Liability for accidents involving statutorily requisitioned vehicles rests with the requisitioning authority, not the insurer.

On January 23, 2010, a fatal accident occurred involving a bus and a motorcycle

The bus, owned by Kidzee Corner School, had been compulsorily requisitioned by the Appellant (District Magistrate) for Gram Panchayat Election duties

The Motor Accident Claims Tribunal (MACT) initially awarded compensation of ₹5,13,500, holding the insurer (Respondent No. 1) liable

On appeal, the High Court of Madhya Pradesh enhanced the compensation to ₹27,01,556 and shifted the entire liability from the Insurance Company to the Appellant/State

The Appellant moved the Supreme Court, arguing that the vehicle remained covered by a valid insurance policy and that public authorities should not bear liability for vehicles they do not own

Whether the State, as a requisitioning authority, or the private insurer of the registered owner is liable to pay compensation for an accident occurring during the period of statutory requisition

The Court relied on the definition of "owner" under Section 2(30) of the Motor Vehicles Act, 1988, which includes persons in possession of a vehicle under specific agreements or control

It applied the precedent in National Insurance Co. Ltd. v. Deepa Devi (2008), which held that a registered owner loses all control during statutory requisition

It further followed Purnya Kala Devi v. State of Assam (2014), establishing that a State in possession of a requisitioned vehicle falls within the definition of "owner"

The Court also considered Section 160 of the Representation of the People Act, 1950, regarding the power to requisition premises and vehicles

The Court reasoned that statutory requisition is a "command" rather than a voluntary arrangement, divesting the registered owner of all custody and decision-making power

During the requisition period, the State determines the deployment and use of the vehicle; therefore, the legal consequences of such control must rest with the State

The Court clarified that private insurance policies are underwritten based on "regular use" by the owner; extending this coverage to compelled public deployment would unfairly shift the burden of governmental risks onto private insurers

It distinguished this case from U.P. SRTC v. Kulsum, noting that the latter involved voluntary lease agreements rather than compulsory statutory requisition

Finally, the Court noted that by utilizing the vehicle’s driver, the State implicitly recognized their competence and assumed responsibility for their actions, especially since the State could have opted to use its own staff under Section 159(2) of the Representation of the People Act

The Court held that when a vehicle is requisitioned for public functions, the requisitioning authority (the State) assumes the role of the "owner" and is liable for any accidents occurring during that period

Consequently, the liability to pay the enhanced compensation of ₹27,01,556 rests solely with the Appellant/State and not the Insurance Company