A missing route permit breaches policy conditions, but the insurer must pay third-party compensation and recover from the owner.

The claimant, Ravi, sustained injuries while riding a motorcycle in a collision with a private bus near Nanjangud on 14 July 2017.

He sought compensation from the bus owner and insurer. The Tribunal awarded ₹1,29,980 and directed the insurer to pay the claimant and recover the amount from the owner because the bus lacked a valid route permit for the place of the accident.

The claimant appealed for enhanced compensation, while the owner appealed against the pay-and-recover direction.

Section 173(1) of the Motor Vehicles Act, 1988 provides for appeals against awards of the Claims Tribunal.

The Court relied on Amrit Paul Singh v. Tata AIG India General Insurance Co. Ltd. and Nagendra v. The New India Insurance Co. Ltd., holding that operation of a vehicle without a valid route permit constitutes a breach of policy conditions; nevertheless, to protect an injured third party, the insurer may be directed to satisfy the award and recover the amount from the vehicle owner.

It also referred to Pappu v. Vinod Kumar Lamba and National Insurance Co. Ltd. v. Swaran Singh in noting the principles applied in Syed Zaheer.

On liability, the Court held that the absence of a valid route permit amounted to a breach of the insurance policy conditions. It therefore upheld the Tribunal’s pay-and-recover direction, relying on the cited Supreme Court authorities and declining to follow the owner’s reliance on Rehanna Begum in light of those authorities.

On compensation, although the doctor assessed 30% disability to the claimant’s left lower limb, the fracture had united and the claimant had returned to his prior work; the Court therefore found no functional disability warranting compensation for loss of future earning capacity.

It nevertheless increased compensation for lost income during treatment, loss of amenities, and food, diet and nourishment, while leaving the other heads undisturbed.

It partly allowed the claimant’s appeal, dismissed the owner’s appeal, and enhanced the total award from ₹1,29,980 to ₹1,73,000. The enhanced compensation carries interest at 6% per annum.

The insurer must initially pay the compensation and recover it from the owner in the same proceedings.