# ~ v. HANSRAJBHAI V. KODALA AND ORS. ETC. ETC

- **Citation:** [2001] 2 S.C.R. 999
- **Court:** Supreme Court of India
- **Decided:** 2001-04-04
- **Bench:** M.B. Shah, D.P. Mohapatra
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/v-hansrajbhai-v-kodala-and-ors-etc-etc-17963
- **Pages:** 26

## Headnote

B
Motor Vehicle Act, 1988 :
Sections 140, 161, 163A, 168-Second Schedule-Compensation under
Section 163A on structured formula basis and Compensation under Section 140 c
on principle of fault liability-Held, compensation under Section 163A is in
altemativt? and not i"'! addition to the detennination of compensation under
Section 140-Section J 63A intmduced to avoid long drawn litigation and delay
in payment o.f compensation-Suggestion to Central Government for revising
the Second Schedule keeping in view the cost of living.
Interpretation of Statutes :
D
Legislative liisto1y-Statement of Objects and Reasons-Aid for const ruction-Held, reason for the Statute is a safest guide for purposes of interpretation.
~
Different phrases in different Sections in an Act-Meaning of-Held,
E
different meaning to be assigned unless context othenvise requires .
•
Heading of a Section-Aid for construction-Held, language of heading
cannot be used to cont1vl operation aftlze Section-Heading provides meaning
and purpose of the Section, which could be referred to in case of ambiguity.
F
Respondent-claimants filed applications under Section 163A of the
Motor Vehicles Act, 1988 before Claims Tribunals for interim compensation on structured formula basis from appellant Insurance Companies.
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The Claims Tribunals allowed the applications and directed the appellants
to pay interim compensation to the respondents. On appeal, High Court
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held that since the award under Section 163A of the Act was an interim
"
award, the claimants were entitled to proceed further with determination
of compensation under Section 168 of the Act. Hence this appeal .
.A(
The appellant-Insurance companies contended that Section 163A
was inserted to provide quicker relief to the accident victims; that the
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1000
SUPREME COURT REPORTS
(200 I] 2 S.C.R.
A
lump sum compensation payable under the structured formula basis is an
~
alternative and optional to the determination of compensation under Section 168 and not meant for interim compensation; and that the applications made by the respondents before Claims Tribunal were substantial
applications and not interim applications.
B
Respondent-claimants contended that compensation payable under
Section 163A of the Act is in addition to the determination of compensation on the basis of fault liability under Section 140; and that if he gets
higher amount under Section 140, then the amount can be adj1.-ted against
the amount of compensation paid under Section 163A.
c
Allo\\ing the appeals, the Court
HELD : 1.1. The purpose of Section 163A and the Second Schedule
to the Motor Vehicles Act, 1988 is to avoid long drawn litigation and delay
D
in payment of compensation to the victims or his heirs who are in dire need
of relief. If such affected claimant opts for accepting the lump-sum compensation based on structured formula, he would get relief at the earliest.
It also gives vital advantage of not pleading or establishing any wrongful
act or neglect or default of the owner of the offending vehicle or vehicles.
However, this benefit can be availed of hy the claimant only by restricting
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his claim on the basis of income at a slab of Rs. 40,000 which is the highest
-i
slab in the Second Schedule which indicates that the legislature wanted to
give benefit of no fault liability to a certain limit. This would clearly
indicate that the scheme is in alternative to the determination of compensation on fault basis under the Act. The object underlining the said amendF
ment is to pay compensation without there being any long drawn litigation
on an predetermined formula, which is known as structured formula basis
which itself is based on relevant criteria for determining compensation and
the procedure of paying compensation after determining the fault is done
away with. Compensation amount is paid without pleading or proof of
'·
fault, on the principle of social justice as a social security measure because
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of even increasing motor vehicle accident

## Text

_Characters 0–39,904 of 63,949. This is a partial read: ask again with offset=39904 for what follows._

THE ORIENTAL INSURANCE CO. LTD. ETC.
A
~
v.
HANSRAJBHAI V. KODALA AND ORS. ETC. ETC.
APRIL 4, 2001
[M.B. SHAH AND D.P. MOHAPATRA, JJ.]
B
Motor Vehicle Act, 1988 :
Sections 140, 161, 163A, 168-Second Schedule-Compensation under
Section 163A on structured formula basis and Compensation under Section 140 c
on principle of fault liability-Held, compensation under Section 163A is in
altemativt? and not i"'! addition to the detennination of compensation under
Section 140-Section J 63A intmduced to avoid long drawn litigation and delay
in payment o.f compensation-Suggestion to Central Government for revising
the Second Schedule keeping in view the cost of living.
Interpretation of Statutes :
D
Legislative liisto1y-Statement of Objects and Reasons-Aid for const ruction-Held, reason for the Statute is a safest guide for purposes of interpretation.
~
Different phrases in different Sections in an Act-Meaning of-Held,
E
different meaning to be assigned unless context othenvise requires .
•
Heading of a Section-Aid for construction-Held, language of heading
cannot be used to cont1vl operation aftlze Section-Heading provides meaning
and purpose of the Section, which could be referred to in case of ambiguity.
F
Respondent-claimants filed applications under Section 163A of the
Motor Vehicles Act, 1988 before Claims Tribunals for interim compensation on structured formula basis from appellant Insurance Companies.
·'
The Claims Tribunals allowed the applications and directed the appellants
to pay interim compensation to the respondents. On appeal, High Court
G
held that since the award under Section 163A of the Act was an interim
"
award, the claimants were entitled to proceed further with determination
of compensation under Section 168 of the Act. Hence this appeal .
.A(
The appellant-Insurance companies contended that Section 163A
was inserted to provide quicker relief to the accident victims; that the
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SUPREME COURT REPORTS
(200 I] 2 S.C.R.
A
lump sum compensation payable under the structured formula basis is an
~
alternative and optional to the determination of compensation under Section 168 and not meant for interim compensation; and that the applications made by the respondents before Claims Tribunal were substantial
applications and not interim applications.
B
Respondent-claimants contended that compensation payable under
Section 163A of the Act is in addition to the determination of compensation on the basis of fault liability under Section 140; and that if he gets
higher amount under Section 140, then the amount can be adj1.-ted against
the amount of compensation paid under Section 163A.
c
Allo\\ing the appeals, the Court
HELD : 1.1. The purpose of Section 163A and the Second Schedule
to the Motor Vehicles Act, 1988 is to avoid long drawn litigation and delay
D
in payment of compensation to the victims or his heirs who are in dire need
of relief. If such affected claimant opts for accepting the lump-sum compensation based on structured formula, he would get relief at the earliest.
It also gives vital advantage of not pleading or establishing any wrongful
act or neglect or default of the owner of the offending vehicle or vehicles.
However, this benefit can be availed of hy the claimant only by restricting
E
his claim on the basis of income at a slab of Rs. 40,000 which is the highest
-i
slab in the Second Schedule which indicates that the legislature wanted to
give benefit of no fault liability to a certain limit. This would clearly
indicate that the scheme is in alternative to the determination of compensation on fault basis under the Act. The object underlining the said amendF
ment is to pay compensation without there being any long drawn litigation
on an predetermined formula, which is known as structured formula basis
which itself is based on relevant criteria for determining compensation and
the procedure of paying compensation after determining the fault is done
away with. Compensation amount is paid without pleading or proof of
'·
fault, on the principle of social justice as a social security measure because
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of even increasing motor vehicle accidents in a fast moving society. Forther, the law before insertion of Section 163A was giving limited benefit to
the extent provided under Section 140 for no fault liability and determina-
,.
tion of compensation amount on fault liability was taking long time. That
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mischief is sought to be remedied hy introducing Section 163A and the
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disease of delay is sought to be cured to a large extent by affording benefit
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ORIENTAL INSURANCE CO. LTD. v. HANSRAJBHAI V. KODALA
1001
to the victims on structured formula basis. Further, if the question of
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determining compensation on fault liability is kept alive, it would result in
additional litigation and complications iu case claimants fail to establish
liability of the owner of the defaulting vehicles. [1015-H; 1016-A-F]
1.2. On reading other sections of the Act, it is clear that the right to
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claim compensation on the basis of no-fault liability under Section 140 is in
addition to the right to claim compensation on the principle of fault liabil·
ity or right to get compensation under any other law. Such amount is
required to he reduced from the amount payable under the fault liability
or compensation, which may he received under any other law. If nothing is
payable under the Act, then the claimant is not required to refund the ,c
amount received by him. Section 163A nowhere provides that this
payment of compensation on no-fault liability on the basis of structured
formula is in addition to the liability to pay compensation in accordance
with the right to get compensation on the principle of fault liability and
unless otherwise provided for the same canse, compensation cannot be
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paid again. [1017-H; 1018-A-CJ
1.3. The Legislature bas spedlically provided scheme of adjustme11t
of compensation under Section 140 read with Section 141 and Section 162
if the claimants get compensation under the Act, while there is no such
provisions under Section 163A. Addition orintroduction of such scheme in
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provisions would he impermissible. Proviso to sub-section (5) of Section
140 would mean that it does not provide for deduction or adjustment of
compensation payable under the Act, i.e., on the principle of fault liability,
•
which is to he determined under Section 168. [1019-D; 1020-G]
Gujarat State Road Transpo11 Corporation, Ahmednbad v. Ramanbhai
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Prablzatblzai & Anr., [1987) 3 SCR 404, referred to.
1.4. The heading of Section 163A indicates that the Legislature has
envisaged special provision for paying compensation on structural for·
:
mula instead of paying the compensation by long drawn litigation after
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establishing fault liability. The non-obstante clause in the Section means
that it is not subject to any adjudication of right to claim compensation as
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provided under the Act. The owner of the motor vehicle or the authorised
insurer would he liable to pay compensation due to accident arising out of
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the use of motor vehicle. Section 163B further clarifies that claim petition
can be filed either under Section 140 or under Section 163A hut not under
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SUPREME COURT REPORTS
(2001] 2 S,C.R
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both sections. Determination of compensation under Section 163A is final
and not as an interim measure. The Legislature has deliberately not pro-
·-I
vided that it is in addition to the compensation payable for adjusting the
compensation payable under Section 163A with the other payment on fault
liability under the Act. (1021-B; G-H]
B
1.5. In case where compensation is paid on no fault liability under
Sections 140 and 161 in case of 'hit and run motor accidents', the Legislalure has provided adjustment or refund of the said compensation in case
where compensation is determined and payable under the award on the
basis of fault liability under section 168 of the Act. There is no such
c
procedure for refund or adjustment of compensation paid were the compensation is paid under Section 163A. The words "under any other law''
for for the time being in force would certainly have different meaning from
the words "under this Act" or '~mder any other provision of this Act''. In
view of the non-obstante c,lause 'notwithstanding anything contained in
D
this Act', the provisions of,Section 163A would exclude determination of
compensation on the principle of fault liability. The procedure of giving
compensation under Section 163A is inconsistent with the procedure prescribed for awarding compensation on fault liability. Under section 163A
compensation is awarded without proof of any fault, while for getting
compensation on the basis of fault liability claimant is required to prove
E
wrongful act, neglect or default of the owner of the vehicle or vehicles
concerned. Award of compensation under section 163A is on predetermined formula for payment of compensation to road accident victims and
that formula itself is based on criteria similar to determining the com pensation under section 168. The object was to avoid delay in determination of
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compensation. (1022-C-H]
1.6. It would be appropriate if Central Government takes necessary
action for revision and correction of the Second Schedule to the Act,
keeping in view the cost of living. [1024-C)
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U.P. Stale Road Transporl Corporation & Ors. v. Trilok Chandra &
~
Ors., [1996] 4 SCC 362, referred to.
2.1. For the purpose of interpretation, the Statement of Objects and
Reasons and Legislative History for a Statute is a safest guide to cull out
,.
legislative intent.
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Utkal Contractors & Joinery P. Ltd. v. Stale of Orissa, [1987] 3 SCC
..,....
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ORIENTAL INSURANCE CO. LID. v. HANSRAJBHAI V. KODALA [SHAH, I.) 1003
279, referred to.
2.2. When the Legislature has taken care of using different phrases
in different sections, normally different meaning is required to be assigned
to the language used by the Legislature unless the context otherwise requires. However, in relation to the same subject matter, if different words
of different import are used in the same statute, there is presumption that
they are not used in the same sense. [1020-E]
Board of Revenue v. Arthur Paul, AIR (1956) SC 35, relied on.
2.3. For interpretation of the word~ of a Section, the language of the
heading cannot be used to control the operation of the Section, but at the
same time being part of the statute, itprimafacie furnishes some clue as to
the meaning and purpose of the Section. In case of ambiguity or doubt,
heading can be referred to as an aid in construing the provisions. [1021-A)
K.P. Varghese v. /. T. 0., [1982] 1 SCR 629, relied on.
CIVIL APPELLKI'E JURISDICTION : Civil Appeal No. 2568 of 200 I.
From the Judgment and Order dated 4.8.98 of the Gujarat High Court
in F.A. No. 2473 of 1996.
WITH
Civil Appeal Nos. 2566/2001, 2570/2001, 2571/2001, 257212001, and
2573/2001.
Altaf Ahmed, Additional Solicitor General, Jitendra Shanna, Mahendra
Anand, S.K. Dholakia, Chandra Prakash Pandey, Kashi Nath Pandey, Ms.
Minakshi Vij, P.N. Jha, Pannanand Gaur, R. Rahim, Rajiv Mehta, Divyand
K. Chhaya, Abhijat P. Medh, S. Wasim A. Quadri for Anil Katiyar, B.K.
Satija, Joy Basu, K.N. Rai and Bishwajit Bhattacharya for the appearing
parties.
The Judgment of the Court was delivered by
SHAH, J. Leave granted.
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The common question involved in these appeals is whether the compensation payable under Section 163A of the Motor Vehicles Act, 1988
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(hereinafter referred to as "the Act") as per the structured formula basis is
in addition or in the alternative to the determination of the compensation on
the principle of fault liability, after following the procedure prescribed under
the Act?
For convenience we would refer to few facts in Civil Appeal arising
out of S.L.P. (Civil) No. 8742 of 1999 in which the judgment and order dated
4.8.98 passed by the High Court of Gujarat at Ahmedabad in FA No. 2473
of 1996 is challenged. Petition claiming compensation of Rs. 2,50,000 was
filed before the Claims Tribunal on the ground that one bus bearing registration No. G.J.3T 9815 met with an accident and Mayur, son of respondent
Nos. 1 and 2, aged about 6 years died as a result thereof. The claimants also
filed au application under Section l 63A of the Act for interim compensation
on structured formula basis. The Insurance Company- appellant contended
that as the bus was not insured with it, it was not liable to pay compensation.
The Claims Tribunal granted the prayer of the respondents and directed the
appellant to pay Rs. 1,62,000 to the respondents as interim compensation. The
appellants preferred appeal before the High Court contending inter alia that
in order to provide quicker relief to the accident victims, Section 163A was
inserted and is not meant for interim compensation but is an alternative to
the detennination of compensation under Section 168. It was further contended that the application under Section 163A was a substantial application
and not an interim application. The High Court by judgment and order dated
4.8.1998 held that the award under Section 163A was au interim award and
the claimants were entitled to proceed further with determination of compensation under Section 168 of the Act. That 0rder is under challenge.
For determining the question involved, the scheme for payment of
compensation under the Act can be divided as under:
(i)
Section 140 - For no-fault liability in case of death or disablement;
(ii)
Section 161 - In case of hit and run motor accidents, where the
identity of the vehicle carmot be ascertained-compern;~tion
amount is Rs. 25000 in case of death and Rs. 12500 in case of
grievous hurt;
(iii) Section 163A - Special provisions as to payment of compensation on structured formula basis without establishing or proving
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ORIENTAL INSURANCE CO. LTD. v. HANSRAJBHAI V. KODALA (SHAH, l.J 1005
any wrongful act or neglect or default of any person;
(iv) Section 168 -
Detennination of compensation payable in
pursuance of any right on the principle of fault liability.
A
Chapter XII provides for constitution of Claims Tribunals by the State
Government for the purpose of adjudicating the claims for compensation and
B
the procedure thereof. Tue Claims Tribunal is required to detennine the
application for payment of compensation either under section 140 or section
163A on the basis of no-fault liability and also on the basis of right to receive.
the compensation on the principle of fault liability on the basis of Law of
Torts, as modified by the Fatal Accidents Act, 1855 read with Motor Vehicles
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Ac~ 1988.
For appreciating the rival contentions, it would be necessary to refer
to the relevant provisions of the Sections 140 (Chapter X), 161, 162, 163A,
163B (Chapter XI) and 167 (Chapter XII) of the Act which are as uuder:
"140. liability to pay tompensatltm in cel1ain cases on the
principle of no fault. -
(I) Whether death or pennanent disablement of any person has
resulted from an accident arising out of the use of a 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.
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(2) Tue amount of compensation which shall be payable under
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sub-section (I) in respect vf the death of any person shall be a fixed
sum of fifty thousand rupees and the amount of compensation payable
under that sub-section in respect of the pennanent disablement of any
person shall be a fixed sum of twenty-five thousand rupees.
(3) In any claim for compensation under sub-section (!),
the claimant shall not be required to plead and establish that the
death or pennanent disablement in respect of which the claim has
been made was due to any wrongful act, neglect or default of
the owner or owners of the vehicle or vehicles concerned or of any
other person.
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(4) A claim for compensation under sub-section (I) shall not be
defeated by reason of any wrongful act, neglect or default of the
person in respect of whose death ot permanent disablement the claim
has been made nor shall the quantum of compensation recoverable in
respect of such death or permanent disablement be reduced on the
basis of the share of such person in the responsibility for such death
or permanent disablement.
(5) Notwithstanding anything contained in sub-section (2) regarding the death or bodily injury to any person, for which the owner
of the vehicle is liable to give compensation forrelief, he is also liable
to pay compensation under any other law for the time _being in force;
Provided that the amount of such compensation to be given under
any other lmv shall be reduced from the amount of compensation
payable under this section or under section 163A
141. (1) Provisions as to other right to claim compensation for
death or petmanent disablement. - (I) The right to claim compensation under section 140 in respect of death or permanent disablement
of any person shall be in addition to any other right, except the right
to claim under the scheme referred to in section 163A (such other
right hereafter in this section referred to as the right on the principle
of fault) to claim compensation in respect thereof under any other
provision of this Act or of any other law for the time being in force.
(2) A claim for compensation under &ection 140 in respect of
death or permanent disablement of any person shall be disposed of
as expeditiously as possible and where compensation is claimed in
respect of such death or permanent disablement under section 140 and
also in pursuance of any right on the principle of fault, the claim for
compensation under section 140 shall be disposed of as aforesaid in
the first place.
(3) Notwithstanding anything contained in sub-section ( 1 ), where
in respect of the death or permanent disablement of any person, the
person liable to pay compensation under section 140 is also liable to
pay compensation in accordance with the right on the principle of
fault. the person so liable shall pay the first-mentioned compensation
and-
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ORIENTAL INSURANCE CO. LTD. v. HANSRAIBHAI V. KODALA [SHAH. l.t 1007
(a)
if the amount of the first-mentioned compensation is less than
the amount of the second-mentioned compensation, he shall be
liable to pay (in addition) to the first-mentioned compensation)
only so much of the second-mentioned compensation as is equal
to the amount by which it exceeds the first mentioned compensation;
(b)
if the amount of the first-mentioned compensation is equal to
or more than the amount of the second- mentioned compensation, he shall not be liable to pay the second-mentioned compensation.
161. Special provisions as to compensation in case of hit and run
motor accident.- (1) For the pmposes of this section, section 162 and
section 163-
(a)
"grievous hurt" shall have the same meaning as in the Indian
Penal Code, 1860 (45 of 1860);
(b)
"hit and run motor accident" means an accident arising out of
the use of a motor vehicle or motor vehicles the identity whereof
cannot be ascertained in spite of reasonable efforts for the
purpose;
(c)
"scheme" means the scheme framed under section 163.
(2) Notwithstanding anything contained in the General Insurance
Business (Nationalisation) Act, 1972 (57 of 1972) or any other law
for the time being in force or any instrument having the force of law,
the General Insurance Corporation of India formed under section 9
of the said Act and the insurance companies for the time being
carrying on general insurance business in India shall provide for
paying in accordance with the provisions of this Act and the scheme,
compensation in respect of the death of, or grievous hurt to, persons
resulting from hit and run motor accidents.
(3) Subject to the provisions of this Act and the scheme, there
shall be paid as compensation-
(a)
in respect of the death of any person resulting from a hit and
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run motor accident, a fixed smn of twenty-five thousand rupees;
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(b)
in respect of grievous hurt to any person resulting from a hit
and run motor accident, a fixed sum of twelve thousand five
hundred rupees.
(4) The provisions of sub-section (1) of section 166 shall apply
for the purpose of making applications for compensation under this
section as they apply for the purpose of making applications for
compensation referred to in that sub- section.
162. Refund in certain cases of compensation paid un<kr section
161.- (!)The payment of compensation in respect of the death of, or
grievous hurt to, any person m1der section 161 shall be subject to the
condition that if any compensation (hereafter in this sub-section
referred to as the other compensation) or other amount in lieu of or
by way of satisfaction of a claim for compensation is awarded or paid
in respect of such death or grievous hurt under any other provision
of this Act or 'any other law or otherwise' so much of the other
compensation or other amount aforesaid as is eqnal to the compensation paid under section 161 _shall be refunded to the insurer.
(2) Before awarding compensation in respect of an accident
involving the death of, or bodily injury to, any person arising out of
the use of a motor vehicle or motor vehicles un<kr any provision of
thi< Act (other than section 161) or any other law, the Tribunal, Court
or other authority awarding such compensation shall verify a• to
whether in respect of such death or bodily injury compensation has
already been paid under section 161 or an application for payment of
compensation is pending under that section, and such Tribunal, Court
or other authority shall,-
(a)
if compensation has already been paid under section 161, di111ct
tht p•rson liabl• to pay 1/111 comptnsalion awarded by it to
rtfund to tht insurtr, so much thereof as is required to be
refunded in accordance with the provisions of sub- section (1);
(b)
if an application for payment of compensation is pending under
section 161 fotward the particulars as to the compensation
awarded by it to the insurer.
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Explanation. - For the putpose of this sub-section, an application
for compensation under section 161 shall be deemed to be pending-
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ORIENTAL INSURANCE CO. LID. v. HANSRAJBHA! V. KODALA (SHAH, J.j 1009
(i)
if such application has been rejected, till the date of the rejection
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of the application, and
(ii)
in any other case, till the date of payment of compensation in
pursuance of the application.
J 63A. Special provisions as to payment of compensation on
structured formula basis. - (1) Notwithstanding anything contained in
this Act or in any other law for the time being in force or instrument
having the force of law, the owner of the motor vehicle of the
authorised insurer shall be liable to pay in tl1e case of death or
perman,ent disablement due to accident arising out of the use of motor
vehicle, compensation, as indicated in the Second Schedule, to tl1e
legal heirs or the victim, as the case may be.
Explanalion. - For the purposes of this sub-section, "pe1manent
disability" shall have the same meaning and extent as in the WorkB
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men's Compensation Act, 1923 (8 of 1923).
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(2) In any claim for compensation under sub-section (!), the
claimant shall not be required to plead or establish that the death or
permanent disablement in respect of which the claim has been made
was due to any wrongful act or neglect or default of the owner of the
vehicle or vehicles concerned or of any other person.
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(3) The Central Government may, keeping in view the cost of
living by notification in the Official Gazette, from time to time amend
the Second Schedule.
1638. Option to flit claim in cmain cases. - Where u person is
entitled to claim compensation under section 140 and se~tiOll i63A,
he shall lile the claim under tither of the said soctions and not under
both.
167. Option rogarding claimsforcomptnsation in certain cases.-
Notwithstanding anything contained in the Workmen'sCompensation
Act, 1923 (8 of 1923) where the death of, 01' bodily injury to,
any person gives rise to a claim for compensation under this Act and
also under the Workmen's CompensatiOll Act, 1923, the person
entitled to compensation may without prejudice to the provisions of
Chapter X claim such compensation under either of those Act• but
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not nnder both."
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Further, Section 164 empowers the Central Government to make rnles
for the purpose of carrying into effect the provisions of Chapter XI which
include making such rules for (a) the forms to be used for the purpose of
the said chapter and (1) the identification by certificates or otherwise of
persons or vehicles exempted from the provisions of the Chapter. Learned
counsel appearing on behalf of the respondents, however, submitted that uptil
now, the Central Government has not framed any such rules as provided
under Section 164. Thereafter, Chapter XII deals with Claims Tribunals.
Section 165 provides for establishment of Claims Tribunals for the purpose
of adjudicating upon claims for compensation in respect of accidents involving a death of, or bodily injury to, persons arising out of or use of motor
vehicles, or damages to any property of a third party so arising, or both, and
Explanation to sub-section (1) provides that "claims for compensation in
respect of accidents involving the death of or bodily injury to persons arising
out of the use of motor vehicle" includes claims for compensation under
Section 140 and 163A. Hence, the application claiming compensation under
Section 140 or 163A and/or on the right to claim compensation on the
principle of fault liability is required to be filed before the Claims Tribunal.
Section 166 provides who can make application for such compensation and
where it could be filed. Additionally, sub-section ( 4) of section 166 makes
provision that the Claims Tribunal shall treat the report of accidents forwarded to it under sub-section (6) of Section 158 as an application for
compensation under the Act and sub-section (6) of section 158 provides for
submitting the report to the Claims Tribunal by the oliicer in charge of the
police station as soon as any information regarding any accident involving
death or bodily injury to any person is recorded or report under Section 158
is completed by a police otlicer. Section 168 requires the Claims Tribunal
to determine the amount of compensation which appears to it to be just
and specify person or persons to whom compensation is to be paid by making
an award. Such award shall also specify the amount which shall be paid
by the insurer or owner or driver of the vehicle involved in the accident
or by all or any of them, as the case may be. Proviso to sub-section (1)
of Section 168 makes it clear that in an application which is filed
under Section 165, if there is a claim for compensation under Section 140
in respect of death or permanent disablement of any person, the eame is to
be disposed of in fust place in accordance with provisions of Chapter X (i.e.
Sections 140 to 143).
ORIENTAL INSURANCE CO. LID. v. HANSRAJBHA! V. KODALA [SHAH, J.)
!Oll
Legislative History - Statement of Objects and Reasons:
A
From the provisions qnoted above, it appears that no specific mention
is made that remedy provided nnder Section 163A is in addition or in the
alternative to the determination of compensation on the basis of fanlt liability.
Section 163A was not there in the original Act of 1988. It was inserted by
Act No. 54 of 1994 w.e.f. 14.11.1994. Hence, for arriving at the proper
conclnsion, it would be necessary to cull out legislative intent by referring
to the legislative history as well as Objects and Reasons for inserting the said
prov1s1on.
The Law Commission of India in its 119th Report in the Introductory
Chapter observed [para 1.6] that previously there was recommendation for
inserting provision in the Motor Vehicles Act to extend protection to victims
of 'hit and rnn' accidents where the person liable to pay such compensation
or his whereabouts cannot be ascertained after reasonable effort by providing
that in such an event, the person entitled to such compensation shall be
entitled to receive it from the State. In para 1.7 for introducing provision for
no fault liability, the Commission observed as nnder:
"By 1980, a wind was blowing !hat compensation to the victims
of motor accidents should be by way of social security and lhe
liability to pay the same must be 'No-fault' liability. The Jaw, as it
stands at present, save lhe provision in Chapter VIIA, inserted by the
Motor Vehicles (Amendment) Act, 1982, enables the victim or the
dependants of the victim in the event of death lo recover compensation on proof of fault of the person liable to pay compensation and
which fanlt caused the harm such as bodily injury or death. In the
B
c
D
E
event of death of a victim of a motor accident and the consequent
F
harm caused to his dependants, the question whether the person
responsible for the action causing hann had committed a fanlt or it
was an inevitable accident, is hardly relevant from the point of view
of victim or his/her dependants. The expanding notions of social
security and social justice envisaged that the liability to pay compenG
sation must be a 'No-fault' liability."
Before the Motor Vehicles Act 1939 was repealed by the present Act,
the Legislature introduced Chapter VII-A in the Motor Vehicles Act, 1939.
While interpreting the said provisions, this Court in Gujarat State Road
Transp01t Corporation, Ahmednbad v. Ramanbhai Prabhatbhai and Another,
H
1012
SUPREME COURT REPORTS
[2001] 2 S.C.R.
A
[1987] 3 SCR 404, referred to the aforesaid recommendations made by the
Law Commission and observed thus:
-y
"When the Fatal Accidents Act, 1855 was enacted there were no
motor vehicles on the roads in India. Today, thanks to the modem
B
civilisation, thousands of motor vehicles are put on the road and the
largest number of injuries and deaths are taking place on the roads
on account of the motor vehicles accidents. In view of the fast and
constantly increasing volume of traffic, the motor vehicles upon the
roads may be regarded to some extent as coming within the principle
of liability defined in Rylands v. Fletcher, [1868] L.R. 3 H.L. 330,
c
340. From the point of view of the pedestrian the roads of this country
have been rendered by the use of the motor vehicles highly dangerous. 'Hit and run' cases lvhere the drivers ({f the motor vehicles who
have caused the accidents are not known are increasing in number.
Where a pedestrian without negligence on his part is injured or killed
D
by a motorist, whether negligently or no~ he or his legal representatives as the case may be should be entitled to recover damages if
the principle of social justice should have any meaning at all. In order
to meet to some extent the responsibility of the society to the
deaths and injuries caused in road accidents there has been
a continuous agitation through out the world to make the liabil;ty
E
for damages arising out of motor vehicles accidents as a liability
·-f.
without fault. In order to meet the above social demand on the
recommendation of the Indian Law CommissiOII Chapter VIIA was
introduced in the Act. Sections 92-A to 92-E of the Act are to be
found in Chapter VI!A."
F
The Court further observed as under:
"This part of the Act is cleurly a departure from the usuul
common law principle that a claimant should establish negligence on
the part of the owner or driver of the motor vehicle before claiming
G
any compensation for the death or permanent disablement caused on
account of a motor vehicle accident. To that extent the substantive law
of the country stands modified. The special provisions contained in
section 109-A to section 109-C of the Act providing for a scheme for
granting relief to victims or the legal representatives of victims of 'hit
\.
and run' motor vehicle accident cases is another novel effort on the
H
part of the Government to remedy the situation created by the modem
ORJENTAL INSURANCE CO. LID. v. HANSRAJBHAI V. KODALA [SHAH, l.] 1013
y
society which has been responsible for introducing so many fast
A
moving vehicles on roads."
Thereafter a Committee to Review the Provisions of Motor Vehicles
Act, 1988 and Central Motor Vehicle Rules, 1989 (hereinafter referred to as
"the Review Committee") was set up by the Government of India in March
1990. The Review Committee in its report suggested changes in a number
B
¥
of provisions in the Act. The Review Committee considered that deterrnination of the claims cases pending before the Claims Tribunal takes a long time.
To obviate such delay, proposals were made that finalisation of compensation
claims would greatly facilitate to the advantage of claimants, the vehicle
owners as well as the insurance companies, if a system of structured comc
pensation can te introduced. Under such scheme the affected party can have
the option of their accepting the lump sum compensation as is notified in that
scheme of structured compensation or of pursuing his claim through t11e
normal channels. Thereafter, the Review Committee considered the suggestion of General Insurance Corporation that claimants should first file their
D
claims with Motor Accident Claims Tribunals and the insurers be allowed six
months' time to confirm their prima facie liability subject to defences
available under the Act. After such continuation. the claimants should be
required to exercise their option for conciliation under Structured Compen-
...
sation Formula within stipulated time .
\'-
E
Finally, the Committee also observed:
"Para 4.11.2: .... In case a claimant opts for conciliation, necessary
consent award may be given by MACT and if he does not opt for it,
be may proceed with regular Motor Accidents Claims Tribunal in the
usual course. The Committee also recommended that the decision of
F
the insurer to accept liability before t11e expiry of the stipulated period
should be the final one and after it is available it will be open to the
insurer to claim compensation under the structured compensation."
Further, the statement of objects and reasons for amending the Act inttr
G
alia mentions that the recommendations of the Review Committee were
forwarded to the State Oovemments for comments and they generally agreed
with these recommendations. The draft of the proposals based on the recom-
~
mendation of the Review Committee and representations from the public were
placed before the Transport Development Council for seeking their views in
the matter. The Transport Development Council made certain suggestions and
H
1014
SUPREME COURT REPORTS
(2001] 2 S.C.R.
A
the relevant suggestion is, - (b) providing adequate compensation to victims
of road accidents without going into long· drawn procedure. The proposed
legislation inter alia provide forB
c
D
"(h) increase in the amount of compensation to the victims of hit and
run cases;
(k)
a new pre-determined formula for payment of compensation to
road accident victims on the basis of age/income, which is more
liberal and rational."
The next question is-whether the recommendations made by the Review
Committee are reflected in the provisions, which are inserted by the said Act.
It is contended that the relevant provisions nowhere provide that lump sum
compensation payable under the structured formula basis is alternative and
optional to the determination of compensation under Section 168. As stated
above, the Legislature has not specified or clarified that compensation
payable under Section 163-A is in the alternative or in addition. Therefore,
we are referring to the reasons for inserting Section I 63A in context of other
provisions. For the purpose of interpretation in such cases, this Comt in Utkul
Contractors and Joinery P. Ltd. & Ors. v. State of Orissa & Ors., (1987] 3
sec 279, observed that reason for a statute is a safest guide to its interpreE
talion and held thus (pp. 288-89): -
'' ....... The reason for a statui.e is the safest guide to its interpretation.
The words of a statute take their colour from the reason for it. How do we
discover the reason for a statute? There are external and internal aids. The
external aids are Statement of Objects and Reasons when the Bill is presented
F
to Parliament, the reports of committees which preceded the Bill and the
reports of Parliamentary Committees. Occasional excursions into the debates
of Parliament are permitted. Internal aids are the preamble, the scheme and
the provisions of the Act. Having discovered the reason for the statute and
so having set the sail to the wind, the interpreter may proceed ahead. No
G
provision in the statute and no word of the statute may be construed in
isolation. Every provision and every word must be looked at generally before
any provision or word is attempted to be construed. The setting and the
pattern are important... Again, while the words of an enactment are important,
the context is no less important."
H
In this context if we refer to the Review Committee's Report, the reason
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I
ORIENTAL INSURANCE CO. LTD. v. HANSRAJBHAI V. KODALA [SHAH,!.]
1015
for enacting Section 163A is to give earliest relief to the victims of the motor
vehicle accidents. The Committee observed that determination of cases takes
long time and, therefore, under a system of structural compensation, the
compensation that is payable for different classes of cases depending upon
the age of the deceased, the monthly income at the time of death, the earning
potential in the case of minor, loss of income on account of loss of limb etc.
can be notified and the affected party can then have option of their accepting
lump sum compensation under the scheme of structural compensation or of
pursuing his claim through the normal channels. The Report of the Review
Committee was considered by the State Governments and comments were
notified. Therealier, the Transport Development Council made suggestions for
providing adequate compensation to victims of road accidents without going
into Jong drawn procedure. As per the objects and reasons, it is a new predetermined formula for payment of compensation to road accidents victims
on the basis of age/income which is more liberal and rational. On the basis
of the said recommendation after considering the Report of the Transport
Development Council, the Bill was introduced with "a new pre-determined
formula for payment of compensation to road accident victims on the basis
of age/income which is more liberal and notional", i.e., Section !63A. It is
also apparent that compensation payable under Section ! 63A is almost based
on relevant criteria for determining the compensation such as annual income,
age of the victim and multiplier to be applied. In addition to the figure which
is arrived at on the basis of said criteria, schedule also provides that amount
of compensation shall not be less than Rs. 50,000. It provides for fixed
amount of general damage in case of death such as (!) Rs. 2000 for funeral
expenses (2) Rs. 5000 for loss of consortium if beneficiary is the spouse (3)
Rs. 2400 for loss of estate (4) for medical expenses supported by the bills,
voucher not exceeding Rs. 15000. Similarly, for disability in non-fatal
accident para 5 of the Schedule provides for dett!rrnination of compensation
on the basis of permanent disability. Para 6 provides for notional income for
those who had no income prior to accident at Rs. 15000 per armum. There
is also provision for reduction of I/3rd amount of compensation on the
assumption that the victim would have incurred the said amount towards
maintaining himself had he been alive.