The Supreme Court has referred to a larger Bench the question of whether legal heirs of a vehicle owner can claim compensation under Section 163A of the Motor Vehicles Act, 1988, for the owner’s death in a motor accident. A Bench comprising Justice Sudhanshu Dhulia and Justice K. Vinod Chandran doubted the correctness of several earlier judgments that had limited such claims only to third parties.
The case arose from a motor accident in which both parents of the petitioner, a minor child named Wakia Afrin, died after their vehicle lost control due to a tyre burst and hit a roadside building. Four persons, including the petitioner’s parents, died in the incident. At the time, the petitioner was only two years old and was represented before the Motor Accident Claims Tribunal (MACT), Cuttack, by her aunt.
The MACT had allowed the claims and awarded ₹4,08,000 for the death of the mother and ₹4,53,339 for the death of the father. The petitioner’s father, who owned the vehicle, was shown as the first respondent before the Tribunal and High Court, with a clear note that he was deceased. The second respondent was the National Insurance Company.
The Orissa High Court had set aside the MACT’s award, holding that a dead person could not be made a respondent, rendering the claim petitions non-maintainable. However, the High Court acknowledged that there was no dispute regarding the insurance policy’s validity and that the driver held a valid licence.
The Supreme Court, however, held that the High Court’s reasoning was legally untenable. Referring to Section 155 of the Motor Vehicles Act, the Court noted that the death of the insured person (owner) after the accident does not bar a claim against the insurer. “The event which gave rise to the claim is the accident and the death occurred after the event; albeit a direct result of the accident,” the Court observed.
The key legal issue before the Court was whether a claim under Section 163A could be maintained for the death of the owner of the vehicle, when the claim is made by his legal heir — in this case, his daughter. The Insurance Company argued that since the minor had inherited the estate of the owner, she could not also be the recipient of compensation under a no-fault liability provision, as the liability would lie against the estate she succeeded.
While the Court accepted that a claim in respect of the deceased mother was maintainable and restored the MACT’s award for her death, it found the issue of liability for the father’s death to be more complex. The Court noted that the insurance policy (Annexure P-1) included a capped coverage of ₹2 lakhs for owner-driver.
The Court examined a series of earlier judgments under Sections 163A and 166 of the Act, including:
- Dhanraj v. New India Assurance Co. Ltd. (2004) 8 SCC 553
- Oriental Insurance Co. Ltd. v. Jhuma Saha (2007) 9 SCC 263
- Oriental Insurance Co. Ltd. v. Rajni Devi (2008) 5 SCC 736
- Ningamma v. United India Insurance Co. Ltd. (2009) 13 SCC 710
- Ramkhiladi v. United India Insurance Co. (2020) 2 SCC 550
These cases had held that owners of vehicles or their legal heirs cannot claim compensation under Section 163A as they are not considered third parties. However, the present Bench expressed doubt over the correctness of these views.
Referring to the non-obstante clause in Section 163A, the Court held:
“Section 163A is a special provision… which overrides not only the entire provisions of the Motor Vehicles Act, 1988 but also any other law for the time being in force and any instrument having the force of law… It would override the provisions under Sections 147 & 149 along with the other provisions of the M.V. Act and the law regulating insurance as also the terms of the policy confining the claim with respect to an owner-driver to a fixed sum.”
The Court emphasized that Section 163A provides for a structured formula-based no-fault compensation scheme, intended as a beneficial piece of legislation in light of the increasing number of motor vehicle accidents and difficulties in proving negligence.
In conclusion, the Court observed:
“We are of the opinion that this issue concerning the liability of the insurer in a claim under Section 163A qua the owner/insured requires an authoritative pronouncement.”
The Bench directed the Registry to place the matter before the Chief Justice of India for appropriate orders to constitute a larger Bench.
