Insurer must satisfy a minor passenger’s award first, with liberty to recover for unauthorised carriage.

Khudabaksh, then about 10 years old, was injured when a Bolero Camper overturned while he was travelling in it.

The vehicle was registered as a goods vehicle and insured with respondent No. 3; its policy recorded seating capacity of 4+1 but limited its use to carriage of goods.

The owner admitted that he had obtained no permit to carry passengers.

The Motor Accident Claims Tribunal awarded ₹4,81,000 with interest at 6% per annum, but exonerated the insurer, relying in part on the driver’s lack of a separate transport-vehicle authorisation.

The owner appealed the insurer’s exoneration.

1. Whether the driver’s lack of a separate transport-vehicle endorsement justified exonerating the insurer, given the vehicle’s classification and gross vehicle weight.

2. Whether the unauthorised carriage of passengers in a goods vehicle without a passenger permit entitled the insurer to complete exoneration, or instead warranted a “pay and recover” direction.

Under Section 173 of the Motor Vehicles Act, 1988, an award of the Motor Accident Claims Tribunal may be challenged in appeal.

Section 147 does not require compulsory insurance coverage for passengers carried in a goods vehicle (New India Assurance Co. Ltd. v. Asha Rani, (2003) 2 SCC 223).

A licence to drive a Light Motor Vehicle covers a transport vehicle within that class; a separate transport endorsement is not required (Mukund Dewangan v. Oriental Insurance Co. Ltd., (2017) 14 SCC 663, affirmed in Bajaj Allianz General Insurance Co. Ltd. v. Rambha Devi, 2024 INSC 840).

Where a policy breach is established, the insurer may be directed to satisfy the award first and recover the amount from the insured and/or driver (Oriental Insurance Co. Ltd. v. Nanjappan, (2004) 13 SCC 224; Amrit Paul Singh v. Tata AIG General Insurance Co. Ltd., (2018) 7 SCC 558).

The Court also relied on Anu Bhanvara v. IFFCO Tokio General Insurance Co. Ltd., Civil Appeal Nos. 6231–6232 of 2019, concerning young children travelling as gratuitous passengers in a goods vehicle.

The vehicle’s gross weight was 2,750 kg and the driver’s licence authorised him to drive an LMV.

Applying Mukund Dewangan and Bajaj Allianz, the Court held that the absence of a separate transport endorsement did not establish a licence breach.

However, the vehicle was being used to carry passengers without a permit authorising that use, and the policy’s seating-capacity entry did not override its goods-carriage limitation or establish contractual cover for unauthorised passengers.

The owner therefore had no right to full indemnification, but the claimant’s status as a minor supported directing the insurer to satisfy the award first, while preserving its recovery rights against the owner and driver.

The insurer was directed to satisfy the award of ₹4,81,000, with interest at 6% per annum from 13 November 2017, and was granted liberty to recover the amount from the owner and driver through the Tribunal or Executing Court, without filing a separate civil suit.

The remaining findings, including the compensation and interest, were left unchanged; no order as to costs was made.