A policy breach does not bar pay-and-recover relief for third-party claimants.

Biren Kalita died from injuries sustained when the motorcycle on which he was a pillion rider was struck by a Tata Magic on 6 March 2016.

His wife, minor son and mother sought compensation under Section 166 of the Motor Vehicles Act, 1988.

The Motor Accident Claims Tribunal awarded Rs. 14,80,000 with interest at 7.5% per annum, directing the insurer to pay 50% and the vehicle owner to pay the balance; it also granted the insurer recovery rights against the owner.

The Tribunal found that the driver lacked a valid licence and the vehicle lacked a valid route permit.

The insurer appealed against its liability and the quantum of compensation.

Whether the insurer could be directed to satisfy 50% of the award, subject to recovery from the owner, despite the findings that the driver lacked a valid licence and the vehicle lacked a valid route permit

Whether the Tribunal’s assessment of compensation required modification, including its treatment of future prospects, personal expenses and medical expenditure

Section 166 of the Motor Vehicles Act, 1988 provides the basis for a claim for compensation arising from a motor-vehicle accident.

Under the “pay and recover” principle, an insurer may be directed to satisfy an award in favour of third-party claimants and then recover the amount from the insured or vehicle owner; a separate suit is not required, and recovery may be pursued through the executing court.

The Court relied on Oriental Insurance Co. Ltd. v. Nanjappan, (2004) 13 SCC 224, and Sunita v. United India Insurance Co. Ltd., 2025 0 Supreme (SC) 1085.

For calculating dependency, the Court assessed future prospects, deducted one-third of income for personal and living expenses given three dependants, and applied the multiplier of 14.

The evidence supported the Tribunal’s findings that the driver’s licence had expired before the accident and that the vehicle lacked a valid route permit.

The Court also noted that the insurer had not established that the owner had been informed of the alleged licence invalidity.

In light of the claimants’ third-party status and the authorities on “pay and recover,” the Court upheld the direction requiring the insurer to pay 50% of the award, while preserving its right to recover that payment from the owner.

On quantum, it retained the monthly income of Rs. 8,000 and the 25% addition for future prospects, but substituted a one-third deduction for personal expenses.

It reduced medical expenses from Rs. 1,50,000 to the Rs. 84,155 supported by the bills, resulting in total compensation of Rs. 12,74,211.

The award was modified to fix total compensation at Rs. 12,74,211, with interest at 7.5% per annum from the date the claim petition was filed until realization.

The insurer was directed to deposit 50%—Rs. 6,37,105.50—with proportionate interest within four weeks of receiving a certified copy of the judgment; the owner remained liable for the other 50%.

The insurer may recover the amount it pays from the owner through the available execution process, without filing a separate suit.