The court affirms that insurers are liable for employees traveling in employer's vehicles, including drivers, under IMT-29 without requiring additional premiums.
In a significant ruling, the Allahabad High Court has upheld the compensation awarded to the family of a deceased driver, Dharamveer, in a case involving The Oriental Insurance Company Limited. The decision, delivered by Justice Sandeep Jain on February 3, 2026, clarified the liability of insurers under the IMT-29 provision of the Indian Motor Tariff, specifically concerning employees traveling in their employer's vehicles.
The case arose from a tragic road accident on February 26, 2015, which resulted in the untimely death of Dharamveer, who was employed as a driver for a Qualis vehicle. The Employee Compensation Commissioner had previously awarded a compensation amount of Rs. 8,26,495 along with 12% interest per annum to the claimants, which the insurer was ordered to indemnify.
The Oriental Insurance Company appealed the decision, arguing that the insurance policy did not cover the paid driver and that there was no master-servant relationship between the deceased and the vehicle's owner at the time of the accident. They further contended that the vehicle had been sold to a third party before the accident, and the insurance policy was not transferred to the new owner, thus absolving them of liability.
However, the court found that at the time of the accident, the vehicle was still registered under the original owner, Rakesh, who had not officially transferred the ownership. The court emphasized that the registered owner, regardless of possession, remains liable under the Motor Vehicles Act, 1988. The court also reiterated the directive from the Insurance Regulatory and Development Authority of India (IRDAI) mandating inbuilt coverage under IMT-29 for employees, including paid drivers, without additional premium.
The judgment cited several Supreme Court rulings, including Pushpa @ Leela v. Shakuntala and Brij Bihari Gupta v. Manmet, reinforcing the liability of the registered owner and the indemnification role of the insurer. The court dismissed the appeal, concluding that no substantial questions of law were raised and directed the Commissioner to disburse the deposited compensation amount of Rs. 17,94,718 to the claimants.
This ruling highlights the comprehensive protection afforded to employees under IMT-29 and the responsibilities of insurers to honor claims related to employees traveling in their employer's vehicles. It underscores the importance of adhering to regulatory directives and clarifies the scope of insurance coverage, bringing relief to affected families while ensuring the accountability of insurers.
Bottom Line:
Insurance law - Liability of insurer under IMT-29 for compensation to employees traveling in employer's vehicle - Specific non-mentioning of driver in insurance policy does not entitle insurer to avoid contractual liability under the Act.
Statutory provision(s): Employees Compensation Act, 1923 Section 30, Motor Vehicles Act, 1988 Section 50, Insurance Regulatory and Development Authority of India (IRDAI) Circular Ref. No. IRDAI/NL/CIR/MOTOR/178/10/2023-24
