A Constitutional Blueprint For Protecting Third-Party Victims Under Motor Vehicles Act
Apropos the proceedings dated 30.10.2025 in National Insurance Company Limited v.Thungala Dhana Laxmi & Ors., the Supreme Court expressed “shock” at the disclosure that over 50 per cent of the vehicles plying on Indian roads are uninsured. The matter arose from an appeal by the insurer challenging a High Court award (of about ₹10 lakh plus interest) in a 1996 fatal accident case.
In open court, the Bench (Justices Sanjay Karol and Prashant Kumar Mishra) directed the insurer, the Insurance Regulatory and Development Authority of India (IRDAI) and the General Insurance Council to propose remedial measures. Among the suggestions was a coercive mechanism (for example, vehicle impounding) to enforce mandatory insurance.
The Union Ministry of Road Transport and Highways was impleaded in the proceedings to assist in the formulation of suitable directions.
Despite Section 146 of the Motor Vehicles Act, 1988 mandating compulsory third-party insurance for all motor vehicles, nearly half of India's vehicles operate without valid coverage. This endemic non-compliance renders the statutory protection for accident victims illusory and frustrates the object of social welfare underlying the Act. Although the Supreme Court's directive in S. Rajaseekaran v. Union of India (2018) introduced long-term insurance policies, the persistence of uninsured vehicles underscores the need for systemic reform.
The Motor Vehicles Act, 1988 (MV Act) embodies India's commitment to road safety and compensation justice. Section 146 unequivocally prohibits the use of any motor vehicle in a public place without valid third-party insurance. Yet, according to data from the Ministry of Road Transport and Highways, nearly 50 per cent of registered vehicles in India lack valid insurance, leaving countless accident victims uncompensated.
This rampant non-compliance erodes the principle of rule of law and defeats the protective purpose of the MV Act. The Supreme Court, in S. Rajaseekaran v. Union of India (W.P. (C) No. 295/2012), introduced long-term motor insurance policies (five years for two-wheelers and three years for other vehicles) effective from 01.09.2018. However, this measure covers only newly sold vehicles, leaving the existing fleet unregulated in terms of renewal and enforcement.
The result is a systemic paradox: while the law mandates insurance, its implementation remains optional in practice.
The Victim's Dilemma and the Failure of Statutory Protection
The raison d'être of compulsory third-party insurance is to ensure immediate and certain compensation to accident victims irrespective of the wrongdoer's solvency. However, uninsured vehicles render this guarantee hollow. Victims face prolonged litigation, delayed compensation, and often depend on the Solatium Fund or ex gratia state payments.
In National Insurance Co. Ltd. v. Swaran Singh [(2004) 3 SCC 297], the Supreme Court held that Chapter XI of the MV Act aims “to protect third parties and not to promote the business interests of insurance companies.” When this protective purpose is frustrated by administrative inaction, the state's duty under Article 21 to secure the right to life and dignity stands compromised.
The Structural Flaws in the Present Regime
The existing enforcement architecture suffers from three systemic weaknesses:
1. Fragmented Databases: Vehicle registration (VAHAN), licensing (SARATHI), and insurance data often remain unintegrated, preventing real-time verification.
Important Note: That the VAHAN and insurance databases are unintegrated is not entirely correct—significant progress has been made. Insurance data uploads via the Insurance Information Bureau (IIB) established by IRDAI to VAHAN / mParivahan / DigiLocker are officially in place. However, it would be premature to say that the integration is fully flawless, every vehicle and insurer seamlessly covered in real time, or that this alone addresses the problem of uninsured vehicles or compliance enforcement. There is a time lag in updation, differing from State to State in a vast nation like ours, and this may need close attention to ensure that the intended integration is full, complete, and trustworthy always.
Further, the mere existence of such data on the validity of an insurance policy on VAHAN may serve no purpose in ensuring valid insurance coverage for all vehicles. Identification of uninsured vehicles must be an ongoing exercise with a trigger to suspend the validity of registration itself and prevent vehicles from plying on roads under Section 39 of the MV Act, 1988, which comes with the power to impound such vehicles.
2. Absence of Renewal Enforcement: Once initial registration is complete, there is no legal or technological mechanism to ensure that insurance remains valid thereafter.
3. Weak Penalty and Detection Mechanisms: Law enforcement agencies lack the digital tools or access to instantly verify insurance status during routine checks. Lack of adequate manpower and political will are undeniable challenges.
Thus, the problem is not legislative inadequacy but institutional fragmentation and the absence of continuous monitoring to ensure strict enforcement.
Exploiting VAHAN Data for Enforcement
In so far as data on VAHAN is concerned regarding the registered vehicles in India, it now appears integrated with insurance databases through the DigiLocker enabler. Yet, experience suggests that updation is not real-time or full and complete. There can be a lag in updation by days or even weeks. Even if VAHAN data reveals the number of uninsured vehicles, it remains unexploited data.
If the interoperability between VAHAN, SARATHI and insurance databases becomes seamless and efficacious, it can be used to render registration invalid on the expiry of insurance coverage and for failure to renew within a fixed timeline. The data on uninsured vehicles available on VAHAN is a goldmine. For uninterrupted insurance coverage, it must be put to use.
There could be wiser counsel on offer on how best to use this data to identify and penalise entities owning and recklessly using uninsured vehicles. They must be made to pay for failure to keep vehicles always insured in compliance with the legal mandate.
There must be an effective oversight mechanism with coordination among MoRTH, IRDAI, the General Insurance Council, Mumbai, and all motor insurance players to devise solutions for utilising uninsured vehicle data on VAHAN to ensure that vehicles do not remain uninsured. Yes, there could be teething problems in any solution. There may be glitches, sale of vehicles, failure to transfer registration, and indifferent owners refusing to obey the law. The idea and approach must be to devise a digital platform-based mechanism to exploit the readily available VAHAN data on uninsured vehicles and make such entities pay for their defiance of law. They must be penalised by suspending registration and impounding such vehicles found plying on roads. E-challans could come in handy through integration with transport and police administration for strict enforcement.
A Blueprint for Reform: The National Motor Insurance Enforcement and Monitoring System (NMIEMS)
To operationalise Section 146 and achieve insurance without interruption, the Supreme Court could consider directing the Union of India to establish a National Motor Insurance Enforcement and Monitoring System (NMIEMS) through a combination of judicial directions and executive coordination.
Automatic Linkage between Insurance and Registration
The VAHAN database must be integrated with insurers' repositories through IRDAI oversight.
Registration certificates (RC) should remain valid only while insurance coverage is active. Lapse of insurance should automatically suspend RC validity until renewal.
Annual Digital Verification and Conditional Services
Insurance validity should be digitally verified during payment of road tax, emission testing, or traffic challan settlement.
Vehicle owners must not be able to renew any government-linked vehicle service unless insurance is current.
Real-Time AI-Driven Enforcement
CCTV and ANPR (Automatic Number Plate Recognition) systems in cities can be linked to the NMIEMS database to detect uninsured vehicles.
E-challan systems could instantly generate penalties for non-insurance, creating self-enforcing deterrence. Vehicles must be impounded until they provide proof of valid insurance coverage.
Insurance-by-Default Scheme
A National Motor Accident Compensation Pool may be constituted, akin to the UK's Motor Insurers' Bureau, funded through a small levy on annual road tax or fuel sales.This would ensure that every vehicle on Indian roads has at least baseline third-party coverage, eliminating total uninsured risk. The existing Solatium Scheme for hit-and-run accidents may not cater to relief in this regard.
Liability of Financiers- Vehicle financiers could be statutorily mandated to ensure policy renewal for vehicles under their control or hypothecation, with penalties for failure.
Judicial Directions for Implementation
In exercise of its constitutional powers under Articles 32 and 142, the Supreme Court may consider issuing structured directions, such as:
Directing MoRTH and IRDAI to create the NMIEMS within a fixed timeline.
Mandating inter-operability between VAHAN, SARATHI, and insurer databases with provision to act on the data so that uninsured vehicles do not remain uninsured, with registration rendered invalid within a defined period.
Ordering automatic suspension of registration certificates upon insurance lapse beyond, say, 30 days.
Requiring periodic compliance reports to be filed before the Court until 100 per cent insurance coverage is achieved or satisfactory progress is made in that direction.
These directions would align with the constitutional duty of the State to protect life and property, as consistently recognised by the Supreme Court of India in multiple cases.
The continuing epidemic of uninsured vehicles is not a failure of legislation but a failure of enforcement. The key therefore lies in strict implementation. Section 146 suffices to support the need for mandatory third-party insurance coverage. The social justice objective underlying Section 146—protection of innocent accident victims—shall remain unattained unless insurance compliance becomes automatic, continuous, and technologically verifiable.
A digitally integrated enforcement regime, constitutionally anchored and judicially monitored, can finally realise the promise of universal insurance coverage. In doing so, India would reaffirm its commitment to the constitutional guarantee of dignity and life under Article 21, and to the humane jurisprudence that underlies its road safety laws—so say We, the People!
Author is an advocate at Madras High Court.
Views Are Personal.