### Insurer Liable to Pay and Recover Compensation Despite Driver Lacking Requisite Category of License

On March 9, 2012, the deceased, Gangappa, while riding as a pillion on a motorcycle, sustained fatal injuries following a collision with a Bajaj Caliber motorcycle driven in a rash and negligent manner.

The Appellants (wife and son of the deceased) filed a claim petition under the Motor Vehicles Act.

The Motor Accident Claims Tribunal (MACT) awarded Rs. 3,10,000/- with 6% interest but fastened liability solely on the owner of the offending vehicle because the driver possessed a license for a Light Motor Vehicle (LMV) rather than a motorcycle with gear.

The Appellants approached the High Court seeking enhancement of compensation and a "pay and recover" order against the Insurance Company.

Whether the deduction for personal expenses should be 1/3rd or 1/2 in the case of a major, earning male member of the family.

Whether the Insurance Company is liable to pay the compensation to third parties initially, with the liberty to recover from the owner, despite a breach of policy conditions regarding the driver's license.

The court applied Section 149(2) of the Motor Vehicles Act regarding the insurer’s liability to third parties.

It relied on *National Insurance Co. Ltd v. Swaran Singh*, which established that an insurer must prove a "wilful breach" by the owner and that technical breaches of license conditions do not automatically avoid liability toward third parties.

It further applied *Pappu and Others v. Vinod Kumar Lamba*, affirming the "pay and recover" principle.

It applied *Sarla Verma v. DTC* and *National Insurance Co. Ltd v. Birender Singh* regarding the dependency of major sons and the standardized deduction of 1/3rd for personal expenses when there are 2–3 dependents.

The court found the Tribunal’s assessment of notional income (Rs. 5,000/-) to be incorrect, adjusting it to Rs. 7,000/- per month for the year 2012 as per the Karnataka Legal Service Authority guidelines.

Regarding dependency, the court rejected the insurer's argument for a 50% deduction, noting that a major son working as a daily wager is still considered a legal representative and dependent; thus, a 1/3rd deduction was appropriate.

On the issue of liability, the court reasoned that the breach (driving a motorcycle with an LMV license) was not so fundamental as to allow the insurer to avoid its statutory obligation to third parties.

Following the *Swaran Singh* and *Pappu* precedents, the court held that while a breach existed, the insurer must first pay the claimants and subsequently recover the amount from the owner in execution proceedings.

The Court modified the Impugned Award to hold the Respondent-Insurance Company liable to deposit the enhanced amount within eight weeks, with the liberty to recover the same from the owner of the vehicle (*Respondent No. 2*).

The heads of compensation included loss of dependency (Rs. 2,94,000/-), filial consortium (Rs. 88,000/-), loss of estate (Rs. 16,500/-), and funeral expenses (Rs. 16,500/-).