Supreme Court Doubts Its Earlier Rulings; Refers Issue To Larger Bench

The claimant, who lost her parents in a motor accident, had approached the Supreme Court by filing a Special Leave Petition.

The Division Bench of Justice Sudhanshu Dhulia and Justice K. Vinod Chandran held, “We are of the opinion that this issue concerning the liability of the insurer in a claim under Section 163A qua the owner/insured requires an authoritative pronouncement. The dictum arising from the various decisions of different benches of two Judges is that the claim under Section 163A is restricted to third party risks, which, with all the respect at our command, we are unable to agree with. We are conscious that the provision, Section 163A, appears under the Chapter with the heading ‘Insurance of Vehicles Against Third Party Risks’, but, as we observed the non-obstante clause is in suppression of the entire Act, the other laws in force and any instrument valid in law.

“We have, herein above doubted, with due respect, the decisions of co-ordinate Benches of two Judges which now will have to be placed before a larger Bench. We direct the Registry to place the matter before the Hon’ble the Chief Justice of India for appropriate orders”, it ordered.

Aor satya kam sharma represented the Petitioner, while Aor Ambhoj Kumar Sinha represented the Respondent.

Factual Background

The petitioner, a minor, was before the Motor Accident Claims Tribunal, claiming compensation under Section 163A of the Motor Vehicles Act, 1988, for the death of both her parents in a motor vehicle accident. The unfortunate accident occurred when the vehicle dashed against a roadside building, having gone out of control due to a tyre burst. Four persons travelling in the vehicle, two of whom were the parents of the petitioner, died in the accident. The petitioner, who was two years old then, was represented by her aunt in the claim petition. The MACT allowed the claim and awarded a compensation of Rs 4,08,000 for the death of the petitioner’s mother and Rs 4,53,339 for the death of the petitioner’s father.

The owner of the vehicle was the petitioner’s father, and before the Tribunal, as well as the High Court, he was shown as the first respondent with the clear recital that he was dead. The second respondent was the Insurance Company. The High Court found that a dead person cannot be made a defendant and hence, the claim petitions were not maintainable. However, it was also categorically found that there was no dispute about the validity of the insurance policy and it had to be stated that the vehicle was driven by a person who held a valid licence.

Reasoning

The Bench explained that Section 155 provides that even if the insured dies after the happening of an event which gave rise to a claim, it shall not be a bar to the survival of any cause of action arising out of the said event, against the insurer. The Bench stated, “A third party claim for compensation would definitely survive since, on the death of the insured it would lie against his estate, which the insurer has an obligation to indemnify. The insurer, hence, can defend any claim against the insured, which the insurer has the liability to indemnify in accordance with the policy issued. The ground stated by the High Court definitely is not tenable.”

Referring to the Provisions of the Act, the Bench said, “We cannot but notice that Section 163A is a special provision brought in, which is a non-obstante clause which overrides not only the entire provisions of the Motor Vehicles Act, 1988 but also any other law for the time being in force and any instrument having the force of law. We cannot but understand the non-obstante clause having a superseding effect over the laws of insurance or even the terms in the policy, which definitely is an instrument having the force of law. It has also to be noticed that Section 163A makes liable the owner of the vehicle or the authorized insurer to pay in accordance with the Second Schedule in the case of death or permanent disablement due to the accident arising out of the use of a motor vehicle.”

As per the Bench, Section 163A provides for no-fault liability claims, the compensation for which is restricted to the structured formula under the IInd Schedule. It is a beneficial piece of legislation brought in, keeping in mind the enhanced chances of an accident, resulting from the prevalence of vehicles in the overcrowded roads of today. The Bench also noted that it was a social security scheme, brought about considering the need for a more comprehensive scheme of ‘no-fault’ liability for reasons of the ever-increasing instances of motor vehicle accidents and the difficulty in proving rash and negligent driving.

The Bench further added, “We are conscious that the provision, Section 163A, appears under the Chapter with the heading ‘Insurance of Vehicles Against Third Party Risks’, but, as we observed the non-obstante clause is in suppression of the entire Act, the other laws in force and any instrument valid in law. We have to notice that the three Judge Bench in Sunita Rathi did not consider the issue arising hereunder.”nThe Bench also agreed with the three Judge Bench decision in Minu b. mehta v. Balkrishna Ramchandra Nayan (1977) which held that under Section 166 the claimants have to prove the negligence of the driver to sustain a claim with respect to compensation arising from the death or injury in a motor vehicle accident and the statutory liability arises only with respect to third parties or those specified under Section 147.

Thus, for gaining clarity on the issue concerning the liability of the insurer in a claim in such cases, the Court referred the matter to a Larger bench.

Cause Title: Wakia Afrin (Minor) v. M/s National Insurance Co. Ltd. (Neutral Citation: 2025 INSC 919)

Appearance

Petitioner: Aor satya kam sharma

Respondent: Aor Ambhoj Kumar Sinha

Click here to read/download Order