Insurer must satisfy third-party claims for unpermitted vehicles, with recovery from the owner and driver.

On 30 April 2009, Jitendra Prasad Gupta was fatally injured when a truck struck him while he was riding a bicycle.

His family sought compensation, alleging that the truck driver had acted rashly and negligently.

The Motor Accident Claims Tribunal awarded ₹14,54,056 with interest at 6% per annum and held the insurer liable.

The insurer appealed, disputing its liability and the quantum of compensation.

Whether the insurer, in the absence of proof that the truck had a valid permit, could be directed to satisfy the award and recover the amount from the owner and driver.

Whether the compensation awarded by the Tribunal required appellate interference.

Under the Motor Vehicles Act, a breach of policy conditions does not necessarily absolve an insurer from satisfying a third-party award in the first instance.

Relying on National Insurance Co. Ltd. v. Challa Bharathamma, (2004) 8 SCC 517, and Amrit Paul Singh v. Tata AIG General Insurance Co. Ltd., (2018) 7 SCC 558, the Court applied the principle that operating a vehicle without a permit is a fundamental statutory infraction and may entitle the insurer to recover from the owner and driver after paying the claimants.

The Court also referred to Sarla Verma v. DTC, (2009) 6 SCC 121, as stating settled principles for assessing compensation.

The insurer had also relied on National Insurance Co. Ltd. v. Swaran Singh, (2004) 3 SCC 297.

The insurance policy was in force, and the truck’s fitness certificate remained valid on the accident date.

Although the insurer alleged that the truck lacked a valid permit, the owner and driver did not produce one despite having the opportunity to do so.

The Court held that, in these circumstances, the burden could not be shifted to the insurer to prove the permit’s non-existence; the absence of evidence establishing a valid permit warranted a pay-and-recover order.

The Court found no basis to interfere with the compensation, which it considered consistent with the principles in Sarla Verma.

The award of ₹14,54,056 with 6% annual interest was affirmed, but the insurer was granted the right to recover the amount paid from the truck’s owner and driver.

The remaining award amount of ₹5,54,056 and the statutory deposit of ₹25,000, with accrued interest, were directed to be released to the claimants in accordance with their respective shares within eight weeks of production of a certified copy of the judgment.