Brij Bihari Gupta v. Manmet
Background
Several claim petitions were filed before a Motor Accidents Claims Tribunal after people were killed or injured in a goods-vehicle accident. The insurance company challenged only three of the eleven awards, arguing it had no liability because the victims were "gratuitous passengers" (unpaid non-fare passengers) riding in a goods vehicle, and because the vehicle's actual possession had passed to the appellant (also the driver) under an unregistered sale agreement, while the insurance policy remained in the registered owner's name. The High Court of Chhattisgarh accepted the insurer's arguments and shifted the entire compensation liability onto the appellant personally; he then appealed to the Supreme Court.
Decision Breakdown
The Supreme Court found that the victims, a fish vendor and a vegetable hawker, were traveling in the goods vehicle to safeguard their own goods being transported in it, which under Section 147 of the Motor Vehicles Act makes them persons the insurer must indemnify, not "gratuitous passengers"; the Tribunal had already made this factual finding and the High Court had overturned it without any real basis. On ownership, the Court held that since the balance sale price was never paid and the registration was never formally transferred to the appellant as required under Section 50 of the Act, the registered owner remained the legal "owner" liable to compensate victims, a liability the insurer was bound to indemnify, following its own precedent in Naveen Kumar v. Vijay Kumar that claimants should not have to chase a trail of informal ownership transfers. Two of the connected appeals were dismissed as already settled through a Lok Adalat, and the remaining appeals were allowed, restoring the insurer's liability to pay.
Lesson Learnt
A person traveling in a goods vehicle to look after goods they own is legally covered by the vehicle's insurance, not treated as an unauthorized "gratuitous passenger." Also, simply handing over possession of a vehicle under an informal sale agreement does not shift legal ownership or liability away from the person whose name remains on the official registration until the transfer is properly completed.