Widow And Children Keep ₹14.96 Lakh Award After Unlicensed-Driver Crash; Chhattisgarh HC Upholds Pay-And-Recover, Removes 9% Default Interest

The claimants, the wife and children of Tapsi Marai, were awarded ₹14,96,317 with interest at 6% per annum under Section 166 of the Motor Vehicles Act, 1988, for his death in a road accident on 24 May 2023.

The Claims Tribunal found that the offending vehicle’s driver did not hold a valid and effective driving licence, but directed the insurer to satisfy the award first and recover the amount from the owner and driver.

It also directed that, if payment was not made within 30 days, interest would be payable at 9% per annum from the date of the claim application.

The insurer appealed, challenging both the “pay and recover” direction and the higher default interest.

Section 173 of the Motor Vehicles Act, 1988 provides for an appeal against an award of the Claims Tribunal; Section 166 governs the claim for compensation, and Section 171 empowers the Tribunal to award interest on compensation.

The Court applied the “pay and recover” principle, relying on Rama Bai v. Amit Minerals, 2025 SCC OnLine SC 2067; Sunita v. United India Insurance Co. Ltd., 2025 SCC OnLine SC 1464; Manuara Khatun v. Rajesh Kumar Singh, (2017) 4 SCC 796; and Amrit Paul Singh v. Tata AIG General Insurance Co. Ltd., (2018) 7 SCC 558.

Under National Insurance Co. Ltd. v. Keshav Bahadur, (2004) 2 SCC 370, the power to award interest does not permit retrospective enhancement of the rate as a penalty for default; absent statutory authority, such a direction is impermissible.

The Tribunal’s finding that the driver lacked a valid and effective licence established a breach of the policy conditions, but did not require the insurer to be wholly exonerated.

Applying the cited Supreme Court authorities, the Court upheld the direction requiring the insurer to satisfy the award first, with liberty to recover from the owner and driver.

By contrast, Keshav Bahadur established that Section 171 does not authorize a higher, penal rate of interest for delayed payment.

The 9% default rate was therefore unsustainable, while the Tribunal’s ordinary award of 6% interest remained applicable.

The “pay and recover” direction was upheld, but the direction for interest at 9% per annum upon default was set aside.

The compensation of ₹14,96,317 shall carry interest at 6% per annum from the date of filing of the claim petition until actual payment; the remaining terms of the award remain intact.