Know About The new and old Laws On Accident Claims in 2022

Know About The Laws On Accident Claims


Throughout the development of civilization, acts of negligence have become actionable wrongs. Under English Law, a person or legal representative of a deceased person who died due to the negligence of another may, in addition to prosecuting the deadly incidents, get paid for their loss under the Law of Torts.

Accusations of ignorant behaviour include the failure to use proper care, skill, or care about a person whose rights are affected by the defendant’s failure to take proper care and skill. A plaintiff is considered to have been injured by the defendant’s negligence. Consequently, negligence accompanied by losses caused to the other party gives rise to a lawsuit.

Fatal Accidents Act, 1885, was enacted in India so that all the people get the right to sue after they have been injured or died in an accident. There is only one necessity of this Act that provides a proper process and a right for legal heirs to claim money from the person who committed the negligence. In India, this act has been effective for a long period. Due to the prevalence of automation and the consequential loss of life and property caused by accidents, it was determined that an effective law would be used to give relief to the victims of accidents.

The Motor Vehicle Act has been amended to introduce provisions for compulsory third party insurance and to provide a mechanism for adjudication of claims by amending Act No.110 of 1956 in which Section 93 to 109 which has involvement with the third party insurance and Section 110(A) to 110(F) with the involvement the creation of the Motor Accident Claims Tribunal and proper process for adjudication of claims are taken into action.

Initial liability was limited to a specific sum. However, the liability of the insurance companies has been widened since 1982, and even the defences which the insurance companies can invoke have been stopped to ensure the payment of paying money to third parties.

Section 92(A) to 92(E) of the Social Security Act of 1982 introduced the concept of some money based on the no-fault designation. As a result of the same amendment, an exemption was been granted for people who lose their lives in hit-and-run accidents involving unknown vehicles.


New Motor Vehicle Acts were introduced in 1988 and the new Motor Vehicle Act’s Chapter 10 is filled with few awards. Chapter 11 of the Act is filled with the insurance of motor vehicles against the risk of third parties, and Chapter 12 of the Act sets up a Claims Tribunal to adjudicate claims and related issues.

There are still major changes occurring in this law. Several times, the Supreme Court has ruled that this is welfare legislation and that the interpretation of law should be made in a way that will assist the victim.

As a result of these new changes, the Supreme Court hastaken serious decisions in recent years which have completely misused the statutory defences the Insurance Company can assert due to major changes made to the law for the burden of proof.

Only limited defences, such as not holding a valid driving license, using the transport system for hire and reward, or using the mode of transportation for purposes that are not allowed with permission, must be proved in such a way that insurers are not able to take advantage of these defences.

The scheme of Chapters 10 and 11 of the Motor Vehicle Act is as follows:

Specifically, Chapter 10 with Sections 140 to 144 provide for some amount of money based on a no-fault basis. It is provided that the kith and kin of the victim who has died will be given Rs. 50,000/- and the grievously injured victim will be given Rs. 25,000/- under this provision. If one or more of the following is taken into account as prima facie evidence, some amount of money can be paid under section 140;
(1) The accident was caused by the offending vehicle;
(2) The insurance coverage of the at-fault vehicle;
(3) A death or grievous injury resulted from the incident.

Due to the differences between main claim petitions and this amount of money, the requirement to prove negligence is not present. This means that this small amount of money is not refundable even if negligence was proved in the main claim.

During an interim award under Chapter 10 insurers cannot even raise a defence relating to negligence of the applicant, which is otherwise is allowed in Section 149 of the Motor Vehicle Act. Over time the insurance company is ultimately found not responsible to pay some small amount of money, victims can claim their loss from the insurance company.

Section 145 to 164 of Chapter 11 provides for compulsory third party insurance, which is a necessity for every registered two-wheeler vehicle owner. Those who use a two-wheeler in public places must carry insurance going perfectly with Chapter 146. It is also jotted down in Section 146(1) that no person shall allow anyone to use a two-wheeler in a public place without having complied with the chapter’s requirements.

The chapter compromises of a policy must be bought and that a liability limit must be defined in Section 147. The law stipulates that the owner of every vehicle is required to have an insurance policy covering against any liability which may be incurred by him in respect of death or bodily injury to any person, including injured goods owners or their authorized representatives, or damage to third party property and also death or bodily injury to any passengers in public service vehicles.

Under this section, the policy does not require coverage of deaths or injuries that occur to employees in the course of employment except to the extent provided under the Workmen’s Compensation Act. According to Section 149, insurers are statutorily held for completing all the purposes of the judgement and awards against the person insured in respect of third party risks.


Until now, the following have been the only defences that insurance companies have been allowed:
(1) Use of transportation to hire and reward constitutes a disqualification from operating a means of transportation.
(2) For the institutions of races and speed testing;
(3) The use of transportation is not allowed by the permission
(4) Drivers with invalid driving licenses or drivers that are disqualified from holding such licenses.
(5) The policy taken is invalid since the same has been obtained through nondisclosure of material facts.

With effect from 14.11.94, Section 163A of this Chapter has been added by amending Act 54 of 1994, whereby special provisions have been made regarding the payment of compensation on a structural formula basis.

A provision like this is being introduced to provide compensation to third party victims without proving negligence or tortious conduct. To provide such a structure formula, Schedule-II was added to the Act.

In claim petitions under Section 166 where the claimant seeks damages as a result of negligence, the Supreme Court has held that the award under Section 163A is final, independent, and not in addition to another award. Consequently, one can claim compensation in either of the sections.

Here is the claim application:
To determine the amount of the claim, a claim application can be filed under section 163A on the structural formula basis provided in schedule-II. Schedule-II has been ruled to contain numerous errors, and the Supreme Court has ruled that this schedule cannot be relied upon fully. Moreover, the Schedule provides no computation chart for calculating the income of persons earning more than Rs.40,000/- per year.

There is also the option of filing a claim petition under Section 166 of the Motor Vehicle Act claiming negligence in which case the claim will be evaluated by the court not concerning a structural formula but instead based on evidence led.

If you are hurt or the legal representative of someone who has died, you can file a claim form in a prescribed format. You must submit the form to the owner of the vehicle, the driver, and the insurer. However, some states do not require the driver to submit the form. According to Rajasthan Motor Accident Claims Tribunal Rules, only the owner and insurer must participate in the claim.

It is not necessary to restrict the period in which a claim can be filed. As the law was initially put into effect, the limitation was six months, which was later increased to one year, and ultimately the provision on limitation was deleted in the name of welfare legislation.

My humble opinion is that when a limitation is prescribed for all types of causes, some limitation of two or three years should also be prescribed for filing claims. There should be no indefinite sentence because it will create serious difficulties for the defendant. The procedure is comprised of several steps intended to enable the compensation to be determined in a summary manner.


Using a motor vehicle can lead to the following accidents:
Section 165 sets forth the requirements for the constitution of a Claim Tribunal that can adjudicate claims for compensation arising from accidents involving the death or bodily injury of persons that occurred while operating a motor vehicle.

The wide scope of this term has been expanded in welfare legislation to include injury resulting from accidents with stationary vehicles, injuries due to bomb blasts, or injuries from fires in petrol tanks. It has also been covered as a motor accident when someone is murdered in a motor vehicle.

The Claim is assessed as follows:
However, compensation assessments can be made good, but they cannot be considered to be foolproof. A certain number of assumptions must be made in such an assessment, and the Courts from time to time will enunciate various principles.

All judges are entitled to apply the principles differently in their assessment. In the mid-20th century, Lord Viscount Simon developed a method of assessment called Nanc’s method, which is more commonly referred to as the “discounting method.”. A second popular method called Davis Method was developed in the 1920s by Lord Wright.

The Supreme Court of Pakistan developed a formula when it was dealing with a case. In the Yearly Income section, the Legal Expenses section gives the amount spent by decedents’ legal representatives.

When this amount is capitalized with certain deductions applied, a pecuniary loss can be assessed to the family. While modifying the above formula, the Supreme Court held in CKS Iyer’s case that there is no exact uniform standard for calculating the value of human life, and it is not possible to determine the amount recoverable by a mathematical calculation, but it can be reflected on the average life expectancy of the legal representatives.

In the same period, Lord Diploc developed the Interest Capitalization method that calculated net pecuniary losses on an annual basis and multiplied them with the number of years for which the loan was purchased. Taking into consideration the development in accident cases, the Supreme Court of India has ruled that the annual income of deceased persons should be considered with a landmark judgment in the case of Susamma Thomas.

The appreciation may amount to the double income, depending upon the nature of the job, age, and prospects, among other factors. A Supreme Court decision states that after determining and doubling annual income, 1/3 should be deducted for expenses to be incurred on the deceased and the remaining amount should be multiplied by a multiplier depending on the age of the deceased and beneficiary.

In this case, the maximum multiplier that was approved by Supreme Court was 16. Eventually, the bench of three Supreme Court judges has approved the Davis Formula and determined dependency based on a unit basis in which the adults have been divided into two and the minors have been divided into one.

A multiplier of 16, which was approved in the Sushma Thomas case, has now been increased to a maximum of 18. Unlike the previous case, the court did not approve doubling the amount for this case, except that a premium could be given based on prospects.
But in the recent Supreme Court decision, the multiplier was reduced from 16 to 12 in the case of 38-year-old victims to make compensation just and to take into account all the factors.

As in the same facts and circumstances, in another case, the Supreme Court held that for determining the multiplier, the factors considered are (1) the age of the deceased (2) the age of the claimants (3) the marital status (4) the education and employment of the claimants; and (5) the loss of pecuniary benefits.

Additionally, the Supreme Court has held compensation criteria include a certain amount of guesswork, a certain amount of hypothetical consideration, and a reasonable degree of sympathy tied to the nature of the disability caused. Nevertheless, all such elements must be viewed with an objective standard.

As a result of the above case law, one can say that the determination of compensation is to be based on precedents that are consistent with the facts and circumstances of a particular case. There should be no mistake that an injured or legal representative of the deceased should receive exorbitant benefits, but the law limits these benefits to be “just compensation” to protect the injured or legal representative of the deceased from possible pecuniary and non-pecuniary losses based on the above judgments.

The legal defences of insurance companies against third parties are as follows:
Section 149(2) specifically provides that the Insurance Company cannot avoid liability except for the grounds included therein and not on any other grounds.

The Supreme Court has recently ruled in a case concerning the provisions of the Motor Vehicle Act that even if the Insurance Company has pleaded and proved its defence, it remains liable to make payment to the third party and can be reimbursed by such third party if it receives such payment from the owner insured.

In every case, the courts have held that the burden of proving the availability of defence lies with the Insurance Company, and not only has the Insurance Company to provide evidence as to whether the policy condition was breached or violation of Section 149(2), it must also demonstrate that such a violation happened with the knowledge and connivance of the policy owner. As long as there is no evidence of knowledge or connivance, the Insurance Company remains liable even if the defence is available.

Driver’s License:
At one point, the fact that you did not have a valid driving license was a good defence for the Insurance Company to avoid liability. As a result of this ruling, the Supreme Court has ruled that the insurance company is not responsible if the driver does not have a valid and functioning driving license.

As well, the learner’s license discharged the insurance company from liability, however, later Supreme Court decisions intended to give purposeful meaning to the Act have made that defence is much more difficult. Sohan Lal Pasi’s case has brought to the fore the concept that a breach of condition must be with knowledge of the owner for the first time by the Supreme Court.

As long as the owner’s knowledge regarding the fake driving licence is not proven by the insurance company, that defence, which might have otherwise been available, would not absolve the insurance company from liability. As a result of a dynamic decision in the case of Swaran Singh, the Supreme Court almost eviscerated the rights mentioned;

(i) Unless the Insurance Company can prove the breach was caused by the policyholder’s knowledge, and that the breach occurred with their knowledge, proving breach of condition or not having a driving license or holding a fake license will not absolve the insurance company.

(ii) A learner’s licence is merely a licence, and it does not absolve the Insurance Company of its responsibility.

The breach of the conditions of the policy, even within the scope of Section 149(2), must be a material one which must have been the root cause of the accident and therefore exempt from the requirement of a driving license in those accidents involving standing vehicles, fire, or murder caused while driving.

There has been a landmark case that has caused history to be created, as well as a message to the government to remove the defence from legislation as the victim must receive compensation.

The passenger of Good Fortune:
In the past, gratuitous or fare-paying passengers in a goods vehicle or fare-paying passengers in a private vehicle have been used as good defences. According to the Motor Vehicle Act 1939, gratuitous passengers are not covered by insurance, but fare passengers in goods vehicles are.

A 5 Judges Bench judgment of the Rajasthan High Court reaffirmed this fact. Specifically, the Division Bench of the Supreme Court found that an Insurance Company is liable for passengers in goods vehicles under the new Motor Vehicle Act.

Another judgment by the Supreme Court’s 3 Judges Bench said that the Insurance Company cannot be held responsible for the gratuitous passenger travelling in the goods vehicle.

Several other judgments have reiterated the above instruction with the directions that the Insurance Company shall pay the compensation to the claimant and then recover the same from the owner.

Checks for insurance premiums that have been dishonoured:
According to the Supreme Court, the Insurance Company has to make payment to a third party once the Cover Note has been issued, and the owner can be sued for the remaining amount.

This judgment must be reviewed otherwise Section 64 VB of the Insurance Act will no longer operate. This judgment has the potential to affect those who get the insurance and receive their check bounced since the insurance company will still be responsible for the liability for another year without any premiums being paid.

In some cases, this is prohibited by public policy as well. The two provisions will conflict in other instances as well.
The vehicle will be transferred:
It has been held that transferring a vehicle before an accident is not an acceptable defence for purposes of limiting third-party liability.

Even though the vehicle has been transferred and the policy has not been transferred, there is still a liability of the insurance company even if the vehicle has been transferred and the policy has not been transferred.

Owners have the right to recover from insurance companies as follows:

It is because of the development of law that the insurance company now owes a strict liability to the third party even if there is no negligence on the part of the insurance company, or no defence available.

The Insurance Company has a right to follow legal precedent incorporating various provisions to recover the said amount paid to the third party from the property owner. Recovery of the debt can be made with the mere filing of an execution application and without the necessity for separate civil action.

The appeal is:

Section 173 of the Motor Vehicle Act provides a mechanism for appealing decisions. It was ruled by the courts, however, that the only parties entitled to appeal are the driver and owner of the vehicle against whom the award is passed.

A claim for appeal can not be filed based on quantum or negligence by the insurance company. A claim for appeal can only be made by a company based on certain statutory defences.

Where the Section 170 application has been rejected, the insurance company has the right to seek judicial review of the reasons for rejection by either filing a writ petition or appealing the decision.

Similarly, in all other circumstances where no order has been rendered by the court or reasons have not been recorded by the Tribunal. Acts of this kind cannot be held accountable by the insurer, and the insurer must be allowed to challenge the same.

Himachal Pradesh High Court has handed down an impressive judgment in which the court has referred to the Nicolletta Rohtagi case, a three-judge bench ruling by the Supreme Court, and determined that in such a case the insurer can file an appeal and agitate these issues before the Court and, if the court finds that it is appropriate, it can proceed with the appeal and determine it on its merits.

My humble opinion is that this provision (section 173) will not benefit anyone because it does not provide an appeal procedure to one of the disputing parties who is responsible for making the payments of damages, namely the insurer.

By not participating in the claims process or presenting themselves to assist the claimants, the insurer would not have the ability to control the high awards in the absence of cross-examination of income levels and other issues. Even though the legislature already restricted the right of defence, further restrictions such as making it impossible for them to participate in the trial would not be appropriate.

There is an urgent need to amend the law to permit the insurer to contest the claims as they are the ones responsible for paying the compensation. If the insurance coverage is available, the owner feels safe and does not cooperate with the insurance company while it is attempting to contest the claim


Moreover, if the number of compensation cases in the courts of law can be reliably quantified, nowadays a large number of cases are coming in. There is this situation because large amounts of compensation are allowed to the claimants and to promote that, fake accidents, fake drivers are staged with the connivance of the police.

Connivance on the part of the police prevents the investigation of delayed filing of Fraud Investigation Reports, delayed recording of statements. In these circumstances, the Insurance Company should be provided with a right to contest the claim based on merit and quantum to make the contest just and equitable.

The conclusion and suggestions are as follows:
Laws on accident claims are evolving rapidly and the consent laws need to be changed to better suit those seeking compensation while at the same time keeping in mind that the interests of those disbursing the compensation, i.e. insurance companies, should be taken into consideration.

Having the right to contest cannot permit imposing liability on them to make a payment without granting them that right. In section 170 the owners and claimants are given the right to seek permission, but collusion between them can damage the rights of the owners.

Currently, as a result of the increased scale of compensations, almost 10 to 15% of the cases presented to the Claim Tribunals are fakes or other accidents are being converted into road accidents after they had already been reported to the police.

When increasing the obligations of the insurance companies, they should be given a right of the proper contest to mitigate fake cases and also the quantum.

I think that the time has come for introducing legislation that will ensure fixed compensations, just like in the case of rail and air. Someone who dies in a rail accident cannot collect more than Rs. 4 lakh, but someone who dies in a road accident can collect up to Rs. 4 crores.

There is no reason for the payment of helping gifts based on the source of transportation. A new idea of compensation without a reference to income or age should be introduced so that every person can receive compensation in the event of an accident, regardless of their circumstance.

An accident investigation scheme should be formulated with the State Police Authorities and the Insurance Companies, under which the Insurance Company would know instantly after an accident occurs, allowing the necessary investigations to be made.

The insurance company steps into the picture when the claim petition is filed because at that point evidence can be gathered that turns a non-accident into an accident and quantifies the damages. It is the intention of the legislation to provide just compensation rather than excessive compensation. This is a fundamental principle that should be remembered at all times.

edited and proofread by nikita sharma

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