Himachal Pradesh HC: Owner of goods vehicle is liable to pay compensation regarding death or injury of gratuitous passenger travelling in his vehicle

The differentiation in two situations can be marked for the reason that in the former case of non-existence or non-holding of the driving license there still is a subsisting contract of insurance covering the risk of third party but in the other there is no contract covering the risk as no premium has been charged or paid for person not covered under the categories defined under section 147 of the Act or by a special contract.

32. Thus, the contention so raised merits rejection for the reason; firstly that there is no provision in the Act which allows the insurer to pay in the first instance and recover later from the insured where the claim relates to gratuitous passenger in a Goods Carriage Vehicle and secondly in view of the law settled in New India Insurance Company Ltd. Vs. Asha Rani, MANU/SC/1105/2002 : 2002:INSC:513 : 2003 ACJ (1), National Insurance Co. Vs. Baljeet Kaur, MANU/SC/0009/2004 : 2004:INSC:19 : 2004 ACJ 428. Both these judgments by three judges' benches expounded the law with respect to liability of insurer to indemnify the insured in respect of claims arising out of death or bodily injury to a gratuitous passenger in a Goods carriage Vehicle and held in favour of insurer. Hon'ble Supreme Court in National Insurance Company Ltd. Vs. Parvathneni in MANU/SC/1418/2013 : (2018) 9 SCC 657 has kept the question of law open on the issue whether the Supreme Court in exercise of powers under Article 142 of the Constitution can direct the insurer to pay and recover, where the liability otherwise does not arise in case of gratuitous passenger. This court while expressing above view has drawn support from judgment passed by a Division Bench of High Court of Judicature at Madras in Bharti AXA General Insurance Co. Ltd. Vs. Aandi reported in MANU/TN/6503/2018 : 2019 ACJ 1975.

33. In view of above discussion, FAO No. 448 of 2018 is allowed. It is held that the insurer is not liable to indemnify the insured. The owner Amba Dutt is held liable to satisfy the award. The quantum of award is also modified to the extent as held above.

IN THE HIGH COURT OF HIMACHAL PRADESH AT SHIMLA

FAO No. 448 of 2018 and FAO No. 34 of 2019

Decided On: 30.04.2025

The Oriental Insurance Company Ltd. Vs. Sheru and Ors.

Author: Satyen Vaidya, J.

 Citation: 2025:HHC:11512,MANU/HP/0601/2025.

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Supreme Court: Legal heirs of gratuitous passengers in goods vehicle are not entitled to get compensation from insurance Company

It is therefore, manifest that in spite of the amendment of 1994, the effect of the provision contained in Section 147 with respect to persons other than the owner of the goods or his authorized representative remains the same. Although the owner of the goods or his authorized representative would now be covered by the policy of insurance in respect of a goods vehicle, it was not the intention of the legislature to provide for the liability of the insurer with respect to passengers, especially gratuitous passengers, who were neither contemplated at the time the contract of insurance was entered into, nor any premium was paid to the extent of the benefit of insurance to such category of people. {Para 20}

21. The upshot of the aforementioned discussions is that instead and in place of the insurer the owner of the vehicle shall be liable to satisfy the decree.

 IN THE SUPREME COURT OF INDIA

Civil Appeal No. 16 of 2004 

Decided On: 06.01.2004

National Insurance Co. Ltd. Vs. Baljit Kaur and Ors.

Hon'ble Judges/Coram:

V.N. Khare, C.J., S.B. Sinha and A.R. Lakshmanan, JJ.

Author: V.N. Khare, C.J.

Citation: AIR 2004 SC 1340,MANU / SC / 0009 / 2004,( 2004 ) 2 SCC 1,[ 2004 ] 1 SCR 274.

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SC Rules Insurer Liable in Motor Accident Case Involving Goods Vehicle Passengers

 Insofar as the contention regarding the passengers in the goods vehicle being gratuitous, we have to notice the evidence as produced by the second Respondent along with I.A. No. 190303/2022 in C.A. Nos. 6338-6339/2024. The deposition of the claimant injured in the said appeal clearly indicates that he was a fish monger and the basket with fish for sale, was being carried in the goods vehicle, in which the claimant was also accompanying the goods. Likewise in C.A. No. 6340/2024, the deceased passenger was a vegetable hawker, who too accompanied the goods carried in the vehicle. We see from the cross-examination by the learned Counsel for the insurer that the said fact was challenged by way of a suggestion. In the examination-in-chief of the witness for the insurer produced as Annexure- R/13, the Administrative Officer asserted that the passengers were gratuitous. But, in cross-examination he categorically stated that he did not have any knowledge regarding the status of the deceased/injured in the accident and he does not have any information as to whether they were accompanying the goods in the vehicle or not. The suggestion made to the claimant hence has to be ignored. It is pertinent that in the reply to the claim filed, produced as Annexure-R/11, the insurer had raised a contention that if there were goods in the vehicle then the seizure of such goods would have been recorded in the mahazar prepared in the criminal case. However, the insurance company did not take any effort to produce any such mahazar. The claimant while being cross-examined was also not confronted with the records of the criminal case which were produced and marked by the claimants in their evidence. {Para 7}

8. We hence find that the contention raised by the insurer that the deceased/injured in the accident were gratuitous passengers in the vehicle remains in the realm of mere assertion without substantiation. Section 147 which has the nominal heading "Requirements of policies and limits of liability" by Sub-section (1)(b)(i) enables indemnification by the insurer, any liability with respect to the death or bodily injury to third parties and any person including owner of the goods or his authorized representative carried in the motor vehicle.

 IN THE SUPREME COURT OF INDIA

Civil Appeal Nos. 6338-6339 of 2024, 6341 of 2024, 6340 of 2024 and 6342 of 2024

Decided On: 08.08.2025

Brij Bihari Gupta Vs. Manmet and Ors.

Hon'ble Judges/Coram:

K. Vinod Chandran and N.V. Anjaria, JJ.

Author: K. Vinod Chandran, J.

Citation: 2025 INSC 948, MANU/SC/1053/2025.

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Supreme Court: Principle of “pay and recover” should be invoked in the case of gratuitous passengers in a goods vehicle

The next question is as to which of the Respondents, that is the owner and driver, or the insurer of the vehicle, would be liable for payment of such compensation. As regard the liability for payment of compensation, it has been contended by the learned Counsel for the Appellants that since the vehicle was admittedly insured with the Respondent No. 1-insurance company, the principle of pay and recover would be invoked even in case of a gratuitous passenger in a goods vehicle. The insurance company should thus be made liable for the payment of compensation to the Appellants and in turn they would have the right to realise/recover the same from the owner and driver of the vehicle. {Para 9}

11. We have heard learned Counsel for the parties and perused the record as well as the various decisions cited by learned Counsel for the parties. The insurance of the vehicle, though as a goods vehicle, is not disputed by the parties. The claimants in the present case are young children who have suffered permanent disability on account of the injuries sustained in the accident. Thus, keeping in view the peculiar facts and circumstances of this case, we are of the considered view that the principle of "pay and recover" should be directed to be invoked in the present case.

 IN THE SUPREME COURT OF INDIA

Civil Appeal Nos. 6231-6232 of 2019 

Decided On: 09.08.2019

Anu Bhanvara and Ors. Vs. IFFCO Tokio General Insurance Company Limited and Ors.

Hon'ble Judges/Coram:

Rohinton Fali Nariman and Vineet Saran, JJ.

Author: Vineet Saran, J.

Citation: (2020) 20 SCC 632,MANU/SC/1077/2019.

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Whether Insurance company is liable to pay compensation for death of owner of goods vehicle travelling in said vehicle ?

The Apex Court has discussed the position of law after
amendment effected to Motor Vehicles Act in 1994. The Apex Court
has laid down that due to the amendment, the owner of goods needs
to be given cover under the statutory policy. When the policy is sold
in respect of goods carrier, it needs to be presumed that policy
covers risk to owner of goods and his representative. The only
question which can be determined is whether deceased was present
in the vehicle as owner of goods or not. If the Tribunal decides this
question in favour of the claimants, then Insurance Company cannot

be exonerated from making payment of compensation. In view of
these circumstances, this Court holds that the Tribunal has
committed error in not holding the Insurance Company liable to
indemnify the owner. In view of the nature of policy and
circumstances of the case, this Court holds that the Insurance
company cannot be exonerated.
 IN THE HIGH COURT OF JUDICATURE AT BOMBAY
 BENCH AT AURANGABAD
 FIRST APPEAL NO. 481 OF 2010
Nanasaheb s/o Trimbakrao Jarange

versus
 The Oriental Insurance Company Ltd.

 CORAM : T. V. NALAWADE, J.
 DATED : 24th JULY , 2014
Citation; 2015(7) ALLMR 323

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