Insurance company must pay and recover compensation for death of gratuitous passenger in a goods vehicle.

On April 1, 2016, a minor, Suryaprakash, was traveling in a load auto (TN 74 U 7373) driven by his father. Near Ahilandapuram Vilakku, the door opened, and the minor fell, sustaining fatal injuries.

The vehicle was a commercial load auto with a seating capacity of one, but was carrying the driver’s wife, sister, and son as gratuitous passengers.

The Tribunal found the driver negligent but also attributed contributory negligence to the parents, fixing liability at 50%.

The Tribunal awarded Rs. 9,60,000 total compensation, directing the Appellant Insurance Company to pay 50% (Rs. 4,80,000) to the claimant and subsequently recover it from the owner due to policy violations (lack of permit/fitness and carrying unauthorized passengers).

The insurer appealed, seeking to be fully exonerated from the "pay and recover" directive.

1. Whether an insurance company can be directed to "pay and recover" compensation in respect of a gratuitous passenger traveling in a goods vehicle (load auto).

2. Whether the Tribunal’s apportionment of 50% negligence and the subsequent liability of the insurer warrants interference.

Section 147 of the Motor Vehicles Act, 1988, regarding the requirements and limits of liability of insurance policies for goods vehicles.

The "pay and recover" principle established in National Insurance Co. Ltd. v. Baljit Kaur and Manuara Khatun v. Rajesh Kr. Singh, which held that insurers should satisfy awards for gratuitous passengers and then recover from the owner.

The "benevolent object" of the Act and the recent Supreme Court precedent in Kaminiben & Ors. v. The Oriental Insurance Company Ltd. (2026 Live Law SC 174), affirming that insurers may be directed to pay claimants first even in cases of gratuitous passengers in a tempo.

The court noted that while the deceased was a gratuitous passenger in a vehicle meant for goods—a violation of policy conditions—the issue of insurer liability in such cases has been consistently addressed by the Supreme Court.

The court rejected the Appellant’s reliance on Bharati AXA General Insurance Co. Ltd. v. Aandi, noting that recent Supreme Court rulings (Kaminiben and Manuara Khatun) have prioritized the claimant’s right to receive compensation swiftly over the insurer's contractual exemptions.

Since the vehicle was insured at the time of the accident and the "pay and recover" principle is intended to subserve the interest of justice for third parties/claimants, the court found no reason to deviate from the Tribunal's order.

The court further observed that the Tribunal had already reduced the liability to 50% due to the parents' part in the negligence.

The High Court dismissed the appeal and confirmed the Tribunal’s award dated December 1, 2020, emphasizing that in motor accident claims, settled principles favoring claimants should be adopted over strict contractual exoneration of insurers.