Hawkers in Goods Vehicle Are Not Gratuitous Passengers – Insurer Cannot Evade Liability – Supreme Court Slams High Court for Perfunctory Interference

“Liability Falls Squarely on the Registered Owner, Even if Possession Was Transferred – Insurer Must Indemnify - the Supreme Court delivered a decisive ruling overturning the Chhattisgarh High Court’s absolution of an insurance company from liability in multiple motor accident claims.

The Bench of Justices K. Vinod Chandran and N.V. Anjaria held that accident victims travelling with their goods in a goods vehicle cannot be treated as gratuitous passengers, and that ownership for liability purposes remains with the registered owner until formally transferred under Section 50 of the Motor Vehicles Act, 1988. “The liability to pay falls squarely on the registered owner… which has to be indemnified by the insurer,” the Court declared.

The case arose from a tragic accident involving a goods vehicle that resulted in deaths and injuries. Eleven claim petitions were filed; the insurer challenged only three, contending:

1. The victims were gratuitous passengers, and

2. The driver-appellant, having possession of the vehicle under an agreement with the registered owner, should bear the liability personally.

The Motor Accidents Claims Tribunal rejected these defences, holding the registered owner, driver, and insurer jointly and severally liable. However, the High Court accepted the insurer’s plea, absolving it of liability and fastening the burden on the appellant-driver.

On the “gratuitous passenger” argument, the Court found the evidence clear: the victims were petty hawkers—fishmongers and vegetable sellers—accompanying their goods for sale. Quoting the Tribunal’s finding in Hindi, the Court underscored:

“मोटर यान अधिनियम के प्रावधानों के अनुसार माल वाहक यान में अपनी सामान की सुरक्षा के लिए बैठे व्यक्ति को अनुग्रह यात्री नहीं माना जा सकता।”

The Court faulted the High Court for overturning this factual finding “without any material and in a perfunctory manner,” terming the insurer’s contention as “mere assertion without substantiation.”

On the ownership transfer issue, the Court examined the possession agreement, noting that it expressly deferred transfer of registration until payment of the balance consideration. No formal transfer under Section 50 had taken place, and the registered owner had not reported any transfer to the RTO.

Citing Naveen Kumar v. Vijay Kumar (2018) 3 SCC 1, the Bench reiterated that the “owner” for liability purposes is the one recorded in the registration certificate, regardless of any informal transfer, “to facilitate fulfilment of the object of the law, which was not to burden the claimant to follow the trail of successive transfers.”

The Supreme Court restored the Tribunal’s direction, holding the insurer liable to satisfy the awards in the contested appeals. It rejected the insurer’s “pick and choose” approach in challenging only certain petitions, noting the lack of rebuttal.

“Awards impugned in the appeals… shall be satisfied by the insurer,” the Court ordered, affirming interest rates of 12% from the Tribunal’s award and 6% on enhanced amounts from the date of the claim petition.

By clarifying that hawkers travelling with their goods are protected as third parties and that registration records govern liability, the Supreme Court has shut the door on insurers attempting to sidestep compensation duties through technical pleas. This judgment reaffirms that justice under the Motor Vehicles Act prioritises victim protection over contractual or procedural loopholes.

Date of Decision: 8 August 2025