Passenger Killed In Crash: Himachal Pradesh HC Makes Car Owner Pay ₹13.93 Lakh After Act-Only Policy Excludes Occupants

The claimants, the deceased’s wife and son, sought compensation under Section 166 of the Motor Vehicles Act for his death in a car accident on 30 December 2016.

The Tribunal awarded Rs.13,93,100 with interest at 6% per annum and directed the insurer to satisfy the award.

The insurer appealed, contending that the policy in force was an Act-only policy that did not cover a gratuitous occupant of a private car.

The Tribunal had relied on an earlier policy, Ext. R-3, which had expired before the accident; the policy in force on the accident date was Ext. RW1/C.

Sections 146 and 147 of the Motor Vehicles Act require insurance against third-party risks but do not, by themselves, extend an Act-only policy to cover a gratuitous occupant of a private car.

The insurer’s liability for such an occupant depends on the policy terms and payment of an additional premium; a comprehensive/package policy may cover an occupant.

The Court relied on United India Insurance Co. Ltd. v. Tilak Singh, (2006) 4 SCC 404, and Oriental Insurance Co. Ltd. v. Sudhakaran, AIR 2008 SC 2729, for the rule that a gratuitous passenger is not covered under a statutory policy absent additional cover, and on National Insurance Co. Ltd. v. Balakrishnan, (2013) 1 SCC 731, distinguishing Act-only policies from comprehensive/package policies.

It also referred to New India Assurance Co. Ltd. v. Sadanand Mukhi, (2009) 2 SCC 417, on the distinction between statutory and contractual insurance cover.

The deceased was an occupant of the car, and Ext. RW1/C—the policy in force on the accident date—was a “Private Car Liability Policy,” or Act-only policy.

It showed payment of only the third-party premium of Rs.2,205, with no additional premium to cover occupants.

Applying the cited authorities, the Court held that the deceased was not covered under that policy and that the insurer could not be required to indemnify the owner.

The Tribunal’s reliance on Ext. R-3 was erroneous because that policy had expired before the accident.

The vehicle owner was held liable to satisfy the award; the remaining terms, including interest, were maintained.

The Court also directed the Registrar General to place a copy of the judgment on the concerned judicial officer’s service record and send a copy to the Director of the H.P. State Judicial Academy.