Insurer may be directed to pay gratuitous-passenger compensation first, with recovery from the vehicle owner.

On 6 June 2009, the claimant, then about 17 years old, was travelling with his father and brother in a goods vehicle as part of a marriage party when it met with an accident.

He suffered grievous injuries, including loss of vision in his left eye, and the Tribunal assessed his permanent disability at 30%.

The Motor Accident Claims Tribunal awarded ₹1,83,500 with interest at 7% per annum.

The insurer appealed, disputing its liability on grounds including that the claimant was a gratuitous passenger in a goods carriage and that the driver lacked the requisite licence.

Whether the driver held a valid and effective licence to drive the vehicle at the time of the accident.

Whether the insurer was liable to indemnify the owner for compensation awarded to a claimant travelling as a gratuitous passenger in a goods carriage.

Whether, despite having no substantive liability to indemnify the owner for that risk, the insurer could be directed to satisfy the award first and recover the amount from the owner.

Section 147 of the Motor Vehicles Act, 1988 does not ordinarily require coverage of a gratuitous passenger travelling in a goods carriage.

In National Insurance Co. Ltd. v. Baljit Kaur, (2004) 2 SCC 1, the Supreme Court recognised that an insurer lacking liability to indemnify in respect of such a passenger may nevertheless be directed to satisfy the award and recover the amount from the vehicle owner.

The Court also relied on Manuara Khatun v. Rajesh Kumar Singh, (2017) 4 SCC 796, which applied the pay-and-recover approach in the case of a gratuitous passenger.

On driving licences, the judgment applied the stated principle that an LMV licence authorises its holder to drive a transport vehicle within the LMV category, with gross vehicle weight not exceeding 7,500 kg, without a separate transport endorsement, citing Bajaj Alliance General Insurance Co. Ltd. v. Rambha Devi, 2024 SCC OnLine SC 3183.

The Court held that the claimant was a gratuitous passenger in a goods carriage and was neither the owner of goods nor an authorised representative of such an owner.

His risk was therefore not ordinarily covered by the insurer’s statutory liability under Section 147.

However, applying Baljit Kaur and Manuara Khatun, the Court distinguished the insurer’s lack of substantive indemnity liability from the appropriate method of satisfying the claimant’s award.

Given the claimant’s age and permanent disability, it directed the insurer to pay first and recover from the owner.

The Court also rejected the licence challenge because the vehicle’s gross weight was about 2,750 kg and the driver held an LMV licence; it found no basis to disturb the Tribunal’s permit finding.

The disability certificate objection was rejected for want of contrary medical evidence.

The award was modified to require the insurer to satisfy the award first, with liberty to recover the amount paid from the vehicle owner in accordance with law.

The 50% already released was to be adjusted; the remaining 50%—₹79,250—along with accrued interest at 7% per annum was directed to be released to the claimant within eight weeks.

The statutory deposit of ₹25,000 was also directed to be remitted to the MACT for payment to the claimant, if not already remitted.