For a gratuitous passenger in a goods vehicle, the insurer must pay first and recover from the owner.

The claimants, the parents of the deceased, sought compensation under Section 166 of the Motor Vehicles Act, 1988, after their 20-year-old son died from injuries sustained when he fell from a goods-carrying jeep on 25 February 2008.

The Tribunal awarded Rs. 8,36,554 with interest at 9% per annum and held the owner, driver and insurer jointly and severally liable.

The insurer appealed, contending that the deceased was an unauthorised passenger in a goods carriage and that the driver lacked a valid LMV licence. The insurer did not press the licence ground, relying on M/s. Bajaj Allianz General Insurance Co. Ltd. v. Rambha Devi & Ors., (2025) 3 SCC 95.

1. Whether the evidence established that the deceased was travelling in the goods carriage without goods, in breach of the insurance policy.

2. Whether, despite that breach, the insurer should be directed to satisfy the award first and then recover the amount from the vehicle owner.

Under the Motor Vehicles Act, 1988, a claim for compensation may be brought under Section 166, and an appeal from the Tribunal’s award lies under Section 173.

Where an insurer raises a policy-breach defence, it may establish that defence by relying on evidence adduced by the claimants; it is not invariably required to lead independent evidence.

The Court considered National Insurance Co. Ltd. v. Savitaben Motibhai & Ors., (2006) 2 GLH 468, and the Supreme Court’s decision in Kaminiben v. Oriental Insurance Company Limited, 2026 LiveLaw (SC) 174, including its reliance on Manuara Khatun and National Insurance Co. Ltd. v. Saju P. Paul, (2013) 2 SCC 41. Those authorities support directing the insurer to pay the award first and recover the amount from the insured in the same proceedings, including where the victim was a gratuitous passenger.

The claimants’ evidence, rather than independent evidence from the insurer, established that the deceased was travelling without goods. The FIR did not mention any goods; the deceased’s mother’s account that he carried clothes and wheat was weakened by her admissions that she had not identified the goods in the FIR, did not know what happened to them, had not sought their return, and that her son had paid a fare of Rs. 20. The spot panchnama also recorded no goods at the scene.

The Court therefore found a policy breach and distinguished Savitaben on the facts.

Applying the pay-and-recover principle, it required the insurer to satisfy the award initially, while permitting recovery from the vehicle owner.

The remaining directions were maintained, and the Tribunal was directed to disburse the compensation to claimant No. 2, as claimant No. 1 had died during the appeal.