Insurer Alleging Tempo Driver Had No Licence Must Pay Fatal-Crash Award First, Then Recover From Owner: Gujarat HC

In brief

The question

Whether the alleged absence of a valid driving licence entitled the insurer to be exonerated from liability to satisfy the award.

The court held

The appeal was partly allowed.

It also directed

The award was modified to require New India Assurance Co. Ltd. to pay ₹5,70,000, less ₹50,000 for no-fault liability if already paid, with interest at 7% per annum from the date of the claim petition until realization, and thereafter recover the amount from the vehicle owner by execution proceedings in accordance with law.

The amount held in fixed deposit, with accrued interest, was ordered to be disbursed to the claimants.

01Facts

On 30 April 2007, a tempo collided with a motorcycle carrying Bhimabhai Bharvad, his wife Amratben and their minor son. Amratben died in the accident.

¶ 1–2

The Motor Accident Claims Tribunal partly allowed the claim petition and directed the tempo’s driver and owner, jointly and severally, to pay ₹5,70,000 with interest at 7% per annum.

¶ 1–2

The insurer appealed under Section 173 of the Motor Vehicles Act, 1988, arguing that the driver had not produced a valid driving licence and that the insurer should therefore be exonerated.

¶ 3–4

It did not seriously contest negligence or the quantum of compensation.

¶ 3–4

02Issues

i.Whether the alleged absence of a valid driving licence entitled the insurer to be exonerated from liability to satisfy the award.

¶ 4, 7

ii.Whether, if the licence issue established a breach of policy conditions, the insurer was required to satisfy the award first and recover the amount from the vehicle owner thereafter.

¶ 7–9

03Law Applied

Under Section 173 of the Motor Vehicles Act, 1988, the High Court may hear an appeal against an award of the Claims Tribunal.

¶ 1

Relying on the Division Bench decision in National Insurance Company Ltd. v. Patel Chandubhai Bhurabhai & Ors., First Appeal No. 145 of 2015, decided 29 October 2026, the Court applied the rule that where an insurer alleges breach of policy conditions, it must first satisfy the compensation award and may thereafter recover the amount from the owner of the offending vehicle.

¶ 7–8

Provisions in the judgment · 1 · Linked ones open on LawLens

Motor Vehicles Act, 1988 Section 173

04Reasoning

The insurer’s appeal was confined to the contention that the tempo’s driver had not produced a valid driving licence; negligence and the compensation amount were not seriously disputed.

¶ 4

Applying the cited Division Bench decision, the Court held that the alleged licence breach did not justify exonerating the insurer from initially satisfying the award. The insurer could pursue recovery from the vehicle owner after payment.

¶ 7–9