The Supreme Court has clarified that when a privately owned vehicle is requisitioned by a State authority for public electoral purposes, liability for accidents occurring during such use falls on the requisitioning authority, not the vehicle’s insurer. This ruling redefines the scope of ownership under the Motor Vehicles Act in contexts of compulsory state control.
Background & Facts
The Dispute
On 23rd January 2010, a bus bearing registration number MP-07-MG-9897, owned by Kidzee Corner School, Gwalior, collided with a motorcycle bearing MP-07-TC-0514, resulting in the death of the motorcycle rider. At the time of the accident, the bus was under requisition by the District Magistrate and District Election Officer, Gwalior, for use in Gram Panchayat elections. The bus was being operated under the direct command of election authorities, not the school.
Key Facts
- The bus was owned by Kidzee Corner School, Gwalior, a private educational institution
- The vehicle was requisitioned by the appellant under statutory authority for the conduct of Gram Panchayat elections
- The driver of the bus was an employee of the school, but was operating the vehicle under the direct orders of election officials
- The bus was not being used for any private, commercial, or regular purpose at the time of the accident
- The insurance policy covering the bus was obtained by the owner for ordinary use, not for state-mandated deployment
- The accident occurred during the period of requisition, which was authorized under Section 160 of the Representation of the People Act, 1950
Procedural History
- 23.01.2010: Accident occurred during requisition for Gram Panchayat elections
- 2010: Claim Petition No. 25/2010 filed before the Fifth Additional Motor Accident Claims Tribunal, Gwalior
- 2012: Tribunal awarded compensation of Rs. 5,13,500 with 6% interest from the date of filing
- 08.01.2024: High Court of Madhya Pradesh delivered impugned judgment
- Allowed appeal by National Insurance Company Limited: shifted liability from insurer to appellant
- Allowed appeal by legal representatives of deceased: enhanced compensation to Rs. 27,01,556
- 2025: Special Leave Petition (Civil) No. 22910 of 2025 filed before the Supreme Court
- 23.03.2026: Supreme Court delivered judgment
Relief Sought
The appellant sought to set aside the High Court’s order shifting liability to the State, arguing that the insurer should remain liable as the vehicle was insured. The legal representatives of the deceased sought affirmation of the enhanced compensation amount.
The Legal Issue
The central question was whether, under the Motor Vehicles Act, 1988, liability for an accident involving a vehicle requisitioned by a State authority for public purposes rests with the insurer or the requisitioning authority, given that the owner has no control over the vehicle during requisition.
Arguments Presented
For the Appellant
The appellant contended that the vehicle was covered by a valid insurance policy at the time of the accident, and that the insurer, as a statutory obligor under Section 147 of the Motor Vehicles Act, must bear liability regardless of who was in control. It argued that imposing liability on public authorities would deter future requisitioning for public purposes and create a chilling effect on civic administration. It further submitted that the insurer had accepted premiums based on the vehicle’s registration and ownership, and thus should bear the risk.
For the Respondent
The respondents, including the legal representatives of the deceased, supported the High Court’s finding that liability must rest with the State. They emphasized that the owner had no control over the vehicle’s use, timing, route, or operation during requisition. They relied on National Insurance Co. Ltd. v. Deepa Devi and Purnya Kala Devi v. State of Assam to argue that statutory control supersedes legal ownership for liability purposes.
The Court's Analysis
The Court examined the definition of "owner" under Section 2(30) of the Motor Vehicles Act, 1988, and held that the term must be interpreted contextually, not merely textually. It emphasized that legislative intent under the Act was to ensure compensation to victims by identifying the person in actual control of the vehicle at the time of the accident.
"While the vehicle remains under requisition, the owner does not exercise any control thereover. The driver may still be the employee of the owner of the vehicle but he has to drive it as per the direction of the officer of the State, who is put in charge thereof."
The Court distinguished the present case from U.P. SRTC v. National Insurance Co. Ltd., where vehicles were operated under contractual agreements, noting that requisition under Section 160 of the Representation of the People Act, 1950 is a compulsory, non-consensual exercise of statutory power. The Court held that such requisition transforms the legal status of possession and control, rendering the State the de facto owner for liability purposes.
The Court further reasoned that insurance policies are underwritten based on the insured’s ordinary use of the vehicle. Compelled deployment for public functions cannot be considered "regular use" within the contemplation of the policy. To hold the insurer liable would extend the contract beyond the agreed risk.
"The insurer assesses and underwrites risk based on the insured’s ordinary operations. When the State steps in, assumes control, and deploys the vehicle for its own purposes, it assumes with that control the corresponding responsibility."
The Court also addressed the practical reality that requisitioned vehicles are typically accompanied by their drivers. By accepting the driver along with the vehicle, the State implicitly recognized the driver’s competence, thereby assuming responsibility for his actions.
The Verdict
The appeal was dismissed. The Supreme Court upheld the High Court’s judgment, holding that the appellant, as the requisitioning authority, is liable to pay compensation of Rs. 27,01,556 with 6% interest from the date of filing of the claim petition. The National Insurance Company Limited is absolved of liability. All pending applications were disposed of.
What This Means For Similar Cases
State Control Overrides Insurance Liability
- Practitioners must now argue that insurance coverage does not automatically transfer liability when a vehicle is compulsorily requisitioned by the State
- Claims against insurers in such cases should be dismissed at the threshold unless the vehicle was used under a voluntary agreement
- The burden shifts to claimants to identify the requisitioning authority as the proper defendant
Requisition Creates De Facto Ownership
- The term "owner" under Section 2(30) of the Motor Vehicles Act must be interpreted functionally, not formally
- Any entity exercising actual control over a vehicle during public duty - regardless of registration - is liable as the statutory owner
- This applies to requisitions under Section 160 of the Representation of the People Act, 1950, and similar statutory provisions
Public Authorities Must Plan for Liability
- District election officers and other public authorities must now account for potential tort liability when requisitioning private vehicles
- Authorities should consider obtaining contingent liability coverage or indemnity arrangements for requisitioned assets
- Failure to do so may expose public funds to unanticipated compensation claims
