146. Necessity for insurance against third party risks. —
(1) No person shall use, except as a
passenger, or cause or allow any other person to use, a motor vehicle in a public place, unless there is in
force, in relation to the use of the vehicle by that person or that other person, as the case may be, a policy
of insurance complying with the requirements of this Chapter:
Provided that in the case of a vehicle carrying, or meant to carry, dangerous or hazardous goods, there
shall also be a policy of insurance under the Public Liability Insurance Act, 1991 (6 of 1991).
Explanation.—For the purposes of this sub-section, a person driving a motor vehicle merely as a paid
employee, while there is in relation to the use of the vehicle no such policy in force as is required by this
sub-section, shall not be deemed to act in contravention of the sub-section unless he knows or has reason
to believe that there is no such policy in force.
(2) The provisions of sub-section
(1) shall not apply to any vehicle owned by the Central Government
or a State Government and used for purposes not connected with any commercial enterprise.
(3) The appropriate Government may, by order, exempt from the operation of sub-section
(1), any
vehicle owned by any of the following authorities, namely:—
(a) the Central Government or a State Government, if the vehicle is used for purposes connected
with any commercial enterprise;
(b) any local authority;
(c) any State Transport Undertaking:
Provided that no such order shall be made in relation to any such authority unless a fund has been
established and is maintained by that authority in such manner as may be prescribed by appropriate
Government.
Explanation.—For the purposes of this sub-section, “appropriate Government” means the Central
Government or a State Government, as the case may be, and—
(i) in relation to any corporation or company owned by the Central Government or any State
Government, means the Central Government or that State Government;
(ii) in relation to any corporation or company owned by the Central Government and one or
more State Governments, means the Central Government;
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(iii) in relation to any other State Transport Undertaking or any local authority, means that
Government which has control over that undertaking or authority.
147. Requirement of policies and limits of liability. —
(1) In order to comply with the requirements
of this Chapter, a policy of insurance must be a policy which—
(a) is issued by a person who is an authorised insurer; and
(b) insures the person or classes of persons specified in the policy to the extent specified in
sub-section
(2)—
(i) against any liability which may be incurred by him in respect of the death of or bodily injury
to any person including owner of the goods or his authorised representative carried in the motor
vehicle or damage to any property of a third party caused by or arising out of the use of the motor
vehicle in a public place;
(ii) against the death of or bodily injury to any passenger of a transport vehicle, except
gratuitous passengers of a goods vehicle, caused by or arising out of the use of the motor vehicle in
a public place.
Explanation.—For the removal of doubts, it is hereby clarified that the death of or bodily injury
to any person or damage to any property of a third party shall be deemed to have been caused by or to
have arisen out of, the use of a vehicle in a public place, notwithstanding that the person who is dead
or injured or the property which is damaged was not in a public place at the time of the accident, if
the act or omission which led to the accident occurred in a public place.
(2) Notwithstanding anything contained under any other law for the time being in force, for the
purposes of third party insurance related to either death of a person or grievous hurt to a person, the
Central Government shall prescribe a base premium and the liability of an insurer in relation to such
premium for an insurance policy under sub-section
(1) in consultation with the Insurance Regulatory
and Development Authority.
(3) A policy shall be of no effect for the purposes of this Chapter unless and until there is issued
by the insurer in favour of the person by whom the policy is effected, a certificate of insurance in the
prescribed form and containing the prescribed particulars of any condition subject to which the policy
is issued and of any other prescribed matters; and different forms, particulars and matters may be
prescribed in different cases.
(4) Notwithstanding anything contained in this Act, a policy of Insurance issued before the
commencement of the Motor Vehicles (Amendment) Act, 2019 shall be continued on the existing
terms under the contract and the provisions of this Act shall apply as if this Act had not been
amended by the said Act.
(5) Where a cover note issued by the insurer under the provisions of this Chapter or the rules or
regulations made thereunder is not followed by a policy of insurance within the specified time, the
insurer shall, within seven days of the expiry of the period of the validity of the cover note, notify the
fact to the registering authority or to such other authority as the State Government may prescribe.
(6) Notwithstanding anything contained in any other law for the time being in force, an insurer
issuing a policy of insurance under this section shall be liable to indemnify the person or classes of
persons specified in the policy in respect of any liability which the policy purports to cover in the case
of that person or those classes of persons.
148. Validity of policies of insurance issued in reciprocating countries. — Where, in pursuance of
an arrangement between India and any reciprocating country, the motor vehicle registered in the
reciprocating country operates on any route or within any area common to the two countries and there is
in force in relation to the use of the vehicle in the reciprocating country, a policy of insurance complying
with the requirements of the law of insurance for the time being in force in that country, then,
notwithstanding anything contained in section 147 but subject to any rules which may be made under
section 164B such policy of insurance shall be effective throughout the route or area in respect of which
the arrangement has been made, as if the policy of insurance had complied with the requirements of this
Chapter.
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149. Settlement by insurance company and procedure therefor. —
(1) The insurance company
shall, upon receiving information of the accident, either from claimant or through accident information
report or otherwise, designate an officer to settle the claims relating to such accident.
(2) An officer designated by the insurance company for processing the settlement of claim of
compensation may make an offer to the claimant for settlement before the Claims Tribunal giving such
details, within thirty days and after following such procedure as may be prescribed by the Central
Government.
(3) If, the claimant to whom the offer is made under sub-section
(2),—
(a) accepts such offer,—
(i) the Claims Tribunal shall make a record of such settlement, and such claim shall be
deemed to be settled by consent; and
(ii) the payment shall be made by the insurance company within a maximum period of thirty
days from the date of receipt of such record of settlement;
(b) rejects such offer, a date of hearing shall be fixed by the Claims Tribunal to adjudicate such
claim on merits.
150. Duty of insurers to satisfy judgments and awards against persons insured in respect of
third party risks. —
(1) If, after a certificate of insurance has been issued under sub-section
(3) of
section 147 in favour of the person by whom a policy has been effected, judgment or award in respect of
any such liability as is required to be covered by a policy under clause
(b) of sub-section
(1) of section
147 (being a liability covered by the terms of the policy) or under the provisions of section 164 is
obtained against any person insured by the policy, then, notwithstanding that the insurer may be entitled
to avoid or cancel or may have avoided or cancelled the policy, the insurer shall, subject to the provisions
of this section, pay to the person entitled to the benefit of the award any sum not exceeding the sum
assured payable thereunder, as if that person were the decree holder, in respect of the liability, together
with any amount payable in respect of costs and any sum payable in respect of interest on that sum by
virtue of any enactment relating to interest on judgments.
(2) No sum shall be payable by an insurer under sub-section
(1) in respect of any judgment or award
unless, before the commencement of the proceedings in which the judgment or award is given the insurer
had notice through the court or, as the case may be, the Claims Tribunal of the bringing of the
proceedings, or in respect of such judgment or award so long as its execution is stayed pending an appeal;
and an insurer to whom notice of the bringing of any such proceedings is so given shall be entitled to be
made a party thereto, and to defend the action on any of the following grounds, namely:—
(a) that there has been a breach of a specified condition of the policy, being one of the following
conditions, namely:––
(i) a condition excluding the use of the vehicle—
(A) for hire or reward, where the vehicle is on the date of the contract of insurance a vehicle
not covered by a permit to ply for hire or reward; or
(B) for organised racing and speed testing; or
(C) for a purpose not allowed by the permit under which the vehicle is used, where the
vehicle is a transport vehicle; or
(D) without side-car being attached where the vehicle is a two-wheeled vehicle; or
(ii) a condition excluding driving by a named person or by any person who is not duly licenced or
by any person who has been disqualified for holding or obtaining a driving licence during the period
of disqualification or driving under the influence of alcohol or drugs as laid down in section 185; or
(iii) a condition excluding liability for injury caused or contributed to by conditions of war, civil
war, riot or civil commotion; or
(b) that the policy is void on the ground that it was obtained by nondisclosure of any material fact or
by representation of any fact which was false in some material particular; or
(c) that there is non-receipt of premium as required under section 64VB of the Insurance Act, 1938
(4 of 1938).
(3) Where any such judgment or award as is referred to in sub-section
(1) is obtained from a court in a
reciprocating country and in the case of a foreign judgment is, by virtue of the provisions of section 13 of
the Code of Civil Procedure, 1908 (5 of 1908) conclusive as to any matter adjudicated upon by it, the
insurer (being an insurer registered under the Insurance Act, 1938 (4 of 1938) and whether or not that
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person is registered under the corresponding law of the reciprocating country) shall be liable to the person
entitled to the benefit of the decree in the manner and to the extent specified in sub-section
(1), as if the
judgment or award were given by a court in India:
Provided that no sum shall be payable by the insurer in respect of any such judgment or award unless,
before the commencement of the proceedings in which the judgment or award is given, the insurer had
notice through the court concerned of the bringing of the proceedings and the insurer to whom notice is so
given is entitled under the corresponding law of the reciprocating country, to be made a party to the
proceedings and to defend the action on grounds similar to those specified in sub-section
(2).
(4) Where a certificate of insurance has been issued under sub-section
(3) of section 147 to the person
by whom a policy has been effected, so much of the policy as purports to restrict the insurance of the
persons insured thereby, by reference to any condition other than those in sub-section
(2) shall, as
respects such liabilities as are required to be covered by a policy under clause
(b) of sub-section
(1) of
section 147, be of no effect.
(5) No insurer to whom the notice referred to in sub-section
(2) or sub-section
(3) has been given
shall be entitled to avoid his liability to any person entitled to the benefit of any such judgment or award
as is referred to in sub-section
(1) or in such judgment as is referred to in sub-section
(3) otherwise than in
the manner provided for in sub-section
(2) or in the corresponding law of the reciprocating country, as the
case may be.
(6) If on the date of filing of any claim, the claimant is not aware of the insurance company with
which the vehicle had been insured, it shall be the duty of the owner of the vehicle to furnish to the
tribunal or court the information as to whether the vehicle had been insured on the date of the accident,
and if so, the name of the insurance company with which it is insured.
Explanation.—For the purposes of this section,—
(a) “award” means an award made by the Claims Tribunal under section 168;
(b) “Claims Tribunal” means a Claims Tribunal constituted under section 165;
(c) “liability covered by the terms of the policy” means the liability which is covered by the
policy or which would be so covered but for the fact that the insurer is entitled to avoid or cancel or
has avoided or cancelled the policy; and
(d) “material fact” and “material particular” mean, respectively, a fact or particular of such a
nature as to influence the judgment of a prudent insurer in determining whether he shall take the risk
and, if so, at what premium and on what conditions.
151. Rights of third party against insurers on insolvency of insured. —
(1) Where under any
contract of insurance affected in accordance with the provisions of this Chapter, a person is insured
against liabilities which he may incur to third party, then—
(a) in the event of the person becoming insolvent or making a composition or arrangement with
his creditors; or
(b) where the insured person is a company, in the event of a winding-up order being made or a
resolution for a voluntary winding-up being passed with respect to the company or of a receiver or
manager of the company’s business or undertaking being duly appointed, or of possession being taken
by or on behalf of the holders of any debentures secured by a floating charge of any property
comprised in or subject to the charge,
if, either before or after that event, any such liability is incurred by the insured person his rights against
the insurer under the contract in respect of the liability shall, notwithstanding anything to the contrary in
any provision of law, be transferred to and vest in the third party to whom the liability was so incurred.
(2) Where an order for the administration of the estate of a deceased debtor is made according to the
law of insolvency, then, if any debt provable in insolvency is owing by the deceased in respect of a
liability to a third party against which he was insured under a contract of insurance in accordance with the
provisions of this Chapter, the deceased debtor’s rights against the insurer in respect of that liability shall,
notwithstanding anything to the contrary in any provision of law, be transferred to and vest in the person
to whom the debt is owing.
(3) Any condition in a policy issued for the purposes of this Chapter purporting, either directly or
indirectly, to avoid the policy or to alter the rights of the parties thereunder upon the happening to the
insured person of any of the events specified in clause
(a) or clause
(b) of sub-section
(1) or upon the
making of an order for the administration of the estate of a deceased debtor according to the law of
insolvency, shall be of no effect.
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(4) Upon a transfer under sub-section
(1) or sub-section
(2), the insurer shall be under the same
liability to the third party as he would have been to the insured person, but—
(a) if the liability of the insurer to the insured person exceeds the liability of the insured person to
the third party, nothing in this Chapter shall affect the rights of the insured person against the insurer
in respect of the excess amount; and
(b) if the liability of the insurer to the insured person is less than the liability of the insured person
to the third party, nothing in this Chapter shall affect the rights of the third party against the insured
person in respect of the balance amount.
152. Duty to give information as to insurance. —
(1) No person against whom a claim is made in
respect of any liability referred to in clause
(b) of sub-section
(1) of section 147 shall, on demand by or on
behalf of the person making the claim, refuse to state whether or not he was insured in respect of that
liability by any policy issued under the provisions of this Chapter, or would have been so insured if the
insurer had not avoided or cancelled the policy, nor shall he refuse, if he was or would have been so
insured, to give such particulars with respect to that policy as were specified in the certificate of insurance
issued in respect thereof.
(2) In the event of any person becoming insolvent or making an arrangement with his creditors or in
the event of an order being made for the administration of the estate of a deceased person according to the
law of insolvency, or in the event of a winding-up order being made or a resolution for a voluntary
winding-up being passed with respect to any company or of a receiver or manager of the company’s
business or undertaking being duly appointed or of possession being taken by or on behalf of the holders
of any debentures secured by a floating charge on any property comprised in or subject to the charge, it
shall be the duty of the insolvent debtor, personal representative of the deceased debtor or company, as
the case may be, or the official assignee or receiver in insolvency, trustee, liquidator, receiver or manager,
or person in possession of the property to give, on the request of any person claiming that the insolvent
debtor, deceased debtor or company is under such liability to him as is covered by the provision of this
Chapter, such information as may reasonably be required by him for the purpose of ascertaining whether
any rights have been transferred to and vested in him by section 151 and for the purpose of enforcing such
rights, if any, and any such contract of insurance as purports whether directly or indirectly to avoid the
contract or to alter the rights of the parties thereunder upon the giving of such information in the events
aforesaid, or otherwise to prohibit or prevent the giving thereof in the said events, shall be of no effect.
(3) If, from the information given to any person in pursuance of sub-section
(2) or otherwise, he has
reasonable ground for supporting that there have or may have been transferred to him under this Chapter
rights against any particular insurer, that insurer shall be subject to the same duty as is imposed by the
said sub-section on the persons therein mentioned.
(4) The duty to give the information imposed by this section shall include a duty to allow all contracts
of insurance, receipts for premiums, and other relevant documents in the possession or power of the
person on whom the duty is so imposed to be inspected and copies thereof to be taken.
153. Settlement between insurers and insured persons. —
(1) No settlement made by an insurer in
respect of any claim which might be made by a third party in respect of any liability of the nature referred
to in clause
(b) of sub-section
(1) of section 147 shall be valid unless such third party is a party to the
settlement.
(2) The Claims Tribunal shall ensure that the settlement is bona fide and was not made under undue
influence and the compensation is made in accordance with the payment schedule referred to in
sub-section
(1) of section 164.
(3) Where a person who is insured under a policy issued for the purpose of this Chapter has become
insolvent, or where, if such insured person is a company, a winding-up order has been made or a
resolution for a voluntary winding-up has been passed with respect to the company, no agreement made
between the insurer and the insured person after the liability has been incurred to a third party and after
the commencement of the insolvency or winding-up, as the case may be, nor any waiver, assignment or
other disposition made by or payment made to the insured person after the commencement aforesaid,
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shall be effective to defeat the rights transferred to the third party under this Chapter; but those rights
shall be the same as if no such agreement, waiver, assignment or disposition or payment has been made.
154. Saving in respect of sections 151, 152 and 153. —
(1) For the purposes of sections 151, 152
and 153, a reference to “liabilities to third parties” in relation to a person insured under any policy of
insurance shall not include a reference to any liability of that person in the capacity of insurer under some
other policy of insurance.
(2) The provisions of sections 151, 152 and 153 shall not apply where a company is wound-up
voluntarily merely for the purposes of reconstruction or of an amalgamation with another company.
155. Effect of death on certain causes of action. —Notwithstanding anything contained in section
306 of the Indian Succession Act, 1925, (39 of 1925) the death of a person in whose favour a certificate
of insurance had been issued, if it occurs after the happening of an event which has given rise to a claim
under the provisions of this Chapter, shall not be a bar to the survival of any cause of action arising out of
such event against his estate or against the insurer.
156. Effect of certificate of insurance. — When an insurer has issued a certificate of insurance in
respect of a contract of insurance between the insurer and the insured person, then—
(a) if and so long as the policy described in the certificate has not been issued by the insurer to
the insured, the insurer shall, as between himself and any other person except the insured, be deemed
to have issued to the insured person a policy of insurance conforming in all respects with the
description and particulars stated in such certificate; and
(b) if the insurer has issued to the insured the policy described in the certificate, but the actual
terms of the policy are less favourable to persons claiming under or by virtue of the policy against the
insurer either directly or through the insured than the particulars of the policy as stated in the
certificate, the policy shall, as between the insurer and any other person except the insured, be
deemed to be in terms conforming in all respects with the particulars stated in the said certificate.
157. Transfer of certificate of insurance. —
(1) Where a person, in whose favour the certificate of
insurance has been issued in accordance with the provisions of this Chapter, transfers to another person
the ownership of the motor vehicle in respect of which such insurance was taken together with the policy
of insurance relating thereto, the certificate of insurance and the policy described in the certificate shall be
deemed to have been transferred in favour of the person to whom the motor vehicle is transferred with
effect from the date of its transfer.
Explanation.—For the removal of doubts, it is hereby clarified that such deemed transfer shall include
transfer of rights and liabilities of the said certificate of insurance and policy of insurance.
(2) The transferee shall apply within fourteen days from the date of transfer in the prescribed form to
the insurer for making necessary changes in regard to the fact of transfer in the certificate of insurance
and the policy described in the certificate in his favour, and the insurer shall make the necessary changes
in the certificate and the policy of insurance in regard to the transfer of insurance.
158. Production of certain certificates, licence and permit in certain cases.—
(1) Any person
driving a motor vehicle in any public place shall, on being so required by a police officer in uniform
authorised in this behalf by the State Government, produce—
(a) the certificate of insurance;
(b) the certificate of registration;
(c) the pollution under control certificate;
(d) the driving licence;
(e) in the case of a transport vehicle, also the certificate of fitness referred to in section 56, and
the permit; and
(f) any certificate or authorisation of exemption that has been granted under this Act,
relating to the use of the vehicle.
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(2) Where, owing to the presence of a motor vehicle in a public place, an accident occurs involving
death or bodily injury to another person, if the driver of the vehicle does not at that time produce the
required certificate, driving licence and permit referred to in sub-section
(1) to a police officer, he or the
owner shall produce the said certificates, licence and permit at the police station at which the driver
makes the report required by section 134.
(3) No person shall be liable to conviction for offences under sub-section
(1) or sub-section
(2) by
reason of the failure to produce the required certificate if, within seven days from the date on which its
production was required under sub-section
(1), or as the case may be, from the date of occurrence of the
accident, he produces the certificate at such police station as may have been specified by him to the police
officer who required its production or, as the case may be, to the police officer at the site of the accident
or to the officer-in-charge of the police station at which he reported the accident:
Provided that except to such extent and with such modifications as may be prescribed, the provisions
of this sub-section shall not apply to the driver of a transport vehicle.
(4) The owner of a motor vehicle shall give such information as he may be required by or on behalf of
a police officer empowered in this behalf by the State Government for the purpose of determining
whether the vehicle was or was not being driven in contravention of section 146 and on any occasion
when the driver was required under this section to produce the certificate of insurance.
(5) In this section, the expression “produce the certificate of insurance” means production for
examination the relevant certificate of insurance or such other evidence as may be prescribed to prove
that the vehicle was not being driven in contravention of section 146.
159. Information to be given regarding accident.—The police officer shall, during the
investigation, prepare an accident information report to facilitate the settlement of claim in such form and
manner, within three months and containing such particulars and submit the same to the Claims Tribunal
and such other agency as may be prescribed.
160. Duty to furnish particulars of vehicle involved in accident. —A registering authority or the
officer-in-charge of a police station shall, if so required by a person who alleges that he is entitled to
claim compe
