3 March 2026 Legal Updates

Motor Accident Compensation: Insurer Can Be Directed to ‘Pay & Recover’ Even If Deceased Was Gratuitous Passenger in Goods Vehicle

a) Case Title:

• Kaminiben & Ors. v. Oriental Insurance Company Limited & Ors.

b) Case No.:

• SLP (Civil) No. 21802/2023

c) Court:

• Supreme Court of India

d) Bench:

• Justice Prashant Kumar Mishra & Justice N.V. Anjaria

Facts of the Case

A tempo (goods vehicle) was hired to carry a Ganesh idol for immersion in the Narmada River during a festival. The deceased travelled in the vehicle along with the idol.

During the journey, a fatal accident occurred, resulting in the death of the passenger. The claimants approached the Motor Accident Claims Tribunal (MACT) seeking compensation.

Tribunal’s Order

The Tribunal awarded ₹13,23,000 compensation and directed the insurance company to:

• Pay the compensation first, and
• Recover the amount later from the vehicle owner.

High Court’s Decision

The High Court set aside the Tribunal’s direction, holding that the insurance company was not liable to pay at all, since the deceased was a gratuitous passenger in a goods vehicle.

The claimants then approached the Supreme Court.

Legal Issue

Whether an insurance company can be directed to “pay and recover” compensation when the deceased was travelling as a gratuitous passenger in a goods vehicle.

Arguments of the Parties

Claimants

• The vehicle was hired primarily to carry the Ganesh idol.
• Travelling of persons with the idol was only incidental.
• Even if insurer is not directly liable, courts can order pay and recover.

Insurance Company

1. The insurer relied on:

• Amudhavalli v. HDFC Ergo General Insurance Company Ltd.

2. It argued that:

• Gratuitous passengers in goods vehicles are not covered under insurance policy.
• Therefore insurer cannot be directed to pay compensation.

Supreme Court’s Reasoning

1. Dominant Purpose Test:

The Court examined why the vehicle was hired.

It found:

• The dominant purpose was transporting the Ganesh idol.
• The deceased was travelling along with the goods (idol).

Thus:

• Travel was incidental to carrying goods, not the primary purpose.

Therefore the deceased could be treated as a gratuitous passenger accompanying his goods.

2. Doctrine of “Pay and Recover”:

a) The Court relied on:

• Manuara Khatun v. Rajesh Kumar Singh

b) This case established that:

• Even where the insurer is technically not liable,
• Courts may direct the insurer to pay compensation first and recover it later from the owner.

c) Purpose:

• To protect accident victims and ensure speedy compensation.

3. Distinguishing Previous Case:

a) The Court distinguished:

• Amudhavalli v. HDFC Ergo General Insurance Company Ltd.

b) In that case:

• The vehicle was hired for travelling, not for carrying goods.

c) Here:

• Vehicle was hired for transporting the idol, so facts were different.

Final Decision

The Supreme Court:

• Allowed the appeal.
• Set aside the High Court’s order.
• Restored the Tribunal’s award.

Thus:

• Insurance company must pay compensation first.
• It may recover the amount from the vehicle owner later.

Key Legal Principles

1. Gratuitous Passenger in Goods Vehicle:

Generally:

• Insurance policy does not cover passengers in goods vehicles.

But courts may still grant relief through pay and recover doctrine.

2. Pay and Recover Principle:

a) Courts may direct:

• Insurer pays compensation to victims first.
• Insurer later recovers money from vehicle owner.

b) Purpose:

• Victims should not suffer because of insurance disputes.

3. Dominant Purpose Test:

To determine liability, courts examine:

• Why the vehicle was hired.
• Whether passenger travel was primary or incidental.

4. Social Justice Approach:

Motor accident compensation law prioritizes:

• Victim protection
• Speedy compensation
• Welfare principles under the Motor Vehicles Act.

5. Role of MACT:

Motor Accident Claims Tribunal ensures:

• Quick compensation
• Minimal technical hurdles.