Supreme Court Rules on Compensation Claim Under Section 163A of Motor Vehicles Act

The case of Ramkhiladi & Anr. vs. The United India Insurance Company & Anr. was a significant ruling concerning compensation claims under Section 163A of the Motor Vehicles Act, 1988. The Supreme Court had to determine whether compensation could be granted to the legal heirs of a deceased motorcyclist under the no-fault liability principle when the deceased himself was responsible for the accident.

Background of the Case

The case originated from a vehicular accident that occurred on October 2, 2006, in which Chotelal alias Shivram, riding a motorcycle (RJ 02 SA 7811), was fatally injured after being hit by another motorcycle (RJ 29 2M 9223). The legal heirs of the deceased filed a claim petition under Section 163A of the Motor Vehicles Act before the Motor Accident Claims Tribunal (MACT), Laxmangarh, Rajasthan. However, the claim was filed only against the owner and insurer of the motorcycle ridden by the deceased and not against the owner of the motorcycle that allegedly caused the accident.

Arguments by the Petitioner

The appellants, legal heirs of the deceased, contended the following:

They filed the claim under Section 163A, which operates under the no-fault liability principle, meaning that negligence does not have to be established.
The deceased was not the owner of the motorcycle but was driving it with the owner’s permission.
Since the deceased was not at fault, compensation should be granted by the insurance company covering the motorcycle he was riding.
The Motor Vehicles Act, 1988, intends to provide relief to victims and their families, and the interpretation of the law should favor claimants.

Arguments by the Respondent

The insurance company contested the claim on the following grounds:

The deceased was not a third party; he had borrowed the motorcycle and was riding it at the time of the accident, making him equivalent to the owner.
As per the contract of insurance, compensation is provided only to third parties and not to owners or those stepping into the owner’s shoes.
The claimants failed to file the case against the owner or insurer of the other motorcycle, which was reportedly responsible for the accident.
In cases where the deceased is at fault, compensation under Section 163A cannot be granted.

Motor Accident Claims Tribunal and High Court Rulings

The MACT ruled in favor of the claimants and awarded Rs. 3,67,000 with an interest rate of 6% per annum. However, the insurance company appealed, and the Rajasthan High Court overturned the MACT’s decision, holding that:

The deceased was responsible for the accident, and the claim should have been filed against the owner of the other motorcycle.
Since the deceased was riding the insured vehicle, he was not considered a third party, making the insurer not liable to pay compensation.
Under Section 163A, the claim must be made against the owner or insurer of the vehicle at fault, and in this case, that party was not included in the petition.

Supreme Court Judgment

The Supreme Court upheld the High Court’s ruling, agreeing that the claimants were not entitled to compensation under Section 163A. The Court made the following key observations:

“In a claim under Section 163A, it is essential that the claimant is a third party in relation to the insured vehicle. If the deceased was riding the vehicle, he cannot claim compensation as a third party.”

The Court further elaborated:

Section 163A provides compensation based on structured formula but does not override the principle that only third parties are covered under motor vehicle insurance policies.
When a person borrows a vehicle, he steps into the shoes of the owner, meaning the insurer has no liability towards him unless specified in the insurance policy.
In similar cases, such as Ningamma vs. United India Insurance Co. and Dhanraj vs. New India Assurance Co., the Court ruled that owners or those in the owner’s position cannot claim compensation under third-party insurance policies.
The claim should have been filed against the owner and insurer of the motorcycle (RJ 29 2M 9223), which was allegedly responsible for the accident.

Legal Precedents Considered

The Supreme Court referred to several key rulings:

Ningamma vs. United India Insurance Co. – Establishing that a borrower of a vehicle is not considered a third party.
Dhanraj vs. New India Assurance Co. – Holding that the liability of the insurance company is restricted to third parties and does not cover the owner.
Rajni Devi vs. Oriental Insurance Co. – Clarifying that Section 163A does not apply when the owner of the vehicle is the claimant.
Ashalata Bhowmik vs. National Insurance Co. – Reaffirming that contracts of insurance define the extent of liability.

Final Outcome

The Supreme Court ruled as follows:

The appeal was dismissed, and the Rajasthan High Court’s ruling was upheld.
The claimants were not entitled to compensation from the insurer of the vehicle driven by the deceased.
Had the claimants filed against the owner and insurer of the motorcycle that caused the accident, they might have had a valid case.
Insurance policies cover third parties, and those stepping into the owner’s shoes (such as a borrower) cannot claim compensation under such policies.

This judgment reaffirmed the principles governing motor vehicle insurance and compensation claims, ensuring that claims under Section 163A adhere to the contractual terms of insurance policies.

Petitioner Name: Ramkhiladi & Anr..
Respondent Name: The United India Insurance Company & Anr..
Judgment By: Justice M. R. Shah, Justice Ashok Bhushan.
Place Of Incident: Rajasthan.
Judgment Date: 07-01-2020.

Don’t miss out on the full details! Download the complete judgment in PDF format below and gain valuable insights instantly!

Download Judgment: Ramkhiladi & Anr. vs The United India Ins Supreme Court of India Judgment Dated 07-01-2020.pdf

Direct Downlaod Judgment: Direct downlaod this Judgment

See all petitions in Compensation Disputes
See all petitions in Motor Vehicle Act
See all petitions in Negligence Claims
See all petitions in Judgment by Mukeshkumar Rasikbhai Shah
See all petitions in Judgment by Ashok Bhushan
See all petitions in dismissed
See all petitions in supreme court of India judgments January 2020
See all petitions in 2020 judgments

See all posts in Accident Cases Category
See all allowed petitions in Accident Cases Category
See all Dismissed petitions in Accident Cases Category
See all partially allowed petitions in Accident Cases Category