Page 138 - The Motor Vehicles Act, 1988

124 THE MOTOR VEHICLES ACT, 1988 SECTION 147

(1) No person shall use, except as a passenger, or cause or allow any other person to use, a
motor vehicle in a public place, unless there is in force in relation to the use of the vehicle by that
person or that other person, as the case may be, a policy of insurance complying with the
requirements of this Chapter:
PROVIDED that in the case of a vehicle carrying, or meant to carry, dangerous or
hazardous goods, there shall also be a policy of insurance under the Public Liability Insurance
Act, 1991 (6 of 1991)].
Explanation : A person driving a motor vehicle merely as a paid employee, while there is
in force in a relation to the use of the vehicle no such policy as is required by this sub-section,
shall not be deemed to act in contravention of the sub-section unless he knows or has reason to
believe that there is no such policy in force.
(2) Sub-section (1) shall not apply to any vehicle owned by the Central Government or a
State Government and used for government purposes unconnected with any commercial
enterprises.
(3) The appropriate government may, by order, exempt from the operation of sub-section
(1) any vehicle owned by any of the following authorities, namely,—
(a) the Central Government or a State Government, if the vehicle is used for
government purposes connected with any commercial enterprise;
(b) any local authority;
(c) any State Transport Undertaking :
PROVIDED that no such order shall be made in relation to any such authority unless
fund has been established and is maintained by that authority in accordance with the rules made
in that behalf under this Act for meeting any liability arising out of the user of any vehicle of that
authority which that authority or any person in its employment may incur to third parties.
Explanation : For the purposes of this sub-section “appropriate government” means the
Central Government or a State Government, as the case may be, and—
(i) in relation to any corporation or company owned by the Central Government or
any State Government, means the Central Government or that State Government;
(ii) in relation to any corporation or company owned by the Central Government and
one or more State Governments, means the Central Government;
(iii) in relation to any other State Transport Undertaking or any local authority means
that government which has control over that undertaking or authority.
147. Requirements 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 vehicles or damage to any property of a third
party caused by or arising out of the use of the vehicle in a public place;
(ii) against the death of or bodily injury to any passenger of a public service
vehicle caused by or arising out of the use of the vehicle in a public place: