Accident Claim: SC says Insurer can’t Raise Plea of Negligence

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November 28, 2017

United India Insurance Co. Ltd. v. Sunil Kumar & Anr.

Date of Judgment: November 24, 2017

In this recent case, the core issue revolved around the scope of Section 163A of the Motor Vehicle Act, 1988. Section 163A of MV Act provides for special provisions as to payment of compensation on structured formula basis.

Also read Accident Claims – How to get compensation under Motor Vehicles Act

Also read Motor Vehicles Accident Compensation under the MV Act

What is Section 163A of MV Act?

Section 163A of MV Act was incorporated in the Motor Vehicle Act, 1988 vide Amendment Act of 1994. The provision enumerates that the owner of the motor vehicle or the authorized Insurer shall be liable to pay in case of death or permanent disablement due to accident arising out of the use of motor vehicle in accordance to the compensation as provided under the Second Schedule.

The provision further states that in such cases the claimant is not required to establish that the death or permanent disablement caused in accident was due to neglect or default of the owner of vehicle.

Issue in the case:

Whether in a claim proceeding under Section 163A of MV Act it is open for the Insurer to raise the defence/plea of negligence?

Authorities referred to by the Court

While discussing the issue, the Court made reference to the case of National Insurance Company Limited v. Sinitha & Ors.1, wherein a two judge bench of Supreme Court understood the scope of Section 163A of the Act to be enabling an Insurer to raise the defence of negligence to counter a claim for compensation.

Mutual Exclusiveness of provisions of Section 163A and 166 of the MV Act2In this context, the Supreme Court made reference to the case of Deepal Girishbhai Soni and others vs. United India Insurance Co. Ltd., Baroda3, wherein the Bench took the view that while Section 140 of the Act deals with cases of interim compensation leaving it open for the claimant to agitate for final compensation by resort to the provisions of Section 166 of the Act, Section 163A of the Act provides for award of final compensation on a structured formula following the provisions of Second Schedule. In the case the Bench also opined that both the provisions i.e. Sections 140 and 163A are based on the concept of ‘no fault liability’ and have been enacted as measures of social security. It was further noted that in a proceeding under Section 163A of the Act the Tribunal may be required to adjudicate upon various disputed questions like age, income, etc. unlike in a proceeding under Section 140 of the Act.

The Court in the case also made reference to the Supreme Court’s verdict in the case of in Hansrajbhai v. Kodala, wherein it was observed that compensation amount is paid without pleading or proof of fault, on the principle of social justice as a social security measure because of ever-increasing motor vehicle accidents in a fast-moving society. That mischief is sought to be remedied by introducing Section 163-A and the disease of delay is sought to be cured to a large extent by affording benefit to the victims on structured-formula basis.

Bench’s Verdict

  • That grant of compensation under Section 163A of MV Act on the basis of the structured formula is in the nature of a final award and the adjudication there under is required to be made without any requirement of any proof of negligence of the driver/owner of the vehicle(s) involved in the accident.
  • That claimant is not required to establish proof of negligence has been made explicit by Section 163A(2). Though the said section does not specifically exclude a possible defence of the Insurer based on the negligence of the claimant but permitting such defence to be introduced by the Insurer to be contemplating any such situation would go contrary to the very legislative object behind introduction of Section 163A of the Act i.e. final compensation within a limited time frame on the basis of the structured formula to overcome situations where the claims of compensation on the basis of fault liability was taking an unduly long time.

In view of the aforesaid, the Supreme Court’s Three-Judge Bench held that in a proceeding under Section 163A of MV Act it is not open for the Insurer to raise any defence of negligence on the part of the victim.

Also read Motor Vehicle Act, 1988 – SC issues guidelines on Assessment of Compensation

The case can be accessed here.

1(2012)2SCC356

2Section 166 of MV Act provides for application for compensation in the event of death or permanent disability due to accident by motor vehicle

3(2004) 5 SCC 385