In a significant ruling, the Supreme Court of India has held that an insurance company cannot evade its liability in a tragic road accident case involving a utility vehicle, dismissing the "pay and recover" direction earlier passed by the High Court. The matter stems from multiple claim petitions filed after a Bolero Camper vehicle met with an accident, resulting in several fatalities and injuries.
Background
The case began when the owner of the utility vehicle, Shyam Lal, challenged the High Court’s order that had directed the insurer - Shriram General Insurance Company - to first pay the compensation to victims and later recover the amount from the owner. The High Court had relied on the insurance policy's clause restricting passenger carriage.
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Counsel for the appellant argued that the Bolero was registered as a "Utility Van" with a seating capacity of five, including the driver, and had a valid contract carriage permit. The insurance policy too mentioned 4+1 seating. Hence, the insurer could not later claim that the policy was restricted only to goods carriage.
Court's Observations
The bench, comprising Justice K. Vinod Chandran and Justice N.V. Anjaria, examined the vehicle registration, insurance documents, and witness depositions. The Court noted that the insurance company's own branch manager admitted the vehicle was a utility van designed for carrying both goods and passengers.
"The limitation as to use applies only to goods vehicles," the bench observed,
Pointing out that the insurance company had issued the policy after verifying all documents, including the permit for five passengers. The Court also rejected the insurer's argument that there were more passengers than allowed. Eyewitness testimony confirmed only four passengers were inside, while additional victims were pedestrians hit during the accident.
On the insurer's plea about one compensation case (relating to deceased Jagdish Prasad Gaur) where no deduction for personal expenses was made, the Court directed the Tribunal to apply a one-third deduction before final disbursal.
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Decision
Ultimately, the Supreme Court set aside the High Court's order and restored the Motor Accident Claims Tribunal's award, with the minor modification mentioned above. The Judgment makes it clear that Shriram General Insurance Company must bear full liability for compensation.
The bench concluded:
"We find absolutely no reason to sustain the order of the High Court directing pay and recovery. The liability is on the Insurance Company and that has to be satisfied fully."
With this, the appeals were allowed, giving relief to the vehicle owner and ensuring claimants receive their compensation directly from the insurer.
Case Title: Shyam Lal v. Shriram General Insurance Co. Ltd. & Others
Case Number: Civil Appeal Nos. 5177-81 of 2022
