For operation without a valid permit, the insurer must pay the award first and recover from the owner.

On 25 February 2001, the first respondent was travelling in an auto-rickshaw when it collided with a tempo allegedly driven rashly and negligently; he sustained injuries and claimed compensation.

The Motor Accidents Claims Tribunal, Sub Court, Padmanabhapuram, awarded him ₹1,02,200 with interest at 7.5% per annum from the date of the claim petition.

The insurer appealed, contending that the tempo lacked a valid permit and that the compensation was excessive.

1. Whether the Tribunal was justified in fastening liability on the insurer without applying pay and recovery, despite the vehicle having been operated without a valid permit.

2. Whether the compensation awarded by the Tribunal was excessive and warranted reduction.

The appeal was brought under Section 173 of the Motor Vehicles Act, 1988.

Relying on the Supreme Court decisions reported at 2018 (1) TN MAC 721 (SC) and AIR 2025 SC 5281, the Court applied the principle that operating a vehicle without a valid permit breaches the policy conditions and, in such circumstances, the insurer may be directed to satisfy the award first, with liberty to recover the amount from the vehicle owner.

The Court found, on the evidence of the insurer’s witness and the insurance policy, that the vehicle was operated without a valid permit; the insurer had also specifically raised that defence before the Tribunal.

Because the Tribunal had not properly considered that evidence and had imposed liability on the insurer without qualification, the award required modification to provide for pay and recovery.

On quantum, the Court considered the injuries and treatment and found no basis to reduce the award; it also rejected the claim for enhancement.

The insurer was directed to deposit ₹1,02,200 with interest at 7.5% per annum from the date of the claim petition within six weeks; the claimant may withdraw the amount, and the insurer may recover the amount paid from the vehicle owner in accordance with law.

The Tribunal’s compensation award was confirmed, with neither reduction nor enhancement, and no costs were ordered.