SC Directs All States/UTs To Frame Rules To Pay Compensation To Accident Victims By Auctioning Uninsured Motor Vehicles [Read Order]

“We direct the Chief Secretaries of each of the States to bring out necessary notification, if not already done, on the lines of the notification issued by the Govt. of NCT of Delhi keeping in view the decision in Jai Prakash (supra). The said exercise shall be completed within twelve weeks hence.”

The Supreme Court has directed each state and union territories to frame appropriate rules to put uninsured motor vehicles in public auction and pay compensation to victims from such sale proceeds.

In connection with a civil appeal arising out of a motor accident claim, the CJI headed bench had taken note of an issue raised by the counsel that numerous accidents occur and there is no insurance or valid insurance, it becomes extremely difficult on the part of the tribunals to pass an executable award. Advocate Radhika Gautam had submitted that there are owners who cannot really pay and, therefore, there should be some arrangement by which the State can bear the responsibility

The bench had heard the Attorney General’s view in this regard and agreed with his submission that the State cannot be held liable because of non-compliance by the owner of the vehicle who has failed to insure the vehicle.

The bench also noted that direction of public auctioning of uninsured vehicles was issued in the case of Jai Prakash vs. National Insurance Company Limited to all the State Governments to incorporate such a rule yet it appears that no steps have been taken so far.

In Jai Prakash, the Apex court bench had observed: “Where there is no insurance cover for a vehicle, the owner should be directed to offer security or deposit an amount, adequate to satisfy the award that may be ultimately passed, as a condition precedent for release of the seized vehicle involved in the accident. If such security or cash deposit is not made, within a period of three months, appropriate steps may be taken for disposal of the vehicle and hold the sale proceeds in deposit until the claim case is disposed of. The appropriate Governments may consider incorporation of a rule on the lines of Rule 6 of the Delhi Motor Accident Claims Tribunal Rules, 2008 in this behalf.”

Relevant portion of the Rule reads: “(2) Where the motor vehicle is not covered by a policy of insurance against third party risks, or when registered owner of the motor vehicle fails to furnish copy of such policy in circumstance mentioned in sub-rule (1), the motor vehicle shall be sold off in public auction by the magistrate having jurisdiction over the area where accident occurred, on expiry of three months of the vehicle being taken in possession by the investigating police officer, and proceeds thereof shall be deposited with the Claims Tribunal having jurisdiction over the area in question, within fifteen days for purpose of satisfying the compensation that may have been awarded, or may be awarded in a claim case arising out of such accident.”

  Disposing of the appeal, the bench comprising Chief Justice Dipak Misra and Justice DY Chandrachud said: “Certain States have issued notifications which have the same effect as that of the Notification issued by the Govt. of NCT of Delhi. Other States are in the process of issuing such notifications. In view of the aforesaid, we do not intend to keep the appeals pending. We direct the Chief Secretaries of each of the States to bring out necessary notification, if not already done, on the lines of the notification issued by the Govt. of NCT of Delhi keeping in view the decision in Jai Prakash (supra). The said exercise shall be completed within twelve weeks hence.”