Compulsory insurance cover for goods vehicles does not extend to gratuitous passengers, though insurer may recover from owner.

The amended Section 147 of the Motor Vehicles Act, 1988 extends compulsory insurance for a goods vehicle only to third-party risk and to the owner of the goods or authorised representative carried in the vehicle, not to gratuitous passengers travelling without premium coverage. The mischief rule was applied to read the 1994 amendment as a limited enlargement of liability, not as a conversion of goods carriage cover into passenger-risk cover. Where the award had already been decided on the then-prevailing legal position, the insurer was required to satisfy the award first, but was permitted to recover the amount from the vehicle owner in execution proceedings.

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Issues: (i) Whether, after the 1994 amendment to Section 147 of the Motor Vehicles Act, 1988, an insurance policy for a goods vehicle covers gratuitous passengers travelling in the vehicle. (ii) Whether, where the insurer is directed to satisfy the award, it may recover the amount from the owner of the vehicle.

Issue (i): Whether, after the 1994 amendment to Section 147 of the Motor Vehicles Act, 1988, an insurance policy for a goods vehicle covers gratuitous passengers travelling in the vehicle.

Analysis: The amended provision enlarged compulsory coverage to include the owner of the goods or his authorised representative carried in the vehicle, but not passengers generally. The legislative change did not convert a goods carriage into a vehicle meant for passenger risk, and the liability under the policy remained confined to third party risk and the specifically added category. Applying the mischief rule, the Court held that the amendment was intended to cure the earlier exclusion only to that limited extent and not to extend cover to persons travelling gratuitously in a goods vehicle without premium being paid for that risk.

Conclusion: The insurer is not liable under Section 147 for gratuitous passengers in a goods vehicle.

Issue (ii): Whether, where the insurer is directed to satisfy the award, it may recover the amount from the owner of the vehicle.

Analysis: Since the claim had been decided by the Tribunal and the High Court on the basis of then-prevailing law, the Court considered it just to protect the claimant by directing immediate satisfaction of the award by the insurer. At the same time, the insurer was given liberty to recover the amount from the owner in execution, without filing a separate suit, by treating the dispute between insurer and owner as capable of determination in the same proceeding under the claim adjudication framework.

Conclusion: The insurer may recover the paid amount from the owner in execution proceedings.

Final Conclusion: The award was modified to hold that gratuitous passengers in a goods vehicle are not covered by compulsory insurance under Section 147, but the insurer was required to satisfy the award first and was permitted to recover the amount from the owner.

Ratio Decidendi: The compulsory insurance cover for a goods vehicle under Section 147 extends only to third party risk and to the owner of the goods or his authorised representative carried in the vehicle, not to gratuitous passengers.

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