Motor Accident | Supreme Court Restores 'Pay And Recover' Principle Against Insurer Where Deceased Travelled As Gratuitous Passenger In Goods Vehicle
Kiran Raj
The Supreme Court Division Bench of Justice Prashant Kumar Mishra and Justice N.V. Anjaria recently held that an insurance company, despite not being directly liable under its policy for passengers travelling in a goods vehicle, can be directed to first pay compensation to the claimants and thereafter recover the amount from the vehicle owner, where the vehicle was hired primarily to carry goods and the travel was only incidental. The dispute arose from a fatal accident involving a goods vehicle hired to transport a Ganesh idol for immersion in the Narmada River, with the deceased travelling alongside the idol. Setting aside the Gujarat High Court's order, the Court restored the Motor Accident Claims Tribunal's award that had directed the insurer to pay compensation of ₹13,23,000 to the claimants and recover the same from the vehicle owner.
The appeal arose from a dispute regarding the liability of an insurance company to satisfy an award passed by the Motor Accident Claims Tribunal in a motor accident claim. The deceased was travelling in a tempo hired on the occasion of a Ganesh immersion festival for carrying an idol to the Narmada River when the accident occurred. The vehicle was a goods vehicle insured with the respondent insurance company on the date of the accident.
The Tribunal awarded compensation of ₹13,23,000/- to the claimants and directed the insurance company to deposit the amount with liberty to recover the same from the owner of the vehicle. The insurance company challenged this direction before the High Court, which set aside the Tribunal’s order holding that the insurer was not liable to first pay and then recover.
Before the Supreme Court, the claimants relied on precedents to contend that even in cases involving gratuitous passengers in goods vehicles, the insurer could be directed to first satisfy the award and then recover from the insured. The insurer relied on a subsequent judgment to argue that such liability could not be imposed where the vehicle was hired for travel.
The Court recorded that, “The short question arising for decision making in this appeal is whether in the facts and circumstances of the case the High Court was justified in reversing the finding of the Motor Accident Claims Tribunal… which had directed the Insurance Company to first pay the amount of compensation to the claimants and thereafter, recover the same from the owner of the vehicle.”
After hearing the parties, the Court observed, “In the present case, the deceased was travelling in the subject tempo along with Ganesh Idol, which was taken for immersion in Narmada River.” It further stated, “Thus, the dominant purpose for hiring the vehicle was not for travelling but for carrying the Ganesh idol for immersion.”
The Bench recorded, “Travelling in the vehicle was only incidental, therefore, at best, the deceased can be treated as gratuitous passenger travelling with his goods (Ganesh idol).”
Referring to precedent, the Court quoted: “since the victim was travelling in offending vehicle as ‘gratuitous passenger’ and hence, the insurance company cannot be held liable to suffer the liability arising out of accident on the strength of the insurance policy. However, this Court keeping in view the benevolent object of the Act and other relevant factors arising in the case, issued the directions against the insurance company to pay the awarded sum to the claimants and then to recover the said sum from the insured in the same proceedings by applying the principle of ‘pay and recover’.”
The Court further recorded, “Thus, in Manuara Khatun & Ors. (supra), this Court has referred and approved Saju P. Paul (supra) case to hold that when the victim was a gratuitous passenger, this Court issued directions against the insurer of the offending vehicle to first satisfy the awarded sum, and then to recover the same from the insured in the same proceedings.”
Distinguishing the authority relied upon by the insurer, the Court stated, “In the case of Amudhavalli & Ors. (supra)… the deceased hired a goods vehicle for travelling and thus, it was not a case where the goods vehicle was taken on rent for carrying the goods, and travelling was incidental as gratuitous passenger.” It added, “Thus, the said case… is distinguishable on facts; and the facts of the present case is similar and closer to the one in the case of Saju P. Paul (supra) and Manuara Khatun & Ors. (supra).”
The Court directed, “In the above view of the matter, we allow the Appeal and set aside the impugned order of the High Court and restore the award passed by the Tribunal. No order as to costs. If the respondent-Insurance Company has satisfied any part of the award, the same shall be set off while calculating the amount to which the Insurance Company shall be liable to pay consequent upon our order. Pending application(s), if any, shall stand disposed of.”
Advocates Representing the Parties:
For the Petitioners: Mr. Md. Tahir M. Hakim, Advocate; Mr. Ejaz Maqbool, AOR; Mr. Mohsin M. Hakim, Advocate; Mr. Zain Maqbool, Advocate; Mr. Meeran Maqbool, Advocate; Mr. Saif Zia, Advocate
For the Respondents: Ms. Sakshi Mittal, AOR
Case Title: Kaminiben & Ors. v. The Oriental Insurance Company Limited & Ors.
Case Number: Civil Appeal No. of 2026 (Arising out of SLP (Civil) No. 21802/2023)
Bench: Justice Prashant Kumar Mishra and Justice N.V. Anjaria
