Insurance Company liable to pay and recover compensation despite driver lacking valid license.

These are two cross-appeals arising from a motor accident involving a motorcycle (C G 10 X 5293).

The accident resulted in the death of 14-year-old Sandeep Dongre.

The Motor Accidents Claims Tribunal (MACT), Bilaspur, awarded Rs. 5,00,000/- to the claimants, fastening liability solely on the owner and driver because the driver lacked a valid and effective driving license.

The owner appealed against the exoneration of the Insurance Company (MAC No. 344/2019), while the claimants sought enhancement of the compensation amount (MAC No. 1721/2019).

During pendency, the driver died and was deleted from the array of parties.

1. Whether the Insurance Company can be directed to "pay and recover" despite the driver not holding a valid license at the time of the accident.

2. Whether the quantum of compensation awarded (Rs. 5,00,000/-) for the death of a 14-year-old child is just and proper.

The Court applied Section 173 of the Motor Vehicles Act, 1988 regarding appeals.

It primarily relied on the principle of "pay and recover" established by the Supreme Court in National Insurance Co. Ltd. v. Swaran Singh and Others (2004) 3 SCC 297, which mandates that even in cases of policy breach (such as lack of a valid license), the insurer may be directed to satisfy the award in favor of third parties and subsequently recover the amount from the insured.

The Court noted that both the owner and the Insurance Company’s officer admitted the driver did not possess a valid license.

While this constituted a breach of policy terms (Ex. D/11) justifying the insurer's exoneration from ultimate liability, the Tribunal erred in not applying the "pay and recover" doctrine to protect the third-party claimants.

Regarding quantum, the Court found that the award of Rs. 5,00,000/- for a deceased minor aged 14 years was consistent with established evidence and required no interference.

The Court further noted that the owner had already deposited 50% of the compensation.

The Court held that the compensation of Rs. 5,00,000/- is just and proper.

It directed the National Insurance Company to pay the remaining 50% of the compensation to the claimants first and subsequently recover said amount from the owner of the vehicle.

The impugned award was modified to reflect the "pay and recover" direction.