The Supreme Court has referred to a larger bench the question of whether insurance companies must pay no-fault compensation under Section 163A of the MV Act for the vehicle owner’s death, even without a third-party claim. The case arose from a minor’s plea after losing her parents in a solo accident.
New Delhi: On August 4, the Supreme Court of India has recently referred an important question to a larger bench regarding compensation under Section 163A of the Motor Vehicles Act, 1988. The key issue is whether legal heirs of a vehicle owner can claim no-fault compensation under this section when the vehicle owner dies in an accident that does not involve any other vehicle.
As per Section 163A of the Motor Vehicles Act, the owner of the vehicle or their authorised insurance company must pay compensation to the legal heirs of a person who dies or becomes permanently disabled due to a motor vehicle accident.
Notably, this compensation does not require the victim to prove negligence or fault.
In this case, a minor girl lost both her parents in a tragic accident. Their vehicle had hit a wall after a tyre burst, and there was no involvement of any third-party vehicle. She filed a claim under Section 163A through her aunt.
The Motor Accident Claims Tribunal (MACT) initially ruled in her favour, awarding compensation of about Rs 4 lakh each for the deaths of her mother and father.
However, in 2023, the Orissa High Court cancelled this award, saying that since her father—who owned the vehicle—also died in the accident and there was no third-party vehicle involved, the claim could not be allowed.
The High Court reasoned that the minor, being the sole heir of the vehicle owner, would effectively be both the person liable for the accident and the beneficiary of the compensation. The insurance company argued that this would be an “anomalous situation”.
The Supreme Court disagreed with the Orissa High Court and restored the ₹4.08 lakh compensation awarded to the minor for her mother’s death.
Regarding the father’s death, the Supreme Court clarified that compensation under the policy was limited to Rs 2 lakh.
However, it raised an important question: Can compensation under Section 163A be claimed for the death of the vehicle owner, even when no other vehicle was involved in the accident?
A Division Bench of Justices Sudhanshu Dhulia and K Vinod Chandran observed that previous Supreme Court decisions had mostly interpreted Section 163A as covering only third-party risks. But the current bench expressed disagreement with that view.
They stated,
“The liability is essentially of the owner but the provision, in addition to the insured/owner makes liable the authorized insurer too. Hence, when there is a valid policy issued in the name of the vehicle involved in the accident, a claim under Section 163A…covers every claim and is not restricted to a third party claim; without any requirement of establishing the negligence, if death or permanent disability is caused by reason of the motor accident.”
Due to a conflict in past decisions, the Court referred the matter to a larger bench for a clear and authoritative ruling.
The judges said,
“We are of the opinion that this issue concerning the liability of the insurer in a claim under Section 163A qua the owner/insured requires an authoritative pronouncement. The dictum arising from the various decisions of different benches of two Judges is that the claim under Section 163A is restricted to third party risks, which, with all the respect at our command, we are unable to agree with.”
Importantly, the Court also made observations regarding the law. It said that even if the insured dies in the accident, the right to claim compensation survives.
Quoting Section 155 of the Act, the judges noted,
“Section 155 provides that even if the insured dies after the happening of an event which gave rise to a claim, it shall not be a bar to the survival of any cause of action arising out of the said event, against the insurer…The ground stated by the High Court definitely is not tenable.”
The Court went on to study past judgments relating to Section 166 (fault-based compensation) and Section 163A (no-fault compensation).
Most previous decisions had held that no-fault compensation was only for third-party victims and not for the vehicle owner or their family.
However, the Court disagreed with this narrow reading of the law. It said that Section 163A has an overriding effect over other parts of the Motor Vehicles Act and even over any other law.
The Court said,
“It is a beneficial piece of legislation brought in, keeping in mind the enhanced chances of an accident, resulting from the prevalence of vehicles in the overcrowded roads of today.”
Therefore, the judges took the view that compensation under Section 163A can be claimed even in cases where no third-party vehicle is involved.
This interpretation, if upheld by a larger bench, will widen the scope of compensation and provide relief to families like the petitioner’s.
In this case, Advocate Satya Kam Sharma represented the petitioner—the minor girl—while Advocate Ambhoj Kumar Sinha appeared for the National Insurance Company.
Case Title:
Wakia Afrin (Minor) v. National Insurance Co. Ltd.
Read Judgement:
Click Here to Read Our Reports on Motor Vehicle Act”
FOLLOW US ON YOUTUBE FOR MORE LEGAL UPDATES
