Emphasising the liability of the insurance company vis-à-vis the insured on the matter of gratuitous passenger carried in a goods vehicle, the High Court of Himachal Pradesh at Shimla, has ruled that the insurance company is not statutorily liable to indemnify the insured for compensation awarded to gratuitous passengers travelling in a goods vehicle, and the liability under Section 147 of the Motor Vehicles Act, 1988, does not extend to such passengers.
The High Court pointed out that a Motor Accidents Claims Tribunal (MACT) does not have the jurisdiction to direct an insurance company to ‘pay and recover’ compensation in cases where there is no statutory liability on the insurer, such as in the case of gratuitous passengers in a goods vehicle.
Such a direction is beyond the powers of the Tribunal, as the power to issue such directions in the interest of justice is an extraordinary power vested in the Supreme Court under Article 142 of the Constitution, added the Court, while concluding that the entire liability to satisfy the award and pay the compensation rests solely with the owner of the vehicle.
A Single Judge Bench of Justice Sushil Kukreja has observed that it is undisputed that the deceased and injured individuals were gratuitous passengers in the offending vehicle, which was a goods vehicle. The Bench analysed the definitions under the Motor Vehicles Act, 1988, noting that a ‘goods carriage’ is a motor vehicle constructed or adapted for use ‘solely for the carriage of goods’ and that the definition of ‘goods’ explicitly excludes ‘living person’.
The Bench examined Section 147 of the 1988 Act and the impact of the 1994 amendment, which inserted the words ‘including owner of the goods or his authorized representative carried in the vehicle’. Citing the Supreme Court’s decision in New India Assurance Co. Ltd. vs. Asha Rani [(2003) 2 SCC 223], the Bench noted that this amendment was not merely clarificatory but was intended to bring the owner of goods or their representative within the sweep of compulsory insurance coverage for a goods vehicle.
Further, relying on National Insurance Company Limited vs. Baljit Kaur [(2004) 2 SCC 1], the Bench reiterated that even after the 1994 amendment, the legislative intent was not to cover all persons travelling in a goods carriage. The statutory liability of the insurer does not extend to passengers in a goods vehicle, especially gratuitous passengers, for whom no premium was paid to cover such a risk.
Thus, the Bench concluded that since the deceased and injured were gratuitous passengers for whom no additional premium was paid, the insurance company has no liability under the law to pay the compensation.
Briefly, a pick-up vehicle, owned and driven by respondent No. 1, and boarded by four passengers Gindu Devi, Geeta Devi, Govind Ram, and another Geeta Devi, met with an accident due to the alleged rash and negligent driving of respondent No. 1, resulting in the on-the-spot death of Gindu Devi and Geeta Devi, and multiple injuries to Govind Ram and the other Geeta Devi.
The claimants therefore filed petitions under Section 166 of the Motor Vehicles Act, 1988, against the owner-cum-driver and the insurer, United India Insurance Company Ltd., which contested the claim, arguing a breach of insurance policy terms, as the deceased and injured were travelling as gratuitous passengers in a goods vehicle.
The Motor Accidents Claims Tribunal (MACT) however, allowed the claim petitions, holding that the accident occurred due to the rash and negligent driving of the owner. It also directed the insurer to first pay the compensation to the claimants and then recover the amount from the owner of the offending vehicle. The insurer therefore appealed this award before the High Court, specifically challenging the direction to ‘pay and recover’.
Cases Relied On:
New India Assurance Co. Ltd. vs. Asha Rani [(2003) 2 SCC 223]
National Insurance Company Limited vs. Baljit Kaur [(2004) 2 SCC 1]
Appearances:
Advocate P.S. Chandel, for the Appellants
Advocates Jaidev Thakur, H.S. Rangra, and Ashok Kumar, for the Respondents
