Absence or invalidity of a driving licence alone does not absolve the insurer of third-party liability.

On 17 March 2013, Swamy @ Venkataramanaswamy was struck by a Royal Enfield motorcycle while walking home and died on 10 April 2013 after treatment at several hospitals.

His wife and two children brought a claim under Section 166 of the Motor Vehicles Act, 1988.

The Tribunal found negligence and awarded Rs.6,07,217 with interest at 6% per annum, but held the owner liable and exonerated the insurer because the owner had not proved that he held a valid driving licence.

The claimants appealed for enhancement; the owner cross-objected to the finding on the driving licence and liability.

Whether the compensation required enhancement, including reassessment of the deceased’s income, personal-expense deduction, future prospects and conventional heads.

Whether the insurer could be exonerated where the evidence did not conclusively establish that the driving licence was fake, and whether the insurer should satisfy the award with a right to recover from the owner.

Whether interest at 6% should be enhanced.

Under Sections 166 and 171 of the Motor Vehicles Act, compensation must be just, and the Tribunal may award simple interest from a date no earlier than the filing of the claim; the rate depends on the circumstances of the case.

Under Section 149(2), the insurer must establish both an available policy defence and a breach by the insured; mere absence, invalidity or falsity of a licence does not, by itself, defeat third-party liability.

Applying National Insurance Co. Ltd. v. Swaran Singh, (2004) 3 SCC 297, and Pappu v. Vinod Kumar Lamba, (2018) 3 SCC 208, the court noted that the insurer may be directed to satisfy the award and recover from the owner where the circumstances warrant.

The court also applied the settled principles for assessing dependency, future prospects and consortium, and held that 9% interest was appropriate in the circumstances, relying on authorities including United India Insurance Co. Ltd. v. Sri Malyadri M., 2026 SCC OnLine Kar 4090.

The court fixed the deceased’s notional monthly income at Rs.8,000, applied 25% future prospects, deducted one-third for personal expenses and used a multiplier of 13, producing loss of dependency of Rs.10,40,000.

It recalculated consortium for three claimants at Rs.1,20,000 and enhanced attendant charges and conveyance to Rs.35,000, while retaining the other supported amounts, for total compensation of Rs.12,34,217.

The licence-verification report recorded only a verbal statement from a record clerk and disclosed that no response to the insurer’s RTI application had been received; it therefore did not conclusively prove the licence was fake.

Applying Swaran Singh and Pappu, the court held that the insurer could not simply be exonerated and stated that liability should be fastened on the insurer, with recovery from the owner.

It increased interest to 9% per annum, having regard to the applicable principles and authorities.

The award was modified to grant total compensation of Rs.12,34,217 with interest at 9% per annum from the date of the petition until realization; the insurer was directed to deposit the enhanced compensation within eight weeks, and the remaining part of the Tribunal’s award was left undisturbed.

The judgment also stated that the insurer’s liability was subject to recovery from the owner.