Motor Vehicles Act, 1988 - Supreme Court Quarterly Digest Jan - Mar, 2026

Assessment of Disability and Loss of Earning Capacity – Functional Disability vs. Physical Disability – The Supreme Court set aside the High Court's decision to reduce the functional disability of the appellant-claimant from 63% to 30% - held that the High Court failed to provide cogent reasons for disregarding the Medical Board's certificate and the neuropsychological report which evidenced severe cognitive impairment, partial blindness, and intellectual disability resulting from a head injury - Noted that for a professional like a Manager, whose role depends on memory and analytical skills, such neurological deficits lead to a profound erosion of faculties essential for employment - the Supreme Court enhanced the functional disability to 100% for the purpose of computing compensation - Supreme Court increased the compensation from ₹35.61 lakh (as fixed by the Madras High Court) to ₹97.73 lakh, restoring and expanding the approach adopted by the Motor Accidents Claims Tribunal (MACT). [Paras 21 - 30] R. Halle v. Reliance General Insurance Company, 2026 LiveLaw (SC) 261 : 2026 INSC 260 : AIR 2026 SC 1511

Conventional Heads – Loss of Consortium vs. Loss of Love and Affection – Subsumption of Heads – Held: Compensation in death cases is restricted to three conventional heads: loss of estate, loss of consortium, and funeral expenses. "Loss of love and affection" is not a distinct head of compensation and is comprehended within the broader head of "consortium," which encompasses spousal, parental, and filial consortium. [Paras 22 - 29] V. Pathmavathi v. Bharthi Axa General Insurance Co. Ltd, 2026 LiveLaw (SC) 132 : 2026 INSC 131 : AIR 2026 SC 840

Duties of Appellate Courts – When an appellate court interferes with the findings of fact recorded by the Motor Accidents Claims Tribunal (MACT), especially regarding disability assessment, it must undertake a thorough reappreciation of evidence and assign clear, convincing reasons - Mechanical reductions of compensation without independent analysis of medical records are not sustainable in law – Appeal allowed. [Relied on Raj Kumar v. Ajay Kumar (2011) 1 SCC 343; Paras 22 - 35] R. Halle v. Reliance General Insurance Company, 2026 LiveLaw (SC) 261 : 2026 INSC 260 : AIR 2026 SC 1511

Motor accident compensation — Procedural Lapses — Non-joinder of driver — Held: The provision for compensation under the Motor Vehicles Act is a beneficial piece of legislation intended to enhance social justice, the rigours of procedure, such as not adding a driver as a party, cannot be allowed to defeat the purpose of the Act, especially as the trial is summary in nature. [Relied on Helen C. Rebello & Ors. Vs. Maharashtra State Road Transport Corporation (1999) 1 SCC 90; Sebastiani Lakra vs. National Insurance Co. Ltd. (2019) 17 SCC 465; United India Insurance Co. Ltd. Vs. Patricia Jean Mahajan & Ors. (2002) 6 SCC 281; Paras 12-17] Managing Director, KSRTC v. P. Chandramouli, 2026 LiveLaw (SC) 245 : 2026 INSC 241 : AIR 2026 SC 1441

No-Fault Liability – Principle and International Precedent – Supreme Court emphasized that requiring proof of negligence through civil courts or consumer fora imposes an "onerous burden" on families in complex scientific matters - Relying on the principle of no-fault liability (similar to Section 164 of the Motor Vehicles Act, 1988), Supreme Court noted that global jurisdictions, including Australia, the UK, and Japan, have implemented dedicated COVID-19 vaccine injury compensation schemes - Supreme Court declined to appoint an independent medical board, finding the existing National and State AEFI Committees adequate for scientific assessment - it reaffirmed the state's duty to maintain transparent surveillance and ensure AEFI data is accessible in the public domain. [Relied on Jacob Puliyel v. Union of India (2022 SCC OnLine SC 533); In re: Distribution of Essential Supplies and Services During Pandemic (2021 SCC OnLine SC 372); Gaurav Kumar Bansal v. Union of India (W.P.(C) No. 539/2021); Paras 27-37] Rachana Gangu v. Union of India, 2026 LiveLaw (SC) 225 : 2026 INSC 218

Procedural Safeguards for Deductions – Proof of Receipt – Deductions from MVA compensation cannot be made based on mere assumptions of eligibility - The Tribunal must first determine the full compensation; claimants must then file an affidavit/declaration regarding the receipt of benefits under the 2006 Rules before the executing court - Adjustments to prevent double recovery are to be made only after receipt is established – Appeals allowed. [Relied on Reliance General Insurance v. Shashi Sharma (2016) 9 SCC 627; Jayalakshmi Coelho v. Oswald Joseph Coelho (2001) 4 SCC 181; State of Punjab v. Darshan Singh (2004) 1 SCC 328; Paras on 6, 7, 8] Reliance General Insurance v. Kanika, 2026 LiveLaw (SC) 196 : 2026 INSC 188 : AIR 2026 SC 1188

Quantum of Compensation – Evidence of Income – Salary Certificate – Held: Determination of income must be founded on proof placed on record and cannot rest on conjecture. Where a salary certificate (Exhibit P-14) and corroborating employer affidavit (PW-3) establish a fixed monthly salary, it is impermissible for courts to assess income at a lower figure without evidence impeaching such documents - Held: Considering the dependents had been pursuing legal proceedings for 15 years since the death of the victim in 2011, the Court enhanced the interest rate to 9% p.a. from the date of filing the claim petition till realization. [Para 32] V. Pathmavathi v. Bharthi Axa General Insurance Co. Ltd, 2026 LiveLaw (SC) 132 : 2026 INSC 131 : AIR 2026 SC 840

Shifting of Liability from Insurer to State – The insurance policy obtained by the owner covers "regular and lawful use" in the ordinary course - Compelled deployment under statutory command cannot be characterized as "regular use" within the usual contemplation of the insurance contract - To fasten liability on the insurer for risks generated exclusively by governmental action would be to extend the contract beyond the agreed risk - responsibility for accidents occurring during the requisition period rests with the requisitioning authority (State) and not the insurer – Although Section 160 of the Representation of the Peoples Act, 1950, does not expressly authorize requisitioning manpower, if the authority utilizes the services of the driver provided with the vehicle, it implicitly recognizes the driver's competence to operate the vehicle under its control - The liability remains with the State even if the driver is an employee of the original owner, as the driver operates under official directions during the requisition period. [Relied on National Insurance Co. Ltd. v. Deepa Devi (2008) 1 SCC 414; Purnya Kala Devi v. State of Assam (2014) 14 SCC 142; Paras 8-12] District Magistrate v. National Insurance Company, 2026 LiveLaw (SC) 280 : 2026 INSC 279

Section 2(28) — Gujarat Motor Vehicles Tax Act, 1958; Section 3 — Constitution of India; Seventh Schedule, List II, Entry 57 — Taxability of Heavy Earth Moving Machinery/Construction Equipment Vehicles - The Supreme Court held that heavy earth moving machinery and construction equipment vehicles (such as Dumpers, Loaders, Excavators, etc.) designed for off-road use within factory or enclosed premises are excluded from the definition of "motor vehicle" under the second part of Section 2(28) of the Motor Vehicles Act, 1988 – Supreme Court made following findings- i. Definition of Motor Vehicle: While such vehicles may fall under the inclusive first part of Section 2(28), they are specifically excluded by the second part of the definition, which omits "a vehicle of a special type adapted for use only in a factory or in any other enclosed premises"; ii. Constitutional Limitation: Entry 57 of List II of the Seventh Schedule only permits states to tax vehicles "suitable for use on roads”- Noted that if a vehicle is designed for off-road operations and does not derive benefit from public road infrastructure, it cannot be burdened with motor vehicle tax; iii. Gujarat Tax Act Deficiency: noted that Schedule I of the Gujarat Motor Vehicles Tax Act, 1958, mentions construction equipment vehicles but prescribes no corresponding rate of tax for them - no tax can be levied or collected from such vehicles; iv. Status of Registration: Merely because such vehicles are registered under the Act does not estop the owner from challenging the liability to pay road tax if the vehicles do not ply on public roads – Appeal allowed. [Relied on Bolani Ores Ltd. vs. State of Orissa (1974) 2 SCC 777; Tarachand Logistic Solutions Limited vs. State of Andhra Pradesh 2025 SCC OnLine SC 1851; Paras 37-39, 42-45, 55] Ultratech Cement Ltd. v. State of Gujarat, 2026 LiveLaw (SC) 27 : 2026 INSC 43

Sections 2(30) and 147 – Requisition of Vehicle for Election Duty – Determination of Liability – Whether the registered owner/insurer or the requisitioning authority (State) is liable for compensation in case of an accident involving a vehicle requisitioned under statutory orders - Held: When a public authority requisitions a privately owned vehicle for public purposes (such as Gram Panchayat Elections), the nature of possession and control changes entirely - The registered owner is divested of custody and decision-making power, and the vehicle is placed at the disposal of the State for governmental functions – Held that the requisitioning authority assumes the role of the "owner" for the period of requisition. District Magistrate v. National Insurance Company, 2026 LiveLaw (SC) 280 : 2026 INSC 279

Section 147 — Liability of Insurer — Gratuitous Passenger in Goods Vehicle — "Pay and Recover" Principle — The Supreme Court restored the Tribunal's order directing the Insurance Company to first pay the compensation to the claimants and subsequently recover the same from the vehicle owner – Noted that the deceased had hired a tempo primarily to transport a Ganesh idol for immersion, making the act of travelling incidental to the transport of goods - In such circumstances, the deceased is treated as a gratuitous passenger travelling with his goods - Supreme Court distinguished this from cases where a vehicle is hired solely for passenger travel, reaffirming that the benevolent object of the Act justifies the "pay and recover" direction even when the insurer is not otherwise liable under the policy – Appeal allowed. [Relied on Manuara Khatun & Ors. v. Rajesh Kumar Singh & Ors. (2017) 4 SCC 796; National Insurance Company Limited v. Saju P. Paul & Anr. (2013) 2 SCC 41; Paras 10-13] Kaminiben v. Oriental Insurance, 2026 LiveLaw (SC) 174

Section 166 and 168 – Just Compensation – Future Prospects – Held: The addition of future prospects to the established income of the deceased is not a matter of judicial discretion but a mandatory legal requirement. For a deceased who was self-employed or on a fixed salary and below the age of 40 years, an addition of 40% towards future prospects is compulsory. The High Court erred in failing to apply this binding precedent. [Relied on National Insurance Co. Ltd. v. Pranay Sethi (2017) 16 SCC 680; Sarla Verma v. DTC (2009) 6 SCC 121; Magma General Insurance Co. Ltd. v. Nanu Ram (2018) 18 SCC 130; Paras 17, 18, 19] V. Pathmavathi v. Bharthi Axa General Insurance Co. Ltd, 2026 LiveLaw (SC) 132 : 2026 INSC 131 : AIR 2026 SC 840

Section 166 — Compensation — Deduction of Group Insurance Scheme (GIS) benefits — Held: Amounts received by the dependents of a deceased under an employer-provided group insurance scheme or other contractual/social security benefits cannot be deducted from the compensation awarded under the Motor Vehicles Act - These benefits arise from an independent contractual relationship and lack the requisite nexus with the statutory compensation payable for death in a motor vehicle accident - The principle of balancing loss and gain cannot be invoked to diminish the statutory entitlement to "just compensation." [Paras 14 - 16] Managing Director, KSRTC v. P. Chandramouli, 2026 LiveLaw (SC) 245 : 2026 INSC 241 : AIR 2026 SC 1441

Section 173 — Appeal against Award — Dismissal on ground of Undertaking — Legality of — High Court dismissed the Insurance Company's appeal merely because a local manager had given an undertaking to the Executing Court to satisfy the award - Held: An undertaking to comply with an award, often given under pressure of execution proceedings (such as attachment of office furniture), does not deprive the insurer of its statutory right to challenge the award on merits - The High Court, as the First Appellate Court, is duty-bound to consider the appeal on both law and facts, especially when patent errors in compensation calculation are alleged - Dismissed an appeal without touching the merits caused grave injustice. National Insurance Company Ltd v. Rathlavath Chandulal, 2026 LiveLaw (SC) 149 : 2026 INSC 146

Section 173 – Compensation – Deduction of Compassionate Financial Assistance – Haryana Compassionate Assistance to Dependents of Deceased Government Employees Rules, 2006 – Rule 5 – The Supreme Court reiterated that financial assistance received under the 2006 Rules which directly replaces "pay and allowances" (loss of income) must be deducted from the compensation awarded under the Motor Vehicles Act to prevent double recovery - components such as family pension, life insurance, and provident fund are not deductible as they do not correspond to the specific head of loss of income. Reliance General Insurance v. Kanika, 2026 LiveLaw (SC) 196 : 2026 INSC 188 : AIR 2026 SC 1188