The Supreme Court has held that when a privately owned vehicle is requisitioned by the State for public purposes, the liability for accidents during such period rests with the State authority and not the insurance company.

The bench of Justice Sanjay Karol and Justice Nongmeikapam Kotiswar Singh upheld the High Court’s decision and ruled that control and possession are decisive factors in determining liability. Once a vehicle is requisitioned, the owner loses control, and the vehicle operates under the direction of State authorities. Consequently, the State assumes responsibility for its use and any resulting accidents.

The case arose from a tragic accident that occurred on 23 January 2010 in Gwalior, Madhya Pradesh, involving a bus and a motorcycle, resulting in the death of the motorcyclist. The bus, owned by a private school, had been requisitioned by the District Administration for Gram Panchayat election duties at the time of the accident. 

The legal heirs of the deceased filed a compensation claim before the Motor Accident Claims Tribunal (MACT), which awarded ₹5.13 lakh along with 6% interest. 

On appeal, the Madhya Pradesh High Court not only enhanced the compensation to ₹27.01 lakh but also shifted the liability from the insurance company to the District Magistrate and election authorities, holding them responsible for the accident. 

The primary legal issue before the Supreme Court was whether the insurer remains liable when the vehicle is under State requisition, or whether liability shifts to the requisitioning authority exercising control over the vehicle.

The State authorities challenged the High Court’s ruling, arguing that since the vehicle was insured, the insurer should bear the liability, and imposing liability on the State would discourage public authorities from requisitioning vehicles for public purposes. 

The Court emphasized that when the State exercises statutory power to requisition a vehicle, it must also bear the consequences arising from its use. 

The Court relied on earlier precedents, including National Insurance Co. Ltd. v. Deepa Devi and Purnya Kala Devi v. State of Assam, to underline that the registered owner cannot be held liable when deprived of control. The term “owner” under motor vehicle law can extend to the person in effective control and possession, including the State during requisition. 

It further clarified that insurance contracts are based on normal usage of the vehicle, and forced deployment for government functions falls outside the contemplated risk coverage. 

The Court distinguished this case from situations where vehicles are operated under agreements (such as with State Transport Corporations), noting that in such contractual arrangements, insurers may still be liable. However, statutory requisition is involuntary, making it fundamentally different.

The Court also made an important observation regarding drivers even though drivers may remain employees of the vehicle owner, they operate under State instructions during requisition. By using the driver, the State implicitly accepts responsibility for their actions.

Case Details

Case Title: District Magistrate And District Election Officer And Collector, Gwalior, M.P. Versus National Insurance Company Limited & Ors. 

Citation: JURISHOUR-261-SC-2026

Case No.: Special Leave Petition (Civil) No.22910 of 2025

Date: 23/03/2026

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