The Supreme Court (SC) is re-evaluating the scope of motor accident compensation claims, specifically regarding whether they should be restricted to third-party liabilities. A bench of Justices Sudhanshu Dhulia and K. Vinod Chandran has referred this critical question to a larger bench, acknowledging conflicting opinions from previous apex court verdicts. This move has the potential to reshape accident compensation jurisprudence in India.
The core of the debate revolves around Section 163A of the Motor Vehicles Act, 1988, which provides for "no-fault liability". This section allows victims of motor accidents to receive structured compensation without needing to prove negligence. However, differing interpretations have emerged over the years, particularly concerning whether the owner-driver of a vehicle can claim compensation, especially in single-vehicle accidents.
In a specific case before the court, a minor girl sought compensation after losing both parents in a car accident where her father was driving. The insurance company compensated her for her mother's death but denied the claim for her father, as he was the insured party. The Supreme Court bench hearing the case expressed the view that Section 163A could be invoked for such claims. The court stated that the provision covers every claim and is not restricted to third-party claims when death or permanent disability is caused by a motor accident, without needing to establish negligence. This perspective includes liability concerning the death of an owner or driver stepping into the owner's shoes, provided the claim is made under Section 163A, irrespective of statutory liability under Section 147 or contractual liability in an insurance policy.
The insurance company argued that the petitioner, inheriting the vehicle owner's estate, could not simultaneously be the liable party and the compensation recipient. The Supreme Court, however, emphasized that Section 163A overrides all provisions of the Motor Vehicles Act and any other prevailing law. The court also referenced Section 155 of the Act, which states that a cause of action survives against the insurer even if the insured dies after an event that led to a claim. A third-party claim for compensation would survive because, upon the insured's death, it would be directed against their estate, which the insurer is obligated to indemnify.
The Supreme Court bench recognized conflicting opinions from previous decisions, including Dhanraj v. New India Assurance, Ningamma v. United India Insurance, and Ramkhiladi v. United India Insurance, which limited Section 163A claims to third-party risks. The bench stated that families are often denied compensation in fatal accident cases, especially those involving self-employed or low-income individuals driving their own vehicles, due to this narrow interpretation. Critics argue that this defeats the welfare intent of Section 163A, especially when no wrongdoing is established. The referral to a larger bench aims to resolve the longstanding confusion in High Courts, where differing interpretations have led to inconsistency in compensation awards. This move is likely to spark debate among insurers, policymakers, and legal experts and could lead to reforms in how motor accident claims are processed in India.
