The insurer must satisfy the third-party award first, then recover from the owner for unlicensed driving.

Tippanna died after injuries sustained in a 17 September 2020 collision involving an auto-rickshaw in which he was travelling and an oncoming vehicle.

His legal representatives claimed compensation, alleging that the auto-rickshaw driver was rash and negligent; the Tribunal awarded ₹14,87,000 but held the owner alone liable because of a policy breach.

The claimants appealed, challenging the liability finding and seeking enhancement.

The insurer disputed the assessment of compensation and argued that the driver lacked a valid driving licence.

Whether the compensation awarded by the Tribunal was inadequate and required modification

Whether the Tribunal was justified in fastening liability on the owner, rather than requiring the insurer to satisfy the award

Under the Motor Vehicles Act, 1988, Section 149(2)(a)(ii) permits an insurer to raise a defence where the driver was not duly licensed; however, in third-party claims, the “pay and recover” doctrine may require the insurer to satisfy the award and then recover the amount from the insured.

The Court relied on National Insurance Co. Ltd. v. Swaran Singh (2004) 3 SCC 297 and Shamanna v. Divisional Manager (2018) 9 SCC 650 for that doctrine and the insurer’s burden to establish breach.

For compensation, National Insurance Co. Ltd. v. Pranay Sethi (2017) 16 SCC 680 supports the conventional heads and applicable escalation.

National Insurance Co. Ltd. v. Birender (AIR 2020 SC 434) establishes that major, married or earning legal-representative claimants may apply for compensation and that their claims are not limited to conventional heads.

The Court also relied on Rama Bai v. M/s. Amit Minerals (2025 SCC 2067, as cited in the judgment) in support of directing the insurer to pay first and recover from the vehicle owner.

The Tribunal’s monthly income assessment of ₹14,500 lacked supporting proof. Applying the Karnataka State Legal Services Authority’s notional-income guidelines for a 2020 accident, the Court fixed income at ₹13,750 per month, added 10% future prospects, applied multiplier 9 for the deceased’s age of 60, and deducted one-fourth for personal expenses, awarding ₹12,25,125 for loss of dependency.

It added ₹16,500 each for loss of estate and funeral expenses and revised consortium to ₹1,76,000, while disallowing a separate award for loss of love and affection; the resulting total was ₹14,34,125.

On liability, the policy was in force on the accident date, but the driver’s alleged lack of a licence constituted a policy-breach issue between insurer and insured.

Applying the “pay and recover” principle, the Court held that the insurer must satisfy the third-party award first and may recover from the owner.

The award was modified to ₹14,34,125, with interest at 6% per annum from the date of the claim petition until realization.

The owner and insurer were held jointly and severally liable, but the insurer was directed to deposit the compensation and accrued interest within four weeks of receiving the certified judgment, with liberty to recover the amount from the owner through the executing court.