Insurer Must Satisfy Third-Party Claims Despite an Invalid Licence, With a Right to Recover from the Owner.

On 15 March 2013, the claimant was riding a motorcycle when an autorickshaw allegedly hit it, causing a fracture of the left humerus and radial nerve palsy.

He sought compensation under Section 166 of the Motor Vehicles Act.

The Tribunal awarded Rs.1,83,711 but dismissed the claim against the insurer after relying on the charge sheet’s allegation that the autorickshaw driver lacked a valid driving licence.

The claimant appealed, seeking enhanced compensation and challenging the insurer’s exoneration.

1. Whether the claimant was entitled to enhanced compensation

2. Whether dismissal of the claim petition against the insurer was justified

A claim for compensation may be brought under Section 166 of the Motor Vehicles Act, and an appeal from the Tribunal’s award lies under Section 173(1).

The insurer cannot establish breach of the policy condition concerning a driver’s licence solely by relying on the charge sheet; the court relied on Iffco-Tokio General Insurance Co. Ltd. v. K. Prabhakar Reddy, Master Faraz v. Dolath Pasha, and the principles in Rukmani v. New India Assurance Co. and National Insurance Co. Ltd. v. Swaran Singh.

Under Pappu v. Vinod Kumar Lamba, where a third-party claim is involved, the insurer may be directed to satisfy the award and recover the amount from the vehicle owner if the vehicle was driven by an unauthorised person or a person without a licence.

The Court reassessed compensation because the Tribunal had used a monthly income of Rs.5,000 despite the applicable notional income for 2013 being Rs.8,000, and had assessed disability at 10% despite the medical evidence supporting 12.5% whole-body disability.

Applying a multiplier of 16, the Court recalculated future loss of income and enhanced compensation for pain and suffering, laid-up-period income, and loss of amenities; it also awarded future medical expenses.

On liability, the charge sheet and the insurer’s evidence did not justify absolving the insurer solely on the allegation that the driver lacked a valid licence.

Since the policy covered the accident and the claimant was a third party, the insurer was required to pay the award, with recovery from the owner thereafter.

The Court enhanced the compensation to Rs.3,49,111, with interest at 6% per annum from the date of the claim petition until deposit, excluding 443 days’ delay in filing the appeal.

It set aside the dismissal of the claim against the insurer and directed the insurer to pay the compensation and thereafter recover it from the owner.

The entire amount was to be released to the claimant upon deposit.