The Motor Vehicle Act, 1988

MV Act,1988-no fault liability–compensation –principle of

insurance- insurance liability-effects of breaking laws.

● The Motor Vehicles Act came into existence in 1988
● laid down rules and regulations on all aspects of road transport,
including registration of motor vehicles, controlling their permits, traffic
regulation, insurances and penalties.
● the Motor Vehicle Act makes it compulsory for a driver to have a valid
driving licence, no vehicle can be used without a registration number.
● Motor Vehicle Act 2019 or the Motor Vehicle (Amendment) Act 2019 was
implemented in September last year
● 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 based liability
1. 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.
2. 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.
3. The rule of strict liability - holds the injurer liable irrespective of the care taken by the
two parties.
4. Before 1988 for motor vehicle accidents liability of injurer was predominantly fault
based liability. - 1988 amendment to the Act brought in an element of strict
liability.
● (section. 140)- “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.” - 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.
● Amended in 1994 - As a result of this amendment, liability of injurer became even
stricter. 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.”
● Section 164: a compensation, of a sum of two lakh rupees in case of death or of
50,000 rupees in case of grievous hurt to the legal heirs or the victim
● Matters of adjudication by Claims Tribunals - According to Section 165, the Claims
Tribunals are constituted for the purpose of adjudicating upon claims from
compensation : (i) in respect of accidents arising out of the use of motor vehicles,
and (ii) involving : (a) the death of, or bodily injury to persons, (b) damage to any
property of third party so arising, or (c) both.
● Application for compensation - According to Section 166, an application for
compensation may be made : (i) by the person who has sustained the injury, or (ii) by
the owner of the property, or (iii) where death has resulted from the accident, by all or
any of the legal representatives of the deceased, or (iv) by an agent duly authorized by
the person injured or all or any of the legal representatives of the deceased, as the case
may be.
● Every application for compensation shall be made to the Claims Tribunal having
jurisdiction over the area in which the accident occurred. The time limit of making the
application for compensation is six months from the occurrence of the accident.
Award of the Claims Tribunal
On receipt of an application for compensation made under Section 166, the Claims
Tribunal shall, after giving the parties an opportunity of being heard, hold an enquiry
into the claim and may make an award determining the amount of compensation,
which appears to it to be just. In the award it is to specify the person or persons to whom,
compensation shall be paid. It has also to specify the amount which shall be paid by the
insurer or the owner or the driver of the vehicle involved in the accident or by all or any
of them, as the case may be. (Sec. 168).
Appeals to the High Court (Sec. 173) : The time limit for such appeal is 90 days from the
date of the award of Claims Tribunal. Before an appeal is preferred, a person against whom
there is an award for payment of an amount, should deposit in the High Court Rs. 25,000/- or
50% of the amount so awarded, whichever is less.
No appeal shall lie against an award of a Claims Tribunal, if the amount in dispute in the
appeal is less than Rs. 1 lakh
Payment of compensation in hit and run motor accident (Sections 161, 162
& 163)
If there is a hit and run motor accident, i.e., the accident arising out of the use
of a motor vehicle the identity whereof cannot be ascertained in spite of
reasonable efforts, there is a special provision for compensation in such a case.
In such a case, the compensation to be paid shall be as follows: As per the
Motor Vehicles (Amendment) Act, 1994 :
(i) a fixed sum of two lakh rupees or such higher amount as may be prescribed
by the Central Government;
(ii) ) in respect of grievous hurt to any person resulting from a hit and run
motor accident, a fixed sum of fifty thousand rupees or such higher amount
 Insurance Policy under the Motor Vehicle Act:
● Section 145 to 164 deals with the insurance of motor vehicles against third
party risk. - also called third party liability where the insurance company
indemnifies the insured person when the insured person is sued or is held liable
for damages against the third person.
● In Government national insurance Company Vs Fakir Chand, - held that the
third parties include any person walking on the road, travelling in another
vehicle, or is a passenger in the vehicle that has been insured.
● The owner of every motor vehicle is bound to insure his vehicle against
third party risk. Thus, if there is insurance against third party risk, the person
suffering due to the accident (third party) caused by the use of motor vehicle
may recover compensation either from the owner or the driver of the vehicle,
or from the insurance company, or from them jointly
Claims under Motor vehicle Act, 1988:

● The Motor Vehicle Act, 1988 provides provisions related to claims for losses
that occurred due to a motor accident to person (self) or other (third party).
● In the case where a third party claims the damage, the report of the
accident should be reported or given to the nearest police station and then
to the insurance company.
● in case of a self claim, the person shall have to inform the insurance
company and the police before the damage gets fixed.
● An application for claims under Motor Vehicles Acts, 1988, can be made or
filled by the owner himself, or else in case of the death of the owner the
nearest kin of the deceased is legally entitled to make such application.
● Further, the accident victim, having age less than the age of 18 years, cannot
go for an accidental claim on its own but can go through a lawyer.
● Application for claiming compensation before the Tribunal may be
made by the accident victim himself or by the owner of the vehicle or
in case death has been caused due to accident the application for
claims can be made through the legal heirs of the deceased or all or
any person duly authorized by the person injured or by all or any of the
legal representative of the injured person.
● Whereas the person, who himself is responsible for reckless and
careless driving, will not be entitled to claim compensation.
● In the case of Manjuri Bera v. Oriental Insurance Company, the
Supreme Court held that the father and the brother would be eligible
to claim compensation under section 140 of the Motor Vehicle Act,
1988 as it does not cease because there is an absence of dependency.
Types of claims under the Act:
There are three types of claims through which one can go for the compensation
claim. There are as follows:
Hit and Run:
These kind cases shall be dealt with the provisions of section 161 of the Act. In
this case, the accused hit the victim through his vehicle and runs away instead
of helping him or taking him to the nearest hospital.
Structured formula basis:
The claim was introduced in the year 1994 after amending the Act. This
amendment has brought a new provision, i.e. section 163A. As per this section,
no necessity to prove the fault of the driver. The owner or the issuer has to give
compensation to the claimant after the identification of the accused is made.
PENALTY UNDER THE MV ACT 2019