Kiran Raj

The Supreme Court of India Division Bench of Justice K. Vinod Chandran and Justice N. V. Anjaria held that the insurer remains liable to indemnify the registered owner for compensation payable to victims of a motor vehicle accident, as the deceased and injured passengers were not gratuitous but were accompanying goods they owned. The Court further held that the registered owner remained legally responsible for compensation since there had been no lawful transfer of ownership of the vehicle at the time of the accident. Appeals challenging the High Court's absolution of the insurer from liability were allowed, and the awards of the Motor Accidents Claims Tribunal, as modified by the High Court in certain cases, were directed to be satisfied by the insurer.

The appeals arose from orders of the High Court of Chhattisgarh at Bilaspur concerning awards passed by the Motor Accidents Claims Tribunal (MACT) in relation to a motor vehicle accident-causing death and injuries. Eleven claim petitions were filed before the MACT. The insurer challenged the awards in only three of these petitions, asserting that it bore no liability as the passengers were gratuitous and the driver was in possession and control of the vehicle under an agreement with the registered owner, rather than being its registered owner himself. The MACT awarded compensation to claimants and held the registered owner, the driver (appellant), and the insurer jointly and severally liable.

Also Read: “A Society Engaged in Charitable Work Holds the Character of a Constructive Trust”: Supreme Court Says Registration Under Societies Act Doesn’t Diminish Public Trust Nature

The claimants and the insurer appealed to the High Court. The High Court allowed the insurer's appeals, absolving it of liability, while enhancing compensation in two claimant appeals and dismissing another. The present appeals were filed by the driver, who had been treated as the ostensible owner, challenging personal liability imposed on him to satisfy the awards. Review petitions filed by him in the High Court were dismissed.

Before the Supreme Court, it was undisputed that the vehicle had a valid insurance policy in the name of the registered owner and that the driver possessed a valid driving licence. The insurer argued that at the time of the accident, possession and ownership of the vehicle had been handed to the appellant under an agreement and that the deceased and injured were gratuitous passengers. The appellant contended that the passengers were petty hawkers transporting their goods and accompanying them, and that ownership had not been legally transferred to him. He also argued that the insurer selectively challenged only three awards out of eleven.

The claimants' amicus curiae supported the appellant's position, producing a chart detailing facts, compensation awarded, and enhancements made by the High Court. The insurer's counsel maintained that it had no liability on either ground advanced.

The Court recorded that in two connected appeals (Civil Appeal Nos. 6341 and 6342), the disputes had been settled in the Lok Adalat, with the appellant paying part of the award and issuing a cheque for the balance. These appeals were dismissed as settled.

On the issue of gratuitous passengers, the Court examined depositions and evidence. It noted: "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." The Court observed that the insurer's own witness admitted in cross-examination to having no knowledge of the passengers' status or whether they were accompanying goods.

The Tribunal's finding on this issue was quoted: "...in the motor vehicle involved in the accident, the claimant was seated for the security of her goods and as per the provisions of the Motor Vehicles Act, a person seated in a goods carriage for security of their goods is not to be considered a gratuitous passenger." The Court held that the High Court interfered with this factual finding without material basis and that the insurer's contention remained an unsubstantiated assertion.

The Court referred to Section 147(1)(b)(i) of the Motor Vehicles Act, which permits indemnification for liability arising from death or injury to any person, including the owner of goods or their authorised representative, carried in the vehicle.

Regarding ownership transfer, the Court analysed the agreement between the registered owner and the appellant. The agreement provided for sale at Rs. 90,000, with Rs. 80,000 paid and the balance Rs. 10,000 to be paid within two months, after which registration would be transferred. The Court stated: "The recitals clearly indicate that there has been no transfer of ownership of the vehicle and the appellant merely had possession of the same." It noted that the Magistrate's order releasing the vehicle to the appellant also recorded that registration remained unchanged and directed transfer within 30 days. The Court found no evidence that statutory requirements under Section 50 of the Act were met and concluded that ownership remained with the registered owner at the time of the accident.

Also Read: Chhattisgarh HC Upholds State Law On Private School Fee Regulation | Individual Hardship No Ground To Challenge Vires As Court Backs State’s Power To Prevent Profiteering

The Court referred to Naveen Kumar v. Vijay Kumar (2018) 3 SCC 1, noting that the statutory definition of "owner" serves to prevent burdening claimants with tracing successive transfers. Liability therefore lay on the registered owner and had to be indemnified by the insurer.

The Court noted that the insurer did not refute the contention that it selectively challenged only three awards out of eleven, and the High Court had not addressed this. It held that this issue was irrelevant in light of the Court's findings on liability.

The Court allowed Civil Appeal Nos. 6338-6339 of 2024 and Civil Appeal No. 6340 of 2024. It ordered that the awards impugned in these appeals, as modified by the High Court in respect of interest rates, be satisfied by the insurer. Specifically, the Tribunal had awarded 12% interest from the date of the claim petition, and the High Court granted 6% interest for the enhanced amounts, also from the date of filing. The Court stated that these awards "shall be satisfied by the insurer". Appeals settled in the Lok Adalat were dismissed. All pending applications were disposed of.

Advocates Representing the Parties:

Amicus Curiae: Mr. Shubhranshu Padhi, Adv. Mr. Jay Nirupam, Adv. Mr. D. Girish Kumar, Adv. Mr. Pranav Giri, Adv. Mr. Ekansh Sisodia, Adv.

For Appellant(s): Mr. Kaustubh Shukla, AOR Mr. Praveen Kumar Singh, Adv. Ms. Pushpanjali Singh, Adv. Mr. Lakshmeesh S. Kamath, Adv. Ms. Samriti Ahuja, Adv. Ms. Aditi Prakash, Adv. Mr. Parijat Kishore, Adv. Mr. Parjiat Kishore, Adv. Mr. Rahul Bhandari, Adv.

For Respondent(s): Mr. Vikrant Singh Bais, AOR Ms. Neema, Adv. Mr. Abhinav Parihar, Adv. Mr. Yogesh Tiwari, Adv. Mr. Utkarsh Singh, Adv. Mr. Dushyant Singh Chauhan, Adv. Mr. Rajesh Kumar Gupta, AOR

Case Title: Brij Bihari Gupta v. Manmet & Ors.

Neutral Citation: 2025 INSC 948

Case Numbers: Civil Appeal Nos. 6338-6339 of 2024, 6340 of 2024, 6341 of 2024, 6342 of 2024

Bench: Justice K. Vinod Chandran, Justice N. V. Anjaria