Chhattisgarh HC Orders Insurer to Pay First Despite Invalid Vehicle Fitness Certificate

News Citation : 2026 LN (HC) 272 | 2026:CGHC:18126

April 21, 2026 : The High Court of Chhattisgarh has ruled that an insurance company must first pay compensation to accident victims even if the insured vehicle lacked a valid fitness certificate, and can later recover the amount from the vehicle owner and driver.

In a judgment delivered on April 21, 2026, Justice Sanjay K. Agrawal partly allowed an appeal filed by United India Insurance Company Limited against a Motor Accident Claims Tribunal (MACT) award. The Tribunal had earlier directed the insurer to pay ₹9,26,800 as compensation to the widow and minor child of a deceased victim.

The insurance company argued that it should not be held liable because the offending vehicle did not have a valid fitness certificate at the time of the accident. It relied on prior rulings suggesting that such a lapse constitutes a breach of policy conditions.

The Court acknowledged that the vehicle owner indeed failed to maintain a valid fitness certificate, which amounts to a fundamental violation. However, it clarified that this breach does not automatically absolve the insurer from its statutory obligation toward third-party claimants.

Referring to the Supreme Court’s ruling in Amrit Paul Singh v. Tata AIG General Insurance Co. Ltd., the Court applied the “pay and recover” principle. Under this doctrine, the insurer is required to satisfy the compensation award in the first instance and then recover the amount from the vehicle owner and driver through legal means.

The Court also examined conflicting precedents within the High Court. While an earlier single bench decision had held that lack of a fitness certificate is not a valid defence under Section 149 of the Motor Vehicles Act, a later division bench ruling treated it as a fundamental breach. The Court followed the binding division bench view but balanced it with the Supreme Court’s guidance on protecting victims’ rights.

As a result, the insurer has been directed to deposit the full compensation amount along with interest, with liberty to recover it from the responsible parties. The Tribunal’s award was modified only to this extent.

The decision reinforces the judiciary’s approach of prioritising compensation for victims while allowing insurers to enforce contractual breaches separately.

Case Reference : MAC No. 44 of 2019, United India Insurance Company Limited vs. Tulsi Bai and Others; Counsel for Appellant: Mr. Dashrath Gupta, Advocate; Counsel for Respondents No.1 & 2: Mr. Saurabh Gupta, Advocate; Counsel for Respondent No.4: Mr. Praveen K. Dhurandhar, Advocate.