Passenger risk coverage depends on premium paid, not the policy’s “liability-only” title.

The claimants challenged the judgment dated 17 November 2017 passed in MACP No. 985 of 2010, by which the Motor Accident Claims Tribunal awarded compensation of ₹3,95,500 with interest at 8% per annum from the date of the claim petition until realisation.

The deceased/claimant was travelling as a pillion rider on motorcycle No. GJ-8-AE-1014.

The Tribunal treated the insurance policy as an “Act-only” or liability-only policy and exonerated the insurer from liability.

In appeal, the claimants contended that the insurer’s own witness had admitted that an additional premium had been paid to cover two passengers, and that the compensation ought to be enhanced to ₹5,00,000 under Section 164 of the Motor Vehicles Act, 1988, as interpreted in New India Assurance Co. Ltd. v. Urmila Halder.

1. Whether the insurance policy covered the risk of the pillion rider, notwithstanding the Tribunal’s description of the policy as an Act-only/liability-only policy.

2. Whether the fixed compensation of ₹5,00,000 under Section 164 of the Motor Vehicles Act, 1988 could be applied retrospectively to an accident that occurred before the amendment came into force.

An appeal against an award of the Motor Accident Claims Tribunal lies under Section 173 of the Motor Vehicles Act, 1988.

The nature and extent of insurance coverage must be determined from the policy terms and the premium breakup, and not merely from the title or description of the policy.

Where the insurer’s authorised officer admits that an additional premium was accepted for covering passengers, the insurer cannot deny coverage for the risk of a covered passenger.

Section 164 of the Motor Vehicles Act introduced fixed compensation of ₹5,00,000 in cases of death.

Relying on New India Assurance Co. Ltd. v. Urmila Halder, 2024 JX (SC) 1154, the Court held that the beneficial amendment could be applied retrospectively in the absence of a specific statutory bar, particularly where it altered or clarified the mode of computation without disturbing the underlying liability.

The High Court found that the Tribunal had erroneously relied on the policy’s title while disregarding the evidence of the insurer’s witness.

In cross-examination, the insurer’s officer expressly admitted that, apart from the premium for the owner and driver, a premium had been accepted for two additional passengers.

Since the claimant was travelling as a pillion rider, this admission established that the relevant risk was covered; no further proof was required from the claimant.

The Court therefore held that the insurer’s exoneration was based on a misreading of the evidence.

On quantum, the Court applied Urmila Halder and treated Section 164 as beneficial legislation capable of retrospective application.

Accordingly, the claimant was entitled to the statutory fixed compensation of ₹5,00,000 rather than the ₹3,95,500 awarded by the Tribunal.

The Tribunal’s award was modified, and the claimants were held entitled to ₹5,00,000 with interest at 8% per annum from the date of the claim petition until realisation.

The insurance company was directed to deposit the decretal amount within 12 weeks.

The Tribunal was directed to disburse the amount lying in deposit or in fixed deposit, along with accrued interest, to the claimants after due verification and subject to deduction of court fees, if applicable.