United India Insurance Company Limited - Appellant Versus Sanju Devi and others – Respondents

Core ratio / Key holding

Headnote

Motor Vehicles Act, 1988 — Insurance — 'Act only policy' — Gratuitous Passenger — Scope of Coverage — Exoneration of Insurer.

Ratio decidendi

• An 'Act only policy' does not cover the liability of the insurer for payment of compensation for a gratuitous occupant in a private car, as such an occupant is not considered a third party.

Important points

• Appeal Allowed. The Insurance Company is exonerated from liability for compensation to gratuitous passengers under an 'Act only policy'.
• The owner and driver of the vehicle remain jointly and severally liable for the compensation amount awarded by the Tribunal.
• Any amount paid by the Insurance Company must be recovered from the respondent Nos. 1, 2 and 3 (owner and driver) of the vehicle.

Keywords