Full Judgment Text
2025 INSC 919
Non-reportable
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
SPECIAL LEAVE PETITION(CIVIL) NOS.15447-48 OF 2024
WAKIA AFRIN (MINOR)
…PETITIONER
VERSUS
M/S NATIONAL INSURANCE CO. LTD.
…RESPONDENT
O R D E R
1. The petitioner, a minor, was before the Motor
1
Accident Claims Tribunal , Cuttack claiming
compensation under Section 163A of the Motor Vehicles
2
Act, 1988 for the death of both her parents in a motor-
vehicle accident. The unfortunate accident occurred
when the vehicle dashed against a road side building, it
1
“the MACT, for brevity”
2
“the Act”
Signature Not Verified
Digitally signed by
NARENDRA PRASAD
Date: 2025.08.01
18:11:56 IST
Reason:
Page 1 of 20
SLP (C) Nos. 15447-48 of 2024
having gone out of control due to a tyre burst, Four
persons travelling in the vehicle, two of whom were the
parents of the petitioner, died in the accident. The
petitioner who was two years old then, was represented
by her aunt in the claim petition. The MACT allowed the
claim and awarded a compensation of Rs.4,08,000/- for
the death of the petitioner’s mother and Rs.4,53,339/- for
the death of the petitioner’s father. The owner of the
vehicle was the petitioner’s father and before the
Tribunal as also the High Court, he was shown as the first
respondent with the clear recital that he was dead. The
second respondent was the Insurance Company. The
High Court found that a dead person cannot be made a
defendant and hence, the claim petitions were not
maintainable. However it was also categorically found
that there was no dispute about the validity of the
insurance policy and it has to be stated that the vehicle
was driven by a person who held a valid licence.
Page 2 of 20
SLP (C) Nos. 15447-48 of 2024
2. Insofar as the ground on which the claim petitions
were found to be not maintainable by the High Court,
useful reference can be made to Section 155 of the Act.
Section 155 provides that even if the insured dies after
the happening of an event which gave rise to a claim, it
shall not be a bar to the survival of any cause of action
arising out of the said event, 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. A third party claim for compensation would
definitely survive since, on the death of the insured it
would lie against his estate, which the insurer has an
obligation to indemnify. The insurer, hence, can defend
any claim against the insured, which the insurer has the
liability to indemnify in accordance with the policy
issued. The ground stated by the High Court definitely is
not tenable. However, herein the question arises as to
whether the petitioner, who is the daughter of the owner
Page 3 of 20
SLP (C) Nos. 15447-48 of 2024
of the vehicle has the right to claim compensation for the
death of the owner of the vehicle, when the claim is
raised under Section 163A of the Act, requiring no proof
of negligence leading to the accident, resulting in the
death or injury suffered.
3. The compelling contention of the Insurance
Company is that the petitioner who is the sole heir of the
owner, having succeeded to the estate of the owner of the
vehicle who died in the accident cannot at the same time,
be the person who has the liability and the recipient of
the compensation. The liability to compensate on the
death of the owner falls on his estate; which the claimant
succeeds to and there cannot be any further
compensation on the loss of dependency, is the
argument.
4. We have already found that Section 155 enables
the claim to be filed and prosecuted even after the death
of the owner of the vehicle, if there is a valid insurance
Page 4 of 20
SLP (C) Nos. 15447-48 of 2024
policy, which would put the insurer in the shoes of the
owner who would be able to take all contentions
available to the insured, to defend the claim; in addition
to any dispute on the validity or enforceability of the
policy. Insofar as the claim raised against the mother is
concerned, we are clear in our minds that it has to be
admitted and the award under Section 163A passed by
the Tribunal has to be restored. What remains is the
liability with respect to the death of the owner which we
see from the insurance policy produced as Annexure P-
1, is limited for the owner-driver to Rs.2 lakhs. Whether
the liability of the insurer can be confined to that
provided in the policy or it can be determined under
Section 163A would also be an issue before us.
5. On the liability under Sections 163A & 166, in the
absence of a third party claim, a number of decisions
were placed before us, which we will have to refer to.
Page 5 of 20
SLP (C) Nos. 15447-48 of 2024
3
Dhanraj v. New India Assurance Co. Ltd. , found that an
Insurance Policy under Section 147 of the Act does not
require the insurer to assume the risk of death or injury
on the body of the owner of the vehicle, since the policy
issued only indemnifies the insured against liabilities
incurred towards a third person or in respect of damages
to property. That was a case in which the appellant was
travelling in his own jeep and suffered injuries in
pursuance to an accident. The driver of the jeep was held
responsible for the accident by the Tribunal and the
challenge was against the direction to the insurer to pay
compensation to the owner/claimant. Extracting Section
147 and referring to Oriental Insurance Co. Ltd. v.
4
Sunita Rathi , it was held that Section 147 covers only the
liability towards a third person or in respect of damages
to property. When the owner of the vehicle, the insured,
has no liability to a third party, the Insurance Company
3
(2004) 8 SCC 553
4
(1998) 1 SCC 365
Page 6 of 20
SLP (C) Nos. 15447-48 of 2024
also does not have any liability. A premium paid under
the head “own damage” was held to be a premium on the
vehicle and the non-electrical accessories not relatable
to the personal injury of the owner/injured.
4
6. Immediately we have to notice that Sunita Rathi
3
relied on in Dhanraj only considered whether the
insurer had any liability to indemnify the owner when the
motor accident occurred prior to the issuance of the
insurance policy; in that case a few minutes before. The
observation that the liability of the insurer arises, only
when the liability of the owner is proved, to indemnify
the insured under the contract of insurance, was in the
context of there existing no valid policy at the time of
accident, and not under Section 163A.
7. In National Insurance Co. Ltd. v. Laxmi Narain
5
Dhut , the question considered was whether principles
5
(2007) 3 SCC 700
Page 7 of 20
SLP (C) Nos. 15447-48 of 2024
laid down in National Insurance Co. Ltd. v. Swaran
6
Singh , with reference to fake licenses were applicable
even to third party claims. While finding that Section 149
applies only to third party risks, the principles in Swaran
6
Singh that any condition taking away the rights of third
parties are void, was reaffirmed; not really relevant for
the issue arising herein.
7
8. Oriental Insurance Co. Ltd. v. Jhuma Saha , was
a case in which the owner, while driving an insured
vehicle swerved the vehicle to save a goat and dashed
against a tree causing injuries inter-alia to the owner-
driver. The claim under Section 166 of the Act was held
3
to be not maintainable, relying on Dhanraj .
8
9 . Oriental Insurance Co. Ltd. v. Rajni Devi was
concerned with an application under Section 163-A of the
Act. Two persons were riding in a motorcycle which went
6
(2004) 3 SCC 297
7
(2007) 9 SCC 263
8
(2008) 5 SCC 736
Page 8 of 20
SLP (C) Nos. 15447-48 of 2024
out of control resulting in an accident in which one of the
riders was killed. There was no evidence as to who was
in the driver’s seat and the claim was resisted by the
insurer on the ground that the cover of personal
insurance cannot be invoked in the case of a pillion rider
and in any event the owner of the vehicle is not a third
party within the meaning of Section 147 of the Act; into
whose shoes the driver steps in. Though Section 163A
3
was noticed, reliance was placed on Dhanraj and Jhuma
7
Saha which dealt with claims under Section 166 of the
Act. It was held that under Section 163A of the Act the
liability is on the owner of the vehicle and a person
cannot be both ‘the claimant and also a recipient’ (sic);
presumably meaning the same individual who has the
liability cannot be the recipient of the compensation.
10. New India Assurance Co. Ltd. v. Sadanand
9
Mukhi considered the claim of the owner of the vehicle
9
(2009) 2 SCC 417
Page 9 of 20
SLP (C) Nos. 15447-48 of 2024
arising from the death of his son while riding the vehicle,
which was insured in the father’s name. The specific
contention taken by the insurer was that given the
relationship of the owner and the deceased, the latter
was not a third party. The claim petition was under
Section 166 of the Act and it was specifically observed by
the Court that it is not a case of invocation of Section 163A
(sic - para 12); leading to an inference that then, the
decision would have been otherwise. Relying on Jhuma
7
Saha and Oriental Insurance Co. Ltd. v. Meena
10
Variyal the claim under Section 166 was disallowed.
10
11. Meena Variyal was a case in which a Regional
Manager was driving the vehicle owned by his
employer-company which met with an accident leading
to his death. The claimants though alleged that another
person was driving the vehicle, failed to implead the said
10
(2007) 5 SCC 428
Page 10 of 20
SLP (C) Nos. 15447-48 of 2024
person; who in fact was the first informant which
information was also to the effect that the accident
occurred while the deceased was driving the vehicle.
The Tribunal absolved the Insurance Company on the
ground that the policy did not cover an employee driving
the vehicle and directed the owner of the car to pay the
compensation. The claimants filed an appeal in which this
Court found that the application under Section 166 would
not be maintainable since the deceased was not a third
party and an Insurance Policy under Section 147(1), in
addition to a third party would not cover the liability in
respect of death or injury arising out and in the course of
the employment of an employee of the insured unless it
be a liability arising under the Workmen’s
Compensation Act, 1923 in respect of a driver or a
conductor in the case of a public service vehicle or
otherwise the owner of the goods carried in a goods
vehicle or his representative. It was found that under
Page 11 of 20
SLP (C) Nos. 15447-48 of 2024
Section 166, the claimants would not have a case, in both
instances of the deceased being an employee, having
driven the vehicle or having travelled in the vehicle; the
deceased being an employee not covered by the
Workmen’s Compensation Act. It was held that the
liability of the insured owner could be indemnified by
the insurer only if there is a special contract bringing
such person under the coverage of the policy. In fact this
Court has specifically referred to a three-Judge Bench of
this Court in Minu B. Mehta v. Balkrishna Ramchandra
11
Nayan wherein it was categorically held that proof of
negligence was necessary before the owner or the
Insurance Company could be held to be liable for the
payment of compensation in a motor accident claim case.
It was in recognition of the principle laid down in Minu
11
B. Mehta that the provision for no-fault liability came
to be incorporated, was the finding.
11
(1977) 2 SCC 441
Page 12 of 20
SLP (C) Nos. 15447-48 of 2024
12
12. Ningamma v. United India Insurance Co. Ltd. ,
considered the claim of the wife and son, legal heirs of
the person who was driving a vehicle, which he
borrowed from the real owner. The accident occurred
while a bullock cart proceeding in front of the motorcycle
abruptly stopped, leading to a collision and the rider of
the motorcycle succumbing to the injuries sustained.
While noticing the beneficial provision under Section
163A, it was held that Section 163A will not have any
application when the claim is for the owner of the vehicle
who cannot be the recipient of the compensation and the
person who has the liability. Quite surprisingly this Court
remanded the matter to the Tribunal for consideration
under Section 166 of the Act.
13
13. Ramkhiladi v. United India Insurance Co. was
again with respect to a vehicular accident involving two
12
(2009) 13 SCC 710
13
(2020) 2 SCC 550
Page 13 of 20
SLP (C) Nos. 15447-48 of 2024
motorbikes. The legal representatives of the deceased,
who was driving one of the motor cycles, filed an
application under Section 163A; impleading only the
owner and the Insurance Company of the motorcycle
driven by the deceased. Even the Insurance Company
had a contention that the rash and negligent driving of
the other motorcycle resulted in the accident; giving rise
to a valid claim under Section 166 against the owner and
insurer of the other vehicle. It was held that though in a
claim under Section 163A of the Act, there was no
requirement to plead or prove the negligence or default
of the driver or owner of the vehicle since a claim under
Section 163A is based on the principle of “no fault
liability”; still only if the deceased is a third party, the
claim can be maintained.
14. We have to observe that all the cases referred to
above are with respect to the claims raised by the legal
representatives of the deceased or the injured owner
Page 14 of 20
SLP (C) Nos. 15447-48 of 2024
who was either the driver of the vehicle involved in the
3 7
accident or its passenger. While Dhanraj , Jhuma Saha
9
and Sadanand Mukhi dealt with claim petitions under
8 12
Section 166 of the Act, Rajni Devi , Ningamma and
13
Ramkhiladi dealt with claims under Section 163A. In
9
Sadanand Mukhi while the Court rejected the
application filed under Section 166, the learned Judges
also made an observation that Section 163A was not
12
invoked. Insofar as Ningamma is concerned while the
claim under Section 163A was found to be not
maintainable there was a direction to the Tribunal to
examine whether the claim could have been sustained
under Section 166. There is considerable variance in the
observations made in the decisions but however as a
principle, statutory liability was held to be not applicable
in case of the owner/insured, since the coverage was
confined to third party risks or those specified in Section
147 read with Section 149.
Page 15 of 20
SLP (C) Nos. 15447-48 of 2024
15. We cannot but notice that Section 163A is a special
provision brought in, which is a non-obstante clause
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. We cannot but understand the non-obstante
clause having a superseding effect over the laws of
insurance or even the terms in the policy, which
definitely is an instrument having the force of law. It has
also to be noticed that Section 163A makes liable the
owner of the vehicle or the authorized insurer to pay in
nd
accordance with the II Schedule in the case of death or
permanent disablement due to the accident arising out of
the use of a motor vehicle.
16. Trite is the principle that the liability with respect
to an accident is on the tortfeasor and in the case of a
motor vehicle accident if the tortfeasor is the driver, the
owner has the vicarious liability, which liability is
Page 16 of 20
SLP (C) Nos. 15447-48 of 2024
indemnified by the insurer, when there is a valid policy.
The liability is essentially of the owner but the provision,
in addition to the insured/owner makes liable the
authorized insurer too. Hence, when there is a valid
policy issued in the name of the vehicle involved in the
accident, a claim under Section 163A, as per the words
employed in the provision, according to us covers every
claim and is not restricted to a third party claim; without
any requirement of establishing the negligence, if death
or permanent disability is caused by reason of the motor
accident. This would also take in the liability with respect
to the death of an owner or a driver who stepped into the
shoes of the owner, if the claim is made under Section
163A dehors the statutory liability under Section 147 or
the contractual liability as reduced to writing in an
insurance policy. 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
Page 17 of 20
SLP (C) Nos. 15447-48 of 2024
terms of the policy confining the claim with respect to an
owner-driver to a fixed sum. This according to us is the
intention of incorporating the non-obstante clause under
Section 163A providing for no-fault liability claims, the
compensation for which is restricted to the structured
nd
formula under the II Schedule. It is a beneficial piece of
legislation brought in, keeping in mind the enhanced
chances of an accident, resulting from the prevalence of
vehicles in the overcrowded roads of today. It was a
social security scheme, brought about considering the
need for a more comprehensive scheme of ‘no-fault’
liability for reason of the ever-increasing instances of
motor vehicle accidents and the difficulty in proving rash
and negligent driving.
17. 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 dictum arising from the various
Page 18 of 20
SLP (C) Nos. 15447-48 of 2024
decisions of different benches of two Judges is that the
claim under Section 163A is restricted to third party risks,
which, with all the respect at our command, we are
unable to agree with. We are conscious that the
provision, Section 163A, appears under the Chapter with
the heading ‘ Insurance of Vehicles Against Third Party
Risks’, but, as we observed the non-obstante clause is in
suppression of the entire Act, the other laws in force and
any instrument valid in law. We have to notice that the
4
three Judge Bench in Sunita Rathi did not consider the
issue arising hereunder. We perfectly agree with the
11
three Judge Bench decision in Minu B. Mehta which
held that under Section 166 the claimants have to prove
the negligence of the driver to sustain a claim with
respect to compensation arising from the death or injury
in a motor vehicle accident and the statutory liability
arises only with respect to third parties or those specified
11
(1977) 2 SCC 441
Page 19 of 20
SLP (C) Nos. 15447-48 of 2024
under Section 147. We have, herein above doubted, with
due respect, the decisions of co-ordinate Benches of two
Judges which now will have to be placed before a larger
Bench. We direct the Registry to place the matter before
the Hon’ble the Chief Justice of India for appropriate
orders.
……….…………………….….. J.
(SUDHANSHU DHULIA)
……….…………………….….. J.
(K. VINOD CHANDRAN)
NEW DELHI;
AUGUST 01, 2025.
Page 20 of 20
SLP (C) Nos. 15447-48 of 2024
Non-reportable
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
SPECIAL LEAVE PETITION(CIVIL) NOS.15447-48 OF 2024
WAKIA AFRIN (MINOR)
…PETITIONER
VERSUS
M/S NATIONAL INSURANCE CO. LTD.
…RESPONDENT
O R D E R
1. The petitioner, a minor, was before the Motor
1
Accident Claims Tribunal , Cuttack claiming
compensation under Section 163A of the Motor Vehicles
2
Act, 1988 for the death of both her parents in a motor-
vehicle accident. The unfortunate accident occurred
when the vehicle dashed against a road side building, it
1
“the MACT, for brevity”
2
“the Act”
Signature Not Verified
Digitally signed by
NARENDRA PRASAD
Date: 2025.08.01
18:11:56 IST
Reason:
Page 1 of 20
SLP (C) Nos. 15447-48 of 2024
having gone out of control due to a tyre burst, Four
persons travelling in the vehicle, two of whom were the
parents of the petitioner, died in the accident. The
petitioner who was two years old then, was represented
by her aunt in the claim petition. The MACT allowed the
claim and awarded a compensation of Rs.4,08,000/- for
the death of the petitioner’s mother and Rs.4,53,339/- for
the death of the petitioner’s father. The owner of the
vehicle was the petitioner’s father and before the
Tribunal as also the High Court, he was shown as the first
respondent with the clear recital that he was dead. The
second respondent was the Insurance Company. The
High Court found that a dead person cannot be made a
defendant and hence, the claim petitions were not
maintainable. However it was also categorically found
that there was no dispute about the validity of the
insurance policy and it has to be stated that the vehicle
was driven by a person who held a valid licence.
Page 2 of 20
SLP (C) Nos. 15447-48 of 2024
2. Insofar as the ground on which the claim petitions
were found to be not maintainable by the High Court,
useful reference can be made to Section 155 of the Act.
Section 155 provides that even if the insured dies after
the happening of an event which gave rise to a claim, it
shall not be a bar to the survival of any cause of action
arising out of the said event, 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. A third party claim for compensation would
definitely survive since, on the death of the insured it
would lie against his estate, which the insurer has an
obligation to indemnify. The insurer, hence, can defend
any claim against the insured, which the insurer has the
liability to indemnify in accordance with the policy
issued. The ground stated by the High Court definitely is
not tenable. However, herein the question arises as to
whether the petitioner, who is the daughter of the owner
Page 3 of 20
SLP (C) Nos. 15447-48 of 2024
of the vehicle has the right to claim compensation for the
death of the owner of the vehicle, when the claim is
raised under Section 163A of the Act, requiring no proof
of negligence leading to the accident, resulting in the
death or injury suffered.
3. The compelling contention of the Insurance
Company is that the petitioner who is the sole heir of the
owner, having succeeded to the estate of the owner of the
vehicle who died in the accident cannot at the same time,
be the person who has the liability and the recipient of
the compensation. The liability to compensate on the
death of the owner falls on his estate; which the claimant
succeeds to and there cannot be any further
compensation on the loss of dependency, is the
argument.
4. We have already found that Section 155 enables
the claim to be filed and prosecuted even after the death
of the owner of the vehicle, if there is a valid insurance
Page 4 of 20
SLP (C) Nos. 15447-48 of 2024
policy, which would put the insurer in the shoes of the
owner who would be able to take all contentions
available to the insured, to defend the claim; in addition
to any dispute on the validity or enforceability of the
policy. Insofar as the claim raised against the mother is
concerned, we are clear in our minds that it has to be
admitted and the award under Section 163A passed by
the Tribunal has to be restored. What remains is the
liability with respect to the death of the owner which we
see from the insurance policy produced as Annexure P-
1, is limited for the owner-driver to Rs.2 lakhs. Whether
the liability of the insurer can be confined to that
provided in the policy or it can be determined under
Section 163A would also be an issue before us.
5. On the liability under Sections 163A & 166, in the
absence of a third party claim, a number of decisions
were placed before us, which we will have to refer to.
Page 5 of 20
SLP (C) Nos. 15447-48 of 2024
3
Dhanraj v. New India Assurance Co. Ltd. , found that an
Insurance Policy under Section 147 of the Act does not
require the insurer to assume the risk of death or injury
on the body of the owner of the vehicle, since the policy
issued only indemnifies the insured against liabilities
incurred towards a third person or in respect of damages
to property. That was a case in which the appellant was
travelling in his own jeep and suffered injuries in
pursuance to an accident. The driver of the jeep was held
responsible for the accident by the Tribunal and the
challenge was against the direction to the insurer to pay
compensation to the owner/claimant. Extracting Section
147 and referring to Oriental Insurance Co. Ltd. v.
4
Sunita Rathi , it was held that Section 147 covers only the
liability towards a third person or in respect of damages
to property. When the owner of the vehicle, the insured,
has no liability to a third party, the Insurance Company
3
(2004) 8 SCC 553
4
(1998) 1 SCC 365
Page 6 of 20
SLP (C) Nos. 15447-48 of 2024
also does not have any liability. A premium paid under
the head “own damage” was held to be a premium on the
vehicle and the non-electrical accessories not relatable
to the personal injury of the owner/injured.
4
6. Immediately we have to notice that Sunita Rathi
3
relied on in Dhanraj only considered whether the
insurer had any liability to indemnify the owner when the
motor accident occurred prior to the issuance of the
insurance policy; in that case a few minutes before. The
observation that the liability of the insurer arises, only
when the liability of the owner is proved, to indemnify
the insured under the contract of insurance, was in the
context of there existing no valid policy at the time of
accident, and not under Section 163A.
7. In National Insurance Co. Ltd. v. Laxmi Narain
5
Dhut , the question considered was whether principles
5
(2007) 3 SCC 700
Page 7 of 20
SLP (C) Nos. 15447-48 of 2024
laid down in National Insurance Co. Ltd. v. Swaran
6
Singh , with reference to fake licenses were applicable
even to third party claims. While finding that Section 149
applies only to third party risks, the principles in Swaran
6
Singh that any condition taking away the rights of third
parties are void, was reaffirmed; not really relevant for
the issue arising herein.
7
8. Oriental Insurance Co. Ltd. v. Jhuma Saha , was
a case in which the owner, while driving an insured
vehicle swerved the vehicle to save a goat and dashed
against a tree causing injuries inter-alia to the owner-
driver. The claim under Section 166 of the Act was held
3
to be not maintainable, relying on Dhanraj .
8
9 . Oriental Insurance Co. Ltd. v. Rajni Devi was
concerned with an application under Section 163-A of the
Act. Two persons were riding in a motorcycle which went
6
(2004) 3 SCC 297
7
(2007) 9 SCC 263
8
(2008) 5 SCC 736
Page 8 of 20
SLP (C) Nos. 15447-48 of 2024
out of control resulting in an accident in which one of the
riders was killed. There was no evidence as to who was
in the driver’s seat and the claim was resisted by the
insurer on the ground that the cover of personal
insurance cannot be invoked in the case of a pillion rider
and in any event the owner of the vehicle is not a third
party within the meaning of Section 147 of the Act; into
whose shoes the driver steps in. Though Section 163A
3
was noticed, reliance was placed on Dhanraj and Jhuma
7
Saha which dealt with claims under Section 166 of the
Act. It was held that under Section 163A of the Act the
liability is on the owner of the vehicle and a person
cannot be both ‘the claimant and also a recipient’ (sic);
presumably meaning the same individual who has the
liability cannot be the recipient of the compensation.
10. New India Assurance Co. Ltd. v. Sadanand
9
Mukhi considered the claim of the owner of the vehicle
9
(2009) 2 SCC 417
Page 9 of 20
SLP (C) Nos. 15447-48 of 2024
arising from the death of his son while riding the vehicle,
which was insured in the father’s name. The specific
contention taken by the insurer was that given the
relationship of the owner and the deceased, the latter
was not a third party. The claim petition was under
Section 166 of the Act and it was specifically observed by
the Court that it is not a case of invocation of Section 163A
(sic - para 12); leading to an inference that then, the
decision would have been otherwise. Relying on Jhuma
7
Saha and Oriental Insurance Co. Ltd. v. Meena
10
Variyal the claim under Section 166 was disallowed.
10
11. Meena Variyal was a case in which a Regional
Manager was driving the vehicle owned by his
employer-company which met with an accident leading
to his death. The claimants though alleged that another
person was driving the vehicle, failed to implead the said
10
(2007) 5 SCC 428
Page 10 of 20
SLP (C) Nos. 15447-48 of 2024
person; who in fact was the first informant which
information was also to the effect that the accident
occurred while the deceased was driving the vehicle.
The Tribunal absolved the Insurance Company on the
ground that the policy did not cover an employee driving
the vehicle and directed the owner of the car to pay the
compensation. The claimants filed an appeal in which this
Court found that the application under Section 166 would
not be maintainable since the deceased was not a third
party and an Insurance Policy under Section 147(1), in
addition to a third party would not cover the liability in
respect of death or injury arising out and in the course of
the employment of an employee of the insured unless it
be a liability arising under the Workmen’s
Compensation Act, 1923 in respect of a driver or a
conductor in the case of a public service vehicle or
otherwise the owner of the goods carried in a goods
vehicle or his representative. It was found that under
Page 11 of 20
SLP (C) Nos. 15447-48 of 2024
Section 166, the claimants would not have a case, in both
instances of the deceased being an employee, having
driven the vehicle or having travelled in the vehicle; the
deceased being an employee not covered by the
Workmen’s Compensation Act. It was held that the
liability of the insured owner could be indemnified by
the insurer only if there is a special contract bringing
such person under the coverage of the policy. In fact this
Court has specifically referred to a three-Judge Bench of
this Court in Minu B. Mehta v. Balkrishna Ramchandra
11
Nayan wherein it was categorically held that proof of
negligence was necessary before the owner or the
Insurance Company could be held to be liable for the
payment of compensation in a motor accident claim case.
It was in recognition of the principle laid down in Minu
11
B. Mehta that the provision for no-fault liability came
to be incorporated, was the finding.
11
(1977) 2 SCC 441
Page 12 of 20
SLP (C) Nos. 15447-48 of 2024
12
12. Ningamma v. United India Insurance Co. Ltd. ,
considered the claim of the wife and son, legal heirs of
the person who was driving a vehicle, which he
borrowed from the real owner. The accident occurred
while a bullock cart proceeding in front of the motorcycle
abruptly stopped, leading to a collision and the rider of
the motorcycle succumbing to the injuries sustained.
While noticing the beneficial provision under Section
163A, it was held that Section 163A will not have any
application when the claim is for the owner of the vehicle
who cannot be the recipient of the compensation and the
person who has the liability. Quite surprisingly this Court
remanded the matter to the Tribunal for consideration
under Section 166 of the Act.
13
13. Ramkhiladi v. United India Insurance Co. was
again with respect to a vehicular accident involving two
12
(2009) 13 SCC 710
13
(2020) 2 SCC 550
Page 13 of 20
SLP (C) Nos. 15447-48 of 2024
motorbikes. The legal representatives of the deceased,
who was driving one of the motor cycles, filed an
application under Section 163A; impleading only the
owner and the Insurance Company of the motorcycle
driven by the deceased. Even the Insurance Company
had a contention that the rash and negligent driving of
the other motorcycle resulted in the accident; giving rise
to a valid claim under Section 166 against the owner and
insurer of the other vehicle. It was held that though in a
claim under Section 163A of the Act, there was no
requirement to plead or prove the negligence or default
of the driver or owner of the vehicle since a claim under
Section 163A is based on the principle of “no fault
liability”; still only if the deceased is a third party, the
claim can be maintained.
14. We have to observe that all the cases referred to
above are with respect to the claims raised by the legal
representatives of the deceased or the injured owner
Page 14 of 20
SLP (C) Nos. 15447-48 of 2024
who was either the driver of the vehicle involved in the
3 7
accident or its passenger. While Dhanraj , Jhuma Saha
9
and Sadanand Mukhi dealt with claim petitions under
8 12
Section 166 of the Act, Rajni Devi , Ningamma and
13
Ramkhiladi dealt with claims under Section 163A. In
9
Sadanand Mukhi while the Court rejected the
application filed under Section 166, the learned Judges
also made an observation that Section 163A was not
12
invoked. Insofar as Ningamma is concerned while the
claim under Section 163A was found to be not
maintainable there was a direction to the Tribunal to
examine whether the claim could have been sustained
under Section 166. There is considerable variance in the
observations made in the decisions but however as a
principle, statutory liability was held to be not applicable
in case of the owner/insured, since the coverage was
confined to third party risks or those specified in Section
147 read with Section 149.
Page 15 of 20
SLP (C) Nos. 15447-48 of 2024
15. We cannot but notice that Section 163A is a special
provision brought in, which is a non-obstante clause
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. We cannot but understand the non-obstante
clause having a superseding effect over the laws of
insurance or even the terms in the policy, which
definitely is an instrument having the force of law. It has
also to be noticed that Section 163A makes liable the
owner of the vehicle or the authorized insurer to pay in
nd
accordance with the II Schedule in the case of death or
permanent disablement due to the accident arising out of
the use of a motor vehicle.
16. Trite is the principle that the liability with respect
to an accident is on the tortfeasor and in the case of a
motor vehicle accident if the tortfeasor is the driver, the
owner has the vicarious liability, which liability is
Page 16 of 20
SLP (C) Nos. 15447-48 of 2024
indemnified by the insurer, when there is a valid policy.
The liability is essentially of the owner but the provision,
in addition to the insured/owner makes liable the
authorized insurer too. Hence, when there is a valid
policy issued in the name of the vehicle involved in the
accident, a claim under Section 163A, as per the words
employed in the provision, according to us covers every
claim and is not restricted to a third party claim; without
any requirement of establishing the negligence, if death
or permanent disability is caused by reason of the motor
accident. This would also take in the liability with respect
to the death of an owner or a driver who stepped into the
shoes of the owner, if the claim is made under Section
163A dehors the statutory liability under Section 147 or
the contractual liability as reduced to writing in an
insurance policy. 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
Page 17 of 20
SLP (C) Nos. 15447-48 of 2024
terms of the policy confining the claim with respect to an
owner-driver to a fixed sum. This according to us is the
intention of incorporating the non-obstante clause under
Section 163A providing for no-fault liability claims, the
compensation for which is restricted to the structured
nd
formula under the II Schedule. It is a beneficial piece of
legislation brought in, keeping in mind the enhanced
chances of an accident, resulting from the prevalence of
vehicles in the overcrowded roads of today. It was a
social security scheme, brought about considering the
need for a more comprehensive scheme of ‘no-fault’
liability for reason of the ever-increasing instances of
motor vehicle accidents and the difficulty in proving rash
and negligent driving.
17. 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 dictum arising from the various
Page 18 of 20
SLP (C) Nos. 15447-48 of 2024
decisions of different benches of two Judges is that the
claim under Section 163A is restricted to third party risks,
which, with all the respect at our command, we are
unable to agree with. We are conscious that the
provision, Section 163A, appears under the Chapter with
the heading ‘ Insurance of Vehicles Against Third Party
Risks’, but, as we observed the non-obstante clause is in
suppression of the entire Act, the other laws in force and
any instrument valid in law. We have to notice that the
4
three Judge Bench in Sunita Rathi did not consider the
issue arising hereunder. We perfectly agree with the
11
three Judge Bench decision in Minu B. Mehta which
held that under Section 166 the claimants have to prove
the negligence of the driver to sustain a claim with
respect to compensation arising from the death or injury
in a motor vehicle accident and the statutory liability
arises only with respect to third parties or those specified
11
(1977) 2 SCC 441
Page 19 of 20
SLP (C) Nos. 15447-48 of 2024
under Section 147. We have, herein above doubted, with
due respect, the decisions of co-ordinate Benches of two
Judges which now will have to be placed before a larger
Bench. We direct the Registry to place the matter before
the Hon’ble the Chief Justice of India for appropriate
orders.
……….…………………….….. J.
(SUDHANSHU DHULIA)
……….…………………….….. J.
(K. VINOD CHANDRAN)
NEW DELHI;
AUGUST 01, 2025.
Page 20 of 20
SLP (C) Nos. 15447-48 of 2024