Madras HC Upholds Tribunal Order Requiring Insurer to Pay 3 Injured Goods-Lorry Passengers First, Then Recover From Owner, Though They Rode Gratuitously

The three minor claimants were injured while travelling as gratuitous passengers in a goods lorry insured by United India Insurance Co. Ltd.

The Tribunal found that the accident resulted from the lorry driver’s rash and negligent driving and that the claimants’ presence in the vehicle breached the policy conditions.

It nevertheless directed the insurer to pay the compensation awards first and recover the amounts from the vehicle owner.

The insurer appealed, challenging that direction; it did not challenge the quantum of compensation.

Under New India Assurance Co. Ltd. v. Asha Rani, (2003) 2 SCC 223, and National Insurance Co. Ltd. v. Baljit Kaur, (2004) 2 SCC 1, an insurer is not statutorily liable to indemnify an owner for gratuitous passengers travelling in a goods vehicle.

The judgment also relied on the later application of the “pay and recover” doctrine in appropriate cases, citing National Insurance Co. Ltd. v. Swaran Singh, (2004) 3 SCC 297, Mangla Ram v. Oriental Insurance Co. Ltd., (2018) 5 SCC 656, and Shamanna v. Oriental Insurance Co. Ltd., (2018) 9 SCC 650.

It treated Kaminiben v. Oriental Insurance Co. Ltd., reported as 2026 (1) TN MAC 680 (SC), as affirming the Tribunal’s power to direct pay and recovery on a case-by-case basis, and followed this Court’s decision in C.M.A.(MD) No. 771 of 2023.

The Tribunal’s finding that the claimants were gratuitous passengers, and that the policy conditions were breached, was undisputed.

The Court considered the insurer’s reliance on Baljit Kaur but held that the later authorities, particularly Kaminiben, supported applying pay and recovery in appropriate cases.

Following its decision in C.M.A.(MD) No. 771 of 2023, the Court concluded that the policy breach did not, in the circumstances, require setting aside the direction that the insurer pay the claimants first and recover from the owner.

Since the insurer had not challenged the compensation amounts, the Court did not reassess quantum.

It confirmed the Tribunal’s awards, including the pay-and-recovery direction, and ordered the insurer to deposit the respective awards with accrued interest within eight weeks, after crediting any sums already deposited.

The claimants may withdraw the amounts in accordance with law and Tribunal procedure; no order as to costs was made.