India is one of the busiest countries when it comes to road traffics. It is observed people in metropolitan cities spend more than two hours in road traffic on a daily basis. Due to the increase of motor vehicles on roads, it has become overcrowded, there has been an increase in road accidents and road safety has become a major concern for the country. The Motor Vehicle Act, 1988, was enacted to maintain road safety standards, and to find an effective way to track down, traffic offenders. Earlier, the drivers of the motor vehicles were not held liable for accidents. The act made it mandatory for drivers to have a driving license. This act helps compensate the people travelling on the road and get affected by the accidents. The act refers to such people as the third party. Under the Motor Vehicle Act, these parties can claim compensation for damages that were caused to them because of the negligence of some other person. When due to an accident the person’s own vehicle is damaged then that person can claim against the insurance company. The injured party can claim compensation under section 163A either against the owner or insurer of the vehicle. The current article will study if the insurer can take the defence of negligence to withdraw compensation against the injured party under section 163A of the Motor Vehicle Act, 1988.
COMPENSATION UNDER SECTION 163A OF THE MOTOR VEHICLE ACT, 1988
Vehicular accidents can be due to many reasons like rash and negligent driving or inappropriate road conditions or vehicle condition. The injured party can claim compensation for the damages caused to him under both civil and criminal actions. Motor Vehicle Act, 1988 provides a civil remedy to those who seek remedy for the inconvenience caused to them. Section 163A of the act provides special provisions for the payment of compensation to the injured parties. It was inserted in Motor Vehicle Act in 1994. Before the insertion of section 163A, the victim or heirs had to prove negligence by the driver of the offending vehicle to make the owner pay the compensation. This created lot of hardships for the victim because if they could not establish the negligence of the driver of the offending vehicle, they were not allowed to get compensation for the damages caused to them. To save the victim from such a setback, section 163A was introduced. This section provides compensation on the structured-formula basis as mentioned in the second schedule of the act. It states that “Notwithstanding anything contained in this Act or in any other law for the time being in force or instrument having the force law, the owner of the motor vehicle or the authorized 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.”This implies that for enabling the compensation under this section the claimant has to only prove that the death or permanent disablement was as a result of a motor vehicle. The driver, passenger as well as a pedestrian in the road will also be considered for compensation. Sub-section 2 of 163A provides that the person claiming such compensation does not need to plead or prove that the death or permanent disablement was caused as a result of wrongful conduct or neglect or default of the owner of the vehicle or of the other vehicles concerned or any other person. Under this section, the central government has the authority to amend the second schedule every once in a while, depending upon the cost-of-living notifications mentioned in the Official Gazette. However, the person cannot claim compensation under 163A if he/she has already claimed compensation under section 140.
THE LIABILITY OF THE INSURANCE COMPANY FOR COMPENSATION UNDER SECTION 163A OF THE MOTOR VEHICLE ACT, 1988
Section 163A provides the claimant with an innovative way to get a speedy remedy for the damages he/she has suffered. But he can avail compensation only under this section and not along with any other section like section 140 or 166 because section 163A is an independent and final compensatory remedy. In Oriental Insurance Co Ltd v Hansraj Bhai V Kodala and Ors, the court decided whether the compensation payable under section 163A of the Motor Vehicle Act 1988 is in addition or alternative to the determination of compensation on the principle of fault liability. The court held that the compensation under section 163A is not inclusive of the compensation under section 140. It is in itself a final compensation. Shivaji v Divisional Manager, United India Insurance Company Ltd., it was held the insurer cannot take up the defence of negligence on part of the victim because it would defeat the very purpose of the insertion of this section. The legislative object of the said section is to provide a final compensation to the victim with a speedy remedy on the basis of a structured formula. In Chandrakanta Tiwari v New India Assurance Company Ltd, the court iterated that under section 163A of the said Act, the insurance company cannot take the defence of negligence with relation to the absence of that someone else was driving the vehicle.
The article started with the question of whether the insurer can take the defence of negligence on part of the victim to avoid paying compensation. The answer to this question is ‘No’. The insurer cannot take the defence of negligence on part of the victim to avoid paying compensation under section 163A because it would defeat the objective of the legislation that is to give remedy within a limited time frame. It is not necessary for the victim to prove that the damages like death or permanent disablement were caused because of the wrongful conduct or neglect of the owner instead he only has to prove that the damages were caused because of the particular motor vehicle. Section 163A serves the purpose of providing effective and quick remedies to the victims or heirs of the victims.
Author(s) Name: Divya K (Symbiosis Law School, Hyderabad)
 Motor Vehicle Act, 1988, No. 59, § 163A (1), Acts of Parliament, 1988 (India).
 Id § 163A (2).
 Oriental Insurance Co Ltd v. Hansraj Bhai V Kodala and Ors, (2001) INSC 192.
 Shivaji v Divisional Manager, United India Insurance Company Ltd, 2018 (2) TN MAC 149.
Chandrakanta Tiwari v New India Assurance Company Ltd, Civil Appeal No. 2527 of 2020, 8th June 2020.