Karnataka High Court
Manjunath Naik vs Smt. Annapoorna Ranade on 19 February, 2026
NC: 2026:KHC:10329
MFA No. 2298 of 2020
C/W MFA.CROB No. 9 of 2021
HC-KAR
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 19TH DAY OF FEBRUARY, 2026
BEFORE
THE HON'BLE MS. JUSTICE TARA VITASTA GANJU
MISCELLANEOUS FIRST APPEAL NO.2298 OF 2020(MV-D)
C/W
MFA CROSS OBJECTION NO. 9 OF 2021 (MV-D)
IN MFA No. 2298/2020
BETWEEN:
MANJUNATH NAIK
AGED ABOUT 57 YEARS,
S/O LATE BABU NAIK,
R/AT KAIRADKA HOUSE,
DURGA POST AND VILLAGE,
KARKALA TALUK,
UDUPI DISTRICT-574 104.
...APPELLANT
(BY SRI. RAJU BHAT., ADVOCATE)
AND:
1. SMT. ANNAPOORNA RANADE
W/O LATE DATTATREYA RANADE,
AGED ABOUT 60 YEARS,
2. BALAKRISHNA RANADE
AGED ABOUT 39 YEARS,
R/AT NO.296, 11TH CROSS,
MPM LAYOUT, MALLATHAHALLI,
BANGALORE SOUTH,
BANGALORE-560 056.
3. SRI. PURUSHOTTHAMA RANADE
AGED ABOUT 36 YEARS,
-1-
NC: 2026:KHC:10329
MFA No. 2298 of 2020
C/W MFA.CROB No. 9 of 2021
HC-KAR
4. SRI. MAHADEVA RANADE
AGED ABOUT 34 YEARS,
R/AT AYYAPPA SWAMY TEMPLE,
LAKSHMIPURAM EXTN, SAKALESHPUR,
HASSAN-573 134.
5. SMT. NEERAJA BAPAT.S.N.
AGED ABOUT 31 YEARS,
W/O NIRANJAN BAPAT.S.C.,
R/AT VIDYARANYAPURA, SRINGERI,
CHICKMAGALUR-577 139.
RESPONDENT NO.2-5 ARE THE CHILDREN OF
LATE DATTATREYA RANADE,
RESPONDENT NO.1-3 ARE R/AT RANADE NIVAS,
HERANJA VALYA, MALA POST AND VILLAGE,
KARKALA TALUK, UDUPI DISTRICT-574 104.
6. THE UNITED INDIA INSURANCE CO.LTD.,
BRANCH OFFICE KARKALA,
P B NO. 29, 2ND FLOOR,
SUSHEELA SANJIV ENCLAVE,
NEAR KARNATAKA BANK LIMITED,
MARKET ROAD, KARKALA,
UDUPI DISTRICT-574 104.
...RESPONDENTS
(BY SRI. PRASANNA.V.R., ADVOCATE FOR R1 TO R5;
SRI. CHENNAKESHAVA MURTY., ADVOCATE FOR R6)
THIS MFA IS FILED U/S.173(1) OF MV ACT, AGAINST THE
JUDGMENT AND AWARD DT.28.03.2019 PASSED IN MVC
NO.89/2018 ON THE FILE OF THE SENIOR CIVIL JUDGE AND
AMACT, KARKALA, AWARDING COMPENSATION OF RS.
8,50,790/- WITH INTEREST AT 8 PERCENT P.A. FROM THE DATE
OF PETITION TILL THE DATE OF REALIZATION.
-2-
NC: 2026:KHC:10329
MFA No. 2298 of 2020
C/W MFA.CROB No. 9 of 2021
HC-KAR
IN MFA.CROB NO. 9/2021
BETWEEN:
1. SMT. ANNAPOORNA RANADE
W/O LATE DATTATREYA RANADE,
AGED ABOUT 60 YEARS,
R/AT RANADE NIVAS HERANJA VALYA,
MALA POST AND VILLAGE KARKALA TALUK,
UDUPI DISTRICT-574 104.
2. SRI. BALAKRISHNA RANADE
AGED ABOUT 39 YEARS,
R/AT NO. 296, 11TH CROSS,
MPM LAYOUT, MALLATHAHALLI,
BANGALORE SOUTH, BANGALORE-560 056.
3. SRI. PURUSHOTTHAMA RANADE
AGED ABOUT 36 YEARS,
R/AT RANADE NIVAS,
HERANJA VALYA, MALA POST,
AND VILLAGE, KARKALA TALUK,
UDUPI DISTRICT-574 104.
4. SRI. MAHADEVA RANADE
AGED ABOUT 34 YEARS,
R/AT AYYAPPA SWAMY TEMPLE,
LAKSHMIPURAM EXTN,
SAKALESHPUR, HASSAN-573 134.
5. SMT. NEERAJA BAPAT.S.N.
AGED ABOUT 31 YEARS,
W/O NIRANJAN BAPAT S.C.,
R/AT VIDYARANYAPURA,
SRINGERI, CHICKMAGALUR-577 139.
...CROSS OBJECTOR
(BY SRI. PRASANNA.V.R., ADVOCATE FOR
SRI. RAJU BHAT., ADVOCATE)
-3-
NC: 2026:KHC:10329
MFA No. 2298 of 2020
C/W MFA.CROB No. 9 of 2021
HC-KAR
AND:
1. SRI. MANJUNATH NAIK
AGED ABOUT 57 YEARS,
S/O LATE BABU NAIK,
R/AT KAIRADKA HOUSE,
DURGA POST AND VILLAGE,
KARKALA TALUK-576 117.
2. M/S. UNITED INDIA INSURANCE CO. LTD.,
BRANCH OFFICE KARKALA,
P.B.NO.29, 2ND FLOOR,
SUSHILA SANJIV ENCLAVE,
NEAR KARNATAKA BANK LIMITED.,
MARKET ROAD, KARKALA DISTRICT-574 104.
...RESPONDENTS
(BY SRI. CHANNAKESHAVA MURTHY., ADVOCATE FOR R2)
THIS MFA.CROB IN MFA NO. 2298/2020 FILED UNDER
ORDER 41 RULE 22 READ WITH SECTION 173(1) OF MOTOR
VEHICLES ACT, AGAINST THE JUDGMENT AND AWARD
DATED 28.03.2019 PASSED IN MVC NO. 89/2018 ON THE
FILE OF THE SENIOR CIVIL JUDGE AND ADDITIONAL MACT,
KARKALA, PARTLY ALLOWING THE CLAIM PETITION FOR
COMPENSATION AND SEEKING ENHANCEMENT OF
COMPENSATION.
THESE APPEALS, COMING ON FOR ADMISSION, THIS DAY,
JUDGMENT WAS DELIVERED THEREIN AS UNDER:
CORAM: HON'BLE MS. JUSTICE TARA VITASTA GANJU
-4-
NC: 2026:KHC:10329
MFA No. 2298 of 2020
C/W MFA.CROB No. 9 of 2021
HC-KAR
ORAL JUDGMENT
1. Both the appeals seek to challenge a Judgment and Award dated 28.03.2019 passed in MVC.No.89/2018, by the learned Senior Civil Judge and AMACT, Karkala [hereinafter referred to as the "Impugned Award"]. By the Impugned Award, the learned Tribunal has granted compensation in a sum of Rs.8,50,790/- along with interest at the rate of 8% per annum, from the date of petition till realization payable by respondent No.1.
2. The challenge before this Court is by way of two appeals both by owner of the vehicle as well as by the claimants. MFA.No.2298/2020 has been filed by the owner, while MFA.Crob.No.9/2021 has been filed by the claimants.
3. The brief facts are that, on 09.06.2017, the deceased Dattathreya Ranade was walking on the extreme left side of the bus stand - Ananthashayana along with his son Mr.Purushotthama Ranade. When they reached near Dwarka Hotel, an auto rikshaw bearing registration No.KA- -5-
NC: 2026:KHC:10329 MFA No. 2298 of 2020 C/W MFA.CROB No. 9 of 2021 HC-KAR 20-C-9884 hit the deceased. As a result of which, he sustained grievous injuries and initially the deceased was hospitalized for 34 days and thereafter again for 20 days. However, he succumbed to his injuries on 05.09.2017. After the accident, the claimants also engaged a home nurse to look after the injured/deceased and also spent substantial amounts towards medicine, conveyance, food, attendant and other expenses including his funeral expenses. A claim petition was filed by the claimants, which was contested by the owner of the offending vehicle along with the Insurance Company.
4. On the basis of the pleadings, the learned Tribunal framed the following issues:
"1. Whether the petitioners prove that Dattathreya Ranade the husband of petitioner No.1 and father of petitioners No.2 to 5 died in a Motor Vehicle Accident on 09-06-2017 at 4.20 p.m. near Dwaraka Hotel, Ananthashayana, due to rash and negligent driving of autorickshaw bearing Reg.No.KA-20-C-9884 by its driver as contended?
2. Whether the respondent No.2 proves that the driver of autorickshaw was not holding valid and effective driving licence as on the date of alleged accident?-6-
NC: 2026:KHC:10329 MFA No. 2298 of 2020 C/W MFA.CROB No. 9 of 2021 HC-KAR
3. Whether the petitioners are entitled for the compensation amount, if so what is the amount and from whom it is recoverable?
4. What Order or Award?"
5. Purushotthama Ranade son of the deceased examined himself as PW.1 and got marked the documents at Exs.P1 to Ex.P38 in evidence. Respondent No.1 is the owner, who examined himself as RW.1 and produced documents at Exs.R1 to R3. No documents were produced by the Insurance Company nor was any evidence led by them.
6. After examining the evidence lead by the parties, the learned Tribunal has awarded the compensation under the following heads:
Sl.No. Particulars Amount (Rs.)
1 Loss of dependency 3,36,000/-
2 Loss of love and affection 80,000/-
3 Medical expenses 3,54,790/-
4 Loss of consortium 20,000/-
5 Loss of estate 15,000/-
6 Funeral expenses 25,000/-
7 Conveyance 10,000/-
8 Nourishment food and attendant
10,000/-
charges
Total 8,50,790/-
-7-
NC: 2026:KHC:10329
MFA No. 2298 of 2020
C/W MFA.CROB No. 9 of 2021
HC-KAR
7. The learned Tribunal recorded a finding that since the owner of the vehicle did not possess a valid driving licence, the Insurance Company has been liable to pay the compensation and recover the same from the owner of the vehicle. The learned Tribunal found that the Insurance Company had proved that the owner who is the driver himself, did not have any driving licence at all and therefore, the Insurance Company cannot be directed to pay the compensation and thereafter recover the same from the Insurance Company. Thus, it was held that the Insurance Company is not liable to make any payment at all. In addition, the learned Tribunal also gave a finding that the Court has no inherent powers to order for pay and recovery. The relevant extract is below:
"Here, in the present case as stated above the insurance company has been able to prove that driver had no licence at all. Therefore, the insurance company is not liable to compensate the owner. The case would have been otherwise if the driver had no valid licence. Here, the owner is driver himself. In such circumstances the insurance company cannot be directed to pay the compensation first to the claimants on behalf of the owner and then recover the same from the owner. In other words, the owner cannot be allowed to be compensated for the wrong done by him intentionally, particularly when the insurance company is not liable to pay.-8-
NC: 2026:KHC:10329 MFA No. 2298 of 2020 C/W MFA.CROB No. 9 of 2021 HC-KAR In view of my above discussion, I find that the insurance company cannot be directed to pay the amount fixed by the tribunal and recover the same from the owner. In fact he insurance company is not liable to pay at all and, therefore, when the company is not liable to pay in view of the present facts and circumstances of the case, the court cannot direct the insurance company to pay first and then recover. Here, the owner, who is driver, is only liable to pay the compensation to the claimants."
20. In view the above rulings, this Court has no inherent power to order for pay and recover proceedings. Hence the respondent No.1 shall pay compensation to the petitioners. Therefore, this issue is answered partly in the affirmative holding that the petitioners are entitled for compensation of Rs.8,50,790/- with interest at the rate of 8% p.a., from the date of petition till the date of realization, from respondent No.1."
8. It is contended by the learned counsel for owner that the Impugned Order suffers from an infirmity. It is further contended that in terms of judgment of the Supreme Court in National Insurance Co. Ltd. v. Swaran Singh and others1, the Insurance Company was liable to make payment of the amounts even if there was no valid driving licence and to recover the amounts from the owner and the liability could not have been fastened on the owner in the first instance. Reliance in this behalf is placed on the 1 (2004) 3 SCC 297 -9- NC: 2026:KHC:10329 MFA No. 2298 of 2020 C/W MFA.CROB No. 9 of 2021 HC-KAR judgment of Swaran Singh's case as well as Rama Bai v. M/s. Amit Minerals through Incharge Officer/Competent Officer and Another2, where the Supreme Court has held that where the driver had no valid driving licence, the Insurance Company is not permitted to avoid its liability and the Insurance Company would be directed to satisfy the award and then recover the same from the insured / owner of the vehicle. Reliance was also placed on the judgment in the case of Shamanna and Another v. Divisional Manager, Oriental Insurance Company Limited and others3.
9. The learned counsel for the claimants on the other hand, has contended while does not dispute the legal position qua order grant of pay and recovery rights the present appeal has been filed for enhancement of the compensation amount. The learned counsel submits that the accident occurred in the year 2017 and the notional 2 2025 SCC Online SC 2067 3 (2018) 9 SCC 650
- 10 -
NC: 2026:KHC:10329 MFA No. 2298 of 2020 C/W MFA.CROB No. 9 of 2021 HC-KAR income to be taken at that time was Rs.11,000/-. However, the Tribunal has taken the income at the rate of Rs.6,000/- Secondly, it is contented although the medical bills were granted, from one medical bill Ex.P16 issued by Adarsha Hospital, Udupi, an amount of Rs.1,00,000/- has been deducted by the Tribunal without any reason being assigned for the same.
10. The learned counsel for the Insurance Company on the other hand contends that since it is a death case, the compensation has been not awarded correctly by the learned Tribunal. He submits that 'funeral expenses' have been wrongly awarded at Rs.25,000/-, while both 'loss of love and affection' and 'loss of consortium' have been given. Learned counsel for the Insurance Company submits that the copy of the bill of Dr.Raja/Dr.Jaspreet Singh is exorbitant and the Tribunal has rightly held it to be the same.
11. The issues that arise for the consideration of this Court is:
- 11 -
NC: 2026:KHC:10329 MFA No. 2298 of 2020 C/W MFA.CROB No. 9 of 2021 HC-KAR
(i) Whether the Tribunal has the power to award "pay and recovery" order; and
(ii) Whether the Tribunal has calculated the compensation in accordance with settled position of law?
12. The undisputed facts are that the deceased was aged 65 years. Hence, the multiplier of '7' has to be applied. The dependent family members are 2. Hence, the deduction would be 1/3rd. The total income comes to Rs.7,334/- (Rs.11,000 - 1/3rd = Rs.7,334/-). Accordingly, the 'loss of dependency' is to be awarded in the following manner:
(Rs.7,334 X 7 X 12 = Rs.6,16,056/-) 12.1. In addition, since the deceased was survived by his wife, three sons and one daughter, hence filial consortium is also required to be awarded. In addition, the claimants had produced medical bills for the hospitalization of the deceased which were exhibited as Ex.P.21. These included at Ex.P.16 as an in-patient bill of Adarsha Hospital Doctors, where an amount has been excluded from the Medical Bill as "exhorbitant". No evidence has been placed on record
- 12 -
NC: 2026:KHC:10329 MFA No. 2298 of 2020 C/W MFA.CROB No. 9 of 2021 HC-KAR to evidence that these charges are not accurate by any contesting party. In these circumstances the learned Tribunal could not have deducted this amount terming it as exhorbitant, without any evidence. The hospitalization is not disputed, and since it is an inpatient bill, one part cannot be deducted. This amount is accordingly to be added. 12.2 So far as concerned the contention that a sum of Rs.1,00,000/- was exorbitant amount to be paid. The learned Tribunal has other than stating that this was an exorbitant amount, has given no reason for saying the same. It is not disputed that the deceased was hospitalized first for so many days and subsequently, in Adarsh Hospital got hospitalized. Ex.P16 is the bill of Adarsh Hospital, which sets out various charges including the charges of the Doctor. There has been no evidence placed on record to state that this amount is not as per the bill of Adarsh Hospital. Thus, for the Tribunal to hold it as being exorbitant, cannot be sustained.
- 13 -
NC: 2026:KHC:10329 MFA No. 2298 of 2020 C/W MFA.CROB No. 9 of 2021 HC-KAR
13. Thus, the compensation awarded by the learned Tribunal is re-assessed in the following manner:
Sl.No. Particulars Amount (Rs.)
1 Loss of dependency 6,16,056/-
(Rs.7,334 X 7 X 12 = Rs.6,16,056/-)
2 Medical expenses 4,54,790/-
3 Loss of consortium 2,00,000/-
4 Loss of estate 15,000/-
5 Funeral expenses 15,000/-
6 Conveyance 10,000/-
7 Nourishment food and 10,000/-
attendance charges
Total 13,20,846/-
Less: awarded by Tribunal 8,50,790/-
Enhanced compensation 4,70,056/-
13.1 Hence, the claimants are entitled to total
compensation of Rs.13,20,846/- along with interest at the rate of 6% per annum from the date of petition till the date of realization.
14. In so far as the liability is concerned, the learned Tribunal has given a finding that there was no valid driving licence. In this regard, the Police registered an FIR and the charge sheet-Exs.P1 and Ex.P8, respectively disclose that the driver of the auto rikshaw has no valid driving licence.
- 14 -
NC: 2026:KHC:10329 MFA No. 2298 of 2020 C/W MFA.CROB No. 9 of 2021 HC-KAR Paragraph No.12 of the Impugned Award in this behalf is set out below:
"12. Issue No.2:- It is contended by respondent No.2 that the driver of the auto rickshaw bearing Reg.No.KA- 20-C-9884 was not holding valid and effective driving licence at the time of alleged accident. Respondent No.1-Manjunath Naik as RW.1 deposed that he was not the driver of the auto rickshaw at the time of accident and he has no driving licence to drive the auto rickshaw. He has further deposed that his son Govardhan Naik drove the auto rickshaw at the time of accident and he had valid driving licence. But the police registered FIR and filed chargesheet against respondent No.1. Ex.P8 chargesheet discloses that the driver of the auto rickshaw had no valid driving licence at the time of accident. Respondent No.1 has not challenged the chargesheet filed by the police. Hence, I answer Issue No.2 in the affirmative."
[Emphasis supplied]
15. However, the Tribunal has thereafter held that it has no power to order pay and recovery. The relevant extract of the Impugned Award is set out below:
"20. In view of the above rulings, this court has no inherent power to order for pay and recover proceedings. Hence the respondent No.1 shall pay compensation to the petitioners. Therefore, this issue is answered partly in the affirmative holding that the petitioners are entitled for compensation of Rs.8,50,790/- with interest at the rate of 8% p.a., from the date of petition till the date of realization, from respondent No.1."
16. The law on the liability of the Insurance Company in the case of a fake, invalid or non-existent driving licence is
- 15 -
NC: 2026:KHC:10329 MFA No. 2298 of 2020 C/W MFA.CROB No. 9 of 2021 HC-KAR no longer res integra. The Supreme Court in the Swaran Singh's case while examining the defence of the insurance company that the offending vehicle was not driven by an authorized person or a person not having a valid driving licence held that it is obligatory on the part of the Respondent/Insurance Company to substantiate the defence and a mere plea would not suffice. The relevant extract is set out below:
"84. We have analysed the relevant provisions of the said Act in terms whereof a motor vehicle must be driven by a person having a driving licence. The owner of a motor vehicle in terms of Section 5 of the Act has a responsibility to see that no vehicle is driven except by a person who does not satisfy the provisions of Section 3 or 4 of the Act. In a case, therefore, where the driver of the vehicle, admittedly, did not hold any licence and the same was allowed consciously to be driven by the owner of the vehicle by such person, the insurer is entitled to succeed in its defence and avoid liability. The matter, however, may be different where a disputed question of fact arises as to whether the driver had a valid licence or where the owner of the vehicle committed a breach of the terms of the contract of insurance as also the provisions of the Act by consciously allowing any person to drive a vehicle who did not have a valid driving licence. In a given case, the driver of the vehicle may not have any hand in it at all e.g. a case where an accident takes place owing to a mechanical fault or vis major. (See Jitendra Kumar [(2003) 6 SCC 420 : JT (2003) 5 SC 538].
- 16 -
NC: 2026:KHC:10329
MFA No. 2298 of 2020
C/W MFA.CROB No. 9 of 2021
HC-KAR
xxx xxx xxx
90. We have construed and determined the scope of sub-clause (ii) of sub-section (2) of Section 149 of the Act. Minor breaches of licence conditions, such as want of medical fitness certificate, requirement about age of the driver and the like not found to have been the direct cause of the accident, would be treated as minor breaches of inconsequential deviation in the matter of use of vehicles. Such minor and inconsequential deviations with regard to licensing conditions would not constitute sufficient ground to deny the benefit of coverage of insurance to the third parties.
91. On all pleas of breach of licensing conditions taken by the insurer, it would be open to the Tribunal to adjudicate the claim and decide inter se liability of insurer and insured; although where such adjudication is likely to entail undue delay in decision of the claim of the victim, the Tribunal in its discretion may relegate the insurer to seek its remedy of reimbursement from the insured in the civil court.
92. It may be true as has been contended on behalf of the petitioner that a fake or forged licence is as good as no licence but the question herein, as noticed hereinbefore, is whether the insurer must prove that the owner was guilty of the wilful breach of the conditions of the insurance policy or the contract of insurance. In Lehru case [(2003) 3 SCC 338 : 2003 SCC (Cri) 614] the matter has been considered in some detail. We are in general agreement with the approach of the Bench but we intend to point out that the observations made therein must be understood to have been made in the light of the requirements of the law in terms whereof the insurer is to establish wilful breach on the part of the insured and not for the purpose of its disentitlement from raising any defence or for the owners to be absolved from any liability
- 17 -
NC: 2026:KHC:10329 MFA No. 2298 of 2020 C/W MFA.CROB No. 9 of 2021 HC-KAR whatsoever. We would be dealing in some detail with this aspect of the matter a little later.
[Emphasis Supplied]
17. The Swaran Singh case clarified that merely stating that the driver of a vehicle did not have a licence or had a invalid or fake licence by itself is not enough to avoid liability by an Insurance Company. They must also establish breach on the part of the owner of the vehicle. Unless the breach is so fundamental that it has contributed to the cause of the accident, the Insurance Company cannot avoid its liability. The relevant extract is set out below:
"110. The summary of our findings to the various issues as raised in these petitions are as follows:
(1) Chapter XI of the Motor Vehicles Act, 1988 providing compulsory insurance of vehicles against third party risks is a social welfare legislation to extend relief by compensation to victims of accidents caused by use of motor vehicles. The provisions of compulsory insurance coverage of all vehicles are with this paramount object and the provisions of the Act have to be so interpreted as to effectuate the said object.
(ii) Insurer is entitled to raise a defence in a claim petition filed under Section 163A or Section 166 of the Motor Vehicles Act, 1988 inter alia in terms of Section 149(2)(a)(ii) of the said Act.
(iii) The breach of policy condition, eg disqualification of driver or invalid driving licence of the driver, as contained in Sub-section
- 18 -
NC: 2026:KHC:10329 MFA No. 2298 of 2020 C/W MFA.CROB No. 9 of 2021 HC-KAR (2)(a)(ii) of Section 149, have to be proved to have been committed by the insured for avoiding liability by the insurer. Mere absence, fake or invalid driving licence or disqualification of the driver for driving at the relevant time, are not in themselves defences available to the insurer against either the insured or the third parties. To avoid its liability towards insured, the insurer has to prove that the insured was guilty of negligence and failed to exercise reasonable care in the matter of fulfilling the condition of the policy regarding use of vehicles by duly licensed driver or one who was not disqualified to drive at the relevant time,
(iv) The insurance companies are, however, with a view to avoid their liability must not only establish the available defence(s) raised in the said proceedings but must also establish breach' on the part of the owner of the vehicle; the burden of proof where for would be on them.
(v) The court cannot lay down any criteria as to how said burden would be discharged, inasmuch as the same would depend upon the facts and circumstance of the case.
(vi) Even where the insurer is able to prove breach on the part of the insured concerning the policy condition regarding holding of a valid licence by the driver or his qualification to drive during the relevant period, the insurer would not be allowed to avoid its liability towards insured unless the said breach or breaches on the condition of driving licence is/ are so fundamental as are found to have contributed to the cause of the accident. The Tribunals in interpreting the policy conditions would apply "the rule of main purpose" and the concept of "fundamental breach" to allow defences available to the insured under Section 149(2) of the Act.
(vii) The question as to whether the owner has taken reasonable care to find out as to whether the driving licence produced by the driver, (a fake one or
- 19 -
NC: 2026:KHC:10329 MFA No. 2298 of 2020 C/W MFA.CROB No. 9 of 2021 HC-KAR otherwise), does not fulfil the requirements of law or not will have to be determined in each case......"
[Emphasis Supplied]
18. The Supreme Court in the case of Pappu and Others while relying on a judgment of a Co-ordinate Bench in National Insurance Company Ltd. Vs. Swaran Singh4 has held that in order for an insurance company to avoid its liability towards the insured, it has to prove that the insured was guilty of negligence or failed to exercise reasonable care in a matter of fulfilling the condition of policy regarding use of vehicles by a licensed driver. It has further been held that the mere absence, fake or invalid driving licence or disqualification of the driver at the relevant times is not in themselves defences available to the insured against either the insured or the third party.
18.1. In the present case, the record reflects that the driver did hold a driving licence, however the licence had expired on 02.11.2009. The learned Tribunal had thus 4 [1] (2004) 3 SCC 297
- 20 -
NC: 2026:KHC:10329 MFA No. 2298 of 2020 C/W MFA.CROB No. 9 of 2021 HC-KAR come to the conclusion that since there was a breach in the Insurance Policy, the Insurance Company ought to be exonerated. Given the settled law in this behalf as reproduced above, this finding requires to be interfered with.
18.2. In Shamanna and another Vs. The Divisional Manager, Oriental Insurance Co.Ltd. and others5, the Supreme Court has held that in cases involving third-party risks, even where there is a breach of policy conditions relating to driving licence, the appropriate course is to direct the insurer to 'pay and recover'. The relevant extract is set out below.
"6. As per the decision in Swaran Singh case [National Insurance Co. Ltd. v. Swaran Singh, (2004) 3 SCC 297 :
2004 SCC (Cri) 733] , onus is always upon the insurance company to prove that the driver had no valid driving licence and that there was breach of policy conditions. Where the driver did not possess the valid driving licence and there are breach of policy conditions, "pay and recover" can be ordered in case of third-party risks. The Tribunal is required to consider "as to whether the owner has taken reasonable care to find out as to whether the driving licence produced by the driver ... does not fulfil the requirements of law or not will have to be determined in each case".
5 (2018) 9 SCC 650
- 21 -
NC: 2026:KHC:10329 MFA No. 2298 of 2020 C/W MFA.CROB No. 9 of 2021 HC-KAR
7. The Supreme Court considered the decision of Swaran Singh case [National Insurance Co. Ltd. v. Swaran Singh, (2004) 3 SCC 297 : 2004 SCC (Cri) 733] in subsequent decision in National Insurance Co. Ltd. v. Laxmi Narain Dhut [National Insurance Co. Ltd. v. Laxmi Narain Dhut, (2007) 3 SCC 700 : (2007) 2 SCC (Cri) 142] , wherein this Court held that: (SCC p. 705, para 5) "5. The decision in Swaran Singh case [National Insurance Co. Ltd. v. Swaran Singh, (2004) 3 SCC 297 : 2004 SCC (Cri) 733] has no application to cases other than third-party risks and in case of third-party risks the insurer has to indemnify the amount and if so advised, to recover the same from the insured."
XXX XXX XXX [
11. In the present case, to deny the benefit of "pay and recover", what seems to have substantially weighed with the High Court is the reference to larger Bench made by the two-Judge Bench in National Insurance Co.
Ltd. v. Parvathneni [National Insurance Co. Ltd. v. Parvathneni, (2009) 8 SCC 785 : (2009) 3 SCC (Civ) 568 : (2009) 3 SCC (Cri) 943] which doubted the correctness of the decisions which in exercise of jurisdiction under Article 142 of the Constitution of India directing insurance company to pay the compensation amount even though insurance company has no liability to pay. In Parvathneni case [National Insurance Co. Ltd. v. Parvathneni, (2009) 8 SCC 785 : (2009) 3 SCC (Civ) 568 : (2009) 3 SCC (Cri) 943] , the Supreme Court pointed out that Article 142 of the Constitution of India does not cover such type of cases and that: (SCC p. 786, para 5) "5. If the insurance company has no liability to pay at all, then, it cannot be compelled by order of the court in exercise of its jurisdiction under Article 142 of the Constitution of India to pay the compensation amount and later on recover it from the owner of the vehicle."
12. The above reference in Parvathneni case [National Insurance Co. Ltd. v. Parvathneni, (2009) 8 SCC 785 : (2009) 3 SCC (Civ) 568 : (2009) 3 SCC (Cri) 943]
- 22 -
NC: 2026:KHC:10329 MFA No. 2298 of 2020 C/W MFA.CROB No. 9 of 2021 HC-KAR has been disposed of on 17-9-2013 [National Insurance Co. Ltd. v. Parvathneni, (2018) 9 SCC 657] by the three-Judge Bench keeping the questions of law open to be decided in an appropriate case.
13. Since the reference to the larger Bench in Parvathneni case [National Insurance Co. Ltd. v. Parvathneni, (2009) 8 SCC 785 : (2009) 3 SCC (Civ) 568 : (2009) 3 SCC (Cri) 943] has been disposed of by keeping the questions of law open to be decided in an appropriate case, presently the decision in Swaran Singh case [National Insurance Co. Ltd. v. Swaran Singh, (2004) 3 SCC 297 : 2004 SCC (Cri) 733] followed in Laxmi Narain Dhut [National Insurance Co. Ltd. v. Laxmi Narain Dhut, (2007) 3 SCC 700 : (2007) 2 SCC (Cri) 142] and other cases hold the field. The award passed by the Tribunal directing the insurance company to pay the compensation amount awarded to the claimants and thereafter, recover the same from the owner of the vehicle in question, is in accordance with the judgment passed by this Court in Swaran Singh [National Insurance Co. Ltd. v. Swaran Singh, (2004) 3 SCC 297 : 2004 SCC (Cri) 733] and Laxmi Narain Dhut [National Insurance Co. Ltd. v. Laxmi Narain Dhut, (2007) 3 SCC 700 : (2007) 2 SCC (Cri) 142] cases. While so, in our view, the High Court ought not to have interfered with the award passed by the Tribunal directing the first respondent to pay and recover from the owner of the vehicle. The impugned judgment [Shamanna v. Laxman, 2016 SCC OnLine Kar 6928] of the High Court exonerating the insurance company from its liability and directing the claimants to recover the compensation from the owner of the vehicle is set aside and the award passed by the Tribunal is restored."
[Emphasis Supplied] 18.3. Thus, it was held that where there was a breach established by the Insurance Company, it would be appropriate that the Insurance Company pay the
- 23 -
NC: 2026:KHC:10329 MFA No. 2298 of 2020 C/W MFA.CROB No. 9 of 2021 HC-KAR compensation and recover the same from the Insured / owner of the vehicle. Accordingly, the learned Tribunal erred in exonerating the Insurance Company from its liability to pay the compensation.
,
19. The judgment in the Swaran Singh case has been followed time and again including in the recent judgment of Rama Bai case, wherein the Supreme Court has held that since the driver had no valid license, the Insurance Company has a valid defence under Section 149(2)(a)(ii), the grant of pay in recovery order can be passed. The relevant extract is below:
"6. In the present case as stated above, on the date of accident, the driver had no valid license and the licence was not renewed. The insurance company was entitled to take a valid defence in that regard under Section 149 (2)(a)(ii) as the driver of the offending vehicle was not duly licensed, to avoid its liability to pay the compensation. The conditions in law are satisfied to absolve the insurance company from the payment of compensation.
6.1 The High Court in the impugned judgment relied upon the decision in Ram Babu Tiwari3 to find that as per the specific provisions of the Motor Vehicles Act, if the driver does not possess a valid and effective driving licence, it results in a breach of conditions of the insurance policy, exonerating the insurer from its liability. But while affirming the order of the High Court, absolving the liability for breach of conditions in the policy, this
- 24 -
NC: 2026:KHC:10329 MFA No. 2298 of 2020 C/W MFA.CROB No. 9 of 2021 HC-KAR Court refused to interfere with orders of 'pay and recover' as directed by the High Court."
[Emphasis supplied]
20. Accordingly, the Court proceeds to pass the following directions:
ORDER
(i) MFA.No.2298/2020 is allowed and MFA.Crob.No. 9/2021 is partly-allowed.
(ii) The impugned Judgment and Award dated 28.03.2019 in MVC.No.89/2018 passed by the learned Senior Civil Judge and AMACT, Karkala is modified to the extent that the claimants are entitled to enhanced compensation of Rs.4,70,056/- along with interest at the rate of 6% per annum from the date of petition till the date of realization, in addition to Rs.8,50,790/-
that has been awarded by the Tribunal.
(iii) The remaining portion of the Impugned Judgment and Award of the Tribunal remains undisturbed.
- 25 -
NC: 2026:KHC:10329 MFA No. 2298 of 2020 C/W MFA.CROB No. 9 of 2021 HC-KAR
(iv) The Insurance Company shall deposit the compensation with interest at 6% p.a. within a period of eight weeks from the date of receipt of the judgment. The amounts once deposited shall be released in favour of the claimants.
(v) The Insurance Company shall be entitled to recover the amount in view of the breach of Insurance Policy.
(vi) The amount in deposit before this Court if any, shall be transmitted to the Tribunal within a week.
(vii) The Registry is directed to draw the modified Award accordingly.
(viii) The Registry is directed transmit a copy of this judgment to the concerned Tribunal, along with its records.
(ix) No order as to costs. Digitally signed by TARA VITASTA GANJU Location: HIGH COURT OF KARNTAKA Sd/- (TARA VITASTA GANJU) JUDGE NR / PSJ / KS List No.: 1 Sl No.: 12 - 26 -