1. Fatal accident involving a commercial vehicle — Claim for compensation under Section 166, Motor Vehicles Act, 1988 — Dispute over insurance liability and driver's license validity. (Para 3 , 4 )
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2025 Supreme(SC) 1085
SUPREME COURT OF INDIA
SANJAY KAROL, JOYMALYA BAGCHI, JJ.
Sunita & Ors. - Appellants
Versus
United India Insurance Co. Ltd. & Ors. – Respondents
Civil Appeal No. 9538 of 2025 (Arising out of Special Leave Petition (Civil) No. 1412 of 2024)
Decided On : 17-07-2025
Advocates appeared:
For the Petitioner(s): Mr. Sanjay Kumar Dubey, Adv. Mr. Devendra Kumar Shukla, AOR Mr. Jitendra Kumar Tripathi, Adv. Ms. Shuchi Singh, Adv. Ms. Anjali Dwivedi, Adv. Mr. Krishna Kant Dubey, Adv. Mr. Akhand Prakash Gupta, Adv. Mr. Vivek Kumar Pandey, Adv.
For the Respondent(s): Mr. T. Mahipal, AOR Mr. Rohit Kumar Sinha, Adv.
For the Petitioner(s): Mr. Sanjay Kumar Dubey, Adv. Mr. Devendra Kumar Shukla, AOR Mr. Jitendra Kumar Tripathi, Adv. Ms. Shuchi Singh, Adv. Ms. Anjali Dwivedi, Adv. Mr. Krishna Kant Dubey, Adv. Mr. Akhand Prakash Gupta, Adv. Mr. Vivek Kumar Pandey, Adv.
For the Respondent(s): Mr. T. Mahipal, AOR Mr. Rohit Kumar Sinha, Adv.
IMPORTANT POINT
(1) Driving Licence – No endorsement is required to drive a commercial vehicle of type in question, by Driver who possesses a license to drive a Light Motor Vehicle (LMV).
(2) Motor Insurance – Principle of “Pay and Recover” can be invoked even in case of “Liability Only Policy”.
Headnote:
(A) Motor Vehicles Act, 1988 – Sections 2(17) – Driving licence – No endorsement is required to drive a commercial vehicle of type in question, by Driver who possesses a license to drive a Light Motor Vehicle (LMV) – Offending vehicle is a commercial one and driver of said vehicle at the time of accident possessed a license to only drive a Light Motor Vehicle (LMV) – Considering gross weight of vehicle in question is not in excess of 7500 Kg., driver can be said to be holding a valid license to drive the same – However, liability could not have been fastened upon Insurer for reason that risk stood not covered as no premium was paid. (Paras 10 and 11)
(B) Motor Vehicles Act, 1988 – Section 147 – Motor Insurance – Liability Only Policy – Death in motor accident – No premium was paid to cover driver, owner, or a gratuitous passenger travelling therein – However, even then, principle of “Pay and Recover” ought to have been invoked – Courts below ought to have directed Insurance Company to indemnify the amount and thereafter recover the same – Insurance Company is liable to indemnify compensation amount awarded by Tribunal and recover the same only from owner of offending vehicle. (Paras 13 and 18)
Facts of the case:
Present appeal arises from final judgment and order dated 12th December 2022, passed by High Court of Madhya Pradesh at Jabalpur in Misc. Appeal No. 554 of 2017, which, in turn, was preferred against award dated 19th December 2016 passed in Case Claim No.22 of 2015 by Motor Accident Claim Tribunal.
Findings of Court:
Amount to be directly remitted into bank amount of claimant-appellant(s). Particulars of bank account are to be immediately supplied by Counsel for the appellant(s) to Counsel for respondent. Amount be remitted positively within a period of four weeks thereafter.
Result : Appeal allowed.
Legal Category Hierarchy
Table of Contents
2. Insurer alleged policy breach due to lack of commercial license and passenger premium — Claimants argued for the application of the pay and recover principle. (Para 5 , 8 )
3. LMV license is valid for commercial vehicles under 7500 kg — Insurers must satisfy claims for gratuitous passengers and recover from the owner. (Para 10 , 13 , 14 , 15 , 17 )
4. LMV license suffices for transport vehicles under 7500 kg — Insurers must apply the pay and recover principle for gratuitous passengers despite policy breaches. (Para 10 , 18 )
5. Appeal allowed — Insurance company directed to indemnify the compensation amount and recover it from the vehicle owner — Compensation amount increased. (Para 18 , 22 )
6. Does a driver holding a Light Motor Vehicle (LMV) license need additional authorization to drive a commercial transport vehicle?
No, a driver with an LMV license is permitted to operate a transport vehicle without additional authorization if the gross vehicle weight does not exceed 7500 kg. (Para 10 )
7. Is an insurance company liable to pay compensation for a gratuitous passenger if the premium for such coverage was not paid?
Yes, under the pay and recover principle, the insurance company must first satisfy the compensation award to the claimant and subsequently recover the amount from the vehicle owner. (Para 13 , 14 , 15 , 18 )
8. How are conventional heads of compensation, such as loss of estate and consortium, treated over time?
Conventional heads of compensation should be revised and increased every three years to ensure the award remains just and fair. (Para 20 )
JUDGMENT :
SANJAY KAROL, J.
Leave Granted.
2. The present appeal arises from the final judgment and order dated 12th December 2022, passed by the High Court of Madhya Pradesh at Jabalpur in Misc. Appeal No. 554 of 2017, which, in turn, was preferred against the award dated 19th December 2016 passed in Case Claim No.22 of 2015 by the Motor Accident Claim Tribunal, District: Seedhi (M.P).
3. The facts giving rise to the present appeal, in a nutshell are that on 27th November 2013, at about 8:15 p.m., the deceased, namely, Gokul Prasad, aged 32 years, was returning home from a weekly market, travelling in a vehicle i.e., TATA 407 Truck bearing registration No. M.P. 53G/03861[Hereinafter referred to as “Offending Vehicle”.], being driven by Respondent No. 3 herein. Upon reaching near Kurwaiha Ghati Road, the said vehicle driven, in a rash and negligent manner, met with an accident. As a result, the deceased sustained severe injuries and died on the spot.
4. A claim petition was filed on behalf of the Appellants (the legal representatives of the deceased) under Section 166 of the Motor Vehicles Act, 1988, before the Tribunal seeking compensation to the tune of Rs. 49,26,000/- claiming the income of the deceased to be Rs.12,000/- per month engaged as a cloth-seller.
5. The Respondent Insurance Company opposed the claimant-appellant(s)’s claim and set up a plea of breach of Policy as the offending vehicle was being used as a loading vehicle without a valid permit, registration and fitness certificate. This was in violation of the conditions of the Insurance Policy. Also, the driver of the vehicle was also not holding a valid license. Consequently, the Insurance Company is not liable to pay any compensation.
6. The Tribunal vide its order dated 19th December 2016, awarded compensation amounting to Rs.19,53,000/- along with interest @6% per annum. The liability to pay compensation was fastened upon the driver and the owner of the vehicle, jointly and severally, as there was a clear violation of the terms and conditions of the Policy. The Tribunal held that though the vehicle was commercial in nature but driven by the driver possessing a license only to drive a Light Motor Vehicle, i.e., a non-commercial vehicle. Furthermore, there was no endorsement stating that the driver was authorized to drive the commercial vehicle. Subsequently, the Tribunal concluded that the offending vehicle was insured under the “Liability Only Policy” which covered only third-party liability as no premium was paid covering the driver or the owner of the vehicle.
7. Being aggrieved thereof, the owner of the offending vehicle preferred an appeal before the High Court. The High Court vide impugned order dated 12th December 2022 dismissed the appeal filed by the owner, affirming the compensation awarded by the Tribunal. The Court observed that the Insurance Company stood rightly exonerated by the Tribunal with liability being fastened on the driver and owner of the vehicle. The High Court gave the following findings by referring to the decisions rendered by this Court:
7.1. By relying on Mukund Dewangan v. Oriental Insurance Company Ltd. Limited & Others, (2017) 14 SCC 663, the High Court held that the endorsement or any other authorization to drive a commercial vehicle was not required, if the driver was holding a license to drive the Light Motor Vehicle (LMV);
7.2. The offending vehicle is insured under the “Liability Only Policy”, which only fixes the liability of the Insurance Company towards third-party liability. Since no premium was paid to cover the liability of the driver as well as any passenger travelling, in the light of law laid down in New India Assurance Company Ltd. v. Vedwati & Ors., (2007) 9 SCC 486, and New India Assurance Company Ltd. v. Asharani & Ors., (2003) 2 SCC 223, the Court came at the conclusion that the liability of the Insurance Company stood rightly exonerated.
8. The present appeal has been instituted by the claimant- appellant(s). The si
