(Prayer : Civil Miscellaneous Appeal filed under Section 173 of Motor Vehicles Act to set aside the Judgment and Decree dated 24.11.2021 passed in M.C.O.P. No. 256 of 2019 before the Motor Accident Claims Tribunal (Additional District Judge (Fast Track Court)), Tenkasi.)

G.R. Swaminathan, J.

1. The question that calls for consideration is whether the insurer can be made liable in a proceeding under Section 166 of the Motor Vehicles Act, 1988 to compensate the legal representatives of a deceased employee who died in a hit and run accident during the course of employment while riding the motor vehicle belonging to the employer.

2. No question of law can be answered in the abstract. It is invariably conditioned by the factual context.

3. One Manikandan @ Haja Mohaideen was riding a two wheeler bearing Registration No.TN 69 K 4858 from west to east in Madurai Keela Vaithiyanathapuram to Thathaneri Main road on 16.01.2018 at about 10.00 P.M. An unidentified vehicle hit the two wheeler ridden by Manikandan @ Haja Mohaideen from behind. Manikandan sustained severe injuries and subsequently died. Crime No.22 of 2018 was registered on the file of the Madurai City, TIW – II in this regard. The offending vehicle could not be identified and the criminal case was closed as undetected. The wife, daughter and mother of the deceased filed petition before the Motor Accident Claims Tribunal under Section 166 of the MV Act, 1988 for compensation. The owner of the two wheeler who also happened to be the employer of the deceased was impleaded as the first respondent. Since the two wheeler was insured with New India Assurance Co. Ltd., they were impleaded as the second respondent.

4. In the claim petition, it was specifically averred that the accident occurred during the course of employment. Counter was filed by the insurer denying their liability. Based on the rival pleadings, the tribunal framed the necessary issues. On the side of the claimants, the wife of the deceased examined herself as PW.1. One Meerajudeen/pillion rider was examined as PW.2. The owner of the vehicle was examined as PW.3. Exs.P1 to P10 were marked. The insurance company examined one of their officials as RW.1. They also marked the certified copy of the policy as Ex.R1. After hearing both the parties and considering the evidence on record, the court below awarded a sum of Rs.35,94,000/- to the claimants. The entire liability was fastened on the insurer. Questioning the same, the insurer has filed this appeal.

5. Heard the learned counsel on either side at length. The insurer’s counsel would contend that the claim petition filed under Section 166 of the Motor Vehicles Act, 1988 was not maintainable. Per contra, the learned counsel appearing for the claimants, relying on a catena of decisions, submitted that the impugned award is well reasoned and that it does not call for interference. Since we needed further elucidation, we requested Shri S.Srinivasan, who had a very long stint as a high ranking executive in Royal Sundaram General Insurance Company Limited, and who is now practising in Chennai, to assist us. The learned amicus curiae appeared before us and made a detailed presentation. We record our gratitude for the excellent assistance rendered by him.

6. The claimants had invoked Section 166 of the MV Act, 1988. For maintaining an application under Section 166 of the Motor Vehicles Act, 1988, proof of rashness and negligence on the part of the driver of the vehicle is sine qua non (vide (2007) 13 SCC 476 Oriental Insurance Co. Ltd. v. Premlata Shukla). The primary liability under law for payment of compensation is that of the driver. Once the driver is liable, the owner of the vehicle becomes vicariously liable for payment of compensation. It is this vicarious liability of the owner that is indemnified by the insurance company (Oriental Insurance Company Limited Vs. Meena Variyal (2007) 5 SCC 428). A third party for whose benefit the insurance is taken is obliged to demonstrate that the driver was guilty of negligence when compensation is sought under Section 166 of the MV Act, 1988.

7. Where the accident has been caused by a vehicle that could not be identified and the entire blame has to be placed on its driver, petition under Section 166 of the MV Act would not be maintainable. Hit and run cases stand on a different footing altogether. That is why, special provisions have been incorporated to deal with claims arising out of such cases. We, therefore, uphold the stand of the insurer that since the deceased-rider of the two wheeler was not at fault, the owner (R1 in the MCOP) cannot be made liable and consequently, the question of the insurer indemnifying the owner does not arise.

8. It is not as if the contention of the claimants’ counsel is bereft of logic. The rider of the two wheeler was the owner’s employee and he died during the course of employment. That is how, the owner is sought to be made liable. Once the liability is mounted on the owner, the baby has to be held by the insurer. Precedential support is derived from the decisions reported in 2017 (1) TNMAC 184 (M/s.New India Assurance Co., Ltd v. Thiru Murugan) and 2021 (1) TNMAC 442 (United India Insurance Co., Ltd v. S.Shanmugam).

9. Neither the claimants nor the owner marked the insurance policy. The owner remained ex-parte. He did not file any counter. But he entered the witness box as PW.3 to endorse the version of the claimants. The insurer raised a question if a person remaining ex-parte can allow himself to be examined as a witness for the claimants. Our answer is in the affirmative. When a plaintiff can examine a sailing defendant as a witness on his side even in the absence of a written statement, a claimant before the claims Tribunal cannot be precluded from examining the owner as his witness.

10. The insurer marked the insurance policy as Ex.R1. It is styled as “two wheeler package policy”. The title of the policy cannot determine its true nature. The terms and conditions set out therein will decide the coverage of the policy. This policy is intended to cover third parties. It is also having O.D cover. That is why it is called as package policy. The accident took place on 16.01.2018. It was before Act 32 of 2019 amending the various provisions of the statute came into force. Therefore, the pre-amendment position alone will govern.

11. “Third party” includes the Government ; that is how Section 145(g) of the Act (as it stood then) has been worded. Post-amendment, the term has been defined to include the Government, the driver and any other co-worker on a transport vehicle. Since we are concerned with the unamended provision, the rider of the vehicle could not be called as a third party. Of course, if the deceased was an employee covered by the proviso to Section 147(i), the position might be different. Section 147(i) as it stood then was as follows :

                     “147.Requirements of policies and limits of liability.-

                     (1) In order to comply with the requirements of this Chapter, a policy of insurance must be a policy which—

                     (a) is issued by a person who is an authorised insurer; and

                     (b) insures the person or classes of persons specified in the policy to the extent specified in sub-section (2)—

                     (i) against any liability which may be incurred by him in respect of the death of or bodily injury to any person including owner of the goods or his authorised representative carried in the motor vehicle or damage to any property of a third party caused by or arising out of the use of the motor vehicle in a public place;

                     (ii) against the death of or bodily injury to any passenger of a transport vehicle, except gratuitous passengers of a goods vehicle, caused by or arising out of the use of the motor vehicle in a public place.

                     Provided that a policy shall not be required-

                     (i) to cover liability in respect of the death, arising out of and in the course of his employment, of the employee of a person insured by the policy or in respect of bodily injury sustained by such an employee arising out of and in the course of his employment other than a liability arising under the Workmen's Compensation Act, 1923 (8 of 1923), in respect of the death of, or bodily injury to, any such employee

                     (a) engaged in driving the vehicle, or

                     (b) if it is a public service vehicle, engaged as a conductor of the vehicle or in examining tickets on the vehicle, or

                     (c) if it is a goods carriage, being carried in the vehicle

                     (ii) to cover any contractual liability.”

If the deceased had been engaged as a driver, then, liability can be fastened under the WC Act against the owner and consequently on the insurer. Unlimited liability under the M.V Act can be fastened if additional premium had been paid. The same benefit can be availed in the case of a conductor or a ticket checker in a public service vehicle. The expression “engaged” is significant. Engagement means some sort of undertaking or contractual obligation (vide P.Ramantha Aiyer’s Advanced Law Lexicon). From the statutory context, one can infer that the person referred to is “driver”. Of course, he can be a spare driver also. But the person must have been engaged as a driver. In the case on hand, the deceased was engaged as a bakery master in the bakery owned by Sonarajan (PW.3/R1 in the MCOP). He was coming for attending the night shift duty when the accident took place. That is the pleading/averment found in the claim petition as well as evidence. In other words, the deceased was not engaged as a driver. Normally, the term “driver” is employed in the context of three wheelers and four wheelers and heavy vehicles. In the case of two wheelers, we employ the expression “rider”. But rider has to have driving license. We don’t call it riding license. If a person is employed to deliver items in a two wheeler, he would probably fall within the aforesaid expression. Zomato, Swiggy, Blinkit and other gig workers come to one’s mind.

12. Let us come back to the case on hand. Though Manikandan had taken the two wheeler of the employer and was going to the place of work, he cannot be called as one engaged in driving. He can only be described as a “permittee”. Such a person will not fall within the exception carved out in the proviso to Section 147(i) of the MV Act. Even if the deceased was under the excepted category, an application under Section 166 of the Act would not be maintainable. Remedy would have to be sought elsewhere.

13. We have our own serious doubts if the deceased was even an employee under PW.3. Though PW.3 was cross examined at length by the insurer, he did not adduce any convincing evidence to show that the deceased was employed by him.

14. In Ningamma v. United India Insurance Co., Ltd (2009) 13 SCC 710, the question that arose for consideration before the Hon’ble Supreme Court was whether the legal representative of a person, who was driving a motorcycle, after borrowing it from the real owner meets with an accident without involving any other vehicle, would be entitled to compensation under Section 163-A of Motor Vehicles Act or under any other provisions of law and whether the insurer would be bound to indemnify the deceased or his legal representative. The Hon’ble Supreme Court held that the deceased who borrowed the motorbike from the real owner would step into the shoes of the owner of the motorbike and that therefore the legal representatives could not claim compensation under Section 163-A of the Motor Vehicles Act. In Ningamma, it was indicated that the legal representatives may still maintain a claim under Section 166 upon establishing that there was no negligence on the part of the deceased and that the deceased was on the facts and terms of the policy, a person whose risk the insurer was bound to cover. But the Hon’ble Supreme Court also referred to New India Assurance Co. Ltd., v. Sadanand Mukhi (2009) 2 SCC 417 wherein it was held that the son of the owner who was driving the vehicle, who died in the accident, cannot be regarded as third party and that therefore, neither Section 163-A nor Section 166 would be applicable.

15. In Ramkhiladi v. United India Insurance Co., (2020) 2 SCC 550, the Hon’ble Supreme Court held that the deceased, being a permissive user of the vehicle insured, cannot maintain a claim against the owner or insurer of the vehicle which is borrowed by him as he will be in the shoes of the owner.

16. In Oriental Insurance Company Limited Vs. Meena Variyal (2007) 5 SCC 428), the The Hon'ble Supreme Court, dealing with a claim arising from the death of a person who died while travelling in/driving his employer's own car, held that the whole protection provided by Chapter XI of the Act is against thirdparty risk, and that a person who is not a “third party” within the meaning of the Act cannot be brought within the insurer's statutory liability merely by invoking the ratio of National Insurance Co. Ltd. v. Swaran Singh, (2004) 3 SCC 297. The expression “any person” in Section 147(1) must be read in the context in which it occurs — namely, protection of “a third party” — and does not extend cover to the owner, the insured, or persons standing in the shoes of the insured. An employee of the insured owner is not, without more, covered under Section 147(1)(b); the proviso to Section 147(1) specifically excludes liability for the death of or injury to an employee arising in the course of employment, save where the liability arises under the Workmen's Compensation Act, 1923 in respect of an employee who is a driver, conductor (of a public service vehicle), or is carried in a goods vehicle — an employee can be brought within cover only through a special contract with the insurer, absent which the insurer incurs no liability. The Court further held that a Tribunal exercising jurisdiction under the Motor Vehicles Act cannot dispense with basic principles of the law of tort — negligence must be established — and that where a claimant is found not to be a third party, the insurer cannot be directed to pay the award in the first instance and recover it from the insured, since that recourse-and-recovery mechanism applies only to genuine thirdparty claims.

17. The Tribunal had relied on 2021 (1) TNMAC 442 (United India Insurance Co., Ltd v. S.Shanmugam) to make the insurer liable. The factual matrix obtaining in S.Shanmugam is similar to the case on hand. But we are unable to deduce any proposition therefrom. The learned Judge relied on Kaushnuma Begum v. New India Assurance Co., Ltd (2001 (2) MLJ 112) to grant relief. Paragraph 7 and 8 of the said order read as follows :

                     “7. The Appellant is the Insurer of the TVS-50 Moped, driven by the injured/First Respondent. The Second Respondent is the Owner of the TVS-50 Moped involved in the accident. The finding of the Tribunal that the accident had occurred only due to the rash and negligent driving of the Driver of the Tempo Van, is not disputed by both the sides.

                     8.This is a hit and run case. The question to be decided is, whether the Claimant is entitled to get Compensation from the Insurer of the TVS-50 moped or not, when the fact remains that the Tempo Van, which caused the accident, fled away immediately after the accident? The Tribunal relied upon the decision of the Hon'ble Supreme Court in the case of Kaushnuma Begum v. New India Assurance Co. Ltd., (2001) 2 SCC 9 : 2001 SCC (Cri) 268 : (2001) 2 Mad LJ 112, wherein it has been held that even though the accident had not occurred due to the negligence of the Driver of the Vehicle, if the case is not falling under the seven exceptions pointed out in Rylands v. Fletcher, 1861-[1873] All ER 1, then it has to be inferred that the accident had occurred due the negligence on the part of the Driver, and in that context the injured and deceased relating to the accident, can claim Compensation from the Owner of the Vehicle. It was put forth on the side of the Insurance Company, which insured the TVS Moped that since no Criminal case or Charge-sheet has been filed against the Driver of the TVS moped, the Insurance Company is not liable to pay any Compensation to the Claimant, when the fact remains that the accident had occurred only due to the rash and negligent driving of the Driver of the unknown Van. But, relying upon the above decision of the Hon'ble Supreme Court and also taking note of the fact that the Insurance Policy of the TVS Moped covers the Third party also, the Tribunal made both the Owner and the Insurance Company of the TVS Moped liable to pay the Compensation, jointly and severally.”

18. We are respectfully of the view that Kaushnuma Begum which concerned an accident that took place before the 1988 Act was enacted has no relevance while adjudicating claim under Section 166 of the Act. This is for the simple reason that Kaushnuma Begum was more about the application of the strict liability principle enunciated in Rylands v. Fletcher to motor accidents. The statute provides for fault based remedy as well as no-fault liability. Hence, there is no need to fall back on strict liability principle. The Hon’ble Supreme Court in Mangala Ram v. Oriental Insurance Co., Ltd., (2018) 5 SCC 656 had mentioned that Kaushnuma Begum was dealing with an application under Section 163-A of the M.V Act, 1988. Hence, Kaushnuma Begum could not have been applied to an application under Section 166. On this sole ground, we hold that S.Shanmugam case was wrongly decided.

19. It is conceded that no additional premium was paid to cover the other employees. The policy in question could not have covered the rider of the insured vehicle. We hold that the claim petition filed under Section 166 and 140 of the M.V Act, 1988 was not maintainable against the appellant-insurer for want of proof of negligence against an identified tortfeasor and because the deceased could not be invested with the status of the third party. The insurer is not liable to compensate and the question of law formulated at the beginning is answered accordingly. The impugned award is set aside.

20. We need to refer to two more decisions. Wakia Afrin v. National Insurance Company Limited (2026) 3 SCC 418 dealt with many of the cases mentioned above. While agreeing with the Three Judges Bench decision in Minu B Mehta v. Balkrishna Ramchandra Nayan (1977) 2 SCC 441 which held that under Section 166, the claimants have to prove the negligence of the driver to sustain a claim with respect to compensation arising from the death or injury in a motor vehicle accident and the statutory liability arises only with respect to third parties or those specified under Section 147, the Hon’ble Supreme Court observed as follows :

                     “18.We are of the opinion that this issue concerning the liability of the insurer in a claim under Section 163-A qua the owner/insured requires an authoritative pronouncement. The dictum arising from the various decisions of different Benches of two Judges is that the claim under Section 163-A is restricted to third-party risks, which, with all the respect at our command, we are unable to agree with. We are conscious that the provision, Section 163-A, appears under the Chapter with the heading “Insurance of Vehicles Against Third-Party Risks”, but, as we observed the non obstante clause is in suppression of the entire Act, the other laws in force and any instrument valid in law.”

21. The other decision is National Insurance Co., Ltd., vs. Thungala Dhana Laxmi (2026 SCC OnLine SC 1486). The facts are captured in paragraphs 27, 28, 29, 30 and 31. Para 34 contains the result along with a statement of law. They are as follows :

                     “27. The brief facts giving rise to this appeal are that on 13.07.1996, the deceased, namely Mr. T. Ramu, was returning from Tirupathi to his village Venkanur in his Maruti 800 vehicle bearing registration number AP 21A 1666. Near, Singarayakonda at about 5:00 A.M., an unknown lorry being driven in a rash and negligent manner struck the car of the deceased from the back side. As a result of the said accident, he suffered injuries and passed away during treatment.

                     28. An application seeking compensation was filed by the claimant-respondents, being the legal representatives of the deceased, before the Tribunal under Section 166 of the MVA (later amended to Section 163-A), to the tune of Rs. 10,00,000/. It was stated therein that the deceased was in the business of seafood and was earning at least Rs. 1,00,000/- per annum. He was the sole breadwinner of his family. The appellant insurance company was the insurer of the Maruti 800 car, in which the deceased was travelling.

                     29. The Tribunal, vide its order dated 08.12.2009, held the claimant-respondents not to be entitled to any compensation. The Tribunal relied upon the testimony of the Assistant Manager of the appellant insurance company and observed that no extra premium was paid to cover the personal risk of the owner's vehicle.

                     30. Aggrieved thereof, the claimant-respondents preferred an appeal before the High Court. It was stated therein that the Tribunal had erroneously absolved the insurance company of its liability to pay compensation to the claimant-respondents.

                     31. The High Court, vide, the impugned judgment, allowed the appeal and awarded a compensation of Rs. 10,00,500/- to the claimant-respondents along with 7.5% interest per annum. The Court observed that the policy in question is a comprehensive policy and would cover the owner of the vehicle as well, who was travelling in the car as a passenger. In the absence of any evidence qua the monthly income of the deceased, the Court assessed his monthly income as Rs. 4,500/- on a notional basis.

                     ...

                     34. It is well settled that in matters concerning motor accident claims, Courts should not adopt a hyper-technical approach. As rightly submitted by the claimant-respondents, in accordance with the circular of the IRDA dated 16.11.2009, insurance companies are liable to compensate for any occupant in the vehicle under a comprehensive/package policy. Consequently, we find no reason to disagree with the reasoning adopted by the High Court. The present Civil Appeal is dismissed to that extent.”

22. Shri Narasimhan Vijayaraghavan, a doyen in this field, has written a critical note on the above judgment (2026 CTC OL (Article) 98. According to him, para 34 may not survive its own scrutiny and that it quietly folds two decades of settled jurisprudence on the meaning of “occupant” cover into an outcome that is, on the facts, humane and, on the law difficult to defend. We did not follow Thungala Laxmi because it did not arise under Section 166 of the M.V Act.

23. For the foregoing reasons, this Civil Miscellaneous Appeal is allowed. Liberty is granted to the claimants to proceed against the owner in the manner known to law. No costs. Connected miscellaneous petition is closed.