Overview: Motor Vehicles Act, 1988 | Law of Torts - CLAT PG PDF Download

Introduction

• The Motor Vehicles Act, 1988 is a significant law passed by the Parliament of India to regulate various aspects of road transport vehicles.
• It came into effect on July 1, 1989, replacing the earlier Motor Vehicles Act of 1939, which had itself replaced the Motor Vehicles Act of 1914.
• Due to the high number of casualties from motor accidents, often caused by violations of traffic rules, major amendments were made to the Act in 2019.
• These amendments introduced new traffic offenses, increased penalties, and included special provisions to protect victims, such as safeguarding Good Samaritans from police harassment.

Objectives of the Act

• Rationalization of certain definitions with additions of certain new definitions of new types of vehicles;
• Stricter procedures relating to grant of driving licences and the period of validity thereof;
• Laying down of standards for the components and parts of motor vehicles;
• Standards for anti-pollution control devices;
• Provision for issuing fitness certificates of vehicles also by the authorised testing stations;
• Enabling provision for updating the system of registration marks;
• Liberalised schemes for grant of stage carriage permits on non-nationalised routes, all-India Tourist permits and also national permits for goods carriages;
• Administration of the Solatium Scheme by the General Insurance Corporation;
• Provision for enhanced compensation in cases of "no fault liability” and in hit and run motor accidents;
• Provision for payment of compensation by the insurer to the extent of actual liability to the victims of motor accidents irrespective of the class of vehicles;
• Maintenance of State registers for driving licences and vehicle registration;
• Constitution of Road Safety Councils.

Salient Features of the Motor Vehicles Act, 1988

• Licensing of Drivers and Conductors: The Act lays down detailed provisions for the licensing process of drivers and conductors, ensuring that only qualified individuals are authorized to operate vehicles.
• Registration of Motor Vehicles: The Act mandates the registration of all motor vehicles, establishing a systematic process for tracking and identifying vehicles on the road.
• Control of Motor Vehicles through Permits: It regulates the operation of motor vehicles through a permit system, controlling aspects like public transport services and goods transport.
• Special Provisions: The Act includes specific provisions related to state transport undertakings, traffic regulation, and insurance to address unique challenges in these areas.
• Liability: The Act defines the liability of various parties in the event of accidents, ensuring accountability and compensation for victims.
• Offences and Penalties: It outlines various offences related to motor vehicle usage and prescribes penalties to deter violations and promote road safety.

Features Added by the Motor Vehicles (Amendment) Act, 2019

• Aadhaar Requirement: The amendment makes it compulsory to provide Aadhaar for vehicle registration and obtaining a driving license.
• Accountability for Juvenile Offenders: In cases where juveniles commit traffic violations, the vehicle owner or guardians will be held responsible unless they can prove they were unaware of the offence or attempted to prevent it.
• Increased Compensation for Hit-and-Run Cases: The government will now provide a minimum compensation of Rs. 2 lakh to the families of victims in hit-and-run accidents, a significant increase from the previous amount of Rs. 25,000.
• Enhanced No Fault Liability Compensation: The compensation for no fault liability cases has been increased tenfold, ensuring better financial support for victims.

Key Changes in the Motor Vehicles Act 1988

The Motor Vehicles (Amendment) Act, 2019, introduced significant changes to the Motor Vehicles Act, 1988, focusing on road safety, accident victim support, and penalties for traffic violations. Here are the key updates:

Increased Compensation for Death and Grievous Hurt

• In case of death, the compensation has been raised to Rs. 5 lakhs from the earlier amount of Rs. 50,000.
• For cases of grievous hurt, the compensation has increased to Rs. 2.5 lakhs from Rs. 25,000.

National Road Safety Board

• The amendment provides for the establishment of a National Road Safety Board, which will advise the central and state governments on traffic management and road safety issues.
• The Board will focus on areas such as motor vehicle standards,licensing,registration,new vehicle technology, and road safety standards.

Automated Fitness Testing

• The amended Act mandates automated fitness testing for vehicles, ensuring compliance with safety and environmental standards.

Cashless Treatment for Accident Victims

• The Motor Vehicles (Amendment) Act, 2019, introduces a provision for cashless treatment of road accident victims during the golden hour, facilitating immediate medical care.

Recall of Defective Vehicles

• The amendment empowers the central government to order the recall of motor vehicles if a defect in the vehicle poses a risk to the environment, other road users, or the driver.

Increased Penalties for Traffic Violations

• The amendment has increased penalties for various driving errors, aiming to enhance road safety and deter violations.

No Fault Liability Under the Motor Vehicles Act

• No fault liability, previously governed by Chapter X of the Motor Vehicles Act, 1988, is now addressed under section 164 following the amendments.
• The term "grievous hurt" has replaced "permanent disablement" in the context of compensation claims.
• Section 164 holds the owner of the vehicle or the authorized insurer liable to pay compensation in cases of death or grievous hurt resulting from a motor vehicle accident.
• Unlike the previous section 140, where only the vehicle owner was liable, the current provision clarifies the roles of both the owner and the insurer in the compensation process.
• The changes in section 164 reflect a clearer understanding of liabilities, aligning with the implicit requirements of the earlier law.

Liability in Multi-Vehicle Accidents

When a death or permanent disability occurs due to an accident involving multiple vehicles, all vehicle owners are jointly and severally liable to pay compensation under Section 164.

Compensation Amounts

• Death: Rs. 5,00,000
• Permanent Disablement: Rs. 2,50,000

Under Section 140, these amounts were significantly lower at Rs. 50,000 for death and Rs. 25,000 for permanent disablement.

No-Fault Liability

• Compensation under Section 164 is based on no-fault liability, meaning it is not necessary to prove intention, negligence, or rashness on the part of the vehicle driver.
• The petitioner does not need to establish any wrongful act, neglect, or default by the driver.
• Even if the victim was negligent, they are still entitled to compensation under this section, as contributory negligence is not a defense.

Settlement by Insurance Company

• Under Section 140, compensation was considered interim, whereas under Section 164, it is a substantial remedy.
• Section 149 outlines the procedure for settlement by the insurance company.
• The claimant (victim) can inform the insurance company about the motor vehicle accident, and the company may also receive this information from other sources.
• Upon receiving information about the accident, the insurance company must appoint a settlement officer to handle the claim.
• The settlement officer follows procedures set by the Central Government and makes a settlement offer within 30 days.
• If the offer is accepted, the Claims Tribunal records the settlement, ending the case without an appeal.
• The insurance company must make the payment within 30 days of acceptance.

Entitlement to Compensation

• The petitioner has the right to claim compensation under any other applicable law.
• If compensation has been received under Section 164, it may affect the claims under other laws.

In summary, Section 164 establishes a clear framework for liability and compensation in multi-vehicle accidents, emphasizing no-fault principles and the role of insurance companies in the settlement process.

Third Party Insurance

Due to the rise in automation and subsequent accidents causing loss of life and property, there was a pressing need to offer relief to victims of such incidents. In response, Parliament aimed to establish a robust legal framework for this purpose. Consequently, provisions for compulsory third-party insurance and a mechanism for adjudicating claims were incorporated into the Motor Vehicle Act, 1939, through the Amending Act No. 110 of 1956. This led to the introduction of:

1. Sections 93 to 109, addressing third-party insurance.
2. Sections 110-A to 110-F, concerning the creation of the Motor Accident Claims Tribunal and the procedures for claim adjudication.

Key Developments in Third Party Insurance

• Initially, the liability of insurance companies was capped at a specific amount. However, post-1982, this liability was made unlimited.
• Defenses available to insurance companies were also restricted to ensure prompt compensation to third parties.
• The concept of interim compensation on a 'no fault' basis was introduced in 1982 with the addition of  Sections 92-A to 92-E to the Motor Vehicles Act, 1939.
• Relief in the form of solatium was extended to individuals who succumbed to hit-and-run accidents where the offending vehicles were unidentified.

Provisions under the New Motor Vehicle Act (1988)

• No Fault Liability: Chapter 10 introduced provisions for no fault liability in specific cases.
• Third Party Risk Insurance: Chapter 11 mandated insurance of motor vehicles against third party risks.
• Claims Tribunal: Chapter 12 established the framework for the constitution of Claims Tribunals and the adjudication of claims and related matters.

Current Changes in Motor Vehicles Act and Insurance Policies

The Motor Vehicles Act is undergoing significant changes, with the Supreme Court emphasizing its welfare aspect and aiming to aid victims through legal interpretations.

Recent Supreme Court judgments have narrowed the defenses available to insurance companies, fundamentally altering the burden of proof in these cases.

Insurance Policies

There are two main types of vehicle insurance policies:

1. Comprehensive Policy: This policy covers losses incurred by the vehicle owner and also their liability to compensate a third party for any losses suffered by that third party due to an accident involving the vehicle.
2. Third Party Insurance Policy: This policy only covers the liability of the vehicle owner to compensate a third party for losses suffered by that third party as a result of an accident.

Compulsory Third Party Insurance

Sections 145 to 164-D of Chapter 11 mandate compulsory third party insurance for all vehicle owners, as outlined in the Motor Vehicles (Amendment) Act, 2019. Section 145(i) defines a "third party" to include the Government, the driver, and any other co-worker on a transport vehicle. The definition emphasizes that a third party is anyone other than the vehicle owner, including government entities and individuals working on the transport vehicle.

Insurance Requirements

• Section 146(1) stipulates that no person shall use or permit the use of a motor vehicle in a public place unless there is an insurance policy in force that complies with the requirements of Chapter 11.
• If the vehicle is carrying hazardous goods or is intended for carrying hazardous goods, it must also be insured under the Public Liability Insurance Act, 1991.

Motor Vehicle Insurance: Key Points

• Using an uninsured vehicle in a public place is an offence under section 196 of the Motor Vehicles Act. The punishment can be imprisonment for up to three months, a fine of up to Rs. 2,000, or both.
• If the offence is repeated, the punishment increases to imprisonment for up to three months, a fine of up to Rs. 4,000, or both.
• If a paid employee is driving an uninsured vehicle and they did not know or have reason to believe that the vehicle was uninsured, they are not guilty of the offence under section 196.
• The state government or central governmentcan exempt certain entities from the application of section 146, including:
  • The government, if the vehicle is used for a commercial enterprise of the state.
  • Any local authority.
  • Any State Transport Undertaking.