LAW COMMISSION OF INDIA
EIGHTY-FIFTH REPORT
oN
CLAIMS FOR COMPENSATION UNDER CHAPTER 8 OF THE MOTOR VEHICLESACT , 1939
1980
D.O. No. F. 2(4)/79-LC
NEW DELHI
Dated, the 30th May, 1980

My dear Minister,

I am forwarding herewith the eighty-lifth Report of the Law Commission containing proposals for amendments of certain provisions contained in Chapter VIII of the Motor Vehicles Act, 1939, bearing on the question of insurance of motor vehicles and adjudication of claims for compensation in respect of the accidents by motor vehicles.

2. Under the law as it is, a Claims Tribunal can pass an award with regard to payment of just compensation only after finding that the accident of the nature specified in sub-section (1) of Section 110 was the result of the negli­gence on the part of the driver or owner of the vehicle (Vide Sinu Bal Krishan (1977) SCR, Vol. 11, page 886). Since this case was decided, the Supreme Court has been suggesting with some persistence that the Motor Vehicles Act should be amended so as to incorporate in it the principle of “no fault liability” in road accidents. (Concord Insurance Company Vs. Nirmla Devi 1979 (3)S.C.R. 694; Rattan Singh Vs. State of Punjab S.C.W.R. d. 10/1/1980 Vol. 35, Part I, page 29).
3. The incorporation of the principle that compensation should be obtain­able without the necessity of proving negli­gence on the part of the person who caused the accident, no doubt, involves an alteration of the existing laws. But the alteration is both just and necessary. The persons generally involved in motor accidents are pedestrians, children, women and illiterates. Some of them are too poor to have the help of a competent lawyer in establishing negligence in claim cases. These cases are contested strenuously by the insurance companies raising all sorts of technical objections for minimising their own liability. The result is that proceedings before the Claims Tribunal drag on for a long time before any award is passed. Sometimes the time consuming costly litigation makes the award of compensation, when and if it is made, virtually meaningless. Claims Tribunals are constituted for expeditious disposal of motor vehicles claims but in actual practice there is no expeditious disposal. The inordinate delay in the disposal of these claims is mainly on account of the difficulty and the time taken in trying the issue of negligence in the use of the vehicle. The principle of “no fault liability” is not a novel. One is familiar with the consept of absolute liability for payment of compensation under the Workmen’s Com­pensation Act, 1923. The principle has already attracted attention in many countries like U.K., Australia, New Zealand and many States of the United States of America.
4. The Commission iias, therefore, suggested that a new provision should be inserted in Chapter VIII of the Motor Vehicles Act, 1939 providing that in “claim cases”, the claimant third party shall not be required to plead and estab­lish that the injury or damage suffered by him was the result of wrongful act or neglect or default in the use of the vehicle, and further the claim for com­pensation shall not be defeated or reduced by reason merely of any wrongful act, neglect or default of the party suffering injury or damage. The Commission has taken advantage of this opportunity for suggesting other amendments for securing speedy disposal of claim cases, for early payment of the amount of compensation awarded, for restricting the right of appeal against an award only to those cases where the amount in dispute in appeal exceeds Rs. 5,000, for award of interest on the compensation amount and placing a monetary limit on the liability of the insurer. Some other amendments have also been suggested. They are of a minor nature. All these amendments have been fully explained in the Report.

80-M/B(D)457MofU&CA-l

5. The Commission is grateful to Shri P. M. Bakshi, Member Secretary for his valuable assistance in the preparation of this Report, The Commission would also like to thank Shri Vaze, Additional Secretary, for his collaboration.

With kind regards.

Yours sincerely, Sd/-

(P. V. DIXIT)

Shri P. Shiv Shankar,

Minister of Law, Justice & Company Affairs, Government of India.