Insurance Companies Liable For Paid Drivers And Cleaners Under Motor Vehicle Act When Additional Premium Is Accepted: Patna High Court

The Patna High Court has ruled that an insurance company must cover the liability for a paid driver and cleaner under the Motor Vehicle Act, 1988, when the vehicle owner pays an additional premium for their coverage. The court emphasized that once the insurance company accepts the additional premium, it extends its liability to cover risks associated with the paid driver and cleaner, shifting the owner's risk to the insurer.Justice Sunil Datta, presiding over the case, stated, “When the owner of a vehicle pay additional premium and same is accepted by the Insurance Company, liability of the Insurance Company gets extended under the Motor Vehicle Act, 1988. Section 147 of the Act clearly prescribes for statutory liability to cover risk of paid driver and cleaner under the insurance policy, which is a matter of contract. On payment of such additional premium by the owner, the liability of the owner shifts upon the insurance company. Thus, the risk of paid driver and cleaner would be covered under the insurance policy. Only when the additional premium is not paid, liability would be as per the Employee Compensation Act, 1923.”“In my view, by accepting additional premium, the Insurance company indemnifies the owner for paid driver and/or cleaner and risk of driver/cleaner is covered under it,” Justice Dutta further clarified.In this case, a tractor with a trailer overturned due to the driver's rash and negligent driving, resulting in the death of the cleaner, Premshankar Modi, at the scene. A police case was registered under Sections 279 and 304A of the Indian Penal Code, and following investigation, a charge sheet was filed against the tractor driver, Phantoosh Kumar. The Tribunal later awarded compensation to the claimants after hearing both parties.It was contended by the Counsel for the Appellant that the Tribunal erred in not identifying that the deceased was not a cleaner, considering that the tractor only had seating capacity for a single person, making the deceased a gratuitous passenger. As a result, he contended that liability could not be imposed on the Insurance Company. Additionally, he noted that the tractor was insured solely for agricultural use but was being utilized for commercial purposes, as it was carrying iron rods in the trailer.In response, the Respondent's Counsel submitted that the deceased was indeed the cleaner, not a gratuitous passenger, and that witness testimony and documentary evidence supported this. The Court observed that these objections—regarding the deceased's role and the tractor's insurance use—were raised only on appeal and contradicted the case record.The Court noted that the occurrence of the incident was undisputed, leaving only two issues to address: whether the appellant was liable to pay compensation, and whether the awarded amount was appropriate, particularly concerning the deceased's monthly income and future prospects as raised by the appellant.The Court reiterated that, “It is well settled that assessment of compensation cannot be done with mathematical precision. The Motor Vehicle Act, 1988 provides for assessment of just and fair compensation.”Considering this principle, the Court decided not to interfere with the income assessment of the deceased at this stage.The Court further observed that the appellant had not raised any objections before the Tribunal regarding the tractor's insurance being solely for agricultural purposes or the deceased being a gratuitous passenger. These objections, raised for the first time on appeal, lacked merit and contradicted the case record.The Court clarified that previous cases cited by the appellant, involving deceased persons as gratuitous passengers, were inapplicable here. It held, “the judgment of this Court referred by the learned counsel for the appellant where the deceased was traveling as a gratuitous passenger are not applicable in this case. The cleaner employed by the owner of vehicle cannot be termed as gratuitous passenger in the fact and circumstances of the case.”For these reasons, the Court held the appeal to be without merit and dismissed it, while upholding the Tribunal's judgment.The Court directed the appellant, the insurance company, to deposit the awarded amount, along with accrued interest as specified by the Tribunal's decision, after deducting any previous payments made to the claimants.Case Title: Shri Ram General Insurance Co. Ltd. vs Radha Devi And OrsLL Citation: 2024 LiveLaw (Pat) 103Click Here To Read Judgement

Insurance Companies Liable For Paid Drivers And Cleaners Under Motor Vehicle Act When Additional Premium Is Accepted: Patna High Court

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Insurance Companies Liable For Paid Drivers And Cleaners Under Motor Vehicle Act When Additional Premium Is Accepted: Patna High Court

Bhavya Singh

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INR 1099+GST

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