Bombay HC: ‘Pay and Recover’ Principle cannot be claimed in Lapsed Insurance Policy

Bombay High Court Insurance claim pay and recover Accident

Chaini Parwani –

Published On: November 17, 2021 at 17:51 IST

The Bombay High Court observed that the “Pay and Recover” Principle requiring Insurance Firms to reimburse Accident Claims and then recover them from Vehicle Owners cannot be solicited in cases where the policies have lapsed.

The Court highlighted that the Principle can be Re-instituted when the Contract of Insurance and the Insurer is exempted from the Liability on account of some Breach of conditions of Insurance or causes like nature. 

The Court further added that the Principle cannot be restored in cases where no such contract exists.

The Case came into Light while the Court was hearing an appeal filed by Oriental Insurance Company against a 2014 Order of Nashik’s Motor Accident Claims Tribunal.

The Order had held the Insurer Jointly Liable to pay damages worth ₹6.68 lakh to family members of Milind Gaikwad, 27, who had died in a road accident while riding a motorcycle when another motorcyclist Uday Pathak collided with him in 2009.

Furthermore, Gaikwad’s family submitted an Accident Claim before the Tribunal, which convicted Pathak alleging the accident occurred due to rash and negligent driving. 

The Tribunal had held that Pathak and his Insurer Oriental Insurance Company were jointly liable to pay the Damages.

The Insurer had then argued the Tribunal’s Order primarily alleging that there was no subsisting Insurance Contract between the Company and Pathak on the date of the Incident. 

The Insurer further stated that the Tribunal misjudged in holding the company jointly liable.

The High Court allowed the submission observing that the Insurance Certificate specifically mentioned that the policy was valid from October 17, 2006, to October 16, 2007, and as such expired long before the Accident.

The Insurance Company cannot be held Jointly Liable for paying the compensation, High Court Held.

Lastly, the claimants sought the Court to apply the principle of ‘Pay and Recover’.

Also Read: Chhattisgarh High Court uphold Tribunal’s verdict on insurance claim

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