Rohtash Kumar vs Sangeeta Verma & Ors.
- Court
- Delhi High Court
* IN THE HIGH COURT OF DELHI AT NEW DELHI
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% Reserved on : 25 September 2026
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Pronounced on : 15 October 2026
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Uploaded on : 16 October 2026
# CNR No. DLHC010336292023
+ MAC.APP. 402/2023
ROHTASH KUMAR .....Appellant
Through: Mr. Shafiq Khan, Mr. Vikasdeep
Sharma, Mr. Mukesh Kumar, Mr.
Abhishek Salwan & Ms. Tanya
Sharma, Advocates.
versus
SANGEETA VERMA & ORS. .....Respondents
Through: Mr. Manoj Kumar, Advocate for
Respondent nos. 1 to 4.
Mr. Gaganmeet Singh Sachdeva,
Standing Counsel for MCD.
CORAM:
HON'BLE MR. JUSTICE ANISH DAYAL
JUDGMENT
ANISH DAYAL, J.
1. This appeal has been filed by the driver of Municipal Corporation
of Delhi (‘ MCD ’) Truck bearing No. DL-lGC-1424 (TATA) (‘ offending
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vehicle’ ) challenging the judgment dated 25 January 2023 passed by
Motor Accident Claims Tribunal, South West District, Dwarka Courts
[‘ MACT/Tribunal ’], in MACT No.747/2016.
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2. The accident took place on 18 December 2014, resulting in death
of Sujeet Kumar . The claim was filed by Sangeeta Verma (wife of
deceased) and other legal heirs of deceased Sujeet Kumar , who was 26
years old at the time of the accident and was employed in private job as a
‘ service technician ’. On that day, at about 09:30 a.m., Sujeet Kumar was
going towards Dwarka on his motorcycle. When he reached near Shiksha
Bharti School, Dwarka, the offending vehicle, driven by appellant, hit
the motorcycle from behind due to which he sustained fatal injuries. The
appellant fled from the spot. Sujeet Kumar was taken to Rockland
Hospital, Sector 12, Dwarka where he was declared brought dead .
3. FIR No.834/2014 was registered at PS Dwarka (South). The
MACT concluded that Sujeet Kumar died as a result of the rash and
negligent driving of the offending vehicle by the appellant/driver.
Compensation was awarded at Rs.22,05,000/- along with interest at the
rate of 9% per annum.
4. The appellant/driver has challenged the apportionment of liability,
which was fastened jointly and severally upon the driver and the owner
of the offending vehicle, i.e. the Municipal Corporation of Delhi
(‘ MCD ’).
5. Mr. Shafiq Khan , counsel for appellant, seeks to argue against the
liability fastened upon appellant and stated that liability to pay entire
compensation ought to have been fastened on the MCD, being employer
of appellant and the offending vehicle was being driven during the
course of employment. He relies upon Section 146(2) of the Motor
Vehicles Act, 1988 (‘ MV Act ’), read with the principles of vicarious
liability, and also upon the decision of a Single Judge of the Rajasthan
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High Court in State of Rajasthan v. Smt. Shekhu & Ors ., 2004 SCC
OnLine Raj 131 where this aspect was discussed in detail.
6. Section 146 MV Act, on which counsel for appellant places
reliance, reads as under:
“ 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:
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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;
(iii) in relation to any other State Transport
Undertaking or any local authority, means that
Government which has control over that
undertaking or authority. ”
(emphasis supplied)
7. Mr. Shafiq Khan , essentially argues that as per Section 146 (2) of
the MV Act, the necessity for insurance against third party, does not
apply for any vehicle owned by the Central Government or State
Government and used for purposes not connected with any commercial
enterprise. He further contends that Section 146(3) of the MV Act
permits the exemption of vehicles owned by local authorities, provided
that no such exemption is granted unless a fund has been established and
is maintained by the authority in the prescribed manner.
8. He therefore argues that, since the offending vehicle was owned
by the MCD, a local authority, it falls within the ambit of this provision.
Although the vehicle was uninsured, the liability is covered by a fund
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that the MCD was required to maintain.
9. This aspect is not disputed by Mr. Gaganmeet Singh Sachdeva ,
Standing Counsel for MCD. However, counsel for the MCD submits that
the MCD should, at most, be liable to pay 50% of the compensation,
with the remaining 50% payable by the driver, whose negligence caused
the accident.
10. On the issue of vicarious liability, counsel for appellant, relies on
the decision of a Single Judge of the High Court of Rajasthan in State of
Rajasthan v. Smt. Shekhu & Ors ( supra ). In the said case, the deceased
had passed away in an accident while going on a bicycle, having been hit
by a jeep that belonged to the District Collector, Barmer. The plea was
raised by the State that they were not liable for the tortious act
committed by the driver at the time of the accident as the jeep was not
being used for government work.
11. The Tribunal concluded that the State had failed to prove that the
jeep was not being used for government work and therefore, the State
appealed before the High Court. The Court considered the aspect of
‘ vicarious liability’ , in principle, in motor accident cases and what was
meant by ‘ course of employment ’, as also the ‘ doctrine of sovereign
immunity’ . The Court noted as under:
“ VICARIOUS LIABILITY, ITS MEANING
9. “Vicarious liability” means that one person takes or
supplies the place of another so far as liability is
concerned. This phrase means the liability of a person
for the tort of another in which he had no part. A
master is jointly and severally liable for any tort
committed by his servant which acting in the course of
his employment.
CONCEPT OF VICARIOUS LIABILITY
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10. It is settled and undisputed principle of the law of
Torts that master is answerable for every such wrong
of his servant as is committed in the course of his
service, though no express command or privity of the
master be proved and the wrongful act may not be for
the master's benefit. In fact, there is a catena of
authority even for the proposition that although the
particular act which gives the cause of action may not
be authorised, still, if the act is done in course of
employment which is authorised, the master is liable.
This doctrine of liability of the master for the acts of
his servant is based on the maxim respondent superior,
which means “let the principal be liable” and it puts
the master in the same position as if he had done the
act himself. It also derives validity from the maxim qui
facit per alium facit per se, which means ‘he who does
an act through another is deemed in law to do it
himself.’
…
12. Even when the owner of the motor vehicle is
involved in an accident is not directly negligent, still he
becomes liable to pay the compensation to the
claimants if they show that the accident has been
caused due to the negligence of the driver or some
other servant of the owner. Such liability is called
vicarious liability where under common law the master
becomes liable for the negligent actions of his servants
carried out in the course of their normal duties.
13. Thus, it can be said that:
i) An owner of a car would be liable in damages
for an accident caused by his servant in the course
of his employment.
ii) He would also be liable if the effective cause of
the accident was that the driver in the course of his
employment committed a breach of his duty in
either not preventing another person from driving
the car or neglecting to see that the said person
drove it properly.
…
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17. The Hon'ble Supreme Court in Pushpabai v. Ranjit
Ginning & Pressing Co. (5), has approved the
statement of Lord Lenning which somewhat expanded
and liberalised the idea that the owner is not only
liable for the negligence of the driver if that driver is
his servant acting in the course of the employment but
also when the driver is with the owner's consent,
driving the car on the owner's business or for the
owner's purposes. Whatever might be the law on this
subject in earlier days, both the concepts of “scope of
employment” and the law as to obligations towards
trespassers have undergone radical changes. The
Hon'ble Supreme Court observed in Pushpabai v.
Ranjit Ginning & Pressing Co. Pvt. Ltd. (supra).
“Before we conclude, we would like to point out that
the recent trend in law is to make the master liable for
acts which do not strictly fall within the term ‘in the
course of employment’ as ordinarily understood.”
18. Keeping in view the above proposition of law, the
matter can be concluded in the following manner:
i) What emerges, therefore, is that the act of the
driver viewed in the background and as part of all
the surrounding circumstances, cannot be isolated
from the course of employment or the course of the
master's work.
ii) Even a careless act or mistake of a servant in
the course of employment fastens liability on the
master. This apart, when a servant does an act
which he is only conditionally authorised to do,
without or beyond the conditions, the master or
employer is liable for the wrongful act. The mere
fact that the driver had consumed liquor against
rules contrary to the terms of contract would not
exempt the master from liability.
iii) Thus, principle of vicarious liability is
applicable in motor accident cases.
…
22. Thus, it can be said that the Hon'ble Supreme
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Court made the position clear that there was no
justification, in principle or in public interest, that the
State should not be held liable vicariously for the
tortious act of its servant.
23. The Hon'ble Supreme Court in the case of Pushpa
Thakur v. Union (9), has held that the doctrine of
sovereign immunity has no application so far as claims
for compensation under the Motor Vehicles Act are
concerned. That apart, after the amending Act 100 of
1956, by which s. 110A of the Motor Vehicles Act,
1939, was inserted, the distinction of sovereign and
non-sovereign acts of the State no longer existed as all
owners of vehicles were brought within the scope of
that section. Sec. 166 of the new Act of 1988
reproduces Sec. 110A of the old Act. Whether the State
is bound by the provisions of the Motor Vehicles Act is
no longer res integra.
…
26. Thus, it can be said that now sovereignty lies with
the people and no-one whatsoever may be can say that
he is immuned from the liability and thus, suit for
damages for negligence of officers of the State in
discharging the statutory duties is maintainable.
…
28. The Hon'ble Supreme Court in the case of State of
Maharashtra v. Kanchanmala Vijay Singh Shirke (12),
has observed that if the vehicle was used in connection
with the affairs of the State and for official purpose, the
State cannot escape its vicarious liability to pay
compensation to the heirs of the victim on the ground
that it had never authorised the clerk to drive the
vehicle.
29. In view of the above proposition of law, the maxim
“lex non protest preceare” has no place today and
now sovereignty vests in the people and from this point
of view, the State is liable for the act done by its
employees and there exists no distinction between
sovereign and non-sovereign acts and like ordinary
citizen, the State would be liable for the act done by its
employees. ”
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12. Applying these principles, the High Court concluded that since the
jeep in question was being driven by the driver under the employment of
the District Collector at Barmer and the jeep belonged to the District
Collector, the State would be considered liable and the State cannot
plead for any immunity.
13. Single Judge of this Court in M.C.D v. Raj Kishore Tiwari , 2008
SCC OnLine Del 882, in relation to an accident resulting in the death
one lady namely Prabha Tiwari , hit by a scavenging van, also
considered this issue. In this regard the Court noted as under:
“ 8. The contention of the counsel for the appellant that
said Karamveer was not an employee of the MCD and
therefore, the MCD is not vicariously liable to pay the
compensation amount, appears to be totally
misconceived and untenable, more particularly when
the Tribunal has held the said Karamveer equally
liable to pay the compensation amount, along with the
appellant MCD. It is not in dispute that at the relevant
time scavenging van was under the control of the
employee of the MCD i.e., Mr. Satinder Kumar who
was the driver of the said van along with one helper
Mr. Ravi. They were assigned the job of removing
sludge from the septic tank and then to discharge the
same in the nearby running ganda nala and therefore,
even if the plea of the appellant is accepted, there was
a clear neglect and carelessness on the part of the said
two employees otherwise nobody could dare to attempt
stealing the said heavy van such as scavenging van in
the presence of the employees of the MCD. Although it
has been pleaded that the complaint was lodged with
the police on the intervening night of 24/25-3-2005
with the concerned police station, Shalimar Bagh
about somebody's having driven away the vehicle but
such a lodging of the complaint cannot absolve the
employees of the MCD and the MCD, being the
employer, from their acts of negligence in not taking
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proper care to protect and safeguard their vehicle. The
Hon'ble Supreme Court in the judgment reported in II
(2000) ACC 291 : (AIR 2000 SC 1930), Rita Devi v.
New India Assurance Co. Ltd., had gone to the extent
of holding the insurance company liable for
compensation for a death which arose on account of
murder at the hands of the thief who committed the
murder while achieving the object of stealing the
autorickshaw. Para 16 of the said judgment is referred
as under:
“In the instant case, as we have noticed the facts,
we have no hesitation in coming to the conclusion
that the murder of the deceased (Dasarath Singh)
was due to an accident arising out of the use of
motor vehicle. Therefore, the Trial Court rightly
came to the conclusion that the claimants were
entitled for compensation as claimed by them and
the High Court was wrong in coming to the
conclusion that the death of Dasarath Singh was
not caused by an accident involving the use of
motor vehicle.”
…
10. Primarily, a person can only be held responsible
for the consequences of his own action. But in certain
circumstances, by reason of the particular legal
relationship with the wrongdoer, a person may be held
liable for the wrongful acts of another person. Such a
liability, which is shown as vicarious liability in the
law of torts, arises when there is relationship of master
and servant or principal and agent between the person
held liable and the person who has committed the
wrongful acts. In order that a master may be held
vicariously liable for the wrongful act of his servant, it
is, however, necessary that the wrongful act of the
servant must fall within the course of the servant's
employment. Similarly, the principal can be held to be
vicariously liable for the wrongful act of the agent
provided that the wrongful act falls within the scope of
his agency. In the instant case, the driver was assigned
the job of removing sludge and it was in the course of
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the employment of MCD that the accident occurred
whatsoever be the reason, thus, the MCD is liable for
the accident as much as the driver. ”
(emphasis supplied)
14. In State of Maharashtra v. Kanchanmala Vijaysing Shirke,
(1995) 5 SCC 659 , the Supreme Court was dealing with a jeep belonging
to the State Government having dashed against a scooter driven by the
victim. Liability by the Tribunal was placed on the clerk who was
driving the vehicle. The High Court held that the jeep was being driven
on official duty, even though driven by the clerk, under authority of the
driver, who was designated to do so.
15. The Supreme Court held that the driver of the vehicle had been
fully authorized to drive the jeep for a purpose connected to the affairs of
the State and allowed another employee of the State, the clerk, who was
also going to official duty, to drive the jeep. It was thus established that
the negligent act was “ in the course of employment ” and the State should
be liable. Relevant paragraphs are extracted as under.
“ 8. The learned counsel appearing for the appellants
took a stand that in the facts and circumstances of the
present case, the State could not be held to be
vicariously liable to pay the compensation for the acts
of the respondent who was just a clerk under the State
Government and was neither authorised nor required
to drive the jeep in question. The jeep had been put in
custody of the driver who alone was entitled to drive
the same. As the respondent had forcibly snatched the
keys from the driver and had caused the accident, the
said respondent only should have been held to be liable
for his act; his act could not bind the State because it
could not be held that he was driving the jeep in the
course of his employment so as to saddle the liability to
pay compensation on the State Government. As a first
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impression, the argument looks attractive, but on
proper analysis and evaluation, according to us, it
cannot be accepted. As already mentioned above, the
High Court has examined the materials on record for
purpose of recording the finding that the jeep was on
official duty, to bring the employees of the State
Government to the office from their residences after
they had their dinner. The respondent was a clerk in
the said office and was required to be present in the
office that night. The High Court has rejected the case
of the State that the said respondent had snatched the
keys from the driver. It has been found that the
respondent was driving the vehicle with the consent
and under the authority of the driver of the jeep.
Nothing has been brought on the record to show that
any instruction had been issued to the driver not to
hand over the vehicle to any other employee of the
State Government while on official duty. As such it has
to be examined whether in this background, it is open
to the State Government to take a stand that the State
Government shall not be vicariously liable for the act
of the respondent.
9. The question of payment of compensation for motor
accidents has assumed great importance during the
last few decades. The road accidents have touched a
new height in India as well as in other parts of the
world. Traditionally, before the court directed payment
of tort compensation, the claimant had to establish the
fault of the person causing injury or damage. But of
late, it shall appear from different judicial
pronouncements that the fault is being read as because
of someone's negligence or carelessness. Same is the
approach and attitude of the courts while judging the
vicarious liability of the employer for negligence of the
employee. Negligence is the omission to do something
which a reasonable man is expected to do or a prudent
man is expected to do. Whether in the facts and
circumstances of a particular case, the person causing
injury to the other was negligent or not has to be
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examined on the materials produced before the court.
It is the rule that an employer, though guilty of no fault
himself, is liable for the damage done by the fault or
negligence of his servant acting in the course of his
employment. In some case, it can be found that an
employee was doing an authorised act in an
unauthorised but not a prohibited way. The employer
shall be liable for such act, because such employee was
acting within the scope of his employment and in so
acting did something negligent or wrongful. A master
is liable even for acts which he has not authorised
provided they are so connected with acts which he has
been so authorised. On the other hand, if the act of the
servant is not even remotely connected within the scope
of employment and is an independent act, the master
shall not be responsible because the servant is not
acting in the course of his employment but has gone
outside. In Salmond's Law of Torts (Twentieth Edn.) at
p. 458 it has been said:
“On the other hand it has been held that a servant
who is authorised to drive a motor vehicle, and
who permits an unauthorised person to drive it in
his place, may yet be acting within the scope of his
employment. The act of permitting another to drive
may be a mode, albeit an improper one, of doing
the authorised work. The master may even be
responsible if the servant impliedly, and not
expressly, permits an unauthorised person to drive
the vehicle, as where he leaves it unattended in
such a manner that it is reasonably foreseeable
that the third party will attempt to drive it, at least
if the driver retains notional control of the
vehicle ."
(emphasis supplied)
16. The Court also considered the scope of Section 146 of the MV Act
and the exemptions from compulsory insurance available to vehicles
belonging to the Central or State Governments or local authorities. It
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observed that courts must exercise greater caution in determining
whether such entities may be held vicariously liable for acts committed
by their employees in the course of employment. In this regard the Court
stated as under:
“ 16. In view of sub-section (1) of Section 94 of the
Motor Vehicles Act, 1939 (Section 146 of the Motor
Vehicles Act, 1988) no person can use or allow any
other person to use a motor vehicle in a public place,
unless there is in force relation to the vehicle by that
person, a policy of insurance complying with the
requirements of Chapter VIII. In view of sub-section
(2) of Section 94 [sub-section (2) of Section 146 of
Motor Vehicles Act, 1988], the said provision is not
applicable to any vehicle owned by the Central or State
Government and used for government purposes. Sub-
section (3) vests power in the appropriate Government
to exempt from the operation of sub-section (1) of
Section 94 any vehicle even owned by any local
authority or any transport undertaking. Section 94 of
the old Act as well as Section 146 of the new Act
requires that a policy of insurance must provide
insurance against any liability to third parties incurred
by the person using the vehicle. But there is no such
requirement so far the vehicles owned by the Central
or State Government are concerned and if the
exemptions are granted from operation of sub-section
(1) of Section 94 it is not incumbent even on the part of
any local authority or any State transport undertaking
to take out insurance policy providing insurance
against any liability to third parties incurred by the
person using the vehicle. In this background,
according to us, the courts while judging the liability
of the Central or State Government or local authorities
or transport undertakings, which have been exempted
from the provision of sub-section (1) of Section 94,
have to be more cautious, while recording a finding as
to whether in the facts and circumstances of a
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particular case the Central or the State Government or
the local authority or the transport undertaking in
question can be held vicariously liable for any act of its
employee in the course of employment. As a result of
commercial and industrial growth, even motor
accidents are on steep rise. For no fault or any
contributory negligence of the victims of such
accidents, the families are deprived of their
breadwinners. The jurisprudence of compensation for
motor accidents must develop towards liberal
approach, because of mounting highway accidents. ”
17. Yet another decision of the Supreme Court in State of Rajasthan
v. Vidhyawati And Another (1962) SCC OnLine SC 144 where a
Constitution Bench considered the extent of the government’s vicarious
liability for tortious acts committed by its employees in the course of
employment. The defendant was a temporary State employee working
as a driver on probation. He was driving a government jeep and had been
sent to the workshop for necessary repairs. On the way, he knocked
down one person walking on the footpath, which resulted in grievous
injuries. The State disputed its liability. The Supreme Court held as
follows:
“ 15. Viewing the case from the point of view of first
principles, there should be no difficulty in holding that
the State should be as much liable for tort in respect of
a tortious act committed by its servant within the scope
of his employment and functioning as such, as any
other employer. The immunity of the Crown in the
United Kingdom was based on the old feudalistic
notions of justice, namely, that the King was incapable
of doing a wrong, and, therefore, of authorising or
instigating one, and that he could not be sued in his
own courts. In India, ever since the time of East India
Company, the sovereign has been held liable to be sued
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in tort or in contract, and the common law immunity
never operated in India. Now that we have, by our
Constitution, established a Republican form of
Government, and one of the objectives is to establish a
Socialistic State with its varied industrial and other
activities, employing a large army of servants, there is
no justification, in principle, or in public interest, that
the State should not be held liable vicariously for the
tortious act of its servant. This Court has deliberately
departed from the common law rule that a civil servant
cannot maintain a suit against the Crown. In the case
of State of Bihar v. Abdul Majid this Court has
recognised the right of a government servant to sue the
Government for recovery of arrears of salary. When
the rule of immunity in favour of the Crown, based on
common law in the United Kingdom, has disappeared
from the land of its birth, there is no legal warrant for
holding that it has any validity in this country,
particularly after the Constitution. As the cause of
action in this case arose after the coming into effect of
the Constitution, in our opinion, it would be only
recognising the old established rule, going back to
more than 100 years at least, if we uphold the various
liability of the State. Article 300 of the Constitution
itself has saved the right of Parliament or the
legislature of a State to enact such law as it may think
fit and proper in this behalf. But so long as the
legislature has not expressed its intention to the
contrary, it must be held that the law is what it has
been ever since the days of East India Company. ”
(emphasis supplied)
18. In Kamla Bai v. State of M.P., 2002 SCC OnLine MP 553, in a
writ petition an issue was raised that the State Road Transport
Corporation is maintaining an account, mandated under Section 146 of
the Motor Vehicles Act for payment of compensation to victims of
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accidents caused by their vehicles. While deliberating on this, the Court
made important observations, which are noted under:
“ 10. Before adverting to rival submissions, it is
relevant to notice the provision of section 146 of Motor
Vehicles Act, 1988. Section 146 of the New Act
corresponds to section 94 of the old Act of 1939.
Section 146 provides that no persons 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 relation to the vehicle by that person or that
other person, as the case may be, a policy of insurance
complying with the requirements of the Chapter IX.
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. Under clause (c) of sub-
section (3) of section 146 it is open to the appropriate
Government to exempt from the operation of sub-
section (1) any vehicle owned by State Transport
Undertaking. However, this power is subject to a rider
as per proviso to sub-section (3) of section 146 that no
such order shall be made in relation to any such
authority unless fund has been established and is
maintained by that authority to meet any liability which
that authority or any person in its employment may
incur to third parties. Sub-sections (1) and (3) of
Section 146 are relevant and they are quoted below:
“146. Necessity for insurance against third party
risk. (1) No persons 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 relation to 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,
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there shall also be a policy of insurance under the
Public Liability Insurance Act, 1991.
(2) xxxxxx
(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.”
11. The above quoted provision of section 146 of the
Act has the public policy behind it. Number of vehicles
on the road has increased phenomenally leading to
increase in road accidents. The provision is to provide
sufficient means to compensate the persons afflicted
and to avoid hardship. In England case Law of Torts
have been recognized in the shape of Road Traffic Act
1930, the third parties’ Rights against Insurer Act
1930 and the Road Traffic Act 1934. A system of
compulsory insurance was enacted by Road Traffic Act
1930. Its object was to reduce the number of cases
where judgment for personal injury obtained against a
motor was not met owing to lack of means of defence in
the running down action and his failure to insure
against such a liability. This is how compulsory
insurance was introduced to cover the liability which
the owner of the vehicle may incur. The said principle
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has found statutory recognition u/s 146 of the Act so
that third parties who suffer on account of user of
motor vehicle would be able to get damage for the
injuries suffered and for their ability to get the damage
will not be depend on the financial condition of the
driver of the vehicle or user causing of injuries. The
Apex Court in New Asiatic Insurance Co. Ltd. v.
Pessumal Dhanamal Aswani), held that object of
corresponding old section 94 was to enable a third
party to recover whatever sum he is in law entitled
despite the ability of the owner or driver to pay. Same
is the law laid down by the Full Bench of this Court in
Mangilal v. Parasram.
13. Statutory obligation is cast under section 146 on
every owner to get insurance done and in case of an
exemption granted under sub-section (3) similar object
is fulfilled by establishment of fund which is required
to be maintained by that authority to meet any liability
of authority or any person in its employment may incur
to third parties. Until unless a fund is established and
maintained to honour the claim vehicle cannot be
plied, sub-section (1) of section 146 makes insurance
against third party risk compulsory, but, in case of
vehicles which are owned inter alia by the State
Transport undertaking the appropriate Government is
authorized to exempt them from this provision, but,
obligation is cast to establish and maintain land for
meeting any liability arising out of use of any vehicle.
Section 196 of the Motor Vehicles Act, 1988 makes
driving of uninsured vehicle an offence punishable with
imprisonment which may extend to 3 months or fine
which may extend to Rs. 1000/- or with both. Section
196 runs as under:
‘196. Driving uninsured vehicle.- Whoever drives a
motor vehicle or cause or allows a motor vehicle to
be driven in contravention of the provisions of
Section 146 shall be punishable with imprisonment
which may extend to three months, or with fine
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which may extend to one thousand rupees, or with
both.”
14. In the backdrop of aforesaid statutory mandate, it
is incumbent upon the State Transport Undertaking to
establish and maintain the “fund” in order to satisfy
the claims arising out of use of its motor vehicles to
third parties.
19. Learned counsel for the petitioners submitted that
since the awards have not been honoured for years
together and simply “Fund” has been established and
is not being maintained, as such vehicles plied by
MPSRTC be not allowed to ply until unless the vehicle
is insured with the insurance company and exemption
should be held to be inoperative as it is conditional on
such “fund” being established and maintained, in my
opinion, MPSRTC has been granted exemption by the
State Government, on the condition of establishing and
maintaining the account which is also otherwise
statutorily prescribed as per proviso to sub-section (3)
of section 146, a duty is cast on MPSRTC to maintain
the account in such maimer that it is able to satisfy the
awards when they are passed in a reasonable time. In
case of failure to maintain such “Fund” day is not
away when Court may be compelled to say that its
vehicle should be insured before they are driven at a
public place. However, such extreme step is not
necessary to be adopted as fund has been created and
State Government has authorized the MPSRTC to
recover Re. 1 per passenger as contribution towards
fund, the duty is cast on MPSRTC if the fund is falling
short to contribute such amount as may be necessary to
meet deficit in the fund and to make the payment of
awards which have attained finality in a reasonable
time which is coextensive liability a condition to enjoy
exemption from insurance. The amount of fund which
is realized has to be spent only towards the permissible
items as such fund is created under the statutory
mandate of section 146(3). ”
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19. In Bajaj Allianz General Insurance Co.Pvt. Ltd. v. Union of
rd
India , decision dated 03 August 2021, in W.P. (Civil) 534/2020, the
Supreme Court noted as under:
“ One additional aspect which has been brought to our
notice is that the vehicles of the State Corporations
which run public transport are not insured because of
exemption provided and, as a result thereof,
compensation is not paid for long period of time as
most of these Corporations are running in losses. In
fact, there are numerous illustrations where the
vehicles had to be attached for coercive recovery from
the Corporations to make payments to the claimants.
Learned ASG would examine the possibility of either
withdrawing the exemption or for a mechanism to
ensure that sufficient fund pool is available with these
Corporations for meeting their liabilities towards the
claimants. ”
(emphasis supplied)
20. MCD’s counsel relied upon the following decisions:
a. Urmiila v. Sushma & Ors. , 2019:DHC:1627 where the
issue of vicarious liability has been considered in the
context of transfer of offending vehicle and therefore, it
would not apply to the present case.
b. Mohd. Sabuddin v. Mohd. Zakir ., 2024:DHC:7799 where
the Court was dealing with extent of liability and
determined on possession and control of the vehicle in
terms of the registered owner, fastened the liability jointly
and severely on the driver. However, these are not facts
related to a State or a government vehicle therefore, the
decision does not apply.
c. The Supreme Court in Oriental Insurance Co. Ltd. v.
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Meena Variyal, (2007) 5 SCC 428 dealt with issues of
determination of negligence stating that when the vehicle is
met with an accident, the primary liability is that of the
driver. Once the driver is liable, the owner of the vehicle
becomes vicariously liable for payment of compensation. It
is this vicarious liability that is indemnified by the
Insurance Company.
Reliance on this principle would work against the MCD for
the reason that the vehicle was not insured and the MCD
has the responsibility to be the overall benefactor of their
vehicles which are operating government service. The MCD
itself steps into the shoes of an insurer. Even if, the driver
was negligent, the owner becomes vicariously liable and
therefore MCD has to be satisfied the award.
d. In T.O. Anthony v. Karvarnan , (2008) 3 SCC 748 reliance
was placed on the aspect of composite negligence and
contributory negligence discussed by the Supreme Court,
leading to joint and several liability. However, this aspect
will not apply, since this is a case where neither composite
negligence nor contributory negligence comes into play. It
is merely an accident caused by the MCD vehicle driven by
the appellant and the simple issue which needs to be
considered is of vicarious liability and the satisfaction of
that liability.
21. Having considered these decisions, the Court is of the clear view
that as stated by the Supreme Court in Meena Variyal ( supra ), the
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vehicle being driven by the employee of an owner meets an accident, the
primary liability is that of the driver. Once the driver is found liable,
however, the vehicle owner becomes vicariously liable to pay
compensation, and that liability is ordinarily indemnified by the
insurance company.
22. In the present appeal, negligence is not in dispute. It is also
undisputed that the appellant, Rohtash Kumar , was an MCD employee
and that the vehicle was owned by the Assistant Commissioner, DEMS
HQ, Najafgarh Zone of the South Delhi Municipal Corporation
(‘ SDMC ’), which has since been integrated into the unified MCD. In
these circumstances, the MCD’s vicarious liability as owner of the
vehicle cannot be displaced or questioned.
23. In any event, the MACT held the driver and owner jointly and
severally liable to pay compensation. The only question in the present
appeal is whether the appellant-driver should remain liable merely
because the vehicle was uninsured. However, lack of insurance of the
MCD vehicle is covered under the ambit of Section 146 (3)(b) of the MV
Act.
24. It is not disputed that the vehicle was being driven during the
course of employment.
25. The appellant, Rohtash Kumar , testified as RW-1 , had stated very
categorically in his evidence by way of affidavit that he was detailed to
drive the vehicle which belonged to the SDMC department, after making
necessary entry in the Movement Register of the vehicles kept in the
office. In his cross examination he stated that post the accident, he had
th
reported it to the department on the same day i.e. 18 December 2014 at
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10:30 p.m. There was no cross examination by the MCD in this regard.
26. In the evidence by way of affidavit filed on behalf of respondent
no.2, SDMC (now MCD), it was admitted that the vehicle was not
insured and as per Section 146(2) of the MV Act, the vehicles owned by
the Government Department were exempted from insurance against third
party risk. It was further stated that “ under the above background, the
vehicle was valid to be used for all official purposes at the date of the
incident.” It was further stated that the Corporation had complied with
all necessary documentation/ fitness of the vehicle before it was used for
official purposes. There was nothing further which had been stated in
terms of denying either the fact that the appellant was their employee or
that he had taken the vehicle out as part of official duty or that the MCD
was not the owner of the vehicle.
27. The issue therefore ultimately turns on vicarious liability and the
MCD’s obligation to meet that liability, given the exemption from
compulsory insurance. The jurisprudence governing motor accident
claims is rooted in the MV Act, which is a beneficial piece of legislation.
Every aspect, interpretation and application has to be seen from that lens.
Mandatory insurance for third party liability was provided for that very
reason in Section 146 (1) of the Act. The exemption under Section 146
(2) was for government vehicles, was not to leave a claimant high and
dry and without any compensation for having been injured or died as a
result of an accident with a government vehicle. Quite to the contrary,
the mandate that a fund would be established, effectively transfers the
responsibility of shoring up the liability from an insurance company to
the organization itself.
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28. The aforesaid interpretation is further fortified by the scheme of
the Central Motor Vehicles Rules, 1989 (‘ CMV Rules ’). Rule 148
thereof provides for the maintenance of records of motor vehicles owned
by authorities falling within the ambit of sub-section (2) of Section 146
of the MV Act, as well as vehicles exempted under sub-section (3)
thereof, in respect of which a policy of insurance has not been obtained.
The Rule also contemplates the maintenance of records of certificates
issued in respect of such vehicles and the persons to whom such
certificates have been issued. More significantly, Rule 151 of the CMV
Rules expressly requires every authority referred to in sub-section (3) of
Section 146 of the MV Act to establish a fund for meeting liabilities
arising from the use of its motor vehicles, including liabilities incurred
towards third parties by the authority or any person in its employment.
Rules 152 to 158 further prescribe a detailed mechanism for the
constitution, replenishment, investment and administration of such fund,
including restrictions on its withdrawal and compliance with directions
issued by the Central or State Government, as the case may be,
concerning the settlement of claims. The statutory framework thus
envisages that exemption from compulsory insurance is accompanied by
an institutional mechanism for meeting third-party liabilities arising from
the use of such vehicles.
29. The aforesaid provisions must be read harmoniously with the
beneficial object of the MV Act, particularly the statutory requirement of
insurance against third-party risks and the corresponding obligation of an
exempted authority to make provision for liabilities arising from the use
of its vehicles. The exemption contemplated under Section 146 cannot be
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construed as conferring immunity upon the owner of a vehicle from
satisfying a compensation award, nor can the absence of an insurance
policy, by itself, result in the burden of compensation being shifted to the
driver alone, where the requirements for fastening vicarious liability
upon the owner stand established.
30. In the present case, the offending vehicle belonged to the MCD,
the appellant was its employee, and the vehicle was being driven in the
course of his employment. The MCD has also acknowledged that the
vehicle was not insured and that it was being used for official purposes.
Consequently, the statutory scheme governing exempted vehicles
reinforces the conclusion that the MCD cannot rely upon the absence of
an insurance policy to avoid its obligation to satisfy the compensation
awarded to the claimants. Any failure to establish or adequately maintain
the fund contemplated under the applicable statutory provisions cannot,
in itself, be permitted to defeat the rights of third-party victims or their
legal representatives.
31. Therefore, any vehicle belonging to /owned by Central or State
government or local authority, which takes the benefit of the exemption
under Section 146 of MV Act, cannot wash its hands away from the
liability to pay compensation to a claimant, who has been injured or died
as a result of an accident involving a vehicle maintained by them. Even
if the fund is not maintained for any reason or is not being established,
that cannot be to the disadvantage of the claimant who has suffered on
account of the accident.
32. The MCD’s submission that the driver should pay 50% of the
compensation is inconsistent with the principle of vicarious liability and
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the requirement that such liability be met through insurance or a fund
established by the authority under Section 146 (2) of MV Act and the
Central Motor Vehicle Rules .
33. If the mandate for establishing a fund is not carried out, it cannot
frustrate the object of the legislation. It is the bounden duty of MCD to
establish and maintain an adequately funded pool to satisfy
compensation awards. This is a statutory duty and cannot be easily
diluted or ignored. In no circumstances can an injured claimant, or the
legal representatives of a deceased victim, be left without compensation
for the harm suffered in an accident involving a vehicle owned by a
government entity.
34. In a welfare state, the obligation of the State and its authorities,
particularly government authorities, to ensure that compensation is paid,
fully and promptly, is all the more compelling.
35. The appeal is therefore allowed.
36. The compensation awarded by the MACT shall be paid in full by
the MCD.
37. The execution proceedings against the appellant shall not proceed
and will be set aside. The MCD shall pay the compensation, together
with accrued interest, to the claimants within four weeks. If any amount
of compensation has already been paid, the balance amount shall be paid
within the time stipulated above.
38. The MCD shall remain at liberty to take such action against the
appellant, the driver of the offending vehicle, as may be permissible
under its applicable service and conduct rules.
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39. Appeal is disposed of in above terms. Pending application if any,
is rendered infructuous.
40. Judgment be uploaded on the website of this Court.
ANISH DAYAL
(JUDGE)
OCTOBER 15, 2026/sm/ zb
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