Insurer Cannot Evade Liability After Collecting Premium – Registered Ownership Is What the Law Recognizes: Allahabad High Court

“Claimant is not expected to trace ownership beyond registered owner — Transfer without RC change is meaningless in the eyes of law,” In a judgment that reaffirms foundational principles of liability under motor accident claims and employee compensation law, the High Court of Judicature at Allahabad dismissed an appeal filed by The Oriental Insurance Company Limited, ruling that registered ownership and premium paid under IMT-29 are decisive factors in fastening legal liability, not private arrangements or unregistered transfers.

Justice Sandeep Jain upheld the Commissioner’s award of compensation to the legal heirs of Dharamveer, a paid driver who died in a road accident on 26 February 2015, while driving a Qualis Car bearing registration no. UA-07-C-6274. The compensation of ₹8,26,495/- with 12% annual interest, ordered under the Employees’ Compensation Act, 1923, was directed to be indemnified by the insurer.

The High Court refused to admit the appeal at all, holding that “no substantial question of law arises”, and that the insurer’s objections were devoid of legal merit.

“Ownership in Civil Law May Cease, But Under Motor Vehicles Act, It Persists Without RC Change”

The core argument raised by the appellant-insurer was that the vehicle had been sold by Rakesh Kumar, the original insured, to one Nirdosh Kumar prior to the accident, and therefore, there was no employer–employee relationship between Rakesh and the deceased driver. The insurer also contended that the insurance policy was not transferred in the name of the alleged buyer, and therefore, it had no contractual or statutory obligation.

Rejecting these contentions, the Court observed:

“Even if the vehicle was allegedly sold, failure to transfer registration under Section 50 of the Motor Vehicles Act renders transferor as owner in law — liability fastened on registered owner and insurer.”

The Court cited the Supreme Court’s ruling in Pushpa @ Leela v. Shakuntala and Others, (2011) 2 SCC 240, where it was categorically held that:

“Transferor must be deemed to continue as the owner of the vehicle for the purposes of the Act, even though under civil law he ceased to be its owner after its sale.”

Similarly, in Brij Bihari Gupta v. Manmet and Others, 2025 SCC OnLine SC 1650, the Apex Court reiterated that registered ownership alone governs liability, stating:

“The liability to pay falls squarely on the registered owner, even if there has been successive transfers which has to be indemnified by the insurer.”

In the present case, it was undisputed from the RC and insurance records that Rakesh Kumar remained the registered owner on the date of the accident, and the vehicle’s registration was only formally transferred to a third party (Mrs. Jaykari Devi) more than a year later, on 6 July 2016.

“Premium Collected Under IMT-29 Is Sufficient to Fix Insurer’s Liability – Paid Driver Is Covered Even Without Being Named”

Another key issue raised by the insurer was that it had not specifically charged a premium for covering a paid driver under the policy, arguing that the IMT-29 endorsement applied only to unnamed employees other than drivers, and that the driver was not named in the policy.

The Court rejected this argument outright, holding that once premium under IMT-29 was collected, the insurer could not escape liability by invoking technicalities. Justice Jain observed:

“Charging premium for two employees in a private car necessarily includes the driver – non-mentioning of driver by name is not fatal – insurer cannot avoid liability after collecting premium.”

Crucially, the Court applied the latest IRDAI Circular dated 18 October 2023 (Ref. No. IRDAI/NL/CIR/MOTOR/178/10/2023-24), which mandates that all insurers must provide compulsory inbuilt IMT-29 coverage for employees (including paid drivers) without charging additional premium, when issuing private car policies.

Quoting the Circular, the Court noted:

“All general insurers... shall provide the cover to the employees travelling in employer’s vehicle (including paid driver, if applicable) under IMT-29... compulsorily as an inbuilt coverage while issuing private car policy.”

Further, the Court noted that since the insurance company had collected ₹50/- as premium under IMT-29, and the vehicle was a private car, it was reasonable to infer that this premium included the deceased paid driver:

“In a private car, which does not employ conductors or helpers, the driver is the only employee – thus, premium for two employees necessarily includes the driver.”

“Employer–Employee Relationship Proved From Written Statements – Registered Ownership Confirms Legal Responsibility”

The High Court also referred to the written statements filed before the Commissioner by both Rakesh Kumar and Nirdosh Kumar, which affirmed the employment of the deceased as a driver. Notably, Nirdosh admitted that the driver was employed on the vehicle, was working under his direction, and died in the course of employment.

The Court held:

“From the written statement submitted by Rakesh Kumar and Nirdosh Kumar, it was proved that Rakesh Kumar was the registered owner of the vehicle at the time of the accident... and the deceased Dharamveer was employed as a driver who died during the course of employment.”

Thus, the Court found no factual or legal infirmity in the findings of the Commissioner that the relationship of employer and employee existed, and that the liability was covered under the Employees’ Compensation Act.

“No Substantial Question of Law – Appeal Dismissed at Admission Stage”

Dismissing the appeal under Section 30 of the Employees’ Compensation Act, the Court categorically held:

“This appeal does not raise any substantial question of law and there is no illegality in the impugned judgment and award dated 03.11.2025 passed by the Commissioner concerned, as such, this appeal has got no merit and is liable to be dismissed at the admission stage.”

The Court also noted that the insurer had already deposited the compensation amount of ₹17,94,718/- (including interest), and directed the Commissioner to disburse the same to the claimants in accordance with the award.

Date of Decision: 3 February 2026