Court case(2004) 2 SCC 1

Persons travelling gratuitously - not as owners of goods or their representatives, and without paying any fare - in a goods vehicle were killed or injured when the vehicle met with an accident. Their legal representatives claimed compensation under the Motor Vehicles Act 1988 and the insurer of the goods vehicle was held liable. The insurer contended that the compulsory cover required by s. 147, as amended in 1994, extended to the owner of goods or his authorised representative carried in the vehicle, but not to gratuitous passengers in a goods vehicle, and that it could not be made liable for them.

The Supreme Court accepted the insurer's contention on the law. Following New India Assurance Co. v. Asha Rani (2003), it held that the 1994 amendment, by inserting the words "including owner of the goods or his authorised representative carried in the vehicle", did not bring gratuitous passengers of a goods vehicle within the compulsory cover; an insurer is not liable for them under an Act policy. However, since the law on the point had been unsettled and the claimants were victims who could not be left without a remedy, the Court, in exercise of its jurisdiction under Article 142, directed the insurer to pay the amounts awarded to the claimants and to recover them from the owner of the vehicle, the recovery to be made by executing the award.