SHYAM LALversusSHRIRAM GENERAL INSURANCE CO. LTD. AND OTHERS

                 [2025] 9 S.C.R. 522 : 2025 INSC 1078

                             Shyam Lal
                                 v.
           Shriram General Insurance Co. Ltd. and Others
                    (Civil Appeal No(s). 5177-81 of 2022)
                               04 September 2025
             [K. Vinod Chandran* and N.V. Anjaria, JJ.]


                             Issue for Consideration
       Whether the order of the High Court directing pay and recovery
       is sustainable.

                                     Headnotes†
       Motor Vehicles Act, 1988 – Motor Vehicle Accident Claim –
       Owner of utility vehicle was involved in an accident – Five
       claim petitions were filed – The High Court found that the
       utility vehicle was not entitled to carry passengers by reason
       of the specific restriction in the policy which is evident from
       “Limitation as to Use” – The High Court ordered “pay and
       recover” – Correctness:
       Held: It was admitted by the Branch Manager in charge of the
       Insurance Company that the insurance policy was issued to the
       owner, in accordance with the rules and looking at the registration
       certificate, wherein the category of the vehicle is registered as “Utility
       Van” – The witness further admitted that the seating capacity in
       the policy is also written as 4+1 and that there is no recital in the
       policy document regarding the premium for passengers having not
       been charged – It was also admitted that the utility van is a vehicle
       in which half portion is used for carrying of goods and half portion
       in front is used for carrying passengers – Hence, there can be no
       restriction insofar as the ‘limitation as to use’ as found in the policy
       which applies only to goods vehicles while the present vehicle as per
       the certificate of registration is a utility vehicle and the permit issued
       is of a contract carriage – The package policy was issued by the
       Insurance Company after looking at the certificate of registration and
       the permit issued and it has been clearly specified that the vehicle
       is entitled to carry 4+1 passengers in addition to the goods – The
       Insurance Company in the above circumstance, cannot wriggle
       out of its liability to indemnify the owner – As far as the contention
       regarding 5 persons having filed claim petitionss, indicating more
* Author
[2025] 9 S.C.R.                                                          523

     Shyam Lal v. Shriram General Insurance Co. Ltd. and Others


     than 4 persons having been carried in the vehicle is concerned,
     the eyewitness, PW2 who saw the accident clearly stated that just
     prior to the accident, he saw the vehicle coming with 4 passengers
     in it – There was no challenge to the said evidence in the cross
     examination by the Insurance Company – There is absolutely no
     reason to sustain the order of the High Court directing pay and
     recovery – The liability is on the Insurance Company and that has
     to be satisfied fully by the Insurance Company. [Paras 6, 7]

                               List of Acts
     Motor Vehicles Act, 1988; Workmen’s Compensation Act, 1923.

                            List of Keywords
     Motor vehicle accident claim; Insurance company; Certificate of
     registration; Contract carriage; Seating capacity of vehicle; Pay
     and recovery; Overloading; Valid package policy; Goods carriage;
     Insurance policy; Specific restriction in insurance policy.

                           Case Arising From
     CIVIL APPELLATE JURISDICTION: Civil Appeal No(s). 5177-81
     of 2022
     From the Judgment and Order dated 10.04.2019 of the High Court
     of Uttarakhand at Nainital in AFO Nos. 604, 605, 606, 607, and
     608 of 2016

                        Appearances for Parties
     Advs. for the Appellant:
     Manohar Pratap, Ms. Bhavana Bisht.
     Advs. for the Respondents:
     Kshitij Mittal, Aryan Sharma, Mukesh Kumar.

                Judgment / Order of the Supreme Court

                                Judgment

     K. Vinod Chandran, J.

     The owner of the utility vehicle involved in an accident, which gave
     rise to 5 claim petitions, has filed the instant appeal challenging the
524                                                          [2025] 9 S.C.R.

                          Supreme Court Reports


       order of “pay and recover” issued by the High Court in the appeal
       filed by the Insurance Company. The High Court found that the utility
       vehicle was not entitled to carry passengers by reason of the specific
       restriction in the policy which is evident from “Limitation as to Use”.
       The contention was that the 4 passengers excluding the driver who
       were entitled to travel in the utility vehicle, are only employees who
       come under the purview of Workmen’s Compensation Act, 1923.
2.     The learned Counsel for the appellant-owner took us through the
       Certificate of Registration (Annexure P1), the contract carriage
       permit (Annexure P2) and the package policy (Annexure P3) which
       indicated the seating capacity including the driver to be 4+1. It is
       argued that the limitation as to use insofar as carriage of goods
       applies only to a goods vehicle and not an utility vehicle which can
       carry both passengers and goods. There is no ground for ordering
       “pay and recovery” in the facts and circumstances of the case,
       especially when the Insurance Company had not taken a defence
       that the vehicle was insured as a goods vehicle. The claimants are
       the legal representatives of the deceased who were either travelling
       in the vehicle or standing/walking at the accident site.
3.     The learned Counsel for the Insurance Company, however, contended
       that there could be no plea of goods being carried in the vehicle
       because one of the deceased was a student and the others; a
       catering employee, a painter, an employee in the postal department
       and an unemployed man. The restriction squarely applies, and the
       passengers cannot be said to be validly covered under the policy.
       It is also argued that even if the passengers are said to be owners
       of goods or his representative, there could not have been more
       than four passengers in the vehicle, when the claim petitions were
       numbering five. There was also an allegation of nine deaths having
       occurred in the accident, which clearly indicates overloading.
4.     The appeal was filed only on the ground of the limitation in the
       policy. The Tribunal found the negligence and rashness in the driving
       of the utility vehicle and the vehicle is covered by a valid package
       policy issued by the Insurance Company are established. Having
       gone through the records, we see that the certificate of registration
       indicates the class of the offending vehicle to be an Utility Van which
       has a seating capacity of 5, including the driver. The permit issued
       as a contract carriage, also allows 5 passengers to be carried in
[2025] 9 S.C.R.                                                           525

     Shyam Lal v. Shriram General Insurance Co. Ltd. and Others


     the vehicle. A ‘contract carriage’ as defined under Section 2(7) of
     the Motor Vehicles Act, 1988 means a motor vehicle which carries a
     passenger or passengers for hire or reward and is engaged under an
     express or implied contract and includes a motor cab notwithstanding
     that separate fares are charged for its passengers. This is in clear
     distinction with a ‘goods carriage’ defined under Section 2(14) of
     the Act which is a vehicle constructed or adapted or used solely for
     the carriage of goods.
5.   The package policy produced shows the make & model as seen from
     the Certificate of Registration indicating the vehicle to be manufactured
     by Mahindra & Mahindra, a Bolero Camper Utility DC, 2WD, BS2.
     The utility vehicle obviously is for carriage of passengers and goods;
     the passengers not being necessarily the owners of the goods as
     seen from the seating capacity of 4+1 including the driver specified
     also in the insurance policy. In the above circumstances, it cannot
     be said that the vehicle was insured as a goods vehicle, which is
     not specified in the policy and hence ‘the limitation as to the use
     only of carriage of goods’ does not apply; the utility vehicle being the
     vehicle registered with a seating capacity of 5 passengers including
     the driver, and the permit issued being one of a contract carriage also
     indicating 5 passengers including the driver to be carried within it.
6.   In this context, we have also gone through the evidence of the Branch
     Manager in charge of the Insurance Company which is produced as
     Annexure No.P6. In chief examination, it was stated that though the
     seating capacity is shown as 4+1 including the driver, the premium
     was taken only for the owner driver and no separate amounts
     were charged for the passengers; which is contrary to the recitals
     in the document. In cross examination, the witness admitted that
     the insurance of any vehicle is issued after perusing the records of
     the vehicle like, registration certificate, fitness and permit validity. It
     was admitted that the insurance policy was issued to the owner, in
     accordance with the rules and looking at the registration certificate,
     wherein the category of the vehicle is registered as “Utility Van”. The
     witness further admitted that the seating capacity in the policy is also
     written as 4+1 and that there is no recital in the policy document
     regarding the premium for passengers having not been charged.
     It has also been deposed, which is again a clear admission, that
     the utility van is a vehicle in which half portion is used for carrying
526                                                             [2025] 9 S.C.R.

                            Supreme Court Reports


       of goods and half portion in front is used for carrying passengers.
       Hence, there can be no restriction insofar as the ‘limitation as to use’
       as found in the policy which applies only to goods vehicles while the
       present vehicle as per the certificate of registration is a utility vehicle
       and the permit issued is of a contract carriage. The package policy
       was issued by the Insurance Company after looking at the certificate
       of registration and the permit issued and it has been clearly specified
       that the vehicle is entitled to carry 4+1 passengers in addition to the
       goods. The Insurance Company in the above circumstance, cannot
       wriggle out of its liability to indemnify the owner.
7.     The contention regarding 5 persons having filed claim petitions,
       indicating more than 4 persons having been carried in the vehicle,
       though is attractive has no significance on the facts as revealed from
       the order of the Tribunal. The Tribunal, on the basis of the evidence
       led, clearly found that in addition to the passengers carried in the
       vehicle, some pedestrians were also dragged down by the vehicle
       when the accident occurred. The eyewitness, PW2 who saw the
       accident clearly stated that just prior to the accident, he saw the
       vehicle coming with 4 passengers in it. There was no challenge to the
       said evidence in the cross examination by the Insurance Company.
       The vehicle having fallen down the gorge, with the passengers as
       also the pedestrians, one of the claim petitions is of a pedestrian,
       which is not clearly demarcated for reason of the 5 persons having
       been extricated at the accident site from and around the vehicle.
       We find absolutely no reason to sustain the order of the High Court
       directing pay and recovery. The liability is on the Insurance Company
       and that has to be satisfied fully by the Insurance Company.
8.     Before leaving the matter, we notice that insofar as one of the claim
       petitions, MACT Case No. 134 of 2014 relatable to the compensation
       for the death of one Jagdish Prasad Gaur, there was a contention
       taken in the appeal filed before the High Court by the Insurance
       Company that no deduction towards 1/3rd of the amount determined
       as compensation for loss of income, as personal expenses has been
       made by the Tribunal. We did not have the benefit of going through
       the order of the Tribunal since the same was not produced before us.
       However, in the fitness of things especially since just compensation
       is to be awarded, we are of the opinion that in computing the income
       at the time of disbursing the amount, the Tribunal shall ensure that
[2025] 9 S.C.R.                                                    527

     Shyam Lal v. Shriram General Insurance Co. Ltd. and Others


     1/3rd deduction is made from the total loss of income computed
     before disbursing the amounts directed in MACT Case No. 134 of
     2014 relatable to Appeal No. 607 of 2016.
9.   The appeals hence stand allowed with the above reservation, setting
     aside the judgment of the High Court and restoring the order of the
     Tribunal with the modification to one of the awards as mentioned
     above.
10. Pending applications, if any, shall stand disposed of.

     Result of the case: Appeals allowed.




     †
         Headnotes prepared by: Ankit Gyan