THE MOTOR VEHICLES

ACT, 1988
Motor Vehicle Act,1988 is a comprehensive enactment in respect to various
matters relating to traffic safety on the roads and minimisation of road
accidents.

 Main provisions of the MV Act includes;

Licensing of drivers of motor vehicles, licensing of conductors of stage
carriers, registration of motor vehicles, certificate of fitness for transport
vehicles, control of transport vehicles through permits, construction,
equipment and maintenance of motor vehicles, control of traffic, compulsory
insurance under MV Act, compensation under MV Act, establishment of
motor accidents claim tribunals, offences, penalties, procedure etc…
 The motor accidents may be resulted from the negligence of the driver
or negligence of the victim or without any fault on the part of the
driver or victim (eg: sudden break failure)
One party suffers damage due to the negligent behaviour of the
other.The victim is entitled to get the remedy for damages. So the
wrongdoer is liable to pay the compensation to the victim. This makes
the concept of compulsory insurance important in MV Act.
Compulsory Insurance

 Motor vehicle Act 1988 makes the insurance of motor vehicles compulsory.
 Chapter Xl (Sec.145- 163) contains provision concerning “ Insurance of
Motor Vehicles against Third party risks”
 According to sec.146
“ No person shall use, except as a passenger, or cause or allow any other
person to use a motor vehicle in a public place, unless there is in force, in
relation to the use of the vehicle by that person or that other person, as the case
may be, a policy of insurance complying with the requirements of this chapter
 Driving uninsured vehicle shall be punishable under sec. 196 of the Act.
 LIABILITY UNDER M V ACT
 No Fault Liability

 According to Sec.140, no fault liability has been Recognised when death

or permanent disablement has resulted from an accident arising out of the
use of a motor vehicle. The amount of compensation payable shall be;
1. In respect of the death of a person, a fixed sum of Rs.50000
2. In respect of permanent disablement of any person, a fixed sum of
Rs.25000
 The doctrine of contributory negligence which is available as a defence
under common law is also abrogated in case of death and permanent
disability
 Sec.163 A provides for payment of compensation on the basis of structural
formula. In case of death the compensation is calculated on the basis of
age range and annual income
 Sec.163 A debars a claimant from claiming compensation under sec.140 as
well as 163 A
 Sec. 140 and sec.163 A Of M V Act thus recognise the principal of no fault
liability.
 Commencement of insurer’s liability
 The insurer’s liability commences as soon as the contract of insurance
comes into force and remains operative during the operation of the policy.
In case of renewal of an existing policy, the risk is covered from the
moment the renewal comes into force.
 National Ins. Co. Ltd. v. J.N. Dhabi
NATURE AND EXTEND OF INSURER’S
LIABILITY
 The policy of insurance issued by an authorised insurer, is:
1. To insure the person or classes of persons specified in the policy and the is
liable only towards the owner of the vehicle.
2. The insurer is liable to the extent specified in section 147 (2); and
3. The liability is for damage caused by,or arising out of,the use of the vehicle
in a public place.
1. Insurer’s liability for third party risks- Liability for
injury to certain person or classes of persons.
 Sec.147 mentions the classes of person for damage to whom an insurance company is liable
under the act policy.
 Liability is for the death or bodily injury to any passenger of a public service vehicle caused
by, or arising out of the use of the vehicle in a public place
 The pillion rider in a two wheeler was not to be treated as a third party.
Oriental insurance Co. Ltd. v. Sudhakaran K. V
 A gratituous passenger in a goods carriage would not be bound by the contract of insurance
( if the insurer has undertaken wider liability, he will be liable for the same)
 If the accident has resulted in damage to property, the owner of the property is entitled to get
the claim
  If the motor vehicle is transferred,the insurance policy lapses on such transfer and
the insurer cannot be held liable unless the policy of insurance is also transferred
with the consent of the insurer.

2. Extend of liability of the insurer under the act.

 Sec.147(2) of the 1988 act makes the following provisions regarding the insurer’s
liability;
1. For death or personal injury to a third party,the insurer’s liability is “ the amount of
liability incurred” ie,for the whole amount of liability
2. For damage to the property of a third party, the insurer’s liability is limited to Rs.6000
 If the driver does not posses a valid driving licence, insurer is not liable to pay claimed
amount.
 • In case of a hit and run motor accident, the compensation to be paid shall be;
1. In respect of the death of any person, a fixed sum of Rs.25000
2.In respect of grievous hurt to any person, a fixed sum of Rs.12500
( sec. 161, 162 and 163 )
Threeti & others v. Motor accidents claim tribunal & others

3. Insurer’s liability for the “use of vehicle” in “public place”

 Under sec.147 , the insurer is liable only if the damage has been caused by, or arising
out of ;
1. The use of the vehicle
2. In a public place
 Use of vehicle
 For the vehicle to be in use, it is not necessary that it must be running on the road. It is
in use even when it is parked, or even when it’s battery has been taken out.
Oriental fire & general Ins. Co. v. S.N. Raj
New India Assurance Co. Ltd. v. Yadu sambaji

In a public place
 The insurer’s liability under the act can arise only in case there has been a use of vehicle
in a public place
 According to sec.2 (34)
Public place means a road, street, way or other place, whether a throughfare or not,to which
the public have a right of access,and includes any place or stand at which passengers are
picked up or set down by a state carriage.
 Public place therefore is a place to which public have a right of access
Life insurance corporation of India v. Karthyani
 There is no bar to any insurer issuing a policy under which he undertakes wider liability,
ie, liability arising even for an accident at private place.
Madarsad Sahebala v. Nagappa Vittappa
 Liability when vehicle not insured

 If a vehicle is not insured against third party risk,the claimant still has
a right to claim compensation. In such case the liability will be fixed
on the negligent driver or the owner of the vehicle. A vehicle
belonging to the central or state government or a corporation is
exempted from being insured under section 146(2) and(3). Thus if a
vehicle belonging to a corporation is not insured, the corporation itself
will be liable to pay compensation.
Defences available to Insurance company

 If the driver of the offending vehicle does not posses a valid driving licence, it has
been held that the principle of “pay and recover” can be ordered to direct the
insurance company to pay the victim and then recover the amount from the owner of
the offending vehicle
 If licence of the driver was not in force on the date of the accident, insurance
company gets exonerated from its liability under the contract of insurance.
 If the vehicle was driven by a minor at the time the accident took place, the insurance
company would get absolved of its liability.
National Insurance Co.Ltd. v. Kaushalya Devi
 The Insurance company, however with a view to avoid their liability must prove the
breach on the part of the owner of the vehicle
Oriental Ins. Co. Ltd. v. Angad kol
Fahim Ahmad v. United India Ins. Co. Ltd
 CLAIMS TRIBUNAL
 A New forum,ie., Motor Accidents Claims Tribunals which substitutes civil courts has
been created by the Motor Vehicles Act for cheaper and speedier remedy to the victims
of accident of motor vehicles.
 Section 165 – 175 of Motor Vehicles Act,1988 deals with;
1. Setting up of claims tribunals
2. Procedure to be followed
3. Award of compensation
 Setting up of a claims tribunal
 By section 165 of the act, the state governments are authorised to constitute Motor Accidents
Claims Tribunals by a notification in the official gazette.
 Section 165 (3) states that,
A person shall not be quantified for appointment as a member of a claims tribunal unless he
(a) is, or has been, a judge of a High Court,or
(b) Is,or has been, a District Judge, or
(c) Is qualified for appointment as a High Court Judge or as a District Judge.
 The MACT Shall have jurisdiction to adjudicate upon claims for compensation in respect of
accidents involving the death or, bodily injury to, persons or damage to any property of a third
party arising out of the use of motor vehicles.
 Claims for compensation includes claims for compensation under section 140 and section 163 A
 Procedure to be followed

Application for compensation

 Sec 166 reads as
1. An application for compensation arising out of an accident of the nature specified in sub
section (1) of section 165 may be made;
(a) by the person who has sustained the injury; or
(b) by the owner of the property; or
(c) where death has resulted from the accident, by all or any of the legal representative of the
deceased; or
(d) By any agent duly authorised by the person injured or all or any of the legal
representatives of the deceased, as the case may be
 An application of compensation shall be made to MACT having jurisdiction over the
area in which the accident occurred or within the local limts of whose jurisdiction the
claimant resides, or within the local limts of whose jurisdiction the defendant resides
 No application for compensation shall be entertained unless it is made within six
months of the occurrence of the accident
( The tribunal, however, had a power to condone the delay and entertain an application after
the said period of six months if it was satisfied that the applicant was prevented by sufficient
cause for making an application)
M.P.S.R.T. Corp. v. Shyamkishore
 Sec.166(4) : The Claims Tribunals shall treat any report of accidents forward as an
application for compensation under this act.( i.e report filed by the police will be
treated as application)
simply the MACT: (1) Holds an enquiry (2) summons the parties and
(3) fixes the liability as per the procedure and pass an award.
Award of Claims Tribunal
 The finding of MACT, fixing the liability and order for compensation is called
award. It is final order. The award should;
(a) Determine the amount of compensation, which appears to be just.
The expression “just” , it is held, denotes, equitablity, fairness, reasonableness and non-
arbitrariness.
While deciding the quantum of compensation, the adjudicating authority has to keep in
view the sufferings of the injured person , nature of the injury, status of the victim, effect of
the injury on victims future, pecuniary loss, including expenses on medical treatment, mental
and physical shock, pain and suffering, inconvenience, hardship, discomfort, frustration,
mental stress in life, incapacity to enjoy normal amenities which he would have enjoyed but
for the injuries and his ability to earn as much as he used to earn or could have earned etc...
While assessing the quantum, the multiplier system is also applied because of deprivation of
dependancy.
(b) Specify the person to whom compensation shall be paid
(c) Specify the amount which shall be paid
 Section 168 makes the following provisions regarding the manner in which the claims
tribunal is to make the award:
1. The claims tribunal after hearing both the parties, must hold an inquiry into the claim
and may make an award by determining the amount of compensation, which appears
to be just, and specifying the persons to whom compensation shall be paid.
2. The claims tribunal shall arrange to deliver the copies of the award to the parties
concerned expeditiously and in any case within a period of fifteen days from the date
of the award.
3. When an award is made under this section,the person who is required to pay any
amount in terms of such award shall, within thirty days of the date of announcing the
award by the claims tribunal, deposit the entire amount awarded in such manner as the
claims tribunal may direct
Appeals

 Section 173 of the Act provides for appeal from the award of the Tribunal.
 Any person aggrieved by an award of a Claims Tribunal may, within ninety days
from the date of award, prefer an appeal to the High Court
 Before going for appeal,the appellant has to deposit Rs.25000/- or 50% of the amount
of award, whichever is less in the MACT .
 No appeal shall lie against any award of a Claims Tribunal if the amount in dispute in
the appeal is less than ten thousand rupees.
THANK
YOU