Supreme Court Expresses Concern Over Quality Of MACT Judgments, Calls For Clear And Reasoned Findings

The Supreme Court on Monday (July 20) expressed displeasure with the lack of legal reasoning in the Motor Accident Claim Tribunals' decisions. The Court observed that many tribunal orders merely reproduce pleadings and evidence without adequately explaining how the facts lead to the ultimate conclusion.

“The Tribunals are bodies that people approach, seeking compensation as a consequence of either accidents or deaths, both being entirely unwelcome scenarios. Then, it is only to be expected of the Tribunals that whatever their conclusion be, the same must be supported by adequate and clear reasoning.”, the Court observed.

The Court noted that it had encountered several cases where the nature and quality of tribunal orders had caused it "considerable disturbance."

Referring to the case before it, the Court observed that although the Tribunal had extensively recorded the submissions of the parties and the evidence led during the proceedings, it failed to meaningfully analyse that material or explain how it supported the final outcome.

“In this case for example, the Tribunal elaborately recorded the submissions and evidence. However, its correlation with the facts of the case and effect of this correlation on the end result was lacking.”, the Court said.

A bench of Justice Sanjay Karol and Justice Nongmeikapam Kotiswar Singh made the aforesaid observations while deciding an appeal arising out of a motor accident compensation dispute, stressing that claimants approach MACTs after suffering accidents or losing loved ones and are therefore entitled to decisions supported by clear and cogent reasoning.

The Court dismissed an appeal filed by Oriental Insurance Co. Ltd. and upheld the insurer's liability to pay compensation in respect of a bus accident that occurred in Nepal. Although the appeal primarily concerned the insurer's liability under a motor insurance policy for an accident outside India, the Court used the occasion to underline the importance of judicial reasoning in motor accident compensation cases.

The Court reminded the MACTs about their judicial responsibility to arrive at a conclusion with a proper legal reasoning, making for an aggrieved party convenient to challenge the decision or to settle the dispute.

“…we may observe that in certain cases that have come up before this Court, including the present one, the tone tenor and extent of the orders passed by the concerned Tribunals has caused us considerable disturbance…The clearer the reasoning and higher the fidelity to the judgments and orders passed by this Court in as much as it is the law that applies to the entirety of the country, the large gap between the date of institution and the date of disposal of such claim petitions will see reduction, as also the number of appeals.”, the judgment authored by Justice Karol said.

Headnote

Motor Vehicles Act, 1988 – Section 147(5), Section 139, and Section 149 – Cross Border Third-Party Insurance Coverage – Accident in Nepal – Liability of the Insurer - Interpretation of Insurance Contract – Harmonious Construction – Rule of Contra Proferentem - An insurance policy must be read as a whole to determine the intent of the parties - Different clauses must be read harmoniously, and one cannot cherry pick a single clause in isolation to base a claim while rejecting other clauses - Where a policy contains ambiguous or multiple interpretations, the one that aligns with the beneficial purpose of the Motor Vehicles Act, 1988 (MVA) and favours the insured (contra proferentem rule) must be adopted. [Paras 14-16]

Conflict between "Geographical Area" and "Limitation as to Use" Clauses – Special Permit for Foreign Territory - The appellant-insurer disputed liability on the ground that the policy's geographical area was limited to "India" - the "Limitation as to Use" clause covered the vehicle's use under a "permit" within the meaning of the MVA - A special permit was validly issued under Section 88(8) of the MVA, explicitly authorizing the vehicle to ply on the Durg-Nepal route - Held, since the "Limitation as to Use" clause was cast in general terms without geographical boundaries, the existence of a valid permit extending to a foreign territory meant the policy covered the use irrespective of the geographical location - If the insurer intended to exclude cross-border territory entirely, it ought to have drafted the exclusion clearly and unambiguously. [Paras 10 - 14]

Statutory Overriding Effect of Section 147(5) MVA over India Motor Tariff Regulations: The insurer argued that the policy was restricted to India because no additional premium was paid to extend coverage to Nepal under General Regulation 4 (GR.4) of the India Motor Tariff (IMT) 2002. Held, Section 147(5) of the MVA contains a potent non-obstante clause which imposes liability on the insurance company to indemnify the specified persons, overriding regulatory instruments like the IMT - Non-payment of the additional premium under GR.4 does not vitiate the valid permit or statutory coverage. [Paras 17 - 22]

Extra-Territorial Operation of the Motor Vehicles Act, 1988: Under Article 245(2) of the Constitution of India, laws made by Parliament cannot be deemed invalid on the ground of extra-territorial operation - The legislative intent to give the MVA extra territorial application for cross-border transit is evident from Section 139 (power to frame rules for taking vehicles outside India) and Section 149(3) (duty of insurers to satisfy foreign judgments from reciprocating countries) - the provisions of the MVA apply to the third-party claim regardless of whether the accident took place in India or Nepal. [Para 21-30]

Validity of Indian Driving License in Nepal – Indo-Nepal Treaty of Peace and Friendship, 1950: The insurer contended that the deceased driver did not possess a valid driving license to drive in Nepal. Held, the driver possessed an effective Indian driving license which was verified without objection by the Nepalese authorities at the border while issuing transit documents. Furthermore, Article 7 of the Treaty of Peace and Friendship between India and Nepal (1950) grants reciprocal privileges regarding the free movement of nationals, ensuring that a valid license issued in India is recognized for movement within Nepal. No evidence was adduced by the insurer to show the license was invalid in Nepal. [Relied on National Insurance Co. Ltd. v. Chief Electoral Officer, (2023) 6 SCC 441; Export Credit Guarantee Corpn. of India Ltd. v. Garg Sons International, (2014) 1 SCC 686; Oriental Insurance Co. Ltd. v. Sony Cheriyan, (1999) 6 SCC 451; Shivram Chandra Jagarnath Cold Storage v. New India Assurance Co. Ltd., (2022) 4 SCC 539; Syed Mehaboob v. New India Assurance Co. Ltd., (2011) 11 SCC 625; Ningamma v. United India Insurance Co. Ltd., (2009) 13 SCC 710; K. Ramya v. National Insurance Co. Ltd., 2022 SCC OnLine SC 1338; Nidhi Bhargava v. National Insurance Co. Ltd., 2025 SCC OnLine SC 872; Mohd. Abdul Samad v. State of Telangana, (2025) 2 SCC 49; A.G. Varadarajulu v. State of T.N., (1998) 4 SCC 231; Madhav Rao Jivaji Rao Scindia v. Union of India, (1971) 1 SCC 85; Aswini Kumar Ghose v. Arabinda Bose, (1952) 2 SCC 237; Paras 24, 25].

Cause Title: THE ORIENTAL INSURANCE CO. LTD. VERSUS DURG ROADWAYS PRIVATE LIMITED & ORS.

Citation : 2026 LiveLaw (SC) 696

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Appearance:

For Petitioner(s) : Mr. Abhishek Kumar Gola, Adv. Mr. Anshul Mehral, Adv. Mr. Arun Kumar Nagar, Adv. Mr. Ravinder Singh, Adv. Mr. Mohit Singh, Adv. Ms. Ragini Agarwal, Adv. Mr. Sudhir Naagar, AOR

For Respondent(s) : Mr. Ashutosh Ghade, AOR Ms. Saloni Meshram, Adv.