Supreme Court holds utility vehicle covered by package policy; sets aside High Court's pay-and-recover direction
A bench of Justices K. Vinod Chandran and N. V. Anjaria heard an appeal by the owner of a utility vehicle challenging the High Court's order directing "pay and recover" against the insurer after a road accident gave rise to five claim petitions. The principal question was whether a policy "limitation as to use" (restricting carriage of goods) disentitled the insurer from indemnifying claims for death and injury arising from the utility vehicle that carried passengers.
The Supreme Court allowed the appeals, set aside the High Court's directive of pay-and-recover and restored the Tribunal's awards in favour of the claimants, subject to a limited modification in one award. The Court found that the vehicle was registered and permitted as an "Utility Van" with seating capacity 4+1 and that the permit was a contract carriage allowing five passengers including the driver; consequently the policy did not insure the vehicle solely as a goods vehicle. The Court, in its reasoning, observed: The Court also noted the insurer's admissions recorded in evidence and observed that "the Insurance Company in the above circumstance, cannot wriggle out of its liability to indemnify the owner."
Background The dispute arose from a collision involving a Mahindra Bolero Camper utility vehicle that resulted in multiple deaths and injuries and five claim petitions before the Motor Accidents Claims Tribunal (MACT). The Tribunal recorded findings of negligence and rashness against the vehicle and awarded compensation to claimants, holding that the vehicle was insured by a valid package policy. The insurer appealed to the High Court, which allowed the insurer's challenge on the ground that the policy contained a "limitation as to use" restricting carriage to goods and therefore ordered the insurer to pay the awards and "recover" from the owner.
On appeal to the Supreme Court, the vehicle owner relied on the registration certificate, contract carriage permit and the package policy showing seating capacity 4+1 and a contract carriage permit permitting five passengers. The insurer urged that several claimants were not validly covered — pointing to the occupations of some deceased (student, catering employee, painter, postal department employee, unemployed) and to an allegation of overloading — and contended the limitation applied. The Supreme Court examined the policy, registration certificate and permit, and the oral admissions of the insurer's branch manager that the policy reflected the vehicle's registration and seating capacity and that no specific recital showed the vehicle to be a goods vehicle. The Court found that eyewitness evidence supported that four passengers were in the vehicle and some deceased were pedestrians dragged by the vehicle, explaining the extrication of five persons at the scene.
The Supreme Court concluded that the policy did not confine the vehicle's use to carriage of goods alone and therefore the insurer remained liable to satisfy the Tribunal's awards. The Court allowed the appeals, set aside the High Court judgment, and restored the Tribunal's orders. The Court further directed that in MACT Case No. 134 of 2014 (relating to the death of Jagdish Prasad Gaur) a deduction of one-third for personal expenses should be made when computing loss of income before disbursal. Appeals were allowed with that reservation; pending applications were disposed of.
Case Details: Case No.: Civil Appeal Nos. 5177-81 of 2022 (2025 INSC 1078) Case Title: Shyam Lal v. Shriram General Insurance Co. Ltd. and Others Appearances: For the Petitioner(s): [Not indicated in the judgment] For the Respondent(s): [Not indicated in the judgment]