States to formulate a Plan to Sell Uninsured Motor Vehicles to Pay Compensation to Accidents Victims- Supreme Court

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September 18, 2018

In this recent case, the Supreme Court has directed all the States and Union Territories (UT’s) to formulate a more comprehensive scheme for payment of compensation to victims of road accidents, in place of the present system of third party insurance. The Apex Court headed by Chief Justice Dipak Misra has ordered that where the motor vehicle is not covered by a policy of insurance against third party risks then the motor vehicle shall be sold off in public auction and proceeds thereof shall be used for the purpose of satisfying the compensation that may be awarded in a claim case arising out of such accident.

Case name: Usha Devi & Anr. Etc. V. Pawan Kumar & Ors.

In the case, the Counsel for the Appellants had raised the issue that when numerous accidents occur and there is no insurance or valid insurance, it becomes extremely difficult on the part of the tribunals to pass an executable award. It was also contended that there are owners who cannot really pay and, therefore, there should be some arrangement by which the State can bear the responsibility.

Reference was also made to the case of Jai Prakash vs. National Insurance Company Limited and others, whereby the Apex Court dealt with many an aspect, to ensure that all accident victims get compensation and had suggested for a comprehensive and unified statute dealing with the accidents so that the families of the helpless victims do not suffer on account of the fact that the vehicle is not insured.

Taking a serious note of the aforesaid contentions advanced by the Appellants the Supreme Court has now directed the Chief Secretaries of each of the States to bring out necessary notification, if not already done, on the lines of the notification issued by the Govt. of NCT of Delhi keeping in view the decision in Jai Prakash case.

Pursuant to the decision Jai Prakash case, the Govt. Of NCT of Delhi had framed Rule i.e. Delhi Motor Accident Claims Tribunal Rules, 2008. The Rule states as under:

‘Where the motor vehicle is not covered by a policy of insurance against third party risks, or when registered owner of the motor vehicle fails to furnish copy of such policy, the motor vehicle shall be sold off in public auction by the magistrate having jurisdiction over the area where accident occurred, on expiry of three months of the vehicle being taken in possession by the investigating police officer, and proceeds thereof shall be deposited with the Claims Tribunal having jurisdiction over the area in question, within fifteen days for purpose of satisfying the compensation that may have been awarded, or may be awarded in a claim case arising out of such accident.’

The Supreme Court’s order can be accessed here.