Vehicle Out of Route Permit? – Insurer Must Pay First, Recover Later: SC Judgment

 🚍 Route Permit Violation Can’t Block Justice: Supreme Court Protects Accident Victims’ Right to Compensation

Case: K. Nagendra v. The New India Insurance Co. Ltd.
Court: Supreme Court of India
Date of Order: 29 October 2025 Indian Kanoon+2SciTech India+2
Citation: 2025 INSC 1270 caseciter.com+1

A Win for Road Accident Victims

In a landmark judgment, the Supreme Court has reaffirmed that insurance companies cannot deny compensation to accident victims merely because the vehicle was operating outside its permitted route.

The ruling in K. Nagendra v. The New India Insurance Co. Ltd. strengthens the principle that technical breaches of policy conditions must not defeat the social purpose of motor insurance—to ensure prompt and fair compensation to victims of road accidents.

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🧭 The Case in Brief

The case arose from a tragic accident involving a bus that was plying outside its permitted route. The insurer refused to pay compensation, claiming that the route permit violation amounted to a breach of policy conditions and absolved them of liability.

The Motor Accident Claims Tribunal (MACT) awarded compensation to the claimants, but the insurer contested it. After conflicting High Court rulings, the issue reached the Supreme Court.

The apex court held that:

“The insurance company cannot escape its statutory liability towards the victims merely because the vehicle was plying beyond the specified route. The insurer must first pay the compensation and may thereafter recover the same from the vehicle owner.” caseciter.com+1

What the Supreme Court Said

The Bench observed that the Motor Vehicles Act is a social welfare legislation, intended to protect innocent victims and their families from the devastating financial impact of road accidents.

Denying compensation on narrow technicalities—such as a route deviation, expired permit, or minor irregularities in paperwork—would, the Court said, be “offensive to the sense of justice.”

The Court therefore applied the “pay and recover” principle, directing the insurer to compensate the victims and then recover the amount from the vehicle owner if policy violations are established. Rawlaw+1

This approach ensures that victims are not trapped in endless litigation between insurers and owners, and that the purpose of compulsory motor insurance—to guarantee compensation—is not undermined.

The Legal Principle: “Pay and Recover”

The “pay and recover” doctrine is not new, but this judgment gives it renewed strength.
The principle was first clearly laid down in National Insurance Co. Ltd. v. Swaran Singh (2004) 3 SCC 297, where the Court held that even if there is a policy breach—like an unlicensed driver or permit violation—the insurer must pay the award to the victim first and then recover it from the insured.

Over the years, courts have applied this doctrine in cases involving:

• Drivers without valid licenses

• Vehicles used for unauthorised commercial purposes

• Permit violations or expired permits

This latest ruling extends the logic even further: a route permit violation cannot be used to delay or deny compensation.

🔍 Why This Judgment Matters

1. Strengthens Victim Protection

   • Victims or their families will no longer suffer because of paperwork disputes between insurers and owners.

   • Compensation will reach those in need first, ensuring financial relief after an accident.

2. Reinforces Social Purpose of Insurance

   • The Court reminded that insurance laws are not meant to shield companies from liability, but to ensure justice and public welfare.

   • Technicalities must not override the spirit of the law.

3. Balances Interests Fairly

   • While victims get compensation promptly, insurers retain the right to recover from the vehicle owner if a genuine policy violation is proven.

4. Encourages Responsible Vehicle Owners

   • Owners are reminded that permit and policy compliance are mandatory, and violations can still cost them in recovery proceedings.

Expert Perspective

This ruling echoes the Court’s consistent pro-victim stance in recent years. In Pappu v. Vinod Kumar Lamba (2018), the Supreme Court held that “mere technical breach cannot defeat the rights of third parties.” Similarly, in United India Insurance Co. Ltd. v. Lehru (2003), the Court emphasised that the insurer’s first duty is towards victims, not contractual loopholes.

Legal experts believe this case will guide MACTs to adopt a more claimant-friendly interpretation in permit-related disputes.

The Real-World Context

According to Ministry of Road Transport & Highways (MoRTH) data, over 1.5 lakh people die annually in road crashes in India. Commercial vehicles—buses, trucks, and taxis—are involved in nearly 40% of fatal crashes.

Yet, victims or their dependents often face delays and denials of claims due to technical objections from insurers, such as:

• “Driver had no badge”

• “Vehicle was off-route”

• “Permit expired two days before accident”

This judgment sends a strong message: insurance cannot be used as an escape route for liability when lives are lost and families devastated.

What Victims & Claimants Should Know

If you or someone you know is involved in an accident where the insurer claims “permit violation” or “off-route operation”:

1. Do not panic or accept rejection at face value.
   The Supreme Court has made it clear that such violations do not bar compensation.

2. File or pursue your MACT claim confidently.
   Mention this judgment (K. Nagendra v. The New India Insurance Co. Ltd., 29 October 2025, 2025 INSC 1270) and earlier rulings like Swaran Singh.

3. The insurer must pay first.
   Any recovery action against the owner happens later, without affecting your award.

4. Engage a lawyer experienced in motor accident claims.
   They can ensure that the insurer’s technical defences don’t delay your rightful compensation.

 For Insurers & Owners: Compliance Still Counts

While the judgment protects victims, it also reminds vehicle owners to maintain up-to-date route permits, fitness certificates, and insurance policies. If a violation occurs, the insurer may recover the amount later—potentially with interest and costs.

Insurers, meanwhile, are encouraged to adopt a compassionate approach in handling claims—honouring the social spirit of motor insurance rather than exploiting technical gaps.

Justice Beyond Paperwork

The Supreme Court’s verdict restores faith in the principle that law exists to serve justice, not bureaucracy.
By ensuring that victims receive compensation even when vehicles stray beyond their approved routes, the Court has reaffirmed that human lives matter more than permits and routes.

For India’s over-worked roads and under-protected victims, this ruling is not just a legal milestone—it’s a humane reminder that justice must travel faster than red tape.

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Author: Amarjeet Singh, Advocate
Legal & Public Policy Analyst | Road Safety & Consumer Rights Advocate
Originally published on Public Right Action Blog