Insurer may recover from the vehicle owner after compensating a policy-excluded passenger.

The claimants sought compensation for the death of Mst. Tahira, who died in a vehicular accident on 18 June 2008 while travelling in a Maruti car insured by the appellant.

The Motor Accidents Claims Tribunal awarded Rs. 9,19,000 with interest at 6.5% per annum and directed the insurer to pay the claimants.

The insurer appealed, contending that the policy covered third-party risk only and did not cover the deceased as a passenger.

The High Court confined its consideration to the insurer’s liability, leaving the findings on the accident and quantum undisturbed.

Whether the insurance policy covered the deceased passenger’s risk, including whether the Tribunal was justified in finding that the Rs. 25 premium under IMT 29 covered vehicle occupants.

Whether, despite the absence of passenger coverage, the insurer could be directed to satisfy the award and recover the amount from the vehicle owner.

The Court relied on the “pay and recover” principle applied by the Supreme Court in Anu Bhanvara v. IFFCO Tokio General Insurance Co. Ltd., (2020) 20 SCC 632, in a case involving a gratuitous passenger.

Under that principle, an insurer may be required to pay the compensation to the claimants and may thereafter recover the award amount from the vehicle owner.

The judgment identifies no statute as the basis of its decision.

The insurer’s witness stated that the owner had purchased only third-party coverage and that no premium had been received to cover passengers or occupants; the witness was not cross-examined on this evidence.

The Tribunal had inferred that the Rs. 25 premium under IMT 29 covered occupants other than the owner or driver, but the High Court held that this finding lacked evidentiary support and was reached despite the owner’s absence from the proceedings.

Accordingly, the policy did not cover the deceased passenger. Applying the Anu Bhanvara principle, however, the Court preserved the claimants’ recovery by requiring the insurer to pay, with a right to recover from the owner.

Any amount deposited in the Court and not already released was ordered to be released to the claimants in their respective shares, subject to verification and identification.