Insurer must satisfy the award first and recover from the owner-driver despite a proven fake licence.

Late Hemo Hazarika was struck by motorcycle No. AS-02/L-0493 on 7 March 2015 while returning from Rongamati Mandir and pulling a handcart on NH-37. He sustained serious injuries, was treated at different hospitals, and died on 2 April 2015. An FIR was registered under Sections 279, 338 and 304A IPC against the motorcycle rider.

His wife, Makon Hazarika, filed a claim petition under Section 166 of the Motor Vehicles Act, 1988, leaving behind two sons and two daughters. The Motor Accident Claims Tribunal, Golaghat, awarded ₹10,37,482 with 6% interest and directed the insurer to pay the amount initially, with liberty to recover it from the vehicle owner after finding a breach of the insurance policy because the driver did not possess a valid licence. The insurer appealed against the pay-and-recover direction and the quantum, while the claimants filed a cross-objection seeking enhancement, higher income assessment, higher interest and parental consortium.

Whether the Tribunal correctly assessed the deceased’s monthly income and the resulting loss of dependency?

Whether the claimants, including the four children, were entitled to compensation for loss of parental consortium?

Whether the insurer was liable to pay the compensation to the claimants in the first instance and recover it from the owner because of the breach relating to the driver’s licence?

Whether interest was payable on the component awarded towards future prospects, and what rate of interest was appropriate?

The Court applied Section 166 of the Motor Vehicles Act, 1988, governing claims for compensation arising from motor-vehicle accidents, and Section 149 concerning the insurer’s statutory defences and liability.

Under the principles in National Insurance Co. Ltd. v. Swaran Singh, (2004) 3 SCC 297, breach of a policy condition such as absence of a valid driving licence may entitle the insurer to avoid indemnification against the owner, but, to protect third-party claimants, the court may direct the insurer to pay first and recover the amount from the owner.

The Court relied on Magma General Insurance Co. Ltd. v. Nanu Ram, (2018) 18 SCC 130, recognising parental consortium as compensation for the loss of a parent’s aid, protection, affection, guidance and companionship.

For interest on future prospects, it followed Oriental Insurance Co. Ltd. v. Niru, 2025 INSC 822, which held that interest may be awarded on the entire compensation, including future prospects.

The Court declined to disturb the Tribunal’s assessment of monthly income at ₹6,000. Although the claimants asserted an income of ₹10,000 and produced a certificate relating to fish-farming activity, there was no sufficiently concrete documentary proof of actual earnings; nevertheless, the deceased was an able-bodied person and the Tribunal’s reasonable estimation was considered justified.

Applying a 25% increase for future prospects, a one-fourth deduction for personal expenses and a multiplier of 13, the Court calculated loss of dependency at ₹8,77,500.

The insurer proved through its witnesses that the driver held a fake licence. Since the driver was also the owner, the breach was attributable to the insured and the insurer was not required to indemnify the owner. However, the claimants were third parties to the insurance contract; therefore, consistent with Swaran Singh, the pay-and-recover direction was upheld.

The Court further held that all four children suffered loss of parental consortium and awarded ₹40,000 to each, in addition to ₹40,000 as spousal consortium to the widow. Relying on Niru, it rejected the insurer’s objection to interest on future prospects and awarded interest on the entire compensation at 7.5% per annum.

The award was made with 7.5% interest per annum on the entire amount, including future prospects. The insurer was directed to deposit the remaining amount before the High Court Registry within four months, after which it was to be disbursed to the claimants upon verification. The insurer retained the right to recover the amount from the vehicle owner because of the established breach of the policy condition concerning the driver’s fake licence.