Motor Vehicles Act: Section 146 –  Necessity for insurance against third party risk

(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:

1[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.—A person driving a motor vehicle merely as a paid employee, while there is in force in relation to the use of the vehicle no such policy 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) Sub-section (1) shall not apply to any vehicle owned by the Central Government or a State Government and used for Government purposes unconnected 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 Government 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 accordance with the rules made in that behalf under this Act for meeting any liability arising out of the use of any vehicle of that authority which that authority or any person in its employment may incur to third parties.

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;

(iii) in relation to any other State transport undertaking or any local authority, means that Government which has control over that undertaking or authority.

Simplified Explanation

Section 146 of the Motor Vehicles Act in India stipulates the necessity for insurance against third-party risk for all motor vehicles. This section is foundational in ensuring that all vehicle owners have insurance to cover potential damages or injuries that their vehicle might cause to other parties in the event of an accident. This kind of insurance is essential not only for the protection of vehicle owners from financial liabilities but also to provide compensation to victims of road accidents.

Overview of Section 146

This section mandates that no person shall use (or allow to be used) a motor vehicle in a public place unless the vehicle is covered by an insurance policy that meets the requirements specified in this Act. The insurance must cover any liability incurred in respect to any accident caused by or arising out of the use of the vehicle.

Key Elements of Section 146

  1. Mandatory Insurance Coverage: All motor vehicles are required to have at least third-party liability insurance before they can be legally driven in public areas. This is to ensure that any damage or injury caused to a third party or property by the vehicle can be compensated.
  2. Scope of Coverage: The insurance policy must cover the owner’s legal liability for death or bodily injury to a third party or damage to third-party property. This does not typically cover damage to the owner’s vehicle or injuries to the owner themselves.
  3. Penalties for Non-Compliance: Using a vehicle without third-party insurance is a legal offense and can result in fines and other penalties, including imprisonment in certain cases. This strict enforcement helps ensure compliance with the law.
  4. Exceptions: Certain vehicles may be exempt from this requirement under specific circumstances as prescribed by the government. For example, vehicles owned by certain government departments might have different provisions.
  5. Insurance Certificate: The vehicle owner must possess a valid insurance certificate and must produce it on demand by the authorities. This certificate is proof of the insurance coverage and is necessary for both legal compliance and for making claims.

Practical Implications

  • Financial Protection: Third-party insurance protects vehicle owners from potentially crippling financial liabilities resulting from accidents. It ensures that the victims of the accidents are compensated without needing to depend on the personal finances of the vehicle owner.
  • Legal Requirement: It is a legal requirement, and failure to have third-party insurance can lead to legal actions, fines, and even impounding of the vehicle by traffic authorities.
  • Accident Claims: In the event of an accident, claims against third-party insurance can be filed by the injured party or the owner of damaged property. The insurance company then handles the claims as per the terms of the policy.

Conclusion

Section 146 of the Motor Vehicles Act plays a crucial role in maintaining financial and legal order on the roads by mandating third-party insurance. This ensures that anyone harmed by a vehicle, other than the occupants insured under the policy, can receive compensation, which upholds both justice and public welfare. Understanding this section helps vehicle owners and users comprehend their obligations and the importance of maintaining appropriate insurance coverage.

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