Labourer Travelling in Tractor-Trolley for Agricultural Work Not a Gratuitous Passenger – Insurer Liable: Madhya Pradesh High Court Dismisses Appeal of Oriental Insurance

"Policy Not Breached, Labourer Was Travelling for Agricultural Purpose and Was Covered Under Insurance" –  In a detailed and significant judgment Indore Bench of the Madhya Pradesh High Court dismissed an appeal filed by Oriental Insurance Co. Ltd., affirming the Motor Accident Claims Tribunal’s award in Misc. Appeal No. 3065 of 2011. The core issue revolved around the insurer’s liability for the death of a labourer travelling in a tractor-trolley used for agricultural purposes, who was engaged in unloading potato sacks at the time of the fatal accident.

The Court concluded that “the vehicle was not being operated in breach of the terms of the Insurance Policy” and that the deceased, who was clearly working as a labourer employed by the owner, was covered under the insurance policy, particularly in light of the additional premium paid for employee liability.

Labourer Dies While Transporting Agricultural Goods – Insurer Denies Liability

The case arose from a tragic accident that occurred on 28 January 2009, when Vijay Kaushal, employed as a labourer, was travelling in a trolley attached to a tractor, assisting in transporting potato sacks. The vehicle, driven negligently, caused him to fall and suffer fatal injuries. His legal heirs filed a claim under Section 166 of the Motor Vehicles Act, 1988, and the Motor Accident Claims Tribunal (MACT) awarded ₹7,75,000 with 8% interest, holding the insurance company liable.

The Oriental Insurance Company, however, challenged the award, arguing on multiple grounds:

• The driver did not possess a valid driving licence,

• The labourer was not covered under the insurance policy,

• The deceased was a gratuitous passenger, and not an employee,

• The policy excluded coverage for passengers in a trolley.

Was the Deceased a Covered Employee or an Uninsured Third Party?

The High Court, while addressing the insurer’s contentions, identified two primary legal issues:

1. Whether the driver of the tractor held a valid driving licence at the time of the accident?

2. Whether the deceased labourer was covered under the insurance policy, or was merely a gratuitous passenger, thereby excluding insurer’s liability?

Findings on Driving Licence: Tribunal’s Conclusion Valid and Based on Evidence

The Court upheld the Tribunal's conclusion regarding the driver’s valid licence. The insurer had relied on a document (Ex. D-2) to suggest that the driver only held an LMV licence. However, as the High Court noted, "neither any dispatch number nor the date of issuance was mentioned on the said document and therefore, the same appeared to be a doubtful document." Further, the insurer’s own witness admitted he was not the original investigator. In contrast, the driver’s photocopy of the licence (Ex. D-5) supported the validity claim.

The Court held: “There is no perversity in the findings recorded by the Claims Tribunal... the finding that the driver of the tractor was holding a valid driving licence is proper and justified.”

Employee or Passenger? Insurer Bound by Terms of Policy

The heart of the dispute lay in determining whether the deceased was an “employee” under the policy or an unauthorised passenger.

The High Court relied on both statutory interpretation and policy terms to conclude that the deceased was not a gratuitous passenger, but rather an employee covered under the policy.

It was observed that “the deceased was sitting in the tractor-trolley in the capacity of an employee of the owner”, and the insurance policy (Ex. D-7) specifically covered liability for an employee, with an additional premium of ₹75/- paid for that purpose.

The Court remarked: “The Tribunal has correctly found that the deceased was travelling as an employee of the owner of the vehicle for the purpose of unloading potato sacks... the vehicle was being used for agricultural purposes for which it was insured.”

Rejecting the insurer’s argument that a casual or non-salaried labourer does not qualify as an “employee,” the Court drew a clear distinction from the case of Oriental Insurance Co. Ltd. v. Brij Mohan, noting that in Brij Mohan, the tractor was being used for non-agricultural (commercial) activity—carrying earth to a brick kiln—contrary to the terms of insurance. Here, however, agricultural use was established.

On Applicability of Section 147 of MV Act: Liability May Also Arise from Policy Terms

The High Court reiterated the settled position that even if a person qualifies as a third party, insurer liability arises only when provided under Section 147 of the Motor Vehicles Act, or if covered under the insurance policy. The decision in Bhav Singh v. Savirani, a Full Bench ruling, was distinguished but reaffirmed.

Quoting the Supreme Court in Amrit Lal Sood v. Kaushalya Devi Thapar, the Court highlighted: “Where the policy is not merely a statutory policy, the terms of the policy have to be considered to determine the liability of the insurer.”

In that spirit, the Court examined the specific terms of Ex. D-7, noting that: “Under the terms of the present policy, the deceased was clearly covered… an extra premium had been paid to cover employee liability, and the vehicle was not being used in breach of that purpose.”

Insurer Must Satisfy Compensation – No Ground for Interference

In summing up, the Court categorically rejected the insurance company’s plea and observed: “The Tribunal has correctly held the insurer of the tractor liable to indemnify the owner of the vehicle and pay compensation. There is no infirmity in the impugned award.”

Accordingly, the appeal was dismissed and the award of ₹7,75,000/- with interest @ 8% per annum was upheld.

Date of Decision: 21 January 2026