By Dr. Sailaja Petikam
The Motor Vehicle Act, 1988 makes the insurance of motor vehicle against third party risks, compulsory for the motor vehicles to be used in public places. The object of the provision is to protect the interest of a third party, who suffers by the use of the said vehicle. The insurance is against liability for the death of, bodily injury to, any person, or damage to any property of a third party, or death of or bodily injury to any passenger of a public service vehicle.
If it is an ‘Act’ policy i.e. the policy only to cover the liability mentioned in the Act, the insurer cannot be made liable for damage to a gratuitous passenger, or a pillion rider on a scooter. The insurer is, however, free to issue a policy (e.g. a comprehensive policy) in which he undertakes to be liable even for damage to a gratuitous passenger.
Necessity for Insurance against Third Party Risk
According to the Motor Vehicles Act, 1988, no person shall use, except as a passenger, or cause to allow any other person to use, a motor vehicle in a public place, unless there is in force in relation to the use of vehicle by that person or that other person, as the case may be, a policy of insurance complying with the requirements of the M.V. Act, 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 Public Liability Insurance Act, 1991 (Sec. 146 of M.V. Act).
The aforesaid section shall not apply to any vehicle owned by the Central Government or a State Government and used for Government purposes unconnected with commercial enterprise.
Any person driving a motor vehicle in any public place shall, on being so required by a police officer in uniform authorized in this behalf by the State Government, produce:
- The certificate of insurance.
- The certificate of registration.
- The driving licence.
- In the case of a transport vehicle, also the certificate of fitness.
Compensation Provisions
Where death or permanent disability of any person has resulted from an accident arising out of the use of a motor vehicle, the owner of the vehicle shall, jointly and severally, be liable to pay compensation in respect of such death or disablement (Sec. 140 M.V. Act, 1988).
The amount of compensation payable in respect of the death of any person shall be a fixed sum of Rs. 50,000/- and the amount of compensation payable in respect of permanent disablement of any person shall be a fixed sum of Rs. 25,000/-.
The claimant shall not be required to plead and establish that the death or permanent disablement was due to any wrongful act, neglect or default of the owner, or of any person.
The owner of the vehicle is liable to give compensation for relief; he is also liable to pay compensation under any other law for the time being in force. Provided, that the amount of such compensation to be given under any other law shall be reduced from the amount of compensation payable under sections 140 or 163-A of M.V. Act, 1988.
The right to claim compensation under section 140 of M.V. Act in respect of death or permanent disablement of any person shall be in addition to any other right except the right to claim under the scheme referred to in section 163-A of M.V. Act.
Permanent Disablement of a person shall be deemed to have resulted from an accident of the nature referred to in sub-section (1) of Sec. 140 if such person has suffered by reason of the accident, any injuries involving:
- Permanent privation of the sight of either eye or hearing of either ear, or privation of any member or joint; or
- Destruction or permanent impairing of the powers of any member or joint; or
- Permanent disfiguration of the head or face.
This provision shall also apply in relation to any claim for compensation in respect of death or permanent disablement of any person under the Employees Compensation Act, 1923. This provision under the M.V. Act shall have effect notwithstanding anything contained in any other provisions of this Act or of any other law for the time being in force.
Special Provisions as to Compensation in Case of Hit and Run Motor Accident (Sec. 161)
In respect of the death of any person resulting from a hit and run motor accident, a fixed sum of Rs. 25,000/-.
In respect of grievous hurt to any person resulting from a hit and run motor accident, a fixed sum of Rs. 12,500/-.
Special Provisions as to Payment of Compensation on Structured Formula Basis Laid Down in Second Schedule (Section 163-A)
Notwithstanding anything contained in this Act or in any law for the time being in force or instrument having in the force of law, the owner of the motor vehicle or the authorized insurer shall be liable to pay in the case of death or permanent disablement due to accident arising out of the use of motor vehicle, compensation, as indicated in the Second Schedule, to the legal heirs or the victim as the case may be.
The claim for compensation under Sec. 163A, the claimant shall not be required to plead or establish that the death or permanent disablement in respect of which the claim has been made was due to any wrongful act or neglect or default of the owner of the vehicle/s concerned or of any other person.
Where a person is entitled to claim compensation under sections 140 and 163-A, he shall file the claim under either of the said sections and not under both.
Insurer’s Duty to Satisfy Judgments and Awards Against Persons Insured in Respect of Third Party
If, after a certificate of insurance has been issued in favour of the person by whom a policy has been effected, judgment or award in respect of any such liability as is required to be covered by a policy is obtained against any person insured by the policy then, notwithstanding that the insurer may be entitled to avoid or cancel, the insurer shall, subject to some provisions of this Act, pay to the person entitled to the benefit of the decree any sum not exceeding the sum assured payable thereunder.
No sum shall be payable by an insurer on showing the following defences, namely:
- That there has been a breach of a specified condition of the policy, being one of the following conditions, namely:
- A condition excluding the use of the vehicle for hire or reward, which was not mentioned while taking the policy; for organized racing and speed testing; for a purpose which was not allowed by the permit; or without side-car being attached where the vehicle is a motor vehicle.
- A condition excluding driving by a named person or persons or by any person who is not duly licensed, or obtaining a driving licence during the period of disqualifications.
- A condition excluding liability for injury caused or contributed to by a condition of war, civil war, riot or civil commotion.
- That the policy is void on the ground that it was obtained by the non-disclosure of a material fact or by a representation of fact which was false in some material particular.
Claims Tribunals
A State Government may, by notification in the Official Gazette, constitute one or more Motor Accidents Claims Tribunals (MACT) for such area as may be specified in the notification for the purpose of adjudicating upon claims for compensation in respect of accidents involving the death of, or bodily injury to, persons arising out of the use of motor vehicles, or damages to any property of a third party so arising, or both (u/s 165).
Qualifications to Hold as Member of MACT
- He is, or has been, a judge of High Court.
- He is, or has been, a District Judge.
- He is qualified for appointment as a judge of a High Court (or as a District Judge).
The Claims Tribunal (MACT) shall have all the powers of a Civil Court for the purpose of enforcing the attendance of witness and of compelling the discovery and production of documents and material objects and for such other purposes as may be prescribed.
Application for Compensation
An application for compensation arising out of an accident of the nature specified in section 165 may be made:
- By the person who has sustained the injury;
- By the owner of the property;
- Where death has resulted from the accident, by all or any of the legal representatives of the deceased; or
- By any agent duly authorised by the person injured or all or any of the legal representatives of the deceased, as the case may be.
Provided that where all the legal representatives of the deceased have not joined in any such application for compensation, the application shall be made on behalf of or for the benefit of all the legal representatives who have not so joined, and shall be impleaded as respondents to the application.
Jurisdiction
Every application shall be made, at the option of the claimant, either to the claims tribunal having jurisdiction over the area in which the accident occurred or to the claims tribunal within the local limits of whose jurisdiction the claimant resides or carries on business. The application shall be in such form and contain such particulars as may be prescribed.
Provided that where a claim under section 140 is made in such application, the application shall contain a separate statement to that effect immediately before the signature of the applicant.
Where any claims tribunal has been constituted for any area, no Civil Court shall have jurisdiction to entertain any question relating to any claim for compensation which may be adjudicated upon by the claims tribunal for that area.
Appeals
Any person aggrieved by an award of a Claims Tribunal may within 90 days from the date of the award, prefer an appeal to the High Court.
Provided that no appeal by the person who is required to pay any amount in terms of such award shall be entertained by the High Court unless he has deposited with it Rs. 25,000/- or 50% of the amount so awarded, whichever is less, in the manner directed by the High Court.
Provided further that the High Court may entertain the appeal after the expiry of the said period of 90 days, if it is satisfied that the appellant was prevented by sufficient cause from preferring the appeal in time.
No appeal shall lie against any award of a MACT, if the amount in dispute in the appeal is less than Rs. 10,000/-.
In R.S. Mishra v. Mohan Singh (1997), if an applicant can show sufficient cause for not appearing, the ex parte award can be set aside.
Award
The MACT shall arrange to deliver copies of the award to the parties concerned expeditiously and in any case within a period of 15 days from the date of the award. The person who is required to pay any amount in terms of such award shall, within 30 days of the date of announcing the award by the claims tribunal, deposit the entire amount awarded in such manner as the claims tribunal may direct.
Where any claims tribunal allows a claim for compensation made under this Act, such tribunal may direct in addition to the amount of compensation simple interest shall also be paid at such rate and from such date not earlier than the date of making the claim as it may specify in this behalf.
According to sec. 174 of the Act, 1988, where any money is due from any person under an award, the Claims Tribunal may, on application made to it by the person entitled to the money, issue a certificate for the amount to the Collector and the Collector shall proceed to recover the same in the manner as an arrears of land revenue.