Requirements of policies and limits of liability
Section 147 of the Motor Vehicles Act, 1988 deals with requirements of policies and limits of liability. [Requirement of policies and limits of liability. The Act came into force on 01 Jul 1989.
1[Requirement of policies and limits of liability. -- (1) In order to comply with the requirements of this Chapter, a policy of insurance must be a policy which--
(a) is issued by a person who is an authorised insurer; and
(b) insures the person or classes of persons specified in the policy to the extent specified in sub-section (2)--
(i) against any liability which may be incurred by him in respect of the death of or bodily injury to any person including owner of the goods or his authorised representative carried in the motor vehicle or damage to any property of a third party caused by or arising out of the use of the motor vehicle in a public place;
(ii) against the death of or bodily injury to any passenger of a transport vehicle, except gratuitous passengers of a goods vehicle, caused by or arising out of the use of the motor vehicle in a public place.
Explanation.--For the removal of doubts, it is hereby clarified that the death of or bodily injury to any person or damage to any property of a third party shall be deemed to have been caused by or to have arisen out of, the use of a vehicle in a public place, notwithstanding that the person who is dead or injured or the property which is damaged was not in a public place at the time of the accident, if the act or omission which led to the accident occurred in a public place.
(2) Notwithstanding anything contained under any other law for the time being in force, for the purposes of third party insurance related to either death of a person or grievous hurt to a person, the Central Government shall prescribe a base premium and the liability of an insurer in relation to such premium for an insurance policy under sub-section (1) in consultation with the Insurance Regulatory and Development Authority.
(3) A policy shall be of no effect for the purposes of this Chapter unless and until there is issued by the insurer in favour of the person by whom the policy is effected, a certificate of insurance in the prescribed form and containing the prescribed particulars of any condition subject to which the policy is issued and of any other prescribed matters; and different forms, particulars and matters may be prescribed in different cases.
(4) Notwithstanding anything contained in this Act, a policy of Insurance issued before the commencement of the Motor Vehicles (Amendment) Act, 2019 shall be continued on the existing terms under the contract and the provisions of this Act shall apply as if this Act had not been amended by the said Act.
(5) Where a cover note issued by the insurer under the provisions of this Chapter or the rules or regulations made thereunder is not followed by a policy of insurance within the specified time, the insurer shall, within seven days of the expiry of the period of the validity of the cover note, notify the fact to the registering authority or to such other authority as the State Government may prescribe.
(6) Notwithstanding anything contained in any other law for the time being in force, an insurer issuing a policy of insurance under this section shall be liable to indemnify the person or classes of persons specified in the policy in respect of any liability which the policy purports to cover in the case of that person or those classes of persons.]
Section 147, The Motor Vehicles Act, 1988 (Act 59 of 1988).
Cross-references
Extracted from the operative text of the enactments themselves. Every destination below exists in our corpus.
Referred to by 8
- s. 130 Duty to produce licence and certificate of registration
- s. 145 Definitions
- s. 148 Validity of policies of insurance issued in reciprocating countries
- s. 150 Duty of insurers to satisfy judgments and awards against persons insured in respect of third party risks
- s. 152 Duty to give information as to insurance
- s. 153 Settlement between insurers and insured persons
- s. 164C Power of Central Government to make rules
- s. 164D Power of State Government to make rules
Related judgements & precedents
These are some judgments that construed this section, and hold precedence value. They hold authority on how to read, interpret and use this section.
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Mamtaj Bi Bapusab Nadaf vs United India Insurance Co.
Court's Decision & Legal Precedent
An insurance company insuring a motor vehicle under Section 147 of the Motor Vehicles Act, 1988, cannot be held liable for death or injury to workmen that occurs during operations (such as unloading goods) that are entirely disconnected from the actual use or operation of the vehicle, even if the goods causing the accident were transported in the insured vehicle. Proximate causation between the use of the vehicle and the injury/death is essential for establishing insurance company liability. Mere transportation of goods in an insured vehicle, without any direct connection of the vehicle to the accident itself, does not render the insurance company liable.
On this section: The Court examined whether death arising during unloading of goods transported in an insured vehicle falls within the scope of liability defined by the statute. The Explanation clause was analyzed to determine whether the vehicle must be in direct proximate connection with the accident.
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Oriental Insurance Co. LTD vs Jhuma Saha
Court's Decision & Legal Precedent
Motor vehicle insurance under Section 147 of the Motor Vehicles Act covers only third-party liability (liability of the insured towards third parties), and does not require insurance companies to assume risk for death or bodily injury to the owner of the vehicle. An owner-driver injured in an accident caused by their own negligence cannot claim compensation under the third-party motor insurance policy unless separate personal accident insurance for the owner has been taken out. The liability of the insurer is strictly limited to indemnification of the insured against third-party claims, and where the insured (owner-driver) cannot be held liable to a third party, the question of insurance liability does not arise.
On this section: The Court applied Section 147(1)(b) to establish that motor insurance policies are required to cover liability against death or bodily injury to third parties only, and specifically does not require coverage for injury to the owner of the vehicle. The provision defines the mandatory scope of motor vehicle insurance liability.
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Surender Nath Loomba vs Oriental Insurance Co. Ltd.
Court's Decision & Legal Precedent
An insurance company's liability to compensate a gratuitous passenger (non-paying occupant) injured in a motor vehicle accident depends entirely on the type of insurance policy in effect: (1) Under an Act Policy (statutory minimum coverage under Motor Vehicles Act, Section 147 and 149), the insurer is not liable for injuries to gratuitous occupants as they are not third parties within the statutory definition; (2) Under a Comprehensive/Package Policy, the insurer is liable for occupant injuries if the policy terms expressly provide such coverage and applicable TAC/IRDA circulars mandate such coverage regardless of specific policy conditions; (3) When the actual policy document is not produced before the tribunal and only a Certificate of Insurance is filed, the tribunal cannot determine the policy type and therefore cannot properly determine insurance liability; (4) The party claiming Act Policy status (the insurer) must produce the original policy document to substantiate its claim, and remand to tribunal is appropriate to allow such production and evidence regarding policy type and coverage terms.
On this section: Section 147 deals with requirements of insurance contract for third-party risks. Court examined whether gratuitous passengers qualify as third parties under this section in absence of comprehensive policy coverage.
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S. Iyyapan vs United India Insurance Co. Ld.
Court's Decision & Legal Precedent
An insurance company cannot deny or avoid its statutory liability to pay compensation to third-party accident victims merely on the ground that the driver, although holding a valid and effective driving licence to drive a light motor vehicle, did not possess a specific endorsement to drive that particular light motor vehicle when used for commercial purposes. The driver's possession of a valid light motor vehicle licence is sufficient authority to operate any type of light motor vehicle regardless of whether it is used for personal or commercial transportation. The statutory obligation of the insurer under Section 149 of the Motor Vehicles Act, 1988 to satisfy judgments and awards in respect of third-party liability cannot be defeated on such technical distinctions between subcategories of light motor vehicles. The compulsory insurance legislation is fundamentally a social welfare measure designed to ensure that accident victims receive compensation, and all relevant provisions must be interpreted to effectuate this paramount protective purpose.
On this section: Conditions of policies of insurance covering third party risks; certificate of insurance issuance
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Eshwarappa @ Maheshwarappa vs C. S. Gurushanthappa
Court's Decision & Legal Precedent
The liability of a motor vehicle owner under Section 140 of the Motor Vehicles Act 1988 to pay no-fault compensation for death or permanent disablement resulting from a motor accident is absolute and independent of the owner's knowledge, consent, or involvement in the accident, and such compensation is a fixed sum determined by law that cannot be reduced, refused, or delayed based on the circumstances of the accident, the fault of the vehicle operator, the unauthorized use of the vehicle, or the procedural timing of the claim, as the statutory scheme under Chapter X (read with Sections 146-147) embodies a public policy mandate that all accident victims receive minimum compensation from the insurance fund to ensure immediate relief without exception or procedural impediment.
On this section: Act only insurance provision; creates large pool of insurance fund for making payments of no-fault compensation
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Oriental Insurance Co. LTD vs Rajni Devi
Court's Decision & Legal Precedent
When the owner of a motor vehicle is himself involved in an accident and claims compensation for his death or injury, the provisions of Section 163-A of the Motor Vehicles Act, 1988 (which provide structured formula compensation in third-party claims) do not apply. Instead, the liability of the insurance company is determined by the contractual terms of the insurance policy. The insurance company's liability is limited to indemnifying the insured against liability to third parties, and if the insured cannot be held liable to a third party, the insurer's obligation to indemnify does not arise. In cases of vehicle owner death or injury, the claim must be based on the specific personal accident insurance terms of the policy, which typically cap coverage at a fixed amount.
On this section: Regarding third-party insurance; Court clarified that the vehicle owner is not a third party within the meaning of this section
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Thokchom Ongoi Sangeeta @ Sangi Devi vs Oriental Insurance Co. Ltd.
Court's Decision & Legal Precedent
The provisions of the Motor Vehicles Act, 1988 do not impose any statutory liability on the owner of a goods carriage to obtain insurance for passengers traveling in the vehicle, and consequently, the insurer has no liability to pay compensation for passenger injuries arising from an accident involving a goods carriage. The legislative intent is evident from the specific use of 'goods carriage' (meant solely for goods) without any reference to passenger coverage in the mandatory insurance provisions, as opposed to 'public service vehicles' for which such coverage is explicitly mandated.
On this section: The Court examined the proviso which explicitly requires insurance for employees and passengers of public service vehicles but contains no reference to passengers in goods carriages, indicating legislative intent to exclude passenger coverage in goods vehicles.
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National Insurance Co. LTD vs Seema Malhotra
Court's Decision & Legal Precedent
When an insured gives a cheque towards payment of insurance premium and the cheque is subsequently dishonoured by the bank due to insufficiency of funds, the insurer is not liable to the insured or their legal heirs to honour the insurance contract or pay claims arising from accidents that occurred before the cheque was dishonoured. This is because: (1) a cheque is a conditional promise to pay, not actual payment; (2) Section 64-VB of the Insurance Act requires that premium must be received before the insurer assumes any risk; (3) an insurance contract consists of reciprocal promises, and when the insured fails to pay the premium, the insurer is absolved from providing coverage; (4) the insurer's statutory liability to third parties under the Motor Vehicles Act is distinct from and does not extend to claims by the insured or their legal heirs.
On this section: Statutory provisions creating liability of insurers to third parties for motor vehicle insurance; the Court distinguished between third party liability (which is mandatory under statute) and liability to the insured (which depends on valid contract formation)
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United India Insurance Company Limited vs Mohan Lal
Court's Decision & Legal Precedent
When multiple motor accident compensation claims arising from a single incident are filed across different jurisdictions, the substantive determination of claims should be decided by the respective local MACTs to ensure access to justice and convenience of vulnerable litigants, but execution of orders and disbursement of compensation should be consolidated before a single MACT to ensure uniformity in implementation of liability decisions and equitable payment distribution.
On this section: Governs jurisdiction and functioning of MACTs; implicitly referenced through MACT tribunal structure throughout the order
The holding above is the ratio decidendi as extracted from the judgment by eCourts India, reproduced unaltered — it is a rendering of the court's reasoning, not a substitute for its words. Read the order itself before relying on it.
Judgments citing this section
These may be obiter dicta or a precedent, for you to study. These are the judgments where this section is quoted.
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… In the case on hand, we are only considering the impact of deletion of proviso to Sub-Section 4 of old Section 149 and Sub-Section 5 of old Section 149 in the corresponding new Section 150. 10. Section 147 of the Motor Vehicles Act, 1988, after amendment reads as follows:- "147. Requirement of policies and limits of liability.- (1) In order to comply with the requirements of this Chapter, a policy of insurance must be a policy which- (a) is issued by a person who is an authorised insurer; and (b) insures …
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… under the Workmen's Compensation Act gets foisted on the employer provided it is shown that the workman concerned suffered from personal injury, fatal or otherwise, by any motor accident arising out of and in the course of his employment. Such an accident is also covered by the statutory coverage contemplated by Section 147 of the Motor Vehicles Act read with the identical provisions under the very contracts of insurance reflected by the policy which would make the insurance company liable to cover all such claims for compensation for which statutory liability is imposed on the employer under Section 3 read with Section 4-A of the …
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… Asha Rani and Others [2003 (2) SCC 223] , New India Insurance Company Ltd. v. Daisy Paul and another [2021 (2) KHC 449] and National Insurance Company Ltd. v. Cholleti Bharatamma and Ors. [2008 (1) SCC 423], in support of his argument. 12. After the amendment to Section 147 of the Motor Vehicles Act, which came into force with effect from 14.11.1994, any person, including the owner of the goods or his authorised representative, carried in the goods vehicle is covered by the insurance policy. 13. The accident involved in this case occurred on 23.09.2010, after the above amendment. …
Made under this section, and citing it
1 instrument states that it was made under this provision — the power to make it comes from here, so a change to any of them changes what this section requires in practice. Newest first.
Another 1 instrument names this provision in its title or its text without being made under it.
Questions about Section 147
What have the courts held on Section 147 of the Motor Vehicles Act?
Mamtaj Bi Bapusab Nadaf vs United India Insurance Co. (07 Sep 2010) is the leading judgment on this section among those set out below: The Court examined whether death arising during unloading of goods transported in an insured vehicle falls within the scope of liability defined by the statute. The Explanation clause was analyzed to determine whether the vehicle must be in direct proximate connection with the accident. Another 8 judgments on this section are set out below, all of them from the Supreme Court. They run from 2001 to 2022.
How do I find court cases under Section 147 of the Motor Vehicles Act?
In judgments and charge sheets this section is written several ways, and each form finds a different set of orders. These search the full text of every order eCourtsIndia holds, best matches first: MV Act 147, section 147 MV Act, section 147 of the Motor Vehicles Act. Each opens the full list of orders on eCourtsIndia, where it can be narrowed by court, year and outcome. 9 reported judgments on this section are set out on this page, beginning with Mamtaj Bi Bapusab Nadaf vs United India Insurance Co. (07 Sep 2010).
What should I read with Section 147 of the Motor Vehicles Act, and has it changed?
8 other provisions in this corpus refer back to it. The rules and notifications made under it are where it actually bites, and there is one: most recently draft GSR 528(E) dated 2nd August 2021 Claims Tribunal investigation (2021).
When did Section 147 of the Motor Vehicles Act come into force?
Section 147 of the Motor Vehicles Act, cited as MV Act 147, came into force on 01 Jul 1989, having been enacted on 14 Oct 1988. It is in force as at the date shown on this page.
Other sections of this Act
- 2. Definitions1948 words
- 88. Validation of permits for use outside region in which granted1560 words
- 51. Special provisions regarding motor vehicle subject to hire-purchase agreement, etc1199 words
- 150. Duty of insurers to satisfy judgments and awards against persons insured in respect of third party risks1102 words
- 96. Power of State Government to make rules for the purposes of this Chapter995 words
- 72. Grant of stage carriage permits868 words
Source and method. Compiled from the enactments of Parliament and of the State legislatures as published on India Code, and republished together with commentary and other original matter under section 52(1)(q)(ii) of the Copyright Act, 1957. Structured, cross-referenced and maintained by eCourtsIndia. Text as in force on 15 Oct 2026. This page is not a substitute for legal advice.