Insurer must satisfy the compensation award first and recover it from the owner for an unlicensed driver.

On 4 January 2019, Nanuram Moya, aged approximately 60 years, was travelling as a hamal/cleaner in pickup vehicle No. CG-05-…-0275. Near Kapari Nala, the vehicle, driven by respondent No. 2, Sundarram Kashyap, overturned, causing fatal injuries to Nanuram.

His wife, Smt. Neelobai Moya, filed a claim petition under Section 163-A of the Motor Vehicles Act, 1988. The Motor Accident Claims Tribunal, Bastar at Jagdalpur, awarded compensation of ₹5,00,000 with interest at 9% per annum and directed the appellant-insurer to satisfy the award.

The Tribunal found that the vehicle was insured but that the driver did not possess a valid and effective driving licence; accordingly, it applied the “pay and recover” principle.

The insurer challenged the award under Section 173 of the Motor Vehicles Act, contending that the deceased was not covered as a cleaner/hamal and that the driver’s licence violation exonerated the insurer.

Whether the deceased was travelling in the insured vehicle as a hamal/cleaner and was therefore covered under the policy issued by the appellant-insurer?

Whether the absence of a valid and effective driving licence entitled the insurer to avoid liability towards the claimant altogether, or only entitled it to recover the amount from the vehicle owner after satisfying the award?

Whether the Tribunal’s award of ₹5,00,000 with 9% annual interest required appellate interference?

The Court applied Section 163-A of the Motor Vehicles Act, 1988, governing compensation claims arising from motor-vehicle accidents on a no-fault basis, and Section 173 concerning appeals against awards of the Claims Tribunal.

It applied the “pay and recover” doctrine, under which an insurer may be directed to satisfy the compensation award notwithstanding a policy breach, with liberty to recover the amount from the insured/vehicle owner in appropriate cases.

The Court relied on Amrit Paul Singh v. Tata AIG General Insurance Co. Ltd., (2018) 7 SCC 558, and Sunita v. United India Insurance Co. Ltd., 2025 SCC OnLine SC 1464, concerning the insurer’s obligation to first pay the awarded compensation and thereafter recover it where the vehicle was driven without a valid licence.

The Court upheld the Tribunal’s factual finding that Nanuram was travelling in the vehicle as a hamal. This conclusion was supported by the testimony of the claimant, Smt. Neelobai Moya, and witness Ledruram Moya, as well as the insurance policy and documentary evidence showing that the risk of the hamal was covered.

The insurer’s contention that the deceased was merely a passenger and was not covered was therefore rejected.

At the same time, the evidence established that the driver lacked a valid and effective driving licence, constituting a breach of the policy conditions.

Applying the Supreme Court precedents, the Court held that this breach did not justify denying compensation to the claimant; instead, the insurer was required to satisfy the award initially and could recover the amount from the responsible parties in accordance with law.

Since the Tribunal’s findings were based on the evidence and disclosed no legal or factual error, appellate interference was unwarranted.

The appeal was dismissed, and the Tribunal’s award of ₹5,00,000 with 9% annual interest was affirmed.

The Tribunal’s record was directed to be returned for necessary compliance and further proceedings.