Insurer may recover compensation from the owner and driver when the offending driver lacked a valid licence.

On 6 November 2006, Shiv Shankar Singh was travelling in the rear seat of a Maruti Alto car bearing registration No. UA-06/D-3200 when it was struck from behind by Bus No. DL-1PA-4687 near Hotel Sonia, Rudrapur.

The claimant sustained grievous injuries and underwent prolonged medical treatment, including surgery and hospitalisation. He claimed compensation of ₹7,47,000 for medical and other expenses.

The Motor Accident Claims Tribunal proceeded ex parte against the bus owner and driver. The insurer contested the claim, alleging that the accident resulted from the negligence of the Alto driver and that the bus driver did not possess a valid and effective driving licence.

The Tribunal awarded ₹2,27,000 with interest at 6% per annum from 19 December 2007 and directed the insurer to satisfy the award, while granting it the right to recover the amount from the bus owner and driver because the bus driver’s licence was not valid and effective on the date of the accident.

Whether the accident occurred due to the rash and negligent driving of Bus No. DL-1PA-4687, or due to contributory negligence on the part of the driver of the Alto car?

Whether the bus driver possessed a valid and effective driving licence on the date of the accident and, if not, what was the effect on the insurer’s liability?

Whether the insurer was entitled to recover the compensation amount from the owner and driver of the offending bus?

Although the insurer may be directed to satisfy the award in favour of the third-party claimant, it may be granted the right to recover the paid amount from the vehicle owner and driver upon proof of a breach relating to the driver’s licence.

The Court relied on K. Nagendra v. The New India Assurance Co. Ltd. & Others, 2025 SCC OnLine SC 2297, which recognised that a right of recovery may be granted to the insurer in cases where the driver’s licence was not effective.

The Court also applied the evidentiary principle that a vehicle which collides with another vehicle from behind may be found negligent where the evidence supports rash and negligent driving, while the insurer bears the consequences of the established policy breach subject to its right of recovery.

The Tribunal’s finding that the bus driver was negligent was supported by the claimant’s case, the police papers, and the fact that the bus struck the Alto car from behind.

The Tribunal therefore correctly rejected the allegation of negligence or contributory negligence on the part of the Alto driver.

The Tribunal also found, on the evidence, that the bus driver’s licence had not been renewed and was consequently not valid and effective on the date of the accident.

Since the Tribunal had already granted the insurer the right to recover the compensation from the bus owner and driver, the legal position clarified in K. Nagendra supported rather than undermined the award.

The insurer remained liable to deposit and satisfy the award of ₹2,27,000 with accrued interest, but retained the right to recover the amount from the owner and driver of Bus No. DL-1PA-4687 because the driver lacked a valid and effective licence on the date of the accident.

The insurer was directed to deposit the remaining decretal amount, along with accrued interest, before the Tribunal within one month; if the amount had already been deposited, the Tribunal was directed to release it to the claimant within one month.