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2025 Supreme(SC) 1648
SUPREME COURT OF INDIA
K. VINOD CHANDRAN, N.V. ANJARIA, JJ.
Shyam Lal – Appellant
Versus
Shriram General Insurance Co. Ltd. and Others. – Respondents
Civil Appeal Nos. 5177-81 of 2022
Decided On : 04-09-2025
For the Appellant(s) : Mr. Manohar Pratap, AOR
For the Respondent(s): Mr. Mukesh Kumar, AOR
Headnote:(A) Motor Vehicles Act, 1988 - Sections 2(7) and 2(14) - Utility vehicle accident - High Court’s order of 'pay and recover' set aside - The utility vehicle was registered to carry 5 passengers including the driver, and thus, valid for the passengers involved in the accident. Court rules that the insurance was not limited to carriage of goods, hence full liability lies with the Insurance Company. (Paras 5, 6, 9)
(B) Insurance Policy - The insurance coverage indicated a capacity of 4+1 and did not restrict to goods alone. The Tribunal's finding of negligence and liability on the Insurance Company was confirmed. (Paras 4, 7, 8)
Facts of the case:
The appeal arises from an accident involving a utility vehicle with claim petitions filed by the deceased's representatives. Disputes centered on the applicability of insurance coverage restrictions and the vehicle’s capacity.
Findings of Court:
The utility vehicle could carry passengers as per registration and insurance policy, hence the insurer must fulfill its liability without restrictions for goods only.
Issues: The primary issues addressed were the extent of liability under the insurance policy and the nature of the vehicle’s coverage.
Ratio Decidendi: The court found no valid grounds for the 'pay and recover' order; the insurer cannot evade liability when the vehicle was permitted to carry passengers and was insured as such.
Result: Appeals allowed.
| Table of Content |
|---|
| 1. challenge to the 'pay and recover' order based on vehicle usage (Para 1) |
| 2. arguments on passenger capacity and policy limitations (Para 2 , 3) |
| 3. court's analysis of vehicle classification and insurance liability (Para 4 , 5 , 6 , 7) |
| 4. consideration of income loss calculation for compensation (Para 8) |
| 5. conclusion reversing high court's decision and restoring tribunal's order (Para 9 , 10) |
JUDGMENT :
K. VINOD CHANDRAN, J.
The owner of the utility vehicle involved in an accident, which gave rise to 5 claim petitions, has filed the instant appeal challenging the order of “pay and recover” issued by the High Court in the appeal filed by the Insurance Company. The High Court found that the utility vehicle was not entitled to carry passengers by reason of the specific restriction in the policy which is evident from “Limitation as to Use”. The contention was that the 4 passengers excluding the driver who were entitled to travel in the utility vehicle, are only employees who come under the purview of Workmen’s Compensation Act, 1923.
2. The learned Counsel for the appellant-owner took us through the Certificate of Registration (Annexure P1), the contract carriage permit (Annexure P2) and the package policy (Annexure P3) which indicated the seating capacity including the driver to be 4+1. It is argued that the limitation as to use insofar as carriage of goods applies only to a goods vehicle and not an utility vehicle which can carry both passengers and goods. There is no ground for ordering “pay and recovery” in the facts and circumstances of the case, especially when the Insurance Company had not taken a defence that the vehicle was insured as a goods vehicle. The claimants are the legal representatives of the deceased who were either travelling in the vehicle or standing/walking at the accident site.
3. The learned Counsel for the Insurance Company, however, contended that there could be no plea of goods being carried in the vehicle because one of the deceased was a student and the others; a catering employee, a painter, an employee in the postal department and an unemployed man. The restriction squarely applies, and the passengers cannot be said to be validly covered under the policy. It is also argued that even if the passengers are said to be owners of goods or his representative, there could not have been more than four passengers in the vehicle, when the claim petitions were numbering five. There was also an allegation of nine deaths having occurred in the accident, which clearly indicates overloading.
4. The appeal was filed only on the ground of the limitation in the policy. The Tribunal found the negligence and rashness in the driving of the utility vehicle and the vehicle is covered by a valid package policy issued by the Insurance Company are established. Having gone through the records, we see that the certificate of registration indicates the class of the offending vehicle to be an Utility Van which has a seating capacity of 5, including the driver. The permit issued as a contract carriage, also allows 5 passengers to be carried in the vehicle. A ‘contract carriage’ as defined under Section 2(7) of the MOTOR VEHICLES ACT , 1988 means a motor vehicle which carries a passenger or passengers for hire or reward and is engaged under an express or implied contract and includes a motor cab notwithstanding that separate fares are charged for its passengers. This is in clear distinction with a ‘goods carriage’ defined under Section 2(14) of the Act which is a vehicle constructed or adapted or used solely for the carriage of goods.
5. The package policy produced shows the make & model as seen from the Certificate of Registration indicating the vehicle to be manufactured by Mahindra & Mahindra, a Bolero Camper Utility DC, 2WD, BS2. The utility vehicle obviously is for carriage of passengers and goods; the passengers not being necessarily the owners of the goods as seen from the seating capacity of 4+1 including the driv
