Insurer must pay compensation first and recover it from the owner despite the driver’s invalid licence.

On 13 January 2023, Mustakkhan Zahirkhan Patha was travelling on a motorcycle when a dumper owned by Indore Auto Engineering, allegedly driven rashly and negligently by Opponent No. 1, collided with the motorcycle, causing his death.

The Motor Accident Claims Tribunal awarded compensation of ₹22,63,573 with 9% interest and proportionate costs, but exonerated the insurer on the ground that the driver did not possess a valid licence to drive the heavy goods vehicle on the date of the accident.

The Tribunal relied on the driving-licence extract, which showed transport-category validity from 2 March 2023 to 1 March 2028, although the accident occurred on 13 January 2023.

The vehicle owner challenged the insurer’s exoneration before the High Court.

Whether the Tribunal was justified in holding that the driver did not possess a valid and effective driving licence to drive the offending heavy goods vehicle on the date of the accident, on the basis of the licence extract alone

Whether, even assuming a breach relating to the driver’s licence, the insurer could be completely exonerated, or whether the principle of “pay and recover” ought to apply

Whether the Tribunal’s award required interference and remand for fresh consideration of the licence issue and the parties’ liabilities

The Court considered the requirements concerning a valid driving licence under the Motor Vehicles Act, including the statutory provisions reflected in Sections 3 and 181 relating to driving without an effective licence.

It relied on Reliance General Insurance Company Ltd. v. Om Prakash & Ors., 2026 (0) AIR (SC) 3591, for the principle that where the validity of a driving licence is disputed, official records from the competent licensing authority must be produced and an unsupported certification or incomplete record cannot substitute for proper documentary proof.

It further relied on Hind Samachar Ltd. (Delhi Unit) v. National Insurance Co. Ltd. & Ors., 2025 (0) AIR (SC) 5089, for the principle that an owner who employs a driver is ordinarily entitled to rely on the licence produced by the driver and is not expected to independently verify its authenticity with the licensing authority; in appropriate cases, the insurer may be directed to pay the compensation first and recover it from the owner.

The Court also followed the coordinate Bench decision in Patel Ashokkumar Shamalbhai v. Ranjitsinh Somaji Chauhan & Ors., First Appeal No. 2262 of 2016, decided on 8 December 2025, applying “pay and recover” in cases involving an alleged breach of policy conditions.

The Tribunal treated the licence extract as conclusively establishing that the driver lacked a valid transport endorsement on 13 January 2023.

However, the High Court noted that the driver’s licence had previously been valid for HGV driving until 1 March 2023 and was renewed from 2 March 2023, creating only an alleged interregnum.

The RTO officer was not examined, and no other evidence was produced to establish the precise legal status of the licence during that period.

In light of the requirement for competent official evidence concerning licence validity, the Tribunal’s finding was considered insufficient.

Further, even if the driver was ultimately found to be unlicensed on the accident date, the authorities relied upon indicated that complete exoneration of the insurer was not the appropriate consequence where the owner had relied on the driver’s licence and absence of due diligence had not been established.

At most, the insurer could be directed to satisfy the award and recover the amount from the liable parties.

The matter therefore required fresh adjudication rather than outright exoneration of the insurer.

The Tribunal was directed to decide the matter preferably within three months of receiving the order, with all parties’ rights and contentions kept open and with directions to cooperate in expeditious disposal.

The amount deposited by the insurer was directed to be kept in fixed deposits.

The connected civil application for stay was disposed of as having become infructuous.