Supreme Court Doubts View That 'No-Fault' Liability u/s163A Motor Vehicles Act Is Only For Third Party Risks; Refers To Larger Bench

The Supreme Court has recently referred to a larger bench the question of whether the families of vehicle owners who die in self-accidents can be allowed compensation under the "no-fault liability" provision(Section 163A) of the Motor Vehicles Act, 1988 (“MVA”), or whether such claims are limited solely to third-party liability.

Although the Court expressed the view that legal heirs of vehicle owners who die in an accident can seek compensation under Section 163A of the Motor Vehicles Act as part of the no-fault liability scheme, it noted the existence of conflicting precedents that limit the application of this principle to third-party claims only. As a result, the Court referred the issue to a larger bench for authoritative ruling.

“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.”, the court said.

“when there is a valid policy issued in the name of the vehicle involved in the accident, a claim under Section 163A, as per the words employed in the provision, according to us covers every claim and is not restricted to a third party claim; without any requirement of establishing the negligence, if death or permanent disability is caused by reason of the motor accident.”, view expressed by the Court.

Unlike Section 166 of MVA, Section 163A of MVA is a beneficial provision which doesn't demand strict proof of negligence for claiming compensation under MVA. The provision ensures an alternative route where fault need not be proven.

The bench comprising Justices Sudhanshu Dhulia and K. Vinod Chandran was hearing the Appeal filed by a minor daughter whose parents died in a road accident due to a tyre burst. The father was driving the vehicle owned by him. The minor daughter, through her aun,t sought compensation under Section 163A of MVA before the Motor Accident Claim Tribunal (“MACT”), which awarded compensation worth ₹4,08,000/- for her mother's death., and ₹4,53,339/- for her father's death.

However, the Orissa High Court set aside the MACT's decision, stating that the claim petition under Section 163A was not maintainable as the Appellant being daughter of the deceased, will inherit their estate and therefore cannot claim compensation from it. Aggrieved by this decision, the minor daughter approached the Supreme Court.

The judgment authored by Justice Chandran, citing Section 155 of MVA, disagreed with the High Court's reasoning, stating that since the claims survive against the insurer even if the insured (owner) dies after the accident, the liability shifts to the owner's estate, and the insurance company must pay if the policy is valid. 

Extending the same line of thought regarding the maintainability of the legal heirs claim under Section 163A of MVA, the Court noticed conflicting opinion rendered by the co-ordinate benches, where decisions rendered in cases of Dhanraj v. New India Assurance (2004), Ningamma v. United India Insurance (2009), and Ramkhiladi v. United India Insurance (2020) held that the claims under Section 163A MVA would be limited to third party risks.

The Court expressed doubt over these rulings, emphasizing the non-obstante clause in Section 163A, which states that the provision applies notwithstanding anything inconsistent elsewhere in the Act or any other law, suggesting a broader application beyond third-party claims.

Referencing the above-stated decisions, in the context of Section 163A MVA, the court said:

“There is considerable variance in the observations made in the decisions but however as a principle, statutory liability was held to be not applicable in case of the owner/insured, since the coverage was confined to third party risks or those specified in Section 147 read with Section 149.”

Accordingly, doubting the correctness of the decisions mentioned above, the Court directed the Registry to place the matter before the Hon'ble the Chief Justice of India for appropriate orders regarding the constitution of a larger bench to decide the issue.

Cause Title: WAKIA AFRIN (MINOR) VERSUS M/S NATIONAL INSURANCE CO. LTD.

Citation : 2025 LiveLaw (SC) 764

Click here to read/download the judgment

Appearance:

For Petitioner(s) Mr. Manish Kaushik, Adv. Mr. Satya Kam Sharma, AOR Mr. Keshav Kumar, Adv.

For Respondent(s) Mr. Ambhoj Kumar Sinha, AOR Ms. Neeti Bhardwaj, Adv. Ms. Monika Sharma, Adv. Ms. Akansha Gahlot, Adv.