Better That State Transport Corporations Avail Third-Party Insurance, Suggests Supreme Court

The Supreme Court on October 1 suggested to the State Governments that the State Public Transport Corporations avail third-party insurance coverage to ensure that victims of the accidents caused by the State buses get timely compensation as per the Motor Vehicles Act.

A bench of Justices M.M. Sundresh and Justice Aravind Kumar was hearing a writ petition which raised various issues relating to motor vehicle claims. One of the issues raised was that the State Corporation vehicles do not have insurance and as a result of which, they are unable to pay timely compensation in motor vehicle cases.

Advocate N Vijayaraghavan, the amicus curiae in the matter, pointed out that according to the proviso of Section 146 of the MV Act, vehicles owned by the Central and State Governments are exempted from taking third-party insurance. He referred to the previous order passed by the Supreme Court in 2021 asking the Central Government to examine the possibility of withdrawing exemption from insurance for State Corporations, that are unable to pay compensation for a long period of time and running into losses.

The amicus also told the bench about the alternate suggestion that the State Corporations create a separate pool of funds, which must at least consist of as much of the liability which has arisen on account of MACT determination for the last 3 financial years. The amicus however opined that this may not be a viable option, considering the fact that many State corporations are incurring heavy losses and are struggling to pay even salaries and pensions.

Justice Sundresh stated that availing insurance "would be a better option" and kept the matter to be heard in November.

Case Details: BAJAJ ALLIANZ GENERAL INSURANCE COMPANY PRIVATE LTD.v. UOI & Ors, W.P.(C) No. 534/2020