Supreme Court of India
JAI PRAKASHversusNATIONAL INSURANCE CO. LTD. & ORS.
- Citation
- 2009 INSC 1315
- Decided
- 17 December 2009
- Disposal
- Hearing Adjourned
- Bench
- R V RAVEENDRAN
Holding
The Court held that to secure compensation for all motor accident victims, the provisions of Sections 158(6) and 166(4) of the Motor Vehicles Act must be faithfully implemented by police authorities and Motor Accident Claims Tribunals, accompanied by specific directions to insurance companies and legislative suggestions.
Summary
The Supreme Court, hearing Special Leave Petitions filed by Jai Prakash against National Insurance Co. Ltd. and others, examined systemic problems in motor accident compensation, including victims of hit‑and‑run, uninsured vehicles and gratuitous passengers, the use of goods vehicles for passenger transport, procedural delays in Motor Accident Claims Tribunals, and the failure of full compensation to reach victims. The Court held that the provisions of Sections 158(6) and 166(4) of the Motor Vehicles Act must be strictly implemented by police and tribunals, and directed the Director‑Generals of Police to ensure compliance, to prosecute owners of uninsured vehicles under Section 196, and to follow a summary procedure for claims. It also issued detailed suggestions for legislative and executive action, for insurance companies to expedite payment, to consider a lifetime third‑party insurance fund, and to protect compensation amounts through fixed‑deposit or annuity schemes. The Court set a phased implementation timetable ending December 2010 and ordered the Supreme Court Registry to circulate the directions to all state governments and high courts. The petition was disposed after the directions were issued.
Issues considered
- How to ensure compensation for victims of hit‑and‑run, uninsured vehicles and gratuitous passengers
- Liability and compensation for passengers in goods vehicles used for passenger transport
- Procedural delays in adjudication of claims by Motor Accident Claims Tribunals
- Ensuring the full compensation amount reaches and benefits the victims and their families
- Implementation of Sections 158(6) and 166(4) of the Motor Vehicles Act, 1988
- Prosecution of drivers and owners of uninsured vehicles under Section 196
- Role of insurance companies in timely payment and protection of compensation
Legislation cited
- Indian Evidence Act, 1872s. 165
- Motor Vehicles Act, 1988s. 146, s. 158(6), s. 161, s. 166(4), s. 196
Subjects
Motor accident compensationHit and runUninsured vehicleThird party insuranceMotor Vehicles ActClaims TribunalProcedural delayInsurance liabilityRoad safetyLegislative reform
Judgment
[2009) 16 (ADDL.) S.C.R. 710
•
A JAi PRAKASH
v.
NATIONAL INSURANCE CO. LTD. & ORS.
(SLP (C ) No. 11801-11804 of 2005)
DECEMBER 17, 2009
8
[R.V. RAVEENDRAN, DR. MUKUNDAKAM SHARMA
AND K.S. RADHAKRISHNAN, JJ.]
Motor Vehicles Act, 1988 - ss. 158(6), 166(4), 196 -
c Central Motor Vehicle Rules, 1950 - r. 150 - Motor accident
- Compensation - In cases of hit and run unidentified
vehicles; uninsured vehicles; gratuitous passengers;
passengers in goods vehicles; procedural delays in
adjudication/settlement of claims; and where compensation
D amount does not reach the claimants, directions issued and 1
suggestions made by the Court - Directions to the police
authorities and claims tribunals for implementation of
provisions u/ss. 158(6), 166(4), 196 and r. 150 - Direction to
Insurance companies to lodge complaint in cases of forged
E driving licences - Suggestions made for legislative/executive
interference to amend and enact more comprehensive law -
Suggestions also made to Insurance Companies.
In the instant Special Leave Petition, the Court
addressed four problems generally faced in motor
F
accident cases -
(i) Victims who do not receive compensation in
cases, that is
G (a) hit and run vehicles which remain
unidentified.
(b) offending vehicles not having insurance
cover and
H 710
JAi PRAKASH v. NATIONAL INSURANCE CO. LTD. & 711
ORS.
(c) vehicles with third party insurance carrying A
persons not covered by insurance (gratuitous
passengers and pillion riders etc.).
{ii) Practice of using goods vehicles for
passenger transport B
(iii) Procedural delay in adjudication/settlement of
-t claims by Motor Accident Claims Tribunal.
(iv) The entire compensation amount not reaching
and benefitting the victims and their families. C
The Court gave the following initial directions
I suggestions:
Suggestions For Legislative and Executive Intervention
r [Problems (i) and (ii)]: D
1.1. To ensure that all accident victims get
compensation, it is necessary to formulate a more
comprehensive scheme for payment of compensation to
the victims of road accidents, in place of the present E
system of third party insurance. [Para 22] [732-G]
1.2. An alternative scheme involves the collection of
' a one time (life time) third party insurance premium by a
Central Insurance Agency in respect of every vehicle
sold (in a manner similar to the collection of life time road F
tax). The fund created by collection of such third party
insurance can be augmented/supplemented by an
appropriate road accident cess/surcharge on the price of
petrol/diesel sold across the country. Such a hybrid
, model which involves collection of a fixed life time G
premium in regard to each vehicle plus imposition of a
road accident cess may provide a more satisfactory
solution in a vast country like India. This will also address
a major grievance of insurance companies that their
H
712 SUPREME COURT REPORTS (2009] 16 (ADDL.) S.C.R.
A outgoings by way of compensation in motor accident
claims is four times the amount received as motor
insurance premia. The general insurance companies may
however continue with optional insurance to provide
cover against damage to the vehicle and injury to the
B owner. [Para 23) [733-8-F]
1.3. A more realistic and easier alternative is to
continue with the present system of third party insurance
with two changes: (I) Define 'third party' - to cover any
accident victim (that is any third party, other than the
C owner) and increase the premia, if necessary. (ii) Increase
the quantum of compensation payable under Section 161
of the Act in case of hit and run motor accidents. [Para
24) [733-F-H; 734-A]
D 1.4. There is an urgent need for laying down and
enforcing Road safety measures and establishment of
large number of Trauma Centres and first aid centres. It
is also necessary to consider the establishment of a
Road Safety Bureau to lay down Road Safety Standards
E and norms, enforce Road safety measures, establish and
run Trauma Centres, establish First Aid Centres in Petrol
Stations, and carry out research/data collection for
accident prevention. [Para 25) [734-B-C]
1.5. The Central Government may consider
F amendment of the Second Schedule to the Act to rectify
the several mistakes therein and rationalize the
compensation payable thereunder. [Para 27] [734-E]
U.P. State Road Transport Corporation v. Trilok Chandra
G 1996 (4) SCC 362; Sar/a Verma v. Delhi Transport
Corporation 2009 (6) SCC 121, referred to.
1.6. Where there is no insurance cover for a vehicle,
the owner should be directed to offer security or depo~it
H
JAi PRAKASH v. NATIONAL INSURANCE CO. LTD. & 713
ORS.
an amount, adequate to satisfy the award that may be A
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 B
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. [Para 28) [734-
G-H; 735-A] c
1.7. In place of the provisions relating to Accident
tribunals and award of compensation in the Motor
Vehicles Act, 1988, and other statutes dealing with
accidents and compensation, enacting a comprehensive
and unified statute dealing with accidents may be D
r
considered. (Para 26) (734-D]
Direction to Police Authorities: [Problem (i)):
1.8. Section 196 of the Act provides that whoever E
drives a motor vehicle or causes or allows a motor
vehicle to be driven in contravention of the provisions of
Section 146 shall be punishable with imprisonment
' which may be extended to three months, or with fine
which may extend to Rs. 1000/-, or with both. Though the
F
statute requires prosecution of the driver and owner of
uninsured vehicles, this is seldom done. Thereby a
valuable deterrent is ignored. Therefore, it is directed that
the Director Generals to issue instructions to prosecute
drivers and owners of uninsured vehicles under Section
196 of the Act. [Para 10) [726-E-G] G
\
Direction to Police Authorities [Problem (iii)):
2. The Legislature tried to reduce the period of
pendency of claim cases and quicken the process of H
714 SUPREME COURT REPORTS [2009] 16 (ADDL.) $.C.R.
A determination of compensation by making two significant
changes in the Act, by Amendment Act 54 of 1994,
making it mandatory for registration of a motor accident
claim within one month of receipt of first information of
the accident, without the claimants having to file a claim
B petition. Neither the police nor the Motor Accidents
Claims Tribunals have made any effort to implement the
mandatory provisions of the Act viz. s. 158 (6) ands. 166
(4). If these provisions are faithfully and effectively
implemented, it will be possible for the victims of accident
c and/or their families to get compensation, in a span of
few months. There is, therefore, an urgent need for the
concerned police authorities and Tribunals to follow the
mandate of these provisions. [Para 4) [722-E-F; 734-A-B]
General Insurance Council v. State of A.P. 2007 (12)
D sec 354, relied on. 1
2.1. The Director General of Police of each State is
directed to instruct all Police Stations in his State to
comply with the provisions of Section 158(6) of the Act.
E The Station House Officers of the jurisdictional police
stations shall submit Accident Information Report (AIR)
in Form No. 54 of the Central Motor Vehicle Rules,1989
to the jurisdictional Motor Vehicle Claims Tribunal, within
30 days of the registration of the FIR. The police should
F also collect and furnish the following additional
particulars in the AIR to the Tribunal: (i) The age of the
victims at the time of accident; (ii) The income of the
victim; (iii) The names and ages of the dependent family
members. [Para 8) [725-D-F]
G 2.2. The AIR shall be accompanied by the attested
copies of the FIR, site sketch/mahazar/photographs of the
place of occurrence, driving licence of the driver,
insurance policy (and if necessary, fitness certificate) of
the vehicle and postmortem report (in case of death) or
H the Injury/Wound certificate (in the case of injuries). The
JAi PRAKASH v. NATIONAL INSURANCE CO. LTD. & 715
ORS.
names/addresses of injured or dependant family A
members of the deceased should also be furnished to the
Tribunal. [Para 8] [725-G]
'-
2.3. Simultaneously, copy of the AIR with annexures
thereto shall be furnished to the concerned insurance
8
company to enable the Insurer to process the claim.
[Para 8] [725-H; 726-A]
2.4. The police shall notify the first date of hearing
fixed by the Tribunal to the victim (injured) or the family
of the victim (in case of death) and the driver, owner and C
insurer. If so directed by the Tribunal, the police may
secure their presence on the first date of hearing. [Para
8] [726-8]
2.5. To avoid any administrative difficulties in 0
immediate implementation of Sections 158(6) of the Act,
such implementation to be carried out in three stages. In
the first stage, all police stations/claims Tribunals in the
NCT Region and State Capital regions shall implement
the provisions by end of. April 2010. In the second stage, E
all the police stations/claims Tribunals in district
headquarters regions shall implement the provisions in
the first stage by the end of August 2010. In the third
stage, all police stations/Claims Tribunals shall implement
the provisions by the end of December, 2010. [Para 9]
[726-C-D] F
2.6. The Transport Department, Health Department
and other concerned departments shall extend
necessary co-operation to the Director-Generals to give
effect to Section 158 (6). [Para 11] [726-G-H] G
Directions to Motor Accident Claims Tribunals [Problem
(iii)]:
3. The Regi_strar General of each High Court is
H
716 SUPREME COURT REPORTS (2009) 16 (ADDL.) S.C.R.
A directed to instruct all Claims Tribunals in his State to
register the reports of accidents received under Section
158(6) of the Act as applications for compensation under
Section 166(4) of the Act and deal with them without
waiting for the filing of claim applications by the injured
B or by the family of the deceased. The Registrar General
shall ensure that necessary Registers, forms and other
support is extended to the Tribunal to give effect to
Section 166(4) of the Act. [Para 12) [727-A-C]
3.1. The Tribunals are required to follow the steps
c mentioned in para 13 without prejudice to the discretion
of each Tribunal to follow such summary procedure as it
deems fit as provided under Section 169 of the Act. Many
Tribunals instead of holding an inquiry into the claim by
following suitable summary procedure, as mandated by
D Section 168 and 169 of the Act, tend to conduct motor
accident cases like regular civil suits. This should be
avoided. The Tribunal shall take an active role in deciding
and expeditious disposal of the applications for
compensation and make effective use of Section 165 of
E the Evidence Act, 1872, to determine the just
compensation. [Para 14) [729-8-D]
Suggestions to Insurance Companies [Problem (iii)]:
4.1. In cases of death, where the liability of the insurer
F is not disputed, the insurance companies should, without
waiting for the decision of the Motor Accidents Claims
Tribunal or a settlement before the Lok Adalat, endeavour
to pay to the family (Legal representatives) of the
deceased, compensation as per the standard formula
G determined by the decisions of this Court. [Para 15) [729-
D-E]
4.2. In cases of injuries to any accident victim, where
the liability is not disputed, the insurer should offer
H treatment at its cost to the injured, without waiting for an
JAi PRAKASH v. NATIONAL INSURANCE CO. LTD. &717
ORS.
award of the Tribunal. If insurance companies can meet A
the bills for treatment of those who have taken a medical
insurance policy, there is no reason why they should not
extend a similar treatment to the accident victims of
vehicles insured with them. [Para 16) [729-F-G]
B
Suggestion to Insurance Companies [Problem (iv)]:
5.1. To protect and preserve the compensation
amount awarded to the families of the deceased victim
special schemes may be considered by the insurance
companies in consultation with the Life Insurance C
Corporation of India, State Bank of India or any other
Nationalized Banks. One proposal is for formulation of a
scheme in consultation with Nationalized Banks under
which the compensation is kept in fixed deposit for an
1 appropriate period and interest is paid by the Bank D
monthly to the claimants without any need for claimants
having to approach either the court or their counsel or
the Bank for that purpose. The scheme should ensure
that the amount of compensation is utilized only for the
benefit of the injured claimants or in case of death, for the E
benefit of the dependent family. [Para 18] [730-F-H; 731-
A]
\
5.2. The Insurance companies may also consider
offering an annuity instead of lump sum compensation.
F
They may prepare an annuity scheme with the
involvement of Life Insurance Corporation of India or its
own actuaries, under which they can pay a monthly
annuity to the widow (for life) and to minor children (till
they attain majority) and in addition a lump sum at the end
' of 20 or 25 years to the widow. The benefit of such G
annuity scheme may also be extended to victims who are
permanently disabled in accidents. Once such schemes
are in place, the victims and the Tribunal will have some
choice in the manner of payment of compensation. [Para
19] [732-A-C] H
718 SUPREME COURT REPORTS [2009] 16 (ADDL.) S.C.R.
A Union Carbide Corporation v. Union of India 1991 (4)
SCC 584; General Manager, Kera/a State Road Transporl
Corporation v. Susamma Thomas 1994 (2) SCC 176,
referred to.
Suggestion to Insurance Companies [Problem (i)]
B
6. Whenever the insurance companies find that the
driver of the insured vehicle possessed fake/forged
driving license, they should lodge a complaint with the
concerned police for prosecution. This will reduce the
c incidence of fake licences and increase the road travel
safety. [Para 20] [732-D]
Case Law Reference:
2001 (12) sec 354 Referred to. Para 4
D
1991 (4) sec 584 Referred to. Para 5 )
1994 (2) sec 116 Referred to. Para 5
2009 (6) sec 121 Referred to. Para 17
E 1996 (4) sec 362 Referred to. Para 27
CIVIL APPELLATE JURISDICTION : SLP (Civil) No(s).
11801-11804 of 2005.
From the Judgment & Order dated 7.12.2004 of the High
F
Court of Punjab & Haryana at Chandigarh in F.A.O. No. 4845,
4846, 4847 & 4848 of 2003.
Gopal Subramonium, SG (A.C.) Manoj Swarup, Laljta
Kohil (for Manoj Swarup & Co.) for the Petitioner.
G
S.L. Gupta, Goodwill lndeevar, Anand Vardhan Sharma,
for the Respondent. •
The following Order of the Court was delivered
H
JAi PRAKASH v. NATIONAL INSURANCE CO. LTD. & 719
ORS.
ORDER A
R.V. RAVEENDRAN, J. 1. We propose to address four
problems frequently faced in motor accident claim cases under
the Motor Vehicles Act, 1988 ('Act' for short).
Problem (i) B
2. The first problem relates to a section of motor accident
victims who are doubly unfortunate - first in getting involved in
an accident, and second, in not getting any compensation. Let
us elaborate. There are two categories of victims in motor c
accidents - those who will be able to get compensation and
those who will not be able to get compensation. Victims of
motor accidents involving insured vehicles, who are assured of
getting compensation from the insurer, fall in the first category.
Victims of motor accidents involving the following categories 0
of vehicles, who do not receive any compensation fall under the
second category:-
-
(i) Hit and run vehicles which remain unidentified.
(ii) Vehicles which do not have any insurance cover. E
(iii) Vehicles with third party insurance, carrying persons
who are not covered by the insurance (gratuitous
\ passengers in a goods vehicle or a car, and pillion
riders on two wheelers etc.)
F
In hit and run cases, the victim has no one from whom he can
claim or get compensation. In regard to vehicles which do not
have any insurance or do not have an insurance covering the
risks relating to gratuitous passengers/riders, even if the driver/
owner may be made liable under an award of the Tribunal, there G
..- is little or no chance of recovery of compensation that may be
~
awarded. This is because normally driver and owners of
uninsured vehicles will not have the capacity to pay the
compensation or would have transferred their assets to escape
paying compensation. It is estimated that around 20% of the H
720 SUPREME COURT REPORTS [2009) 16 (ADDL.) S C.R.
A victims of motor accidents fall under the unfortunate categories
who do not get any compensation (except some who may get
a token amount under Section 161 or 140 of the Act). A person
hit by an uninsured vehicle, feels frustrated, cheated and
-
discriminated, when he does not get any compensation, but
B sees another person hit by an insured vehicle getting
compensation. The victim does not choose the vehicle which ...
hits him, nor any role in causing the accident. But a victim is ...
denied compensation, if the vehicle which hits disappears
without trace, or if the vehicle is without insurance, while a
similar victim hit by an insured vehicle gets compensation.
c Should the State, which by law provided for compulsory third
party insurance to protect motor accident victims, ignore these
20% victims who do not get compensation or provide them with
some effective remedy? Should the State go something to
reduce the incidence of non-insurance?
D i
Problem (ii)
3. The second problem relates to the widespread practice
of using goods vehicles for passenger traffic. Such use is
E primarily due to the following four reasons:
-
(a) Non-availability of regular mode of passenger transport
in several parts of the country, particularly in rural areas,
compelling people to use lorries and other goods vehicles
as modes of transport to reach their destinations.
F
(b) Non-availability of contract carriages for group travel
during special occasions. Consequently, large groups of
people use, again mostly in rural areas, goods vehicles
G
(lorries and tractor-trailers) for group travel on occasions
like marriages, festivals, functions and political rallies.
(c) Frequent break-down of buses/cars/other vehicles (on
.. -
roads with sparse traffic) due to bad maintenance of roads
or the vehicles, or other emergencies forcing the stranded
passengers to use goods vehicles to reach nearest city
H
JAi PRAKASH v. NATIONAL INSURANCE CO. LTD. & 721
ORS. [R.V. RAVEENDRAN, J.]
or town from which they can get regular recognized modes A
of transport.
(d) The temptation of lorry drivers to make a quick buck
by carrying passengers for a fare (with or without the
knowledge of the owner) coupled with the attraction of a B
low fare for the poor and needy. (These passengers though
termed as 'gratuitous' passengers, except in a few cases,
-o\ are fare paying illegal passengers).
Where persons travel in a goods vehicle either knowing or not
knowing that such travel is illegal (gratuitously or by paying an c
illegal 'fare' to the driver or owner) and such the vehicle is
involved in an accident resulting in injuries to such passengers,
various legal and moral questions arise. Whether the victims
• are entitled to compensation? Whether the insurer is liable?
.,
Whether the owner, who may be unaware of such i11egal D
j
carriage by the driver, can be made liable? Whether the owner
and driver of goods vehicles should be made liable to pay
--
compensation, even where they were carrying passengers
stranded on the road, gratuitously only out of sympathy ?
Whether 'illegal' passengers should be denied compensation E
as a deterrent to discourage unauthorized travel? Should we
ignore the harsh reality that as long as the causes necessitating
or forcing people to resort to such illegal travel in goods
\ vehicles continue to exist, people will continue to travel in goods
vehicles, unmindful of the risk, whether legal or illegal? F
Problem (iii)
4. The third problem relates to the procedural delays in
adjudication/settlement of claims by Motor Accidents Claims
Tribunals (for short 'Tribunals') and consequential hardship to G
t the victims and their families. In cases where the accident victim
dies, the family- usually the widow and children - loses its sole
bread winner and are virtually driven to the streets. Many a time,
the widow and children are forced to take up unaccustomed
manual labour for their survival, the children foregoing their H
722 SUPREME COURT REPORTS [2009) 16 (ADDL.) S.C.R.
A education. Payment of compensation without delay will help
them to sustain themselves and pick up the threads to live with
dignity
(4.1.) Most of the accident victims (who are injured) are
not able to access quality medical treatment for want of
8
funds, as their earning capacity is either permanently lost
or is put on hold on account of the injuries. They get the
compensation only after the treatment and after a 1'-
contested trial. Many a time lack of treatment or
inadequate treatment for want of funds, itself converts what
c could have been a temporary disability into permanent
disability for the victim, thereby increasing the
compensation payable. The Insurance Companies know
full well that timely payment of compensation or timely
better treatment of the victims can ultimately reduce the .
D quantum of compensation payable by them. The insurance
companies also know that they will have to ultimately
reimburse the cost of medical treatment of the accident
victim with interest. But still they fail to extend timely aid to
E
the injured victims, but wait for the injured to file a claim
petition, after completing the treatment at his own cost. ·---
(4.2.) The Legislature tried to reduce the period of
pendency of claim cases and quicken the process of
determination of compensation by making two significant
F changes in the Act, by Amendment Act 54 of 1994,
making it mandatory for registration of a motor accident
claim within one month of receipt of first information of the
accident, without the claimants having to file a claim
petition. Sub-section (6) of section 158 of the Act provides:
G "As soon as any information regarding any accident
involving death or bodily injury to any person is recorded i
or report under this section is completed by a police officer,
the officer-in-charge of the police station shall forward a
copy of the same within thirty days from the date of
H recording of information or, as the case may be, on
JAi PRAKASH v. NATIONAL INSURANCE CO. LTD. & 723
ORS. [R.V. RAVEENDRAN, J.]
completion of such report to the Claims Tribunal having A
jurisdiction and a copy thereof to the concerned insurer,
and where a copy is made available to the owner, he shall
also within thirty days of receipt of such report, forward the
same to such Claims Tribunal and insurer".
B
Sub-section (4) of Section 166 of the Act reads thus:-
1 'The Claims Tribunal shall treat any report of accidents
forwarded to it under sub-section (6) of section 158 as an
application for compensation under this Act".
c
Rule 150 of Central Motor Vehicle Rules, 1989 prescribes the
form (No.54) of the Police Report required to be submitted
under section 158(6) of the Act.
(4.3.) This Court in General Insurance Council v. State of
; D
A.P. [2007 (12) SCC 354] emphasised the need for
implementing the aforesaid provisions. This Court directed:
.... "It is, therefore, directed that all the State Governments and
the Union Territories shall instruct all police officers
concerned about the need to comply with the requirement E
of Section 158(6) keeping in view the requirement
indicated in Rule 150 and in Form 54, Central Motor
\ Vehicles Rules, 1989. Periodical checking shall be done
by the Inspector General of Police concerned to ensure
that the requirements are being complied with. In case F
there is non-compliance, appropriate action shall be taken
against the erring officials. The Department of Road
Transport and Highways shall make periodical verification
to ensure that action is being taken and in case of any
deviation immediately bring the same to the notice of the
+. State Governments/Union Territories concerned so that
necessary action can be taken against the officials
concerned."
(4.4.) But unfortunately neither the police nor the Motor
Accidents Claims Tribunals have made any effort to implement
\
724 SUPREME COURT REPORTS [2009] 16 (ADDL.) S.C R
A these mandatory provisions of the Act. If these provisions are
faithfully and effectively implemented, it will be possible for the
victims of accident and/or their families to get compensation,
in a span of few months. There is, therefore, an urgent need
for the concerned police authorities and Tribunals to follow the
B mandate of these provisions.
Problem (iv)
5. Courts have always been concerned that the full '
compensation amount does not reach and benefit the victims
c and their families, particularly those who are uneducated,
ignorant, or not worldly-wise. Unless there are built-in
safeguards they may be deprived of the benefit of
compensation which may be the sole source of their future
sustenance. This court has time and again insisted upon
D measures to ensure that the compensation amount is
appropriately invested and protected and not frittered away
.,..
owing to ignorance, illiteracy and susceptibility to exploitation.
[See Union Carbide Corporation v. Union of India - 1991 (4)
SCC 584 and General Manager, Kera/a State Road Transport
E Corporation v. Susamma Thomas - 1994 (2) SCC 176]. But
in spite of the directions in these cases, the position continues
-
to be far from unsatisfactory and in many cases unscrupulous
relatives, agents and touts are taking away a big chunk of the
compensation, by ingenious methods.
F Reports of Amicus Curiae
6. In this background, to find some solutions, on 9.9.2008,
this Court requested Shri Gopal Subramaniam, to assist the
Court as Amicus Curiae. The learned amicus curiae with his
G usual thoroughness and commitment has examined the issues
and submitted a series of reports and has also made several .
suggestions for consideration. He has also referred to and
relied on a series of zealous directions issued by a learned
Single Judge of the Delhi High Court to expedite and streamline
H the adjudication of motor vehicle claims and disbursement of
,
JAi PRAKASH v. NATIONAL INSURANCE CO. LTD. & 725
ORS. [R.V. RAVEENDRAN, J.]
compensation. A
7. Having considered the nature of the problems and
taking note of the several suggestions made by the learned
Amicus Curiae and after hearing, we propose to issue a set
of directions to the police authorities and Claims Tribunals. We B
also propose to make some suggestions for implementation
by Insurance Companies and some suggestions for the
consideration of the Parliament and the Central Government.
'I
Directions to Police Authorities
c
8. The Director General of Police of each State is directed
to instruct all Police Stations in his State to comply with the
provisions of Section 158(6) of the Act. For this purpose, the
following steps will have to be taken by the Station House
Officers of the jurisdictional police stations: D
f (i) Accident Information Report in Form No. 54 of the
Central Motor Vehicle Rules, 1989 ('AIR' for short) shall be
submitted by the police (Station House Officer) to the ·
• jurisdictional Motor Vehicle Claims Tribunal, within ~O days
of the registration of the FIR. In addition to the particulars E
required to be furnished in Form No. 54, the police should
also collect and furnish the following additional particulars
in the AIR to the Tribunal: (i) The age of the victims at the
time of accident; (ii) The income of the victim; (iii) The
names and ages of the dependent family members. F
(ii) The AIR shall be accompanied by the attested copies
of the FIR, site sketch/mahazar/photographs of the place
of occurrence, driving licence of the driver, insurance
policy (and if necessary, fitness certificate) of the vehicle G
and postmortem report (in case of death) or the Injury/
~ Wound certificate (in the case of injuries). The names/
addresses of injured or dependant family members of the
deceased should also be furnished to the Tribunal.
(iii) Simultaneously, copy of the AIR with annexures thereto H
726 SUPREME COURT REPORTS [2009) 16 (ADDL.) S.C.R.
A shall be furnished to the concerned insurance company to
enable the Insurer to process the claim.
(iv) The police shall notify the first date of hearing fixed by
the Tribunal to the victim (injured) or the family of the victim
(in case of death) and the driver, owner and insurer. If so
B
directed by the Tribunal, the police may secure their
presence on the first date of hearing.
;.
9. To avoid any administrative difficulties in immediate
implementation of sections 158(6) of the Act, we permit such
c implementation to be carried out in three stages. In the first
stage, all police stations/claims Tribunals in the NCT Region
and State Capital regions shall implement the provisions by end
of April 2010. In the second stage, all the police stations/claims
Tribunals in district headquarters regions shall implement the
D provisions by the end of August 2010. In the third stage, all
police stations/Claims Tribunals shall implement the provisions
by the end of December, 2010. The Director Generals shall
ensure that necessary forms and infrastructural support is made
available to give effect to Section 158 (6) of the Act.
E
10. Section 196 of the Act provides that whoever drives a
motor vehicle or causes or allows a motor vehicle to be driven
in contravention of the provisions of Section 146 shall be
j
punishable with imprisonment which may be extended to three
months, or with fine which may extend to Rs. 1000/-, or with
F both. Though the statute requires prosecution of the driver and
owner of uninsured vehicles, this is seldom done. Thereby a
valuable deterrent is ignored. We therefore direct the Director
Generals to issue instructions to prosecute drivers and owners
of uninsured vehicles under Section 196 of the Act.
G
11. The Transport Department, Health Department and . . '
other concerned departments shall extend necessary co-
operation to the Director-Generals to give effect to Section 158
(6).
H
JAi PRAKASH v. NATIONAL INSURANCE CO. LTD. & 727
ORS. [RV RAVEENDRAN, J.]
Directions to the Claims Tribunals A
12. The Registrar General of each High Court is directed
to instruct all Claims Tribunals in his State to register the
reports of accidents receive under Section 158 (6) of the Act
as applications for compensation under Section 166 (4) of the
B
Act and deal with them without waiting for the filing of claim
applications by the injured or by the family of the deceased. The
Registrar General shall ensure that necessary Registers, forms
and other support is extended to the Tribunal to give effect to
Section 166 (4) of the Act.
c
13. For complying with section 166(4) of the Act, the
jurisdictional Motor Accident Claims Tribunals shall initiate the
following steps:
1 (a) The Tribunal shall maintain an Institution Register for D
recording the AIRs which are received from the
Station House Officers of the Police Stations and
register them as miscellaneous petitions. If any
private claim petitions are directly filed with
reference to an AIR, they should also be recorded
E
in the Register.
(b) The Tribunal shall list the AIRs as miscellaneous
petitions. It shall fix a date for preliminary hearing
so as to enable the police to notify such date to the
victim (family of victim in the event of death) and the F
owner, driver and insurer of the vehi.:::le involved in
the accident. Once the claimant/s appear, the
miscellaneous application shall be converted to
claim petition. Where a claimanUs file the claim
petition even before the receipt of the AIR by the G
Tribunal, the AIR may be tagged to the claim
petition.
(c) The Tribunal shall enquire and satisfy itself that the
AIR relates to a real accident and is not the result
H
728 SUPREME COURT REPORTS (2009] 16 (ADDL) S.C.R.
A of any collusion and fabrication of an accident (by
any 'Police Officer - Advocate - Doctor' nexus,
which has come to light in several cases).
(d) The Tribunal shall by a summary enquiry ascertain
the dependent family members/legal heirs. The
B
jurisdictional police shall also enquire and submit
the names of the dependent legal heirs.
•
(e) The Tribunal shall categories the claim cases
registered, into those where the insurer disputes
c liability and those where the insurer does not
dispute the liability.
(f) Wherever the insurer does not dispute the liability
under the policy, the Tribunal shall make an
D endeavour to determine the compensation amount
by a summary enquiry or refer the matter to the Lok
Adalat for settlement, so as to dispose of the claim
petition itself, within a time frame not exceeding six
months from the date of registration of the claim
petition.
E
(g) The insurance companies shall be directed to
deposit the admitted amount or the amount I
determined, with the claims tribunals within 30 days
of determination. The Tribunals should ensure that
F the compensation amount is kept in Fixed deposit
and disbursed as per the directions contained in
General Manager, KSRTC v. Susamma Thomas
[1994 (2) sec 176].
(h) As the proceedings initiated in pursuance of
G ~
Section 158(6) and 166(4) of the Act. are different
in nature from an application by the victim/s under
Section 166( 1) of the Act, Section 170 wi II not
apply. The insurers will therefore be entitled to
assist the Tribunal (either independently or with the
H
JAi PRAKASH v. NATIONAL INSURANCE CO. LTD. & 729
ORS. [RV RAVEENDRAN, J.]
owners of the vehicles) to verify the correctness in A
regard to the accident, injuries, age, income and
dependents of the deceased victim and in
determining the quantum of compensation.
14. The aforesaid directions to the Tribunals are without B
prejudice to the discretion of each Tribunal to follow such
summary procedure as it deems fit as provided under Section
. 169 of the Act. Many Tribunals instead of holding an inquiry into
the claim by following suitable summary procedure, as
mandated by Section 168 and 169 of the Act, tend to conduct
motor accident cases like regular civil suits. This should be
c
avoided. The Tribunal shall take an active role in deciding and
expeditious disposal of the applications for compensation and
• make effective use of Section 165 of the Evidence Act, 1872,
to determine the just compensation.
D
• SUGGESTIONS FOR INSURANCE COMPANIES
15. In cases of death, where the liability of the insurer is
not disputed, the insurance companies should, without waiting
for the decision of the Motor Accidents Claims Tribunal or a
E
settlement before the Lok Adalat, endeavour to pay to the family
(Legal representatives) of the deceased, compensation as per
the standard formula determined by the decisions of this Court.
\
16. In cases of injuries to any accident victim, where the
liability is not disputed, the insurer should offer treatment at its F
cost to the injured, without waiting for an award of the Tribunal.
If insurance companies can meet the bills for treatment of those
who have taken a medical insurance policy, we see no reason
why they should not extend a similar treatment to the accident
victims of vehicles insured with them . G
...
17. In countries like United Kingdom, the percentage of
motor accident claims, with reference to the accidents is very
low. This is because immediately after being notified of the
accident, the insurer makes its own enquiries and satisfies itself H
730 SUPREME COURT REPORTS [2009] 16 (ADDL.) S.C.R.
A about its liability and voluntarily assesses and pays the
compensation to the victim. Only where the insurer denies the
claim or where the victim is not satisfied with the quantum of
compensation paid, the matter goes to court. There is no
reason why insurance companies in India should not adopt such
B a procedure. In death cases, the calculation of compensation
is now standardized by several decisions of this court [See for
example: Sarfa Venna v. Delhi Transport Corporation - 2009 ..
(6) SCC 121]. The insurers can either by relying upon the police
report (AIR) or by enquiring with the family or the employer of
c the deceased, ascertain the three inputs required for calculation
of the compensation, that is, age of the deceased, income of
the deceased and number of dependent family members. With
these particulars, the insurers can easily calculate the
compensation and offer a compensation, either a lump sum or "
an annuity. Similarly in cases of injuries, the insurers can offer
D
treatment in hospitals approved by it and meet the expenses
or pay the bills, or if the victim has already undergone the
treatment, reimburse the cost of treatment. It can also reimburse
other items of special damages, the damages for pain
suffering, which is also standardized in several decisions of this
E Court. By such voluntary payment there will be all round benefits.
The insurers save interest and litigation cost and discharge
their obligation to the society. The victims will be relieved from
I
financial hardship and benefit from timely effective treatment.
Burden on courts will be reduced and judicial man power can
F be diverted to more complex cases.
18. To protect and preserve the compensation amount
awarded to the families of the deceased victim special
schemes may be considered by the insurance companies in
G consultation with the Life Insurance Corporation of India, State
Bank of India or any other Nationalized Banks. One proposal
..
is for formulation of a scheme in consultation with Nationalized
Banks under which the compensation is kept in fixed deposit
for an appropriate period and interest is paid by the Bank
H monthly to the claimants without any need for claimants having
JAi PRAKASH v. NATIONAL INSURANCE CO. LTD. & 731
ORS. [R.V. RAVEENDRAN, J.]
to approach either the court or their counsel or the Bank for that A
purpose. The scheme should ensure that the amount of
compensation is utilized only for the benefit of the injured
claimants or in case of death, for the benefit of the dependent
family. We extract below the particulars of a special Scheme
offered by a nationalized Bank at the instance of the Delhi High B
Court:
(i) The fixed deposit shall be automatically renewed till
the period prescribed by the Court.
(ii) The interest on the fixed deposit shall be paid C
monthly.
(iii) The monthly interest shall be credited automatically
in the saving account of the claimant.
D
(iv) Original fixed deposit receipt shall be retained by
the Bank in safe custody. However, the original
passbook shall be given to the claimant along with
the photocopy of the FDR.
(v) The original fixed deposit receipt shall be handed E
over to the claimant at the end of the fixed deposit
period.
(vi) Photo identity card shall be issued to the claimant
and the withdrawal shall be permitted only after du~ F
verification by the Bank of the identity card of the
claimant.
(vii) No cheque book shall be issued to the claimant
without permission of the court.
G
(viii) No loan, advance or withdrawal shall be allowed on
the fixed deposit without permission of the court.
(ix) The claimant can operate the saving bank account
from the nearest branch of UCO Bank and on the H
732 SUPREME COURT REPORTS (2009] 16 (ADDL.) S.C.R.-
A request of the claimant, the bank shall provide the
said facility.
19. The Insurance companies may also consider offering
an annuity instead of lump sum compensation. They may
'8 prepare an annuity scheme with the involvement of Life
Insurance Corporation of India or its own actuaries, under which
they can pay a monthly annuity to the widow (for life) and to
minor children (till they attain majority) and in addition a lump
sum at the end of 20 or 25 years to the widow. The benefit of
such annuity scheme may also be extended to victims who are
C permanently disabled in accidents. Once such schemes are in
place, the victims and the Tribunal will have some choice in the
manner of payment of compensation.
20. Whenever the insurance companies find that the driver
D of the insured vehicle possessed fake/forged driving license,
they should lodge a complaint with the concerned police for
prosecution. This will reduce the incidence of fake licences and
increase the road travel safety.
SUGGESTIONS FOR LEGISLATIVE/EXECUTIVE
E INTERVENTION
21. We may next refer to some vital areas where
intervention by the legislature and/or executive is called for. The
suggestions are intended to draw the attention of the executive
F and legislature to the several vexed issues, which when properly
and expeditiously addressed, will improve the system of
compensating the motor accident victims.
Ensuring that all accident victims get compensation
G 22. To ensure that all accident victims get compensation,
it is necessary to formulate a more comprehensive scheme for
payment of compensation to victims of road accidents, in place
of the present system of third party insurance. For example, in
South Africa cuid some other African countries, Road Accident
H Funds have been created, managed by Road Accident Fund
JAi PRAKASH v. NATIONAL INSURANCE CO. LTD. & 733
ORS. [R.V. RAVEENDRAN, J.]
+ Commissions, thereby eliminating the need for third party A
insurance. A fuel levy/surcharge is collected on the sale of
petrol and diesel and credited to such fund. All accident victims,
without exception, are paid compensation from out of the said
fund by the Commission. But the feedback from operational
statistics relating to such funds is that the scheme, while B
successful i~ smaller countries, may encounter difficulties and
financial deficits in larger countries like South Africa or
. developing countries with infrastructural deficiencies .
23. An alternative scheme involves the collection of a one C
time (life time) third party insurance premium by a Central
Insurance Agency in respect of every vehicle sold (in a manner
similar to the collection of life time road tax). The fund created
by collection of such third party insurance can be augmented/
supplemented by an appropriate road accident cess/surcharge
on the price of petrol/diesel sold across the country. Such a D
hybrid model which involves collection of a fixed life time
premium in regard to each vehicle plus imposition of a road
accident cess may provide a more satisfactory solution in a
vast country like India. This will also address a major grievance
of insurance companies that their outgoings by way of E
compensation in motor accident claims is four times the
'amount received as motor insurance premia. The general
ins,urance companies may however continue with optional
\ insurance to provide cover against damage to the vehicle and
injury to the owner. F
24. A more realistic and easier alternative is to continue
with the present system of third party insurance with two
changes:
(i) Define 'third party' - to cover any accident victim G
(that is any third party, other than the owner) and
increasing the premia, if necessary.
(ii) Increase the quantum of compensation payable
under Section 161 of the Act in case of hit and run H
734 SUPREME COURT REPORTS (2009] 16 (ADDL.) S.C.R.
A motor accidents.
25. India has the dubious distinction of being one of the
countries with the highest number of road accidents and the
longest response time in securing first aid and medical
B treatment. There is therefore an urgent need for laying down
and enforcing Road safety measures and establishment of large
number of Trauma Centres and first aid centres. It is also
necessary to consider the establishment of a Road Safety
Bureau to lay down Road Safety Standards and norms, enforce
Road safety measures, establish and run Trauma Centres,
c establish First Aid Centres in Petrol Stations, and carry out
research/data collection for accident prevention.
26. Several countries have comprehensive enactments t
dealing exclusively with accidents. In place of the provisions ,,..
D relating to Accident tribunals and award of compensation inthe
Motor Vehicles Act, 1988, and other statutes dealing wi'th
accidents and compensation, enacting a comprehensive and
unified statute dealing with accidents may be considered.
Rationalisation of II schedule to Motor Vehicles Act. 1988
E
27. The Central Government may consider amendment of
the Second Schedule to the Act to rectify the several mistakes
therein and rationalize the compensation payable thereunder,
repeatedly pointed out by this Court [See UP. State Road
F Transport Corporation v. Tri/ok Chandra - 1996 (4) SCC 362,
and Sarla Verma (supra)].
Securing the com(:!ensation to the victims of accidents
involving uninsured vehicles
G 28. 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
H made, within a period of three months, appropriate steps may
JAi PRAKASH v. NATIONAL INSURANCE CO. LTD. & 735
ORS. [R.V. RAVEENDRAN, J.]
be taken for disposal of the vehicle and hold the sale proceeds A
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.
CONSEQUENTIAL DIRECTIONS
B
- 29. The Supreme Court Registry is directed to send
copies of this order to (i) Chief Secretaries and Director
Generals of Police of all States, and (ii) Registrar-Generals of
all High Courts, for compliance with the directions. The C
suggestions made may be placed before the Central
Government by the learned Solicitor General. Registry may
receive and put up any other suggestions. Us! for further
directions on 7 .1.2010.
D
K.K.T. Matter adjourned.
-
Search Indian case law
Ask in plain English, not just keywords. 25,000 AI words free, no card.
Try "Motor accident compensation"Sign in to search