Insurance companies liable for paid drivers and cleaners under the Motor Vehicle Act when an additional premium is accepted: Patna High Court

The Patna High Court has ruled that an insurance company must cover liability for a paid driver and cleaner under the Motor Vehicle Act, 1988, when the vehicle owner pays an additional premium for his cover.

The court emphasized that once the insurance company accepts the additional premium, it extends its liability to cover the risks associated with the paid driver and cleaner, thereby shifting the risk from the owner to the insurer.

Judge Sunil Datta, who presided over the case stated: “When the owner of a vehicle pays an additional premium and it is accepted by the insurance company, the liability of the insurance company is extended under the Motor Vehicle Act, 1988. Section 147 of the Act clearly prescribes legal liability to cover the risk of a paid cover driver. and cleaner according to the insurance policy, which is a contractual matter. Upon payment of such additional premium by the owner, the liability shifts from the owner to the insurance company. The risk of a paid driver and cleaner would therefore be covered under the insurance policy. Only if the additional premium is not paid, the liability would fall under the Employee Compensation Act, 1923.”

“In my opinion, by accepting an additional premium, the insurance company indemnifies the owner for the paid driver and/or cleaner and the risk of the driver/cleaner is covered.” Justice Dutta further clarified.

In this case, a tractor-trailer overturned due to the driver’s rash and careless driving, resulting in the death of the cleaner, Premshankar Modi, on the spot. A police case was registered under Sections 279 and 304A of the Indian Penal Code, and after investigation, a chargesheet was filed against the tractor driver, Phantoosh Kumar. After hearing both sides, the court later awarded damages to the plaintiffs.

Counsel for the appellant submitted that the Tribunal erred in not finding that the deceased was not a cleaner as the tractor could only accommodate one person, making the deceased an unnecessary passenger. He therefore considered that liability could not be imposed on the insurer. Furthermore, he noted that the tractor was insured for agricultural use only, but was used for commercial purposes as there were iron bars in the trailer.

In response, counsel for the defendant submitted that the deceased was indeed the cleaner and not an unnecessary passenger, and that witness statements and evidence supported this. The Court noted that these objections – regarding the role of the deceased and the insurance use of the tractor – had only been raised on appeal and were inconsistent with the record.

The Court noted that the incident was undisputed and that only two issues remained: whether the appellant was liable to pay damages, and whether the amount awarded was appropriate, particularly as regards the deceased’s monthly income and future prospects as stated by the appellant argued. .

The Court reiterated that, “It is an established fact that the assessment of compensation cannot be done with mathematical precision. The Motor Vehicles Act 1988 provides for the assessment of just and equitable compensation.”

Given this principle, the court decided not to interfere with the deceased’s income assessment at this stage.

The Court further noted that the appellant had not raised any objection before the Tribunal regarding the fact that the insurance of the tractor was for agricultural purposes only or that the deceased was a free passenger. These objections, which were raised for the first time on appeal, were unfounded and contradicted the file.

The Court clarified that previous cases cited by the appellant, involving deceased persons as unnecessary passengers, did not apply here. It held, “The judgment of this Court referred by the counsel for the appellant, wherein the deceased traveled as a free passenger, is not applicable in this case. Considering the fact and the circumstances of the case, the cleaner employed by the owner of the vehicle cannot be regarded as an unnecessary passenger.”

For these reasons, the Court found the appeal unfounded and dismissed it, while upholding the Tribunal’s decision.

The Court ordered the appellant, the insurance company, to deposit the awarded amount together with accrued interest as specified in 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 Ors

Click here to read the verdict