Salient Features of Motor Vehicles Amendment Bill 2016

The Motor Vehicles(Amendment) Bill 2016, introduced in the Lok Sabha by the Union Minister of Road Transport and Highways, Sri. Nitin Gadkari, on 09.08.2016, seeks to bring about comprehensive changes in the present Motor Vehicles Act. The salient features of the Bill are as follows :-

Limits on insurer’s liability

The proposed amendment seeks to put a cap on the liability to be borne by insurance companies in respect of third party claims. As per the present Act, the liability of the insurer for indemnifying the owner for compensation claims in respect of death or bodily injury arising out of use of motor vehicle is unlimited. In other words, as per present Act, the insurer has to cover the liability incurred in respect of any accident to the extent of actual amount of liability incurred.(See Section 147(2)(a) of present Act). However, the proposed Bill seeks to replace the said provision with an altogether new provision, which puts an upper limit of liability of insurer to an extent of Rs.10 lakh in respect of death and Rs. 5 lakhs in respect of bodily injury arising out of motor vehicle accident. As per the new provision, the Central Government, by rule-making, is empowered to fix the premium and corresponding liability of the insurer, in consultation with the Insurance Regulatory and Development Authority. The proviso to the proposed new Section 147(2) states that such liability fixed by the Central Government shall not exceed Rs. 10 lakhs in respect of death, and Rs.5 lakhs in respect of bodily injury.

This means that the liability fixed on the insurer can be even lesser than Rs.10 lakhs and Rs.5 lakhs in case of death or bodily injury, as the case may be.

The consequence of this section would be that in compensation claims, the victims will not be able to realize more than Rs.10 lakhs in case of death, and Rs.5 lakhs in case of bodily injury from the insurer under third party claim, and will have to realize the excess amount from the owner or driver. This provision will certainly frustrate the social welfare intent of compulsory third party insurance.

Enabling insurer to seek exoneration from liability for non-receipt of premium

The Bill seeks to make non-receipt of premium one of the specified conditions, which would enable the insurer to seek exoneration from the liability. As per the present law, non-receipt of premium would not amount to breach of a statutory condition. Hence, even if the cheque drawn towards premium was subsequently dishonoured, the insurer was held liable to satisfy the liability towards third party victims( See New India Assurance Co.Ltd. v. Rula AIR 2000 SC 1082 : (2000) 3 SCC 195)). The settled law on the point was that once an insurance certificate is issued, then the insurer will have to meet third party claims, notwithstanding the fact that it was entitled to avoid or cancel the policy; although it can later recover the amount from the insured.

However, the proposed amendment enables the insurer to avoid the policy on the ground of non-receipt of premium, by virtue of new section as Secton 149 2(c)

Survival of claim to the estate of claimant after his death 

As per the present law, a claim for personal injury would abate on the death of the claimant, and would not survive to his estate, due to the operation of Section 306 of the Indian Succession Act.( Except in Kerala where due to the operation of Kerala Torts(Miscellaneous) Provisions Act, which enables legal heirs to continue action for personal injury even after expiry of original claimant). The claim would survive to the estate only if death had nexus with the injuries, and only in such cases the legal heirs would be entitled to come on record and continue with the prosecution of the claim.

The proposed Bill seeks to remedy that situation, bv incorporation of a new sub-section, Section 166(5), with a non-obstante clause which says that the right of a person to claim compensation for injury in an accident shall, upon the death of the person injured, survive to his legal representatives, irrespective of whether the cause of death is relatable to or had any nexus with the injury or not..

Hit and Run Scheme

The compensation payable for victims in ‘hit and run’ out of the scheme fund under Section 161 has been enhanced to Rs. 2 lakhs in case of death, and Rs. 50,000/- in case of bodily injury, from Rs.25,000/- and Rs.12,500/- respectively.

Motor Vehicle Accident Fund

The Bill seeks to introduce a Motor Vehicle Accident Fund under Section 164B, which is to be augmented by a special tax or cess. The Fund is to be utilized for giving immediate relief to victims of motor accidents, and also hit and run cases. The compensation paid out of the fund shall be deductible from the compensation which the victim may get in future from the Tribunal.

Stringent Penalties for Road Traffic Violations

The Bill seeks to enhance the penalties for road traffic violations

Proposed Amendments in Various Penalties under Motor Vehicle Amendment Bill – 2016

(Table courtesy, www.pib.nic.in, Press Information Bureau website.) 

What is noteworthy is the provision for imposition of penalty for unauthorized use of vehicles by juveniles, whereby the guardian and owner is made liable for penal action. 

Protection of Good Samaritans

The Act defines “good Samaritan” as a person, who in good faith, voluntarily and without expectation of any reward or compensation renders emergency medical or non-medical care or assistance at the scene of an accident to the victim or transporting such victim to the hospital as per Section 134A. The Act makes provision for protection of Good Samaritans from unnecessary trouble or harassment from civil or criminal proceedings and empowers Central Government to frame Rules for their protections. This provision is incorporated following the directions of the Supreme Court in Save Live Foundation vs. Union of India AIR 2016 SC 1617 

Community Service as punishment

For causing motor accidents, punishment in the form of ‘Community Service’ can be imposed. The Act defines “Community Service” as unpaid work which a person is required to perform as a punishment for an offence committed under this Act. It seems a cue has been taken from the judgment of the Supreme Court in BMW case( State vs. Sanjeev Nanda (2012) 8 SCC 450), wherein community service of two years was imposed as an alternate punishment.

Although the Bill contains several noteworthy provisions which seek to ensure road safety, the provision seeking to introduce limited liability of insurer is regressive in nature, and can cause a lot of hardship to innocent victims of road traffic accidents. The monsoon session of the Lok Sabha ended on 12.08.2016, and the Bill is still pending on the date, and might be considered in the Winter Session of Parliament.

Image from here.

Manu Sebastian is a Lawyer practising in Kerala High Court.