Accident – Liability Only Policy – Doctrine of Pay & Recover

The truck in which the deceased was travelling met with accident.   As a result, the deceased suffered severe injuries and died on the spot.

The Tribunal held that there was clear violation of the terms and conditions of the policy and the offending vehicle was insured under Liability Policy only.   It had, therefore, awarded compensation of Rs.19,53,000/- with interest and the joint liability was fastened on the owner & the driver of the truck.

The High Court dismissed the appeal of the truck owner.

HELD that although the offending vehicle was commercial one and driver had only LMV licence, it can be said that he was holding valid licence. He was not liable.  However, the Insurer was not liable for the reason that the risk was not covered as no premium was paid.

However, although the vehicle was covered under Liability Only Policy and no premium was paid to cover the driver, owner or a gratuitous passenger, the principle of Pay and Recovery ought to have been invoked.  The Courts ought to have directed the Insurer to indemnify the amount and thereafter, recover the same from the owner. 

 Judgment dated 17.7.2025 of the Supreme Court of India in Civil Appeal No.9538 of 2025 of Sunit and others    vs.  United India Insurance Co. Ltd and others