THE NEW INDIA ASSURANCE COMPANY LTD.versusGEETABEN NANLABHAI RATHVA

      C/FA/3415/2024                               JUDGMENT DATED: 29/01/2026




              IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

                        R/FIRST APPEAL NO. 3415 of 2024
                                     With
                       R/CROSS OBJECTION NO. 12 of 2025
                                      In
                        R/FIRST APPEAL NO. 3415 of 2024

FOR APPROVAL AND SIGNATURE:


HONOURABLE MR. JUSTICE HASMUKH D. SUTHAR
==========================================================

             Approved for Reporting                Yes          No

==========================================================
                  THE NEW INDIA ASSURANCE COMPANY LTD.
                                   Versus
                    GEETABEN NANLABHAI RATHVA & ORS.
==========================================================
Appearance:
MS DIMPLE A THAKER(6838) for the Appellant(s) No. 1
DISMISSED FOR NON PROSECUTION for the Defendant(s) No. 6
MR MOHSIN M HAKIM(5396) for the Defendant(s) No. 1,2,3,4,5
==========================================================
     CORAM:HONOURABLE MR. JUSTICE HASMUKH D. SUTHAR

                               Date : 29/01/2026

                               ORAL JUDGMENT


ORDER IN FIRST APPEAL

1.      Admit. Mr. Mohsin Hakim, learned counsel waives service of notice of
admission for respondent Nos.1 to 5.

2.      With consent of learned counsel for the respective parties and
considering the issue involved in the appeal as well as in Cross-Objection,
the same were heard together and are hereby disposed of by this common
judgment.

2.1     Being aggrieved and dissatisfied with the judgment and award dated
28.03.2024 passed by the Motor Accident Claims Tribunal (Main),
Chhotaudepur, in Motor Accident Claim Petition No. 83 of 2021 filed under



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      C/FA/3415/2024                              JUDGMENT DATED: 29/01/2026




Section 166 of the Motor Vehicles Act, 1988 (for short, “the MV Act”), the
appellant – Insurance Comapny prefers appeal under Section 173 of the
Motor Vehicles Act, 1988, whereby, the Tribunal has been pleased to partly
allow the claim petition and awarded compensation of Rs.15,82,000/-. While,
the claimants have preferred Cross- Objection on the ground of inadequate
compensation.

2.2     Heard Ms. Dimple A. Thaker, learned advocate for the appellant-
Insurance Company and Mr. Mohsin Hakim, learned advocate appearing for
the original claimants.

3.      Ms. Thaker, learned counsel for the appellant has submitted that the
Tribunal has committed error in passing the order of ‘pay and recover’
though the insurance company is able to prove the defense that the son of
owner of vehicle was driving a motorcycle without holding a valid and
effective license and owner knew that his son was not holding license
though he has handed over the vehicle to his son. Therefore, this is a clear
cut breach of the terms and conditions of the insurance policy and violation
of the Motor Vehicles Act. Hence, fundamental breach is proved and owner
himself was found within the knowledge that his son having no license.
Therefore, she has requested to exonerate the insurance company. The
Tribunal has also awarded exorbitant compensation. The Insurance
Company has taken a defense, which is already coming out from the
evidence. Even the appellant has examined witness Nareshbhai Bhikhabhai
Patel, who was Asst. Motor Vehicle Inspector at Exh:13 and Insurance
Company has proved defense. Hence, she has requested to allow the appeal
as prayed for.

4.      Per contra, Mr. Mohsin Hakim, learned counsel for the original
claimants has opposed the present appeal and contended that the Tribunal
has not committed any error in fastening the liability on the insurance
company as the claimants are the third party and have nothing to do with
the breach of the policy. He has further submitted that the alleged incident


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     C/FA/3415/2024                                 JUDGMENT DATED: 29/01/2026




occurred in the year 2020 and at least minimum wage prevailing at the time
of accident is required to be assessed and therefore, the Tribunal ought to
have considered monthly income of the deceased as Rs.9340/- and future
prospective is also required to be considered. However, the Tribunal has not
considered the said aspect and meager amount is awarded. Mr. Hakim has
relied on the decision of Jawahar Singh Vs. Bala Jain, reported in 2011 (6)
SCC 425 and Chandranben & Ors. Vs. Yogeshbhai Kalambhai Vasava &
Ors. reported in 2024 (0) ACJ 437 and requested to dismiss the appeal and
allow the cross-objection.

5.     Having heard learned counsel for the respective parties, it appears
that after appreciating the evidence produced on record, the Tribunal held
the offending vehicle sole negligent relying on the decisions of the Bimla
Devi Vs. HRTC reported in AIR 2009 SC 2819 and Parmeshwari Devi Vs.
Amir Chand, reported in 2011 (11) SCC 635.           Further, as the issue of
negligence is not discussed, appeal is to be decided in narrow compass qua
liability. Factum of accident and coverage of policy is not in dispute.
Admittedly, the claimants are third party. In order to prove the claim, the
claimants have produced afÏdavit at Exh:19, FIR at Exh:21, Panchnama at
Exh:22, PM report at Exh:24, RC Book at Exh:25 and opponent No.3
Insurance Company has examined witness Nareshbhai Patel and he has
produced information about non-availability of driving license of Srikant
Ashokbhai Solanki, who was driver of motorcycle.

6.     The insurance company has assailed the judgment and award on the
ground of breach of the conditions of the insurance policy, contending that
it is liable to be exonerated since, on the date of the accident, the driver of
the offending vehicle was not holding an effective and valid driving licence.
It is further contended that opponent No.2, being the father of opponent
No.1, was well aware of the fact that his son was not holding a valid driving
licence and yet permitted him to drive the vehicle on a public road. In this
regard, the witness examined at Exh.30 has categorically stated that, as per



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     C/FA/3415/2024                                JUDGMENT DATED: 29/01/2026




the computer data and record available with the RTO ofÏce, opponent No.1
was not holding an effective and valid driving licence on the date of the
accident. Thus, the breach of the conditions of the insurance policy stands
proved on record. However, the Tribunal has rightly come to the conclusion
that merely because there was a breach of the policy conditions, the
insurance company cannot be exonerated from its statutory liability, as the
claimants are third parties. The Tribunal has, therefore, rightly passed an
order of “pay and recover”, holding that it is the duty of the insurance
company to first satisfy the award under Section 149 of the Motor Vehicles
Act, 1988, and thereafter recover the same from the owner and driver of the
offending vehicle in accordance with law.



7.     Having heard learned counsel for the respective parties and perusing
material placed on record, it appears that the Insurance Company has
submitted that on the ground of violation of the terms and conditions of the
insurance policy, it is required to be exonerated from its liability. However,
an insurance policy is a statutory contract entered into between the insurer
and the insured for the benefit of third parties. The aforesaid ratio has also
been followed by the Hon’ble Apex Court in Shamanna vs. Oriental
Insurance Co. Ltd., (2018) 9 SCC 650, wherein, while considering Sections
147 and 149 of the Motor Vehicles Act, it has been held that the victim of a
motor vehicle accident is a third party, and it is the statutory duty of the
insurer to satisfy the award. The principle of “pay and recover” has been
reiterated, holding that if the driver had no valid driving licence and there
was a breach of policy conditions, the High Court ought not to interfere with
the order of “pay and recover” passed by the Tribunal. If the Insurance
Company has paid any amount, the mode of recovery is also provided, and
the insurer has the liberty to initiate proceedings before the executing
Court concerned, if the dispute is between the insurer and the owner. In the
present case, the claimants are third party and has no concern with the inter
se terms and conditions of the insurance policy. Hence, in view of the



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     C/FA/3415/2024                                             JUDGMENT DATED: 29/01/2026




decisions of the Hon’ble Supreme Court in Anu Bhanvara & Ors. vs. IFFCO
Tokio General Insurance Co. Ltd. & Ors., (2020) 20 SCC 632; Sunita & Ors.
vs. United India Insurance Co. Ltd. & Ors.; and Rama Bai vs. M/s. Amit
Minerals, 2025 INSC 1162, the learned Tribunal has not committed any
error in awarding compensation.

8.     As per Section 150, which pertains to the duty of insurers to satisfy
judgments and awards against persons insured in respect of third-party
risks, and keeping in mind the aforesaid facts, the Hon’ble Supreme Court, in
National Insurance Co. Ltd. vs. Swaran Singh, reported in (2004) 3 SCC
297, has in paragraphs 83 and 102 observed as under:


       “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 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.”

       102 the summary of our findings to the various issues as raised in these petitions are
       as follows:

       (i) Chapter XI of the Motor Vehicles Act, 1988 providing compulsory insurance of
       vehicles against third party risks is a social welfare legislation to extend relief by
       compensation to victims of accidents caused by use of motor vehicles. The provisions
       of compulsory insurance coverage of all vehicles are with this paramount object and
       the provisions of the Act have to be so interpreted as to effectuate the said object.

       (ii) Insurer is entitled to raise a defence in a claim petition filed under Section 163 A or
       Section 166 of the Motor Vehicles Act, 1988 inter alia in terms of Section 149(2)(a)(ii)
       of the said Act.

       (iii) The breach of policy condition e.g., disqualification of driver or invalid driving
       licence of the driver, as contained in sub-section (2)(a)(ii) of Section 149, have to be
       proved to have been committed by the insured for avoiding liability by the insurer.
       Mere absence, fake or invalid driving licence or disqualification of the driver for driving
       at the relevant time, are not in themselves defences available to the insurer against



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C/FA/3415/2024                                             JUDGMENT DATED: 29/01/2026




  either the insured or the third parties. To avoid its liability towards insured, the insurer
  has to prove that the insured was guilty of negligence and failed to exercise
  reasonable care in the matter of fulfilling the condition of the policy regarding use of
  vehicles by duly licensed driver or one who was not disqualified to drive at the relevant
  time.

  (iv) The insurance companies are, however, with a view to avoid their liability must not
  only establish the available defence(s) raised in the said proceedings but must also
  establish 'breach' on the part of the owner of the vehicle; the burden of proof
  wherefor would be on them.

  (v) The court cannot lay down any criteria as to how said burden would be discharged,
  inasmuch as the same would depend upon the facts and circumstance of each case.

  (vi) Even where the insurer is able to prove breach on the part of the insured
  concerning the policy condition regarding holding of a valid licence by the driver or his
  qualification to drive during the relevant period, the insurer would not be allowed to
  avoid its liability towards insured unless the said breach or breaches on the condition
  of driving licence is/ are so fundamental as are found to have contributed to the cause
  of the accident. The Tribunals in interpreting the policy conditions would apply "the
  rule of main purpose" and the concept of "fundamental breach" to allow defences
  available to the insured under Section 149(2) of the Act.

  (vii) The question as to whether the owner has taken reasonable care to find out as to
  whether the driving licence produced by the driver, (a fake one or otherwise), does not
  fulfil the requirements of law or not will have to be determined in each case.

  (viii) If a vehicle at the time of accident was driven by a person having a learner's
  licence, the insurance companies would be liable to satisfy the decree.

  (ix) The claims tribunal constituted under Section 165 read with Section 168 is
  empowered to adjudicate all claims in respect of the accidents involving death or of
  bodily injury or damage to property of third party arising in use of motor vehicle. The
  said power of the tribunal is not restricted to decide the claims inter se between
  claimant or claimants on one side and insured, insurer and driver on the other. In the
  course of adjudicating the claim for compensation and to decide the availability of
  defence or defences to the insurer, the Tribunal has necessarily the power and
  jurisdiction to decide disputes inter se between insurer and the insured. The decision
  rendered on the claims and disputes inter se between the insurer and insured in the
  course of adjudication of claim for compensation by the claimants and the award
  made thereon is enforceable and executable in the same manner as provided in
  Section 174 of the Act for enforcement and execution of the award in favour of the
  claimants.

  (x) Where on adjudication of the claim under the Act the tribunal arrives at a
  conclusion that the insurer has satisfactorily proved its defence in accordance with the
  provisions of Section 149(2) read with sub-section (7), as interpreted by this Court
  above, the Tribunal can direct that the insurer is liable to be reimbursed by the insured
  for the compensation and other amounts which it has been compelled to pay to the
  third party under the award of the tribunal.

  Such determination of claim by the Tribunal will be enforceable and the money found
  due to the insurer from the insured will be recoverable on a certificate issued by the
  tribunal to the Collector in the same manner under Section 174 of the Act as arrears of
  land revenue. The certificate will be issued for the recovery as arrears of land revenue
  only if, as required by sub-section (3) of Section 168 of the Act the insured fails to
  deposit the amount awarded in favour of the insurer within thirty days from the date



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      C/FA/3415/2024                                           JUDGMENT DATED: 29/01/2026




        of announcement of the award by the tribunal.

        (xi) The provisions contained in sub-section (4) with proviso thereunder and sub-section
        (5) which are intended to cover specified contingencies mentioned therein to enable
        the insurer to recover amount paid under the contract of insurance on behalf of the
        insured can be taken recourse of by the Tribunal and be extended to claims and
        defences of insurer against insured by relegating them to the remedy before regular
        court in cases where on given facts and circumstances adjudication of their claims
        inter se might delay the adjudication of the claims of the victims.



9.      Keeping in mind the aforesaid provision, more particularly paragraph
102(x), the Hon’ble Supreme Court has held that where, upon execution of
the claim, the Tribunal concludes that the insurer has satisfactorily proved
its defence, the Tribunal may direct that the insurer is entitled to be
reimbursed by the insured for the compensation and other amounts which it
has been compelled to pay to the third party. Paragraph 102(xi) further
provides that the provisions contained in sub-section (4) with the proviso
thereunder, and sub-section (5), are intended to cover the specified
contingencies mentioned therein so as to enable the insurer to recover the
amount.

10.     Further, this Court deems it fit to refer to the judgment of the
Hon’ble Apex Court in Sadhna Tomar v. Ashok Kushwaha, 2025 SCJ 414,
wherein the Tribunal was pleased to pass an award of compensation in
favour of the claimant, holding that the Insurance Company shall pay the
amount of compensation to the claimant and thereafter recover the same
from the driver and owner of the offending vehicle, who were held jointly
and severally liable, relying on the decision in Swaran Singh (supra). The
said view was afÏrmed by the High Court, and the order of “pay and
recover” was also upheld by the Hon’ble Apex Court. In view of the above,
the learned Tribunal has not committed any error in passing the order of
“pay and recover”.


11.     The Hon’ble Supreme Court in the cases of Shamanna (supra), Rama
Bai (supra), and Swaran Singh (supra) has consistently held that the insurer
must first pay the compensation amount to the third party and may


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      C/FA/3415/2024                                JUDGMENT DATED: 29/01/2026




thereafter recover the same from the insured. Even though the insurer is
entitled to raise a valid defence regarding the driver not possessing a valid
driving licence under Section 149(2)(a)(ii) to avoid liability, and even if the
conditions of law are satisfied to absolve the insurer from paying the
compensation, the doctrine of “pay and recover” continues to apply.

12.     In view of the judgment of the Hon’ble Supreme Court in Rambabu
Tiwari vs. United India Insurance Co., (2008) 8 SCC 165, wherein the Court
exonerated the Insurance Company from liability for breach of policy
conditions but refused to interfere with the order of “pay and recover”, the
direction issued by the learned Tribunal in the present case also does not
warrant any interference.



13.     In view of the reliance placed by the learned advocate for the
appellant, no assistance can be derived by the appellant–Insurance
Company, as the Hon’ble Supreme Court has reafÏrmed the social welfare
intent underlying the Motor Vehicles Act. The principle or order of “pay and
recover” embodies judicial empathy, ensuring that victims are not left
uncompensated due to disputes between the owner and the insurer. At the
same time, considering contractual accountability, an owner who breaches
the conditions of the policy cannot escape financial responsibility, as
insurers retain the right to recover the amount paid to the claimant. This
dual balance justice to the victim and fairness to the insurer strengthens the
integrity of the Motor Vehicles accident compensation system.

14.     As regards the authority relied upon by the learned advocate for the
appellant, in view of several judgments wherein the Hon’ble Apex Court has
passed order in the case of Shamanna (supra), Parminder Singh v. New
India Assurance Company Limited, (2019) 7 SCC 217, the learned Tribunal
has not committed any error. The authorities relied upon by the learned
advocate for the appellant nowhere refer to the case of Samanna (supra).

15.     In view of the above, the Hon’ble Apex Court has already decided the



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      C/FA/3415/2024                                    JUDGMENT DATED: 29/01/2026




issue     in     Swaran   Singh   (supra).        Considering    the     subsequent
pronouncements discussing the scope of the ‘pay and recover’ order and the
benevolent object of the legislation, as earlier explained in paragraph 14 of
this order, the principle of ‘pay and recover’ reflects judicial empathy
ensuring that victims are not left uncompensated due to disputes between
the owner and the insurer. Therefore, the argument canvassed by the
learned advocate for the appellant regarding contractual accountability is
not acceptable and Tribunal has not committed any error in passing the
order of “pay and recover”.

16.     The appellant–Insurance Company is directed to pay the amount of
compensation determined by the Tribunal, with liberty to recover the same
from the owner of the offending vehicle in accordance with law. In view of
the law laid down by the Hon’ble Apex Court in Oriental Insurance Co. Ltd.
v. Nanjappan, (2004) 13 SCC 224, it is always open for the Insurance
Company to recover the amount from owner by initiating appropriate
proceedings before the Executing Court, without being required to file a
separate suit. While passing the order of "pay and recover", the Tribunal
shall issue appropriate directions to protect the interest of the Insurance
Company, as directed by the Hon’ble Apex Court in Nanjappan (supra),
subject to suitable conditions and safeguards..

17.     In view of the above conspectus, no interference is called for in order
passed by the learned Tribunal of “pay and recover”. The present First
Appeal stands dismissed.



                          ORDER IN CROSS OBJECTION


1.      The applicants are the original claimants have preferred present
Cross Objection against the judgment and award dated 28.03.2024 passed
by the Motor Accident Claims Tribunal (Main), Chhotaudepur, in Motor
Accident Claim Petition No. 83 of 2021 filed under Section 166 of the Motor
Vehicles Act, 1988 (for short, “the MV Act”) on the ground of inadequate


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     C/FA/3415/2024                               JUDGMENT DATED: 29/01/2026




compensation.

2.     Heard Mr. Mohsin Hakim, learned advocate appearing for the
applicants - original claimants and Ms. Dimple A. Thaker, learned advocate
for the respondent No.1- Insurance Company.

3.     Having heard learned counsel for both the sides and perusing the
evidence produced on record, it appears that as per the say of the claimants,
the deceased was earning Rs.12,000/- p.m, however, the Tribunal has
considered Rs.8,000/- p.m income. But perusing the fact that the alleged
accident took place on 09.11.2020 and minimum wage prevailing at that
time was Rs.8,637/- p.m. for unskilled person. Even if, no proof of income is
produced on the record, then Tribunal has to consider prevalent minimum
wages in absence of evidence of monthly income of the deceased. In the
present case, the accident occurred in the year 2020 and during that time,
the deceased was doing agriculture work and as per the minimum wages,
the minimum income is required to be considered as Rs.8,637/-. Hence, the
income of the deceased is reassessed as Rs.8,600/- per month. Further, the
Tribunal has considered future prospective income of the deceased at 40 %
which is proper. As the deceased having 5 dependents, 1/4th deduction as
personal expenditure and living of the deceased and multiplier of 15 were
considered by the learned Tribunal as per the judgment of the Apex Court in
the case of Sarla Verma (Smt) & Ors. Vs. Delhi Transport Corporation &
Anr. [2009 (6) SCC 121] are just and proper.

4.     Therefore, calculating the income of the deceased as Rs.8,600/- and
future prospect of 40% = Rs.3,440/- which comes to Rs.12,040/- and 1/4th
amount is required to be deducted as personal expenditure and living of the
deceased which comes to Rs.3,010/- and the net amount comes to Rs.9030/-.
In view of above, the amount under the head of loss of future dependency
is required to be reassessed as Rs.9,030/- x 12 months x 15 multiplier =
Rs.16,25,400/-. Therefore, the appellants are entitled to get additional
amount of Rs.1,13,400/- under the head of future loss of dependency.


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     C/FA/3415/2024                                      JUDGMENT DATED: 29/01/2026




5.     Further, the Tribunal by relying on the judgment of Pranay Sethi
(supra) has awarded total Rs.70,000/- under conventional heads, however,
this Court is of the view that amount is required to be reassessed as
Rs.18,150/- towards loss of estate and Rs.18,150/- towards funeral
expenses.

6.     Further, in view of ratio laid down by the Hon’ble Supreme Court in
the case of Magma General Insurance Co. Ltd., Vs. Nanu Ram, reported in
(2018) 18 SCC 130 and Janabai Wd/o Dinkarrao Ghorpade & Ors., Vs M/s
ICICI Lambord Insurance Company Ltd., reported in 2022 LiveLaw (SC)
666, the amount towards loss of consortium is reassessed as Rs.2,42,000/-
(Rs.48,400/- x 5 dependents).

7.     As discussed above, the applicants – original claimants are entitled to
get compensation computed as under:-
                           Heads               Awarded by the Reassessed by this
                                                     Tribunal             Court
                Future loss of dependency           15,12,000/-       Rs.16,25,400/-
                Loss of Estate, Funeral              70,000/-          Rs.18,150/-
                                                                       Rs.18,150/-
                expenses    and    loss   of
                                                                      Rs.2,42,000/-
                consortium
                Total compensation                  15,82,000/-         19,03,700/-


8.     As Rs.15,82,000/- is already awarded by learned Tribunal, the
applicants – original claimants are entitled to get additional amount of
Rs.3,21,700/- (Rs.19,03,700 – Rs.15,82,000/-) with proportionate costs and
interest as awarded by the learned Tribunal.

9.     Hence, present Cross-Objection is allowed. The judgment and award
dated 28.03.2024 passed by the Motor Accident Claims Tribunal (Main),
Chhotaudepur, in Motor Accident Claim Petition No. 83 of 2021 stands
modified to the aforesaid extent. Rest of the judgment and award remains
unaltered. It is provided that respondent No.1 shall deposit such additional


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       C/FA/3415/2024                                                      JUDGMENT DATED: 29/01/2026




 amount of Rs.3,21,700/- along with interest as awarded by the Tribunal,
 before the Tribunal within a period of four weeks from the date of receipt
 of this order. Record and proceedings be remitted back to the concerned
 Tribunal forthwith.

 10.       The Tribunal is directed to recover or deduct the deficit court fees on
 enhanced amount and thereafter disburse the amount accordingly. Award
 to be drawn accordingly.




                                                                          (HASMUKH D. SUTHAR,J)

 SUCHIT


Original copy of this order has been signed by the Hon'ble Judge.
Digitally signed by: PATEL SUCHIT JAYESHBHAI(HC01083), Private Secretary, at High Court of Gujarat on 30/01/2026 10:54:37




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