Motor Vehicle Act, 1988 – SC issues guidelines on Assessment of Compensation

Motor Vehicle Act, 1988 – SC issues guidelines on Assessment of Compensation

Case name: National Insurance Company Limited v. Pranay Sethi

In a landmark judgment passed by Five-Judge Constitution Bench of the Supreme Court in October, 2017, the Supreme Court has issued guidelines for computation of compensation under the Motor Vehicle Act, 1988.

In the case, the Supreme Court Bench headed by Chief Justice Dipak Misra was hearing a reference made to the Bench in the case of National Insurance Company Ltd. v. Pushpa & Ors.[1], in view of divergence of opinion of the Supreme Court in the cases of Reshma Kumari & Ors. v. Madan Mohan and Rajesh and Others v. Rajbir Singh and Others with reference to Sections 163A and 166 of the Motor Vehicles Act, 1988 (the Act) and the methodology of computation of future prospects.

Some of the factors on which the Bench expounded and issued guidelines were addition of future prospects to determine the multiplicand, deduction towards personal and living expenses (where the deceased was married and where the deceased was a bachelor), and the selection of multiplier and also detailed on the reasonable figures on conventional heads.

Read more here.

Accident Claim: SC says Insurer can’t Raise Plea of Negligence

Case name: United India Insurance Co. Ltd. v. Sunil Kumar & Anr.

In this recent case, the core issue revolved around the scope of Section 163A of the Motor Vehicle Act, 1988. Section 163A of MV Act provides for special provisions as to payment of compensation on structured formula basis.

Key takeaways from the case:

• That grant of compensation under Section 163A of MV Acton the basis of the structured formula is in the nature of a final award and the adjudication there under is required to be made without any requirement of any proof of negligence of the driver/owner of the vehicle(s) involved in the accident.
• That claimant is not required to establish proof of negligence has been made explicit by Section 163A (2). Though the said section does not specifically exclude a possible defence of the Insurer based on the negligence of the claimant but permitting such defence to be introduced by the Insurer to be contemplating any such situation would go contrary to the very legislative object behind introduction of Section 163A of the Act i.e. final compensation within a limited time frame on the basis of the structured formula to overcome situations where the claims of compensation on the basis of fault liability was taking an unduly long time.