Akula Narayana Vs Oriental Insurance Company Limited & Anr. (Supreme Court of India)
SC Applies Pay-& -Recover: Insurer Must Pay Victim Despite Policy Breach- Victim Cannot Suffer – Overloading Not a Bar to Compensation—Insurer Can Recover from Owner, Rules SC- Breach of Policy ≠ Total Exoneration.
The Supreme Court allowed the appeal of the claimant & restored the Motor Accident Tribunal’s directions, holding that even if there was a breach of policy conditions, the insurer cannot be fully absolved & must pay the compensation first, with the right to recover it later from the vehicle owner.
The Tribunal had held the insurer & owner jointly & severally liable, relying on the insurer’s own administrative manager’s admission that additional premium had been collected for covering driver, conductor & cleaner. The High Court reversed this, holding that (i) the deceased passenger was not covered, & (ii) the vehicle, a five-seater, was carrying nine persons, amounting to clear breach of policy, hence no liability on insurer.
The Supreme Court noted that the only issue before it was whether the insurer should be completely exonerated or ordered to pay & recover. Relying on the principles in Swaran Singh, Shamanna, Mata Ram, & the recent ruling in Rama Bai v. Amit Minerals, the Court held that even where there is breach of policy, the insurer must satisfy the award & then recover from the insured, particularly when the contract of insurance itself is not in dispute.
