Summary: The Jammu & Kashmir High Court has clarified that a motor insurance company is generally not liable to pay compensation if a gratuitous passenger is involved in an accident in the offending vehicle. A “gratuitous passenger” is defined as someone transported in a vehicle without payment, essentially someone who has been given a lift. While the Motor Vehicles Act, 1988, does not explicitly define “gratuitous passenger,” it notably exempts such passengers in goods vehicles from mandatory insurance coverage under Section 147(1)(b)(ii). The Court emphasized that if it’s proven a person was a gratuitous passenger and not covered by the policy, the insurance company is not liable, even under “pay and recover” provisions. This principle was highlighted in a case where a Motor Accident Claims Tribunal had awarded compensation, but the High Court overturned it, finding that the deceased was likely a gratuitous passenger in a truck. This stance aligns with various Supreme Court rulings, such as National Insurance Co. Ltd. Vs. Baljit Kaur and Oriental Insurance Co. Ltd. v. Brij Mohan, which have consistently held that gratuitous passengers in goods vehicles are generally not covered, placing the liability on the vehicle owner. However, some Supreme Court judgments, exercising extraordinary jurisdiction under Article 142 of the Constitution, have directed insurance companies to “pay and recover” the compensation from the vehicle owner in the interest of justice. Therefore, while a motor insurance policy typically does not cover gratuitous passengers, the onus is on the insurance company to prove this, and courts may, in specific circumstances, mandate initial payment by the insurer with subsequent recovery from the vehicle owner.
HON’BLE HIGH COURT OF J&K has observed that an insurance company is not liable for compensation if a gratuitous passenger travels by offending vehicle. The Court further observed that needless to say here that it is settled position of law that in a case where it is proved that a person travelling by the offending vehicle as a gratuitous passenger, not covered under the policy of insurance, in such eventuality, the insurance company is not liable to pay compensation to the claimants concerned, even under the statutory provision of pay and recover.
WHO IS A GRATUITOUS PASSENGER?
A gratuitous passenger is a person who is transported in a vehicle as a courtesy, without payment. The term “gratuitous” means that someone is obliging another person.
“The Motor Vehicles Act, 1988 does not define the expression ‘gratuitous passenger’. However, Section 147(1)(b)(ii) of the Act expressly exempts the case of a ‘gratuitous passenger’ in a goods vehicle in a public place. But gratuitous passenger would mean one who has taken lift.
The law relating to the insurer’s liability for payment of compensation to gratuitous passengers in a vehicle after the enactment of the Motor Vehicles Act, 1988, which replaced the Motor Vehicles Act, 1939, initially came up for consideration in Satpal Singh‘s case (supra) wherein Supreme Court was called upon to consider the change in the provisions relating to third party risk, as was contained in Section 95 of the 1939 Act as against the provisions of Section 147 of the 1988 Act.
Their Lordships held that as per the proviso to Section 95(1) when read with its Clause (ii), it would be clear that the policy of insurance was not required to cover the liability in respect of the death of or bodily injury to persons who were gratuitous passengers of that vehicle. In contrast, under Section 147 of the 1988 Act, the insurance policy was required to insure the person or classes of persons specified in the policy to the extent specified.
| SECTION 147 IN THE MOTOR VEHICLES ACT, 1988
Requirements of policies and limits of liability. – (1) In order to comply with the requirements of this Chapter, a policy of insurance must be a policy which – (a)is issued by a person who is an authorised insurer; and (b)insures the person or classes of persons specified in the policy to the extent specified in sub-section (2) – (i) against any liability which may be incurred by him in respect of the death of or bodily injury to any person including owner of the goods or his authorised representative carried in the motor vehicle or damage to any property of a third party caused by or arising out of the use of the motor vehicle in a public place; (ii) against the death of or bodily injury to any passenger of a transport vehicle, except gratuitous passengers of a goods vehicle, caused by or arising out of the use of the motor vehicle in a public place. Explanation. – For the removal of doubts, it is hereby clarified that the death of or bodily injury to any person or damage to any property of a third party shall be deemed to have been caused by or to have arisen out of, the use of a vehicle in a public place, notwithstanding that the person who is dead or injured or the property which is damaged was not in a public place at the time of the accident, if the act or omission which led to the accident occurred in a public place. (2) Notwithstanding anything contained under any other law for the time being in force, for the purposes of third party insurance related to either death of a person or grievous hurt to a person, the Central Government shall prescribe a base premium and the liability of an insurer in relation to such premium for an insurance policy under sub-section (1) in consultation with the Insurance Regulatory and Development Authority. (3) A policy shall be of no effect for the purposes of this Chapter unless and until there is issued by the insurer in favour of the person by whom the policy is effected, a certificate of insurance in the prescribed form and containing the prescribed particulars of any condition subject to which the policy is issued and of any other prescribed matters; and different forms, particulars and matters may be prescribed in different cases. (4) Notwithstanding anything contained in this Act, a policy of Insurance issued before the commencement of the Motor Vehicles (Amendment) Act, 2019 shall be continued on the existing terms under the contract and the provisions of this Act shall apply as if this Act had not been amended by the said Act. (5)Where a cover note issued by the insurer under the provisions of this Chapter or the rules or regulations made thereunder is not followed by a policy of insurance within the specified time, the insurer shall, within seven days of the expiry of the period of the validity of the cover note, notify the fact to the registering authority or to such other authority as the State Government may prescribe. (6)Notwithstanding anything contained in any other law for the time being in force, an insurer issuing a policy of insurance under this section shall be liable to indemnify the person or classes of persons specified in the policy in respect of any liability which the policy purports to cover in the case of that person or those classes of persons. |
BRIF FACTS:
1.The court was considering an appeal challenging the award passed by the Motor Accident Claims Tribunal whereby an amount of Rs. 12,65,000 inclusive of the interim already granted, on “No Fault Basis Liability” was awarded in favour of the Claimants/ Respondents along with interest @ 6 percent per annum from the date of filing of the Claim Petition till final realization of the awarded amount.
2. The husband of the claimant and her father were travelling in a truck being driven by its driver rashly and negligently. After reaching a certain point, the driver lost control of the vehicle, as a result whereof, the vehicle skidded off the road and fell down about 200 feet deep gorge, thereby completely damaging the vehicle and inflicting serious injuries upon her husband who was taken to District Hospital, wherefrom he was referred to SKIMS, Srinagar, where he died and an FIR came to be registered with regard to the incident.
3. The wife of the victim approached the Tribunal with a Claim Petition seeking compensation to the tune of Rs. 45.00 lakhs for the death of the deceased.
4. Pursuant to notice having been issued by the Tribunal, the insurance-company/ appellant appeared and filed its objections to the Claim Petition, while as driver and owner of the offending vehicle, did not file any objections and were, accordingly, proceeded ex-parte before the Tribunal.
5. In its objections before the Tribunal, the appellant stated that the Claim Petition was not maintainable against the company, in as much as, the deceased was not a labourer of the truck employed by the insured and was not covered under the policy of insurance.
6. Later, the impugned order came to pass of the MACT.
7. The award stands challenged on various grounds, including that the deceased was travelling by the offending insured vehicle gratuitously, as such, the claimants, though entitled to receive compensation, but the insurer is not liable to indemnify the insured of his liability.
8. The court was of the view that the plea raised by the appellant-insurance company as to whether the deceased was, in fact, working with a Construction Company-HCC on a monthly remuneration should have been inquired into by the Tribunal and an official from the Construction Company should have been examined with regard to that fact or, in the alternative, the driver or owner of the offending vehicle should have been examined by the Tribunal, so as to state whether the deceased was working with the truck owned by the registered owner and driven by the Respondent-driver, as on the date of accident.
DECISION:
“This, given the facts and circumstances of the case before the Tribunal, was required, so as to rule out the fact that the deceased was not a gratuitous passenger. Needless to say here that it is settled position of law that in a case where it is proved that a person travelling by the offending vehicle as a gratuitous passenger, not covered under the policy of insurance, in such eventuality, the insurance company is not liable to pay compensation to the claimants concerned, even under the statutory provision of pay and recover.
That being so, this Court is of the considered opinion that the Tribunal has wrongly decided the issue, while passing the impugned Award,” the Court observed. “The appeal was accordingly allowed.”
IN BELOW MENTIONED CASE ALSO HON’BLE JHARKHAND HIGH COURT CONSIDERED PERSON TRAVELLING IN TRUCK A GRATUITOUS PASSENGER AND MADE OWENER OF TRUCK LIABLE NOT INSURER
| Ashok Kumar v. Birendra Kumar Singh, 2023 SCC OnLine Jhar 1291, decided on 1-09-2023.
Jharkhand High Court: In an appeal against judgment passed by the Additional District and Sessions Judge-cum-Motor Vehicle Claims Tribunal Judge dismissing the claim for compensation under Section 166 of Motor Vehicles Act, 1988, HON’BLE COURT directed the truck owner to compensate the gratuitous passenger and held that the insurance company was not liable as per facts of the case. BACKGROUND. 1. According to the facts, the claimant was travelling by truck on 13-06-1996 and some miscreants tried to stop the vehicle, but the driver did not stop the truck and tried to flee at high speed. 2.The miscreants hurled a bomb on the truck which blasted on its front windscreen causing grievous injuries on claimant’s face. 3. He was treated for a long period and the injury caused his face to look displeasing. 4. At the time of accident, the said truck was insured with Oriental Insurance Company and the claimant claimed compensation of Rs 3 lakhs with an interest @18% per annum from the insurance company. 5.The truck owner denied maintainability of the case as well his own liability to compensate the claimant since the vehicle was insured. 6. On the other hand, the insurance company nudged its liability and highlighted the fact that the claimant was travelling in the offending truck as a gratuitous passenger and that the truck driver violated terms and conditions of the insurance policy. 7. The Tribunal concluded that the claimant could not establish sustaining permanent disablement because of the accident at the relevant point of time and dismissed the claim holding that the claimant was not entitled to any compensation. 8. The said decision was challenged in the instant matter. COURT’S ANALYSIS OF LIABILITY FOR COMPENSATION UNDER MOTOR VEHICLE ACT, 1988 The Court considered the following questions: 1. Whether the claimant was a bonafide passenger of the truck, travelling as the owner of the goods? 2. Whether the claimant was entitled to any amount of compensation, and to what extent? The Court analysed the evidence which unequivocally suggested that the claimant was a passenger travelling in the said truck, but the claimant did not state about any of his loaded goods in the statement or having taken the truck on hire. The Court thereby held him to be a gratuitous passenger in the goods carrying vehicle. Considering the nature of the injuries sustained, the Court held that the claimant was entitled to compensation since the claimant sustained bodily injuries and mental trauma arising out of the accident involving use of motor vehicle. The Court found compensation of a lump sum amount of Rs 75,000 to be just for claimant’s entitlement. CONCLUSION The Court clarified that the insurance company will not be liable to pay any compensation due to violation of terms of policy. The vehicle owner was liable to pay the amount of compensation since the claimant was a gratuitous passenger. The Court directed the vehicle owner to pay the amount of Rs. 75000 compensations to the claimant within 60 days after which, the amount would carry an interest @7% p.a. |
The Supreme Court of India has ruled on several cases involving gratuitous passengers and insurance companies. These cases have established that insurance companies are liable to pay compensation for gratuitous passengers in some circumstances.
1.A three Judge Bench of the apex Court in the case of National Insurance Co. Ltd. Vs. Baljit Kaur and Others reported in (2004) 2 SCC 1 (Baljit Kaur), considered the question, whether, the insurance policy in respect of goods vehicle is required to cover the gratuitous passenger in view of the amendment to Section 147 of the Act. The apex court, after considering all the previous decisions came to the conclusion that the Insurance Company was not liable as the risk of unauthorized passenger in a goods vehicle or gratuitous passengers are not covered under the policy and there is a breach of condition of the policy in carrying a passenger in a goods vehicle. Therefore, the owner of the vehicle was held liable to satisfy the decree. However, at paragraph No. 21, the Court was of the opinion that interest of justice would be sub-served if the Insurance Company was directed to satisfy the award in favour of the claimant, if not, already satisfied and recover the same from the owner of the vehicle. The court also observed that, for the purpose of such recovery, it would not be necessary for the insurer to file a separate suit but it may initiate a proceeding before the executing court as if the dispute between the insurer and the insured was also determined by the Tribunal and the issue being decided against the owner and in favour of the insurer.
2. In a decision reported in (2007) 7 SCC 56 between Oriental Insurance Co. Ltd. and Brij Mohan and Others, (Brij Mohan), the apex Court has observed that, a gratuitous passenger carried in a goods vehicle is not covered under the Act but the Act has extended the statutory cover to the owner of the goods or his authorized representative carried in the vehicle, and not to gratuitous passenger A direction however was given by the apex Court to ‘pay and recover’ though it held that, gratuitous passenger was not covered under the policy. Even though the Insurance Company was found to be not liable, by exercising constitutional jurisdiction under Article 142 of the Constitution of India direction was given to satisfy the award made by the Tribunal in favour of the appellant. Therefore, this decision indicates that the extraordinary jurisdiction under Article 142 of the Constitution of India which is available only to the apex Court can be exercised to direct pay and recovery, even when it finds that the liability of the Insurance Company is absent. In spite of that, a direction can be issued by the apex Court to the Insurance Company to satisfy the award and later recover the said amount from the owner.
3. In another ruling reported in (2008) 8 SCC 246 between National Insurance Company Limited and Kaushalaya Devi and Others, the apex Court was dealing with the provisions under Sections 149(2)(a)(ii)and 147 of the Act, with reference to third party cover and the defences available to the insurer and exclusion of insurer’s liability. The Apex Court made an observation that due to non-coverage of gratuitous passenger in goods carriage and when an accident was caused by the driver of the vehicle not possessing a valid and effective driving licence and deceased was traveling as a gratuitous passenger in goods carriage, the owner alone was liable to pay compensation for death of claimant’s son caused by rash and negligent driving on the part of the driver of the truck. Further, the deceased was not the owner of any goods which were being carried in the truck. He had been traveling in the truck for the purpose of collecting empty boxes and he was traveling in the truck for a purpose other than the one for which he was entitled to travel in a public carriage goods vehicle. Holding that the insurer was not liable in such circumstances the Apex Court directed that, if the amount deposited by the insurer had not been withdrawn, the deposited amount be refunded and proceedings for release of the amount could be initiated against the owner of the vehicle. In this case also, having found that there was a fundamental breach of the condition which falls under Section 149 (2) of the Act, the apex Court exonerated the liability of the Insurance Company and categorically held that the owner is liable and Insurance Company cannot be directed to ‘pay and recover’.
4. In 2017 ACJ 1031 between Manuara Khatun and others and Rajesh Kumar Singh and others, the apex Court was also dealing with gratuitous passengers and the liability of an insurer and also with reference to pay and recovery concept in a head on collision between a jeep and truck coming from opposite directions resulting in death of two passengers in the jeep. The Tribunal found the driver of the jeep was negligent in causing the accident and there was no negligence of the truck driver. Both passengers who were traveling in the jeep, which was a private vehicle, were held to be gratuitous passengers and liability was saddled on the owner of jeep by exonerating the insurance company.
The Apex Court, after a detailed deliberation of the relevant provisions held that the deceased were traveling as gratuitous passengers in the vehicle and insurance company was not liable but it was directed to make the payment of awarded amounts in both the claims and to recover the amount from the insured in execution proceedings.
Therefore, in this particular case, it is clear again that if the Insurance company though was able to establish the defence as contemplated under Section 149 (2) of the Act, there would be no liability of the insurance company, but again, depending upon the facts of each case, the Apex Court directed payment of the compensation by the insurance company and recover the same from the owner.
CONCLUSION: a Motor Insurance Policy does not cover a gratuitous passenger. Since Gratuitous Passengers’ definition not given in MVA,1988, hence we can consider that a Gratuitous Passenger is a traveller in the vehicle by courtesy or without payment, or vehicle given lift to someone not related or related. MVA,1988 prohibits travelling of a Gratuitous Passenger in Goods Carrying Vehicle. But in case of claim of compensation an insurance company must prove that person is a Gratuitous Passenger and hence not covered. In these cases, courts may direct insurance companies to pay compensation and recover the same from owner of the vehicle.
*****
DISCLAIMER: article presented here is only for sharing information for readers.
Author Bio
