Section 163A’s no‑fault scheme covers claims even where insured was the deceased; matter referred to larger Bench

A bench of Justices Sudhanshu Dhulia and K. Vinod Chandran heard a challenge to a Motor Accident Claims Tribunal award and a High Court order which had held the petitions not maintainable on the ground that a dead person could not be made a defendant. The appeal arose from claims under Section 163A of the Motor Vehicles Act, 1988 seeking statutory compensation for the deaths of the petitioner's parents in a vehicle accident.

The Court held that Section 163A, being a non‑obstante provision, operated as a special, no‑fault statutory regime and covered claims arising from death even where the owner/insured was the deceased or where heirs succeeded to his estate. The bench found the High Court’s objection on maintainability — that a deceased owner could not be impleaded — to be untenable in view of Section 155 and restored the award in respect of the petitioner’s mother. The Court noted tensions in earlier two‑Judge decisions on whether Section 163A was confined to third‑party risks and observed that the question required an authoritative pronouncement by a larger Bench. The Court, in its reasoning, observed: "Trite is the principle that the liability with respect to an accident is on the tortfeasor and in the case of a motor vehicle accident if the tortfeasor is the driver, the owner has the vicarious liability, which liability is indemnified by the insurer, when there is a valid policy. The liability is essentially of the owner but the provision, in addition to the insured/owner makes liable the authorized insurer too. Hence, 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. This would also take in the liability with respect to the death of an owner or a driver who stepped into the shoes of the owner, if the claim is made under Section 163A dehors the statutory liability under Section 147 or the contractual liability as reduced to writing in an insurance policy. It would override the provisions under Sections 147 & 149 along with the other provisions of the M.V. Act and the law regulating insurance as also the terms of the policy confining the claim with respect to an owner‑driver to a fixed sum. This according to us is the intention of incorporating the non‑obstante clause under Section 163A providing for no‑fault liability claims, the compensation for which is restricted to the structured formula under the IInd Schedule...."

Background

The petitioner, then two years old, sued as a minor through her aunt after both her parents died when their vehicle went out of control following a tyre burst and crashed into a roadside building. The Motor Accident Claims Tribunal awarded Rs.4,08,000 for the mother’s death and Rs.4,53,339 for the father’s death. The father was the registered owner of the vehicle and had been shown in proceedings as a respondent with a recital that he was dead; the insurer was the other respondent. The High Court set aside the awards on the ground that a deceased person could not be made a defendant and therefore the petitions were not maintainable, although it accepted that the insurance policy was valid and the driver held a licence.

The Supreme Court observed that Section 155 enabled survival of causes of action against an insurer where the insured died after the event giving rise to a claim, and it rejected the High Court’s maintainability reasoning. The Court reviewed precedent including Dhanraj, Sunita Rathi, Jhuma Saha, Rajni Devi, Sadanand Mukhi, Meena Variyal, Ningamma and Ramkhiladi, and noted inconsistencies in two‑judge decisions on whether Section 163A applied only to third‑party claims. The Court emphasised that "Section 163A is a special provision brought in, which is a non‑obstante clause which overrides not only the entire provisions of the Motor Vehicles Act, 1988 but also any other law for the time being in force and any instrument having the force of law." It reiterated that a claim under Section 163A was based on the principle of "no‑fault liability" and restored the Tribunal’s award insofar as it related to the petitioner’s mother. The Court observed that the question whether the insurer’s liability could be confined to the owner‑driver limit in the policy or must follow Section 163A required authoritative consideration and therefore directed that the matter be placed before the Chief Justice for appropriate orders to constitute a larger Bench.

Case Details: Case No.: 2025 INSC 919 (Special Leave Petition (Civil) Nos. 15447-48 of 2024) Case Title: WAKIA AFRIN (MINOR) v. M/S NATIONAL INSURANCE CO. LTD. Appearances: For the Petitioner(s): Not indicated in the judgment For the Respondent(s): Not indicated in the judgment