High Court of Gujarat Allows Insurance Company's Appeal in Tractor Accident Case — Pay and Recovery Order Set Aside. The Court held that the Tribunal exceeded its jurisdiction by directing the insurer to pay and recover compensation for an unauthorized passenger in a goods vehicle, as the risk was not covered under Section 147 of the Motor Vehicles Act, 1988.

High Court: Gujarat High Court In Favour of Accused

Admin

2026-05-19 00:06:44

Font size:

Case Note & Summary

The case involves an appeal by The New India Assurance Company Limited against the judgment and award dated 08.02.2022 passed by the Motor Accident Claims Tribunal (Aux), Ahmedabad Rural at Mirzapur, in Motor Accident Claim Petition No. 62/2005. The Tribunal had partly allowed the claim petition and awarded compensation of Rs.4,17,500/- to the claimants, who are the legal heirs of the deceased Prahaladbhai Dhulabhai Patel. The deceased died in a motor accident involving a tractor, which is a goods vehicle. The Insurance Company contended that the deceased was an unauthorized passenger on the tractor, and the risk of a passenger is not covered under the insurance policy as per Section 147 of the Motor Vehicles Act, 1988. The appellant argued that the Tribunal erred in directing the Insurance Company to pay and recover the amount, as the Tribunal lacked the power to pass such an order when the insurer had no statutory liability. The appellant also submitted that the owner of the vehicle had expired during the pendency of the proceedings, and his legal heirs were not brought on record, rendering the order a nullity. The Court examined the scope of Section 147, which defines the minimum statutory coverage required in a motor insurance policy, and held that the statutory liability extends only to risks expressly enumerated therein, namely death or bodily injury of a third party and the owner's representative travelling in a goods vehicle. Since the deceased was an unauthorized passenger, the risk fell outside the scope of Section 147, and the insurer had no statutory liability. The Court further held that the Tribunal's power to direct 'pay and recover' is not available when the insurer has no statutory liability under Section 147. The defences under Section 149(2) are available only when the insurer is otherwise liable. Consequently, the Court allowed the appeal, set aside the impugned judgment and award, and dismissed the claim petition against the Insurance Company. The Court also noted that the claimants may recover the amount from the owner of the vehicle, if permissible under law.

Headnote

A) Motor Vehicles Act - Insurance - Statutory Liability - Section 147, Motor Vehicles Act, 1988 - The statutory liability of an insurer under Section 147 extends only to risks expressly enumerated, namely death or bodily injury of a third party and the owner's representative travelling in a goods vehicle. If the risk falls outside this scope, the insurer has no statutory liability and cannot be compelled to pay. (Paras 5-6)

B) Motor Vehicles Act - Insurance - Pay and Recover - Section 149, Motor Vehicles Act, 1988 - The Tribunal's power to direct 'pay and recover' is not available when the insurer has no statutory liability under Section 147. The defences under Section 149(2) are available only when the insurer is otherwise liable. (Paras 6-7)

C) Motor Vehicles Act - Goods Vehicle - Unauthorized Passenger - Section 147, Motor Vehicles Act, 1988; Rule 28, Rules of the Road Regulations, 1989 - A tractor being a goods vehicle is prohibited from carrying passengers for hire or reward. The deceased travelling as an unauthorized passenger is not covered under the insurance policy, and the insurer is not liable to pay compensation. (Paras 3, 5)

Issue of Consideration

Whether the Motor Accident Claims Tribunal has the power to direct an insurance company to 'pay and recover' compensation when the deceased was an unauthorized passenger in a goods vehicle, and the risk is not covered under Section 147 of the Motor Vehicles Act, 1988.

Final Decision

The High Court allowed the appeal, set aside the impugned judgment and award dated 08.02.2022 passed by the Motor Accident Claims Tribunal (Aux), Ahmedabad Rural at Mirzapur, in Motor Accident Claim Petition No. 62/2005, and dismissed the claim petition against the Insurance Company. The Court held that the Tribunal had no power to direct 'pay and recover' when the insurer had no statutory liability under Section 147 of the Motor Vehicles Act, 1988.

Law Points

Motor Vehicles Act
1988
Section 147
Section 149
Section 166
Section 173
unauthorized passenger
goods vehicle
pay and recover
statutory liability
third-party risk
tractor
Rules of the Road Regulations
1989
Rule 28

Case Details

2026 LawText (GUJ) (01) 230

R/First Appeal No. 2015 of 2022

2026-01-15

Hasmukh D. Suthar

Mr. Rathin P. Raval for the appellant

The New India Assurance Company Limited

Gitaben WD/O Prahaladbhai Dhulabhai Patel & Ors.

Nature of Litigation

Appeal under Section 173 of the Motor Vehicles Act, 1988 against the judgment and award of the Motor Accident Claims Tribunal awarding compensation for the death of a person in a tractor accident.

Remedy Sought

The appellant Insurance Company sought to set aside the Tribunal's order directing it to pay and recover compensation, contending that the deceased was an unauthorized passenger and the risk was not covered under the policy.

Filing Reason

The Insurance Company was aggrieved by the Tribunal's direction to pay and recover compensation for an unauthorized passenger in a goods vehicle, which it argued was beyond the Tribunal's power and contrary to Section 147 of the Motor Vehicles Act.

Previous Decisions

Issues

Whether the Tribunal has the power to direct an insurance company to 'pay and recover' compensation when the deceased was an unauthorized passenger in a goods vehicle and the risk is not covered under Section 147 of the Motor Vehicles Act, 1988. Whether the Insurance Company is liable to pay compensation for the death of an unauthorized passenger in a tractor, which is a goods vehicle.

Submissions/Arguments

The appellant argued that the deceased was an unauthorized passenger on the tractor, and the risk of a passenger is not covered under the insurance policy as per Section 147 of the Motor Vehicles Act, 1988. The Tribunal erred in directing the Insurance Company to pay and recover the amount, as the Tribunal lacked the power to pass such an order when the insurer had no statutory liability. The appellant also submitted that the owner of the vehicle had expired during the pendency of the proceedings, and his legal heirs were not brought on record, rendering the order a nullity.

Ratio Decidendi

The statutory liability of an insurer under Section 147 of the Motor Vehicles Act, 1988 extends only to risks expressly enumerated therein. If the risk falls outside this scope, the insurer has no statutory liability and cannot be compelled to pay. The Tribunal's power to direct 'pay and recover' is not available when the insurer has no statutory liability under Section 147. The defences under Section 149(2) are available only when the insurer is otherwise liable.

Judgment Excerpts

Section 147 defines the minimum statutory coverage required in a motor insurance policy to safeguard third-party interests at the time of an accident by mandating compulsory insurance. If the risk falls outside the scope of Section 147, the insurer has no statutory liability and cannot be compelled to pay. The Tribunal on the ground that the Tribunal has the power to pass an order of 'pay and recover', whereas the learned advocate for the appellant has disputed the Tribunal's authority to pass such an order.

Procedural History

The Motor Accident Claims Tribunal (Aux), Ahmedabad Rural at Mirzapur, partly allowed the claim petition and awarded compensation of Rs.4,17,500/- with a direction to the Insurance Company to pay and recover the amount. Aggrieved, the Insurance Company filed an appeal under Section 173 of the Motor Vehicles Act, 1988 before the High Court of Gujarat at Ahmedabad.