THIRD PARTY ACCIDENT CLAIMS – IMPORTANT SECTIONS UNDER MOTOR VEHICLES ACT, 1988

THIRD PARTY ACCIDENT
CLAIMS – IMPORTANT
SECTIONS UNDER MOTOR
VEHICLES ACT, 1988
Abdul Raheem, Vijayawada - 7013235656

Accident means an
unlooked for mishap or an
untoward event which is
not expected or designed.
The word ‘Accident’ has
nowhere been defined in
the Act or rules framed
under the Motor Vehicles
Act. Ordinarily the word
‘accident’ means an event
which occurs without one’s
foresight or expectation
[Nag raja Moopanar Vs.
Emperor, AIR 1928
(Mad)364]
Arising out of the use of
motor vehicle:

Motor third-party insurance or third-party liability cover, which is
sometimes also referred to as the 'act only' cover, is a statutory requirement
under the Motor Vehicles Act.
It is referred to as a 'third-party' cover since the beneficiary of the policy is
someone other than the two parties involved in the contract (the car owner
and the insurance company). The policy does not provide any benefit to the
insured. However, it covers the insured's legal liability for death/disability of
third-party loss or damage to third-party property.

CENTERAL LEGISLATION
•MOTOR VEHILCES ACT, 1988
•CENTRAL MOTOR VEHICLE RULES, 1989
STATE LEGISLATION
•A.P. Motor Vehicles Rules, 1989

Important & Relevant Sections of Motor Vehicle Act (As amended
thereafter) and types of policies
• The Motor Vehicles Act, 1988 consolidated & rationalized various
laws regulating road transport.
• It extends to the whole of India.
• Chapters – 14 & Sections – 217
In India, under the provisions of the Motor Vehicles Act, 1988, it is
mandatory that every vehicle should have a valid Insurance to drive on the
road.

Third party insurance is compulsory for all motor vehicles. In G. Govindan v. New
India Assurance Co. Ltd. (AIR 1999 SC 1398),Third party risks insurance is
mandatory under the statute. This provision cannot be overridden by any clause in the
insurance policy.
 Types of Motor Policies:
• Act only Policy: covers third party liability and damage to third party property
damage.
• Package policy: Coverage as per Act only Policy plus own damage to vehicle.
Important & Relevant Sections of Motor Vehicle Act (As
amended thereafter) and types of policies

According to wheels : 2 Wheeler, 3 Wheeler, 4 Wheeler, 6 Wheeler, 10
Wheeler etc.,
According to Capacity: LMV < 7500 kgs, HMV >7500 kgs
According to type of Useage: Own Usage, Goods Carriage, Passenger
Carriage
According to fuel: Petrol, Diesel, LPG, CNG, Battery
Registration Numbers in Andhra Pradesh:
A to S = Private means own usage and it shown white board number
plates
T to Y = Goods Carriage, Passenger Carriage i.e., Transport usage and
it shown Yellow board number plates
Z = Andhra Pradesh State Road Transport Corporation i.e., APSRTC
TYPES OF VEHICLES

Types of Vehicles Under Motor Vehicle Act
Words Defined Clause of Section 2
Contract carriage 7
Goods carriage 14
Heavy goods vehicle 16
Heavy passenger motor vehicle 17
Invalid carriage 18
Light motor vehicle 21
Maxicab 22
Medium goods vehicle 23
Medium passenger motor vehicle 24
Motor cab 25
Motor car 26
Motor cycle 27
Motor vehicle or vehicle 28
Omnibus 29
Private service vehicle 33
Public service vehicle 35
Semi trailer 39
Stage carriage 40
Tourist vehicle 43
Tractor 44
Trailer 46
Transport vehicle 47

Sec 2 (28) “Motor Vehicle” or “Vehicle”
Any mechanically propelled vehicle adapted for use upon roads
Power of propulsion is transmitted thereto from an external or internal source
Includes a chassis to which a body has not been attached
It includes trailer Petorl / Tanker, pay loader. Excavator, dampers or rockers, Heavy earth
moving machines other MVS
WHICH IS NOT MOTOR VEHICLE
Does not include a vehicle running upon fixed rails or a vehicle of a special type adapted
for use only in a factory or in any other enclosed premises or a vehicle having less than four
wheels fitted with engine capacity of not exceeding 25 cubic centimetres
Important Definitions under Sec. 2 of MV Act

Sec 2 (21) “light motor vehicle” means a transport vehicle or omnibus the
gross vehicle weight of either of which or a motor car or tractor or road-roller
the unladen weight of any of which, does not exceed 1[7500] kilograms;
Sec 2 (23) “medium goods vehicle” means any goods carriage other than a
light motor vehicle or a heavy goods vehicle;
Sec 2 (16) “heavy goods vehicle” means any goods carriage the gross vehicle
weight of which, or a tractor or a road-roller the unladen weight of either of
which, exceeds 12,000 kilograms;
Sec 2 (25) “motor cab” means any motor vehicle constructed or adapted to
carry not more than six passengers excluding the driver for hire or reward;

Sec 2 (15) “gross vehicle weight” means in respect of any vehicle the total
weight of the vehicle and load certified and registered by the registering
authority as permissible for that vehicle;
Sec 2 (48) “unladen weight” means the weight of a vehicle or trailer
including all equipment ordinarily used with the vehicle or trailer when
working, but excluding the weight of a driver or attendant; and where
alternative parts or bodies are used the unladen weight of the vehicle
means the weight of the vehicle with the heaviest such alternative part or
body;

Sec 2 (30) “owner” means a person in whose name a motor vehicle stands registered, and
where such person is a minor, the guardian of such minor, and in relation to a motor
vehicle which is the subject of a hire-purchase, agreement, or an agreement of lease or an
agreement of hypothecation, the person in possession of the vehicle under that agreement;
Sec 2 (37) “registering authority” means an authority empowered to register motor
vehicles under Chapter IV;
Sec 2 (4) “certificate of registration” means the certificate issued by a competent authority
to the effect that a motor vehicle has been duly registered in accordance with the
provisions of Chapter IV;
Sec 2 (31) “permit” means a permit issued by a State or Regional Transport Authority or
an authority prescribed in this behalf under this Act authorising the use of a motor vehicle
as a transport vehicle;

 Sec 2 (9) “driver” includes, in relation to a motor vehicle which is drawn by
another motor vehicle, the person who acts as a steersman of the drawn
vehicle;
 Sec 2 (10) “driving licence” means the licence issued by a competent authority
under Chapter II authorising the person specified therein to drive, otherwise
than as a learner, a motor vehicle or a motor vehicle of any specified class or
description;
 Sec 2 (20) “licensing authority” means an authority empowered to issue
licences under Chapter II or, as the case may be, Chapter III;
 Sec 2 (34) Public place - means a road, street, way or other place, whether a
thoroughfare or not, to which the public have a right of access, and includes any
place or stand at which passengers are picked up or set down by a stage carriage;

Important Sections under Motor Vehicles Act
Sec 39. Necessity for registration
Prohibits the driving of a motor vehicle in any public place or in any other place without
registering it under the provisions of this Chapter.
Sec 66. Necessity for permits
•That no motor vehicle shall be used as a transport vehicle without a permit issued by
transport authorities to use the vehicle as such in a public place.
•It also provides for exemption of certain vehicles from the operation of the provisions of
this clause on certain conditions and for usage for certain specific purposes.
Sec 56. Certificate of fitness of transport vehicles
•That every transport vehicle should carry an effective certificate of fitness issued by the
prescribed authorities or by any authorised testing stations specified by the State
Governments. It also empowers the issuing authorities to cancel any such certificate
•if the vehicle fails to comply with the requirements of this Act.
•The certificate of fitness is to be effective throughout India.

Sec 3. Necessity for driving licence.—(1) No person shall drive a motor vehicle in
any public place unless he holds an effective driving licence issued to him authorising
him to drive the vehicle; and no person shall so drive a transport vehicle [other than
3[a motor cab or motor cycle] hired for his own use or rented under any scheme made
under sub-section (2) of section 75] unless his driving licence specifically entitles him
so to do.
(2) The conditions subject to which sub-section (1) shall not apply to a person
receiving instructions in driving a motor vehicle shall be such as may be prescribed
by the Central Government.
Objects and Reasons: - provides for the need to have a licence to drive a motor
vehicle & a special authorisation to drive a transport vehicle and Sub-clause (2)
empowers the Central Government to prescribe conditions subject to which a vehicle
may be driven by a person receiving instructions in driving.

Important Sections under
Motor Vehicles Act
Sec .146. Necessity for insurance against third party risk.
 No person shall use, except as passenger, or cause or allow any other person to use , a motor vehicle
in a public place, unless there is in force in relation to the use of the vehicle by that person or that
other person, as the case may be, a policy of insurance complying with the requirements of this
chapter:
(Goods carrying vehicle carrying or meant to carry hazardous goods, there shall
be policy of insurance under Public liability act 1991)
 Not applicable for Central Government/State Government.
 Appropriate Government may grant exemption by order provided fund has been established &
maintained to meet the TP liabilities.

Sec 147: Requirements of policies and limits of liability.
 Policy of insurance must be issued by authorized insurer.
 Policy insures the person or classes of persons specified in the policy to the extent specified in sub section (2)-
Against any liability which may be incurred by him in r/o the death or bodily injury to any person or damage to any property of third party caused by or
arising out of the use of the vehicle in a public place.
Against the death of or bodily injury to any passenger of a Public service vehicle caused by or arising out of the use of the vehicle in a public place.
 Provided that Policy shall not be required-
To cover liability in r/o the death, arising out of and in the course of his employment of the employee of a person insured by the policy or in r/o bodily
injury sustained by such employee arising out of and in the course of his employment other than a liability arising under the WC act in r/o death or bodily
injury to, any such employee-
A) engaged in driving the said vehicle, or
B) if it is PSV engaged as conductor of the vehicle or in examining tickets on the vehicle or
C) if it is a goods carriage, being carried in the vehicle, or
ii) to cover any contractual liability.
2) Subject to the proviso of sub section 1, policy of insurance shall cover any liability incurred in respect of any accident up to the following limits:
a) save as provided in clause (b), the amount of liability incurred. c) Rs 6000/- TPPD as per our policy it is 7.50 Lacs
3) Where a cover note issued by the insurer under the provisions of this chapter or the rules made thereunder is not, followed by policy of insurance within
prescribed time, the insurer shall, within seven days of the expiry of the validity of the cover note, notify the fact to the registering authority in whose records the
vehicle to which the cover note relates has been registered or to such other authority as the state Government may prescribe.
4) Notwithstanding anything contained in any law for the time being in force, an insurer issuing a policy of insurance under this section shall be liable to
indemnify the person or classes of persons specified in the policy in respect of any liability which the policy purports to cover in the case of that person or those
classes of persons.

Important Sections under Motor Vehicles Act - Defences available
to insurer – Sec 149(2)
Sec 149: Duty of insurers to satisfy judgments and awards against persons insured in respect of
third party risks.
1) If after a certificate of insurance has been issued under sec 147(3) in favour of the person by whom policy
has been effected, judgment or award in respect of any such liability as is required to be covered by a
policy under section 147(1) (b) is obtained against any person insured by the policy, then
notwithstanding, that the insurer may be entitled to avoid or cancel or may have avoided or cancelled the
policy, the insurer shall, subject to the provision of this section, pay to the person entitled to the benefit of
the decree any sum not exceeding the sum assured payable thereunder, as if he were the judgment debtor,
in respect of the liability, together with any amount payable in respect of costs and any sum payable in r/o
interest on that sum by virtue of any enactment relating to interest on judgments.
2) No sum shall be payable by an insurer under sec 149(1) in r/o any judgment or award unless,
before the commencement of the proceedings in which the judgment or award is given the insurer
had notice through the court or, as the case may be, the claims tribunal of the bringing of the
proceedings, or in r/o such judgment or award so long as execution is stayed there on pending an
appeal; and an insurer to whom notice of the bringing of any such proceedings is so given shall be
entitled to be made a party thereto and to defend the action on any of the following grounds:

A. That there has been a breach of specified condition of the policy,-
1) a condition excluding the use of the vehicle-
a) for hire or reward, where the vehicle is on the date of the contract of insurance a vehicle
not covered by a permit to ply for hire or reward, or
b) for organised racing and speed testing; or
c) for a purpose not allowed by the permit under which, the vehicle is used, where the
vehicle is transport vehicle, or
2) A condition excluding driving by a named person or persons or by any person who is not duly
licensed, or by any person who has been disqualified for holding or obtaining a driving licence
during the period of disqualification; or
3) A condition excluding liability for injury caused or contributed to by conditions of war, civil
war, riot or civil commotion; or
B. That the policy is void on the ground that it was obtained by the non disclosure of a material fact or
by a representation of fact which was false in some material particular.
Important Sections under Motor Vehicles Act - Defences
available to insurer –Sec 149(2)

4) Where a certificate of insurance has been issued under sec 147(3) to the person by whom a
policy has been effected, so much of the policy as purports to restrict the insurance of the
persons insured thereby by reference to any condition other than those in clause (b) of sub
section 2 shall, as respects such liabilities as are required to be covered by a policy under sec
147(1)(b), be of no effect-
provided that any sum paid by the insurer in or towards the discharge of any
liability of any person which is covered by the policy by virtue of only of this sub section
shall be recoverable by the insurer from that person.
Material fact and material particular means a fact or particular of such nature as to
influence the judgment of the prudent insurer in determining whether he will take the risk and
if so, at what premium and on what conditions, and the expression “liability covered by the
terms of the policy means a liability which is covered by the policy.
Important Sections under Motor Vehicles Act - Defences available to insurer
–Sec 149(2)

Sec.136. Inspection of vehicle involved in accident.
133.Duty of owner of motor vehicle to give information.
134. Duty of driver in case of accident and injury to a person.
158. Production of certain certificates, licence and permit in certain cases.
140. Liability to pay compensation in certain cases on the principle of no fault.
163A. Special provisions as to payment of compensation on structured formula
basis.
166. Application for compensation.
163B. Option to file claim in certain cases.( Either 140 or 163 A not under both)
167. Option regarding claims for compensation in certain cases. (MACT or WC)
170. Impleading insurer in certain cases.
168. Award of the Claims Tribunal.
171. Award of interest where any claim is allowed. (Simple interest)
172. Award of compensatory costs in certain cases.

Difference in section 163-A & section166.
SECTION—163 A
• Negligence need not to be proved by
victim.
• Maximum income can be Rs.40,000/-
p.a.,
• Works on structured formula basis
• Loss of income is quantified only for
52 weeks
• Multiplier fixed on the basis of Age
• Only Pecuniary and general damages
are awarded
• Income at the time of accident taken.
• Only claims for PD & Death
entertained.
SECTION—166
• Negligence has to be proved.
• Court considers the income on the basis of
evidence and minimum wages act.
• Works on principles laid down by various
judgments
• Loss of income is quantified as per the
evidence
• Tribunal has to adjudicate multiplier
applicability.
• Pecuniary, General and speculative damages
are awarded
• Future income also taken into account
• Claims for PD & Death including injury
claims can be filed.

Appeal from the order of MACT to be preferred within a period of 90 days
from the date of order.
Rs. 25000/- or 50% of the award amount, whichever is less, to be deposited
before the MACT for filing appeal.
No appeal can be preferred on the ground of quantum if the amount involved
is less than Rs. 10,000/-
Sec. 173 : Appeals

163_A (3) MV.Act_Amendment_S.O. 2022 (E).—New Delhi, the 22nd May, 2018_THE
GAZETTE OF INDIA EXTRAORDINARY“THE SECOND SCHEDULE” (See
Section 163A)
SCHEDULE FOR COMPENSATION FOR THIRD PARTY FATAL
ACCIDENTS/INJURY CASES CLAIMS
1.(a) Fatal Accidents: Compensation payable in case of Death shall be five lakh rupees.
(b) Accidents resulting in permanent disability: Compensation payable shall be = [Rs.
5,00,000/- × percentage disability as per Schedule I of the Employee’s Compensation Act, 1923
(8 of 1923)] : Provided that the minimum compensation in case of permanent disability of
any kind shall not be less than fifty thousand rupees.
(c) Accidents resulting in minor injury : A fixed compensation of twenty five thousand
rupees shall be payable:
2. On and from the date of 1st day of January, 2019 the amount of compensation specified in
the clauses (a) to (c) of paragraph (1) shall stand increased by 5 per cent annually”.

The Second Schedule (See Section 163 A)
General Damages (in case of death):
The following General Damages shall be payable in addition to compensations outlined above:
(i) Funeral expenses: Rs. 2,000/-
(ii) Loss of Consortium, if beneficiary is the spouse: Rs. 5,000/-
(iii) Loss of Estate: Rs. 2,500/-
(iv) Medical Expenses—Actual expenses incurred before death supported by bills/vouchers but not exceeding : Rs. 15, 000/-
General Damages in case of Injuries and Disabilities:
(i) Pain and Sufferings : (a) Grievous injuries : Rs. 5,000/- (b) Non-grievous injuries : Rs. 1,000/-
(ii) Medical Expenses—Actual expenses incurred supported by bills/vouchers but not exceeding as one time payment : Rs.
15,000/-
Disability in non-fatal accidents:
The following compensation shall be payable in case of disability to the victim arising out of non-fatal accidents:
Loss of income, if any, for actual period of disablement not exceeding fifty-two weeks.
PLUS either of the following:—
(a) In case of permanent total disablement the amount payable shall be arrived at by multiplying the annual loss of income
by the Multiplier applicable to the age on the date of determining the compensation, or
(b) In case of permanent partial disablement such percentage of compensation which would have been payable in the case
of permanent total disablement as specified under item (a) above.
Injuries deemed to result in Permanent Total Disablement /Permanent Partial Disablement and percentage of loss of
earning capacity shall be as per Schedule I under Workmen's Compensation Act, 1923.
Notional income for compensation to those who had no income prior to accident:—
Fatal and disability in non-fatal accidents:—
(a) Non-earning persons: Rs. 15,000 p.a.
(b) Spouse: Rs. l/3rd of income of the earning/surviving spouse.
In case of other injuries only "general damage" as applicable.

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THIRD PARTY ACCIDENT CLAIMS – IMPORTANT SECTIONS UNDER MOTOR VEHICLES ACT, 1988

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