1. Motor accident claims under Motor Vehicles Act — Insurance policy not covering passengers — Liability disputed. (Para 3 , 4 , 5 )
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2026 Supreme(Gau) 1438
THE GAUHATI HIGH COURT (HIGH COURT OF ASSAM, NAGALAND, MIZORAM AND ARUNACHAL PRADESH)
NELSON SAILO, J.
United India Insurance Co. Ltd. – Petitioner
Versus
Sh Gin Rosanga, S/O Biakchhawna And Ors. – Respondents
Macapp./1 Of 2025, Macapp./3 Of 2025, Macapp./2 Of 2025
Decided On : 20-07-2026
Advocates Appeared:
For The Petitioner: Mr K Laldinliana
For The Respondent: Mr. Johny L Tochhawng
For The Petitioner: Mr K Laldinliana
For The Respondent: Mr. Johny L Tochhawng
Insurer of a vehicle with a liability-only policy is not liable for gratuitous passengers, but must pay the compensation award and then recover from the insured under the pay and recover principle.
Headnote:(A) Motor Vehicles Act, 1988 - Sections 166 and 168 - Insurance - Liability of insurer for gratuitous passengers - Unless policy is comprehensive or package policy, insurer is not liable to indemnify occupants/passengers not covered by the policy - Principle of 'pay and recover' applied - Insurer directed to pay compensation awarded by Tribunal and then recover from the insured in accordance with law. (Paras 11, 12, 13, 14)
Facts of the case:
A car insured under a third-party liability only policy met with an accident resulting in death of three passengers. Their legal heirs filed claims for compensation under Section 166 of the Motor Vehicles Act. The Tribunal awarded compensation, which the insurance company challenged on the ground that the policy did not cover gratuitous passengers.
Findings of Court:
The court found that the insurance policy was limited to third-party, owner-cum-driver and paid driver, and no additional premium was paid for passengers. Therefore, the insurer was not liable to indemnify the claimants. However, applying the principle of 'pay and recover' as enunciated by the Apex Court, the court directed the insurer to deposit the compensation amount before the Tribunal and then recover the same from the insured. The statutory deposit was ordered to be refunded. Interest at 7% per annum from the date of filing of claim till final payment was maintained.
Issues: Whether the insurance company is liable to pay compensation for gratuitous passengers not covered by the policy; and if not, whether the principle of pay and recover applies.
Ratio Decidendi: Even though the insurer had no liability under the policy to indemnify gratuitous passengers, in a beneficial legislation like the Motor Vehicles Act, the appropriate recourse is to apply the pay and recover principle - the insurer must first satisfy the award and then recover from the insured.
Result: All three appeals disposed off with the direction that the appellant insurance company deposit the compensation amount as per the Tribunal's order and then recover the awarded amount from the insured in accordance with law. Statutory deposit to be refunded.
Legal Category Hierarchy
Table of Contents
2. Insurance company denies liability due to no additional premium for passengers; claimants seek pay and recover. (Para 6 , 7 , 8 )
3. Appeals disposed; insurance company directed to deposit compensation and recover from insuree. (Para 13 , 14 , 15 , 16 )
4. Is an insurance company liable to compensate gratuitous passengers under a policy not covering them?
No, unless the policy is comprehensive or package policy covering occupants; insurer not liable for gratuitous passengers. (Para 11 , 12 )
5. What remedy applies when insurance company is not liable but vehicle is insured?
Insurance company must pay compensation and then recover the amount from the insured (pay and recover principle). (Para 12 , 13 )
JUDGMENT :
NELSON SAILO, J.
This order will dispose of all the 3 (three) appeals preferred by the appellant against the 3 (three) Judgment & Order all dated 18.10.2024 passed by the learned Presiding Officer, Motor Accident Claims Tribunal (Tribunal) in MACT Case Nos. 6, 7 & 36/2022. In other words, although the learned Tribunal has rendered three separate judgment and order but as the vehicle involved in the accident and the accident itself are one and the same and that only separate claims have been made by the individual occupants of the vehicle, all the appeals are being disposed of by this common order.
2. Heard Mr. K. Laldinliana, learned counsel for the appellants and Mr. Johny L. Tochhawng, learned counsel for respondent Nos. 1 & 2 in MAC. App. No. 1/2025, respondent No. 1 in Mac. App. No. 2/2025 and for respondent Nos. 1 & 2 in MAC App. No. 3/2025. None appears for the respondent vehicle owner represented by his legal representative and also for the driver of the accident vehicle despite service of notice.
3. Brief facts of the case as projected by the appellant Insurance Company is that one Maruti Wagon R Car bearing registration No. MZ 01J 4141 belonging to Shri. Lalramthara (owner) and driven by Lalchhuanawma (Driver) on 19.12.2018 at 7:30 am, while coming from Aizawl towards Lamka, Manipur met with an accident on the outskirt of North East Khawdungsei village, in between Ngopa and North East Khawdungsei village at approximately about 2 kms from North East Khawdungsei. As a result of the accident, four out of the five occupants of the vehicle succumbed to their injuries on the spot. The vehicle owner Lalramthara was amongst one of the deceased persons. However, the driver of the vehicle Shri. Lalchhuanawma survived.
4. As a result, the legal heirs of the deceased persons filed the claims for compensation before the Tribunal under Section 166 of the Motor Vehicles Act, 1988 ( as amended) (MV Act). The claimants arrayed the Insurance Company, the owner of the vehicle through his legal representative and the driver of the accident vehicle as opposite parties to the claim application. In response to the claim the opposite parties including the appellants Insurance Company file their written statements denying their liability to pay compensation as was claimed by the claimants. It was the case of the owner of the accident vehicle as well as the driver of the accident vehicle that since the vehicle was validly insured with the appellants Insurance Company, they were not liable to pay compensation but it was the appellants Insurance Company who was to indemnify the claimants for the death of the deceased persons.
5. There is no dispute at the bar that the claim application filed by the owner of the vehicle in question was disposed of by the Tribunal by awarding a certain amount of compensation to be paid by the Insurance Company. The appellant Insurance Company has also satisfied the awarded amount. However, in respect of the three passengers of the vehicle, although the Tribunal awarded compensation through the impugned Judgment & Orders impugned in the instant appeals, the Insurance Company being aggrieved has challenged the same before this Court in the instant proceedings.
6. Mr. K.Laldinliana, learned counsel for the appellant submits that the appellant Insurance Company by filing their written statement denied their liability to pay compensation and had also examined the Manager of the Insurance Company as their witness. In his deposition, the said witness clearly stated that the Insurance Company did not receive any additional premium for passenger/inmate/occupants to cover the risk of the passenger/ inmate/occupants. In fact, the vehicle was insured under private car-liability only policy and the said policy does not cover the occupants/inmate/passenger of the vehicle. Under the circumstance, the appellant Insurance Company is not liable to pay compensation to the claimants. In support of his submission, the learned co
