1.motor Accidents-Compensation No Fault Liability

MOTOR ACCIDENTS - COMPENSATION
NO FAULT LIABILITY
PRESENTED
BY
Y V RAMA KRISHNA
VICE CHAIRMAN(RETD)
AP ADMINISTRATIVE TRIBUNAL.
DOCTRINE OF NO FAULT LIABILITY
BACK DROP
• JUDICIAL HISTORY
Claims for compensation - based on law of Torts.
• Fault is ‘Sine Qua Non’ to claim damages under the law of Torts.
• Sri Justice Fazalali in Manjusri Raha Vs B.L.Gupta(AIR 1977 SC
1158) in view of faster growth o f vehicular traffic and loss of life
and limbs due to frequency of motor accidents, observed :
• “The time is ripe for serious consideration of creating no-fault
liability. Having regard to the directive principles of State policy ,
the poverty of the ordinary run of victims of automobile
accidents, the compulsory nature of insurance of motor vehicles,
the nationalization of general insurance companies and the
expanding trend towards nationalization of bus transport, the law
of torts based on no-fault liability needs reform”
Sri Justice V.R.Krishnayyar in Concord of India
Insurance Co. Vs Nirmala (AIR 1979 SC 1666)
observed:
“The jurisprudence of compensation for motor
accidents must develop in the direction of
no-fault liability and the determination of the
quantum must be liberal, not niggardly since the
law values life and limb in a free country in
generous scales.”
STATUTORY HISTORY:
In the light of observations of Supreme
Court and the recommendations of Law
Commission, Motor Vehicles Act 1939 was
amended and Chapter X was introduced and
under sec 95 no-fault liability was provided.
M V Act 1988 replaced 1939 Act. Chapter X
of Act 1988 deals with it.
• Sec 140 speaks about liability to pay
compensation in case of death or
permanent disability.
• Sec 141 speaks about other right to claim
compensation.
• Sec 142 defines permanent disability.
• Sec 143 states about the applicability of
chapter X to Workmen’s Compensation Act.
• Sec 144 speaks about overriding effect.
NO FAULT LIABILITY – SEC.140
• Death or Permanent Disability of any person in
an Accident arising out of use of Motor
Vehicle(s).
Owner(s) - jointly and severally liable to pay :
In case of – Death: Rs 50,000/
– Permanent Disability: Rs 25,000/-
• Need not plead
– fault on the part of owner or driver and
– fault of Deceased or injured is not a defense
• Entitled to compensation u/other laws except
u/sec 163 A.
• Compensation u/sec. to be deducted from
other compensation awarded.
• Accident – not defined under MVAct.
• Distinction between Murder and
Accidental Murder is drawn in Smt. Rita Devi
Vs New India Assurance co.(2000) 5 SCC 113
by the Supreme Court. It is held:
• “ If the dominant intention of the act of
felony is to kill –it is a murder simplicitor.
If the murder was not originally intended
and same was caused in furtherance of any
other felonious act then such murder is an
accidental murder”.
• Accident arising out of use of motor vehicle :
• The word ‘use’ has a wider connotation to cover
the period when the vehicle is not moving and
stationary, became immobile due to breakdown
or mechanical defect or accident.
• The accident should be connected with the use
of the motor vehicle. The connection need not
be direct and immediate. The expression used
enlarges the field of protection made available
to the victims and is in consonance with the
beneficial object underlying the enactment.
Vide Sivaji Dayanu patil Vs Smt. Vatschala Uttam
More 1991 ACJ 777 (SC). It is followed in Smt.
Rita Devi (supra).
• DEFENCES available for Claims U/S 140 to
the Insurance Companies :
• The burden is on the Insurance Co. to prove:
a) Owner committed willful breach of
conditions of policy,
b) Insurance Companies can take all
defenses available u/s 149.
National Insurance Co.vs Tumu Guruva Reddy
-2001 ACJ 542 (A.P);
Yellawwa Vs Nat. Ins. Co. AIR 2007 S.C.2582.
• Willful breach of conditions of policy:
• Mere violation of conditions of policy by
insured is not sufficient to get over the
liability by the insurer.
• The insurer must prove that the insured is
guilty of negligence and failed to exercise
reasonable care in fulfilling the conditions of
policy . The burden is on the insurer to
establish willful breach.
• Fundamental breach :
• The breach of conditions of policy must be so
fundamental as are found to have
contributed to the cause of the accident.
• The rule of ‘main purpose’ and concept of
‘fundamental breach’ have to be kept in mind
in interpreting the policy conditions and the
defenses available to the insurer.
• These niceties are extensively considered by
a three Judge bench of Supreme Court in
National Insurance Co.Ltd. Vs Swaran Singh
2004 ACJ 1=(2004) 3 SCC 297.
• The breach must be willful. If insured has

taken all precautions to fulfill condition -
there is no willful breach. Vide Sohan Lal
Passi Vs P. Sesha Reddy AIR 1996 SC 2627.
Followed in Swaran Singh (supra).
• PERMANENT DISABILITY : Sec.142.
• A)Permanent Privation of :
1) sight of either eye or
2)hearing of either ear
3) 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.
• Doctrine of Strict Liability:
• The "STRICT LIABILITY" doctrine propounded in Rynalds
Vs Fletcher is:
"The true rule of law is that the person who, for his own
purposes, brings on his land and collects and keeps
there anything likely to do mischief if it escapes, must
keep it in at his peril, and, if he does so, he is prima
facie answerable for all the damage which is the natural
consequence of its escape. He can excuse himself by
showing that the escape was owing to the plaintiffs
default, or perhaps, that the escape was the
consequence of vis major, or the act of God; but as
nothing of this sort exists, here, it is unnecessary to
inquire what excuse would be sufficient“.
• The principles laid down in
Rylands Vs Fletcher were considered by a
Constitutional Bench of Supreme Court in M.C.
Mehta Vs Union of India.1987(1) SCC395.
• This aspect was also considered in
Charan Scihu vsUnion of India1990(1) SCC613.
• Supreme Court in
Smt. Kaushnuma Begum Vs New India
Assurance Co. Manu/SC/0002/2001 has held
rule of Rynalds can be followed.
• The Constitutional Bench in M.C Mehta(supra) has held
as follows :
"In view of fast and constantly increasing volume of
traffic, the motor vehicles upon the roads may be
regarded to some extent as coming within the principle
of liability defined in Rynalds Vs Fletcher. From the
point of view of the pedestrian, the roads of this
country have been rendered by the use of the motor
vehicles highly dangerous. Hit and run cases where the
drivers of the motor vehicles who have caused the
accidents are not known are increasing in number.
When a pedestrian without negligence on his part is
injured or killed by a motorist whether throughout the
world to make the liability for damages arising out of
motor vehicles accidents as a liability without fault."
negligently or not, he or his legal
representatives as the case may be should be
entitled to recover damages, if the principle of
social justice should have any meaning at all.
In order to meet to some extent the
responsibility of the society to the deaths and
injuries caused in road accidents there has
been a continuous agitation throughout the
world to make the liability for damages arising
out of motor vehicles accidents as a LIABILITY
WITHOUT FAULT.
• May be in view of the above observations of
Supreme Court the Parliament brought an
amendment to MVAct and Introduced a
Structured Formula under 2nd Schedule and
introduced SEC 163-A and 163-B.
• The liability to pay as per 2nd Sch. is a NO
FAULT liability as fault of owner or driver is
irrelevant for a claim under SEC 163-A.
LIABILITY UNDER – SEC 163 - A.
Not withstanding anything u/Act or any law,
Owner or Insurer shall pay –
in case of Death or Permanent Disability –
to the legal heirs or victim
Compensation as per 2nd Schedule.
• Permanent Disability - as defined u/ W.C.Act.
• Not necessary to plead or establish – wrongful
act/neglect/default of Owner(s) or of any
person.
• Option to claim u/s 140 or 163-A - but not
both.(163-B).
• Claim U/s 163-A excludes claim U/S 166 but
not in addition. Deepal Girishbhai Soni Vs U.I.
Co.(2004)5 SCC 385(three J bench )
• Persons whose annual income is up to
Rs 40,000/-can only take recourse u/this
sec.(ibid).
• It requires re consideration as daily minimum
wages exceeds Rs 40000/-per year.
• Multiplier U/2nd Sh. is only for calculating
compensation for Permanent Disability but
not in case of death. – Rani Gupta Vs
U.I.Ins.Co. 2009 (3)Suprem535.
• No arithmetical mistakes in 2nd Sh.
(disagreeing with earlier views of S.C )
Reshmakumari Vs Madanmohan (2009)1 SCC
422.
• The view of S.C. that claim u/163-A does not
come U/no fault liability N.Ins.Co. Vs
Sunita(2012)2 SCC 56 is not accepted by
subsequent bench of S.C in the case between
U.Ind.Ins.Co. vs Sunil Kumar (2014) 1 SCC 680
and relied on three judge bench of S.C. in
Deepal Girishbhai (cited supra) and referred
the matter to a Larger Bench.
• Driver – Entitled U/sec. 163-A ?
No ,when no other vehicle is involved as he
is not a 3ed person. In New India Assurance.
Co Vs Meerabhai 2007 ACJ 818.
• Owner does not come u/163-A even if he is
driving – Lrs not entitled. In Ninganna Vs
U.Ind.Ins Co 2009 ACJ 2020.
• Defences available to the insurer in a claim
u/s 163-A:
• Defences available under Sec 149(2) of
MVAct are applicable to a claim U/S 163-A .
Vide Oriental Insurance Co. Vs Meena Varial
(2007) 5 SCC 428.
• If that is so the Doctrine of “pay and recover”
is applicable to a claim u/s 163-A.
SECOND – SCHEDULE.
• It is a structured formula-applicable to both fatal
accidents and permanent disability cases.
• Under it , Victims are classified or grouped as per
age and multipliers are prescribed.
• In death cases victims are classified on the basis
of annual income. Maximum is stated as
Rs 40000/-
• Pre calculated or pre determined amount are
prescribed. The Multiplier ranges from 5 to20.
• Where as Multiplier in 2nd vertical Colum ranges
from 5 to 18.
• In case of fatal accident claims from the
amount of prescribed compensation 1/3rd of
it shall be reduced as personal expenses.
• Amount of compensation in fatal accidents
shall not be less than Rs 50000/-
• It prescribes general damages in addition to
prescribed compensation .i.e. funeral
expenses, loss of consortium in case the
claimant is the spouse , loss of estate and
medical expenses incurred prier to the death
by the victim.
• It also prescribes the method of calculating
compensation in case of disability by using
the multiplier in col.2 of table and loss of
income.
• It prescribes notional income in certain cases.
• Non-earning persons – Rs. 15000/- per year.
• Spouse - 1/3rd of income of the
earning/surviving spouse.
• In case of other injuries only “general
damage” as applicable.
• The Supreme Court in Kisan Gopal Vs Lala
(2014) 1 SCC 244 considered the notional
income of non earning persons prescribed
under 2nd schedule .
• It is observed that the amount of Rs 15000/-
was fixed in 1994 and Rupee value has come
down drastically and it is just and reasonable
to take notional income as Rs 30000/-
• In view of the directions and observations made
by Supreme Court , a Bill of 2012 was introduced
to amend the 2nd schedule and other provisions .
• It was pass by Rajya Sabha and it is pending in Lok
Sabha.
• A reference is made in Puttamma vs K L Narayana
Reddy.(2013)15 SCC 45.
• Let us hope for better future to the motor
accident victims.
THANKS.
ALL THE BEST.
[email protected]

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MOTOR ACCIDENTS - COMPENSATION

• The breach must be willful. If insured has

ALL THE BEST.

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