Section 164’s enhanced no-fault compensation applies retrospectively to pre-amendment motor accident deaths.

On 14.10.1998, Tata 407 bearing registration No. HP-15-2998 lost control and fell into a deep ditch near village Khagu Dhudal on the Kiratpur Sahib Mandi road, resulting in the deaths of its driver, Lal Chand, and cleaner, Daljit Singh.

Their dependants filed claim petitions under Section 163-A of the Motor Vehicles Act, 1988. By a common Award dated 06.08.2001, the Motor Accident Claims Tribunal, Rupnagar awarded Rs.3,77,200/- in respect of Lal Chand’s death and Rs.2,78,800/- in respect of Daljit Singh’s death, with interest at 9% per annum from the dates of filing until realization.

The Tribunal held the vehicle owner and the Insurance Company jointly and severally liable and rejected the Insurance Company’s contention that the claimants’ remedy lay exclusively under the Workmen’s Compensation Act, 1923.

The Insurance Company filed appeals challenging its liability, while the claimants filed cross-objections seeking enhancement.

1. Whether the claim petitions under Section 163-A of the Motor Vehicles Act were maintainable in respect of the deaths of the insured vehicle’s driver and cleaner, and whether the Insurance Company was liable to indemnify the insured?

2. Whether the claimants were entitled to enhancement of compensation in view of the subsequently enacted Section 164 of the Motor Vehicles Act, providing Rs.5,00,000/- for death under the no-fault liability regime?

3. From what date was the enhanced compensation payable with interest?

The Court applied Section 163-A of the Motor Vehicles Act, 1988, concerning compensation on a structured-formula and no-fault basis, and Section 167, which permits an injured person or dependants to elect between remedies under the Motor Vehicles Act and the Workmen’s Compensation Act.

It relied on Rita Devi v. New India Assurance Co. Ltd., 2000 ACJ 801, in support of the maintainability of a motor accident claim despite the employment relationship.

The Court distinguished National Insurance Co. Ltd. v. Prembai Patel, 2005(2) RCR (Civil), on the ground that the policy in the present case was a comprehensive policy rather than merely an Act policy.

It further relied on Ram Murti v. Punjab State Electricity Board, 2023 ACJ 631, which applied the beneficial compensation provision retrospectively and granted Rs.5,00,000/- for death under the no-fault liability framework.

Section 164 of the Motor Vehicles Act, introduced by the Motor Vehicles (Amendment) Act, 2019 with effect from 01.09.2019, prescribes compensation of Rs.5,00,000/- in case of death.

The Insurance Company argued that the deceased driver and cleaner were employees of the insured and therefore were not third parties, making the claims under the Motor Vehicles Act unavailable. The Court rejected this submission because the Insurance Company admitted that the policy was comprehensive and not merely an Act policy; consequently, the policy covered liability arising from the deaths of the insured’s employees, and Prembai Patel was inapplicable.

The Court also accepted the maintainability of the claims under the no-fault provisions, consistent with the Tribunal’s reliance on Section 167 and Rita Devi.

Applying the beneficial approach adopted in Ram Murti, the Court held that the claimants were entitled to the statutory amount of Rs.5,00,000/- for each death, notwithstanding that the accident occurred in 1998 and the original awards had been passed under Section 163-A.

Since the original awards were lower than Rs.5,00,000/-, only the respective shortfalls were payable as enhanced compensation, with interest from 01.09.2019, the date on which Section 164 came into force.

The claimants in the Lal Chand matter were held entitled to the enhanced amount of Rs.1,22,800/-, rounded by the Court to Rs.1,23,000/-, over and above the original award of Rs.3,77,200/-. The claimants in the Daljit Singh matter were held entitled to Rs.2,21,200/-, stated by the Court as rounded to Rs.2,21,000/-, over and above the original award of Rs.2,78,800/-.

The enhanced amounts were directed to carry interest at 9% per annum from 01.09.2019 until realization and were made payable by the Insurance Company and the vehicle owner jointly and severally.