Insurer must satisfy third-party awards despite minor’s unlicensed driving, with recovery from the owner and driver.

On 29 June 2010, the claimant, who was selling food items at Ganesh Service Station, was hit by Maruti Car No. GJ-12-AK-1430 driven by respondent No. 1, causing multiple injuries and fractures.

The claimant filed Motor Accident Claim Petition No. 370 of 2010 before the Motor Accident Claims Tribunal, Gandhidham-Kachchh. The Tribunal awarded ₹2,76,000 with interest at 7% per annum, but exonerated the insurer on the ground that the offending vehicle was being driven by a minor without a driving licence. The claimant appealed, challenging both the quantum of compensation and the insurer’s exoneration.

Whether the compensation awarded by the Tribunal required enhancement by reassessing the claimant’s income, future prospects, loss of income, and non-pecuniary damages.

Whether the insurer could be completely exonerated from satisfying the award because the offending vehicle was driven by a minor who did not hold a driving licence.

In assessing compensation where actual income is not proved, the court may adopt the applicable minimum wages, as recognised in Govind Yadav v. The New India Insurance Co. Ltd., (2011) 10 SCC 683.

Future prospects may be added to the income of a self-employed claimant in accordance with National Insurance Co. Ltd. v. Pranay Sethi, (2017) 16 SCC 680, and Sidram v. Divisional Manager, United India Insurance Co. Ltd., (2023) 3 SCC 439.

Under the principles in Jawahar Singh v. Bala Jain, 2011 (6) SCC 425, and National Insurance Co. Ltd. v. Swaran Singh, (2004) 3 SCC 297, breach of policy conditions such as absence of a valid driving licence does not ordinarily permit the insurer to avoid payment to a third-party victim; the insurer may be directed to pay first and recover the amount from the owner and driver.

The court distinguished United India Insurance Co. Ltd. v. Rakesh Kumar Arora, (2008) 13 SCC 298, because that case concerned a claimant who was an occupant of the offending vehicle rather than a third-party victim.

Since the claimant’s income was not proved by cogent evidence, the Tribunal’s assessment of ₹3,000 per month was replaced by the applicable Gujarat minimum wage for a skilled worker, namely ₹4,210 per month.

As the claimant was approximately 45 years old, 25% was added for future prospects, producing a monthly income of ₹5,262.

Applying the undisputed functional disability of 20% and a multiplier of 14, the court calculated future loss of income at ₹1,76,736.

Considering the multiple fractures, hospitalisation and subsequent outpatient treatment, actual loss of income was assessed for four months at ₹16,840, while ₹15,000 each was granted for pain, shock and suffering and for special diet, transportation and attendant charges.

The total compensation was therefore enhanced to ₹3,85,776, including the undisputed medical expenses of ₹1,62,200.

On liability, the court held that the claimant was a third-party victim and should not suffer because the vehicle owner permitted a minor without a licence to drive. Applying Jawahar Singh and Swaran Singh, it found complete exoneration of the insurer unsustainable, but preserved the insurer’s right to recover the amount from the owner and driver.

The insurer was directed to deposit the awarded amount, including interest, within six weeks and to satisfy the award in the first instance, with liberty to recover the amount from the owner and driver through execution proceedings before the Tribunal.

The Tribunal was directed to disburse the amount after deducting any deficit court fees and upon due verification.