The ruling arose from a 2014 accident case in which a motorcyclist was killed after being struck by a speeding bus. The Motor Accident Claims Tribunal (MACT) had awarded a compensation of ₹18.86 lakh to the victim’s family.

The bus owner later challenged the decision before the Karnataka High Court, claiming the vehicle had breached the insurance policy terms by operating beyond its authorised route. The High Court, however, ordered the insurance company to first pay the compensation to the victim’s family and then recover the amount from the vehicle owner. Dissatisfied, both parties approached the Supreme Court.

What the Supreme Court said

A bench of Justice Sanjay Karol and Justice Prashant Kumar Mishra dismissed the appeals, upholding the High Court’s direction. The judges stressed that the objective of insurance policies is to indemnify and protect, not to exploit technical violations to deny relief to victims.

“Denying compensation merely because the vehicle was operating outside its permit area would be contrary to the principles of justice,” the bench observed.

50% of India’s vehicles run without insurance

During the proceedings, senior advocate Joy Basu highlighted that nearly half of all vehicles in India are uninsured, a revelation that drew concern from the bench. Justice Karol remarked that the situation reflected poor enforcement of mandatory insurance requirements.

This observation came in the context of a separate case from Telangana, where the High Court had ordered an insurer to pay ₹10 lakh to the family of a man who died in a 1996 road accident.

Court calls for better compliance and enforcement

Expressing concern over the high number of uninsured vehicles on Indian roads, the Supreme Court urged authorities to explore stricter enforcement mechanisms and policy reforms to ensure compliance with motor insurance laws.

The bench said it would further examine possible measures to improve road safety, insurance accountability, and victim protection in future hearings.