The Supreme Court has held that compensation under the Motor Vehicles Act cannot be awarded merely because a motor vehicle was allegedly involved in a chain of events leading to a person’s death.
The bench of Justice Sanjay Karol and Justice Augustine George Masih observed that claimants must establish a causal connection between the use of the vehicle and the death or injury, setting aside the compensation awarded by the Motor Accident Claims Tribunal (MACT) and the High Court in a case arising out of an alleged murder.
The dispute originated from the death of Anand, who was last seen on 29 November 2009 travelling in a vehicle driven by the appellant, Dilip Agarwal. Three days later, Anand’s body was discovered near Binjkot village in Chhattisgarh. His wife lodged an FIR alleging that three accused persons had conspired to kidnap and murder him before disposing of his body.
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Parallel to the criminal proceedings, Anand’s wife and three children filed a compensation claim under Section 166 of the Motor Vehicles Act before the Motor Accident Claims Tribunal. They contended that Anand had been killed inside Dilip’s vehicle and that the vehicle had therefore been used in the commission of the offence, making the owner and insurer liable to compensate the family.
In the criminal trial, Dilip Agarwal was initially convicted under Sections 365, 302, 201 and 120B of the Indian Penal Code. However, the High Court subsequently acquitted him after holding that the prosecution had failed to establish the “last seen” theory on which the conviction primarily rested.
Despite the acquittal, the MACT concluded that although rashness and negligence had not been proved, the death was nevertheless covered under Sections 165 and 166 of the Motor Vehicles Act. The Tribunal reasoned that the injuries were inflicted while Anand was inside the vehicle and awarded compensation of ₹5.64 lakh with 7% interest.
The High Court affirmed this reasoning and enhanced the compensation to ₹8.60 lakh with 6% interest on the enhanced amount.
The principal question before the Supreme Court was whether Anand’s death could be said to have “arisen out of” the use of the motor vehicle so as to attract liability under the Motor Vehicles Act.
The Bench examined previous precedents interpreting the expression “arising out of,” including decisions explaining that the phrase has a broader meaning than “caused by” and requires a causal relationship between the use of the vehicle and the injury, though not necessarily a direct one. However, the Court emphasised that some nexus must still be established.
The Court observed that liability under the Motor Vehicles Act cannot be imposed merely because both a motor vehicle and a death are involved in the same sequence of events. The statutory phrase “arising out of the use of a motor vehicle” requires a demonstrable connection between the vehicle’s use and the accident or injury.
The Supreme Court found that neither the Tribunal nor the High Court had identified any evidence establishing that Anand sustained fatal injuries inside the vehicle.
The Bench noted that no forensic evidence—such as blood stains, skin cells or hair—had been recovered from the vehicle. There was also no allegation that the car had been involved in any collision or road accident. The only evidence suggested that Anand had suffered injuries caused by hard and blunt objects, without establishing where or how those injuries were inflicted.
According to the Court, the lower courts had merely assumed that the injuries were sustained inside the vehicle without any evidentiary basis.
The Bench acknowledged that compensation proceedings under the Motor Vehicles Act are civil in nature and therefore governed by the standard of preponderance of probabilities, which is lower than the criminal standard of proof beyond reasonable doubt.
Nevertheless, even applying this lower standard, the Court held that the claimants had failed to establish the essential causal connection between the vehicle and the death. The Court reiterated that while claimants need not prove the exact manner in which injuries were sustained, they must still demonstrate some link between the use of the vehicle and the fatal incident.
Allowing the appeals, the Supreme Court held that although there was an alleged murder and a motor vehicle featured in the surrounding circumstances, the evidence failed to establish any relationship between the death and the use of the vehicle as required under the Motor Vehicles Act.
Accordingly, the Court set aside the judgments of both the MACT and the High Court, holding that no liability could be fastened on the vehicle owner or insurer under the Act. However, considering the peculiar facts of the case, the Bench directed that any compensation already paid to the claimants should not be recovered.Â
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