1. Motor Vehicle as a Civil Wrong

2. Motor Vehicle Acts, 1988
Motor Vehicles Act, 1988 is a comprehensive legislation in relation to various matters relating to traffic safety on the roads & to minimize road accidents.
The Act makes the insurance of motor vehicles compulsory. The owner of every motor vehicle is bound to insure his vehicle against third party risks.
The insurance company, i.e., the insurer covers the risk of loss to third party by the use of motor vehicles.

3. Motor Vehicle Acts, 1988
Thus, if there is insurance against third party risk, the person/victim suffering due to the accident caused by the use of motor vehicle may recover compensation either from the owner of the vehicle or the driver of the vehicle or from the insurance company or from all of them jointly.
All such persons/victims, who are at risk on account of the use of motor vehicle, are called “third party” in the sense that they are other than the “first party, i.e., insurer” and “second party, i.e., the insured”.
Chapter XI, S.146 provides for “Insurance of motor vehicles against third party risks”.

4. Motor Vehicle Acts, 1988
S.146 (1) provides that there shall be a policy of insurance complying with the requirements of MV Act, 1988, for the use of the motor vehicle by any person in public place.
But the above requirement if insurance is not prescribed in respect of any vehicle owned by Central Govt. or a State Govt. and the use of vehicle for Govt. purposes unconnected with any commercial enterprise (S.146 (2); or where an exemption from requirement of insurance has been given by the appropriate govt. (S.146 (3).

5. Motor Vehicle Acts, 1988
Thus, no person can either himself use or allow another person to make use of a motor vehicle, unless there is in force an insurance policy in relation to that vehicle, as required by Chapter XI of MV Act, 1988.
Contravention of S.146 is punishable under S.196, MV Act, 1988, which provides that whoever drives a motor vehicle or causes or allows a motor vehicle to be driven in contravention of the provisions of S.146 shall be punishable with imprisonment which may extend to three months, or with fine which may extend to one thousand rupees, or with both.

6. Object of Compulsory Insurance
To protect the interest of third party/victim, who suffers by the use of the said vehicle.
If the vehicle is insured, the injured party can claim compensation from the insurance company/insurer.
Even if the driver or owner of vehicle is not in a position to pay to the victim of the accident, the insurer will pay on behalf of the owner of the vehicle insured.
The insurer is liable to compensate the persons specified in the insurance policy (S.147 (5), MV Act, 1988.

7. Insurer’s Liability
S.147 (1) (b) provides for the extent of liability of the insurer which may be incurred in respect of death of bodily injury to any person including owner of the goods or his authorized representative carried in the vehicle or damage to any property of third party caused or arising out of the use of the vehicle in a public place.
S.147 (2) provides that the policy shall cover any liability incurred in respect of any accident upto the limit:
a) as provided in S.147 (1) (b), the amount of liability incurred;
b) in respect of damage to any property of a third party, a limit of Rs 6,000.

8. Insurer’s Liability
S.147 (3) provides that the insurance policy shall be of no effect unless the insurer has issued a “certificate of insurance” in the prescribed form & containing the prescribed particulars of any condition .
The liability of the insurer commences as soon as the contract of insurance comes into force & remains operative during the operation of the policy. In case of renewal of an existing policy, the risk is covered from the moment the renewal comes into force.
But the insurer is not made liable for the harm suffered by a passenger travelling in a private car, neither when a public transport is hired.

9. Insurer’s Liability
In National Ins. Co. Ltd. v. J. N. Dhabi, the contract of renewal of insurance policy came into force w.e.f at 4:00 pm whereas the accident occurred on at 11:14 am, i.e., before the renewal of the contract. Thus, SC held that insurer could not be made liable for such an accident.

10. Insurer’s Liability
Insurer’s liability is not in respect of owner of a two wheeler or pillion rider of a two wheeler.
In Oriental Insurance Co. Ltd. v. Sudhakaran K.V., AIR 2008 SC 2729
The deceased was travelling as a pillion rider on a scooter, when she fell down & got injured & died due to those injuries. When suit was filed, it was found that the contract of insurance covered risk to third party only & question before the SC was whether the pillion rider on a scooter would be a third party within the meaning of S.147.

11. Insurer’s Liability
SC held that the pillion rider in a two wheeler was not to be treated as a third party when the accident had to occurred owing to rash & negligent riding of the scooter & not on the part of the driver of another vehicle.
The provisions of S.147 could not be extended to an injury or death of the owner of the vehicle or to pillion rider.

12. Question of Liability
When an accident done by a motor vehicle takes place, the question of liability arises, i.e., who would be liable to pay compensation to the victim and his family members?
There are three methods through which liability arises: -
Fault based liability;
No Fault based liability;
Liability under Hit and Run cases

13. Fault based Liability
a) Fault based liability: - It involves fault on the part of the driver of the vehicle while driving the motor vehicle which makes the driver or owner of the vehicle or the insurance company liable to pay compensation to the victim or to injured party.
Since the motor vehicle is compulsorily insured, the insurance company is always held liable to pay compensation to the injured party or to his family in case of his death because of the fault on the part of the driver of the motor vehicle with which the accident took place.

14. No Fault
b) No Fault based liability: - The view expressed by various authors is that the liability to pay compensation arises even though there was no rash and negligent driving on the part of the driver of the motor vehicle.
It involves absolute liability of the driver/owner of the vehicle/insurance company
This provision makes a departure from established Common Law principle that claimant can succeed only if he proves negligence on the part of either the owner or the driver or the driver of the vehicle.

15. No Fault
Here compensation is payable to the victim or to his family members by the vehicle owner or insurance company.
It can be imposed on both vehicle owners involved in an accident.
The concept of ‘no fault liability’ is that the amount/compensation is payable not because there was fault on the part of the driver of the vehicle, but because the vehicle was involved in the accident.
In such cases, liability of the owners of all the vehicles involved in the accident and of course of the insurance company, if the vehicles were insured, should be joint and several

16. No Fault
There are special courts/tribunals formed under S.165, MV Act, 1988 called “Motor Accidents Claims Tribunals” (MACT) to hear the cases relating to motor accidents.
The aspects required to be analyzed by MACT while awarding compensation in no fault based liability are that:
a) whether the accident has arisen out of use of the motor vehicle;
b) the said accident has resulted in a permanent disablement of the person who is making the claim or the death of a person whose legal representatives are making the claim; and

17. No Fault
c) the claim is made against the owner and insurer of the motor vehicle involved in the accident.
Once these three factors are established, the claimant is entitled to succeed for no fault liability.

18. No Fault
The provision of ‘no fault liability’ is contained in Section 140, Motor Vehicles Act, 1988.
According to S.140, no fault liability has been recognized when death or permanent disability has resulted from an accident arising out of the use of a motor vehicle.
The amount of compensation payable shall be: -
a) in respect of death of a person, a fixed
sum of Rs. 50,000, and
b) in respect of permanent disability of
any person, a fixed sum of Rs.25,000.

19. No Fault
S.163-A provides for payment of compensation by the owner of the motor vehicle or by the authorized insurer in case of death or permanent disablement due to accident arising out of the use of motor vehicle.
The compensation provided is as indicated in Second Schedule (structured multiplier formula) of the MV Act, 1988.
S.163-A provides for filling of a claim petition where an accident takes place due to the use of motor vehicle.

20. No Fault
For filling a claim under this section, it is not necessary for a claimant to establish any act of negligence on the part of the driver.
It is not even necessary even to plead that the death had occurred owing to any wrongful act or negligent or default of the owner of the vehicle.

21. Hit & Run
c) Liability under Hit and Run cases: - means fleeing from the scene of accident/crime after crashing into someone’s vehicle.
It is considered hit & run whether the accused is caught or not.
S.161 (1) (b) defines “hit & run motor accident” as an accident arising out of the use of a motor vehicle or motor vehicles, whose identity cannot be ascertained in spite of reasonable efforts for the said purpose.
S.161 (3) provides for compensation in hit & run cases: (a) in case of death, Rs 25,000 & (b) in case of grievous hurt to any person, Rs 12,500.

22. Hit & Run
Sanjeev Nanda case (BMW hit & run case): - Sanjeev Nanda’s BMW car hit 6 people, including 3 policemen in 1999.
Thereafter he ran away after hitting these people.
He was charge-sheeted & later convicted under Section 304-A, IPC for rash & negligent driving & was awarded 2 years imprisonment by the Delhi HC & the SC.
He was also asked to pay compensation of Rs 50 lakhs to the Central Govt. which will be used for compensating victims of road accidents, wherein the erring drivers could not be traced.

23. Appeal
S.173 (1) states that any person aggrieved by an award of Motor Accident Claims Tribunal can prefer an appeal to the HC.
This appeal is to be filed within 90 days from the date of the award of Motor Accident Claims Tribunal.
S.173 (2) states that no appeal shall lie against any award of Motor Accident Claims Tribunal, if the amount in dispute in appeal is less than Rs 10,000.

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