Delhi High Court
Universal Sompo Gen Ins Co Ltd vs Reena Kumari & Ors on 29 July, 2026
Author: Manoj Kumar Ohri
Bench: Manoj Kumar Ohri
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Reserved on : 13.07.2026
Pronounced on : 29.07.2026
Uploaded on : 30.07.2026
+ FAO 434/2017 and CM APPL. 40402/2017
UNIVERSAL SOMPO GEN INS CO LTD .....Appellant
Through: Mr. Mohammad Mustafa, Advocate
versus
REENA KUMARI & ORS .....Respondents
Through: Dr. Sanjay Kumar Tiwary, Advocate
for Respondent No. 6
CORAM:
HON'BLE MR. JUSTICE MANOJ KUMAR OHRI
JUDGMENT
1. The present appeal has been preferred assailing the order dated
23.05.2017 passed by the learned Commissioner Employees Compensation
in Case No. CEC-D/NW/220/2015/220.
Vide the said order, the claim application filed by respondent nos. 1 to
5 (hereinafter the “claimants”) came to be allowed and the appellant, along
with respondent no. 6, was held jointly and severally liable to pay
compensation of Rs.3,63,846/- along with further simple interest @ 12% per
annum w.e.f. 24.05.2017 till its realization.
2. Briefly stated, Sh. Mahesh Chandra Mishra @ Mahesh Chand
(hereinafter the “deceased”) was employed as a driver on truck bearing
registration no. HR-55E-5025 owned by respondent no. 6. On 18.03.2013,
the deceased met with an accident out of and during the course of his
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employment, resulting in his death. The vehicle in question was returning
from Nepal when its brakes allegedly failed on a downward mountain road,
causing the deceased to lose control of the vehicle, which collided with
another vehicle. The deceased succumbed to the injuries sustained in the
accident. The claimants, being the dependants of the deceased, thereafter
instituted the underlying claim application under the provisions of the
Employee’s Compensation Act, 1923 (hereinafter the “EC Act“).
3. Before the learned Commissioner, the appellant as well as respondent
no. 6 resisted the claim application on various grounds. Respondent no. 6
contended that the claimants had not approached the learned Commissioner
with clean hands as they had suppressed the fact that they had already
received a sum of Rs.4,75,000/- from one NLG Insurance Co. Ltd. under the
Motor Vehicle and Management Act, 1993 of Nepal. The appellant similarly
contended that the claim application was barred under Section 167 of the
Motor Vehicles Act, 1988 (hereinafter the “MV Act“), as the claimants had
already availed compensation by way of a motor accident claim. The
appellant further contended that there was no privity of contract between it
and the claimants; that the accident had never been intimated to it despite
there being a policy condition requiring immediate intimation; that no
additional premium had been paid for plying the insured vehicle outside the
territory of India, whereas the accident had admittedly occurred in Nepal;
and that there existed no employer-employee relationship between the
appellant and the deceased. It was, accordingly, prayed that the claim
application be dismissed.
4. The claimants opposed the aforesaid objections and submitted that
they had never filed any application or preferred any motor accident claim
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seeking compensation. It was further submitted that the amount received
from NLG Insurance Co. Ltd. did not disentitle them from maintaining the
present proceedings. Reliance was also placed upon Section 17 of the EC
Act to contend that any compensation paid otherwise than by deposit before
the Commissioner could not be treated as compensation under the EC Act.
5. Upon consideration of the rival submissions, the learned
Commissioner rejected the contentions put forth by the appellant and
respondent no. 6. It was held that neither of them had been able to establish
that the claimants had instituted any proceedings under the MV Act, either
in India or abroad, so as to attract the bar contained in Section 167 of the
MV Act. The learned Commissioner further held that the mere receipt of
amounts from NLG Insurance Co. Ltd. did not debar the claimants from
maintaining proceedings under the EC Act. Learned Commissioner relied
upon the decision of the Supreme Court in National Insurance Company
Ltd. Vs. Sinitha & Ors.1 and directed that the amount already received by the
claimants from NLG Insurance Co. Ltd. be deducted while computing the
compensation payable to them under the EC Act. The remaining objections
raised by the appellant regarding breach of insurance policy conditions, non-
payment of additional premium, and non-intimation of the accident also
came to be rejected. Aggrieved thereby, the appellant preferred the present
appeal.
6. It is pertinent to note that during the course of hearing the present
appeal, this Court, vide order dated 19.03.2026, recorded the statement of
the learned counsel for the appellant that, in view of the amount of
Rs.4,75,000/- already having been deducted from the compensation awarded
1
(2012) 2 SCC 356
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by the learned Commissioner, the appellant did not wish to press its
challenge to the maintainability of the claim application. The controversy
was, thus, expressly confined to the limited question of the appellant’s
entitlement to recovery rights against respondent no. 6. Accordingly, the
only issue which survives for consideration in the present appeal is whether
the appellant is entitled to recover the amount paid by it to the claimants
from respondent no. 6.
7. Learned counsel for the appellant contends that the learned
Commissioner erred by not granting the insurer/appellant recovery rights
against the employer/respondent no. 6. He contends that respondent no. 6
breached the terms and conditions of the insurance policy by permitting the
deceased to drive the insured vehicle despite his driving license having
expired. It is further submitted that respondent no. 6 also permitted the
insured vehicle to ply outside the territorial limits of India, despite no
additional premium having been paid for such use. It is, therefore, contended
that while the appellant may be liable to satisfy the impugned order with
respect to the claimants, the principle of “pay and recover” should apply,
and the appellant would accordingly be entitled to recover the amount so
paid from respondent no. 6.
8. Per contra, learned counsel appearing for respondent no. 6 submits
that no breach of the insurance policy’s conditions warranting grant of
recovery rights has been established. He accordingly prays for the present
appeal to be dismissed.
9. I have heard the learned counsels for the parties and perused the
material placed on record.
10. A perusal of the impugned order shows that while dealing with the
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contentions raised by the appellant, the learned Commissioner specifically
noted that the driving license of the deceased had expired prior to the date of
the accident. The learned Commissioner further observed that, on all such
issues, the appellant would only have a remedy against the
employer/respondent no. 6 and could not escape its liability of indemnifying
the insured for the liability arising on account of injury suffered by the
deceased during the course of his employment.
11. This Court finds no infirmity with the view taken by the learned
Commissioner insofar as the claimants, being the dependants of the
deceased employee, could not be deprived of compensation on account of
disputes inter se the appellant and respondent no. 6. The direction requiring
the appellant to satisfy the impugned order, therefore, warrants no
interference.
12. However, with respect to the doctrine of “pay and recover” sought to
be relied upon by the appellant, a gainful reference may be made to the
decision of the Supreme Court in Rama Bai Vs. Amit Minerals2. In the said
case, while seized of a dispute arising from a motor accident claim wherein
the offending driver did not possess a valid driving license on the date of the
accident, the Supreme Court discussed a catena of its decisions on the
subject of “pay and recover”. It ultimately held that the insurance company
has to pay the compensation amount payable to the third party and may
thereafter recover the same from the insured. The relevant portion from the
said decision is reproduced hereunder:-
“5. The submission on part of the appellant that the High Court
ought to have applied the “pay and recover” principle rests on the
decision of this Court in Shamanna1 (supra) and Parminder Singh22
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(supra). In Shamanna1 (supra) this Court dealt with the claim of
compensation by third party victim of the motor accident. In para 5 of the
judgment, this Court referred to its own earlier decision in National
Insurance Co. Ltd. v. Swaran Singh4 to reiterate that the insurer has to
pay the compensation amount payable to the third party and the insurance
company may recover the same thereafter from the insured.
5.1 In Shamanna1 in which the doctrine of “pay and recover” was
considered, the driver had no valid licence and the insurance policy was
violated. Similar principle, as applied in Parminder Singh2 in which the
driver of the offending vehicle was found driving the vehicle in breach of
the policy conditions, the insurance company was absolved and the
principle of „pay and recover‟ was applied.
5.2 It was pointed out on behalf of respondent No. 3 – Insurance
Company that in subsequent decision in National Insurance Company
Limited v. Parvathneni5, this Court doubted the justification of applying
the principle of pay and recover on the ground that if the Insurance
Company was found not liable in law to pay the compensation, the
direction regarding pay and recover can be said to be beyond the legal
propriety.
5.2.1 In the earlier decisions in National Insurance Co. Ltd. v.
Yellamma6, Samundra Devi v. Narendra Kaur7, Oriental Insurance Co.
Ltd. v. Brij Mohan8 and New India Insurance Co. v. Darshana Devi9 this
Court had applied the very principle, about the correctness of which,
reservations were expressed in Parvathneni5.
5.2.2 However, as found in Shamanna1 the reference was not
answered and the case was disposed of on 17.09.2013, keeping the
question of law open to be decided in an appropriate case.
6. In the present case as stated above, on the date of accident, the
driver had no valid license and the licence was not renewed. The
insurance company was entitled to take a valid defence in that regard
under Section 149 (2)(a)(ii) as the driver of the offending vehicle was not
duly licensed, to avoid its liability to pay the compensation. The conditions
in law are satisfied to absolve the insurance company from the payment of
compensation.
6.1 The High Court in the impugned judgment relied upon the
decision in Ram Babu Tiwari3 to find that as per the specific provisions of
the Motor Vehicles Act, if the driver does not possess a valid and effective
driving licence, it results in a breach of conditions of the insurance policy,
exonerating the insurer from its liability. But while affirming the order of
the High Court, absolving the liability for breach of conditions in the
policy, this Court refused to interfere with orders of „pay and recover‟ as
directed by the High Court.
7. In the above circumstances, going by the series of decisions of
this Court, it is only proper that the insurer be directed to satisfy the
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award, which however can be recovered by the insurer from the insured-
owner of the vehicle. The appeal stands allowed.
Pending application, if any, shall stand disposed of.”
13. In view of the position of law detailed in the above-cited decision, this
Court is of the considered opinion that, in the facts of the present case, the
appellant is entitled to the relief of “pay and recover”. To this limited extent,
the impugned order calls for modification.
14. Accordingly, the impugned order is modified insofar as the appellant
shall be entitled to recover from respondent no. 6 the amount paid by it
towards satisfaction of the impugned order.
15. It is clarified that the rights of the claimants under the impugned order
shall remain unaffected.
16. If the compensation deposited by the appellant before the learned
Commissioner has not already been released in favour of the claimants, the
same be done expeditiously, along with the interest accrued thereon, if any.
17. The present appeal, along with the pending application, is disposed of
in the above terms.
(MANOJ KUMAR OHRI)
JUDGE
JULY 30, 2026
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