SHAMANNA vs THE DIVISIONAL MANAGER THE ORIENTAL INSURANCE CO. LTD.

The Supreme Court held that in cases of third-party risks, the insurance company is liable to indemnify the compensation amount payable to the claimants, even if the driver had no valid driving license, as per the precedent set in National Insurance Company Ltd. v. Swaran Singh (2004) 3 SCC 297. The Court clarified that the High Court erred in reversing the Tribunal's 'pay and recover' order, emphasizing that such discretion lies with the Supreme Court under Article 142 of the Constitution. The Court upheld the High Court's enhancement of compensation from Rs.3,55,500 to Rs.4,94,700, affirming the owner's liability to pay the compensation directly to the claimants.