Insurance Company liable to pay and recover where driver lacks valid license for offending vehicle.

On March 19, 2020, Punabhai Bhathibhai Sangada died following a collision between his motorcycle and one driven by Respondent No. 1.

The Motor Accident Claims Tribunal (Auxiliary), Panchmahals at Godhra, awarded the claimants ₹19,81,594/- with 9% interest, holding the insurance company and the owner/driver jointly and severally liable.

The Appellant (Insurance Company) challenged this award, contending that the rider of the offending vehicle lacked a valid driving license at the time of the accident.

Evidence showed that the license produced (Exh. 60) was in the name of "Ranjitsinh s/o Ramsinh Baria," whereas the vehicle was driven by "Laxmanbhai Ramsinhbhai Baria".

1. Whether the rider of the offending motorcycle possessed a valid driving license at the time of the accident.

2. Whether the Insurance Company can be completely exonerated or granted "pay and recover" rights due to a breach of policy terms.

The Court applied the principles of the Motor Vehicles Act, 1988, concerning the contractual breach of insurance policy conditions, specifically the requirement for the driver to hold a valid driving license to fasten liability on the insurer.

It further applied the "Pay and Recover" doctrine established by the Supreme Court, which protects third-party claimants by requiring the insurer to satisfy the award initially and subsequently recover the amount from the insured/tortfesor when a fundamental breach of policy (like an invalid license) is proven.

The Court observed that although the driver (Respondent No. 1) was summoned to produce his license, his advocate produced a document (Exh. 60) belonging to a different individual named Ranjitsinh.

The Court drew an adverse inference, concluding that Respondent No. 1 did not hold a valid license, otherwise, he would have produced his own.

Since the motorcycle was insured, the risk to the third party remained covered; however, the lack of a valid license constituted a material breach of policy terms.

The Court found the Tribunal erred by not granting recovery rights to the insurer despite the evidence of license mismatch.

The Court directed the Appellant Insurance Company to satisfy the award in favor of the claimants at the first instance but granted it the liberty to recover the entire amount from the owner and rider of the offending motorcycle through execution proceedings before the Tribunal.