Insurance Company is Bound by Seating Capacity and Premium Entries Mentioned in the Insurance Policy

On December 1, 2017, the deceased (Sharafat) was traveling in an auto (MP-31-L-0194) when it overturned due to the driver’s (Non-applicant No. 1) negligence.

Sharafat succumbed to his injuries during treatment.

The claimants filed for compensation before the Claims Tribunal, Sheopur, which awarded an amount in their favor.

The Insurance Company appealed this award, alleging: (i) the vehicle was falsely implicated due to a 44-day delay in lodging the FIR; (ii) the deceased was a gratuitous passenger in a goods vehicle; and (iii) the vehicle was operated in violation of policy conditions (lack of valid permit/license).

1. Whether the offending vehicle was falsely implicated in the accident due to the delay in filing the FIR and the initial reporting against an "unknown" vehicle.

2. Whether the Insurance Company is exempt from liability on the ground that the deceased was a gratuitous passenger in a goods vehicle for which no premium was paid.

The court applied the principles of the Motor Vehicles Act regarding the liability of insurers toward third parties and passengers.

It emphasized the binding nature of the terms specified in the Insurance Policy (Exhibit D/5), specifically the "seating capacity" and "premium" sections.

The court also relied on the standard of proof in motor accident claim cases, where oral testimony of eyewitnesses (AW-2) and corroborating criminal investigation records (charge sheets) are used to establish the involvement of a vehicle despite delays in FIR registration.

The Court rejected the "gratuitous passenger" argument because the Insurance Company’s own witness (Anoop Pandey) admitted that the policy (Exhibit D/5) recorded a seating capacity of two persons and a premium of Rs. 50/- for a driver/cleaner/employee.

The Court held that the insurer cannot disclaim liability by citing an internal employee error in the policy document once the premium is accepted.

Regarding the "false implication," the Court noted that while the FIR was delayed, the eyewitness (AW-2) remained "substantially intact" during cross-examination.

Furthermore, the owner and driver of the vehicle admitted in court that the vehicle was involved in the accident on that date and did not contest the police's criminal charge sheet.

This lack of rebuttal from the owner/driver combined with the eyewitness testimony sufficiently proved the vehicle's involvement.

It held that the Tribunal correctly appreciated the evidence and that the Insurance Company is liable to pay compensation as the policy covered more than just the driver.

The Court found no perversity or illegality in the lower court's findings regarding the accident's occurrence or the vehicle's involvement.