A package policy does not cover gratuitous passengers in a goods carriage; insurer bears no liability.

On 21 July 2010, a TATA 207 DI carrying 11 labourers was involved in a collision with truck No. AS-01-P-9354. The claimant’s husband, who was travelling in the TATA 207 DI, sustained fatal injuries and died at the spot.

The Motor Accident Claims Tribunal, Jorhat, in M.A.C. Case No. 50/2010, held the insurers liable and imposed 50% of the compensation liability—amounting to Rs. 6,04,400—on the appellant, Oriental Insurance Company Ltd.

The Tribunal treated the insurance policy as a private package policy and held that it covered the deceased occupant.

In appeal, the appellant relied on the Insurance Certificate-cum-Policy, which described the vehicle as a TATA 207 DI with a seating capacity of 2+1.

The policy restricted the use of the vehicle to carriage of goods and excluded the carriage of passengers, except permitted employees covered under the Workmen’s Compensation Act.

The appellant contended that no additional premium had been paid for passengers travelling beyond the permissible limit.

Whether the insurance policy issued for the TATA 207 DI covered the deceased, who was travelling as a passenger in a goods/public carriage vehicle beyond its permitted seating capacity?

Whether the appellant-insurer could be held liable for 50% of the compensation awarded by the Tribunal?

Whether the claimants could recover the corresponding share of compensation from the owner of the offending vehicle after the insurer’s liability was set aside?

The Court applied Section 147 of the Motor Vehicles Act, 1988, under which compulsory insurance covers specified third-party risks, including limited liability for employees carried in a goods vehicle, but does not ordinarily require coverage for gratuitous passengers travelling in a goods carriage.

Relying on New India Assurance Co. Ltd. v. Vedwati, (2007) 9 SCC 486, and National Insurance Co. Ltd. v. Prema Devi, (2008) 2 SCC (Crl.) 627, the Court reiterated that an insurer is not statutorily liable for gratuitous passengers travelling in a goods carriage.

The Court distinguished National Insurance Co. Ltd. v. Balakrishnan, concerning occupants of a private car covered by a comprehensive/package policy, on the basis that the present policy related to a goods/public carriage and expressly restricted the carriage of passengers.

It also relied on Oriental Insurance Co. Ltd. v. Miss Monjuma Begum, M.A.C. Appeal No. 166/2018, to hold that, where the policy does not cover the risk, the liability should be imposed on the owner rather than directing the insurer to pay and recover.

The Court found that the Tribunal had incorrectly characterised the policy as a private package policy.

The policy was in fact a package policy for a public carriage other than a three-wheeler, and the insured vehicle had a seating capacity of only 2+1.

Its limitation-of-use clause permitted carriage of goods and excluded passengers, except employees within the permissible number and covered under the Workmen’s Compensation Act.

The deceased was one of 11 labourers travelling in the vehicle, and the policy contained no additional premium or coverage for passengers beyond the permitted limit.

Consequently, the comprehensive/package-policy principle in Balakrishnan was inapplicable, while the rule in Vedwati and Prema Devi governed the case.

The insurer therefore had no contractual or statutory liability for the deceased’s death.

The portion of the Tribunal’s award imposing 50% liability on Oriental Insurance Company Ltd. was set aside and quashed.

The claimants were granted liberty to recover the remaining compensation from the owner of the offending vehicle by approaching the Tribunal with an appropriate application.

The appellant was permitted to obtain a refund of the amount deposited with the Registry in accordance with the applicable procedure.

The appeal was accordingly disposed of.