An insurer that proves the owner broke the policy by carrying passengers in a goods vehicle may escape the final bill, but not the duty to pay an injured child first, the Rajasthan High Court has held, modifying a Tribunal award that had let Shriram General Insurance walk away entirely.
Jodhpur: The Rajasthan High Court has directed Shriram General Insurance Company to satisfy, in the first instance, a motor accident award of Rs 4.81 lakh in favour of a boy who was about 10 years old when he was injured while travelling in a goods vehicle, with liberty to recover the amount from the vehicle’s owner and driver [Yar Mohammad v. Khudabaksh and Others].
Justice Farjand Ali, in a reportable judgment pronounced on September 24, 2026, partly allowed the owner’s appeal under Section 173 of the Motor Vehicles Act against the award of the Motor Accident Claims Tribunal, Jaisalmer, which had exonerated the insurer and fastened the entire liability on the owner and driver.
Background of the case
On May 12, 2017, claimant Khudabaksh was returning with relatives and acquaintances from the Dargah at Madhala Sharif in a Bolero Camper (RJ-15-GA-4945) owned by the appellant Yar Mohammad and driven by Amin Khan. Near village Devikot, the vehicle overturned, allegedly because it was being driven rashly and at high speed, and the boy suffered abdominal and other injuries. A charge sheet was filed against the driver under Sections 279, 337 and 338 IPC.
On February 16, 2024, the Tribunal found the accident was caused by the driver’s rash and negligent driving and awarded Rs 4,81,000 with 6% annual interest from November 13, 2017. It exonerated the insurer, however, holding that the vehicle was registered as a goods vehicle, no passenger premium had been paid, passengers were being carried, and the driver did not hold a transport vehicle licence.
Licence finding set aside
The High Court first rejected the Tribunal’s licence-based reasoning. The driver’s licence authorised him to drive an LMV, and the policy recorded the vehicle’s gross weight as 2,750 kg, placing it in the Light Motor Vehicle class. Relying on Mukund Dewangan v. Oriental Insurance and the Constitution Bench ruling in Bajaj Allianz v. Rambha Devi, the Court held that an LMV licence holder may drive a transport vehicle of that class without a separate endorsement:
“In view of the aforesaid legal position, merely because the licence records its validity for driving a vehicle other than a transport vehicle, it cannot, by itself, lead to the conclusion that respondent No.2 was not authorised to drive the vehicle in question.”
But the permit breach stands
The permit issue went the other way. The owner had admitted in cross-examination that the vehicle was not a passenger vehicle and that he held no permit to carry passengers. The Court held this breach established, and found that the policy, which limited use to carriage of goods, did not contractually cover such passengers despite recording a seating capacity of 4+1. It distinguished the Supreme Court’s 2025 decision in Shyam Lal v. Shriram General Insurance, where the vehicle had a contract carriage permit for five persons, and relied on New India Assurance v. Asha Rani, which holds that Section 147 does not compel insurers to cover passengers in goods vehicles.
Pay first, recover later
The Court then drew a line between an insurer’s ultimate liability and its duty to satisfy an award in the first instance. Applying the ‘pay and recover’ principle from Oriental Insurance v. Nanjappan, Amrit Paul Singh v. Tata AIG and Anu Bhanvara v. IFFCO Tokio, the last of which concerned young children travelling as gratuitous passengers in a goods vehicle, it held:
“In these circumstances, complete exoneration of the Insurance Company from the obligation to satisfy the award would not be the appropriate course. The claimant was a minor child of about 10 years of age at the time of the accident and has already obtained an award of compensation from the learned Tribunal.”
Such a direction, the Court clarified, neither makes the insurer ultimately liable nor erases the owner’s breach. It only regulates how the compensation reaches the claimant.
Directions
The insurer must first pay the award of Rs 4,81,000 with 6% interest from November 13, 2017 to the claimant, and may then recover the amount from the owner and driver by proceeding before the Tribunal or executing court, without filing a separate civil suit. The quantum of compensation and the interest terms remain unchanged.
Case Title: Yar Mohammad v. Khudabaksh and Others [S.B. Civil Miscellaneous Appeal No. 2916/2025]
Bench: Justice Farjand Ali, Rajasthan High Court at Jodhpur
Date of Judgment: September 24, 2026
For the Appellant: Leela Dhar Khatri
For the Respondents: Vishal Singhal