The Madhya Pradesh High Court has affirmed that Motor Accident Claims Tribunals retain the authority to apply the 'pay and recover' principle even after the 2019 amendments to the Motor Vehicles Act, clarifying a long-standing ambiguity in compensation adjudication.
Background & Facts
The Dispute
The dispute arose from a motor accident involving respondent No. 1 on 02 June 2024, resulting in personal injuries. He filed a claim petition before the Motor Accident Claims Tribunal, Vidisha, seeking compensation. The Tribunal, while exonerating the insurance company from direct liability, directed it to pay the compensation amount with liberty to recover the same from the owner or driver of the offending vehicle under the doctrine of 'pay and recover'.
Procedural History
- 24 July 2025: Motor Accident Claims Tribunal passed award in M.A.C.C. No. 118/2024, exonerating SBI General Insurance but applying 'pay and recover'.
- 2025: SBI General Insurance filed Civil Revision No. 1188 of 2025 under Section 115 of the Code of Civil Procedure, challenging the Tribunal’s authority to apply 'pay and recover' post-amendment.
- 23 January 2026: High Court heard the revision and application for condonation of delay under Section 5 of the Limitation Act, which was granted.
Relief Sought
The petitioner sought quashing of the Tribunal’s award on the ground that the 'pay and recover' mechanism was no longer permissible under the amended Motor Vehicles Act, particularly Section 149, and that the Tribunal had exceeded its jurisdiction.
The Legal Issue
The central question was whether Section 149 of the Motor Vehicles Act, as amended in 2019, extinguishes the power of Motor Accident Claims Tribunals to direct insurance companies to pay compensation with liberty to recover the same from the owner or driver.
Arguments Presented
For the Petitioner
Counsel for SBI General Insurance contended that the 2019 amendments to the Motor Vehicles Act restructured the liability framework, making insurance companies directly liable only when the owner is insured and the driver is authorized. They argued that the 'pay and recover' mechanism, previously permitted under pre-amendment law, was implicitly repealed as it created a dual liability structure inconsistent with the amended statutory scheme. Reliance was placed on the legislative intent to simplify claims and eliminate procedural delays.
For the Respondent
The respondents argued that the 'pay and recover' principle is a procedural mechanism to ensure prompt compensation to victims without requiring them to pursue multiple litigations. They emphasized that the Tribunal’s order did not impose direct liability on the insurer but merely facilitated payment subject to recovery, which remains consistent with the compensatory purpose of the Act.
The Court's Analysis
The Court examined the legislative intent behind the 2019 amendments and the jurisprudential evolution of the 'pay and recover' doctrine. It noted that while Section 149 now mandates direct liability of insurers in specific circumstances, it does not expressly prohibit Tribunals from adopting the 'pay and recover' mechanism where the insurer is not directly liable but holds a contractual obligation.
"The principle of 'pay and recover' is not a creation of statute but a judicially evolved tool to ensure justice to victims without unduly burdening them with multiple proceedings."
The Court relied on its own earlier decision in Cholamandalam MS General Insurance Company Ltd. v. Munni Bai, which held that the amended Section 149 does not oust the Tribunal’s inherent power to apply this principle. The Court emphasized that the doctrine serves the humanitarian objective of the Act and aligns with Section 166, which mandates expeditious disposal of claims. It further observed that the Tribunal’s order did not impose liability on the insurer but merely directed payment subject to recovery, preserving the insurer’s right to seek reimbursement from the actual wrongdoer.
The Court rejected the petitioner’s argument that the amendment impliedly repealed the doctrine, noting that such a conclusion would undermine victim-centric justice and create a gap in compensation delivery.
The Verdict
The petitioner’s civil revision was dismissed. The Court held that Motor Accident Claims Tribunals retain the authority to apply the 'pay and recover' principle even after the 2019 amendments to the Motor Vehicles Act, provided the insurer is not directly liable under Section 149. The quantum of compensation and exoneration of the insurer remain open to challenge in separate proceedings.
What This Means For Similar Cases
Pay and Recover Remains a Valid Mechanism
- Practitioners must now treat 'pay and recover' as a legally recognized procedural tool, not an ultra vires act.
- Claimants’ advocates should routinely seek this direction where the insurer is not directly liable but the vehicle is insured.
- Insurers must prepare for payment under this mechanism and preserve documentation for recovery.
Tribunal Awards Are Not Final on Liability Allocation
- The Court clarified that upholding 'pay and recover' does not preclude future challenges to the insurer’s exoneration or the compensation amount.
- Separate revisions or appeals against exoneration or quantum remain maintainable.
- Practitioners must file such challenges within the prescribed time limits to avoid estoppel.
Judicial Precedent Controls Over Legislative Silence
- Where the statute is silent on a procedural mechanism, courts may uphold established doctrines that serve the Act’s humanitarian purpose.
- This reinforces the principle that statutory interpretation must favor victim compensation over technical exclusions.
