SC Motor Vehicles Act Seating Capacity: Insurer Cannot Deny Compensation

Home / Top Stories / Supreme Court Judgments Motor Vehicles Act: SC Says Technical Error In Seating Capacity Cannot Let Insurer Avoid Compensation X Supreme Court clarifies insurer’s liability in tractor accident case. The Supreme Court held that an insurer cannot deny Motor Vehicles Act compensation where the Registration Certificate recorded the tractor’s seating capacity as 1+1 despite an incorrect policy entry. The Supreme Court has held that an insurance company cannot avoid liability to pay compensation under the Motor Vehicles Act merely because the seating capacity of a vehicle was incorrectly recorded in the insurance policy, particularly when the policy stated that the figure was based on the Registration Certificate, which correctly recorded the vehicle's seating capacity. A Bench of Justices Ahsanuddin Amanullah and Manmohan held that such a technical discrepancy cannot be used to deny insurance coverage when the actual seating capacity is established by the Registration Certificate and the error was not attributable to the insured owner. Court observed that beneficial insurance legislation must be interpreted in a manner that protects the insured from being unfairly burdened by such discrepancies, and that protects the common man from adverse circumstances. Where a chain of events establishes that an accident was caused by the vehicle itself, liability should not be fastened on the owner on the basis of an overly technical interpretation of policy stipulations, Court said. Court accordingly held the insurance company liable to pay the compensation, finding that the accident had a direct nexus with the vehicle and that the deceased passenger was deemed to be covered under the insurance policy. What was the dispute over the insurance policy? The appeal arose out of an order dated March 11, 2025 passed by the Madhya Pradesh High Court. The high court had dismissed an appeal filed by the appellant, who was the owner and driver of the offending vehicle, against the award dated September 15, 2023 passed by the Motor Accident Claims Tribunal, Khandwa. The tribunal had fastened liability on the appellant while exonerating the respondent-insurance company from paying compensation of Rs. 9,94,056 to the respondent no.1-claimant, along with interest at the rate of 6% per annum. Before the Supreme Court, it was contended that the deceased was travelling on the tractor and, after falling from it, his head came under the wheels of the same tractor. The appellant submitted that the chain of events was complete: the accident was caused by the vehicle, the deceased was travelling on the vehicle and his death also occurred due to the vehicle itself. The core issue before the Court was whether the insurance policy covered a person other than the driver who was travelling on the vehicle and met with an accident. It was contended that the Registration Certificate Book clearly showed the seating capacity of the tractor as 1+1. Therefore, the insurance company’s contention that the policy covered only one person, which would mean the driver alone, and that liability should consequently be fastened on the appellant, was not sustainable. It was further submitted that although the insurance policy recorded the seating capacity as one, the same column stated that the figure was based on the Registration Certificate Book. This was factually incorrect since the Registration Certificate Book indisputably recorded the seating capacity as 1+1. The appellant also argued that even if the seating capacity had been incorrectly recorded as one, the resulting liability could not be fastened on him, as he had acted in good faith and produced the Registration Certificate Book before the insurance company while getting the vehicle insured. It was therefore submitted that the Court should not adopt a technical approach while interpreting beneficial insurance legislation intended to protect a common man from adverse circumstances, particularly when the tec

Lawyers representing motor accident claimants can cite this Supreme Court precedent to challenge insurer denials based on technical discrepancies in policy seating capacity, particularly when the Registration Certificate confirms the actual capacity. Insurers should review claims processes to avoid denying compensation on such grounds, aligning with the beneficial interpretation of insurance legislation.

Source: Original reporting via LawBeat