Overloading Passenger Vehicle Did Not Lead To Accident, Not A Breach Of Policy: HP High Court Directs Insurance Company To Pay Compensation
The Himachal Pradesh High Court held that overloading of a passenger vehicle is not a violation or fundamental breach of the terms of the insurance policy unless it is related to the cause of the accident.Relying on the decision of Supreme Court in National Insurance Co. Ltd. v. Swaran Singh, 2004 which held that the breach on the part of the insured must show that the accident or damage...
The Himachal Pradesh High Court held that overloading of a passenger vehicle is not a violation or fundamental breach of the terms of the insurance policy unless it is related to the cause of the accident.
Relying on the decision of Supreme Court in National Insurance Co. Ltd. v. Swaran Singh, 2004 which held that the breach on the part of the insured must show that the accident or damage that occurred was due to the breach.
Justice Vivek Singh Thakur remarked: “So far as overloading of one extra person is concerned, it is not a violation or fundamental breach of the terms of the policy having consequences of absolving Insurance Company from indemnifying the owner to pay the compensation in an accident, particularly when overloading of one person is not related to cause of the accident”.
The case arose out of a motor accident that occurred near Shimla, which led to the death of two occupants in the car. Both occupants were employees of Himachal Auto Rohru. Their parents filed claim petitions before the Motor Accident Claims Tribunal, Shimla. The Tribunal awarded compensation based on the salary and overtime.
Aggrieved by the award, the Insurance company filed petitions in the High Court, contending that the car had a seating capacity of 5, however, 6 persons were travelling in it, which led to a violation of the insurance policy and provisions of the Motor Vehicles Act.
The insurance company also contended that there were no documents placed on record which determined the monthly income of deceased persons, and in such cases, the Court should determine the amount of compensation by relying on the monthly wages notified by the Government of Himachal Pradesh.
The Court held that the overloading of one extra person in the car did not amount to a fundamental breach of the insurance contract as it had no relation to the accident. Further, the Court noted that even though the claimants contended that the income of the deceased included the overtime, it was not established that the overtime payment was made every day. Thus, the Court revised the compensation, but rejected the contention of the Insurance Company regarding the overloading of the persons.
Case Name: United India Insurance Company v/s Sita Devi & Others., United India Insurance Company v/s Joginder Singh & Others
Case No.: FAO No. 284 of 2016, FAO No.329 of 2016
Date of Decision: 24.07.2025
For the Petitioner: Mr.Ashwani K. Sharma, Senior Advocate, with Ms.Nisha Nalot, Advocate, vice Mr.Ishan Sharma, Advocate, in both appeals.
For the Respondents: Mr.Pankaj Sawant, Advocate, Mr. Sunil A Kumar, Advocate, respondents No. 1 and 2, in both appeals. Mr. Raju Ram Rahi, Advocate, vice for respondent No. 3 in both appeals.