Insurer Must Pay Gratuitous Passengers in Goods Vehicles Before Recovering from the Owner

On 6 March 1997, the claimants were travelling in a truck carrying cumin seeds when it was involved in a collision near Khokaria village; they sustained injuries and sought compensation

The MACT awarded Bachubhai Rs. 80,501 and Naranbhai Rs. 53,000, with interest, but exonerated the insurer after finding that the claimants were gratuitous passengers in a goods vehicle and that the policy did not cover them

The claimants appealed, limiting their submissions to a direction that the insurer pay the awards first and recover the amounts from the vehicle owner

1. Whether claimants travelling in a goods vehicle as third parties could obtain a “pay and recover” direction against the insurer despite being treated as gratuitous passengers

2. Whether the insurer, after satisfying the awards, could recover the amounts from the owner of the vehicle

The Court applied the “pay and recover” principle, under which an insurer may be directed, in appropriate circumstances, to satisfy an award in favour of claimants and then recover the amount from the insured owner, even where the insurer is not liable to indemnify the insured under the policy.

Relying on Kaminiben v. Oriental Insurance Company Limited, 2026 LiveLaw (SC) 174, the Court noted the Supreme Court’s reliance on National Insurance Co. Ltd. v. Saju P. Paul and Manuara Khatun v. Rajesh Kumar Singh for that principle, and on National Insurance Co. Ltd. v. Challa Upendra Rao for the recovery procedure

The judgment also distinguished Amudhavalli on the basis that it concerned a goods vehicle hired for travel, rather than a vehicle hired to carry goods with travel incidental to that purpose

The Tribunal’s finding that the claimants were gratuitous passengers, and its resulting exoneration of the insurer, were not displaced in these appeals; the claimants sought only a pay-and-recover order

Applying Kaminiben and the authorities discussed there, the High Court concluded that the claimants, as third parties, could receive the benefit of that direction notwithstanding the insurer’s exoneration from ultimate liability

The insurer was therefore required to satisfy the awards first, with recovery to follow against the vehicle owner

The insurer was directed to deposit the compensation, interest and costs before the Tribunal within 12 weeks, and was entitled to recover the amount from the vehicle owner by executing the order

The Tribunal was directed to disburse the deposited amounts to the claimants after verification and to deduct any unpaid court fees as required by law