I believe this driver has been working under your own roles but under a fixed-term contract for a certain period, which got extended every time, and not that he was hired or engaged through a contractor who pays him a salary. If the latter is the case, then the compensation shall be the responsibility of that contractor.
If the driver was coming to duty, then the notional extension theory will apply, and as such, the accident would be considered as occurring during the course of and in connection with employment. In such a situation, the employer's responsibility is to approach the Workmen Compensation Commission. If the driver is covered by ESI, naturally, you should have submitted an accident report to ESIC, and the entire liability that arises on account of his hospitalization, compensation for loss of income, total disability, etc., would have been taken care of by the ESI Corporation. In the absence of ESI, it will become the employer's obligation to pay such compensation.
Usually, the employer is not expected to pay any amount other than the amount required for treatment, directly to the injured employee. Now, I advise you to take the matter to the Workmen Compensation Commission (under the Employees Compensation Act) to decide what shall be the amount of compensation, and whether the amount paid by way of salary can be adjusted against the compensation payable or not. It is also very important to note that it should be established that the accident happened in connection with employment, and the notional extension theory as explained above will apply in this case.