Statement of investigating officer regarding lack of valid license is insufficient to absolve insurer of third-party liability.

On October 26, 2014, the daughter of Respondent No. 1 was hit and killed by a Bolero Pick-up driven rashly by Respondent No. 3 and owned by Respondent No. 2

An FIR was lodged, and the investigation concluded the accident was caused by the driver’s negligence

The Motor Accident Claims Tribunal (MACT), Shillong, awarded Respondent No. 1 compensation of ₹18,84,400 with 8% interest

The appellant (Insurance Company) appealed the decision, arguing they should be exonerated from liability because the driver did not possess a valid driving license at the time of the accident, as per the testimony of the Investigating Officer (CW-4)

1. Whether the Insurance Company is liable to pay compensation when the driver allegedly did not possess a valid driving license at the time of the accident

2. Whether the principle of "Pay and Recover" should be applied if a breach of policy conditions (lack of license) is established

3. Whether the "No-Fault Liability" amount already paid should be deducted from the final award

Section 149 of the Motor Vehicles Act, 1988, regarding the statutory defenses available to insurers

The insurer must prove the insured was guilty of negligence regarding the driver's licensing to avoid liability, as established in National Insurance Co. Ltd. v. Swaran Singh (2004) 3 SCC 297

Principles concerning the shifting of the onus of proof between the owner and the insurer as per Pappu v. Vinod Kumar Lamba (2018) 3 SCC 208 and United India Insurance Co. Ltd. v. Gian Chand (1997) 7 SCC 558

The "Pay and Recover" doctrine as per New India Assurance Co., Shimla v. Kamla & Ors. (2001) 4 SCC 342

The Court examined the testimony of CW-4, the Investigating Officer, who stated the driver admitted to not possessing a "valid" license. The Court observed that a lack of a "valid" license does not strictly equate to having "no license at all," as it could imply the license was fake or invalid, creating a benefit of doubt in favor of the claimant

While the owner (Respondent No. 2) failed to prove the driver was duly authorized and licensed, the Insurer failed to summon the driver or produce records from the Road Transport Authority to conclusively prove a total absence of a license. Following the precedent in Rukmani v. New India Assurance Co., the Court held that the officer’s testimony alone was insufficient to discharge the insurer's burden of proof

Noting the potential breach of policy, the Court found it equitable to protect the third-party claimant while allowing the insurer the right to recover from the owner

The Court partially allowed the appeal and modified the quantum of the award to ₹18,34,000, deducting the ₹50,000 previously paid under "No-Fault Liability". The total sum, with interest, is ordered to be paid within 30 days