Motor Vehicles Act, 1988 | Relevant Provisions

The following notes integrate the statutory text of the Motor Vehicles Act, 1988 with the substantial changes introduced by the Motor Vehicles (Amendment) Act, 2019 (most of which were notified and came into effect on April 1, 2022).

Section 146: Necessity for Insurance against Third Party Risk

• Mandatory Requirement: No person shall use (except as a passenger) or allow any other person to use a motor vehicle in a public place unless a valid third-party insurance policy is in force.
• Hazardous Goods: Vehicles carrying dangerous or hazardous goods must additionally have a policy under the Public Liability Insurance Act, 1991.
• Exemption for Employees: A paid employee driving a vehicle without insurance is not liable unless they knew or had reason to believe the policy was not in force.
• Government Vehicles: Vehicles owned by Central/State Governments for non-commercial purposes are exempt. If used for commercial purposes, they may be exempt only if the authority maintains a dedicated fund to meet third-party liabilities.

Section 147: Requirements of Policies and Limits of Liability

• Authorized Insurer: The policy must be issued by an insurer authorized by the IRDAI.
• Coverage Scope:
  • Death or Bodily Injury: Covers any person, including the owner of the goods or their authorized representative carried in a goods vehicle.
  • Public Service Vehicles: Covers death or injury to passengers.
  • Property Damage: Coverage for damage to third-party property.
• Territorial Fiction: Liability is deemed to arise in a "public place" even if the victim or property was not in a public place, provided the act/omission leading to the accident occurred in a public place.
• Limits of Liability:
  • Death/Injury: Generally unlimited (though the 2019 Amendment empowered the Central Govt to prescribe a base premium and limit, the current judicial practice remains "Just Compensation").
  • Property Damage: Capped at ₹6,000.
• Statutory Indemnity: Under Section 147(5), the insurer is legally bound to indemnify the insured for all liabilities the policy purports to cover.

Section 150: Rights of Third Parties against Insurers (Insolvency)

If the insured person becomes insolvent (or a company is wound up), their rights against the insurer are transferred to and vest in the third party to whom the liability was incurred. Any policy condition that seeks to alter or void the policy because the insured became insolvent is of no effect. If the insurer’s liability is less than what is owed to the third party, the third party can still claim the balance from the (insolvent) insured’s estate.

Section 152: Settlement between Insurers and Insured Persons

No settlement between the insurer and the insured regarding a third-party claim is valid unless the third party is a participant in that settlement. Once liability is incurred, no private agreement or waiver between the insurer and an insolvent insured can defeat the rights of the third party.

Section 160: Duty to Furnish Particulars

Police and Registering Authorities must provide vehicle identification marks, owner details, and driver info to a claimant or insurer upon payment of a fee.

• e-DAR (Electronic Detailed Accident Report): In practice (as per 2022 rules), this data is now integrated into a digital portal to expedite claims.

Section 161: Compensation for "Hit and Run" Accidents

Hit and Run accidents refers to accident where the identity of the vehicle cannot be ascertained despite reasonable efforts.

• Revised Compensation (Amended 2019/2022):
  • Death: Increased from ₹25,000 to ₹2,00,000.
  • Grievous Hurt: Increased from ₹12,500 to ₹50,000.
• Funding: These payments are made from the Motor Vehicle Accident Fund.

Section 162: Refund of Compensation

• Anti-Double Recovery: If a victim receives compensation under Section 161 (Hit and Run) and later receives a higher award under another provision (e.g., the vehicle is eventually identified), the amount paid under Section 161 must be refunded to the insurer/fund.
• Golden Hour Scheme: Section 162 of the Motor Vehicles Act, 1988 (as amended in 2019) primarily pertains to the Cashless Treatment Scheme for Road Accident Victims during the "Golden Hour". It mandates that the Central Government create a scheme for providing prompt, cashless treatment to accident victims during the first hour after a collision.

Section 163 & 163A: Structured Formula and Schemes

The 2019 Amendment effectively replaced the old "Structured Formula" (Section 163A) with a new Section 164.

• Section 164 (New): Provides for ₹5 Lakh for death and ₹2.5 Lakh for grievous hurt on a "No-Fault" basis (meaning the claimant doesn't have to prove the driver's negligence).
• Section 163B: A claimant must choose between filing under the special "No-Fault" provision (Section 164) or the regular fault-based provision (Section 166). They cannot claim under both.

Section 169 & 170: Powers of the Tribunal

Tribunals can follow a summary procedure to ensure speedy disposal. They have the same powers as a Civil Court for summoning witnesses and discovery of documents.

• Impleading the Insurer (Section 170): If there is collusion between the claimant and the vehicle owner, or if the owner fails to contest the claim, the Tribunal can allow the Insurance Company to contest the claim on all grounds (not just the limited statutory grounds).

Section 171 & 172: Interest and Costs

• Interest: Tribunals may award simple interest from the date of filing the claim. (Commonly awarded at 6% to 9%).
• Compensatory Costs: If a claim or defence is found to be false or vexatious, the Tribunal can award special costs up to ₹1,000.

Key Takeaway for 2026: Ensure all claims are filed within the six-month limitation period from the date of the accident, as introduced in Section 166(3) by the 2019 Amendment.

Comparison: Section 164 vs. Section 166

The 2019 Amendment (notified in 2022) significantly streamlined the compensation process by distinguishing between a Fixed/Fast-track claim and a Full/Adjudicated claim.

When an accident occurs, you effectively have two main paths to seek compensation. You must choose one, as Section 163B prohibits filing under both for the same accident.

Central Motor Vehicles (Amendment) Rules, 2022

The latest amendments introduced a strict "Police-to-Tribunal" digital workflow called the Detailed Accident Report (DAR) system. This is designed to settle claims within 6 to 12 months rather than years.

1. First Accident Report (FAR): The police must upload the FAR to the Claims Tribunal and Insurance Company within 48 hours of the accident.
2. Interim Accident Report (IAR): Submitted by police within 50 days after gathering documents from victims and owners.
3. Detailed Accident Report (DAR): The final report submitted by the police within 90 days. This report is now treated as a Claim Petition automatically under Section 166(4).
4. Offer of Settlement: Once the DAR is filed, the Insurance Company has 30 days to examine it and make a "Legal Offer" for settlement to the claimant.
5. Consent Award: If the victim accepts the offer, the Tribunal passes a "Consent Award" and the money must be paid within 30 days.