Fault And No Fault Liability Under Motor Vehicle Act

November 5, 2021

Introduction :-

The Motor Vehicles Act came into existence in 1988. It laid down rules and regulations on all aspects of road transport, including registration of motor vehicles, controlling their permits, traffic regulation, insurances and penalties. Also, the Motor Vehicle Act makes it compulsory for a driver to have a valid driving licence. Also, no vehicle can be used without a registration number.

The new Motor Vehicle Act 2019 or the Motor Vehicle (Amendment) Act 2019 was implemented in September last year. With the introduction of the new act, several traffic fines have increased substantially and it is believed that the stricter penalties will no help the authorities curb the menace of road accidents caused due to negligent driving. Ubi jus ibi remedium the Latin maxim states that, where there is wrong, there is remedy. It is an essential maxim of law of torts , where one’s right has been invaded, the law provides for the remedy to safeguard the right of the aggrieved. It was in the case of Ashby V. White , where the court held that: When a person is rested with a right , he must have a means to safeguard and have a remedy if someone violates it, and is a useless to think of a right without providing from any remedy for its violation.

The Motor Vehicle Act, 1988 was enacted on July 1, 1988. The original Act, i.e. The Motor Vehicle Act, 1939 was amended numerous time to keep it according to the phase of technology and development. Later , a committee was set up in to draft a comprehensive legislation as per the various suggestion. In amended act, Section 140 to section 144 under chapter-X lays the provision for no fault liability. Section 145 to 164 under Chapter -XI deals with the insurance provision pertaining to third party claims, and Section 165 to 176 , Chapter XII, deals with claims tribunals. This act was said to be great benefit to society as it primarily aimed to provide the relief to persons who encounters the accidents and then are not paid adequate compensation , that they should have to make good to their damages.

To point out some of the welfare provisions , the act provided the driving license to be mandatory to drive a motor vehicle , and registration of the vehicle to be valid only for the period of fifteen years , which can be further renewed for another five year. The act also includes various other provision for the benefit of the road accidents victims.

Compensation under motor vehicle act :-

Rules for payment of compensation can be discussed under two sub-headings;

a. Fault based liability and

b. no fault liability

Fault Liability

Fault based liability

The cases of motor accidents constitute a major bulk of tort cases in India. To prevail in a suit generally , a victim must also demonstrate that the injurer has breached a duty he owe to the victim. When an injurer breaches a legal duty he is said to be “at fault’ or negligent. Breach of a duty is caused by doing something which a reasonable man should do under the circumstances.

The rule of negligence with the defence of contributory negligence holds injurer liable if and only if he was negligent and the victim was not. In India, this rule requires proportional sharing of liability when both parties were negligent. That is, the compensation the victim receives gets reduced in proportion to his or her negligence. The rule of strict liability always holds the injurer liable irrespective of the care taken by the two parties. Before 1988 for motor vehicle accidents liability of injurer was predominantly fault based liability. However, the 1988 amendment to the Act brought in an element of strict liability.

The following provision (section. 140) was introduced in the amendment: “where death or permanent disablement of any person has resulted from an accident arising out of the use of the 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.” In simple terms, this amendment implied that the injurer or the insurance company of the injurer has to pay a certain amount as compensation to the victim irrespective of whose fault it is.

The Act was further amended in 1994. As a result of this amendment, liability of injurer became even stricter. According to section 163-A: “Notwithstanding anything containing in this Act or any other law for the time being in force, the owner of the motor vehicle or the authored insurer shall be liable to pay in the case of death or permanent disablement due to accident arising out of the use of the motor vehicle, compensation as indicated in the second schedule, to legal heirs or the victim s the case may be.”

The claimant shall not be required to plead or establish that the death or permanent disablement was due to any wrong full act or neglect or default of the owner of the vehicle or the vehicles concerned or any other person.While filing the damage awards (i.e the liability payments to be made by the injurer to the victim), courts should take into account the entire loss suffered by victim. A court may entitle the victim to over or under compensation. Such court errors can cause various effects depending upon the liability rule in force.

Motor Vehicles Act,1988, however, recognizes limited ‘no fault liability’ but only in the cases of death and permanent disablement. While deciding on compensation, courts have applied rule of negligence with defence of contributory negligence. For instance, if the liability is limited to Rs. 50.000 in the case of death and Rs.25,000 in the case of permanent disablement. Such compensation can be claimed without establishing any negligence on the part of owner or the driver of the vehicle. The compensation claimed exceeding the amount can prevail only if negligence is proved.

No Fault liability

It was brought to the bench of Acting Chief Justice A. Sambasiva Rao , in the case of Haji Zakaria V. Naoshir Cama, whether the liability to pay the compensation can be levied upon owner , even when there was no fault on his behalf or negligent act. This was over-ruled b the Hon’ble Supreme Court of India, it was of the opinion that, where there is no fault or negligence by the owner, there could be no liability be imposed upon him.

Anyhow, the principle of No Fault was developed to provide the victim with some sort of relief incase of hit and run and such cases. Being welfare state, denial of the compensation over the fact that there was a contributory negligence on part of the victim or where the negligence of the driver of a vehicle was not established beyond the reasonable doubt. defeats the idea of social justice, and so the provision was made that driver or the owner should be held without taking the fact of contributory negligence into consideration.

There was doubt as to in which way does the principle of No-fault liability differs from the principle of Strict liability. In the case of the No-fault liability the compensation is fixed, on the other-hand , in the case of Strict liability liability is not fixed, but is upon the discretion of the court. The former principle is different from the common law principle which says that the claimant should establish the act of negligent and rash driving on the part of owner or the driver to claim the compensation. However, the section 140 to section 144 of the Motor Vehicle Act, 1988 provides exception to such rule.

In case of Minu B. Mehta V. Balkrishna, the apex court overruled the verdict of the Andhra Pradesh High Court and Bombay High Court , and ruled that the of the owner of the vehicle or the company of the vehicle insurer can not be held liable unless there’s a negligence on the part of the owner or the driver of the vehicle.

In Shridhar V. United India Insurance Company, the apex court was of view that where an accident is caused due to oil spilled on the road, negligence would be on the part of the driver only , not upon the owner , or the other . In such a circumstances, the insurer would not be liable, the computation of the liability shall be on the basis of no fault principle.

While adjudicating in the case of Ishwarappa v/s. C.S. Gurusthanthappa, the court held that section 140 of the act in intended to provide an immediate relief to the victim or heirs and legal representative of the deceased person in an event of an accident. And so the claim under section 140, is paid at the threshold of the case proceedings.

Section 140 of The Motor Vehicle Act 1988
The act provides the provision for the payment of the compensation to the aggrieved , in case of death or permanent disability by the vehicle of defendant , by himself or the driver of any such vehicle. According to section 140, No fault liability is to be invoked when a death or permanent disability has been resulted from an accident arising out of a motor vehicle.

In any claim made under this act, the amount of compensation be payable as follows:

Where the accident causes the death of the a person, a fixed sum of Rs. 50,000/- &
If causes permanent disability of any person, a fixed sum of Rs.25,000/-.

The sub-section (3) of the act makes it clear that, the burden of the pleading and fact whether or not wrongful act, negligence, or default was committed by the claimant or his heir or representative , the compensation under this section is not subjected to any burden of proof on the shoulders of the claimant. The compensation under this section is governed by No fault liability principle.

By reading section 140 and 163-A together , the intent of the act is crystal clear , that any claim raised under the section 163-A of this act, need not be subjected to be examined based on any proof or pleading at the hands of the claimants , and shall be provided relief under section 140.

Is the Section 140 to be applied retrospectively?
The matter of consideration regarding date for the determination of the compensation is the date of the accident. The amendment to increase the amount payable under the act was increased on 14/11/1994 from Rs.25,000/- to Rs.50,000/- for causing death. The following provision is not retrospectively, and so if any accident occurs before 14/11/1994 , the compensation shall be paid Rs. 25,000/- only. For filing claim under sec. 140 , it is not mandatory for precedent that the primary claim petition under section. 166 be filled. Even though the the claim petition is not filled under or if the claim is dismissed failing the limitation period, an application for claim under sec. 140 cannot be dismissed on the similar ground.

Manjit Singh Vs. Rattan Singh, the court in the following case held that amended section.140 . 14/11/1994 which has raised the amount of the compensation is applicable retrospectively. And so, for an accident leading to death, before the amended was made, the compensation was computed by the Tribunal for Rs.30,000/- was raised to Rs. 50,000/-. This verdict however needs reconsideration. The compensation shall be payable as per the law applicable as the time of accident took place.

Case Law:
The Oriental Insurance Co. Ltd. Vs. Seela Ratnan And Ors

Facts:
The issue was brought to the bench regarding amendment made to Section 140 in year 1994 in The Motor Vehicles Act, 1988. The amendment aim to increase the compensation of accidental death and permanent disability. The accident in the concerned case took place before the date of the amendment came to force.

Issues:
It is before the Hon’ble bench to decided that whether, Section 140 of the Motor Vehicles Act is applicable retrospectively?

Judgement:
The court in the above case ruled that , Section6(c) of the General Clause Act would be applied in the concerned case and the amendments made as in Section 140 of the Motor Vehicles Act, 1988 cannot be applied in the case retrospectively. And so any claim made before the amendment came into the force shall not be governed as per the amendments made, meanwhile shall be subjected to the compensation as per earlier provisions. “When an accident has occurred before the commencement of 1988 Act no fault liability can be granted as per Section 92-A of the repealed Act and not under Section 140 of the 1988 Act.

Supreme Court had considered the applicability of Section 6 of General Clauses Act to the provisions of the repealed Act in Gurcharan Singh Baldev Singh Yashwant Singh (1991) 6 JT (SC) 256 : (AIR 1992 SC 180). An application was filed by an operator for renewal of his permit under Section 58 of the Motor Vehicles Act, 1939.

Conclusion :-

There arise two kinds of liabilities Fault liability and No fault liability.

No-fault liability or absolute liability arises due to accidents over the road. It basically means another party who was involved in the accident has to pay compensation to the victim. He can’t sidestep himself from the liabilities by arguing that it was not his negligence or mistake. Whether it was the negligence of the victim or not, the driver or owner of the car will pay compensation to the suffering party. Section 140 to section 144 of the Motor Vehicle Act, 2019 deals with no-fault liability. Section 140 of the Motor Vehicle Act, 2019 states that if a person died or permanently disabled due to the accident then the owner of the vehicle would be equally liable to pay compensation. A sum of 50,000 shall be paid on the death of any person while 25,000 rupees to those who became permanently disabled. This section is claimant centric as they are not required to prove that the act was done wrongfully or was due to the negligence of the owner or owners of the vehicle. S. Kaushnum began v. New India Assurance Co. Ltd (2001):can be the case for it. While the fault liability arises when one is at a fault or is negligent.

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November 5, 2021