--A PROJECT REPORT ON--

SUPREME COURT ON MACT

SUBMITTED TO: SUBMITTED BY:

NIGAM BHARDWAJ AMIT SINGH RATHOUR

LEGAL HEAD, ICICI LOMBARD ARMY INSTITUTE OF LAW

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 CONTENTS
1. INTRODUCTION ............................................................................................................... 3
2. PROCEDURE AND POWERS OF CLAIMS TRIBUNALS. (SECTION 169)................................. 3
3. CONSTITUTION OF MOTOR VEHICLE ACCIDENTS CLAIM TRIBUNAL. ................................. 4
4. IMPORTANT CASE LAWS BY SUPREME COURT. ................................................................. 4
I. NECESSITY FOR INSURANCE AGAINST THIRD PARTY RISK .............................................. 4
II. WHAT IS COMPENSATION. ........................................................................................... 6
III. POLICY AND LIMITS OF LIABILITY .............................................................................. 6

IV. HEADS TO DETERMINE COMPENSATION. ................................................................... 8

V. CHALLENGE TO QUANTUM OF COMPENSATION.............................................................. 9
5. IMPORTANT JUDGMENTS ON COMPENSATION. ................................................................. 10
I. AWARD OF COMPENSATION SHALL BE REASONABLE AND JUST (K. SURESH V. NEW INDIA
ASSURANCE COMPANY LIMITED AND ANOTHER) ................................................................... 10
II. COMPENSATION UNDER THE HEAD DISABILITY TO EARN LIVELIHOOD IN FUTURE DISTINCT
FROM COMPENSATION UNDER THE HEAD SUFFERING AND LOSS OF ENJOYMENT OF LIFE.
(RAMESH CHANDRA V. RANDHIR SINGH AND OTHERS) ........................................................... 10
III. COMPENSATION FOR PERMANENT DISABILITY CANNOT EXCLUDE COMPENSATION
UNDER OTHER HEADS (B. KOTHANDAPANI V. TAMIL NADU STATE TRANSPORT CORPORATION
LIMITED) .......................................................................................................................... 11
IV. COURTS TO ADEQUATELY COMPENSATE THE VICTIM FOR NOT ONLY PHYSICAL INJURY
BUT ALSO FOR LEADING A NORMAL LIFE. (KAVITHA V. DEEPAK AND OTHERS)....................... 12

V. COMPENSATION IN CASE WHERE VICTIM IS A CHILD. (MASTER MALLIKARJUN V.

DIVISIONAL MANAGER, THE NATIONAL INSURANCE COMPANY LIMITED & ANR.)..................... 12
VI. CHILD WAS NOT EARNING MONEY DOESN’T DISENTITLE PARENTS FROM CLAIMING
FULL BENEFITS U/FATAL ACCIDENTS ACT (R. AYYAVU AND ANR. V. GOPINATHAN NAIR
AND ANR.) ....................................................................................................................... 13

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 1. INTRODUCTION

The Motor Vehicles Act, 1988 is an Act of the Parliament of India which regulates all the
aspects of road transport vehicles. This Act came into force from 1 July 1989. This act replaced
the previous motor vehicle act 1939 which earlier replaced the motor vehicle act 1914. Motor
vehicles Act created a new forum named motor accidents claims tribunals which substituted
civil courts in order to provide cheaper and speedier remedy to the victims of accident of motor
vehicles. Earlier to file a suit, suit for damages had to be filed with civil court, on payment of
advalorem court fee. But under the provision of motor vehicle Act, an application claiming
compensation can be made to the claims tribunal without payment of advalorem court fee.

The Tribunal is to follow a summary procedure for adjudication of claims being provided, the
sections do not deal with the substantive law regarding determination of liability. They only
furnish a new mode of enforcing liability. For determination of liability one has still to look to
the substantive law in the law of torts and Fatal Accident Act, 1855 or at any rate to the
principles thereof.” In the case of Oriental Fire & General Insurance Co. Vs. Kamal Kamini.
it was critically explained that the liability is still based on law of torts and enactment like the
fatal accident act.

2. PROCEDURE AND POWERS OF CLAIMS TRIBUNALS.

(SECTION 169)

(1) In holding any inquiry under Section 168, the Claims Tribunal may, subject to any rules
that may be made in this behalf, follow such summary procedure as it thinks fit.

(2) The Claims Tribunal shall have all the powers of a Civil Court for the purpose of taking
evidence on oath and of enforcing the attendance of witnesses and of compelling the discovery
and production of documents and material objects and for such other purposes as may be
prescribed; and the Claims Tribunal shall be deemed to be a Civil Court for all the purposes of
Section 195 and Chapter XXVI of the Code of Criminal Procedure, 1973 (2 of 1974).

(3) Subject to any rules that may be made in this behalf, the Claims Tribunal may, for the
purpose of adjudicating upon any claim for compensation, choose one or more persons
possessing special knowledge of any matter relevant to the inquiry to assist it in holding the
inquiry.

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 3. CONSTITUTION OF MOTOR VEHICLE ACCIDENTS CLAIM
TRIBUNAL.

Chapter XXII of the Motor Vehicle Act, 1988 provides for the constitution of Motor Vehicle
Accidents Claim Tribunal (hereinafter referred to as ‘MACT’). Section 165 to Section 176
deals with constitution, procedure and powers of MACT.

4. IMPORTANT CASE LAWS BY SUPREME COURT.

I. NECESSITY FOR INSURANCE AGAINST THIRD PARTY RISK

Section 146 of the MV, Act provides for Compulsory insurance against third Part Risk as
follows:

“146. Necessity for insurance against third party risk.

(1) No person shall use, except as a passenger, or cause or allow any other
person to use, a motor vehicle in a public place, unless there is in force in
relation to the use of the vehicle by that person or that other person, as the
case may be, a policy of insurance complying with the requirements of this
Chapter:

[Provided that in the case of a vehicle carrying, or meant to carry,

dangerous or hazardous goods, there shall also be a policy of insurance
under the Public Liability Insurance Act, 1991 (6 of 1991).]

Explanation. —A person driving a motor vehicle merely as a paid employee,

while there is in force in relation to the use of the vehicle no such policy as
is required by this sub-section, shall not be deemed to act in contravention
of the sub-section unless he knows or has reason to believe that there is no
such policy in force.

(2) Sub-section (1) shall not apply to any vehicle owned by the Central
Government or a State Government and used for Government purposes
unconnected with any commercial enterprise.

(3) The appropriate Government may, by order, exempt from the operation
of sub-section (1) any vehicle owned by any of the following authorities,
namely—

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 (a) the Central Government or a State Government, if the vehicle is used for
Government purposes connected with any commercial enterprise;

(b) any local authority;

(c) any State transport undertaking:

Provided that no such order shall be made in relation to any such authority
unless a fund has been established and is maintained by that authority in
accordance with the rules made in that behalf under this Act for meeting
any liability arising out of the use of any vehicle of that authority which that
authority or any person in its employment may incur to third parties.

Explanation. —For the purposes of this sub-section, “appropriate

Government” means the Central Government or a State Government, as the
case may be, and—

(i) in relation to any corporation or company owned by the Central

Government or any State Government, means the Central Government or
that State Government;

(ii) in relation to any corporation or company owned by the Central

Government and one or more State Governments, means the Central
Government;

(iii) in relation to any other State transport undertaking or any local

authority, means that Government which has control over that undertaking
or authority.”

in the case of United India Insurance Co. Ltd. v. Santro Devi,1 the Scope of
compulsory insurance was discussed by the Supreme Court and it was held that the
Provisions of compulsory insurance have been framed to advance a social object. It
is part of the social justice doctrine. When a certificate of insurance is issued, in law,
the insurance company is bound to reimburse the owner. Contract of insurance must
fulfil the statutory requirements of formation of a valid contract but in case of a third-
party risk the question has to be considered from a different angle,

1
(2009) 1 SCC 558

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COMPULSORY INSURANCE. Compulsory insurance is meant for benefit of third parties.
Once vehicle is insured, owner and any other person can use vehicle with consent of owner.
Section 146 does not provide that a separate insurance policy needs to be taken out for use of
vehicle by such other person.2

II. WHAT IS COMPENSATION.

In the case of Govind Yadav v. New India Insurance Co. Ltd.3 Supreme Court held
that the term “compensation” would include not only expenses incurred for
immediate treatment, but also expenses likely to be incurred for future medical
treatment/care necessary for particular injury or disability caused by an accident.

Moreover, in the case of Anant v. Pratap4, court held that the Award of lump sum
compensation without following multiplier method is not permissible.
Compensation has to be just compensation. Mode of award in cases of permanent
disability has to be based on functional disability or actual loss of income/income-
earning capacity. Due to changed scenario in view of cost of living and current rate
of inflation, Second Schedule provided under Motor Vehicles Act became
redundant.

III. POLICY AND LIMITS OF LIABILITY

a) Scope. In the case of Oriental Insurance Co. Ltd. v. Brij Mohan,5 it was held
by Supreme Court that the Gratuitous passenger carried in goods vehicle, is not
covered under the provisions of Section 147. The 1994 amendment only
extended the statutory cover to the owner of the goods or his authorized
representative carried in the vehicle, and not to gratuitous passengers. So where
a labourer was traveling on the trolley of the tractor carrying earth to brick kiln,
he being merely a passenger, his claim was not maintainable.

Passengers travelling in goods carriage whether gratuitous or otherwise, are not

covered.6

2
U.P. SRTC v. Kulsum, (2011) 8 SCC 142
3
(2011) 10 SCC 683
4
(2018) 9 SCC 450.
5
(2007) 7 SCC 56
6
National Insurance Co. Ltd. v. Cholleti Bharatamma, (2008) 1 SCC 423

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 b) Insurer's liability. Insurer's liability under Section 147 in respect of third party
risk—In absence of any specific agreement undertaking any liability in excess
of the statutory limit and payment of separate premium therefore, insurer's
liability would be confined to that provided in the statute. Where the insurance
company concerned wishes to take a defence in a claim petition that its liability
is not in excess of the statutory liability it should file a copy of the insurance
policy along with its defence.7
Once the insurer has issued a certificate of insurance in accordance with sub-
section (4) of Section 95 the insurer has to satisfy any decree which a person
receiving injuries from the use of the vehicle insured has obtained against any
person insured by the policy. He is liable to satisfy the decree when he has been
served with a notice under Section 149 about the proceedings in which the
judgment was delivered.8
The insurer is not liable to pay compensation in respect of a pillion-rider in
terms of the statutory cover mandated by Section 147 when the accident has
taken place owing to rash and negligent driving of the motor vehicle carrying
the pillion-rider concerned. Such a pillion-rider is not to be treated as a “third
party” under Section 147. Such a pillion-rider would be covered only in case
additional cover is purchased under the contract of insurance. The legal
obligation arising under Section 147 cannot be extended to an injury or death of
the owner of the vehicle or a pillion-rider travelling thereon.9
c) Breach of condition. Breach of carrying humans in a goods vehicle more than the
number permitted in terms of the insurance policy. Held, cannot be said to be such
fundamental breach so as to afford ground to the insurer to deny indemnification
unless there were some factors which contributed to the causing of the accident.
Exclusion terms of policy should be read down so as to serve the main purpose of
it to indemnify the insured.10
d) Liability of insurance company vis-à-vis owner of vehicle. Since the insurance
policy of the owner of the vehicle covered six occupants of the vehicle in
question, including the driver, the liability of the insurer would be confined to

7
National Insurance Co. Ltd. v. Jugal Kishore, (1988) 1 SCC 626.
8
Guru Govekar v. Filomena F. Lobo, (1988) 3 SCC 1.
9
Oriental Insurance Co. Ltd. v. Sudhakaran K.V., (2008) 7 SCC 428 : (2008) 3 SCC (Cri) 110.
10
B.N. Nagaraju v. Oriental Insurance Co. Ltd., Divl. Officer, (1996) 4 SCC 647,

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 six persons only, notwithstanding the larger number of persons carried in the
vehicle. Such excess number of persons would have to be treated as third parties,
but since no premium had been paid in the policy for them, the insurer would
not be liable to make payment of the compensation amount as far as they are
concerned. Since there can be no pick and choose method to identify the five
passengers, excluding the driver, in respect of whom compensation would be
payable by the Insurance Company, to meet the ends of justice should deposit
the total amount of compensation awarded to all the claimants and the amounts
so deposited be disbursed to the claimants in respect of their claims, with liberty
to the Insurance Company to recover the amounts paid by it over and above the
compensation amounts payable in respect of the persons covered by the
insurance policy from the owner of the vehicle by putting the decree into
execution. For the aforesaid purpose, the total amount of the six awards which
are the highest shall be construed as the liability of the Insurance Company.
After deducting the said amount from the total amount of all the awards
deposited in terms of this order, the Insurance Company will be entitled to
recover the balance amount from the owner of the vehicle as if it is an amount
decreed by the Tribunal in favour of the Insurance Company. The Insurance
Company will not be required to file a separate suit in this regard in order to
recover the amounts paid in excess of its liability from the owner of the vehicle,
United India Insurance Co. Ltd. v. K.M. Poonam, (2015) 15 SCC 297

IV. HEADS TO DETERMINE COMPENSATION.

In the case of Sarla Verma v. Delhi Transport Corporation11 it was held that other
than the detailed calculation required to calculate the loss of dependency, certain
lump sums may be awarded under heads of (i) loss of estate, (ii) loss of consortium,
and (iii) funeral expenses, cost of transportation of the body (if incurred) and cost
of any medical treatment of the deceased before death (if incurred).

Assessment of compensation, though involves, certain hypothetical considerations,

should nevertheless be objective. Justice and justness emanate from equality in
treatment, consistency and thoroughness in adjudication, and fairness and
uniformity in the decision-making process and the decisions. Hence, expressing

11
(2009) 6 SCC 121

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 grave concern over lack of uniformity and consistency among the decisions of
Tribunals, when the factors/inputs as well as the formula/legal principles are the
same, consistency and uniformity, and not divergence and freakiness, should be the
result of adjudication to arrive at just compensation. To arrive at uniformity and
consistency in determination of compensation in cases of death, Tribunals directed
to follow the well-settled steps

In the case of Bhogireddi Varalakshmi v. Mani Muthupandi12, Supreme Court

Defined Consortium as a right of spouse to company, care, help, comfort, guidance,
society, solace, affection and sexual relations with his/her mate. Even children of
deceased are entitled to award of compensation for loss of love, care and guidance.
This emotional aspect has nothing to do with expected lifespan.

V. CHALLENGE TO QUANTUM OF COMPENSATION

Order 41 Rule 33 CPC enables an appellate court to pass any order which ought to
have been passed by the trial court and to make such further or other order as the
case may require, even if the respondent had not filed any appeal or cross-
objections. This power is entrusted to the appellate court to enable it to do complete
justice between the parties. Order 41 Rule 33 CPC can be pressed into service to
make the award more effective or maintain the award on other grounds or to make
the other parties to litigation to share the benefits or the liability, but cannot be
invoked to get a larger or higher relief. For example, where the claimants seek
compensation against the owner and the insurer of the vehicle and the Tribunal
makes the award only against the owner, on an appeal by the owner challenging the
quantum, the appellate court can make the insurer jointly and severally liable to pay
the compensation, along with the owner, even though the claimants had not
challenged the non-grant of relief against the insurer.

In the case of Ranjana Prakash v. Divl. Manager13 it was observed by the court
that Where an appeal is filed challenging the quantum of compensation, irrespective
of who files the appeal, the appropriate course for the High Court is to examine the
facts and by applying the relevant principles, determine the just compensation. If
the compensation determined by it is higher than the compensation awarded by the

12
(2017) 3 SCC 802
13
(2011) 14 SCC 639

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 Tribunal, the High Court will allow the appeal, if it is by the claimants and dismiss
the appeal, if it is by the owner/insurer. Similarly, if the compensation determined
by the High Court is lesser than the compensation awarded by the Tribunal, the
High Court will dismiss any appeal by the claimants for enhancement, but allow
any appeal by the owner/insurer for reduction. The High Court cannot obviously
increase the compensation in an appeal by the owner/insurer for reducing the
compensation, nor can it reduce the compensation in an appeal by the claimants
seeking enhancement of compensation.

5. IMPORTANT JUDGMENTS ON COMPENSATION.

I. AWARD OF COMPENSATION SHALL BE REASONABLE AND JUST (K.

SURESH V. NEW INDIA ASSURANCE COMPANY LIMITED AND
ANOTHER)14

In this case, the Supreme Court observed:

That while assessing the quantum of compensation some guess work, some
hypothetical considerations and some sympathy come into play but, a significant
one, the ultimate determination is to be viewed with some objective standards.

That neither the Tribunal nor a court can take a flight in fancy and award an
exorbitant sum. In conceptual eventuality “just compensation” plays a dominant
role.

That an adjudicating authority, while determining the quantum of compensation,

has to keep in view the sufferings of the injured person which would include his
inability to lead a full life, his incapacity to enjoy the normal amenities which he
would have enjoyed but for the injuries and his ability to earn as much as he used
to earn or could have earned.

II. COMPENSATION UNDER THE HEAD DISABILITY TO EARN

LIVELIHOOD IN FUTURE DISTINCT FROM COMPENSATION
UNDER THE HEAD SUFFERING AND LOSS OF ENJOYMENT OF
LIFE. (RAMESH CHANDRA V. RANDHIR SINGH AND OTHERS)15

14
(2012) 12 SCC 274
15
(1990) 3 SCC 723

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 The Apex Court opined that:

That the sum awarded for pain, suffering and loss of enjoyment of life etc. termed
as general damages should be taken to be covered by damages granted for loss of
earnings is concerned that too is misplaced and without any basis.

The pain and suffering and loss of enjoyment of life which is a resultant and
permanent fact occasioned by the nature of injuries received by the claimant and
the ordeal he had to undergo.

Money solace is the answer discovered by the Law of Torts. No substitute has yet
been found to replace the element of money. This, on the face of it appeals to us as
a distinct head, quite apart from the inability to earn livelihood on the basis of
incapacity or disability which is quite different.

The incapacity or disability to earn a livelihood would have to be viewed not only
in praesenti but in futuro on reasonable expectancies and taking into account
deprival of earnings of a conceivable period. This head being totally different
cannot in our view overlap the grant of compensation under the head of pain,
suffering and loss of enjoyment of life.

One head relates to the impairment of person’s capacity to earn, the other relates to
the pain and suffering and loss of enjoyment of life by the person himself.

III. COMPENSATION FOR PERMANENT DISABILITY CANNOT

EXCLUDE COMPENSATION UNDER OTHER HEADS (B.
KOTHANDAPANI V. TAMIL NADU STATE TRANSPORT
CORPORATION LIMITED)16

The Supreme Court made the following observations in the case:

That the compensation for loss of earning power/capacity has to be determined

based on various aspects including permanent injury/disability. At the same time, it
cannot be construed that compensation cannot be granted for permanent disability
of any nature.

16
(2011) 6 SCC 420

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 It cannot be disputed that apart from the fact that the permanent disability affects
the earning capacity of the person concerned, undoubtedly, one has to forego other
personal comforts and even for normal avocation they have to depend on others.

IV. COURTS TO ADEQUATELY COMPENSATE THE VICTIM FOR NOT

ONLY PHYSICAL INJURY BUT ALSO FOR LEADING A NORMAL
LIFE. (KAVITHA V. DEEPAK AND OTHERS)17

In this case, the Supreme Court stated that:

The Courts while determining the quantum of compensation, either for permanently
or temporarily disabled persons, must make effort to adequately compensate them
not merely for physical injury and treatment but also for loss of earning, inability to
lead a normal life and to enjoy life’s amenities.

That in determining the quantum of compensation payable to the victims of

accident, who are disabled either permanently or temporarily, efforts should always
be made to award adequate compensation not only for the physical injury and
treatment, but also for the loss of earning and inability to lead a normal life and
enjoy amenities, which would have been enjoyed but for the disability caused due
to the accident.

The amount awarded under the head of loss of earning capacity are distinct and do
not overlap with the amount awarded for pain, suffering and loss of enjoyment of
life or the amount awarded for medical expenses.

V. COMPENSATION IN CASE WHERE VICTIM IS A CHILD. (MASTER

MALLIKARJUN V. DIVISIONAL MANAGER, THE NATIONAL
INSURANCE COMPANY LIMITED & ANR.)18

In this case, the Supreme Court considered the issue of fair compensation to be
awarded to a child, who suffered a disability in a motor accident.

The Apex Court in the case declared that the minimum compensation in such cases
should be Rs.3,00,000/, if the child suffers whole-body disability between 10% to

17
(2012) 8 SCC 604
18
2013 (3) KLJ 815

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 30%, Rs.4,00,000/- for disability up to 60%, Rs.5,00,000/- for disability up to 90%
and Rs.6,00,000/-, if the disability is above 90%.

However, in the case, the Supreme Court did not fix the aforesaid parameters as an
inviolable standard and declared that in exceptional circumstances, the Tribunals
and courts would be empowered to grant more as per the factual requirements to be
assessed from case to case.

Other observation made by the Court in the case was that the main elements of
damage in the case of child victims are the pain, shock, frustration, deprivation of
ordinary pleasures and enjoyment associated with healthy and mobile limbs. The
compensation awarded should enable the child to acquire something or to develop
a lifestyle which will offset to some extent the inconvenience or discomfort arising
out of the disability.

That appropriate compensation for disability should take care of all the non-
pecuniary damages. In other words, apart from this head, there shall only be the
claim for the actual expenditure for treatment, attendant, transportation, etc.

VI. CHILD WAS NOT EARNING MONEY DOESN’T DISENTITLE PARENTS

FROM CLAIMING FULL BENEFITS U/FATAL ACCIDENTS ACT (R.
AYYAVU AND ANR. V. GOPINATHAN NAIR AND ANR.)19

In the case, the Supreme Court held:

That the mere fact that the children were not earning any money or money’s worth
would not disentitle their parents from claiming the full benefits under the Fatal
Accidents Act.

That in the absence of statutory guidelines, the court has to make an estimate of the
pecuniary loss suffered by the members of the family of the deceased. Greater value
is attributed to life while the purchasing power of the Rupee has considerably
diminished.

That sentiments indeed have no place, but the court has to evaluate the pecuniary
loss resulting from death on the basis of a proper appreciation of the relevant
circumstances and hard realities.

19
AIR 1991 ACJ 718

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In doing so, the court has to take into account all reasonable probabilities of future
benefits, but exclude, from its consideration all fancied or bare possibilities or
speculative conjectures.

Thus, damages are to be based on the reasonable expectation of pecuniary benefit

and on other non-pecuniary benefit.

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