SC proposes no fuel for uninsured vehicles, seeks tech-driven road safety overhaul

In a significant move to improve road safety and strengthen compliance with motor insurance laws, the Supreme Court on Tuesday directed the Centre to design a pilot project under which vehicles without valid third-party insurance could be denied fuel at petrol pumps until they obtain the mandatory cover.

The top court also asked the government to roll out pilot projects on select highway corridors to replace physical toll collection with automatic vehicle detection systems, saying the move would reduce congestion at toll plazas and improve traffic flow.

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A bench of Justices Sanjay Karol and Prashant Kumar Mishra expressed concern over the large number of uninsured vehicles on Indian roads, noting that nearly 56% of vehicles lack mandatory third-party insurance, according to the Parliamentary Standing Committee on Finance's 2024-25 report.

"As deliberated upon in court, the IRDA (Insurance Regulatory and Development Authority) in consultation with the MoRTH (Ministry of Road Transport and Highways) to deliberate and evolve a pilot project whereby fuel for vehicles to be linked with valid insurance status. In the absence thereof, the vehicle concerned would be refused fuel at petrol pumps, until such time that valid insurance is obtained," the bench said.

The court observed that such a system would serve two purposes by helping identify uninsured or unregistered vehicles while encouraging owners to comply with the statutory requirement of obtaining valid insurance.

"Such projects would ensure ground-level compliance with the statutory mandate of Section 146 of the MVA. This may be done through the use of ANPR (Automatic Number Plate Recognition) cameras," it said, noting that the Ministry of Petroleum and Natural Gas had, in principle, raised no objection to the proposal.

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The bench also directed the Insurance Regulatory and Development Authority of India (IRDAI) to increase the mandatory long-term third-party insurance period for new vehicles by one year. New cars will now require four years of third-party cover, up from three years, while new two-wheelers must carry six years of cover instead of five.

"We notice that despite eight years having passed from the said direction, a large number of vehicles remain uninsured. While the IRDA and GIC (General Insurance Council) have recommended that this period not be enhanced, we are of the view that it is in the interest of road safety that the period be enhanced by one year," the bench observed.

The court noted that of the country's 30.48 crore registered vehicles, about 16.54 crore remain uninsured, undermining the objective of the Motor Vehicles Act.

"The object behind mandatory insurance under Section 146 of the MVA is not just that victims of road accidents are compensated, it is also that they are not drawn into prolonged litigation," the bench said.

It observed that uninsured vehicles often leave accident victims and their families without timely compensation, forcing them into lengthy legal battles over liability and damages, particularly in cases involving death or permanent disability.

To improve enforcement, the court directed IRDAI and the Ministry of Road Transport and Highways to deploy Automatic Number Plate Recognition (ANPR) cameras in selected states, integrated with the Insurance Information Bureau and the VAHAN database, to automatically detect uninsured vehicles and issue e-challans.

The bench also ordered that state police be equipped with handheld devices or mobile applications linked to the same databases, enabling real-time verification of insurance status and enforcement of mandatory insurance requirements.

Additionally, the court directed IRDAI to introduce a range of policy options for private vehicle owners, including a basic third-party policy with minimum statutory coverage as well as optional add-ons such as own-damage and personal accident cover.

The directions came while hearing a motor accident compensation matter, with the court observing that despite a robust statutory framework mandating third-party insurance, weak enforcement has left many road accident victims struggling to secure compensation in a timely manner.