Liability towards injuries to third party on no fault basis under Motor Vehicles Act

1.2 Law of Torts

Submitted by :-
Patil Rushikesh Dilip
UID - 19-77
B.A LLB 2019-2024
Submitted to :-
Dr. Ragini Khubhalkar

MAHARASHTRA NATIONAL LAW UNIVERSITY, NAGPUR

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Table of Contents

Table of Cases 3
Introduction 5
Research Methodology 6
Offences and penalties related to Motor Vehicle act, 1988 7
Compensation For Third Party accidents 8
No liability in some Exceptions 10
Section 140 of Motor Vehicle Act, 1988 11
Conclusion 13
Bibliography 14

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Table of Cases
United India Ins. Co. Ltd. v. Kuldip Kaur

Rathnashalvan v. State of Karnataka

Sarla Verma vs. Delhi Transport Corporation
Puttamma v KL Narayan Reddy

Manjusri Raha V. B.L Gupta

Kaushnuma Begum v. New India Assurance Co. Ltd.,

State of Karnataka v. Muralidhar

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Table of Statutes

ACTS YEAR
Fatal Accidents Act 1846
Motor Vehicle Act 1914
Motor Vehicle Act 1939
Motor Vehicle Act 1988

TABLE OF ABBREVIATIONS

Abbreviations Full Forms

MVA Motor Vehicle act
CMVR Central Motor Vehicles Rules
INR Indian Rupees
SEC. Section

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Introduction

The Motor Vehicle Act of India has its root from England. When industrialisation was at its peak &
the advent of road and rail transport made England authorities to introduce Fatal Accident Act which
was enacted in 1846. As time went by and law went on developing it was then introduce in India in
1855. Later Motor Vehicle act of 1939 was enacted to deal specifically for the accidents arising out
of Motor Vehicles. Further in 1988 was brought forward to enhance and change the law relating to
accidents arising from motor vehicles. This act works towards giving compensation to the victims
who are injured or died in accident caused by motor vehicle. This act was also further amended in
1994.
This paper will mainly focus on the Motor Vehicle Act of 1988 since its more relevant. It provides
detailed provision on licensing of the drivers and conductors, registration of motor vehicles, the
provision on controlling their permits, traffic regulation, related insurance, liabilities, and
penalties.This act majorly concentrates on innocent people who are on the road and can get affected
by drivers of these motor vehicles. The motor vehicle act provides a provision for compensation for
such helpless people. They are referred to as "Third Party" and the motor vehicle act revolves around
providing safety to these third party people. The motor vehicle act makes it mandatory for a driver to
have a valid driving license and no motor vehicle can be driven without being registered under the
motor vehicle act. This certificate of registration shall be valid for next fifteen years from date of
registration and can be further renewed for next five years. This research paper will focus mainly on
these following aspects of Motor Vehicle Act of 1988

• Liability towards the injuries caused by the violation of motor vehicle act.
• No fault liability
• Amount of Compensation awardable to the plaintiff.
• Offences related to the Motor Vehicle Act, 1988
Sri Justice Fazalali in Manjusri Raha Vs B.L.Gupta(AIR 1977 SC 1158) in view of faster growth of
vehicular traffic and loss of life and limbs due to frequency of motor accidents, observed “The time
is ripe for serious consideration of creating no-fault liability. Having regard to the directive principles
of State policy , the poverty of the ordinary run of victims of automobile accidents, the compulsory
nature of insurance of motor vehicles, the nationalization of general insurance companies and the
expanding trend towards nationalization of bus transport, the law of torts based on no-fault liability
needs reform”

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Research Methodology
For fulfilling the descriptive notion of any research it is highly expected that doctrinal research would
come handy, not only doctrinal research gives adequate data but also relevant data to put in the
research paper like this. Although the primary sources are always the product of Empirical research
but in a research paper like this, Empirical research wasn’t relevant. Doctrinal research is widely
known as library based research mainly because of two reasons :-
A. Since the data which researcher borrows is directly taken from books. The books are thus found
in library hence the term library research comes in play.
B. Also, when going through several text books and reviewing them, the data collected is generally
concerned with analysing the sources. This at last helps to make an assignment.
There are many advantages associated with library-based research methodology. Firstly, it is often
traditionally taught that legal research methods should be conducted in the early stages of legal
training. As a result, most legal scholars will focus on the techniques used at the time, to initiate
graduate research. In addition, for new graduate students, there will be no shortage of experts capable
of providing training on ideological research. Secondly, because of the proliferation of law schools
and law firms, research conducted under this design is likely to be of more acceptable character in
the presence of legal research. Doctrinal research still represents a "base" in the legal community and
most universities demand an even higher degree of work based on this ideological framework. For
practical purposes, distinctive research methodology is required. The busy practitioner tends to be
concerned with the law “as it is” and rarely has the time to consider research that does not fit within
that paradigm and timeframe. Moreover, because of its focus on the sources of jurisprudence,
established research is more manageable and results more predictable. For the postgraduate studies
researcher, this helps with meeting deadlines and contain surprises.
Surfing the online sources also helped in gathering relevant content for the assignment related to
“liability towards injuries to third party on no fault basis under motor vehicle act”. All the books and
websites are mention in paper either in the form of footnoting or bibliography.

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Offences and penalties related to Motor Vehicle act, 1988

• Under section 3 r/w 181 Motor Vehicle Act, a person driving without a valid license shall have to
pay a penalty of INR 500/- and or imprisonment of around three months.

• Under section 5 r/w 180 Motor Vehicle Act, a person allowing his vehicle to be driven by a person
who do not have a valid license shall have to pay a penalty of INR 1000/- with or without three
months of imprisonment.

• Under section 130(3) r/w 177 Motor Vehicle Act, a person not carrying all the documents required
shall be liable to pay a penalty of INR 100/-.

• Under section 130 r/w 177 Motor Vehicle Act, a person driving without a valid insurance shall be
liable to pay a penalty of INR 1000/- with or without an imprisonment of three months.

• Under section 130 r/w 177 Motor Vehicle Act, a person driving without a valid permit shall be
liable to pay a penalty of INR 5000/- which could not be less than INR 2000/-.

• Under section 130 r/w 177 Motor Vehicle Act, a person driving without a valid fitness shall be
liable to pay a penalty of INR 5000/- which could not be less than INR 2000/-.

• Under section 39 r/w 192 Motor Vehicle Act, a person without a valid R.C, for his vehicle shall be
liable to pay a penalty of INR 2000/-.

• Under section 4 r/s 181 Motor Vehicle Act, a minor driving the vehicle shall be liable to pay a
penalty of INR 500/-.

• Under section 5 r/w 180 Motor Vehicle Act, allowing an unauthorised person to drive shall levy a
penalty of INR 1000/-.

• Under section 129 r/w 177 Motor Vehicle Act, a person driving without helmet shall be liable to
pay a penalty of INR 100/-.

• Under section 138(3) CMVR 177 Motor Vehicle Act, a person driving without fastening his seat
belt shall be liable to pay a penalty of INR 100/-.

• Under section 184 Motor Vehicle Act, a person found doing rash driving shall be liable to pay a
penalty of INR 1000/-.

• Under section 112-183 Motor Vehicle Act, a person found of doing hasty or dangerous driving
shall be liable to pay a penalty of INR 1000/- with or without imprisonment depending on the
severity of the fault.

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• Under section 17(i) RRR 177 Motor Vehicle Act, a person driving in a one way against the way
shall be liable to pay a penalty of INR 100/-.1

There are various other penalties under the motor vehicle act for various scenarios, number plate
related offences, vehicle light related offences, horn related offences, traffic police relate offences,
traffic signal related offences, speed and overtake related offences, offences related to pollution,
offences related condition of motor vehicle, offences related to parking, etc.

Compensation For Third Party accidents

On 22 May 2018, the Central Government issued a notification by which the scale of compensation
for third party fatal accidents and injury claims under the Second Schedule of the Motor Vehicles Act
1988 (MV Act) was amended. These claims for compensation are considered on a 'no-fault liability'
basis as envisaged under §163A of the MV Act. In other words, the claimant is not required to prove
or plead that death or permanent disablement was due to 'any wrongful act or neglect or default of
the owner of the vehicle.’

- Calculation for compensation:-

The erstwhile Second Schedule of the MV Act provided for compensation on a 'structured formula
basis' which was indicated in a tabular form. Broadly, compensation was formulated on the basis of
the victim's age and income and suffered from several defects and inconsistencies as observed by the
Supreme Court in Sarla Verma V. Delhi Transport Corporation [(2009) 6 SCC 121)] Further, the
Court noted in Sarla Verma that different tribunals were utilising different calculation mechanisms
on similar factual scenarios which was leading to a lack of uniformity and consistency in awarding
compensation under such claims.In addition, the Supreme Court in Puttamma v KL Narayan
Reddy [(2013) 15 SCC 45] observed that the Second Schedule of the MV Act was in need of an urgent
amendment, as it was based on the prevailing cost index of 1994.The notification of May 2018 has
now amended the Second Schedule and removes the formula system that had existed without
amendment since 1994.
As per the substituted Second Schedule, compensation will now payable be as follows:
• For accidents resulting in minor injury: fixed compensation of ₹20,000.
• For accidents resulting in permanent disability: compensation payable will be calculated based
on the 'disability percentage' specified in Schedule I of the Employee's Compensation Act
1923, where the minimum compensation payable shall be not less than ₹50,000 and the
maximum compensation payable shall be ₹5 lakhs.

1
http://bardhaman.gov.in/
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 • For fatal accidents: fixed compensation of ₹5 lakhs

Defining Third Party :-

Motor Vehicle Act, 1988, under section 145(g) “third party” includes everyone other than the
contracting parties to the insurance policy, be it a person travelling in another vehicle, one walking
on the road or a passenger in the vehicle itself which is the subject matter.
Policies and Insurance for Third Party under no fault liability :-
Third-party insurance or the ‘act only’ cover, is a statutory requirement under the Motor Vehicles
Act. It is referred to as a ‘third-party’ cover since the beneficiary of the policy is someone other than
the two parties involved in the contract i.e. the insured and the insurance company. The policy covers
the insured’s legal liability for death/disability of third party loss or damage to third party property.
The victim can claim for compensation under ‘no fault liability’ or ‘fault liability’ of the Motor
Vehicles Act 1988. However, unlimited compensation is available only for bodily injury or loss of
life. In case of damage to a property, the insurer’s liability is limited to maximum Rs.7.5 lakh.
No fault liability :- In no fault liability, the compensation amount is fixed and is payable even if any
one of the exceptions to the rule can be applied. It is a statutory liability created without which the
claimant should not get any amount under that count. Compensation on account of accident arising
from the use of motor vehicles can be claimed under the common law even without the aid of a
statute, Kaushnuma Begum v. New India Assurance Co. Ltd., (2001) 2 SCC 9, 15: 2001 SCC (Cri)
268: AIR 2001 SC 485.2

2
Motor Vehicles Laws and Rules, Private Limited Company, 1961, 7th edition, Allahabad, Uttarpradesh
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No liability in some Exceptions
In the recent case, United India Ins. Co. Ltd. v. Kuldip Kaur decided on June 01, 2018 the intrinsic
issue that fell for consideration before the High of Punjab & Haryana was whether liability can be
imposed under Section 140 of the Motor Vehicles Act, 1988 in case the offending vehicle is
unidentified? While deciding the case, the High Court referred to statutory provisions under Sections
140 and 161 of the Motor Vehicle Act. Section 140 of the Act provides for liability to pay
compensation in certain cases on the principle of no fault and Section 161 provides for special
provisions as to compensation in case of hit and run motor accident.
On scrutiny of the aforesaid provisions, the High Court stated that Section 140 of the Act provides
that where death or permanent disability has occurred on account of accident arising out of the use of
motor vehicle etc. the owner of the vehicle shall be liable to pay compensation in respect of such
death or disablement whereas Section 161 deals with a hit and run motor accident i.e. an accident
arising out of the use of a motor vehicle, the identity whereof cannot be ascertained in spite of
reasonable efforts for the purpose. Section 161 provides for a fixed compensation of Rs. 25,000/- in
case of death and Rs. 12,500 in case of grievous hurt.
This recent case has its major impact on the liability towards injuries to third party on no fault basis.
Even if the plaintiff who had nothing to do with the main concerned parties gets grievous hurt which
thus makes the plaintiff a third party. The third party though being proven the hurt and damage won’t
get the compensation since the aggressor won’t be identified because of the vehicle which isn’t
identified. Henceforth it can be concluded that one single amendment or judgement can totally
transform the already set notion. Just like this case, the judgement has its pros and cons but no one is
supposed to question the judgement of the judicial bodies and hence the world will have to look at its
‘pros’ dominated side for now.

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Section 140 of Motor Vehicle Act, 1988
Section 140 deals with the liability to pay compensation in certain cases on the principle of no fault.

• In a accident, where death or permanent disablement of any person has resulted from an accident
because of the use of a motor vehicle or motor vehicles, the owner of the vehicle shall, or, as the
case may be, the owners of the vehicles shall, jointly and severally, be liable to pay compensation
in respect of such death or disablement in accordance with the provisions of this section.

• The amount of compensation which shall be payable under sub-section (1) in respect of the death
of any person shall be a fixed sum of 1[fifty thousand rupees] and the amount of compensation
payable under that sub-section in respect of the permanent disablement of any person shall be a
fixed sum of 2[twenty-five thousand rupees].

• In any claim for compensation under sub-section(1), the claimant shall not be required to plead
and establish that the death or permanent disablement in respect of which the claim has been made
was due to any wrongful act, neglect or default of the owner or owners of the vehicle or vehicles
concerned or of any other person.

• A claim for compensation under sub-section (1) shall not be defeated by reason of any wrongful
act, neglect or default of the person in respect of whose death or permanent disablement the claim
has been made nor shall the quantum of compensation recoverable in respect of such death or
permanent disablement be reduced on the basis of the share of such person in the responsibility for
such death or permanent disablement. 3[(5) Notwithstanding anything contained in sub-section (2)
regarding death or bodily injury to any person, for which the owner of the vehicle is liable to give
compensation for relief, he is also liable to pay compensation under any other law for the time
being in force: Provided that the amount of such compensation to be given under any other law
shall be reduced from the amount of compensation payable under this section or under section
163A.]3

3
https://indiankanoon.org
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Recent Decision on Motor Vehicle Act :-
The Rajya Sabha on July 31st of 2019 passed, The Motor Vehicles (Amendment) Bill. The bill
contains provisions that will make Indian roads safer. The Bill was passed earlier in the Lok Sabha.
The Bill proposes huge increases in various penalties for traffic violations, protection to Good
Samaritans, recall of defective vehicle parts by auto companies, holding builders accountable for poor
quality of infrastructure and making vehicle owners criminally liable for violations committed by
juvenile drivers. These move by the government was being mocked at but it will surely have its huge
share in making the unfortunate “Third party” safer.
Third party property damage :-
Under the Motor vehicle act of 1988, the limit is Rs. 6,000 unless extra premium is charged. Insurance
company won’t be liable if the main vehicle isn’t insured at the same time of the accident. The phrase
“any property of a third party” occurring in Sections 147 and 165 of the Motor Vehicles Act would
mean property which is outside the goods vehicle and not being carried in a goods vehicle cannot be
termed to be property of a third party. The insurance Company shall be at liberty to cross examine
the claimants and other witness and also to contest the claim.
Reason behind injuries :-
The person who brings the petition for compensation, must show that the respondent was negligent
on his part. In doing so the plaintiff proves whether the respondent was rash or not. In Rathnashalvan
v. State of Karnataka supreme court defined rashness as hazarding a dangerous or wanton act with
the knowledge that it is so, and that it may cause injury.
Negligence is also one of the most common factor in the road accidents which indirectly results in
the liability towards the third party which has nothing to do with the main act. The Supreme Court of
India in State of Karnataka v. Muralidhar defines ‘negligience’ as follows :
“Negligence means omission to do something with reasonable and prudent means granted by
the consideration which ordinarily regulate human affairs or doing something which prudent
and reasonable means guided by similar considerations would not do”

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Conclusion
What can be inferred from the paper is that liability towards the injuries to third party are immense.
Although there are exception which completely nullify the notion. It can also be inferred that parties
which have no relation with the main act or to say that they are just the observers who are
unfortunately the end victims of the violations have a somewhat more privileges since they are the
sufferers. These parties are called ‘Third parties’.
The law therefore can be termed as truly unbiased in nature, since it doesn’t completely free up the
respondent nor does it completely punish the respondent. When it comes to being equal it stays equal
with whichever cost. The Motor Vehicle act doesn’t let go the no fault liability, for example if there
is a car which is driven by A at high speed. The car ramps up with another car, damage done to the
cars is extreme though there are no severe injuries to any of the driver. But the windshield which got
cracked hits the man who is walking on the footpath. He gets sever head injuries. Here court will
definitely not let A just pay the compensation to another driver. A will have to pay the compensatory
amount to the side-walker as well. Though the incident was unforeseeable its still the duty of care on
the part of A to not be negligent. Henceforth it can be concluded that the two word no fault aren’t
enough to free the respondent. There are several other liabilities which can be imposed on the
negligent person.

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Bibliography
• Motor vehicle act, aurora editorial board,2014, 2, pages 178
• Professional's The Central Motor Vehicles Rules, 1989 Bare Act, professional book publishers,
2018

• Motor Vehicles Laws and Rules, Private Limited Company, 1961, 7th edition, Allahabad,
Uttarpradesh

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