Section 164’s fixed compensation of ₹5 lakh applies retrospectively to pre-amendment motor accident claims.

On 24 August 2010, the deceased persons were travelling in goods truck No. GJ-16-V-5244 from Kadavali to Valiya, along with their goods. Near Kadavali village, the truck was allegedly driven rashly and at excessive speed, lost control, overturned, and caused fatal injuries; fourteen persons died in the accident.

The deceased were treated as unauthorised or gratuitous passengers travelling in the goods vehicle.

Their legal representatives filed claim petitions before the Motor Accident Claims Tribunal, Ankleshwar, being MACP Nos. 1970, 1962, 1964 and 1971 of 2013. The Tribunal passed a common judgment and award dated 8 August 2019, against which the claimants preferred appeals under Section 173 of the Motor Vehicles Act, 1988.

Whether, despite the deceased being gratuitous or unauthorised passengers in the goods vehicle, the insurer should be directed to first satisfy the award and thereafter recover the amount from the vehicle owner?

Whether the amendment introducing Section 164 of the Motor Vehicles Act, including fixed compensation for death, could be applied retrospectively to claims arising from an accident that occurred before the amendment came into force?

Section 173 of the Motor Vehicles Act permits an appeal against an award of the Claims Tribunal.

The Court applied the statutory scheme concerning compensation under Sections 163A and 164, holding that a beneficial amendment providing fixed compensation may receive retrospective application in the absence of an express bar, relying on New India Assurance Co. Ltd. v. Urmila Halder, 2024 JX (SC) 1154.

On insurer liability, the Court relied on Shamanna v. Oriental Insurance Co. Ltd., (2018) 9 SCC 650, Manuara Khatun v. Rajesh Kumar Singh, (2017) 4 SCC 796, and Saju P. Paul, (2013) 2 SCC 41, which recognise that although an insurer may not ultimately be liable for a gratuitous passenger in breach of policy conditions, it may be directed to first pay the compensation to third-party claimants and recover it from the insured.

The recovery may be undertaken in the same proceedings without a separate suit, in accordance with Oriental Insurance Co. Ltd. v. Nanjappan, (2004) 13 SCC 224.

The evidence established that the deceased were travelling in the truck with their goods and that the truck overturned because of the driver’s rash and excessive-speed driving.

Although their status as gratuitous passengers constituted a breach of the policy conditions and ordinarily excluded the insurer’s ultimate liability, the Court treated them as third-party victims who should not be denied compensation on a technical ground.

Applying Shamanna, Manuara Khatun, Saju P. Paul and the subsequent Gujarat and Supreme Court decisions, the Court held that the insurer must first satisfy the award and may thereafter recover the amount from the vehicle owner in the same execution proceedings.

On quantum, the Court followed Urmila Halder and held that the beneficial amendment introducing Section 164 applied retrospectively, permitting the claimants to receive fixed compensation of ₹5,00,000 in each death claim, notwithstanding the date of the accident.

The Tribunal’s award was modified, and each appellant was held entitled to fixed compensation of ₹5,00,000, with interest at 9% per annum from the date of the claim petition until realisation.

All opponents were held jointly and severally liable.

The insurer was directed to satisfy the award in the first instance, with liberty to recover the paid amount from the vehicle owner by executing the High Court’s order, without requiring a separate suit.