The judgment came in Dilip Agarwal vs Rajshri Agarwal (July 22), where a Bench of Justices Sanjay Karol and Augustine George Masih set aside compensation awarded by the Motor Accident Claims Tribunal (MACT) and later upheld by the High Court.
What was the case about?
The case stemmed from the death of a man named Anand, who had travelled in a car driven by his acquaintance, Dilip Agarwal, in November 2009. Three days later, Anand’s body was found near a village in Chhattisgarh.
Anand’s wife and children filed a compensation claim before the MACT under Section 166 of the Motor Vehicles Act, arguing that since the vehicle had been used during the commission of the alleged offence, his death arose out of the use of a motor vehicle. They sought compensation of around ₹26 lakh.
Although Agarwal was initially convicted in the related criminal case, the High Court later acquitted him after finding that the prosecution had failed to establish the “last seen” theory.
Despite the acquittal, the MACT awarded compensation of ₹5.64 lakh with interest, holding that the death was covered under the Motor Vehicles Act. The High Court subsequently enhanced the compensation to ₹8.61 lakh.
What did the Supreme Court decide?
The Supreme Court reversed the compensation award.
It held that liability under the Motor Vehicles Act arises only when the injury or death can be shown to have arisen out of the use of a motor vehicle. While the phrase “arising out of” has a wider meaning than “caused by”, it still requires a causal relationship between the vehicle and the accident.
The Bench observed that in this case there was no evidence showing that Anand suffered injuries inside the vehicle or that the vehicle itself contributed to his death. There was no forensic evidence such as blood, hair or skin cells recovered from the car, nor was there any allegation of a collision or road accident involving the vehicle.
“The mere fact that there was a car somehow involved in a chain of circumstances that led to his death does not mean that the provisions of the Motor Vehicles Act would apply,” the court said in substance, adding that some connection between the vehicle and the death must be established.
Why does the ruling matter?
The judgment clarifies an important principle governing motor accident compensation claims.
Motor Accident Claims Tribunals are meant to compensate victims of accidents arising out of the use of motor vehicles. Courts have previously interpreted the expression “arising out of” broadly, covering situations even when a vehicle is stationary or when the injury is not directly caused by driving.
However, the Supreme Court has now underlined that this broader interpretation does not eliminate the need for a causal link. A vehicle’s presence alone cannot trigger liability under the Motor Vehicles Act.
Does an acquittal automatically defeat a compensation claim?
No.
The court reiterated that compensation proceedings before a MACT are civil in nature, where claims are decided on the “preponderance of probabilities” rather than the stricter criminal standard of “proof beyond reasonable doubt.” Therefore, an acquittal in a criminal case does not automatically prevent compensation from being awarded.
However, even under this lower evidentiary threshold, claimants must establish facts showing that the injury or death was connected to the use of the motor vehicle. In this case, the court found that requirement had not been met.
What happens to the compensation already paid?
Although the Supreme Court set aside the compensation awarded by the MACT and High Court, it directed that any amount already paid to the deceased’s family should not be recovered, considering the peculiar facts of the case.
