Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2026 Supreme(Online)(HP) 1970

IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA
Sushil Kukreja, J
Shriram General Insurance Company Limited – Appellant
Versus
Nikki Devi – Respondent
FAOs No. 593 of 2016|FAO No. 334 of 2018

Advocates:
For the Appellants/Petitioners: Jagdish Thakur, Sanjeev Kuthiala, Tamanna Sharma
For the Respondents: Sanjeev Kuthiala, Tamanna Sharma, Kamlesh Kumari, A.S. Rana, Raman Sethi, Jagdish Thakur

An insurance company is not liable to indemnify an insured for the death of a gratuitous passenger in a goods vehicle. Liability for compensation remains with the person reflected as the registered owner in statutory records, irrespective of private transfer agreements.

Headnote:(A) Motor Vehicles Act, 1988 - Sections 147, 166 and 173 - Fatal accident - Compensation - Liability of insurer - Gratuitous passengers in goods carriage - Whether insurance company liable to indemnify for death of unauthorized passengers travelling in goods vehicle - Court held that insurer is under no statutory liability to cover gratuitous passengers in goods vehicles as no premium is paid for such risks - Coverage to owner of goods under amended Section 147 cannot be extended to unauthorized persons exceeding seating capacity. (Paras 31, 33, 34, 39)

(B) Motor Vehicles Act, 1988 - Section 2(30) - Transfer of vehicle - Liability of registered owner - Where vehicle is transferred but name of transferor continues in record of registering authority, transferor remains liable for compensation - Liability to pay compensation is fastened upon person in whose name vehicle is registered. (Paras 41, 42)

(C) Compensation - Assessment of dependency - In absence of documentary proof of income, guesswork must be based on reality - Addition of future prospects in case of self-employed deceased - Deduction for personal expenses - Application of appropriate multiplier based on age of deceased - Admissibility and quantification of conventional heads. (Paras 16, 17, 22, 23, 25, 26, 29)

Facts of the case:
Legal heirs of the deceased sought enhancement of compensation awarded by the tribunal, while the insurer appealed to set aside the award of compensation for the death of a passenger in a goods vehicle, contending he was a gratuitous passenger. The tribunal had fastened liability jointly on the driver and insurer, despite the owner transferring the vehicle to a third party without updating registration records.

Findings of Court:
The court enhanced the compensation based on a realistic assessment of income and application of settled multipliers. However, it held the insurer not liable for claims concerning gratuitous passengers in goods vehicles. It further held the registered owner liable for payment of compensation, rejecting the plea for 'pay and recover' as the same was an exercise of extraordinary jurisdiction not available to the High Court.

Issues: (i) Whether an insurance company is liable to pay compensation for the death of a gratuitous passenger in a goods carriage vehicle; (ii) Whether a transferor of a vehicle, who remains the registered owner in official records, is liable to pay compensation; (iii) Determination of just and fair compensation.

Ratio Decidendi: Insurance coverage in goods carriages is limited to statutory requirements, excluding gratuitous passengers exceeding the vehicle's authorized seating capacity. Furthermore, the registered owner of a vehicle remains statutorily liable for claims until the registration is officially updated.

Result: Appeals disposed; compensation enhanced; insurer exonerated from liability; liability fastened exclusively upon the registered owner's legal representatives.

Judgement Key Points

Key Points: - The court held that the insurer is not liable to indemnify gratuitous passengers in a goods vehicle; liability lies with the owner unless statutory exceptions apply (!) (!) (!) (!) . - For calculating compensation, the court applied Sarla Verma and Pranay Sethi principles: determine income (with permissible guesswork supported by evidence), apply personal living expense deduction (1/3 for three dependents), consider future prospects (40% uplift for self-employed under 40), use appropriate multiplier (M-15 for 37 years), and add conventional heads with 10% annual enhancement per Sunita case (!) (!) (!) (!) (!) (!) (!) . - Conventional heads (loss of estate, funeral expenses, spousal/parental/filial consortium) are to be enhanced by 10% at three-year intervals; specific awards in this case: loss of dependency Rs.11,76,120/-, funeral Rs.19,965/-, loss of estate Rs.19,965/-, spousal consortium Rs.53,240/-, parental consortium Rs.1,06,480/- each, total Rs.13,75,770/- (!) (!) (!) (!) (!) (!) (!) (!) (!) . - The owner of the goods vehicle (registered owner) remains liable if he is the true owner or in possession; if transfers are not properly registered, liability remains with the registered owner; Naveen Kumar etc. and subsequent case law cited (!) (!) (!) .

What is the liability of the insurer for a gratuitous passenger in a goods vehicle under Section 147 of the Motor Vehicles Act?

What is the method for determining monthly income and future prospects for compensation under the Motor Vehicles Act in a death claim?

What is the appropriate head and amount of conventional compensation (loss of estate, loss of consortium, funeral expenses) and the applicable annual enhancement?

Table of Content
1. assessment of just compensation based on evidence and guesswork. (Para 2 , 3 , 4 , 14 , 15 , 17 , 18 , 19)
2. calculation of dependency, future prospects, and conventional heads of compensation. (Para 20 , 21 , 22 , 23 , 24 , 25 , 26 , 27 , 28 , 29)
3. insurance company is not liable for compensation concerning unauthorized gratuitous passengers in a goods vehicle. (Para 30 , 31 , 32 , 33 , 34 , 35 , 36 , 37 , 38 , 39 , 43)
4. registered owner remains liable for compensation despite unregistered transfer of the vehicle. (Para 40 , 41 , 42)
5. final modification of the award exonerating the insurer and holding the owner liable. (Para 44)

Sushil Kukreja, Judge.

Since both these appeals are the offshoots of impugned award, dated 30.12.2015, passed by learned Motor Accidents Claims Tribunal, Bilaspur, H.P. (hereinafter for the sake of brevity referred to as “the learned Tribunal”), they are taken up together for consideration and disposal.

2. The appellants in FAO No. 334 of 2018, who were petitioners (claimants) before the learned Tribunal below (hereinafter referred to as “the petitioners/claimants”) maintained appeal under Section 173 of the Motor Vehicles Act, 1988 (for short ‘the Act’) against impugned award, dated 30.12.2015, passed by learned Tribunal below, whereby the petitioners were held entitled to compensation of Rs.13,30,000/-, alongwith interest @ 9% per annum from the date of filing of the petition till actual realization of the amount, with a prayer to allow their appeal and the amount of compensation be enhanced.

3. Conversely, appellant-Shriram General Insurance Company, respondent No. 4 before the learned Tribunal below, also maintained appeal, i.e., FAO No. 593 of 2016, under section 173 of the Act, against the aforesaid impugned award passed by the learned Tribunal below, with a prayer to quash and set-aside the impugned award by dismissing the claim petition filed by the petitioners/claimants.

4. The facts giving rise to the appeal are that the petitioners/claimants, i.e., Smt. Nikki Devi, Mr. Sunil, wife and son, respectively, of Shri Suresh Kumar (deceased) and Smt. Roshani Devi, mother of the deceased, filed a claim petition under Section 166 of the Act, claiming compensation. As per the petitioners, the deceased was running a hotel at Delag and he was an agriculturist as well. The monthly income of the deceased was around Rs.30,000/-. On the evening of 10.09.2011 the deceased was going from village Delag to village Bhurali in three-wheeler, having registration No. HP-23B-4002, for attending a function in the house of the daughter of Shri Sukh Dev. S/Shri Sukh Dev, Rajinder Kumar, Jagdish Chand and Abhishek were also travelling with the deceased in the same three-wheeler. The aforesaid three-wheeler was owned by respondent No. 2-Shri Rashila Ram and it was being driven by respondent No. 1-Shri Nirmal Singh. The three-wheeler was being driven on a high speed by respondent No. 1 and when the vehicle reached village Bhurali, due to high speed, vehicle went out of control and rolled down into the Khud. In the accident the deceased suffered severe injuries and he was rushed to Sunder Nagar Hospital, where he was declared dead. As per the petitioners, the accident had occurred due to the rash and negligent driving of respondent No.1.

5. In response to the claim petition filed by the petitioners, the respondents filed separate replies. Respondent No. 1 took preliminary objection of maintainability of the claim petition. On merits, the age, income and avocation of the deceased was denied, however, it was admitted that the deceased was travelling in the aforesaid three-wheeler and it was being driven by the replying respondent. As per the replying respondent, he was driving the vehicle with care and caution and near village Bhurali a big stone fell on the vehicle, due to rainy season and despite his best efforts, the vehicle tumbled on the road. The accident occurred due to natural calamity, in which

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