Motor Vehicles Accident Compensation: Important Judgments Of 2021[Supreme Court & High Courts]

Supreme Court Decisions

1. Motor Accident Compensation- Future Prospects Can Be Granted Even In Cases Pertaining To Notional Income

A bench comprising Justices NV Ramana, S. Abdul Nazeer and Surya Kant in Kirti v. Oriental Insurance Company Ltd. held that future prospects can be granted even in cases pertaining to notional income. The court observed thus while disposing an appeal arising out of Motor Accident Compensation Claim filed by heirs of a deceased couple who died in an accident. In this case, the Motor Accident Claims Tribunal awarded a total sum of Rs 40.71 lakhs for both deceased to the claimants. Partly allowing the appeal filed by Insurance Company, the High Court reversed the addition of future prospects.

2. Motor Accident Compensation: Multiplier Method Has To Be Applied For Future Prospects And Advancement In Life And Career

A Bench of Justices Sanjay Kishan Kaul and Hemant Gupta in Karthik Subramanian v. B. Sarath Babu observed that, while computing motor accident compensation, the multiplier method has to be applied for future prospects and advancement in life and career.

"In our view, this issue is no more res integra in view of Sandeep Khanduja's case (supra) and Erudhaya Priya's case (supra) opining that the multiplier method has to be applied for future prospects and advancement in life and career. Thus, the same principle would have to apply and learned counsel for insurance companies cannot seriously contend to the contrary," the bench observed in the facts of the case.

3. "Insurer Should Deposit Award In Bank Account Maintained By MACT By RTGS/NEFT': SC Issues Directions For Uniform Procedure In Granting Motor Accident Compensation

The Supreme Court in Bajaj Allianz General Insurance Company Private Ltd. v. Union of India issued a slew of directions regarding the process of disbursement of compensation as well as expediting the matter before the MACTs across the country. According to these directions, a jurisdictional police station has to submit an Accident Information Report about the accident to the tribunal and insurer within the first 48 hours either over email or a dedicated website. They shall also submit a detailed accident report to them within three months.

4. Breath Analysis Or Blood Test Not Necessary For Insurer To Reject Claim On Ground Of Drunken Driving

A bench comprising Justices UU Lalit, Indira Banerjee and KM Joseph in IFFCO Tokio General Insurance Company Ltd v. Pearl Beverages Ltd held that a breath analyzer test or blood test as contemplated under the Motor Vehicles Act is not necessary for an insurer to repudiate an accident policy claim on the ground of drunken driving. The Court held that if the insurance company is able to establish from the facts that the driver was under the influence of alcohol at the time of the accident, it will not be deprived of its right to exclude the policy benefit merely on the ground that the scientific tests for alcohol presence were not carried out.

5. Motor Accident Compensation - Self-Employed Deceased Aged Below 40 Years Entitled To 40% Addition As Future Prospects

A Bench comprising CJI NV Ramana, Justices Surya Kant and Aniruddha Bose in Rahul Sharma & Anr. v. National Insurance Company Ltd & Ors. reiterated that addition of 40% income must be given towards future prospects while computing motor accident compensation if the deceased was self-employed and was aged less than aged 40 years.

6. Motor Vehicles Act - Third Party Insurance Deemed To Be Transferred Along With Effective Control Over Vehicle In A Hire Agreement

The Supreme Court in Uttar Pradesh State Road Transport Corporation v. National Insurance Company Limited & Ors held that when a transport corporation hires a motor vehicle for use from its registered owner, the third-party insurance coverage will also be deemed to be transferred along with the vehicle. The person who is having the effective control and command of the vehicle will be regarded as the 'owner'. Therefore, along with the vehicle it must be deemed that the existing insurance policy also remains transferred for the period of hire, the division bench of Justices S. Abdul Nazeer and Krishna Murari noted.

7. Motor Accident Compensation: Pranay Sethi Judgment Doesn't Limit Operation Of Statute Providing Greater Benefits

The Supreme Court in New India Assurance Co. Ltd. v. Urmila Shukla has observed that the judgment in Pranay Sethi does not limit the operation of a statutory provision granting greater benefits in the matter of Motor Accident Compensation. "If a statutory instrument has devised a formula which affords better or greater benefit, such statutory instrument must be allowed to operate unless the statutory instrument is otherwise found to be invalid," the bench of Justices Uday Umesh Lalit and Ajay Rastogi observed. The Court dismissed an Insurance Company's appeal challenging the award by Motor Accidents Claim Tribunal, Allahabad of Rs.24,43,432/- was awarded with 7% interest, while considering the claim in respect of an accident which resulted in the death of one Jairam Shukla.

8. Motor Accident Claim Petition Does Not Abate On Death Of Injured Claimant

The Supreme Court in Oriental Insurance Company Limited v. Kahlon @ Jasmail Singh Kahlon (deceased) observed that a motor accident claim petition does not abate even after the death of the injured claimant. A Bench comprising Justices Navin Sinha and R. Subhash Reddy ruled that the right to sue survive to his heirs and legal representatives in so far as loss to the estate is concerned. The Court added that the loss of estate would include expenditure on medicines, treatment, diet, attendant, Doctor's fee, etc. including income and future prospects which would have caused reasonable accretion to the estate but for the sudden expenditure which had to be met from and depleted the estate of the injured, subsequently deceased.

9. Process Of Determination Of Motor Accident Compensation Cannot Be By A Continuing Mandamus, It Must Take Place At One Go

The Supreme Court in HDFC ERGO General Insurance Co. Ltd. v. Mukesh Kumar observed that while determining compensation under the Motor Vehicle Act, a court cannot direct the continued maintenance by Insurance Company of a prosthetic limb for the injured claimant. The process of determination of such compensation cannot be by a continuing mandamus, in a colloquial sense, and the determination must take place at one go, the bench of Justices Sanjay Kishan Kaul and Hrishikesh Roy observed.

10. Motor Accident Compensation- Multiplier Which Is Relevant To The Deceased Has To Be Applied

The Supreme Court in Chandra v. Branch Manager, Oriental Insurance Company Limited observed that, while computing Motor Accident Compensation, the multiplier which is relevant to the deceased has to be applied. The bench of Justices KM Joseph and PS Narasimha observed that the claimants should be granted an increase by 40 per cent having regard to the admitted age of the deceased being below 40 years on the basis of the salary which we have arrived upon based on the order of the appointment.

11. Motor Accident Claim - Evidence Recorded Before Tribunal To Be Given Weightage Over Contents Of FIR In Case Of Contradiction

While deciding the issue of negligence in a claim for motor accident, Supreme Court in National Insurance Company v. Chamundeswari & Ors observed that if any evidence before the Tribunal runs contrary to the contents in the First Information Report, the evidence which is recorded before the Tribunal has to be given weightage over the contents of the First Information Report.

A Bench comprising Justice Subhash Reddy and Justice Hrishikesh Roy made this observation while delivering its verdict in an appeal filed by National Insurance Company against Madras High Court's order partly allowing plea filed by wife and son of the deceased who lost his life in a motor vehicle accident, and enhancing compensation to Rs.1,85,08,832.

12. Motor Accidents Claim - Minimum Wage Notification Not An Absolute Yardstick To Fix Income Of Deceased In Absence Of Salary Certificate

While deciding on compensation to be paid in a case of motor vehicle accident, the Supreme Court in Chandra @ Chanda v. Mukesh Kumar Yadav and others observed that merely because claimants were unable to produce documentary evidence to show the monthly income of the deceased, the same does not justify adoption of the lowest tier of minimum wage while computing the income.

"In absence of a salary certificate the minimum wage notification can be a yardstick but at the same time cannot be an absolute one to fix the income of the deceased. In absence of documentary evidence on record some amount of guesswork is required to be done. But at the same time the guesswork for assessing the income of the deceased should not be totally detached from reality," the Bench comprising Justice Subhash Reddy and Justice Hrishikesh Roy observed.

13. 'Dependent' Mother In Law Of A Deceased Can Maintain Motor Accident Claim Petition

The Supreme Court in N. Jayasree v. Cholamandalam Ms General Insurance Company Ltd observed that a motor accident claim petition filed by mother in law who was dependent on her deceased son-in-law is maintainable. "It is not uncommon in Indian Society for the mother­-in­-law to live with her daughter and son-­in­-law during her old age and be dependent upon her son-­in-­law for her maintenance," the bench of Justices S. Abdul Nazeer and Krishna Murari observed while holding that she is a "legal representative" under Section 166 of the Motor Vehicles Act.

"In our view, the term 'legal representative' should be given a wider interpretation for the purpose of Chapter XII of MV Act and it should not be confined only to mean the spouse, parents and children of the deceased. As noticed above, MV Act is a benevolent legislation enacted for the object of providing monetary relief to the victims or their families. Therefore, the MV Act calls for a liberal and wider interpretation to serve the real purpose underlying the enactment and fulfill its legislative intent," Court said.

14. Motor Accident Claims - Loss Of Earning Capacity To Be Fixed As 100% When Claimant Is Incapacitated For Life

The Supreme Court in Jithendran v. New India Assurance Co. Ltd held that the loss of earning capacity must be fixed as 100% when a claimant-motor accident victim is incapacitated for life and is confined to home. A person therefore is not only to be compensated for the injury suffered due to the accident but also for the loss suffered on account of the injury and his inability to lead the life he led, prior to the life-altering event the bench of Justices R. Subhash Reddy and Hrishikesh Roy observed. The court added that the extent of economic loss arising from a disability may not be measured in proportions to the extent of permanent disability.

"While the money awarded by Courts can hardly redress the actual sufferings of the injured victim (who is deprived of the normal amenities of life and suffers the unease of being a burden on others), the courts can make a genuine attempt to help restore the self-dignity of such claimant, by awarding 'just compensation," the bench remarked. In the case, the Court noted that even though the physical disability is assessed at 69%, the functional disability is 100% insofar as claimant's loss of earning capacity is concerned.

15. Vehicle Manufacturer Cannot Be Held Liable For Deficiency In Service By Dealer/Authorized Service Center In Repair

The Supreme Court in Honda Cars India Limited v. Sudesh Berry observed that a vehicle manufacturer cannot be held liable for any deficiency in service by the dealer or the authorized center in rendering assistance for repairs of the vehicle. In this case, the bench of Justices UU Lalit and S. Ravindra Bhat agreed with the submission made by the manufacturer that there is not an iota of material that the accident occurred as a result of any manufacturing defect. If there be any deficiency in service by the dealer or the authorized center in rendering assistance for repairs of the vehicle, the manufacturer of the vehicle cannot be held liable, the court said while referring to a recent judgment in TATA Motors Ltd. v. Antonio Paulo Vaz.

16. Sec 163A MV Act -Fixing Rs 15,000 Per Annum As Notional Income For Non-Earning Members Not Reasonable As Schedule II Not Yet Amended

While dealing with a civil appeal preferred by appellant claimants aggrieved by the High Court of Jharkhand, Ranchi's judgment the Supreme Court in Kurvan Ansari alias Kurvan Ali & Anr. v. Shyam Kishore Murmu & Anr observed that despite repeated directions, Schedule-II of the Motor Vehicles Act, 1988 has not been amended yet. The bench of Justices R Subhash Reddy and Hrishikesh Roy observed,

"In this case, it is to be noted that the accident was on 06.09.2004. In spite of repeated directions, Schedule-II is not yet amended. Therefore, fixing notional income at Rs.15,000/- per annum for non- earning members is not just and reasonable."

17. Motor Accident Compensation: Claimants Entitled To 'Future Prospects' Even If Deceased Was Not Earning

The Supreme Court in Meena Pawaia v. Ashraf Ali observed that even in the case of a deceased who had no income at the time of death, their legal heirs shall also be entitled to future prospects by adding future rise in income. It is not expected that the deceased who was not serving at all, his income is likely to remain static and his income would remain stagnant, the bench comprising Justices MR Shah and Sanjiv Khanna said.

18. Supreme Court Issues Additional Directions For Disbursement Of Compensation And Expeditious Adjudication Of MACT Claims

The Supreme Court in Bajaj Allianz General Insurance Company Private Ltd. v. Union of India further issued a slew of directions regarding disbursement of compensation and expeditious adjudication of motor accident claims by online mechanism. The bench of Justices SK Kaul and MM Sundresh directed as follows- A. Format For Payment Advised For Remittance Of Compensation To Be Followed Across Country B. Interest On Disbursement Of Compensation To Beneficiaries To Be Enured To Their Benefit C. Insurance Company/Depositor To Communicate Factum Of Deposit Expeditiously To MACT With Copy To Beneficiary D. District Medical Board To Follow Guidelines Issued By Ministry of Social Justice and Empowerment E. Aspect Of Disparity In TDS Certificate Can Be Redressed By Directions To Legal Services Authority Or Any Agency/Mediation Group To Assist The Claimant In Obtaining A Pan Card And Amending The Formats Across The Country F. Registrar General Of High Courts To Show Compliance Of Directions Passed On March 16, 2021 G. Insurance Companies To Develop Common Mobile App Within 2 Months From Date Of Order H. Alternative Mechanism To Ensure Availability Of Sufficient Pool With The State Corporations

19. Supreme Court Recommends Constitution Of Motor Vehicle Appellate Tribunals In View Of Large Pendency In High Courts

In view of large pendency of motor accident claims appeals before High Courts, the Supreme Court in Rasmita Biswal & Ors v. Divisional Manager, National Insurance Company Ltd & Anr recommended the constitution of Motor Vehicle Appellate Tribunals in the country by amending Section 173 of the Motor Vehicles Act for hearing the appeals challenging the award of a Tribunal.

A Division Bench comprising Justice Abdul Nazeer and Justice Krishna Murari requested the Department of Justice, Ministry of Law and Justice to examine the matter. It recommended speedy disposal of the appeals concerning payment of compensation to the victims of road accidents, and to curtail the pendency before the High Courts.

20. Motor Accident Claims - Potential To Earn Can Be Considered To Determine Compensation If There Is No Evidence For Actual Income

The bench of Justices MR Shah and BV Nagarathna in Basant Devi v. Divisional Manager, The New India Assurance Company Ltd held that even if there is no evidence on record of actual income, the deceased person's potential to earn can be considered while considering insurance claims in motor accidents matter.

The deceased was a computer engineer with a B.Tech degree. While there was evidence on record to show that the deceased was earning Rs.10,000/ month, there was no documentary evidence to show an additional 10,000/month which Appellants claimed. The Motor Accidents Claims Tribunal, Ranchi in its judgment assessed the "future loss of income" of the deceased at Rs.20,000/month and on that basis arrived at a compensation figure of Rs. 30 Lakhs.

21. Conception That House Makers Do Not "Work" Or That They Do Not Add Economic Value To The Household Is A Problematic Idea: SC In Motor Vehicle Compensation Case

A bench comprising Justices NV Ramana, S. Abdul Nazeer and Surya Kant in Kirti v. Oriental Insurance Company Ltd had observed that the conception that house makers do not "work" or that they do not add economic value to the household is a problematic idea that has persisted for many years and must be overcome.

22. Mere Failure To Avoid Collision By Taking Some Extraordinary Precaution Does Not In Itself Constitute Contributory Negligence

The Supreme Court in K. Anusha Vs Regional Manager, Shriram General Insurance Co.Ltd observed that mere failure to avoid the collision by taking some extraordinary precaution, does not in itself constitute negligence.

To establish contributory negligence, some act or omission, which materially contributed to the accident or the damage, should be attributed to the person against whom it is alleged, the bench comprising Justices Hemant Gupta and V. Ramasubramanian observed.

High Court Decisions 

1. Where Motor Accident Caused Trauma To Claimant's Heirs And There Is Nexus Between Accident And Death, Heirs Entitled to Compensation: Allahabad High Court

In an appeal from a motor accident claim, a Division Bench of Justices Dr Kaushal Jayendra Thaker and Ajit Singh in (Deceased) Satish Chand Sharma & Ors. v. Manoj & Anr. underscored the importance of ensuring the claimant(s) received the compensation they were entitled to in the event of a dispute between the owner of the vehicle that caused the accident and the insurer.

To this end, it emphasized that even the heirs of the claimant, once their status as heirs was established, would be entitled to claim compensation due to the original claimant.

Relying on Surpal Singh Ladhubha Gohil v Raliyatbahen Mohanbhai Savlia it was stated,

"The facts go to show that the claimant was under the constant treatment of doctors till the claimant survived therefore, it can safely be held that the accident caused a lot of trauma both to the claimant as well his heirs. There is a nexus between the death of the deceased and accidental injury. There is sufficient evidence to the effect that death of the deceased was due to development which took place due to resultant multiple injuries caused by the accident which would show that injuries were the root cause of the death. Therefore, heirs are entitled to compensation."

2. No Person Supposed To Share Driver's Seat In 3 Wheeler Goods Carriage: Kerala High Court

Justice A. Badharudeen in Bajaj Allianz General Insurance Co. Ltd v. Bheema & Anr. held that in a three-wheeler goods carriage, no other person whether a passenger or the owner of the vehicle is supposed to share the seat of the driver and any such action is a violation of the insurance policy conditions and that such persons would be considered as gratuitous passengers. Observing so, the Court set aside the liability fastened on the insurance company by the Motor Vehicles Tribunal to compensate such a passenger.

3. Married Daughter & Parents Of Deceased Entitled To Compensation As Dependents Under Motor Vehicles Act: Kerala High Court

The Court in United India Insurance Co. Ltd v. Shalumol ruled that a married daughter and the parents of the deceased are entitled to claim compensation under Section 166 of the Motor Vehicles Act, 1988, as dependents of the deceased. Justice C.S Dias while dismissing an appeal filed by the insurance company opined that it would be preposterous to accept the contention if the counsel for the appellant that a 25-year-old daughter would be no longer dependent on her 49-year-old mother because she was given in marriage.

4. Motor Accident Compensation Can't Be Reduced Saying Pillion Rider Didn't Wear Helmet; Not Contributory Negligence : Kerala High Court

The Kerala High Court in Kadeeja Musaliyar and Ors. v. Riyas Manakadavan and Ors; National insurance Co. v. Kadeeja Musaliyar while dealing with the question whether the Tribunal could reduce the compensation payable on a motorcycle accident if the deceased pillion rider rode without a helmet in observed that,

"Simply because there is a violation of Section 129 of the Motor Vehicles Act 1988 by a victim in an accident, there is no presumption that there is contributory negligence on the part of the person who was not wearing the helmet. It is to be decided in the facts and circumstances of each case."

What was necessary to be ascertained was whether the individual contributed to the accident that occurred, Justice P.V. Kunhikrishnan reasoned, based on Kerala High Court judgment in PJ Jose v. Vanchankal Niyas & Ors.

"To attribute contributory negligence, some other additional evidence is necessary," the Court again said.

5. Time To Review Mentality Of Considering Plight Of Injured Victims Sympathetically Despite Violation Of Traffic Laws By Them: Madras High Court

While dealing with the case of a bus driver, who was held liable by the Motor Accidents Claims Tribunal for accident with a two-wheeler vehicle carrying four persons, a Single Bench of Justice K. Murali Shankar in Tamil Nadu State Transport Corporation v. Marimuthu & Ors. observed,

"It is high time for all stakeholders to review our mind-set that in cases of road accidents involving big and small vehicles, fixing the driver of the big vehicle as tort-feasor, as in majority of cases FIRs came to be registered against the driver of the big vehicle and investigations are being carried out in such a way to make that driver is responsible for the accident.

It is also high time for all who are dealing with motor accident claims to review our mentality in considering the plight of the injured victim or the legal heirs of the deceased victim sympathetically and awarding compensation in the accidents that occurred by violating the Laws and Rules."