The Supreme Court on Monday, March 23, held that when the State requisitions a private vehicle for a public purpose such as election duty, the requisitioning authority must bear liability for any accident that takes place during that period, and not the insurer.
A Bench of Justice Sanjay Karol and Justice N. Kotiswar Singh upheld the judgment of the Madhya Pradesh High Court, Gwalior Bench. The High Court had set aside the Motor Accident Claims Tribunal’s decision, which had fixed liability on the insurer, and instead placed liability on the District Magistrate/Election Officer, Gwalior.
The case arose from an accident involving a private school bus that the authorities had requisitioned for Gram Panchayat election duty. The bus collided with a motorcyclist, causing his death.
Court On Liability During Requisition
The Supreme Court held that once the State requisitions a private bus, the owner loses custody and control over the vehicle. The State then uses the vehicle for its own governmental functions. In such a situation, the law cannot shift the consequences of that control to the insurer, whose contract covered the vehicle’s regular and voluntary use by the owner.
The Bench observed:
“…where a vehicle is requisitioned for public functions and an incident occurs during the period of such requisition, liability ought properly to be borne by the requisitioning authority, and not by the insurer engaged by the owner for the vehicle’s regular and voluntary use.”
The Court explained that after requisition, the State exercises effective control over the vehicle. Therefore, the responsibility flowing from that use must also rest with the State authority that took over the vehicle.
Reliance On Purnya Kala Devi Judgment
To support this view, the Court relied on Purnya Kala Devi v. State of Assam (2014) 14 SCC 142. It noted that under Section 2(30) of the Motor Vehicles Act, 1988, the term “owner” carries a functional meaning and does not depend only on formal title.
The Court said that an authority in possession and control of the vehicle, including a requisitioning authority, can qualify as the “owner” for the purpose of determining liability.
Why Insurer Cannot Be Held Responsible
The Bench said that imposing liability on the insurer in such circumstances would unfairly expand the insurance contract beyond the risk it originally covered. According to the Court, the insurer calculates and underwrites risk based on the insured’s ordinary use of the vehicle. When the State takes control and deploys the vehicle for its own purposes, it must also take responsibility for the consequences of that use.
The Court observed:
“To fasten liability upon the insurer in these circumstances would be to extend the contract beyond the risk that was agreed to be covered. Requiring the insurer to answer for consequences arising from a use neither authorised nor controlled by the insured would be unfair. 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. Further, when statutory power is exercised to requisition private property in the public interest, that power carries with it an obligation to answer for the consequences flowing from such compelled use. To hold otherwise would impose upon private parties and their insurers the burden of risks generated exclusively by governmental action.”
Earlier UP SRTC Cases Distinguished
The appellant relied on U.P. SRTC v. Kulsum (2011) and U.P. SRTC v. National Insurance Co. Ltd. (2021) to argue that the insurer should bear liability. However, the Supreme Court found both decisions distinguishable.
The Bench noted that those matters involved buses operated by State transport corporations under voluntary agreements. In contrast, the present matter concerned compulsory requisition by the State. For that reason, the earlier rulings did not apply.
Appeal Dismissed
On these findings, the Supreme Court dismissed the appeal.
Cause Title: District Magistrate and District Election Officer and Collector, Gwalior, M.P. versus National Insurance Company Limited & Ors.
Appearance
For Petitioner(s): Mr. Siddharth Sharma, Advocate; Mr. Shashank Singh, AOR; Mr. Ankit Singh, Advocate; Mr. Milind Modi, Advocate.
For Respondent(s): Mr. Manu Luv Shalia, Advocate; Ms. Manjeet Chawla, AOR; Ms. Jyoti, Advocate; Mr. Manek Sharma, Advocate; Mr. Abid Ali, Advocate.
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