Insurer Liable for Death of Laborer on Tractor Mudguard Under Third-Party Coverage and Statutory Rules

The heirs of the deceased (claimants) filed a petition under Section 166 of the Motor Vehicles Act, 1988, following a fatal accident involving a tractor

The deceased was traveling on the mudguard of the tractor when it turned turtle due to the driver's rash and negligent driving

The appellant Insurance Company contested the claim, arguing that the deceased was an unauthorized/gratuitous passenger, the driver lacked a valid license, and the vehicle's seating capacity was limited to only the driver

The Tribunal partly allowed the claim, awarding Rs. 8,23,000/- with 9% interest, holding the insurer jointly and severally liable

1. Whether the Insurance Company can avoid liability based on the driver's alleged lack of a valid and effective driving license

2. Whether the Insurance Company is liable for the death of a person traveling on a tractor mudguard who is considered an unauthorized or gratuitous passenger

3. Whether the deceased, sitting on the mudguard as a laborer, should be treated as a "third party" for the purposes of compensation

The court applied Section 149(2)(a)(ii) of the Motor Vehicles Act, 1988, regarding the insurer’s defense of an unlicensed driver, as interpreted in National Insurance Co. Ltd v. Swaran Singh, which places the burden of proof for the "breach" on the insurer

It also applied Rule 122 of the Gujarat Motor Vehicle Rules, 1989, which permits bona fide employees of the owner to travel in a goods carriage

the court relied on the precedent in United India Insurance Co. Ltd v. Kalabhai Bachubhai Parmar, establishing that a passenger injured due to negligent driving can be treated as a "third party" regardless of seating capacity violations

The Court found that while the Insurer raised a defense regarding the lack of a driving license, it failed to examine any RTO official or produce documentary evidence to prove the breach

Regarding the passenger's status, the Court noted that although the tractor's RC book specified a seating capacity of one, Rule 122 of the Gujarat Motor Vehicle Rules permits bona fide employees (laborers) to be carried

The Court reasoned that once it is established—via the FIR [Exh. 34] and deposition [Exh. 24]—that the accident occurred because the driver was negligent, a laborer falling off the vehicle is positioned as a "third party" injured by the driver's negligence

Consequently, the seating capacity restriction did not exonerate the insurer from its statutory liability toward a third party

The court directed the full release and disbursement of the deposited award amount to the claimants within six weeks