Unauthorized Tractor Passenger Killed In Rollover: Gujarat HC Orders Insurer To Pay Compensation First, Recover From Owner

The deceased, aged 22, died when a tractor overturned on 21 March 2019.

The claimants sought compensation under Section 166 of the Motor Vehicles Act, 1988.

The Tribunal awarded ₹21,65,260 with 9% annual interest but exonerated the insurer, finding that the deceased was travelling beside the driver despite the tractor’s seating capacity being limited to the driver.

The claimants appealed under Section 173, challenging the award; the insurer also argued that the Tribunal had deducted only one-fifth of income for personal expenses despite the deceased’s father being a claimant.

Section 166 of the Motor Vehicles Act provides the basis for a claim for compensation arising from a motor-vehicle accident, while Section 173 provides for an appeal against a Tribunal’s award.

Under Shivraj v. Rajendra, (2018) 10 SCC 432, where an insurer is not liable to indemnify the owner because the vehicle carried an unauthorised passenger in breach of the policy, the court may nevertheless direct the insurer to satisfy the award first and recover the amount from the vehicle owner.

Compensation must also be recalculated where the Tribunal’s deduction for personal and living expenses is found erroneous.

The Court accepted the Tribunal’s finding, supported by the police papers, that the deceased was travelling beside the tractor driver, although the tractor’s permitted seating capacity was one, including the driver. This breached the policy conditions; however, Shivraj required the insurer to pay the compensation first and then recover it from the owner.

The Court also accepted the insurer’s contention, conceded by claimants’ counsel, that the Tribunal had erred in deducting only one-fifth of income for personal expenses, and recalculated the compensation at ₹20,44,300.

The judgment contains an apparent inconsistency: although the recalculated award is ₹1,20,960 lower than the Tribunal’s award, paragraph 12 describes that amount as “additional” and says the claimants may recover it from the owner.