1. The appellant has filed this appeal under Section 173 (1) of Motor Vehicle Act, being aggrieved by the award dated 03/04/2012 passed in the Claim Case M.V.C. No.216/10.

2.Learned counsel appearing for appellant submitted that the impugned award passed by the Learned Claims Tribunal is contrary to law and facts on record, as the Tribunal has erroneously fastened liability upon the Appellant despite clear findings that the offending vehicle was being plied without a valid permit on the date of the accident, which constitutes a fundamental breach of the terms and conditions of the insurance policy; therefore, in view of such violation, the Appellant Insurance Company cannot be held liable to indemnify the insured, and the direction to "pay and recover" has been wrongly applied without proper appreciation of the evidence and legal position rendering the impugned award unsustainable, and hence, the same deserves to be set aside to the extent it holds the appellant liable. He further submits that the appeal has been filed on two grounds. The first ground is that, at the time of the accident, the auto driver, Shri Manish Ben, did not possess a transport vehicle licence and only possessed an LMV licence.

3. It is evident from the record that the respondent no.2 had a Light Motor Vehicle License, whereas the vehicle involved in the accident was a transport vehicle, but it is important to mention here that vehicle involved in this case was a Auto Rickshaw Vehicle, and its weight is below 7,500 kg. Hence, the auto rickshaw does not come under the category of heavy vehicle. In this regard, the Hon'ble Supreme Court has laid down the principle in the case of Mukund Dewangan V. Oriental Insurance Co. Ltd.; (2017) 14 SCC 663 as under:-

          "The definition of "light motor vehicle" makes it clear that for a transport vehicle or omnibus, the gross vehicle weight of either of which or a motor car or tractor or roadroller the unladen weight of any of which, does not exceed 7500 kg. "Gross vehicle weight" has been defined in Section 2(15). The motor car or tractor or roadroller, the unladen weight of any of which does not exceed 7500 kg. as defined in Section 2(48) of the Act, are also the light motor vehicle.".

4. Learned counsel for the appellant further submits that, at the time of the accident, no permit under Section 66 of the Motor Vehicles Act had been issued by the RTO, therefore, the Tribunal has wrongly passed the order directing the insurance company to first pay the compensation to the claimant and thereafter recover the same from the owner and driver. But in the law laid down by the Supreme Court in the case of New India Assurance Company Vs. Satpal Singh and Otheres and in the case of Amudhavalli and Others Vs. HDFC Ergo General Insurance Company Ltd. and Others. If the vehicle was being used then insurance company will liable to pay the amount to the claimant and also company will be entitled to recover the amount from the owner and driver.

5. The issue involved in this appeal has already been decided by the Hon'ble Supreme Court in para 7, 8, 9 and 10 of the judgment dated 29.10.2025 passed in K. Nagendra v. The New India Insurance Co. Ltd. and others, (Arising out of SLP (C) Nos.7139-7140 of 2023); reported in 2025 SCC OnLine SC 2297, which are quoted as under:-

          "7. Before going to the exact issue involved in this case, it would be appropriate to refer to certain judgments which will set out the instances in which this Court has approved the application of the above-mentioned principle. It is on that benchmark that we will proceed to examine the correctness of the High Court's conclusions.

          7.1 In National Insurance Co. Ltd. v. Swaran Singh, ((2004) 3 SCC 297) a bench of 3 learned Judges of this Court observed thus:

          "83. Sub-section (5) of Section 149 which imposes a liability on the insurer must also be given its full effect. The insurance company may not be liable to satisfy the decree and, therefore, its liability may be zero but it does not mean that it did not have initial liability at all. Thus, if the insurance company is made liable to pay any amount, it can recover the entire amount paid to the third party on behalf of the assured. If this interpretation is not given to the beneficent provisions of the Act having regard to its purport and object, we fail to see a situation where beneficent provisions can be given effect to. Sub-section (7) of Section 149 of the Act, to which pointed attention of the Court has been drawn by the learned counsel for the petitioner, which is in negative language may now be noticed. The said provision must be read with sub-section (1) thereof. The right to avoid liability in terms of sub-section (2) of Section 149 is restricted as has been discussed hereinbefore. It is one thing to say that the insurance companies are entitled to raise a defence but it is another thing to say that despite the fact that its defence has been accepted having regard to the facts and circumstances of the case, the Tribunal has power to direct them to satisfy the decree at the first instance and then direct recovery of the same from the owner. These two matters stand apart and require contextual reading."

          [This judgment was followed in Shamanna v. Oriental Insurance Co. Ltd., (2018) 9 SCC 650] (emphasis supplied) 7.2 K.T Thomas J., in New India Assurance Co. v. Kamla , (2001) 4 SCC 342 stated the position of law succinctly, thus:

          "25.... The insurer and the insured are bound by the conditions enumerated in the policy and the insurer is not liable to the insured if there is violation of any policy condition. But the insurer who is made statutorily liable to pay compensation to third parties on account of the certificate of insurance issued shall be entitled to recover from the insured the amount paid to the third parties, if there was any breach of policy conditions on account of the vehicle being driven without a valid driving licence. Learned counsel for the insured contended that it is enough if he establishes that he made all due enquiries and believed bona fide that the driver employed by him had a valid driving licence, in which case there was no breach of the policy condition. As we have not decided on that contention it is open to the insured to raise it before the Claims Tribunal. In the present case, if the Insurance Company succeeds in establishing that there was breach of the policy condition, the Claims Tribunal shall direct the insured to pay that amount to the insurer. In default the insurer shall be allowed to recover that amount (which the insurer is directed to pay to the claimant third parties) from the insured person.

          7.3 In Parminder Singh v. New India Assurance Co. Ltd ., (2019) 7 SCC 217, this Court approved the application of this principle in cases where the driver of the offending vehicle does not possess a valid driving license.

          7.4 In S. Iyyapan v. United India Insurance Co. Ltd. , (2013) 7 SCC 62, it was held that if at the time of accident, there is a discrepancy in the vehicle being dofven by the driver and the endorsement on the driver's license (i.e., the kind of vehicle said driver is permitted to operate) then, in such a case, pay and recover shall be permitted.

          7.5 In M/s Chatha Service Station v. Lalmati Devi & Ors., (2025) SCC OnLine SC 756, it was held that when a vehicle involved in an accident is found to be carrying certain goods which it was not authorized to as per law (in the instant case hazardous goods within the meaning of Rule 9 of Central Motor Vehicles Rules, 1989) the insurance company while would be required to compensate the victim of the accident, it shall be entitled to recover the amount so paid from the holder of the insurance policy.

          8. Now, let us consider the instant case. The record reveals that the offending vehicle did not have the permit to enter Channapatna City, where the accident took place. This position is not in dispute. Unquestionably, therefore, the terms of the permit have been deviated.

          9. The purpose of an insurance policy in the present context is to shield the owner/operator from direct liability when such an unforeseen/unfortunate incident takes place. To deny the victim/dependents of the victim compensation simply because the accident took place outside the bounds of the permit and, therefore, is outside the purview of the insurance policy, would be offensive to the sense of justice, for the accident itself is for no fault of his. Then, the Insurance Company most certainly ought to pay.

          10. At the same time though, when an Insurance Company takes on a policy and accepts payments of premium in pursuance thereto, it agrees to do so within certain bounds. The contract lays down the four corners within which such an insurance policy would operate. If that is the case, to expect the insurer to pay compensation to a third party, which is clearly outside the bounds of the said agreement would be unfair. Balancing the need for payment of compensation to the victim vis-à-vis the interests of the insurer, the order of the High Court applying the pay and recover principle, in our considered view, is entirely justified and requires no interference"

6. In the light of aforesaid law laid down by Hon'ble Supreme Court, the argument advanced by the appellant/Insurance Company is not acceptable. The Tribunal has rightly passed the award of "pay and recover" and directed the appellant/Insurance Company to pay the awarded amount and recover the said amount from respondent No.1.

7. In view of the aforesaid discussion and the aforesaid law laid down by the Hon'ble Supreme Court, this Court is of the considered opinion that there is no merit in the present case, and the award passed by the Tribunal does not warrant any interference.

8. Accordingly, the miscellaneous appeal filed by the appellant/Insurance Company is dismissed, and the award passed by the Tribunal is hereby affirmed.

9. Record of the Tribunal be sent back immediately.