August 10, 2018
In the case, the Supreme Court Bench headed by Chief Justice Dipak Misra reiterated that under Section 163A of the Motor Vehicle Act (it provides for payment of compensation on structured formula basis), the insurer cannot raise any defence of negligence on the part of the victim to counter a claim for compensation.
Case name: Shivaji and Anr. v. Divisional Manager, United India Insurance Co. Ltd.
Date of Judgment: August 09, 2018
In the case, the appellants (the parents of deceased driver) had filed a claim petition seeking compensation under Section 163A of the Motor Vehicle Act. The deceased driver’s car met with an accident resulting in the death of the driver and two other passengers.
The Tribunal noted that since the claim petition had been filed under Section 163A of the Motor Vehicle Act, the question of proving that the accident happened due to the rash and negligent act of the driver did not arise and accordingly allowed a claim of Rs 4,60,800 together with interest.
Aggrieved by the Tribunals’ order, the insurer approached the High Court, the High Court allowed the insurer’s appeal on the ground that as the deceased driver in this case was responsible for causing the accident, compensation could not have been awarded to the appellants.
- The Supreme Court in appeal held that the issue in the case was no longer res integra and is covered by a recent judgment of Supreme Court in United India Insurance Co. Ltd. v. Sunil Kumar & Anr. wherein it was held that to permit a defence of negligence of the claimant by the insurer and/or to understand Section 163A of the Act as contemplating such a situation, would be inconsistent with the legislative object behind introduction of this provision, which is “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”.
- The Court observed that if an insurer was permitted to raise a defence of negligence under Section 163A of the Act, it would “bring a proceeding under Section 163A of the Act at par with the proceeding under Section 166 of the Act which would not only be self-contradictory but also defeat the very legislative intention”.
- Consequently, it was held that in a proceeding under Section 163A of the Act, the insurer cannot raise any defence of negligence on the part of the victim to counter a claim for compensation.
In view of the aforesaid, the Three-Judge Bench of the Supreme Court set aside the High Court’s order.
The entire case can be accessed here.