Law of Torts

Explain the right to receive compensation u/s 163-A of Motor Vehicles Act, 1988

The true scope of Section 163-A introduced by amendment by Act 54 of 1994 with effect from 14.11.1994. Since the answer to question that falls for consideration before us rests entirely on the interpretation of the said provision, it is necessary to extract the same in extenso:

“163-A. Special provisions as to payment of compensation on structured formula basis.–(1) Notwithstanding anything contained in this Act or in any other law for the time being in force or instrument having the force of law, the owner of the motor vehicle or the authorised insurer shall be liable to pay in the case of death or permanent disablement due to accident arising out of the use of motor vehicle, compensation, as indicated in the Second Schedule, to the legal heirs or the victim, as the case may be.

Explanation,–For the purpose of this sub-section, permanent disability shall have the same meaning and extent as in the Workmen’s Compensation Act, 1923 (8 of 1923).

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

(3) The Central Government may, keeping in view the cost of living by notification in the official gazette, from time to time amend the Second Schedule.”

A brief review of the legislative history of the above provision may be helpful for a proper appreciation of the true purpose underlying the said provision. The Law Commission of India had in its 119th Report recommended amendment to the Motor Vehicles Act for the protection of the victims of hit-and-run accidents in cases where the particulars of such offenders cannot be ascertained. It referred to the changing judicial thought and the compulsions of providing social security to victims of road accidents by dispensing with proof of fault. The recommendations of the Commission were followed by a Committee for review of the provisions of the Act set up by the Government somewhere in the year 1990. This Committee also suggested certain changes in the provisions of the Act taking into consideration that such claim cases pending before the Tribunal take a long time. The recommendations envisaged award of compensation on a structured formula basis where the affected party could have the option of accepting a lump sum compensation as notified under the scheme or of pursuing claims through the normal channels. The recommendations eventually culminated in the introduction of Sections 163-A and 163-B of the Motor Vehicles Act in the year 1994. The Statement of Objects and Reasons for the introduction of the said provisions read as under:

“(2) After the coming into force of the Motor Vehicles Act, 1988, Government received a number of representations and suggestions from the State Governments, transport operators and members of public regarding the inconvenience faced by them because of the operation of some of the provisions of the 1988 Act. A Review Committee was, therefore, constituted by the Government in March 1990 to examine and review the 1988 Act.

The recommendations of the Review Committee are in para (3). The relevant part whereof reads as under:

The recommendations of the Review Committee were forwarded to the State Governments for comments and they generally agree with these recommendations. The Government also considered a large number of representations received, after finalisation of the Report of the Review Committee, from the transport operators and public for making amendments in the Act. The draft of the proposals based on the recommendations of the Review Committee and representations from the public were placed before the Transport Development Council for seeking their views in the matter. The important suggestions made by the Transport Development Council relate to or are on account of–

(b) Providing adequate compensation to the victims of road accidents without going into long-drawn procedure.”

 In The Oriental Insurance Co. Ltd. etc. Vs. Hansrajbhai V.Kodala and Others etc. etc., , the Apex Court held that the object underlying the above amendment could be discovered from the recommendations of the Review Committee which in turn showed that the purpose behind the amendment was to give earliest relief to the victims of motor vehicle accidents. Prolonged litigation in the Tribunals for determination of compensation was the primary reason why the Committee and eventually Parliament felt that introduction of a structured formula for payment without insisting upon proof of fault would remedy the situation. The court also declared that the compensation payable u/s 163-A was based on a criteria underlying determination of compensation even on fault basis by taking into consideration the annual income, the age of the victim and by applying an appropriate multiplier to the same. The court repelled the contention that compensation u/s 163-A was in addition to the fault liability u/s 168 and held that the non obstante clause in Section 163-A simply excluded determination of compensation on the principle of fault liability. To the same effect is the decision of a Full Bench of this court in Guruanna Vadi and another Vs. The General Manager, Karnataka State Road Transport Corporation, Bangalore and another, , where Section 163-A was declared to be a substantive provision available only for claims based on post-1994 accidents.

 It is evident from the above that Section 163-A was never intended to provide relief to those who suffered in a road accident not because of the negligence of another person making use of a motor vehicle, but only on account of their own rash, negligent or imprudent act resulting in death or personal injury to them.

The recommendations of the Law Commission were concerned more with the victims of hit-and-run accident cases where the particulars of offenders could not be ascertained. It also expressed concern about the security of victims, of road accidents and recommended dispensing with proof of fault on the part of the owner or driver of the vehicle. The recommendations, it is clear, were made from the point of view of victims of accidents on the roads more than those who were responsible for the same. The Review Committee too had viewed the situation from the point of view of such victims and expressed concern about the time it took for disposal of ordinary cases before the Tribunals. The objects and reasons underlying the introduction of the provision also envisaged adequate compensation to victims of road accidents without going into what was described as long-drawn procedure. The decision of the Apex Court in The Oriental Insurance Co. Ltd. etc. Vs. Hansrajbhai V.Kodala and Others etc. etc., , elucidated the purpose underlying the introduction of Section 163-A in the light of recommendations of the Law Commission and the Review Committee. There is nothing in any one of the above to suggest that Section 163-A was intended to be available even in a situation where the accident in question had caused death or physical injury to none except the person who was rash and negligent in using the motor vehicle. The universal concern was for the safety and the social security of an innocent user of the road and not for a person who had because of his own imprudence, rashness or negligence met with an accident and suffered an injury or death.

 It is truism to say that legislative history of a provision including the aims and objects which the bill sets out before the legislature are only aids for interpretation of the provision eventually enacted for enforcement. A statutory provision cannot be understood or interpreted only on the touchstone of its historical background or aids like the subject heading or the aims and objects stated in the bill preceding the legislation. While the object of any exercise aimed at interpreting a statute is to ascertain the intention of the legislature enacting it, the golden rule among numerous other rules of interpretation that have been judicially evolved is that the intention of the legislature is to be primarily gathered from the language used in the provision. A statute is an edict of the legislature and the language employed in the same is the determinative factor for understanding the true legislative intent. “Statutes should be construed not as theorems of Euclid” said learned Judge Hand, “but words must be construed with some imagination of the purposes which lie behind them”. [See Lenigh Valley Coal Co. v. Yensavage 218 FR 547; Union of India v. Eilip Tiago De Gama of Vedem Vasco De Gama AIR 1990 SC 981 : Institute of Chartered Accountants of India v. Price Waterhouse AIR 1998 SC 74 and Shiv Shakti Co-op. Housing Society v. Swaraj Developers AIR 2003 SCW 2445.

 Let us then turn to Section 163-A of the Motor Vehicles Act. It envisages payment of compensation for death or permanent disablement due to an accident arising out of the use of motor vehicle to the victim or his legal heirs as the case may be. The term ‘victim’ has not been defined in the Act. The literal meaning of the word as given in Chambers 20th Century Dictionary is: “a living being offered as a sacrifice; one subjected to death, suffering or ill-treatment; a prey; a sufferer”. Black’s Law Dictionary explains the term thus: “The person who is the object of a crime or tort, as the victim of a robbery is the person robbed”. Person whom court determines has suffered pecuniary damages as a result of defendant’s criminal activities; that person may be individual, public or private corporation, government, partnership, or unincorporated association.

The right to receive compensation u/s 163-A presupposes that the person who makes a claim is a victim or the legal heirs of a victim. The provision on the plain language employed in the same does not entitle a person who is neither a victim nor his/her legal heir to claim any compensation. In other words, one who is the victim of his own actions of rash or negligent driving cannot invoke Section 163-A for making a claim. The concern of the legislature and the jurists is understandably for the victim in contradistinction to the victimizer or one who falls a victim to his own action. While road accidents generally affect innocent third parties or those making use of public transport, cases, where the owner or driver of the vehicle alone suffers on account of his rash and negligent driving, are not uncommon. Drunken driving, speeding in what are high-performance new generation of automobiles including two-wheelers are accounting for a large number of accidents every day. Quite often these accidents kill or wound even the person who is driving the vehicle. Parliament did not in our opinion intend to provide for compensation to the person responsible for the accident on structured formula basis in such cases. Neither the provisions of Section 163-A nor the background in which the same were introduced disclose any such intention. The argument that Section 163-A is a panacea for all ills concerning the accidents regardless of whether the person who is killed or injured is or is not a victim must therefore be rejected.

20. The issue can be examined from yet another angle. Section 147 of the Motor Vehicles Act prescribes the requirement of a policy of insurance in order that the same may be said to comply with the provisions of Chapter XI. It, inter alia, envisages a policy of insurance which insures the person or class of persons specified in the policy against any liability which may be incurred by him in respect of the death or bodily injury or damage to any property of a third party arising out of the use of the vehicle in a public place. What is important is that the policy must insure the owner against “any liability which arises against him” on account of any death or injury arising out of a motor accident. In the case of an accident where the person who is killed or injured is himself responsible for the accident without the involvement of any other vehicle or agency, no liability qua the insured would arise except where the person who is killed or injured is an employee of the insured and the accident arises out of his employment. In any such case, rashness or negligence of the employee may be inconsequential for purposes f holding the employer liable to pay the compensation under the Workmen’s Compensation Act. The decision of this court in Y.R. Shanbhag Vs. Mohammed Gouse and Others, , has taken the view that where the driver had sustained injuries due to his own driving he cannot maintain a petition under Motor Vehicles Act, his remedy being under Workmen’s Compensation Act. Reference may also be made to another Division Bench decision of this court in B. Prabhakar v. Bachima 1984 ACJ 582, where the court observed:

“From Section 110-AA, it is clear that before an application can be entertained, the accident must have occurred due to the actionable negligence of the owner or the driver of the vehicle…When the accident has occurred due to actionable negligence of the deceased who was himself the driver, no claim by his legal representatives can be entertained under the Act. That being so Section 110-AA will not come into play at all.”

We need not dilate on the rights and liabilities of the parties in such a case for that aspect even though raised before us does not strictly speaking fall for a detailed examination. Suffice it to say that in a case where no liability arises against the driver or owner of the vehicle on account of the accident no such liability will arise even against the insurance company with whom the vehicle involved in the accident is insured. Section 163-A of the Act does not in our opinion alter that legal position. It does not alter the legal basis on which a liability arises u/s 147 of the Act nor does it provide a different or modified basis for the same. That being so, in the case of an accident where the person killed or injured is himself responsible for the accident, no liability would arise against the insured nor can any such liability be enforced u/s 163-A of the Act. For a liability u/s 163-A to arise against insurance company, it is essential that such a liability must first arise against the insured and the insurance company u/s 147 of Motor Vehicles Act.

 Two decisions relied upon by the appellants may at this stage be noticed. In Kokla Devi Vs. Chet Ram and Another, , a Division Bench of the High Court of Himachal Pradesh held that Section 163-A had brought about a drastic change in the concept of tortious liability prevailing prior to it. The court was of the view that the ‘non obstante’ clause in Section 163-A permitted even the tortfeasor to claim compensation on the principle of no fault liability. With respect to the Hon’ble Judges who delivered the said decision we find it difficult to subscribe to that view. Section 163-A of the Act no doubt brings about a significant change in the legal position as regards the obligation to prove fault is concerned, but the change is not so drastic so as to make even a tortfeasor entitled to claim compensation for his own act of rashness, negligence or imprudence. The ‘non obstante’ clause in Section 163-A simply dispenses with proof of fault by the claimants against the driver or the owner of the vehicle involved in the accident. The claimant u/s 163-A therefore need not prove that the driver or the owner of the vehicle was at fault in the sense that the accident had occurred on account of any negligence or rashness on his part. That does not, however, mean that claimant can maintain a claim on the basis of his own fault or negligence and argue that even when he himself may have caused the accident on account of His own rash and negligent driving, he can nevertheless make the insurance company pay for the same. Inasmuch as Section 163-A dispenses with proof of fault, it does so only where the claimant is not solely responsible for the accident. The correct approach appears to us to be to find out whether in the absence of Section 163-A, a claim could on the facts pleaded be maintained by claimant, if the answer is ‘no’ because the claimant was himself the tortfeasor, the provisions of Section 163-A would not come to his rescue and make such a claim maintainable. If the answer is ‘yes’ the beneficial provisions u/s 163-A would absolve the claimant of the obligation to prove that the accident had taken place on account of the fault of the driver or owner of the vehicle provided he is willing to accept the amount of compensation offered according to the structured formula prescribed in the Schedule. That is the only way in which the anomaly arising out of a contrary interpretation can possibly be avoided.

In New India Assurance Co. Ltd. Vs. Muna Maya Basant, , a Division Bench of Gujarat High Court also took the view that non obstante clause appearing in Section 163-A permitted even the tortfeasor to claim compensation and that the insurance company can contest the claim only on the ground of total absence of a contract of insurance and not otherwise. For the reasons that we have set out above, we regret our inability to follow that line of reasoning. As held by the Apex Court in The Oriental Insurance Co. Ltd. etc. Vs. Hansrajbhai V.Kodala and Others etc. etc., , the non obstante clause simply excludes determination of compensation on the principle of fault liability. The said provision does not permit a person to place a premium upon his own fault and make the insurance company pay for the same.