SUPREME COURT ON COMPENSATION TO ACCIDENT VICTIMS IN CASE OF NO MOTOR VEHICLE THIRD PARTY INSURANCE COVER

Recently, the Supreme Court in Usha Devi and Anr. vs. Pawan Kumar and others dated 13.09.2018 has held that the victims of motor vehicle accidents where the vehicles are not insured for third party insurance in India [Accident(s)] would be compensated in accordance with any of the mechanisms suggested by the Supreme Court herein and as adopted by various State Governments in India.

It has been argued by the Appellants that the State has the obligation to check that no uninsured motor vehicles are allowed to be driven on the road. Failing which, the victims of such Accidents should be compensated by the State itself.

But the Supreme Court in this case vide Order dated 26.03.2018 made the following suggestions:

To enact a comprehensive statute dealing with the motor vehicle accidents including those where vehicles are not insured for third party insurance, so that the victims and/or their families do not have to unnecessarily suffer.

To create and manage road accident funds, in place of third party insurance, which would enable payment of compensation to all accident victims, without exception.

Alternatively, to collect a one-time (life time) third party insurance premium by a central insurance agency with respect all vehicles at the time of their sale, in a manner similar to the collection of life time road tax. In addition to the fund created by collection of one-time third party insurance premium, an appropriate road accident cess/surcharge may be levied on the price of petrol/diesel sold across the country.

This model would reduce the burden on insurance companies as well who feel that their outgoings, in the form of payments of third party insurance in case of motor vehicle accidents, is more than the amounts received as third party insurance premiums.

Alternatively, to continue with the third party insurance system but with two changes:

To define ‘third party’ by covering all accident victims (not including the owner of the vehicle) and increasing the third party insurance premium amounts, if necessary

To increase the quantum of compensation in case of hit and run motor accidents

To lay down and enforce road safety measures

To establish trauma centres and first aid centres

To consider the establishment of Road Safety Bureau in order to lay down road safety standards and norms, enforce road safety measures, set up and run trauma centres, to establish first aid centres in petrol stations and carry out research or data collection for accident prevention

In case of Accidents, the owner should be directed to offer security or deposit of an amount within 3 months, that would be adequate to satisfy the award that may be passed by a court or a tribunal as a condition precedent for release of the seized vehicle involved in the Accident. Failing which, the appropriate steps may be taken to dispose of the vehicle and hold such sale proceeds in deposit.

The aforesaid suggestions have been directed to be placed before the Central Government for appropriate action to be taken to comply with them and also for compliance by the Chief Secretaries and the Director Generals of Police of all the States and the Registrar Generals of all the High Courts.

The Apex Court vide Judgment dated 13.09.2018 further held that the State Government cannot be held liable to pay compensation for the owners’ failure to insure their vehicle for third party insurance.

The Supreme Court also directed the Chief Secretaries of each of the States to bring out necessary notification, if not already done within 12 weeks.

Further, the Supreme Court has held the owner of the vehicle involved in the Accident in this case to be liable to face criminal action.

Daliparthy Harini

Senior Legal Associate

The Indian Lawyer