Madhya Pradesh High Court
Bharti Axa Gen. Ins. Co.Ltd. vs Smt. Ramratibai on 20 June, 2025
Author: Gurpal Singh Ahluwalia
Bench: G. S. Ahluwalia
NEUTRAL CITATION NO. 2025:MPHC-GWL:12674
1 CR-625-2024
IN THE HIGH COURT OF MADHYA PRADESH
AT GWALIOR
BEFORE
HON'BLE SHRI JUSTICE G. S. AHLUWALIA
ON THE 20th OF JUNE, 2025
CIVIL REVISION No. 625 of 2024
BHARTI AXA GEN. INS. CO.LTD.
Versus
SMT. RAMRATIBAI AND OTHERS
Appearance:
Mr. Bal Krishna Agrawal - Advocate for the petitioner / insurance
company.
None for the respondents.
ORDER
This civil revision under Section 115 of CPC has been filed against
Award dated 08.05.2024 passed by First MACT, Dabra, District – Gwalior
(M.P.) in M.A.C.C. No.70/2022.
2. A solitary ground was raised by counsel for the Insurance Company
that although the Insurance Company has been exonerated on the ground that
the offending vehicle was being driven in violation of the terms and
conditions of the insurance policy as the driver of the vehicle was not having
valid and effective licence, but the Claims Tribunal has applied the principle
of pay and recover. It is submitted that the principle of pay and recover came
into force for the first time after the judgment was passed by the Supreme
Court in the case of National Insurance Company Limited Vs. Swaran Singh
and others, reported in 2004 ACJ 1 . Thereafter, Section 149 was renumbered
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as Section 150 of the Act. It is submitted that earlier proviso to sub-section 4
of Section 149 and sub-section 5 provided for the concept of pay and
recover. However, after amendment, the proviso to sub-section 4 and sub-
section 5 of Section 150 of the Act have been omitted. Thus, in view of
changed scenario, the judgment passed by the Supreme Court in the case of
Swaran Singh (supra) does not hold good, and thus, where the Insurance
Company is exonerated from its liability on the ground of violation of the
terms and conditions of the insurance policy, then the principle of pay and
recover cannot be applied.
3. Per contra, appeal is vehemently opposed by counsel for the
respondents.
4. Section 149 of the Act, which was earlier in existence, reads as
under:-
“149. Duty of insurers to satisfy judgments and awards
against persons insured in respect of third party risks.–(1)
If, after a certificate of insurance has been issued under sub-
section (3) of section 147 in favour of the person by whom a
policy has been effected, judgment or award in respect of any
such liability as is required to be covered by a policy under
clause (b) of sub-section (1) of section 147 (being a liability
covered by the terms of the policy) 1 [or under the provisions
of section 163A] is obtained against any person insured by
the policy, then, notwithstanding that the insurer may be
entitled to avoid or cancel or may have avoided or cancelled
the policy, the insurer shall, subject to the provisions of this
section, pay to the person entitled to the benefit of the decree
any sum not exceeding the sum assured payable thereunder,
as if he were the judgment debtor, in respect of the liability,
together with any amount payable in respect of costs and any
sum payable in respect of interest on that sum by virtue of
any enactment relating to interest on judgments.
(2) No sum shall be payable by an insurer under sub-section (1) in
respect of any judgment or award unless, before the
commencement of the proceedings in which the judgment or
award is given the insurer had notice through the Court or, as theSignature Not Verified
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case may be, the Claims Tribunal of the bringing of the
proceedings, or in respect of such judgment or award so long as
execution is stayed thereon pending an appeal; and an insurer to
whom notice of the bringing of any such proceedings is so given
shall be entitled to be made a party thereto and to defend the
action on any of the following grounds, namely:–
(a) that there has been a breach of a specified condition of the
policy, being one of the following conditions, namely:–
(i) a condition excluding the use of the vehicle–
(a) for hire or reward, where the vehicle is on the
date of the contract of insurance a vehicle not
covered by a permit to ply for hire or reward, or
(b) for organised racing and speed testing, or
(c) for a purpose not allowed by the permit under
which the vehicle is used, where the vehicle is a
transport vehicle, or
(d) without side-car being attached where the
vehicle is a motor cycle; or
(ii) a condition excluding driving by a named person or
persons or by any person who is not duly licensed, or by
any person who has been disqualified for holding or
obtaining a driving licence during the period of
disqualification; or
(iii) a condition excluding liability for injury caused or
contributed to by conditions of war, civil war, riot or
civil commotion; or
(b) that the policy is void on the ground that it was
obtained by the non-disclosure of a material fact or
by a representation of fact which was false in some
material particular.
(3) Where any such judgment as is referred to in sub-section (1) is
obtained from a Court in a reciprocating country and in the case of
a foreign judgment is, by virtue of the provisions of section 13 of
the Code of Civil Procedure, 1908 (5 of 1908) conclusive as to
any matter adjudicated upon by it, the insurer (being an insurer
registered under the Insurance Act, 1938 (4 of 1938) and whether
or not he is registered under the corresponding law of the
reciprocating country) shall be liable to the person entitled to the
benefit of the decree in the manner and to the extent specified in
sub-section (1), as if the judgment were given by a Court in India:
Provided that no sum shall be payable by the insurer in respect of
any such judgment unless, before the commencement of the
proceedings in which the judgment is given, the insurer had notice
through the Court concerned of the bringing of the proceedings
and the insurer to whom notice is so given is entitled under the
corresponding law of the reciprocating country, to be made a party
to the proceedings and to defend the action on grounds similar to
those specified in sub-section (2).
(4) Where a certificate of insurance has been issued under sub-
section (3) of section 147 to the person by whom a policy has been
effected, so much of the policy as purports to restrict the insurance
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of the persons insured thereby by reference to any conditions other
than those in clause (b) of sub-section (2) shall, as respects such
liabilities as are required to be covered by a policy under clause
(b) of sub-section (1) of section 147, be of no effect:
Provided that any sum paid by the insurer in or towards the
discharge of any liability of any person which is covered by the
policy by virtue only of this sub-section shall be recoverable by
the insurer from that person.
(5) If the amount which an insurer becomes liable under this
section to pay in respect of a liability incurred by a person insured
by a policy exceeds the amount for which the insurer would apart
from the provisions of this section be liable under the policy in
respect of that liability, the insurer shall be entitled to recover the
excess from that person.
(6) In this section the expressions “material fact” and “material
particular” means, respectively a fact or particular of such a nature
as to influence the judgment of a prudent insurer in determining
whether he will take the risk and, if so at what premium and on
what conditions and the expression “liability covered by the terms
of the policy” means a liability which is covered by the policy or
which would be so covered but for the fact that the insurer is
entitled to avoid or cancel or has avoided or cancelled the policy.
(7) No insurer to whom the notice referred to in sub-section (2) or
sub-section (3) has been given shall be entitled to avoid his
liability to any person entitled to the benefit of any such judgment
or award as is referred to in sub-section (1) or in such judgment as
is referred to in sub-section (3) otherwise than in the manner
provided for in sub-section (2) or in the corresponding law of the
reciprocating country, as the case may be.
Explanation.–For the purpose of this section, “Claims Tribunal”
means a Claims Tribunal constituted under section 165 and
“award” means an award made by that Tribunal under section
168.”
(Emphasis supplied)
5. Thereafter, Section 149 of the Act was renumbered as Section 150
of the Act, which reads as under:
“150. Duty of insurers to satisfy judgments and awards
against persons insured in respect of third party risks. – (1) If,
after a certificate of insurance has been issued under sub-
section (3) of section 147 in favour of the person by whom a
policy has been effected, judgment or award in respect of any
such liability as is required to be covered by a policy under
clause (b) of sub-section (1) of section 147 (being a liability
covered by the terms of the policy) or under the provisions of
section 164 is obtained against any person insured by the
policy, then, notwithstanding that the insurer may be entitled
to avoid or cancel or may have avoided or cancelled the
policy, the insurer shall, subject to the provisions of thisSignature Not Verified
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NEUTRAL CITATION NO. 2025:MPHC-GWL:126745 CR-625-2024
section, pay to the person entitled to the benefit of the award
any sum not exceeding the sum assured payable thereunder,
as if that person were the decree holder, in respect of the
liability, together with any amount payable in respect of
costs and any sum payable in respect of interest on that sum
by virtue of any enactment relating to interest on judgments.
(2) No sum shall be payable by an insurer under sub-section
(1) in respect of any judgment or award unless, before the
commencement of the proceedings in which the judgment or
award is given the insurer had notice through the court or, as
the case may be, the Claims Tribunal of the bringing of the
proceedings, or in respect of such judgment or award so long
as its execution is stayed pending an appeal; and an insurer to
whom notice of the bringing of any such proceedings is so
given shall be entitled to be made a party thereto, and to
defend the action on any of the following grounds, namely: –
(a) that there has been a breach of a specified condition
of the policy, being one of the following conditions,
namely:-
(i) a condition excluding the use of the vehicle –
(A) for hire or reward, where the vehicle is
on the date of the contract of insurance a
vehicle not covered by a permit to ply for
hire or reward; or
(B) for organised racing and speed testing; or
(C) for a purpose not allowed by the permit
under which the vehicle is used, where the
vehicle is a transport vehicle; or
(D) without side-car being attached where the
vehicle is a two-wheeled vehicle; or
(ii) a condition excluding driving by a named
person or by any person who is not duly licenced
or by any person who has been disqualified for
holding or obtaining a driving licence during the
period of disqualification or driving under the
influence of alcohol or drugs as laid down in
section 185; or
(iii) a condition excluding liability for injury
caused or contributed to by conditions of war, civil
war, riot or civil commotion; or
(b) that the policy is void on the ground that it was
obtained by nondisclosure of any material fact or by
representation of any fact which was false in some
material particular; or
(c) that there is non-receipt of premium as required
under section 64VB of the Insurance Act, 1938 (4 of
1938).
(3) Where any such judgment or award as is referred to in
sub-section (1) is obtained from a court in a reciprocating
country and in the case of a foreign judgment is, by virtue of
the provisions of section 13 of the Code of Civil Procedure,Signature Not Verified
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1908 conclusive as to any matter adjudicated upon by it, the
insurer (being an insurer registered under the Insurance Act,
1938 and whether or not that person is registered under the
corresponding law of the reciprocating country) shall be
liable to the person entitled to the benefit of the decree in the
manner and to the extent specified in sub-section (1), as if the
judgment or award were given by a court in India:
Provided that no sum shall be payable by the insurer in
respect of any such judgment or award unless, before the
commencement of the proceedings in which the judgment or
award is given, the insurer had notice through the court
concerned of the bringing of the proceedings and the insurer
to whom notice is so given is entitled under the
corresponding law of the reciprocating country, to be made a
party to the proceedings and to defend the action on grounds
similar to those specified in sub-section (2).
(4) Where a certificate of insurance has been issued under
sub-section (3) of section 147 to the person by whom a
policy has been effected, so much of the policy as purports to
restrict the insurance of the persons insured thereby, by
reference to any condition other than those in sub-section (2)
shall, as respects such liabilities as are required to be covered
by a policy under clause (b) of sub-section (1) of section 147,
be of no effect.
(5) No insurer to whom the notice referred to in sub-section
(2) or sub-section (3) has been given shall be entitled to
avoid his liability to any person entitled to the benefit of any
such judgment or award as is referred to in sub-section (1) or
in such judgment as is referred to in sub-section (3)
otherwise than in the manner provided for in sub-section (2)
or in the corresponding law of the reciprocating country, as
the case may be.
(6) If on the date of filing of any claim, the claimant is not
aware of the insurance company with which the vehicle had
been insured, it shall be the duty of the owner of the vehicle
to furnish to the tribunal or court the information as to
whether the vehicle had been insured on the date of the
accident, and if so, the name of the insurance company with
which it is insured.
Explanation. – For the purposes of this section, –
(a) “award” means an award made by the Claims
Tribunal under section 168;
(b) “Claims Tribunal” means a Claims Tribunal
constituted under section 165;
(c) “liability covered by the terms of the policy” means
the liability which is covered by the policy or which
would be so covered but for the fact that the insurer is
entitled to avoid or cancel or has avoided or cancelled
the policy; and
(d) “material fact” and “material particular” mean,
respectively, a fact or particular of such a nature as toSignature Not Verified
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influence the judgment of a prudent insurer in
determining whether he shall take the risk and, if so, at
what premium and on what conditions.”
6. On comparison of both the sections, it is clear that the proviso to
subsection 4 and sub-section 5 of Section 149 of the Act have been omitted
and are no more part of Section 150.
7. Now, the only question for consideration is as to what is the effect
of omission of proviso to sub-section 4 and sub-section 5 of Section 149 of
the Act.
The Supreme Court in the case of Swaran Singh (supra) has held
as under:
“102. The summary of our findings to the various issues as raised
in these petitions are as follows:
(i) Chapter XI of the Motor Vehicles Act, 1988 providing
compulsory insurance of vehicles against third party risks is
a social welfare legislation to extend relief by compensation
to victims of accidents caused by use of motor vehicles. The
provisions of compulsory insurance coverage of all vehicles
are with this paramount object and the provisions of the Act
have to be so interpreted as to effectuate the said object.
(ii) Insurer is entitled to raise a defence in a claim petition
filed under Section 163 A or Section 166 of the Motor
Vehicles Act, 1988 inter alia in terms of Section 149(2)(a)(ii)
of the said Act.
(iii) The breach of policy condition e.g., disqualification of
driver or invalid driving licence of the driver, as contained in
sub-section (2)(a)(ii) of section 149, have to be proved to
have been committed by the insured for avoiding liability by
the insurer. Mere absence, fake or invalid driving licence or
disqualification of the driver for driving at the relevant time,
are not in themselves defences available to the insurer against
either the insured or the third parties. To avoid its liability
towards insured, the insurer has to prove that the insured was
guilty of negligence and failed to exercise reasonable care in
the matter of fulfilling the condition of the policy regarding
use of vehicles by duly licensed driver or one who was not
disqualified to drive at the relevant time.
(iv) The insurance companies are, however, with a view to
avoid their liability must not only establish the available
defence(s) raised in the said proceedings but must also
establish ‘breach’ on the part of the owner of the vehicle; theSignature Not Verified
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burden of proof wherefor would be on them.
(v) The court cannot lay down any criteria as to how said
burden would be discharged, inasmuch as the same would
depend upon the facts and circumstance of each case.
(vi) Even where the insurer is able to prove breach on the part
of the insured concerning the policy condition regarding
holding of a valid licence by the driver or his qualification to
drive during the relevant period, the insurer would not be
allowed to avoid its liability towards insured unless the said
breach or breaches on the condition of driving licence is/ are
so fundamental as are found to have contributed to the cause
of the accident. The Tribunals in interpreting the policy
conditions would apply “the rule of main purpose” and the
concept of “fundamental breach” to allow defences available
to the insured under section 149(2) of the Act.
(vii) The question as to whether the owner has taken
reasonable care to find out as to whether the driving licence
produced by the driver, (a fake one or otherwise), does not
fulfil the requirements of law or not will have to be
determined in each case.
(viii) If a vehicle at the time of accident was driven by a
person having a learner’s licence, the insurance companies
would be liable to satisfy the decree.
(ix) The claims tribunal constituted under Section 165 read
with Section 168 is empowered to adjudicate all claims in
respect of the accidents involving death or of bodily injury or
damage to property of third party arising in use of motor
vehicle. The said power of the tribunal is not restricted to
decide the claims inter se
between claimant or claimants on one side and insured,
insurer and driver on the other. In the course of adjudicating
the claim for compensation and to decide the availability of
defence or defences to the insurer, the Tribunal has
necessarily the power and jurisdiction to decide disputes inter
se between insurer and the insured. The decision rendered on
the claims and disputes inter se between the insurer and
insured in the course of adjudication of claim for
compensation by the claimants and the award made thereon
is enforceable and executable in the same manner as
provided in Section 174 of the Act for enforcement and
execution of the award in favour of the claimants.
(x) Where on adjudication of the claim under the Act the
tribunal arrives at a conclusion that the insurer has
satisfactorily proved its defence in accordance with the
provisions of section 149(2) read with sub-section (7), as
interpreted by this Court above, the Tribunal can direct that
the insurer is liable to be reimbursed by the insured for the
compensation and other amounts which it has been
compelled to pay to the third party under the award of the
tribunal.
(xi) The provisions contained in sub-section (4) with proviso
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thereunder and sub-section (5) which are intended to cover
specified contingencies mentioned therein to enable the
insurer to recover amount paid under the contract of
insurance on behalf of the insured can be taken recourse of
by the Tribunal and be extended to claims and defences of
insurer against insured by relegating them to the remedy
before regular court in cases where on given facts and
circumstances adjudication of their claims inter se might
delay the adjudication of the claims of the victims.”
It is clear from paragraph 102 (x) that Supreme Court in the case of
Swaran Singh (supra) has held that where, on adjudication of the claim, the
Tribunal comes to the conclusion that the insurer has satisfactorily proved its
defence, then the Tribunal can also direct that the insurer is liable to be
reimbursed by the insured for the compensation and other amounts which it
has been compelled to pay to the third party. Similarly, paragraph 102 (xi)
provides that the provisions contained in sub-section 4 with the proviso
thereunder and sub-section 5 are intended to cover specified contingencies
mentioned therein to enable the insurer to recover the amount. If the
insurance company is held jointly and severally liable, then there is no
question of the application of paragraph 102 (x) of the judgment passed in
the case of Swaran Singh (supra). Therefore, it is clear that Para 102(x)
would apply where the insurer has successfully proved its defence.
8. So far as Section 149 (5) is concerned, it is with regard to the extent
of liability, and the present case is not covered by the erstwhile provision of
Section 149 (5) of the Act. Proviso to sub-section 4 of Section 149 had given
authority to the insurer to recover the compensation from the insured if any
compensation amount is paid. However, in the present case, the insurance
company has been exonerated from the liability on the ground of violation of
terms and conditions of the insurance policy. The insurance policy is a
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statutory contract entered into between the insurer and the insured for the
benefit of the third party. If the insured has violated the conditions of the
insurance policy, it is a matter between the insurer and the insured, and the
third party cannot be made to suffer by going for execution against a private
person instead of the insurer. Therefore, in considered opinion of this Court,
paragraph 102 (x) of the judgment in the case of Swaran Singh (supra) would
apply even if the proviso to sub-section 4 and sub-section 5 of Section 149 of
Act has been omitted, and that has not brought any difference in the
application of the principle of pay and recover.
9. No other argument is advanced by counsel for petitioner.
10. The revision fails and is hereby dismissed.
(G. S. AHLUWALIA)
JUDGE
AKS
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