Comprehensive Insurance Package Policy Covers Gratuitous Passengers: Sikkim HC

The Sikkim High Court restricted insurers attempting to evade liability for passenger deaths under comprehensive insurance package policies, ruling that it explicitly mandates coverage for unnamed persons regardless of third-party status.

A single-judge bench comprising Chief Justice A. Muhamed Mustaque heard an appeal filed by an insurance provider challenging a compensation award of Rs. 28,29,000/- plus 10% interest. The insurer contested its liability, arguing that a passenger in a private vehicle cannot be treated as a third party when no other vehicle is involved in the accident.

Distinction Between Act Policies and Package Policies

The Appellant Company, relying on the judgments of the Apex Court in United India Insurance Company Limited, Shimla vs. Tilak Singh and Others ( "AIR 2006 SC 1576": 2006 CaseBase(SC) 625) and National Insurance Company Limited vs. Balakrishnan and Another ( "(2013) 1 SCC 731": 2012 CaseBase(SC) 778), argued that a passenger travelling gratuitously in a vehicle cannot claim third-party compensation, especially when there is no involvement of another vehicle. However, the Sikkim High Court distinguished these precedents by noting they related primarily to 'Act-only' policies. The Sikkim High Court expressed that “This Court notes that the above judgments are related to claim under the Act policy. In such circumstances, the claim of the third party alone would be admissible under law for claiming compensation from the insurer. This Court notes that it is a package policy. That means it is a package policy. That means it is a comprehensive policy that covers the passengers in the vehicle itself.” Referring to the precedent in The New India Assurance Co. Ltd. vs. Hemlata Lucksom and Another, the Court affirmed that passengers are entitled to claim compensation against the insurer under package policies.

Background

The matter arose from a fatal accident on August 17, 2017, when a vehicle plunged off the road, resulting in the instantaneous death of a bachelor who was an Electrical Engineering graduate from NIT Sikkim. His mother, the respondent, filed for compensation claiming a monthly income of Rs. 18,000/-. The Motor Accidents Claims Tribunal, Gangtok, awarded Rs. 28,29,000/- after finding the vehicle had a valid private car package policy effective from October 2016 to October 2017.

The insurer challenged this in the High Court, asserting that the deceased was a gratuitous passenger and thus excluded from coverage. The Sikkim High Court rejected this, noting that the insurer had collected premiums specifically covering unnamed persons. Following the principle laid down in The New India Assurance Co. Ltd. vs. Hemlata Lucksom and Another, the appeal was dismissed, and the Tribunal's award was upheld.

Case Details:
Case No.: MAC App No. 15 of 2024
Case Title: The Manager, The New India Assurance Co. Ltd. vs. Man Maya Ramudamu
Appearances:
For the Petitioner(s): Mr. Dipayan Roy, Advocate
For the Respondent(s): Mr. Birendra Pourali, Advocate

Source: 2026 CaseBase(SIK) 88