Insurer must satisfy the third-party award first, with recovery against the owner and unlicensed driver.

On 31 October 2011, a Scorpio struck an Alto car carrying Ashis Maji and his family, causing the Alto to hit a road divider; Ashis Maji died from his injuries.

A claim was brought before the Motor Accident Claims Tribunal, which awarded Rs. 27,27,500 with 6% annual interest and directed the insurer to pay.

The insurer appealed, challenging the income calculation, the award under conventional heads, and its liability on the ground that the Scorpio’s driver lacked a valid and effective licence on the accident date.

The Tribunal had relied on the deceased’s salary records; the licence-related evidence was marked Exhibit C.

1. Whether the Tribunal erred in calculating the deceased’s income for loss of dependency.

2. Whether the Tribunal erred in directing the insurer to pay where the offending vehicle’s driver did not possess a valid licence.

3. Whether the Tribunal erred in computing compensation under the conventional heads.

In National Insurance Co. Ltd. v. Indira Srivastava, (2008) 2 SCC 763, the Court held that actual salary for dependency calculations is generally salary less income tax, while other salary components that are savings or deferred payments should not be deducted.

Under the principles discussed in Sadhana Tomar v. Ashok Kushwaha, Civil Appeal No. 3763 of 2025, and Reliance General Insurance Co. Ltd. v. Om Parkash, 2026 INSC 767, an insurer may be directed to pay third-party claimants first and recover from the driver and owner where a breach concerning the driver’s licence is established.

National Insurance Co. Ltd. v. Pranay Sethi, (2017) 16 SCC 680, governs compensation under the conventional heads of loss of estate, consortium and funeral expenses.

The salary records showed annual gross salary of approximately Rs. 3 lakh after income-tax and professional-tax deductions. Applying Indira Srivastava, the Court found no error in the Tribunal’s income calculation.

Exhibit C indicated that the licence was not valid from 8 April 2011 to 24 March 2014, a period covering the accident; the Court treated the licence breach as established and held that the owner and driver bore the ultimate liability, while applying “pay and recover” to protect the claimants’ immediate right to compensation.

Applying Pranay Sethi, the Court reassessed the conventional heads as Rs. 15,000 for loss of estate, Rs. 40,000 for consortium and Rs. 15,000 for funeral expenses.

With annual income of Rs. 3 lakh, a one-third deduction and multiplier of 13, the revised total compensation was Rs. 26,70,000.

The insurer was directed to deposit that amount, with 6% annual interest from the date of the claim application until deposit, after crediting any sums already paid or deposited, within one month.

The insurer must pay the claimants first but may recover the amount from the owner and driver, who are jointly and severally liable.

The Registrar General was directed to release the funds to the claimants in equal shares, subject to payment of Rs. 40,000 to the deceased’s widow for spousal consortium.