Motor Vehicles Act: liability and claims

1. Why a statute for road accidents

Under the common law, a road accident victim had to prove negligence of the driver, and the owner was liable only vicariously. The victim might succeed against a driver who had no money. The Act changes three things: it imposes liability without fault for a fixed sum, it makes third-party insurance compulsory so that there is a solvent payer, and it sets up Claims Tribunals with a summary procedure. These are the salient features to list in an answer.

2. Liability without fault: s.164

Section 164 makes the owner of the vehicle or the authorised insurer liable to pay, in case of death, a fixed compensation of ₹5 lakh, and in case of grievous hurt, ₹2.5 lakh, to the legal heirs or the victim. The claimant is not required to plead or establish that the death or injury was due to the wrongful act, neglect or default of the owner, driver or anyone else. Contributory negligence of the victim is no answer. This is a statutory form of strict liability, justified on the footing that motor vehicles create a risk on the road and the cost should fall on those who run them and their insurers.

The claimant who receives fixed compensation under s.164 cannot also pursue a fault-based claim under s.166 for the same accident: the two routes are alternatives, and the claimant must choose. The s.164 route suits a victim who cannot prove negligence; the s.166 route suits one whose actual loss is larger.

3. Hit and run: s.161 and the Accident Fund

A hit and run accident is one where the identity of the vehicle cannot be ascertained despite reasonable efforts. Under s.161 the victim receives compensation of ₹2 lakh for death and ₹50,000 for grievous hurt, or such higher amounts as the Central Government prescribes. The money is paid under the Compensation to Victims of Hit and Run Motor Accidents Scheme, 2022 from the Motor Vehicle Accident Fund created by s.164B. The Fund also pays for treatment of accident victims, including during the “golden hour” (s.162), and covers claims involving uninsured vehicles.

Two related provisions are often asked: s.134A protects the Good Samaritan who helps an accident victim from civil and criminal liability, and s.134 casts duties on the driver to secure medical attention and report the accident.

4. Compulsory third-party insurance: ss.146–147

Section 146 forbids any person from using a motor vehicle in a public place unless there is a policy of insurance complying with Chapter XI. Section 147 sets out what the policy must cover: liability for death of or bodily injury to any third party, and damage to third-party property, caused by the use of the vehicle in a public place. Liability for death and bodily injury is unlimited. The insurer must satisfy awards against the insured; its defences are limited by statute (for example, use of the vehicle for an unpermitted purpose, or driving by a person without a valid licence), and even where a defence succeeds the courts have often directed the insurer to pay and recover from the owner, so that the victim is not left without payment. Using a vehicle without insurance is an offence under s.196.

5. Claims Tribunals: ss.165–168

• s.165 — the State Government constitutes Motor Accidents Claims Tribunals for claims arising out of death, bodily injury or damage to property of third parties.
• s.166 — who may apply: the injured person, the owner of damaged property, all or any of the legal representatives of the deceased, or an authorised agent. The claim may be filed where the accident occurred, where the claimant resides or carries on business, or where the defendant resides. As amended, the application must be made within six months of the accident. The police report of the accident can be treated as an application.
• s.167 — where a claim also lies under the Employee's Compensation Act, 1923, the claimant may choose either forum, not both.
• s.168 — the Tribunal holds an inquiry, determines the compensation that appears just, and specifies the amount payable by the insurer, owner or driver. The amount must be deposited within thirty days.

Section 175 bars the jurisdiction of civil courts over questions within the Tribunal's competence. Appeals lie to the High Court under s.173.

6. Computing compensation: the multiplier method

Under s.166 compensation is “just compensation”. With s.163A and its Second Schedule gone, courts compute loss of dependency in death cases by the method settled in two Supreme Court decisions.

Sarla Verma v. Delhi Transport Corporation, 2009 INSC 506, (2009) 6 SCC 121, laid down the steps:

• take the deceased's monthly income and add future prospects;
• deduct personal expenses: one-third if the deceased was married with two or three dependants, one-fourth with four to six dependants, one-fifth with more than six, and one-half for a bachelor;
• multiply the annual dependency by a multiplier chosen by the age of the deceased: 18 for ages 15 to 25, falling by one for each five years (17, 16, 15, 14, 13 up to age 50), then 11, 9, 7 and 5 for the higher age groups.

National Insurance Co. Ltd. v. Pranay Sethi, 2017 INSC 1068, (2017) 16 SCC 680, a Constitution Bench, approved the Sarla Verma table for multiplier and deductions and settled future prospects:

• permanent employment: add 50% of actual salary if the deceased was below 40, 30% between 40 and 50, and 15% between 50 and 60;
• self-employed or on fixed salary: add 40%, 25% and 10% for the same age groups;
• conventional heads fixed at ₹15,000 for loss of estate, ₹40,000 for loss of consortium and ₹15,000 for funeral expenses, to be enhanced by 10% every three years.

7. Offences and penalties (briefly)

The 2019 amendment raised fines sharply. Examples: driving without a licence (s.181, ₹5,000); dangerous driving (s.184); drunken driving (s.185, imprisonment up to six months or fine of ₹10,000, or both, for a first offence); driving without insurance (s.196); offences by juveniles (s.199A), where the guardian or owner is deemed guilty unless he proves the offence was committed without his knowledge, and the vehicle's registration is cancelled. Causing death by rash or negligent driving is punished under s.106 of the Bharatiya Nyaya Sanhita, 2023.

8. Problem

A 30-year-old salaried bank officer earning ₹40,000 a month is killed when a lorry hits his scooter. He leaves a wife and two children. The lorry's insurer says the scooterist was also careless.

Issue. What claims lie, and how is compensation computed?

Law. The family may claim ₹5 lakh under s.164 without proving fault, or just compensation under s.166 on proof of the lorry driver's negligence, computed by the Sarla Verma / Pranay Sethi method. The insurer is bound to satisfy the award under ss.147 and 149.

Application. The s.164 sum is small for a salaried victim, so a s.166 claim is better if negligence can be shown. Income ₹40,000 plus 50% future prospects (permanent job, under 40) gives ₹60,000. Deduct one-third for personal expenses (three dependants), leaving ₹40,000 a month, or ₹4.8 lakh a year. Multiplier for age 26–30 is 17, giving ₹81.6 lakh, plus the conventional heads as enhanced. If the deceased was partly at fault, the s.166 award may be reduced for contributory negligence; the s.164 award would not be.

Conclusion. The family should file under s.166 before the Claims Tribunal within six months of the accident, against the driver, owner and insurer.

How this is examined

A 10-mark question: “Explain liability without fault under the Motor Vehicles Act” or “Discuss the constitution and powers of Claims Tribunals.” Open with the 2019 amendment, then s.164, s.161, insurance, and the Tribunal. Short notes: “Hit and run motor accidents”, “Compulsory insurance”, “Claims Tribunal”. A computation problem on the multiplier method can also appear.