An insurer cannot avoid liability without proving that deceased occupants were unauthorized passengers in a goods vehicle.

Two claims arose from a truck accident on 27 April 2012 in which Kapil, aged 19, and Gulab Singh, aged 38, died.

Their families claimed that the deceased were travelling in the truck as workers; the owner and driver maintained that they were pedestrians struck after the truck’s brakes failed.

The insurer disputed coverage, alleging that the deceased were unauthorised passengers, and also challenged negligence and the compensation awarded by the Tribunal.

The Tribunal held the insurer liable and awarded ₹10,97,000 in Kapil’s claim and ₹19,71,000 in Gulab Singh’s claim, with interest at 7.5% per annum.

1. Whether the insurer established that the deceased were unauthorised passengers and that their presence in the truck amounted to a fundamental breach of the insurance policy.

2. Whether rash and negligent driving by the truck driver was established for the purposes of the claims under Section 166 of the Motor Vehicles Act.

3. Whether the Tribunal’s awards represented just compensation, including the appropriate future-prospects addition, deductions, multiplier and conventional heads.

Sections 166 and 173 of the Motor Vehicles Act govern, respectively, claims for compensation arising from motor accidents and appeals against awards.

Motor-accident claims are summary proceedings in which liability is determined on a preponderance of probabilities.

The Court referred to Section 60 of the Indian Evidence Act, 1872, requiring oral evidence of a perceived fact to be direct.

Under National Insurance Co. Ltd. v. Pranay Sethi, a 40% addition for future prospects applies to the established income of a self-employed or fixed-salary deceased below 40; deductions for personal expenses and selection of the multiplier follow Sarla Verma v. Delhi Transport Corporation.

Pranay Sethi also governs conventional heads, while Magma General Insurance Co. Ltd. v. Nanu Ram recognises parental, filial and spousal consortium, including compensation to parents for the death of an unmarried child.

The Court rejected the insurer’s policy-breach defence because the evidence did not establish that the deceased were travelling in the truck: the claimants’ witness had not seen the accident, the police officer had no personal knowledge, and the driver supported the account that the deceased were pedestrians.

The Court therefore found the insurer had failed to prove that the deceased were unauthorised passengers.

It upheld the finding of negligence, noting that the accident was admitted, the driver was prosecuted, and the charge-sheet specifically alleged rash and negligent driving; the asserted brake failure did not displace the Tribunal’s finding.

On quantum, it retained the Tribunal’s assessment of ₹6,000 monthly income in each case, applied a 40% future-prospects addition, and recalculated dependency using the applicable personal-expense deductions and multipliers.

It substituted the conventional-head awards in accordance with Pranay Sethi and awarded consortium to the claimants under Magma General Insurance.

It partly allowed the insurer’s appeal in Gulab Singh’s case and reduced compensation from ₹19,71,000 to ₹15,19,600.

In both cases, interest remained at 7.5% per annum, and the insurer remained liable to pay the compensation.