The case study deals with the latest decision of the Supreme Court confirming the exclusion of gratuition passengers from the third-party risk.

The measure of the restoration lies in the extent to which we apply social values more noble than mere monetary profit. Insurance as a method of risk mitigation has grown significantly. The motor vehicle act prescribes statutory insurance for vehicles. The provisions require a user of vehicle to insure against injury or death caused to a third party. Voluntary insurance requires a person to insure against loss to oneselfeither through injury or death, or through having to pay for injury caused to another. As majority of the business in the country is nationalized, the judiciary tried to treat statutory insurance as a part and parcel of the social security scheme of the state. In this direction, the Motor Vehicles Act 1988 (MVA) provides for setting up a fund by the insurance company for paying compensation to victims of motor accidents. The Act insists for compulsory insurance.

A policy of motor insurance is a contract with the insurer to indemnify the owner against the loss or damage to the vehicle or against liability he may incur towards third parties in case of death or bodily injury caused to them or damage to their property caused by the use of the vehicle. The Indian courts in dealing with motor insurance contracts have to rely on the general principles of the Law of Contract.

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