146. Necessity for insurance against third party risk. - (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.Explanation. - For the purposes of this sub-section, a person driving a motor vehicle merely as a paid employee, while there is in relation to the use of the vehicle no such policy in force 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)The provisions of sub-section (1) shall not apply to any vehicle owned by the Central Government or a State Government and used for purposes not connected with any commercial enterprise.(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 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 a fund has been established and is maintained by that authority in such manner as may be prescribed by appropriate Government.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.
