Gauhati HC Upholds Insurer’s Pay-Then-Recover Order After Owner Let Unauthorized Driver Drive in Fatal Bolero Crash

On 20 November 2011, Rafiqul Islam was travelling with goods in a Bolero Lamper when it met with an accident; he later died of his injuries.

His family filed a claim under Section 166 of the Motor Vehicles Act, 1988.

The Motor Accident Claims Tribunal assessed compensation at ₹10,66,000 with interest at 6% per annum, found that the vehicle’s driver had a fake licence and that the owner had allowed an unauthorised driver to drive, and directed the insurer to pay the award and recover it from the owner.

The insurer appealed against that direction.

Under the “pay and recover” principle recognised in National Insurance Co. Ltd. v. Swaran Singh, (2004) 3 SCC 297, and Oriental Insurance Co. Ltd. v. Nanjappan, (2004) 13 SCC 224, an insurer may be directed to satisfy an award and then recover the amount from the insured owner where the circumstances warrant that course.

Nanjappan further provides that recovery may be pursued before the executing court without a separate suit, with notice to the owner and appropriate security and execution measures.

The Court also considered Hind Samachar Ltd. (Delhi Unit) v. National Insurance Co. Ltd., (2026) 2 SCC 773, and Kaminiben v. The Oriental Insurance Co. Ltd., judgment dated 11 February 2026, concerning insurer liability and pay-and-recover directions, including in cases involving gratuitous passengers.

The owner did not contest the award, and the finding that he had allowed an unauthorised driver to drive the vehicle remained unchallenged.

The Court therefore held that Hind Samachar did not govern the present facts.

It considered the pay-and-recover direction consistent with Swaran Singh and Nanjappan, and noted that Kaminiben also supported such directions in appropriate cases involving gratuitous passengers.

The Court found no basis to disturb the Tribunal’s direction, while specifying that recovery should proceed in accordance with the procedure described in Nanjappan.

The insurer was directed to deposit the compensation with 6% annual interest within six weeks, and to deposit costs of ₹15,000 with the Tribunal.

The insurer could obtain refund of the amount deposited in the High Court Registry and the statutory deposit upon complying with the stated deposit requirements.

In disbursing the award, the Tribunal was directed to follow the recovery procedure set out in paragraph 8 of Nanjappan.