Chhattisgarh HC Applies 'Pay and Recover' Rule for Tractor Passengers

Reaffirming strict limits on policy breach liabilities, the High Court of Chhattisgarh has held that insurance companies cannot be directly burdened with compensation for unauthorized passengers carried in single-seater vehicles. Applying settled principles, the Court mandated that while the insurer must initially pay the enhanced compensation to victims, it retains absolute liberty to recover the full amount from the vehicle owner and driver.

In an appeal challenging the quantum awarded by the Claims Tribunal, a Single Bench of Justice Sanjay K. Agrawal reviewed the liability framework under Section 173 of the Motor Vehicles Act, 1988. The Court considered both the claimants' prayer for enhancement and the insurer's plea for complete exoneration.

Court's Analysis and Order

The High Court held that carrying a person on a tractor with a single-seat capacity constitutes a clear policy breach. However, relying on established jurisprudence, the Court directed the insurer to satisfy the award first.

The Court has following directions:

"The additional compensation amount of Rs. 4,00,000/- along-with interest shall be deposited by the concerned respondent within a period of 45 days from the date of receipt of a copy of this order. Rest of the conditions of the impugned award shall remain intact."

The Court, in its reasoning, observed: "Taking into consideration the seating capacity of tractor was only one i.e. driver, no other person was permitted to sit in the vehicle as per the policy, therefore, it will be a case of breach of policy and the insurance company cannot be held responsible to make payment of compensation. However, as held by the Supreme Court in the matter of National Insurance Company Limited v. Swaran Singh & Others ( "(2004) 3 SCC 297": 2004 CaseBase(SC) 114) the principle of “pay and recover” would apply. Accordingly, the insurance company would firstly pay the amount of compensation, within a period of 45 days from the date of receipt of a copy of this order, to the claimants and thereafter, recover the same from the driver & owner of the offending vehicle."

Background

The proceedings arose from an award dated December 6, 2018, passed by the Additional Motor Accident Claims Tribunal, Pendra Road, Bilaspur, in Claim Case No.02/2018, which had allowed a compensation of Rs. 1,00,000/- to the claimants. Seeking an enhancement of the compensation, the claimants filed an appeal under Section 173 of the Motor Vehicles Act, 1988. Concurrently, the New India Insurance Company Limited filed cross-objections seeking complete exoneration on the ground that the deceased was riding as an unauthorized passenger on a tractor having a seating capacity of only one person.

In light of Indrakunwar & Anr. v. Thunulal @ Ramnath Cherw & Ors., the High Court enhanced the total compensation to Rs. 5,00,000/- along with 6% interest per annum from the date of filing the claim application. Balancing third-party protection with contractual breach, the Court partially allowed both the claimants' appeal and the insurance company's cross-objection by invoking the "pay and recover" doctrine as framed in National Insurance Company Limited v. Swaran Singh & Others ( "(2004) 3 SCC 297": 2004 CaseBase(SC) 114).

Case Details:
Case No.: MAC No. 175 of 2020
Neutral Citation: 2026:CGHC:34949
Case Title: Sonsai Gond & Ors. v. Munna Baiga & Ors.
Appearances:
For the Petitioner(s): Ms. Najmi Begam, Advocate on behalf of Mr. Yogendra Chaturvedi, Advocate
For the Respondent(s): Mr. Aditya Srivastava, Advocate on behalf of Mr. B.P.Singh, Advocate (for R-1 & R-2); Mr. Sudhir Agrawal, Advocate (for R-3)

Source: 2026 CaseBase(CTH) 9017