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Insurance Companies Not Liable To Pay Compensation To Unauthorised Passengers

In Bharati AXA General Insurance Co. Ltd. vs Aandi. & others, the Madras High Court was hearing a bunch of appeals challenging an award passed by the Motor Accident Claims Tribunal, which had, while granting compensation to eighteen victims of a road accident, directed the insurance company to pay the compensation to unauthorised passengers as well, with liberty to recover the same from the owner of the vehicle. The claimants in the case at hand, had engaged a goods vehicle to travel for a wedding, and were therefore, unauthorized passengers.

The court noted that following a 1994 amendment to the Motor Vehicles Act, 1988, Section 147 of the Act restricts an insurer’s liability in case of motor vehicle accidents to a third party; the owner of the goods or his authorized representative carried in a goods vehicle; and the passenger of a public service vehicle.

It also noted that Section 149 (2)(a)(i)(c) of the Act allows insurance companies to be exempted from liability if the vehicle in question, being a transport vehicle, was used for a purpose not allowed by its permit.

The court then noted, “No doubt true that in many cases the claimants may not be able to realise the award amount from the owners of the vehicles involved in the accident. But, the said factual situation alone cannot impel us to do something against the provisions of the statute and the decisions of the larger benches of the Hon’ble Supreme Court of India.”

The Madras High Court therefore reiterated that insurance companies cannot be held liable to compensate for deaths or injuries to unauthorised/ gratuitous passengers in goods or transport vehicles.

In doing so, the Bench comprising Justice KK Sasidharan and Justice R. Subramanian refused to consider as precedent the recent judgment in Shivraj v. Rajendra, wherein the Supreme Court had affirmed the High Court’s conclusion that the insurance company was not liable for the loss or injuries suffered by the unauthorised passenger, but had opined that the High Court should have directed the company to pay such compensation with liberty to recover the same from the tractor owner.

Article referred: https://www.livelaw.in/insurance-companies-not-liable-to-pay-compensation-to-unauthorised-passengers-for-motor-vehicle-deaths-injuries-madras-hc/

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