Insurer must satisfy the third-party award first, with liberty to recover from the owner and unlicensed driver.

On 23 December 2015, Lachit Kalita was hit by motorcycle No. AS-01-BU-6307, driven by Azahar Ali, near Manasha Mandir on GMCH Road, Guwahati.

He sustained serious injuries and died during treatment at Gauhati Medical College and Hospital.

His mother, brothers and sister instituted a claim under the Motor Vehicles Act, 1988.

The Motor Accident Claims Tribunal held the accident to have resulted from the rash and negligent driving of the motorcycle and awarded compensation of ₹10,12,800, with interest at the bank rate, fastening liability on Oriental Insurance Company Ltd.

The Insurance Company appealed, disputing both its liability on the ground that the driver did not possess a valid driving licence and the assessment of the deceased’s income at ₹6,500 per month.

Whether the Insurance Company could be directed to satisfy the compensation award despite the offending vehicle being driven by a person who did not possess a valid driving licence at the time of the accident.

Whether the Tribunal erred in assessing the deceased’s monthly income at ₹6,500 and in awarding total compensation of ₹10,12,800.

The Court applied the provisions and principles governing third-party compensation under the Motor Vehicles Act, 1988, including the distinction between the insurer’s contractual defence arising from breach of a policy condition and the statutory protection afforded to third-party victims.

A breach arising from the driver’s absence of a valid driving licence may entitle the insurer to recover the amount from the owner and driver, but does not ordinarily justify denying immediate payment to the third-party claimants.

The Court also applied the established principles for computation of fatal motor-accident compensation: assessment of reasonable income where documentary proof is unavailable, addition for future prospects, deduction towards personal expenses, application of the appropriate multiplier based on the deceased’s age, and separate amounts for funeral expenses and loss of estate.

The Court upheld the finding that Azahar Ali was driving without a valid licence, treating that circumstance as a breach of the insurance policy condition.

Nevertheless, since the claimants were third parties and had already been awarded compensation for the death caused by the insured vehicle, the insurer was required to satisfy the award in the first instance, with a corresponding right of recovery against the owner and driver.

On quantum, although no documentary evidence established the deceased’s pleaded income of ₹8,000 per month, the absence of documentary proof did not require adoption of the lowest possible notional income.

Considering the deceased’s age of 19 years and the circumstances on record, the Court found the Tribunal’s assessment of ₹6,500 per month reasonable.

The addition of 40% for future prospects, deduction of 50% for personal expenses, application of multiplier 18, and awards of ₹15,000 each for funeral expenses and loss of estate were accordingly sustained.

Oriental Insurance Company Ltd. was directed to deposit the awarded amount before the Tribunal within three weeks and the claimants were permitted to withdraw it upon proper verification, subject to the terms of the Tribunal’s award.

The Insurance Company was granted liberty to recover the amount from respondent Nos. 6 and 7, Makub Hazarika and Azahar Ali, the owner and driver respectively, on account of the driver’s invalid licence.

The statutory deposit, if any, was directed to be returned to the Insurance Company with interest, and the records were ordered to be transmitted back to the Tribunal.