1. Vehicular accident resulting in death — Claim for compensation under Motor Vehicles Act — Driver lacking valid driving license on date of accident. (Para 3 )
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2025 Supreme(SC) 1742
SUPREME COURT OF INDIA
K. VINOD CHANDRAN, N.V. ANJARIA, JJ.
Rama Bai – Appellant
Versus
M/S Amit Minerals, Through Incharge Officer/Competent Officer & Anrs. – Respondents
Civil Appeal No. 9669 of 2024
Decided On : 24-09-2025
Advocates appeared:
For the Appellant(s) : Mr. Kaustubh Shukla, AOR Ms. Pushpanjali Singh, Adv. Mr. Praveen Singh, Adv.
For the Respondent(s): Mr. Manish Kumar, Adv. Mr. Shivam Singh, Adv. Mr. Shubham Janghu, Adv. Mr. Ishwar Singh, Adv. Mr. Yoshit Jain, Adv. Ms. Ishita Agrwal, Adv. Mr. Divyansh Mishra, Adv. Mr. Kumar Saurav, Adv. Mr. Gopal Singh, AOR
For the Appellant(s) : Mr. Kaustubh Shukla, AOR Ms. Pushpanjali Singh, Adv. Mr. Praveen Singh, Adv.
For the Respondent(s): Mr. Manish Kumar, Adv. Mr. Shivam Singh, Adv. Mr. Shubham Janghu, Adv. Mr. Ishwar Singh, Adv. Mr. Yoshit Jain, Adv. Ms. Ishita Agrwal, Adv. Mr. Divyansh Mishra, Adv. Mr. Kumar Saurav, Adv. Mr. Gopal Singh, AOR
The absence of a valid driving license at the time of the accident exonerates the insurer from liability under the Motor Vehicles Act, while the 'pay and recover' principle mandates that the insurer must initially satisfy the compensation amount.
Headnote:(A) Motor Vehicles Act - Sections 149(2)(a)(ii) and 15 - Liability of insurer - Validity of driving license - High Court held that driver was not holding a valid license at the time of accident, leading to breach of policy and relieving the insurer of liability. Court endorsed the ‘pay and recover’ principle as discussed in Shamanna and Parminder Singh. (Paras 3.4, 6.1, and 7)
(B) Compensation - Enhancement of compensation - High Court enhanced compensation from Rs.3 lakhs to Rs.5,33,600/- based on misinterpretation of driving license validity and compensation parameters. Compensatory awards were framed under various heads. (Paras 2.2 and 3.2)
Facts of the case:
The appellant is the mother of the deceased Nand Kumar, who died in a vehicular accident involving a truck and a tractor on 13.10.2011. The initial compensation was Rs.3 lakhs awarded by the Tribunal, subsequently enhanced by the High Court.
Findings of Court:
High Court's determination of driver’s invalid license as the basis for exonerating the insurance company was upheld and the compensation was enhanced to Rs.5,33,600/- with 7% interest from the date of filing.
Issues: The legality of the exoneration of the insurer due to the driver’s lack of a valid license and the application of the 'pay and recover' principle.
Ratio Decidendi: The court reaffirmed that an insurer can be exonerated from liability if the driver violates policy conditions such as not holding a valid license; however, the principle of ‘pay and recover’ was directed to be applied, requiring the insurer to pay compensation initially while reserving the right to recover from the insured.
Result: Appeal allowed.
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Table of Contents
2. Whether the insurance company should satisfy the compensation award and subsequently recover the amount from the insured owner under the pay and recover doctrine. (Para 2 , 5 )
3. Driver's lack of valid license constitutes a breach of insurance policy conditions, entitling the insurer to a defense under Section 149(2)(a)(ii) of the Motor Vehicles Act. (Para 6 )
4. In cases of policy breach due to invalid driving licenses, the insurer must satisfy the award to the third party and may recover it from the insured. (Para 7 )
5. Appeal allowed — Insurer directed to satisfy the award with the right to recover the amount from the insured owner. (Para 7 )
6. Does a driver's expired license exonerate the insurance company from liability?
Yes, if the driver does not possess a valid and effective driving license on the date of the accident, it results in a breach of insurance policy conditions, entitling the insurer to avoid liability under Section 149(2)(a)(ii) of the Motor Vehicles Act. (Para 6 )
7. What is the pay and recover principle in motor accident claims?
The pay and recover principle requires the insurance company to first satisfy the compensation amount payable to the third-party victim and subsequently recover that amount from the insured owner of the vehicle. (Para 5 , 7 )
8. Is the pay and recover doctrine applicable even when the insurer is legally entitled to avoid liability?
Yes, despite legal defenses for policy breach, the court may direct the insurer to satisfy the award to the third party and recover the amount from the insured owner. (Para 5 , 7 )
JUDGEMENT :
N.V. ANJARIA, J.
Preferred by the appellant-claimants, the present Appeal is directed against judgment and award dated 11.06.2020 of the High Court of Chhattisgarh, Bilaspur in M.A. (C) No. 876 of 2013, whereby the High Court enhanced the compensation payable to the appellant-claimant and absolved respondent No. 3 – Insurance Company from the liability to pay the amount, fastening the same on respondent Nos. 1 and 2 – driver and the owner respectively.
2. The case and grievance of the appellant is that the High Court ought to have applied the doctrine of “pay and recover” requiring the Insurance Company to satisfy the amount of compensation to the claimant and subsequently allow the Insurance Company to recover the amount in accordance with law.
2.1 In support of the plea that principle of ‘pay and recover’ should have been applied, the appellant pressed into service the decisions of this Court in Shamanna and Another v. Divisional Manager, Oriental Insurance Company Limited and others , (2018) 9 SCC 650 and in Parminder Singh v. New India Assurance Company Limited and Others , (2019) 7 SCC 217.
3. The appellant happens to be the mother of one Nand Kumar who died in a vehicular accident that occurred on 13.10.2011. A truck bearing registration No. CG-04-J-1233 driven by respondent No. 1 met with an accident with a tractor-trolley, tractor bearing separate registration No.CG-04-DM-9357. The said Nand Kumar was a conductor in the truck who died succumbing to injuries suffered in the accident.
3.1 The 2nd Additional Motor Accident Claims Tribunal, Raipur, Chhattisgarh in Claim Case No.64 of 2012 instituted by the parents of the deceased awarded compensation of Rs.3 Lakhs by applying the relevant parameters for determination of compensation. The compensation amount was ordered to be deposited by respondent Nos. 1 and 2 – driver and the owner and to be disbursed in accordance with the directions issued. It was found that respondent No.1–Driver was not holding a valid licence on 13.10.2011 which was the date of the accident.
3.2 In the appeal preferred by the appellant before the High Court, the amount of compensation was enhanced, assessing it under different heads, totalling to Rs.5,33,600/- instead of Rs.3 Lakhs awarded by the Tribunal, with interest at the rate of 7% per annum from the date of the filing of the claim application till the realisation. While enhancing the compensation, the High Court fastened the liability to pay the amount on the respondent No. 1 – driver and respondent No. 2 – owner holding that respondent No. 3 – Insurance Company was entitled in law to avoid the liability.
3.3 The aforesaid conclusion reached by the High Court, concurring with what was held by the Accidents Claim Tribunal on the said issue, was arrived at on the basis that respondent No.1 Paras Satnami–driver’s driving licence No. CG.04/2002/0006140, issued from the Regional Transport Office, for driving the transport vehicle was not valid from 20.06.2010 to 02.11.2011 as the validity of the license had expired on 20.06.2010 and only renewed from 03.11.2011 to 02.11.2014. The accident took place on 13.10.2011.
3.4 In other words, on the date of the accident a valid licence was not held by respondent No. 2 – driver. Therefore, it was not legally permissible for him to drive the vehicle on the date of accident. The factum that there was no driving licence on 03.10.2011 was proved from the Insurance Document (Ex. D-1C) and the Driving Licence (Ex. D-2C). Thus, the driver of the offending vehicle was found not to have a valid license on the date of accident.
3.5 While endorsing to the view of the Tribunal that there was no valid license of the driver on the date of accident which would render the insurance company not liable to pay the compensation, the High Court referred to the relevant provisions of the MOTOR VEHICLES ACT , including Section 15 which prescribes for “Renewal of Driving Licences”. The High Court proceeded to rely on the decisi
