Insurer must compensate an unauthorized goods-vehicle passenger first, then recover from the insured.

The claimant was injured while travelling in a goods tempo insured by the appellant. The insurer disputed liability, contending that the claimant was a gratuitous passenger.

The vehicle owner’s initial complaint stated that the claimant boarded the tempo on its return journey after the vehicle had unloaded watermelons; a later statement described the claimant as an unloader.

The Tribunal awarded ₹9,78,000 with 6% annual interest and held the insurer jointly and severally liable. The insurer appealed, challenging liability only; the accident, coverage, injuries and entitlement to compensation were not in dispute

Whether the Tribunal was justified in holding the insurer liable to pay compensation where the claimant travelled in a goods vehicle and the evidence did not establish that he was a loader or fair-paying passenger

Rule 100 of the Karnataka Motor Vehicles Rules, 1989 permits the carriage of up to two loaders in a medium goods vehicle.

A person travelling in a goods vehicle without establishing a permitted role or status may be a gratuitous or fair-paying passenger, potentially in breach of policy conditions.

Relying on Kaminiben v. Oriental India Insurance Co. Ltd., which considered Manuara Khatun v. Rajesh Kumar Singh, National Insurance Co. Ltd. v. Saju P. Paul and Amudhavalli v. HDFC Ergo General Insurance Co. Ltd., the Court applied the pay-and-recover principle: the insurer must satisfy the third-party award first and may then recover the amount from the insured in the same proceedings.

The complaint stated that the claimant boarded the tempo on its return journey after the watermelons had been unloaded. The record contained no evidence that the tempo was carrying goods on that journey or that the claimant had been engaged as an unloader.

Although Rule 100 permits loaders in a medium goods vehicle, the Court held that this did not establish the claimant’s entitlement to travel in the circumstances. Nor was there evidence that he was a fair-paying passenger. His carriage therefore breached the policy conditions; however, applying the Supreme Court authorities cited, that breach did not relieve the insurer of the obligation to pay the third-party claimant in the first instance

The amount already deposited was to be transmitted to the Tribunal, any balance deposited within six weeks, and the compensation released to the claimant upon deposit