Gujarat HC exonerates insurance company in goods vehicle fatality case

Gujarat High Court has set aside a compensation award against Shree Ram General Insurance Company, ruling that a passenger travelling in a goods vehicle with personal household items does not qualify as a "passenger with goods" under the Motor Vehicles Act.

An appeal was filed by the insurance provider against a 2016 tribunal decision. The tribunal had originally ordered the company to pay ₹9,70,000 to the legal heirs of a deceased man who died while travelling in a pickup van.

The core of the dispute rested on the status of the deceased. While the claimants initially argued the deceased was a 'cleaner' or 'labourer', cross-examination revealed he was travelling back from a Sunday market with household groceries.

The court emphasised that under section 2(13) of the Motor Vehicles Act, 1988, the definition of 'goods' specifically excludes personal luggage or effects. The single bench noted that since the deceased was carrying personal belongings rather than goods, he was an unauthorised "gratuitous passenger".

The court found that plying passengers for hire in a vehicle registered strictly for goods carriage constituted a fundamental breach of the insurance policy terms. Evidence from an RTO officer confirmed the vehicle was not permitted to carry passengers for fare.

Citing recent Supreme Court precedents, the high court held that no "pay and recover" order could be issued against the insurer in cases of such fundamental breaches.

The high court fully exonerated the insurance company from the liability to pay compensation. The tribunal was directed to release 70% of the previously deposited award amount back to the insurance company within four weeks.

While the claimants are permitted to keep the 30% already disbursed to them, the insurance company is granted liberty to recover that specific amount from the vehicle owner. It shall be open for the original claimants to pursue appropriate legal remedies with regard to the recovery and realisation of the remaining amount of compensation from the owner of the insured vehicle in accordance with law, the court said.