Insurance Company Must Indemnify Award And Recover From Owner; Driver Found Licensed To Drive TATA 407

A bench of Justices Sanjay Karol and Joymalya Bagchi heard the civil appeal by the legal representatives of the deceased challenging the High Court of Madhya Pradesh’s order that affirmed the Motor Accident Claims Tribunal’s award. The appeal arose from an accident on 27 November 2013 in which the deceased, Gokul Prasad, died when a TATA 407 truck driven by the respondent met with a collision; the claimants sought compensation under Section 166 of the Motor Vehicles Act.

The Court allowed the appeal in part and directed the insurer to indemnify the compensation awarded by the Tribunal and thereafter to recover the same from the owner of the offending vehicle. The Court held that the driver, who held a licence for a Light Motor Vehicle (LMV), was competent to drive the TATA 407 because its gross vehicle weight did not exceed 7,500 kg, observing that “the driver can be said to be holding a valid license to drive the same.” The bench accepted that the policy was a “Liability Only Policy” with no premium having been paid to cover certain risks, but nevertheless invoked the settled principle of “pay and recover” to ensure prompt relief to the claimants. The Court, in its reasoning, observed: “Therefore, in light of the attending facts and circumstances of the case, we are of the view that the Insurance Company is liable to indemnify the compensation amount awarded by the Tribunal and recover the same only from the owner of the offending vehicle.” The Court increased the conventional heads of compensation by 10% and fixed the total payable at Rs.26,97,500/, with interest at 6% per annum as directed by the Tribunal.

Background The deceased, aged 32 and described as a cloth-seller with monthly income taken at Rs.12,000, died on the spot after the TATA 407 truck — driven allegedly in a rash and negligent manner — collided near Kurwaiha Ghati Road. The claim petition sought Rs.49,26,000/-. The insurer pleaded breach of policy conditions, contending that the vehicle was used as a loading/commercial vehicle without a valid permit, registration endorsement and fitness certificate, and that the driver did not possess the licence authorising him to drive a commercial vehicle; it therefore denied liability.

The Motor Accident Claims Tribunal awarded Rs.19,53,000/- and fastened liability on the driver and owner, holding that the policy was “Liability Only” and that no premium covered the driver or passengers. The owner’s appeal to the High Court was dismissed; the High Court held the insurer rightly exonerated and relied on precedents including Mukund Dewangan and subsequent authority. The claimants impugned these findings before this Court, urging application of National Insurance Co. Ltd. v. Paravathneni and other decisions where the Court applied the “pay and recover” principle in cases of uninsured risk to ensure compensation to victims.

This Court examined the license classification issue in light of the Constitutional Bench’s reasoning in Bajaj Alliance General Insurance Co. Ltd. v. Rambha Devi and concluded that a licence for LMV permitted driving certain transport vehicles where gross vehicle weight did not exceed 7,500 kg. The Court held that, despite the absence of premium for the relevant risks, the insurer must initially satisfy the award and was entitled to recover the amount from the vehicle owner. Applying precedents including National Insurance Co. Ltd. v. Baljit Kaur and Anu Bhanvara v. IFFCO Tokio, the Court directed raising the compensation under conventional heads by 10% (per Pranay Sethi) and ordered immediate remittance of the decretal amount into the claimants’ bank account within four weeks. The driver was held not liable; the owner remained primarily liable to the insurer in the recovery action. Pending applications stood disposed of.

Case Details: Case No.: 2025 INSC 867; Civil Appeal No. 9538 of 2025 (Arising out of SLP (C) No. 1412 of 2024) Case Title: Sunita & Ors. v. United India Insurance Co. Ltd. & Ors. Appearances: For the Petitioner(s): (Not indicated in the judgment text) For the Respondent(s): (Not indicated in the judgment text) Amicus Curiae: Ms. Vidhi Pankaj Thaker

Delivered: July 17, 2025.