Insurer Must Pay Compensation First, With Liberty to Recover From the Vehicle Owner for a Driving-Licence Breach.

Saru Kumar Nageshiya, an unmarried 23-year-old, died in a motorcycle accident on 10 August 2022.

His mother, father and two brothers sought compensation, alleging that he earned Rs.15,000 per month as a mason.

The Claims Tribunal assessed his monthly income at Rs.8,320, applied a 40% future-prospects addition, deducted half for personal expenses and applied a multiplier of 18. It awarded Rs.14,07,984 with 9% interest, but exonerated the insurer for breach of the driving-licence condition.

The claimants appealed for enhancement and sought a pay-and-recover direction against the insurer.

1. Whether the Tribunal’s assessment of the deceased’s income and award under conventional heads required enhancement.

2. Whether, despite the breach of the driving-licence condition, the insurer should be directed to pay the compensation first and recover it from the vehicle owner.

Section 173 of the Motor Vehicles Act, 1988 provides for an appeal against an award of the Claims Tribunal.

In assessing compensation, National Insurance Co. Ltd. v. Pranay Sethi, Sarla Verma & Ors. v. Delhi Transport Corporation & Ors. and Magma General Insurance Co. Ltd. v. Nanu Ram @ Chuhru Ram & Ors. supplied the principles applied to future prospects, personal-expense deductions, multiplier and conventional heads.

For a breach of a driving-licence policy condition, the Court relied on Rama Bai v. Amit Minerals, directing the insurer to satisfy the award in the first instance with liberty to recover from the vehicle owner.

The Court also assessed income by reference to the Chhattisgarh minimum-wage notification for unskilled labour.

As the claimants produced no credible evidence establishing the deceased’s mason work or claimed income, the Court rejected the asserted monthly income of Rs.15,000 but found the Tribunal’s assessment too low.

It adopted Rs.9,960 per month, the applicable minimum wage for unskilled labour, while affirming the 40% future-prospects addition, half deduction and multiplier of 18.

It recalculated consortium at Rs.44,000 for each of the four claimants and increased loss of estate and funeral expenses to Rs.16,500 each.

Although the Tribunal had found a driving-licence breach, the Court applied the pay-and-recover principle rather than leaving the claimants to recover directly from the owner.

Compensation was enhanced from Rs.14,07,984 to Rs.17,14,952, leaving an additional Rs.3,06,968 payable with interest at 6% per annum from the date of the claim application until realization.

The insurer was directed to pay the compensation first, with liberty to recover it from the vehicle owner in accordance with law; the remaining terms of the Tribunal’s award were left unchanged.

The Registry was also directed to communicate the enhancement to the claimants in Hindi.