Abstract-
- It is complex, cumbersome and adversarial.
- It deter to legitimate victims.
- It takes far too long to get compensation.
- It diverts too much money to claim handlers.
- Therefore, the status-quo is unacceptable.
Despite Constitutional and statutory provision for compensation to vehicular accident victims in India[1], many of them has to suffer double jeopardy, first in involving in an accident, second in not getting any compensation[2]. Those who could manage to overcome the rigors of law and procedure fall prey to the elements of defects and delay in the system. Thus as a whole, the existing dynamics of law and procedure was badly suffering from deficiency syndrome, which very often not only dilutes but also deny compensation to the genuine victims of vehicular accident[3]. Thus the need of the hour is about simplification of the law and procedure that will not only secure but also ensure compensation to all the vehicular victims without delay and discrimination.
There cannot be any better moment to propose for simplification in the law and procedure for payment of compensation to the road accident victims, than at a time, while the Government of India is in its way proposing large scale changes into the Act as per the Motor Vehicle Amendment Bill, 2016.
Introduction- Procedure was devised for simplification in the administration of justice. But, many a times, over anxiety for simplification leads to more complications. As a result, instead of mitigating difficulties it create more stumbling blocks. In the process a person suffering from a vehicular accident expecting some compensation has to suffer double jeopardy, first involving in an accident, next in not getting any compensation. Those who could manage to overcome the rigours of law and procedure, fall prey to the elements of delay, a by-product of the deficiency syndrome. Under the circumstances, question arises whether there is any way out from the rigours of procedure, more particularly, for the road accident victims to secure compensation without delay and discrimination. [4]
Motor Vehicle Act, 1988, (hereinafter referred to as ‘Act’) is the nodal Act for administration of compensation to vehicular victims in India. As per the Act the victim or his legal heirs are entitled for compensation.[5] Outwardly it appears as if all is well in the system. But reading between the lines exposes the existing loopholes casting serious doubt about its utility and necessity for its simplification.
Reality bites: Hard facts about the Act– First of all, many of the victims are not eligible for compensation, since they are not required to be covered under the Act[6]. Those who were covered and eligible under the Act also not entitled to receive compensation, in case the vehicle was used in contravention of the Act and or there is a breach of insurance policy terms and conditions.[7] Those who could manage to cross such hurdles and ultimately awarded compensation, realize the same after prolonged delay. Worst among all, even after so much difficulties and delay what they receive is either inadequate or discriminatory since the amount of compensation is not universal but vary from person to person and from place to place even in similar circumstances.[8] Very often, what they receive as compensation was withered away by unscrupulous intermediaries due to victim’s ignorance and illiteracy.[9] And ultimately in the process, the victim has to suffer for no fault of his own. This is only illustrative in nature and not exhaustive, since there is no end to the misery of the vehicular victims in India.
Deficiencies– In nutshell the existing law on payment of compensation to the vehicular victims suffers from various deficiencies such as;
a) Discrimination per-se : Exclusion of many potential vehicular victims from the purview of the compulsory insurance such as gratuitous passengers,[10] occupants of private car[11], pillion rider of two-wheeler vehicle, passengers travelling in a goods carriage or tractor.
b) Discrimination based on sex : For the purpose of computation of compensation for injury or death of any women without having known source of income, her notional income is considered to be 1/3rd income of her spouse, despite Constitutional mandate not to discriminate based on sex. (Ref II Schedule to the Act)
c) Discrimination based on income-source of income : Addition of 50% or 30% towards future prospective income based on age to the existing income of the injured/ deceased for computation of compensation, in case he / she was having a stable job with prospectus of growth enunciated in the case of Sushamma Thomas, approved in the case of Sarla Verma and affirmed by three Judges Bench of the Apex Court in the case of Reshma Kumari[18] enable’s the rich to be richer and the poor to suffer.
d) Discrimination based on place of suing : For the purpose of claiming compensation while foetus is regarded as a person in some parts of India the same is not regarded as a person in other parts of India, based on the contrary ruling of the respective High Courts. This happened due to absence of clear-cut ruling by the Apex Court on an important issue having serious impact on the life and death of potential parents in general and mother in particular.
e) Discrimination for unknown reason : The logic for exclusion of pillion rider of a two-wheeler and occupants of a private car under a liability only policy and its inclusion under a package policy by the insurer without any difference in premium, was without any logic which is not ven understood by the legal pundits or veteran insurance bigwigs.[20]
f) Delay in disposal of the cases- – Delay defeat justice in case of litigation but when the same relates to payment of compensation it destroy many victims and their family who could have survived the tragedy had the compensation amount would have been paid in time. It makes mockery of the concept of compensation which was based on the principle to put the victim in the same condition so far money can compensate.
g) Error apparent on the face of II Schedule– Despite, pointed out by none other than the Apex Court in the case of ‘Trilok Chandra’ way back in the year 1996, that the Second Schedule suffering from several defects, the Government yet to take its cognizance not to speak about its correction and ratification.
h) Inconsistency between law and practice : Absence of driving licence[23], and or permit , as a statutory defence enable the insurer to pay to the third party and recover the same from the insured, considered and claimed to be a defence from exoneration from the liability by the insurers in India.
Major area of litigation : Dispute relating to quantum– One of the major areas of litigation relates to the quantum of compensation. In an average, 50% of total litigation relating to payment of compensation revolves around the quantum of compensation payable in a given case. Though, attempts had been made by the Apex Court from time to time for standardization of compensation payable to the victims, yet the same found to be counter-productive in further delay of the matter.
Setting the agenda– Under the above circumstances, we need to look for the appropriate doses not in piecemeal basis but as a whole, which should prove as panacea for all evils without any defects and side-effects.
Action plan- Hence, it is imperative to eschew window dressing and go for re-form and not mere reform, where each and every victim of vehicular accident in India irrespective of his sex, economic condition, dependency, income, source of income, place of suing should receive equal monetary compensation without delay, disparity and discrimination.
Basic feature of the proposed Act for payment of equal compensation to all vehicular victims- Negligible number of appeals before the High Courts and Supreme Court of India relating to claims involving Railway accident was clear indication of the fact that wherever and whenever the amount of compensation was fixed no case can be made out for prolonged litigation on the quantum of compensation. Therefore, fixation of compensation amount for the victims of vehicular accident, in the line of fixed compensation system followed for the railway accident victims in India could have enabled to eradicate the primary and potential source of litigation and delay in adjudication process. For this we can be guided by the fixed compensation system prevailing in Japan. In this regime, fixed amount of compensation will be made available to all the potential victims of vehicular accident in India except the owner/insured.
Preliminary – To establish an integrated social order with equal dignity of person, repeal, the existing Chapter X to XII from the M V Act, 1988 and replace the same with a separate and comprehensive ‘Act’ for the purpose of payment of compensation to victims of vehicular in India with a title like “ Payment of compensation to the motor vehicle accident victims Act, ( year).
Objective– The basic objective of the said Act will be to consolidate all the laws relating to payment of compensation to all the victims of vehicular accident in India based on the principle of ‘Strict Liability’ and any matter ‘connected therewith’ or ‘ancillary thereto’.
Provision for equal compensation to all the victims of vehicular accident in India – In a fixed compensation regime based on the principles of strict liability, there shall not be any differential treatment between the victims of insured vehicle, uninsured vehicle and ‘hit and run’ accident cases. All the vehicular victims except owner, as a class will be entitled for the same amount of compensation without suffering any disability either because the vehicle was uninsured or the identity of the vehicle was not known.
Compulsory insurance of liability under the Act and penalty for using uninsured vehicle in normal times and in case the same involved in an accident causing personal injury- Though insurance of motor-vehicle was compulsory in India, yet research reveals 60% of the same remained uninsured[.Since a vehicle on road without insurance is a potential danger to the life and safety of the members of the society as a whole the same need to be dealt with more stringently. To deter and ensure that no vehicle ply on road without a valid liability insurance, it is proposed to make the penalty provision for the use of an uninsured vehicle more stringent with compulsory and mandatory minimum 1 month imprisonment and penalty of Rs. 5000/*- for 2-wheeler and Rs. 10,000/*- for other vehicles.(*the fine amount should be around 10 times than the prevailing price of a liability insurance policy for that vehicle).
But, in case the uninsured vehicle involved in an accident causing personal injury or death the penalty should be increased to minimum imprisonment of 3 months and fine of Rs. 20000/*-, (*the amount of fine should be 20 times more than the prevailing price of a liability insurance policy) besides seizure, confiscation and sell by auction of the vehicle to meet the cost of compensation by the Government through the Solatium Fund. Such a provision will be sufficient to deter any reasonable person from using an uninsured vehicle.
Amount of compensation- So far as the amount of compensation for the victims of vehicular accident is concerned the same cannot be at par with the compensation payable to the victims of railway accident since, Railway Accident and Untoward incidents Amendment Rules, 1997 was made somewhere in 1994. Hence, the amount of compensation require appropriate upward revision based on present economic condition of our society. At the same time it should borne in mind that the same should not be either a bonanza or a windfall. Even though people involved in vehicular accident in India was socially and economically not better off than those who travel by air, still we propose that the amount of compensation for the vehicular victims should be fixed at par with the compensation provided for air crash victims in domestic sector.
Accordingly, the proposed amount of compensation are as under;
In case death of any child upto 18 years – Rs. 5 lakh
In case of death of any adult person above 18 years- Rs 7.5 lakh
In case of permanent Disablement Rs. 10 lakh.
For other injuries as per the schedule in the Railway Accident and untoward incidents Amendment Rules, 1997 subject to proportionate increase wherever applicable.
Liability of the Insurer – Duty to satisfy the award- It is to be noted that the liability of insurer for payment of compensation to the vehicular victims was absolute and unqualified. Whenever, the vehicle was insured, the compensation amount will be paid by the insurer of the vehicle involved in the accident. In case the vehicle was uninsured or unidentified, then the compensation will be paid from a fund to be established to that effect similar to the existing “Solatium Fund Scheme’. In case of accident involving more than one vehicle, than all the insure’s of the vehicles involved in the accident will be liable to contribute equal share of compensation without any apportionment of negligence or liability. However, the victim has the exclusive option to claim from any one of the insurer of the vehicle involved in such accident. In such circumstances, the insurer who paid the compensation shall have the right of recovery from other insurer/s and from the Fund (in case involving uninsured or unidentified vehicle) after satisfaction of the entire compensation amount.
Procedure –Whenever the vehicle was insured, the claim for compensation as per entitlement should be made to the nearest office of the respective insurance company by the claimants together with the Accident Information Report (AIR) (in the manner prescribed by the Delhi High Court) obtained from the police investigating the matter. Based on the AIR the insurer will settle the claim within a period of 30 days from the date of receipt of the claim application with necessary papers, failing which the insurer shall be liable to pay simple interest @ 12% pa after 30 days from the date of application till realisation.
Similarly, in case of accident involving uninsured or unknown vehicle, the claim application to be submitted before the Claim Officer to be appointed by the Government in this regard in similar line of Claim Officers under Solatium Fund Scheme The claim officer will settle the claim and pay the compensation within a period of 30 days from the date of application, failing which, shall be liable to pay simple interest @ 12% pa after 30 days from the date of application till realisation.
To ensure that the compensation amount reach the victims without allowing the feed to be frittered away by the middle man , the compensation can be deposited in the bank account of the claimants through (UID) Aadhar card similar to the transfer of subsidy in LPG prevailing in India.
Right of recovery- Practically there exist several ways and means for the victim to enforce the order of the Tribunal and realize the compensation from the insurer. Whereas it is other-way round for the insurer to enforce its right of recovery and realize the amount paid to the victim, from the insured under pay and recovery order. As a result, commercial Insurance Companies find it extremely difficult to fathom the loss and streamline the business in an organized manner for its survival. To be fair with both the victim and insurer to enforce their respective rights, it is suggested that while victims may be allowed to continue with the existing practice, the insurer should be allowed to recover and realize the amount paid to the victim, from the insured for breach of rational and justifiable terms and conditions attached to the policy of Insurance, after satisfaction of the award.
Establishment of Insurance Debt Recovery Tribunal for insurance sector similar to the Debt Recovery Tribunal for banking and other financial institutions. – For the purpose of recovery either from the insured or from other insurance companies, or from the Fund, the Government will establish a Debt Recovery Tribunal for insurer. But anticipating very few such cases, instead of a separate Tribunal, the said power can be even vested with the existing Debt Recovery Tribunal for bank and other financial institutions, Or in turn authorise the “Claim Officers appointed under the Act can be authorised to hold additional power of the Recovery Officer.
Justification- Having suggested a fixed compensation regime based on the principle of strict liability as panacea to all evil, now it is time to examine the effectiveness of the proposed Act in eradicating the deficiency syndrome in general and the symptoms mentioned hereinabove in particulars..
With reference to discrimination per-se– The problem posed by the Apex Court in the case of Jai Prakash relating to the hit and run accident victims, victims of uninsured vehicle and victims not eligible to receive compensation such as gratuitous passenger, pillion rider etc. will be completely eliminated since, proposed compensation system provides compulsory fixed compensation to all the victims of vehicular accident (except the owner). So this will be redundant.
With reference to discrimination based on sex– Since proposed Act provides fixed compensation to all the victims, question of discrimination based on sex will be redundant too.
With reference to discrimination based on economic condition- Economic condition may be a factor to reckon with for the purpose of calculation of compensation based on multiplier method but not in case where the amount of compensation is fixed and universal without any relevance to the income of the victim. Since compensation for pedestrian and pavement dweller will be same as for the privileged and powerful persons from palaces, discrimination based on economic condition shall be a thing of the past.
With reference to discrimination based on Source of income / job- Since compensation have nothing to do with the income of the victims, source of income / job will have no place and to be buried forever in a Fixed Compensation regime.
With reference to discrimination based on place of suing – Problem arising out of different interpretation of law by the High Courts will not arise since there is no ambiguity either in eligibility or liability, rather it will herald an era of clarity and uniformity.
With reference to discrimination for unknown reasons– Practice of covering pillion rider in two-wheeler and occupants in a private car under package policy without charging extra premium and its non-coverage under liability only policy without any rational reason or lawful justification will be put to rest since in fixed compensation regime, all the victims except owner were eligible for compensation without any discrimination..
With reference to delay– In a fixed compensation regime with mandatory settlement period of 30 days the question of delay will not arise.
With reference to error apparent on the face of second schedule– With the introduction of fixed compensation regime for all victims, the second schedule will be redundant.
With reference to the grey area- The grey area are mainly because of the lack of clarity and poor drafting of the provision relating to compensation. Grey area in law came into surface only when the black and white print of the law was ineffective and uncertain. The proposed system will be above all those grey areas and will not affect the right of the victim to receive and liability of the insurer to pay notwithstanding any restriction. If any, the same will be limited to the insurer and insured, where both will have opportunity to place and plead their respective case. Hence, even if there is any ambiguity in law or ambiguity between theory and practice that will be an issue between the insurer and insured without affecting the right of the victim to receive and duty of the insurer to pay the compensation amount.
With reference to safeguard the feed from being frittered away by the beneficiaries– Majority of the cases where the feed was being frittered away from the beneficiaries by the unscrupulous middle man was due to the sheer ignorance of the claimants about the quantum of compensation in a given case. Once the amount was fixed and made known to the claimants beforehand, possibility for falling prey to lesser compensation by the unscrupulous middle man will be put to an end. Moreover it is also proposed to pay the compensation like the subsidy provided against purchase of LPG though (UID) Aadhar directly into the bank account of the beneficiaries. This can act as a full proof system against the menace.
India is the home for 1/3rd of the world’s extreme poor population. And 3/4th of the vehicular victims in India belong to that category. In such circumstances, unlimited compensation based on sex, age, income, dependency best suited to the rich and famous but not the poor.
As per available statistics 80% of the vehicular claims pertain to lower strata of the society, receiving maximum compensation not more or less Rs. 10 lakh under any circumstances. Whereas hardly 10 to 20% of the victims belongs to middle class and upper class, who receive compensation above Rs. 10 lakh, based on the existing calculation process. Therefore, the existing compensation best suited to rich and famous but not to the poor, pedestrian, pavement dweller, and passengers. Question arises as to why the poor should suffer for the rich by resorting to a never ending litigation process instead the rich resorting to a happy ending process of fixed compensation. Even otherwise the rich and famous have sufficient means to mitigate their hardship. But for the poor it is a life and death situation.
That’s apart we do not advocate for non-payment of compensation or discrimination between rich and poor, but for payment of equal amount of compensation to one and all in the true spirit of ‘death the leveler’. This will be a bold step to ensure not only distribution of material resources of the country to sub-serve the common good but also to eliminate concentration of wealth. This will ultimately prove to be an effective solution for the deficiency syndrome.
As stated earlier, the basic objective of the study is to dissect law and suggest remedies that would make the system more inclusive, simple and guarantee of compensation to all vehicular victims as quick as possible, without much ado about the legality or technicality.
Hence we need to speed up the compensation system, and make it surprisingly small and unreasonably simple yet very effective.
[1] Justice V Krishna Iyer in State of Haryana vs. Darshana Devi -AIR 1979 SC 355
[2] Jai Prakash vs. National Insurance Company -2010 ACJ 455
[3] Das M K -Paradox of unlimited compensation- Either bonanza or pittance but not equitable- Insurance Times (March 2012)-Kolkata- India-Insurance Times – S K Agarwal- Kolkata
[4] Ibid 2
[5] . MLJ Motor Vehicle Laws Vol-I & II (13th Edition, 2008) Wardha- Nagpur, India. Lexis Nexis-Butterworts.
[6] . Tiwari D K (2013) How to claim and assess motor accident compensation, New Delhi, India, India Law House
[7]. Raju D. (2nd Edition, 2008) Supreme Court on Motor Accident Claims and compensation (1995 to 2008), New Delhi, India, India Law House
[8] . Das M K – Motor TP Policy whether consistent or inconsistent- Parvatak- (April-September 2010)-Pune- India-National Insurance Academy, Pune
[9] . GM KSRTC v Sushamma Thomas- 1994 (2) SCC 176
[10] New India Assc Co Ltd. vs. Asharani- : AIR 2003 SC 607
[11] Oriental Ins. Vs. Meena Variyal : 2007 ACJ 1284
[12] United India vs. Tilak Singh : 2006(4)SCALE 67
[13] National Ins vs. Ajit Kumar : AIR 2003 SC 3093
[14] New India vs. Vedwati : 2007 ACJ 1043
[15] Arun Kmar Agrawal vs National Insurance Company Lt – 2010 (9) SCC 218.
[16] Ibid 9
[17] Sarla Verma vs. DTC – 2009 (6) SCC 121
[18] Reshma Kumari vs. Madan Mohan – 2013 (9) SCC 65
[19] Das M K – Foetus – Unborn child-Still born child –Whether a person? Insurance Times (May 2013)- Kolkata- India-Insurance Times – S K Agarwal- Kolkata
[20] Das M K – Argument continues- Insurance Times (March and April 2010) Kolkata- India-Insurance Times – S K garwal- Kolkata.
[21] Bhattacharya A and Annesh James – A Study of cases pending in the MACT in Delhi as on 1st January 2008- (May 2009) -NewDelhi-India- Arrears Committee of the Supreme Court
[22] UPSRTC vs. Trilok Chandra- 1996 (4) SCC 362
[23] National Insurance Company Ltd. vs. Swaran Singh- (2004) 3 SCC 297
[24] National Insurance Company Ltd. vs Chella bharatamma -1999 1 SCC 403
[25] Automobile insurance in Japan (2010), Tokyo, Japan, The Non-life insurance rating organisation of Japan, http://www.nliro.or.jp
Chandrani L R, Vinay Verma, Report on legal aspects of Motor Third party claims and law relating to motor accident victims, Pune, India, National Insurance Academy- (It is a report prepared after study of various legal systems of compensation of Road Traffic victims prevailing in developed and developing countries touching vast array of issues broadly on legal aspects of Motor Third party claims and law relating to motor accident victims and an unpublished study report available at the library of National Insurance Academy at Pune, Reference No. 368.092 CHA/VER 13718
[26] Only 40% Of Vehicles In India Are Insured; 10.4 Crore On-The-Road Vehicles Are Uninsured!
As per the study, it was found that 60% of vehicles in India are uninsured, which means that only 4 out of 10 vehicles plying on Indian roads are insured against accident or theft. As per the data shared, during 2015-16, there were total of 19 crore registered vehicles in India, and out of this, only 8.26 crore vehicles were actually insured.
Interestingly, the report finds that majority of the uninsured vehicles are two wheelers, which includes bikes, scooters.
The situation hasn’t changed much in the last 4-5 years, when it comes to vehicle insurance. For example, during 2012-13, there were total number of 15 crore vehicles in India, out of which only 6.02 crore were insured. Hence, the ratio of 40% insured vehicles is being maintained since last 4 years in India.
http://trak.in/tags/business/2017/01/24/indian-vehicles-insurance-stats/ visited on 23-03-2017
[27] Hess v. Pawloski, 274 U.S. 352 (1927), “Motor vehicles are dangereous machines and even when skilfully and carefully operated their use is attended by serious damage to person and property.” https://en.wikipedia.org/wiki/Hess_v._Pawloski visited on 23-03-2017
[28] Divl Manager KSRTC vs Mahadev Shetty- (2003) 7 SCC 197
[29] Order dated 25-05-2009 by Delhi High Court in FAO 842 of 2003 between Rajesh Tyagi & Ors. Vs Jaibir Singh & Ors
http://www.supremecourtjudgements.in/judgment?jid=260810 visited on 23-03-2017
[30] ibid 9
[31] Ibid 2
[32] India is home of 400 million of poor which one third of total extremely poor people of the world
http://www.downtoearth.org.in/news/a-third-of-the-worlds-poor-live-in-india-says-un-45376 visited on 24-03-2017
India has one third of world’s poorest, says World Bank
One in three of the world’s poorest people are living in India, the world’s second-fastest growing economy, according to a new study by the World Bank.
http://www.telegraph.co.uk/news/worldnews/asia/india/10003228/India-has-one-third-of-worlds-poorest-says-World-Bank.html visited on 24-03-2017
Abbreviation used
ACJ- Accident Claim Cases
AIR- All India Reporter
SCC- Supreme Court Cases
TAC- The Transport and Accident Cases-
