An owner’s lack of assets does not bar a pay-and-recover order against the insurer.

The claimant, aged 23 at the time of the accident, was injured when his motorcycle collided with a motorcycle ridden negligently by the first respondent.

He sought compensation under Section 166 of the Motor Vehicles Act, 1988.

The Tribunal awarded Rs.5,62,658 with interest at 6% per annum, but, finding that the offending motorcycle’s rider lacked a valid driving licence, exonerated the insurer and imposed liability on the owner.

The claimant appealed, challenging both the refusal to direct “pay and recover” and the amount of compensation

Whether the insurer should be directed to satisfy the award in the first instance and recover the amount from the vehicle owner, despite the rider’s lack of a valid driving licence

Whether the compensation awarded by the Tribunal required enhancement

Under Section 149 of the Motor Vehicles Act, an insurer may establish a policy breach, including the absence of a valid driving licence, but the court may direct it to satisfy a third-party award first and recover the amount from the insured.

The Court relied on National Insurance Co. Ltd. v. Swaran Singh, Shamanna v. Divisional Manager, Oriental Insurance Co. Ltd., Pappu v. Vinod Kumar Lamba, and the Karnataka High Court Full Bench decision in New India Assurance Co. Ltd. v. Yellavva on the “pay and recover” principle

For assessment of disability-related compensation, it referred to Raj Kumar v. Ajay Kumar; it applied the multiplier of 18 for the claimant’s age under Sarla Verma v. Delhi Transport Corporation

The Court also applied the KSLSA notional-income guideline for accidents in 2016.

The Court held that the rider’s lack of a valid licence established a policy breach but did not justify denying the third-party claimant the benefit of an insurer-funded award in the first instance.

The owner’s asserted lack of assets did not alter the insurer’s obligation or defeat recovery rights.

On quantum, the Court rejected the claimed monthly income of Rs.40,000 for want of adequate proof of net earnings and reassessed notional income at Rs.9,500 per month under the applicable KSLSA guideline.

It retained the Tribunal’s 10% whole-body functional disability, finding it appropriate after considering the medical evidence and the claimant’s occupation, and applied a multiplier of 18.

It recalculated loss of future earning capacity at Rs.2,05,200 and loss of income during the three-month laid-up period at Rs.28,500, affirming the remaining heads.

The Court enhanced total compensation from Rs.5,62,658 to Rs.5,99,558, with interest at 6% per annum from the date of the claim petition until deposit.

The insurer was directed to deposit the total compensation and accrued interest before the Tribunal within eight weeks and was granted liberty to recover the amount from the owner in execution proceedings.