Most of the victims were going to Chamba town to participate in the Minjar, a Hindu fair that symbolises the blossoming of maize.
The private bus was going to Chamba town from Dularo village when it skidded off the road and fell into the 300-feet deep gorge near Gagaala, some 12 km from the town and around 475 km from the state capital.
"The 40-seater bus was overcrowded. People were even sitting on its roof," Chamba Deputy Commissioner Sunil Chaudhary told IANS.
He said 37 people, including the driver, died on the spot.
Image: People perform rescue work near the mangled remains of a passenger bus that rolled down into a gorge near Chamba town on Saturday, August 11, 2012. (PTI)