Insurance company must pay compensation and recover from owner where driver held LMV license for motorcycle.

On November 19, 2019, Kalpeshbhai Garasiya died after being hit by a motorcycle driven by respondent no. 3 in a rash and negligent manner.

The Motor Accident Claims Tribunal (Auxiliary), Petlad, awarded the claimants Rs. 10,88,400/- with 9% interest.

The appellant insurance company challenged the award on the grounds that the motorcyclist lacked a valid driving license (possessing an LMV license instead of a motorcycle license).

The original claimants filed cross-objections seeking enhancement of compensation, arguing that the deceased's income was underestimated and consortium was not awarded.

1. Whether the insurance company can be exonerated from liability when the driver held an LMV license but was operating a motorcycle.

2. Whether the compensation awarded by the Tribunal should be enhanced based on minimum wages and conventional heads like loss of consortium.

The court applied the principle of "Pay and Recover" as established by the Hon’ble Supreme Court in Oriental Insurance Company Ltd. v. Zaharulnisha & Ors. (2008), which held that driving a class of vehicle not authorized by the license is a breach of policy conditions, yet the insurer must satisfy the award in favor of third parties and then recover from the owner.

The court relied on National Insurance Company Ltd. v. Pranay Sethi (2017) regarding future prospects and Magma General Insurance Company Limited v. Nanu Ram @ Chuhru Ram (2018) for the awarding of parental/filial consortium.

The court found that although the RTO officer proved the rider held only an LMV license, the "Pay and Recover" doctrine applied to protect the claimants.

Since income was not proved by cogent evidence, the court adopted the minimum wage for skilled workers in Gujarat at the time of the accident (Rs. 8,720/- pm).

The court added 40% for future prospects (deceased was 22 years old) and deducted 1/2 for personal expenses as the deceased was a bachelor.

The court further corrected the Tribunal’s omission of loss of consortium for both parents and updated funeral expenses and loss of estate in line with current benchmarks.

The court allowed both the appeal and cross-objection in part and enhanced the compensation from Rs. 10,88,400/- to Rs. 14,51,564/-, directing an additional payment of Rs. 3,63,164/- with 9% interest.