This Supreme Court judgment holds that under Section 147 of the Motor Vehicles Act, 1988, an insurer is liable to indemnify claims for the owner of goods or his authorized representative traveling in a goods vehicle. Furthermore, the registered owner remains liable for compensation until a transfer is formally reported to the Registering Authority under Section 50, and the insurer cannot avoid its liability based on unsubstantiated assertions.
Facts Of The Case:
A motor accident involving a goods vehicle resulted in several claims for death and injury. The injured and deceased were petty hawkers, such as a fish monger and a vegetable vendor, who were accompanying their goods in the vehicle at the time of the accident. The insurance company contested its liability on two primary grounds. First, it argued that the victims were gratuitous passengers in a goods vehicle and thus not covered under the policy. Second, it claimed there was no liability to indemnify as the registered owner had transferred possession and ownership of the vehicle to the appellant-driver via an agreement, though the insurance policy remained in the registered owner’s name and the vehicle’s registration was never formally transferred. The Motor Accidents Claims Tribunal had awarded compensation, holding the registered owner, the driver, and the insurer jointly liable. However, the High Court allowed the insurer’s appeal, absolving it of liability. The present appeals were filed by the driver, challenging the High Court’s decision to fasten the entire liability for satisfying the awards on him.
Procedural History:
The procedural history began with multiple claim petitions filed before the Motor Accidents Claims Tribunal. The Tribunal awarded compensation, holding the registered owner, the driver (appellant), and the insurance company jointly and severally liable. Dissatisfied, both the claimants and the insurance company filed appeals before the High Court of Chhattisgarh. The High Court allowed the insurer’s appeals, absolving it of liability, while partly allowing the claimants’ appeals by enhancing compensation in some cases and dismissing others. The appellant-driver then filed the present civil appeals in the Supreme Court, challenging the High Court’s order that cast the entire liability upon him. During the pendency of these appeals, two matters were settled at the Lok Adalat. The Supreme Court ultimately allowed the remaining appeals, setting aside the High Court’s order and restoring the insurer’s liability to satisfy the awards.
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Court Observation:
The Court observed that the insurer’s claim of the passengers being gratuitous was a mere assertion without substantiation, as evidence showed the deceased and injured were owners of the goods accompanying their merchandise in the vehicle, placing them squarely within the definition of a third party under Section 147 of the Motor Vehicles Act. Furthermore, the Court found there was no legal transfer of ownership to the appellant-driver, as the registered owner had not reported the transfer to the Registering Authority as mandated under Section 50 of the Act. Consequently, the registered owner remained the legal owner liable for compensation, a liability the insurer was obligated to indemnify. The Court also noted the insurer’s selective challenge of only three out of eleven claim awards without justification.
Final Decision & Judgement:
The Supreme Court allowed the appeals, setting aside the impugned judgment of the High Court. It was held that the insurer was liable to indemnify the claims as the injured and deceased were owners of goods traveling in the goods vehicle, thus falling within the purview of a ‘third party’ under the insurance policy. The registered owner was declared the legal owner liable for compensation, as no valid transfer of ownership was effected under Section 50 of the Motor Vehicles Act, 1988. The insurer was directed to satisfy the awards passed by the Tribunal, as modified by the High Court.
Case Details:
Case Title: Brij Bihari Gupta Versus Mannet & Ors. Citation:2025 INSC 948 Civil Appeal No.: Civil Appeal Nos. 6338-6339 of 2024 Date of Judgement: August 08, 2025 Judges/Justice Name: Justice K. Vinod Chandran and Justice N. V. Anjaria
Download The Judgement Here