In a ruling with wide ramifications for public transport, the Supreme Court has ruled that the insurance company is not liable to compensate for more than the passengers legally permitted in a private vehicle in case of accident. A bench comprising of Justices Altamas Kabir and Cyriac Joseph pronounced the verdict while disposing of the appeal filed by United India Insurance Company.

On August 18, 2004 a jeep fell in a ditch resulting in the death of seven passenger and injuries to others. The main contention of the insurance company was that an insurer is liable to pay compensation only to the passengers authorised to travel in the public transport.
The apex court in its judgement agreed with the insurance company and noted, 'the liability of the insurance therefore, is confined to the number of people covered by the insurance policy and beyond the same. In other words, as in the present case, since the insurance policy of the owner of the vehicle covered six occupants of the vehicle in question including the driver, the liability of the insurer would be confined to six people only. The remaining people will have treated as third parties only.

The apex court, however insurance company to recover the balance amount of compensation from the owner of the vehicle by executing this judgement.