Insurers are not liable for gratuitous passengers in goods vehicles under the pre-amendment Motor Vehicles Act.

On 28 January 1994, the deceased, Prabhatbhai Babubhai Chauhan, was travelling on the mudguard of a tractor towing a trolley when the tractor overturned and crushed him.

The Claims Tribunal awarded compensation of ₹1,65,000 but held the vehicle’s owner and legal representatives liable and exonerated the insurer, finding that the deceased was a gratuitous passenger in a goods vehicle.

The claimant appealed against the insurer’s exoneration.

Whether the insurer was liable under the law applicable to the accident to indemnify the vehicle’s owner for the death of a gratuitous passenger travelling in a goods vehicle.

Whether the insurer could be directed to pay the compensation first and recover it from the owner.

Because the accident occurred before the Motor Vehicles Act, 1988 amendment effective from 14 November 1994, the Court applied the relevant provisions of the Motor Vehicles Act, 1939, including Section 95.

Under the principles stated in New India Assurance Co. Ltd. v. Asha Rani and the authorities following it, compulsory insurance did not cover a passenger travelling gratuitously in a goods vehicle before the 1994 amendment; that amendment’s extension of cover to the owner of goods or authorised representative did not extend to gratuitous passengers.

The Court also relied on National Insurance Co. Ltd. v. V. Chinnamma and Gujarat High Court decisions, including United India Insurance Co. Ltd. v. Chandrakant Revashankar Bhatt, in support of the rule that an insurer is not liable to pay, or to pay first and recover, where the claimant was a gratuitous passenger and statutory liability did not arise.

The deceased was undisputedly travelling on the tractor as a gratuitous passenger, and the accident occurred before the 1994 amendment.

Applying Section 95 of the 1939 Act and the cited authorities, the Court held that the compulsory policy did not cover his risk.

It found no error in the Tribunal’s exoneration of the insurer and, consistently with the authorities cited, no basis to require the insurer to satisfy the award and recover the amount from the owner.

The Court dismissed the appeal, leaving the Tribunal’s award and the insurer’s exoneration undisturbed. It directed that the record and proceedings, if any, be sent back to the Tribunal.