This article is written by Saumya Sudarshini from Chankya National Law University

Table of Contents

Introduction

The car industry has grown tremendously over time as a result of the process of urbanization and industrialization, which has transformed cities into metropolitan areas and economic powerhouses. Nowadays, it’s a given that every urban household owns a car that serves as the family vehicle. Due to its large market, this business presents a number of issues to both the general population and the environment. Imagine a journey where the twists and turns of the road are unpredictable, and unforeseen events can change everything in the blink of an eye. In the realm of our daily commutes and road adventures, understanding the legal intricacies that govern accidents is like having a reliable road map. This article is your guide to navigating the concept of “No-Fault Liability” as outlined in the Motor Vehicle Act, 1988. We’re about to embark on a journey of unraveling key insights, shedding light on what happens when the unexpected occurs on the road, and how the law seeks to provide clarity and fairness in the aftermath of vehicular incidents. So, fasten your seatbelts as we delve into the heart of the matter, exploring the human side of legal provisions that shape our experiences on the roadways.

Understanding the Motor Vehicle Act, 1988

The idea that there is a remedy for every injury is the foundation of the Motor Vehicle Act, a tort law. This is when the concept of damages and compensation is implemented. It has been said that the Motor Vehicle Act of 1988 is a welfare statute that attempts to provide compensation to people who have suffered injury. The Motor Vehicle Act of 1939 gathered together all existing motor vehicle laws, but it required constant updates through amendments. The Act needed to be updated to include all new techniques related to motor vehicles due to changes in road transport technology, the expansion of the road network, and changes in passenger transport patterns.

The primary goal of the Motor Vehicle Act is to provide support to innocent drivers who sustain injuries frequently and are thus unable to file a claim for the compensation they are entitled to. This Act requires a driver’s license for all drivers of motor vehicles. In addition, a vehicle must be registered in accordance with the Act, which has a 15-year validity period that can be extended for an additional 5-year period. In addition to licensing and registration, the Motor Vehicle Act of 1988 covers additional facets of road transport vehicles.

The Motor Vehicle Act of 1939 had multiple amendments in order that it remained relevant to the evolving technology and advancement. A committee was later established to develop comprehensive legislation based on the different suggestions. No fault liability is outlined in Sections 140 to 144 of the modified Act under Chapter X.

Third party claim insurance is covered in Sections 145 to 164 of Chapter XI, while claims tribunals are covered in Sections 165 to 176 of Chapter XII. This act was stated to be of tremendous social value because its main goal was to give relief to individuals who suffer accidents but do not receive the proper compensation, requiring them to make up for their losses. The act also contains a number of additional provisions for the benefit of victims of crash-related injuries.

Principle of No- Fault Liability

In essence, No-Fault Liability questions the accepted wisdom of who is at fault in road accidents. This legal structure places a higher priority on providing victims with timely compensation, regardless of the party responsible for the collapse, than it does on extended blame disputes. The fundamental idea is to provide individuals impacted with prompt financial assistance while understanding that accidents can occur even in the absence of obvious accountability. “No fault liability” is covered by Section 140 of the Motor Vehicles Act.

“No fault liability” refers to the legal concept that in cases where an accident resulting from the driving of a motor vehicle or vehicles causes death or serious injuries, the owner of the vehicle is nevertheless liable for compensation, even in cases when the accident is not their fault. When someone dies or rendered permanently disabled in an accident caused by using a motor vehicle, the owners of the vehicle are responsible for compensating the victim in compliance with this section’s provisions.

This Section’s provisions establish a fixed compensation amount that must be given regardless of whether the accident resulted in death or disability. If an owner dies away, they are obligated to pay fifty thousand rupees in compensation; if an owner is disabled, the amount of compensation is twenty-five thousand rupees. These established rates of compensation are in accordance with sub-section (1) of Section 140. It should be remembered that in order to receive compensation for death or disability, the parties involved do not have to provide evidence of wrongdoing, negligence, or default on the defendant’s behalf because they are still obligated to pay damages.

If a claim is made for compensation under sub-section (1), the claimant is not required to prove, by plea or otherwise, that the owner(s) of the vehicles in question, any other person, or their negligence or default caused the death or permanent disablement for which the claim is made. Section 92-A of the Motor Vehicles Act of 1939 is in accordance with this Act. National Insurance company v. Deorao and others (2002) is a significant case involving compensation.

Difference between ‘No-Fault Liability’ and ‘Strict Liability’- A Comparitive Study

In instances of ‘no fault liability,’ there’s a common tendency to mix it up with ‘strict liability.’ These legal terms have key differences. In ‘no fault liability,’ compensation is predetermined under sub-section (1), with fifty thousand rupees fixed for death and twenty-five thousand rupees for disablement. On the contrary, ‘strict liability’ lacks a fixed compensation amount as it isn’t codified. Understanding legal codification is crucial here – ‘no fault liability’ is codified under Sec-140, giving it statutory powers, while ‘strict liability’ falls under tort law and lacks statutory authority. Another important point is that if someone were to seek compensation under normal tort law for a motor vehicle accident, they could do so, but any compensation received this way would be deducted from what the motor vehicles tribunal would award.

Therefore, these are distinct concepts. The court maintains that, even in a motor vehicle accident, a victim is entitled to compensation from the tribunal unless exceptions apply. The tribunal and High Court erred in withholding compensation from the claimants, as evident in the case Kaushnuma Begum and others v. New India Assurance Co. Ltd and others.

Case Laws

The Oriental Insurance Co. Ltd v. Hansrajbhai V. Kodala & Ors (2001)

In this case, the question was whether a structured formula-based claim for compensation under Section 163A could replace or serve as an alternative to a claim under Section 140 of the MVA.

The Court determined that the compensation awarded in accordance with Section 163A is an end measure as opposed to a temporary one. Because of this, the compensation adjustment granted under Section 140 is made in accordance with the fault liability concept, which is payable under Section 168 of the MVA rather than Section 163A.

Therefore, Section 163A prohibits the payment of compensation based on fault, therefore Section 140 was rejected in addition to the demand for compensation under Section 163A.

United India Ins. Co. Ltd. Vs. Kuldip Kaur

Summary of facts: The question of whether Section 140 of the Motor Vehicle Act of 1988 would impose responsibility in the absence of an identifiable infringing vehicle was presented to the bench of the Hon’ble High Court of Punjab v. Haryana.

Judgement:

The court cited Motor Vehicle Act, 1988 sections 161 (specific provision for payment of compensation in case of hit-and-run case with a motor vehicle) and 140 (obligation to pay compensation in accident resulting in death or permanent disability with no flaws). The Punjab and Haryana High Court ruled that in cases where the offending vehicle is unknown, no culpability may be imposed under the aforementioned clause.

The Oriental Insurance Co. Ltd. Vs. Seela Ratnan And Ors

Background:

The matter before the court pertains to the modification introduced to Section 140 in the year 1994 within The Motor Vehicles Act, 1988. The amendment’s objective was to augment compensation for accidental death and permanent disability. Importantly, the accident under consideration occurred prior to the effective date of this amendment.

Key Issues:

The central question for the esteemed bench to deliberate upon is whether Section 140 of the Motor Vehicles Act applies retrospectively.

Judgement:

In the aforementioned case, the court determined that Section 6(c) of the General Clause Act would be applicable, clarifying that the amendments introduced in Section 140 of the Motor Vehicles Act, 1988, cannot be retroactively applied. Consequently, any claims initiated before the enactment of the amendment shall not be governed by the revised provisions but shall instead adhere to the compensation stipulations outlined in earlier provisions. The court emphasized that when an accident transpires before the commencement of the 1988 Act, no-fault liability cannot be granted under Section 140 of the 1988 Act but must be considered under Section 92-A of the repealed Act.

The Supreme Court’s consideration of the applicability of Section 6 of the General Clauses Act to provisions of the repealed Act, as seen in Gurcharan Singh Baldev Singh Yashwant Singh (1991) 6 JT (SC) 256: (AIR 1992 SC 180), provides context. In this instance, an operator sought the renewal of his permit under Section 58 of the Motor Vehicles Act, 1939. The question at hand was whether, post the implementation of the Motor Vehicles Act, 1988, the application became void and legally nonexistent, or whether, being a right within the scope of Clause (c) of Section 6 of the General Clauses Act, it persisted and endured despite the repeal of the Motor Vehicles Act, 1939. The court observed that Section 6(c) is designed to safeguard any rights or privileges acquired under the repealed Act.

Conclusion:

The no-fault liability outlined in Section 140 of the Motor Vehicle Act, 1988, is designed with the humane intention of promptly aiding victims or their heirs affected by accidents caused by motor vehicles, leading to either death or permanent disability. The compensation, set at Rs. 25,000/- for permanent disability and Rs. 50,000/- for death under Section 140, aims to alleviate the immediate financial burden on those who have suffered.

It’s crucial to note that victims or their representatives are not burdened with proving negligence, and compensation is not contingent on establishing fault. When handling claims under Section 140, the court does not delve into determining whether the defendant acted negligently or took precautions to prevent the accident. Moreover, the court does not consider the inevitability of the accident. Importantly, no claims can be filed under this act unless the vehicle responsible for the accident is identified.

The court, in addressing multiple claims under this act, has affirmed that the increased claim amounts are not applicable retrospectively. In other words, accidents occurring before the amendment came into effect will not receive the augmented compensation. The establishment of claim tribunals under the Motor Vehicle Act aims to provide victims with cost-effective and swift remedies.

This act is considered an asset in India’s motor laws landscape. The inclusion of the third-party insurance clause and compensation through the no-fault liability provision reflects a positive evolution in legal provisions. These changes have widened the scope of benefits for aggrieved parties making claims under the act, marking a significant step forward in ensuring justice for those affected by motor vehicle accidents.