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Report No. 149

Chapter 2

No Fault Liability

"(1) Where death or permanent disablement of any person has resulted from an accident arising out of the use of a motor vehicle or motor vehicles, the owners of the vehicles shall, jointly and severally, be liable to pay compensation in respect of such death or disablement in accordance with the provisions of this section.

(2) The amount of compensation which shall be payable under sub¬section (1) in respect of death of any person shall be a fixed sum of twenty-five thousand rupees and the amount of compensation payable under that sub-section in respect of the permanent disablement of any person shall be a fixed sum of twelve thousand rupees.

(3) In any claim for compensation under sub-section (1), the claimant shall not be required to plead and establish that the death or permanent disablement in respect of which the claim has been made was due to any wrongful act, neglect or default of the owner or owners of the vehicle or vehicles concerned or of any other person.

(4) A claim for compensation under sub-section (1) shall not be defeated by reason of any wrongful act, neglect or default of the person in respect of whose death or permanent disablement the claim has been made nor shall the quantum of compensation recoverable in respect of such death or permanent disablement be reduced on the basis of the share of such person in the responsibility for such death or permanent disablement."

2.1. Chapter X of the 1988 Act deals with liability without fault in certain cases and Chapter XI of the Act is titled as "Insurance of Motor Vehicles against third party risks". Section 140 in Chapter X, reads as follows:

2.2. A perusal of the aforesaid provisions reveals that the liability to pay compensation of ad hoc amount is based on the principle of no fault liability. Thus, in a claim under this section in respect of death or permanent disablement of a person resulting from an accident, the claimant is not required to establish that such event occurred due to any wrongful act, neglect or default of the owner or owners of the vehicle or of any other person1 or that there was no contributory fault, neglect or default on his part. The amount of compensation fixed in respect of death of any person is Rs. 25,000 and in case of permanent disablement Rs. 12,000.

The object of the aforesaid provision is to obviate a protracted trial into nuances as to the extent of negligence of either of the parties or as to the amount of compensation to which the injured/deceased should be entitled. Further, the financial solvency or otherwise of the owner of the motor vehicle is also not taken into consideration. The victim of the accident or his legal representatives are entitled to receive from the insurance company, irrespective of the fault on the part of the vehicle owner or contributory negligence on his part, the amounts specified in section 140(2).2

This provision does not preclude the victim from claiming a higher compensation against the owner of the vehicle, in case he can prove the same.3 There are, however, two limitations in section 140: (i) it is applicable only where the victim dies or is permanently disabled on account of an accident arising out of the use of a motor vehicle, (ii) the compensation provided for is the fixed amount mentioned in the section.

1. Sub-section 3 of section 140.

2. Section 140 does not make mention of the insurance company, but this follows from the languages of section 147 in Chapter XI.

3. Section 141.

2.3. Experience shows that motor vehicle accidents, of manifold nature, occur wherein the injuries sustained by the victims are severe but not resulting in permanent disablement or death of the victim. A question arises whether such cases should be compelled to be contested in ordinary civil court or should those victims also be entitled to claim ad hoc amounts. It is a matter of common knowledge that pedestrians, cycle and three wheeler users on road mostly belong to poor class of our society who are victims of road accidents.

Such victims, as in cases of permanent disablement, are also required to meet medical expenses etc., and the injuries may even result in considerable absence from their work¬place resulting in loss of earnings. If those who depend for their daily bread on the day's wages are made to suffer such loss, their families suffer, but section 140 does not provide any ad hoc relief to this category. This results in great hardship and suffering to the poorer section of the people. We are therefore of the view that some amount of statutory compensation even for injuries less severe than those set out in section 140 should be prescribed.

2.4. The amounts fixed viz., Rs. 25,000 in case of death and Rs. 12,000 in case of permanent disablement are woefully inadequate.1 When a person dies in a railway accident, he gets compensation on the scale mentioned in the schedule to the Railway Accidents/Compensation Rules, 1989 which goes up to Rs. 2 lakhs in cases of death or permanent disablement.2 If a person below 12 years of age dies in plane accident, his legal representatives are entitled to a sum of Rs. 2.5 lakhs and if the victim is more than 12 years of age the compensation would be to the extent of Rs. 5 lakhs.3

But if a person dies in a motor vehicle accident, the amount of compensation payable to him is so paltry that it does not come to even a fraction of the amount payable in the case of a plane accident. There appears to be no valid justification for such a disparity. In either case, it is the insurance cover from which compensation is available for payment. The need for removing such disparity and anomalous situation has been emphasised by the Supreme Court in Manjushri's case4 as under:

1. It is interesting to see that Schedule I to the recent Public Liability Insurance Act (6 of 1991) incorporates these limits. It, however, provides relief for temporarily partial disability and also for damage to private property.

2. Section 127 of the Railway Accidents Act, 1989, read with the rules made thereunder.

3. See notification (S.O. 1018) issued by the Ministry of Civil Aviation and Tourism, published in the Gazette of India, Part II - Section 3 - Sub-section (ii), dated 11-4-1992, p. 1943.

4. AIR 1977 SC 1158, decided in the context, not of section 140 of 1988 Act, but of a complicated scale regarding the limits of statutory insurance cover spelt out in section 95(2) of the 1939 Act, in respect of goods and public passenger vehicles. In respect of other vehicles, the insurance cover had to be co-extensive with the liability of the insured.

"Our country can ill-afford the loss of a precious life when we are building a progressive society and if any person engaged in industry, office, business or any other occupation dies, a void is created which is bound to result in a serious set back to the industry or occupation concerned. Apart from that the death of a worker creates a serious economic problem for the family which he leaves behind. In these circumstances, it is only just and fair that the Legislature should make a suitable provision so as to pay adequate compensation by properly evaluating the precious life of a citizen in its true perspective rather than devaluing human life on the basis of an artificial mathematical formula.

It is common knowledge that where a passenger travelling by a plane dies in an accident, he gets a compensation of Rs. 1,00,000 or larger sums and yet when death comes to him not through a plane but through a motor vehicle, he is entitled only to Rs. 2000. Does it indicate that the life of a passenger travelling by plane becomes more precious merely because he has chosen a particular conveyance and the value of his life is considerably reduced if he happens to choose a conveyance of a lesser value like a motor vehicle?

Such an invidious distinction is absolutely shocking on any judicial or social conscience and yet section 95(2)(d) of the Motor Vehicles Act seems to suggest a such distinction. We would also like to suggest that instead of limiting the liability of the insurance companies to a specified sum of money as representing the value of human life, the amount should be left to be determined by a Court in the special circumstances of each case"1. The above observations were reiterated in a subsequent decision2 also. Besides, as already stated it appears inequitable that persons who suffer injuries not resulting in death or permanent disablement should be left without any redress. Such persons also need immediate ad hoc relief in the form of compensation.

1. In this context, the recommendations of the 85th Report of the Law Commission (Chapter 5) may also be seen. The legislature has preferred to prescribe fixed sums as ad hoc compensation leaving parties to litigate for higher compensation at their choice.

2. Kunhimohammed v. Ahmedkutty, AIR 1987 SC 2158.

2.5. While there is, therefore, a case for the enhancement of the amounts of compensation fixed under section 140, we do not think that the scales of compensation in respect of air or railway accidents can be usefully adopted here. So far as air accidents are concerned: (a) the provisions are governed by international conventions, (b) the passengers carried generally belong to an affluent class, the loss resulting from the death or injury to whom is likely to. be evaluated at the notified figures, and (c) it is open to the carrier to exonerate itself from his liability wholly or partly by proving that the damage was caused by, or contributed to by the negligence of the injured person.1

So far as railway accidents are concerned, they commonly involve a large number of persons and a fixed ad hoc scale of compensation on "no fault" basis has been evolved to avoid protracted proceedings in such cases. On the other hand, the assessment of individual compensation is less cumbersome in the case of motor vehicle accidents and an elaborate adjudicatory machinery has also been constituted under the Act. Even under the Railways Act, such individual assessment is envisaged in cases of injuries other than those specified in the Rules.2 In principle too, the specification of a rigid formula of fixed compensation as final without any regard to the circumstances of the deceased/injured would appear to be incorrect and unjust.

1. Rule 22 of the First Schedule to the Carriage by Air Act, 1972.

2. Rule 3(3) of the Railway Accidents (Compensation) Rules, 1990 and the Schedule thereunder.

2.6. Taking note of the above considerations and even keeping in view that what section 140 provides for is a "no fault liability" without prejudice to claims for higher compensation after enquiry and adjudication, it is clear that the amount of compensation payable under the section is inadequate and, therefore, it needs to be raised. We are of the view that section 140 should be modified to provide for compensation even in respect of injuries less severe than the ones set out presently in the aforesaid section. It is, therefore, recommended that the amounts of compensation payable under section 140(2) be fixed as follows:

(i) In the case of death - Rs. 1,00,000

(ii) In the case of permanent disablement - Rs. 60,000

(iii) In the case of serious injury not resulting in death or permanent disablement - Rs. 5,000

Removing certain deficiencies in the Motor Vehicles Act, 1988 Back

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