Scroll Top

CALCULATION OF COMPENSATION IN ACCIDENTS: THE INTRICACIES OF THE MOTOR VEHICLES ACT 1988

INTRODUCTION

Road accidents are a common cause of death and grievous injuries to thousands of people daily across India and other countries. The Motor Vehicles Act was passed by the Parliament of India in 1988 to deal with the various aspects of vehicles and damages caused by one vehicle to another. The Preamble to the Act is intended to consolidate and modernize motor vehicle legislation.[1] This act, along with some landmark judgments (Sarla Verma v Delhi Transport Corporation and National Insurance Company Limited v Pranay Sethi)[2] has made the compensation to be given to the victims of accidents more certain and easier to calculate, unlike before when it was as ambiguous as throwing a ball in the air. Further, it has given out a certain procedure through which the victims can get their claims. The various sections of the act provide for obligatory compensation to be given to the aggrieved party by the party causing the damage and the procedure for filing complaints and such. This also serves to provide a deterrent effect to the offenders as well as ensure the well-being of the innocent families of the victims.

DIRECT OBLIGATORY COMPENSATION BY SECTION 140 OF THE MOTOR VEHICLES ACT 1988

Section 140 provides for the obligation of compensation to be given by the owner or driver of the vehicle to the aggrieved party in case of death or permanent disability caused because of the accident, even if there is hardly any fault of anyone. Further, this section provides for no proof claim which is that the aggrieved party does not have any burden of proof of negligence or wrongful conduct. This section provides for the claim of Rs. 50000 if the accident results in the death of any person and a claim of Rs. 25000 if the accident results in permanent injury of a person.[3] Lastly, a stamp of Rs.10 is to be attached to the application.

WHO CAN APPLY FOR COMPENSATION AND HOW: AN ANALYSIS OF SECTION 166 OF THE MOTOR VEHICLES ACT 1988

The claimant or the aggrieved party has to submit a compensation claim with the ‘Motor Accident Claim Tribunal’ for getting the claim under the Motor Vehicles Act. Further, the people eligible for getting the compensation are:

  • The injured person;
  • The damaged or implicated property’s owner;
  • Any or all of the legal representatives of the deceased in cases of death caused by the accident;
  • The authorized agent of the party or any or all of the legal representatives.

Lastly, the application for compensation must be made within six months of the occurrence of the accident.[4]

STRUCTURE OF THE COMPENSATION AMOUNT TO BE PAID TO THE VICTIM WITH REFERENCE TO LANDMARK CASES

There are three factors to be considered while calculating compensation in case of death:

  • Age of the deceased;
  • Income of the deceased;
  • The Number of dependants, for example, widowed wives, unmarried children, aged parents, and so on.[5]

Further, some points are to be additionally considered for calculating the amount of compensation for dependants like some amount is deducted as the living expenses of the person’s being, multiplier if the deceased had a job and died young leaving people behind.

If the deceased was having a permanent job at the time of the accident and aged less than 40 years, then 50% is added to the original salary for future needs. If the deceased is aged between 40 to 50 years, 30% is added to the actual salary. If the deceased is aged between 50 to 60 years, 15% is added to the original salary of the deceased.[6]

If the deceased worked in a fixed salary job or was self-employed and there is proof of such income, then there is a 40% addition if the deceased is less than 40 years of age, 25% addition if the deceased is between 40 to 50 years of age and 10% addition to the actual salary if he is between 50 to 60 years of age.[7]

Further, some amount from that is deducted towards the living expenses of the deceased. 1/3rd of the total amount is deducted if the deceased is married and has two to three dependents. 1/4th of the total amount is deducted if the number of dependents is between four to six. 1/5th of the total amount is deducted if the number of dependents is more than six. But if the deceased is a bachelor and parents are the only claimants of the compensation, 50% of the income may be deducted for personal expenses, which may become 1/3rd if there are unmarried sisters and so on.[8]

Further, there are multipliers ranging from 13 to 18 for people of different age groups, in the pattern of 18 for the age group of 15 to 20 and 21 to 25 years to 13 for the age group of 46 to 50 years, and continuing till 5 for more aged groups till 70 years of age.[9]

Further, there are other expenses given like Rs. 15000 towards expenses on the event of the funeral, Rs. 15000 towards loss of estate, and Rs. 40000 towards loss of companionship.

MOTOR ACCIDENT CLAIM TRIBUNAL

The Motor Accident Claims Tribunal was established to settle compensation claims of motor accidents under the Motor Vehicles Act, of 1988. The major goal of the claim tribunal is to see that the claims are tried quickly and that justice is served.

Appeals are allowed against the decisions of the tribunal if the amount of dispute is above Rs. 10000. According to Section 173 of the Motor Vehicles Act, 1988, the appeals have to be filed within 90 days and the authority to decide the cases will lie before the High Courts. If the appeal is filed later than 90 days, there should be a reasonable cause of delay and the court should be satisfied with the cause.[10]

CONCLUSION

It must be noted that accident claims are not the only things dealt with by the Motor Vehicles Act, the act also deals with licensing and other aspects of motor vehicles. If rash and negligent driving is involved in the accident, then it is dealt with by Sections 279[11], 338[12] and 427[13] of the Indian Procedural Code. Further, expert evidence must be included in such cases. Nowadays, with the advancement of alternate dispute resolution, motor accident claim cases are also settled out of court in many instances for speedy dispute resolution. Further, such methods ensure the reduction in burden on the court caused by the long pendency of cases. Thus, accident claim cases are dealt with through many methods in contemporary court systems. This has evolved the system of giving compensation to accident victims from an ambiguous and unclarified aspect to a hopeful, unequivocal, and calculative concept.

Author(s) Name: Anwesha Nayak (Nirma University, Ahmedabad)

Reference(s):

[1] Motor Vehicles Act 1988

[2] Sarla Verma v Delhi Transport Corporation [2009] 6 SCC 121; National Insurance Company Limited v Pranay Sethi [2017] 16 SCC 680

[3] Motor Vehicles Act 1988, s 140

[4] Motor Vehicles Act 1988, s 166

[5] Sarla Verma v Delhi Transport Corporation (2009) 6 SCC 121

[6] Ibid

[7] National Insurance Company Limited v Pranay Sethi (2017) 16 SCC 680

[8] Sarla Verma v Delhi Transport Corporation (2009) 6 SCC 121

[9] Ibid

[10] Motor Vehicles Act 1988, s 173

[11] The Indian Penal Code 1860, s 279

[12] The Indian Penal Code 1860, s 338

[13] The Indian Penal Code 1860, s 427