Amendment to Section 163-A Motor Vehicles Act applies retrospectively to accidents occurring before its 2018 notification.

In brief

The question

Whether the Notification dated 22.05.2018, which amended the Second Schedule of the Motor Vehicles Act to fix death compensation at Rs. 5,00,000/-, has retrospective effect on accidents occurring prior to the notification date.

The court held

The Court answered the issue in the affirmative, holding that the 2018 amendment applies to the claim.

It also directed

The appeal was partly allowed, and the award was modified.

The total compensation was reduced from Rs. 6,94,599/- to Rs. 5,40,000/- (comprising the Rs. 5,00,000/- base and Rs. 40,000/- for annual increments).

The claimants are entitled to 6% interest per annum from the date of the claim application (23.01.2019).

The Appellant was directed to deposit the balance amount within 45 days.

01Facts

The claimants filed an application under Section 163-A of the Motor Vehicles Act, 1988, following a fatal motor accident involving the deceased, Sukhnath Ram, on 13.04.2018.

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The Motor Accident Claims Tribunal, Jashpur, awarded compensation of Rs. 6,94,599/- with interest on 30.08.2019.

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The Appellant (Insurer) challenged this award, contending that pursuant to the Central Government notification dated 22.05.2018, which amended the Second Schedule of the Act, the compensation for death under the structured formula is fixed at a flat rate of Rs. 5,00,000/-.

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02Issues

i.Whether the Notification dated 22.05.2018, which amended the Second Schedule of the Motor Vehicles Act to fix death compensation at Rs. 5,00,000/-, has retrospective effect on accidents occurring prior to the notification date.

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03Law Applied

The Court applied Section 163-A of the Motor Vehicles Act, 1988, which provides for compensation on a structured formula basis without the requirement to prove fault.

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It specifically relied on the Notification dated 22.05.2018, which substituted the Second Schedule to fix compensation for fatal accidents at Rs. 5,00,000/- with a 5% annual increase effective from 01.01.2019.

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The Court followed the precedent established by the Supreme Court in New India Assurance Co. Ltd. v. Urmila Halder (2024 SCC OnLine SC 498), which held that beneficial legislation regarding computational modalities applies to pending claims even if the accident preceded the amendment.

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Provisions in the judgment · 3 · Linked ones open on LawLens

Motor Vehicles Act, 1988 Section 163 Section 173 Section 2

04Reasoning

The Court observed that while the accident occurred on 13.04.2018 and the amendment was notified on 22.05.2018, the Supreme Court's ruling in Urmila Halder clarifies that the amendment is a clarifying "computational mode" of beneficial legislation.

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Since there is no specific bar to its retrospective application, the benefit of the simplified structured formula must be passed to the claimants.

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The High Court determined that the Tribunal erred by not adhering to the amended Schedule, which caps the base compensation at Rs. 5,00,000/- for Section 163-A claims.

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Additionally, the Court applied Paragraph 2 of the 2018 Notification, which mandates a 5% annual increase in the compensation amount starting from 01.01.2019.

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Calculating this increase over approximately eight years, the Court added Rs. 40,000/- to the base sum.

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