Insurance Company not liable for accidents of goods vehicle prior to 1994 amendment: Gujarat High Court

Insurance Company not liable for accidents of goods vehicle prior to 1994 amendment: Gujarat High Court

The Gujarat High Court in its recent judgement held that liability cannot be fastened upon the insurance company under Section 147 of the Motor Vehicles Act, 1988 (MV Act) in the event the motor accident victim was travelling in a goods vehicle and such accident took place prior to the 1994 Amendment Act.

The Court was hearing the instant appeal against the judgement of the Motor Accident Claims Tribunal which had allowed the claim petition partly by awarding INR 4.1 lacs of compensation and holding both insurance companies liable to the extent of 50%.

In its judgement Justice Hemant Pracchak explained:

"…the present appellant insurance company is exonerated from the liability fastened upon it as the deceased was travelling in goods vehicle and it is clearly breach of the policy and therefore, the insurance company is not held liable…Considering the ratio laid down by Hon'ble Apex Court and considering the fact that the date of accident is of 9.1.1994 i.e. prior to the date of amendment in Section 147 of the Motor Vehicles Act which has come into force in November 1994 and therefore, the present appeal deserves to be allowed."

After the 1994 amendment in the MV Act, Section 147 mandated a policy of insurance against the death or bodily injury to any passenger of a transport vehicle, including goods vehicle; (except gratuitous passengers of a goods vehicle) caused by the use of that motor vehicle in a public place.

Relying on the Asha Rani judgement, the High Court reiterated:

"Section 2(35) of 1988 Act does not include passengers in goods carriage..."

Further, in respect of Section 147 of the 1988 Act, it was explained:

"Proviso appended thereto categorically states that compulsory coverage in respect of drivers and conductors of public service vehicle and employees carried in a goods vehicle would be limited to the liability under the Workmen's Compensation Act. It does not speak of any passenger in a 'goods carriage'."

Additionally, as per the judgement, the owner of a passenger carrying vehicle must pay the premium for covering the risks of the passengers which was not paid in the instant case.

Thus, the Claimants were entitled to get compensation from the other insurance company and the remaining 50% from the owner and driver of the tempo via appropriate proceedings. The amount deposited by the instant insurance company with the Tribunal was ordered to be refunded.