & 3), in accor- dance with law. 11.Accordingly, the appeal is partly allowed to the extent indicated herein- above. Sd/- (Sanjay K. Agrawal) Judge Jyoti