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Report No. 119

Access to Exclusive Forum for Victims of Motor Accidents under The Motor Vehicles Act, 1939

Chapter I


1.1. Consistent with the task assigned to the present Law Commission to recommend comprehensive judicial reforms touching almost all aspects of 'Justice delivery system', the primary focus was on decentralisation of justice system. Decentralisation, amongst others, must have the object of removing road blocks in access to justice. The guiding consideration of the Law Commission in this behalf has been to take justice to the door-steps of the people. That is also the mandate of Article 39A of the Constitution which requires the State to secure that the operation of the legal system promotes justice, on a basis of equal opportunity, and to ensure that opportunities for securing justice are not denied to any citizen by reason of economic or other disabilities. This Report deals with a small but significant aspect of removing geographic barriers which are intertwined with economic barriers in the access to justice in the developing branch of compensation for the victims of motor accidents.

1.2. With the widening horizon of Law of Torts and the awareness about the right to recover compensation for the harm suffered by the wrongful act of some other person, victims of motor accidents came forward to file suits for compensation by way of damages suffered. Till 1956, they were required to invoke the jurisdiction of ordinary civil courts where generally litigation has a tendency to drag on for a long time and the underlying object of compensation by way of restitution stood defeated. Until 1956, there was no special forum for adjudication of claims for compensation by the victims of motor accidents. Surface transport, especially the road transport, was in the process of fast development.

With the pace of industrialisation and the incapacity of the Railway Administration to transport goods, road transport expanded considerably. On the introduction of State Road Transport Corporations Act, 1950, all the States set up their Road Transport Corporations and gradually the private passenger bus operators were being eliminated. However, transport of goods by trucks remained within the exclusive domain of private sector and proliferated. Permits for tourist buses under section 63(7) of the Motor Vehicles Act, 1939, were in great demand. With the realisation that tourism is an industry with a high potential for earning profits even in terms of foreign exchange, the Tourism Development Corporations came into existence and provided numerous facilities for attracting tourists.

Every year, the number of indigenous and foreign tourists went up. Permits for tourist buses entitled to Inter-State operations were in great demand. Levy of taxes by the States on passenger vehicles and goods vehicles had to meet the challenge of Article 301 of the Constitution which guaranteed freedom of trade, commerce and intercourse. Interpreting the content and contours of the freedom of trade, commerce and intercourse, the Supreme Court held that if such taxes were compensatory in character, they would be immune from the challenge of Article 301.1 To make the tax compensatory, the State agreed to set apart a substantial part of the receipt of tax on improving facilities for road transport. It was asserted that a tax, the receipt of which is utilised for facilitating road transport, ensures trade, commerce and intercourse and, therefore, could not be said to violate the freedom guaranteed in Article 301.

Accordingly, facilities for road transport multiplied. Long distance travel by cars, buses and taxies increased substantially. The cumulative effect of all these facilities led to larger number of accidents and the risk inherent to pedestrians and users of the road accelerated considerably. Awareness slowly grew that the victims of motor accidents who suffered damage are entitled to recover compensation from the party whose action inflicted the injury. Upto 1956, claim for compensation was to be filed before the ordinary Civil Court having jurisdiction in the area. The Civil Courts treated the claims as of routine nature and the proceedings dragged on interminably.

1. Khyebari Tea Co. Ltd. v. State of Assam, (1964) 5 SCR 975; Atiabari Tea Co. Ltd. v. State of Assam, (1961) 1 SCR 809; Automobile Transport (Rajasthan) Co. Ltd. v. State of Rajasthan, (1963) 1 SCR 491; and State of Karnataka v. Hansa Corporation, (1980) 4 SCC 697.

1.3. That raised the vital issue as to what is the principle behind compensation payable by way of damages. The simplest answer is that he who inflicts harm must repair the same, and that the repair may come in terms of money compensation. The next important question that agitated the minds of those charged with a duty to determine adequate compensation was as to what ought to be the yardstick for measuring the damages. Compensation has to be assessed keeping in view the injury suffered by the victims or the loss caused to the dependants of the victim in case of death. Undoubtedly, there is some distinction between compensation and damages, but in final analysis, this distinction becomes blurred.

The expression, 'compensation' has been defined as the pecuniary recompense which a person is entitled to receive in respect of damage or loss which he has suffered, other than as a result of an actionable wrong, litigated in the Civil Court, committed by the person bound to make the recompense. Shorn of embellishment, compensation is payable by the person who is responsible for the damage to person or property suffered by the victim.

In the event of death, the approach has been to assess the earning capacity of the deceased, deduct from it what is spent for himself, ascertain whether the balance was spent on the dependants of the victim and restore the same by way of adequate compensation. This, in short, is called the principle of restitution, which implies that one must restore, so far as money can do, to the plaintiff or one entitled to and seeking compensation, to the position he would have been if the tort in question had not been done to him. In simple language, restore in economic terms what the deceased was providing in his life time to his dependants or to himself before he suffered harm.

Avoiding the discussion with regard to the various heads under which compensation can be claimed in respect of the pecuniary loss to the dependants or to the injured himself on account of injury, it is to be ascertained by balancing on the one hand the loss to the claimants for future pecuniary benefit, and on the other, any pecuniary advantage which, from whatever source, comes to them by reason of death, i.e., the balance of loss and gain to a dependant by the death must be ascertained. After this balance is ascertained, it has to be quantified in the manner provided in some judgments by keeping in view the age of the deceased and his expected span of working life. In simpler language, after taking into account the various legal aspects, what the Court tries to do is to provide, as far as possible, the same benefit which the dependants enjoyed when the deceased was alive by awarding such compensation that his death would not deny the benefits.

1.4. Once the principle of compensation is scientifically understood, it cannot be gainsaid that it must be awarded as early and as expeditiously as possible. If the bread-winner dies and the dependants are ill-equipped to earn their livelihood, if the amount of compensation is not made available forthwith or as expeditiously as possible, unwittingly, the lot of the dependants would be destitution and starvation. Ordinary civil courts take long time to determine and award compensation.

To mitigate this hardship, a comprehensive amendment was made in the Motor Vehicles Act, by Act 100 of 1956, enabling the State Governments to set up Claims Tribunals for the purpose of adjudicating upon claims for compensation in respect of accident involving the death of, or bodily injury to, persons arising out of the use of motor vehicles or damages to the property of a third party so arising or both. A new forum was thus devised exclusively for entertaining claims for compensation arising out of motor accidents with a fairly simple procedure as provided in section 110C of the Motor Vehicles Act.

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