Can Owners Claim No-Fault Compensation Under Section 163A MV Act? Supreme Court Sends To Larger Bench

The court noted that there is considerable variance in the observations made by coordinate benches on this issue, although as a general principle statutory liability has been held not to apply in the case of the owner or insured, since the coverage was confined to third party risks or those specified under Section 147 read with Section 149 of the Act.

The present case concerned a plea by minor petitioner Wakia Afrin, whose parents both died in a road accident when their vehicle crashed into a roadside building due to a tyre burst.

The Motor Accident Claims Tribunal had allowed her claim and awarded Rs 4,08,000 for the death of her mother and Rs 4,53,339 for the death of her father. The owner of the vehicle was the petitioner’s father. The Punjab and Haryana High Court, however, held that a dead person cannot be made a defendant and therefore the claim petitions were not maintainable. The High Court nonetheless recorded that there was no dispute about the validity of the insurance policy and that the vehicle had been driven by a person holding a valid driving licence.

Holding that the High Court’s order could not be sustained, the Supreme Court considered the question whether the daughter of the owner of the vehicle has the right to claim compensation for the death of the owner when the claim is raised under Section 163A, which allows recovery without the need to prove negligence. The bench pointed out that Section 155 enables a claim to be filed and prosecuted even after the death of the owner of the vehicle, provided there is a valid insurance policy in place. It emphasised that Section 163A is a special provision containing a non-obstante clause that overrides not only other provisions of the Motor Vehicles Act but also any other law or instrument having the force of law. “We cannot but understand the non-obstante clause having a superseding effect over the laws of insurance or even the terms in the policy, which definitely is an instrument having the force of law,” the court said.

The bench noted that Section 163A makes liable the owner of the vehicle or the authorised insurer to pay compensation in accordance with the Second Schedule in the case of death or permanent disablement due to an accident arising out of the use of a motor vehicle. “When there is a valid policy issued in the name of the vehicle involved in the accident, a claim under Section 163A, as per the words employed in the provision, covers every claim and is not restricted to a third party claim; without any requirement of establishing the negligence, if death or permanent disability is caused by reason of the motor accident,” the bench said.

According to the court, such a reading would also include liability for the death of an owner or a driver who stepped into the shoes of the owner if the claim is made under Section 163A independently of the statutory liability under Section 147 or the contractual liability recorded in the insurance policy. The bench added that this would override the provisions under Sections 147 and 149, along with other provisions of the Motor Vehicles Act and the law regulating insurance, as well as policy terms that confine claims for an owner-driver to a fixed sum.

Describing Section 163A as a beneficial piece of legislation, the court said it was brought in keeping in mind the increased likelihood of accidents due to the growing number of vehicles on overcrowded roads, and as a social security measure to provide a more comprehensive “no-fault” liability scheme in light of the difficulties in proving rash and negligent driving. The bench made it clear that it was unable to agree with earlier two-judge bench decisions which had held that an owner or legal heir cannot claim compensation under Section 163A because they are not “third parties.”

With these findings, the bench formally doubted the correctness of the decisions of coordinate benches and ordered that the matter be placed before a larger bench for a final and authoritative ruling. It directed the registry to place the papers before the Chief Justice of India for appropriate orders. The outcome of the larger bench’s decision could have far-reaching implications for the scope of no-fault compensation under the Motor Vehicles Act, particularly for cases where the deceased was the owner or driver of the insured vehicle.