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Legal Pronouncements for Compensation under Section 166 of the Motor Vehicles Act, 1988

Motor accidents are a fairly commonplace occurrence in our daily lives. Motor accidents occur very frequently and lead to considerable loss of life and property. To cover such accidents and make provisions for them, a legislative mechanism namely the Motor Vehicles Act 1988(hereinafter referred to as the ‘Act’) has been instituted. The parties thus involved in a typical motor accident case requiring judicial dispensation include the owner of the vehicle, the driver the insurers and the deceased/injured.

In this article, it has been attempted to delineate the principles for award of compensation by the Court in respect to claims arising out of motor vehicle accidents causing death or injury(Section 166 of the Act). Some of the major provisions under the Act pertaining to the above are dealt with as below;

Legal Provisions
Section 140 of the Act augurs for interim compensation on no fault basis(without proving negligence by the claimant on account of the owner of the vehicle concerned) vis a vis Section 166 of the Act is for the final adjudication of the claim.

Section 165of the Act stipulates adjudicating upon claims for compensation in respect of accidents involving the death of, or bodily injury to, persons arising out of the use of motor vehicles, or damages to any property of a third party so arising, or both.

Section 166 of the Act states as to who can claim compensation in MACT cases with regard to Section 165 on the basis of evidence led. This would be by;
(a) By the person sustaining the injury.
(b) By the owner of the property where death has resulted from the motor accident.
(c) By all or any of the legal representatives of the deceased.
(d) By any agent duly authorized by the person injured or all or any of the legal representatives of the deceased as the case may be.

Section 2(30) of the Motor Vehicles Act defines who the owner is “Owner thus is a person in whose name the motor vehicle stands registered and where such a person is a minor, the guardian of such minor. In relation to a Motor Vehicle which is the subject matter of a hire purchase agreement or an agreement of lease or an agreement of hypothecation, the person in possession of the vehicle under that agreement.

A claim under Section 163-A of the Act can be also filed wherein compensation is granted by the Courts on the structured formula basis as provided under Schedule II of the Act . However the Honble Apex Court has adjudged the Schedule to have glaring mistakes.

Documents accompanying the Claim Petition
The MACT , Gurgaon as held in the case of Rajesh Tyagi vs Jasbeer Singh (FAO 842 Of 2003), decided on 21stDec, 2009has laid down the following directions as to the documents accompanying Claim Petition in the event of injuries/death
1) Copy of the FIR registered in connection with the said incident if any-
2) Copy of the MLC/Post Mortem Report/ Death Report.
3) The documents of identity of the claimants and of the deceased in a death case.
4) Original bills of expenses incurred on the treatment along with treatment record.
5) Documents of educational qualification of the deceased.
6) Disability Certificate if already obtained in a injury case.
7) The proof of income of the deceased/injured.
8) Documents as to the age of the victim.
9) The cover note of the third party insurance policy if any.
10) An affidavit in support of the above documents and detailing the relationship of the claimants with the deceased.

Hence the I.O (Investigating Officer) of the police shall submit a D.A.R (Detailed Accident Report) along with the aforesaid documents within 30 days.This provision has been to enable the motor accident victims get the compensation in a timely manner without having to themselves file a claim petition.

Petition to be filed within reasonable time.
The Supreme Court, in M/s. Purohit and Company vs. Khatoonbee (S.L.P NO 25760 of 20:-to raise a claim for compensation before a Motor Accident Claims Tribunal, it should be done within a reasonable time. It further held that the question of reasonability would be with respect to the facts and circumstances of each case.

Determination of Compensation
A Constitutional Bench of the Apex Court in the case of National Insurance Company Limited vs Pranay Sethi and Ors (S.L.P 255290 OF 2014)decided on October 31st, 2017 upheld the Multiplier concept and deduction in personal and living expenses as laid down in the Sarla Verma case. However the future aspects in awarding compensation under Section 166 of the Motor Vehicles Act have been newly formulated by following the standardization principle. The following principles have been laid down :-

Factors to be determined
The income of the deceased
The age of the deceased
The number of dependants

Determination of Multiplier
As regard the cases where the age of the victim happens to be up to 15 years, the Supreme Court was of the considered opinion that in such cases irrespective of Section 163-A or Section 166 under which the claim for compensation has been made, multiplier of 15 and the assessment as indicated in the Second Schedule subject to correction as pointed out in Column (6) of the Table IN Sarla Vermain (S.L.P 8648 of 2007),decided on 15thApril, 2009should be followed.

In all other cases of death where the application has been made under Section 166, the multiplier as in indicated in Column (4) of the Table in Sarla Verma which starts with an operative multiplier of 18(for the age groups of 15-20 and 21 to 25 Years) reduced by one unit for every five years i.e M-17 for 26 to 30 years, M-16 for 31 to 35 years, M-15 for 36 to 40 years, M-14 for 41 to 45 years, M-13 for 46 to 50 years, then reduced by two units for every five years, that is M-11 for 51 to 55 years, M-9 for 56 to 60 years, M-7 for 61 to 65 years and M-5 for 66 to 70 years

Deduction of Personal Expenses
Where the deceased was married, the deduction towards personal and living expenses of the deceased, should be one-third (1/3rd) where the number of dependent family members is 2 to 3, one-fourth (1/4th) where the number of dependant family members is 4 to 6, and one-fifth (1/5th) where the number of dependant family members exceed six.

Where the deceased is a bachelor and the claimants are the parents, the deduction follows a different principle. In regard to bachelors, normally, 50% is deducted as personal and living expenses, because it is assumed that a bachelor would tend to spend more on himself.

Thus even if the deceased is survived by parents and siblings, only the mother would be considered to be a dependant, and 50% would be treated as the personal and living expenses of the bachelor and 50% as the contribution to the family. However, where family of the bachelor is large and dependant on the income of the deceased, as in a case where he has a widowed mother and large number of younger non-earning sisters or brothers, his personal and living expenses may be restricted to one-third and contribution to the family will be taken as two-third.

Application of Future Prospects
While determining the income, an addition of 50% of actual salary to the income of the deceased towards future prospects, where the deceased had a permanent job and was below the age of 40 years, should be made. The addition should be 30%, if the if the age of the deceased was 48 between 40 to 50 years. In case the deceased was between the age of 50 to 60 years, the addition should be 15%. Actual salary should be read as actual salary less tax.

In case the deceased was self-employed or on a fixed salary, an addition of 40% of the established income should be the warrant where the deceased was below the age of 40 years. An addition of 25% to where the deceased was between the age of 40 to 50 years.

Insurer’s liability
Often, it is to be seen that the insurer of the vehicle disputes liability of the payment of the insurance amount. In the event the offending vehicle is not insured then the insurance company is not liable to pay. Whenever the owner of the vehicles violates the insurance policy’s terms and conditions , then also the insurer is not liable to pay.

Conclusion
Hence in progression it can be seen that the Hon’ble Apex Court has formulated the principles for claim of compensation under Section 166 of the Motor Vehicles Act based on the multiplier effect. A special mention is made to the Lok Adalat in which forum either party to the case can approach the same for mutual settlement once the case is filed and the notice is issued.