1. Motor accident claim — Passenger in private car — Insurer denied liability under package policy. (Para 3 , 4 , 5 )
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2026 Supreme(Sikk) 91
THE HIGH COURT OF SIKKIM: GANGTOK
A. Muhamed Mustaque, C.J.
The Manager, The New India Assurance Co. Ltd. - Appellant
Versus
Man Maya Ramudamu, W/o Late Bhim Bahadur Ramudamu - Respondent
MAC App No.15 of 2024
Decided On : 28-09-2026
Important Points
Under a comprehensive package insurance policy, passengers are entitled to claim compensation from the insurer, as such policies cover passengers—unlike statutory 'Act policies' which are limited to third-party claims—provided the relevant premium has been collected.
Subject
Insurance Law - Motor Accident Claims
Headnote
(A) Insurance Law - Package Policy vs. Act Policy - Liability of Insurer - Compensation for passengers - In a comprehensive or package policy, passengers are covered and entitled to claim compensation, distinguishing such cases from those involving "Act policies" where only third-party claims are admissible (Paras 7, 8, 10).
Facts of the case:
The claimant, mother of a deceased engineer, sought compensation following a fatal road accident where the deceased was traveling as a passenger in a private vehicle. The vehicle was covered by a valid private car package policy that specifically covered unnamed persons, for which the premium had been collected. The insurer challenged the liability to pay compensation on the ground that a passenger traveling gratuitously cannot claim third-party compensation.
Findings of Court:
The court held that the insurance policy in question was a package policy, which is a comprehensive policy covering the passengers within the vehicle. The court noted that the insurer had collected premium for the coverage of unnamed persons, justifying the liability to pay compensation (Paras 8, 12).
Issues: Whether a passenger traveling in a vehicle under a comprehensive package policy is entitled to compensation from the insurer, and whether the distinction between an "Act policy" and a "package policy" affects such liability.
Ratio Decidendi: The court reasoned that while statutory "Act policies" may limit compensation to third parties, a "package policy" is comprehensive and covers passengers. Therefore, the insurer is liable to pay compensation to passengers when a package policy is in effect and the appropriate premium has been collected.
Result: Appeal dismissed.
Facts of the case:
The claimant, mother of a deceased engineer, sought compensation following a fatal road accident where the deceased was traveling as a passenger in a private vehicle. The vehicle was covered by a valid private car package policy that specifically covered unnamed persons, for which the premium had been collected. The insurer challenged the liability to pay compensation on the ground that a passenger traveling gratuitously cannot claim third-party compensation.
Findings of Court:
The court held that the insurance policy in question was a package policy, which is a comprehensive policy covering the passengers within the vehicle. The court noted that the insurer had collected premium for the coverage of unnamed persons, justifying the liability to pay compensation (Paras 8, 12).
Issues: Whether a passenger traveling in a vehicle under a comprehensive package policy is entitled to compensation from the insurer, and whether the distinction between an "Act policy" and a "package policy" affects such liability.
Ratio Decidendi: The court reasoned that while statutory "Act policies" may limit compensation to third parties, a "package policy" is comprehensive and covers passengers. Therefore, the insurer is liable to pay compensation to passengers when a package policy is in effect and the appropriate premium has been collected.
Result: Appeal dismissed.
Legal Category Hierarchy
Advocates Appeared:
For the Appellant :Mr. Dipayan Roy, Advocate (through VC)
For the Respondent:Mr. Birendra Pourali, Advocate
For the Appellant :Mr. Dipayan Roy, Advocate (through VC)
For the Respondent:Mr. Birendra Pourali, Advocate
Table of Contents
2. Insurer argued gratuitous passenger not covered under third-party policy. Claimant argued passenger covered under package policy. (Para 6 , 9 )
3. Package policy is comprehensive and covers passengers. Prior precedent in Hemlata Lucksom holds passengers entitled to compensation. (Para 7 , 8 , 10 , 11 )
4. Under a package policy, insurer is liable for passenger injuries or death. Act policy rule for third parties only does not apply. (Para 7 , 8 , 10 , 11 , 12 )
5. Appeal dismissed. No costs. Interlocutory applications disposed. Trial court records remitted. (Para 14 , 15 , 16 , 17 )
6. Is a passenger in a private car covered under a package insurance policy for compensation?
Yes, a package policy is comprehensive and covers passengers. The insurer is liable to pay compensation for injuries or death to such passengers. (Para 8 , 10 , 11 )
7. Does the rule that gratuitous passengers cannot claim third-party compensation apply to a package policy?
No. The rule applies only to Act policies. Under a package policy, the passenger is covered as the policy expressly covers unnamed persons. (Para 7 , 8 , 10 )
JUDGMENT :
A. Muhamed Mustaque, C.J.
1. This Appeal has been preferred by the Insurer-Appellant Company challenging an Award of compensation passed in MACT Case No. 37 of 2019 by the Motor Accidents Claims Tribunal, Gangtok, Sikkim.
2. The Appellant Company was asked to pay a total compensation of Rs. 28,29,000/- (Rupees Twenty-Eight Lakhs and Twenty-Nine Thousand only) together with 10% interest per annum from the date of filing of the petition to the Claimant-Respondent.
3. Brief facts involved in this case are as follows:-
The Claimant is the mother of the deceased son. The deceased was an Electrical Engineer graduate from National Institute of Technology, Sikkim and it is claimed that his monthly income would have been Rs. 18,000/- per month.
4. On 17.08.2017, the deceased was travelling in a vehicle bearing registration No.SK01PB2044. The vehicle plunged down from the road, resulting in instantaneous death of the son of the Claimant. The deceased was a bachelor.
5. The vehicle had a valid insurance policy effective from 13.10.2016 to 12.10.2017, covering the date of accident. It was a private car package policy. In the policy itself, it is mentioned that the liability covers unnamed persons and premium was collected accordingly. The Learned Tribunal also found that it was a valid policy.
6. In this Appeal, learned counsel for the appellant, relying on the judgments of the Apex Court in United India Insurance Company Limited, Shimla vs. Tilak Singh and Others , AIR 2006 SC 1576 and National Insurance Company Limited vs. Balakrishnan and Another , (2013) 1 SCC 731 would argue that a passenger travelling in the vehicle cannot claim third-party compensation. Therefore, the insurance company cannot be made liable to pay the compensation. It is further argued that there is no involvement of any other vehicle, and therefore the passenger travelling gratuitously cannot claim the compensation. The dependents of the passenger who was travelling gratuitously also cannot claim compensation.
7. This Court notes that the above judgments are related to claim under the Act policy. In such circumstances, the claim of the third party alone would be admissible under law for claiming compensation from the insurer.
8. This Court notes that it is a package policy. That means it is a comprehensive policy that covers the passengers in the vehicle itself.
9. Learned Counsel for the Respondent placing reliance on The New India Assurance Co. Ltd. vs. Hemlata Lucksom and Another , 2024 SCC OnLine Sikk 125 submits that this Court has considered the matter in detail and found that the passengers are also covered.
10. In Hemlata Lucksom (supra) this Court considered a similar issue relating to a passenger travelling in a car and held that under the package policy, the passengers are entitled to claim compensation against the insurer.
11. I find no reason to differ with the judgment of this Court.
12. Taking note of the premium collected by the insurance company under the policy, the Tribunal was justified in ordering the liability to pay compensation by the Insurer.
13. No other issue arises for consideration.
14. Accordingly, the appeal stands dismissed.
15. No order as to costs.
16. Pending Interlocutory Application(s), if any, stand also disposed of.
17. Trial Court records be remitted back.
