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Motor Vehicles Act 1988

Motor Vehicles Act 1988

The Motor Vehicles Act, 1988 is an Act of the Parliament of India which regulates all aspects of road transport vehicles. The Act came into force from 1 July 1989. It replaced the Motor Vehicles Act, 1938 which earlier replaced the first such enactment Motor Vehicles Act, 1914. The Act provides in detail the legislative provisions regarding licensing of drivers and conductors, registration of motor vehicles, control of motor vehicles through permits, special provisions relating to state transport undertakings, traffic regulations, insurance, liability, offences and penalties etc. Further, in order to exercise the legislative provisions of the Act, the Government of India made the Central Motor Vehicles Rules, 1989.

Necessity for insurance against third party risk

Section 146 of the above Act states that no person shall use, other than as a passenger or allow to use a motor vehicle in a public place unless a policy of insurance which covers the liability to third party on account of death or bodily injury to such third party or damage to any property of a third party arising out of the use of the vehicle in a public place. Therefore, it is mandatory for the owner of any motor vehicle to obtain, at the minimum, a policy from any General insurance company holding a valid licence from IRDA, which covers the risk of death or bodily injury to a third party arising out of usage of the vehicle in a public place.

The liabilities which require compulsory insurance are as follows:

(a) death or bodily injury of any person including the owner of the goods or his authorised representative carried in the carriage

(b) damage to any property of a third party

(c) death or bodily injury of any passenger of a public service vehicle

(d) liability arising under the Workmen’s Compensation Act, 1923 in respect of death or bodily injury of the paid driver of the vehicle, conductor or ticket examiner (public service vehicles) and workers carried in a goods vehicle

(e) The limit of liability to third party property is `6,000.

No Fault liability

Section 140 of the Motor Vehicles Act, 1988, provides for liability of the owner of the Motor Vehicles to pay compensation in certain cases, on the principle of no fault. The amount of compensation so payable is Rs.50,000 for death and Rs.25,000 for permanent disablement of any person resulting from an accident arising out of the use of the motor vehicles. The principle of “no fault” means that the claimant need not prove negligence on the part of the motorist. Liability is automatic in such cases. Further, under Section 141(1) of the said Act, claims for death or permanent disablement can also be pursued under other provisions of the Act on the basis of negligence (fault liability).

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Duty of insurers to satisfy judgements and awards against persons insured in respect of third party risks

Where a judgement or an award has been given against a insured person in respect of a third party liability covered under the insurance policy, then, notwithstanding the rights or the insurer to avoid or cancel the insurance policy, the insurer shall be liable to pay to the person entitled to the benefit of decree (third party), as if the insurer were the judgement debtor, together with any amount payable in respect of costs and any sum payable alongwith interest.

However, no sum as above shall be payable by an insurer if notice of the bringing of any such proceedings in which the judgement or award is given, is given to insurer and the insurer can defend the action on the ground of breach of any of the following conditions in the policy document:

(a) Condition that the vehicle on the date of contract of insurance not covered by a permit to ply for hire or reward – if the vehicle was used for hire or reward

(b) For organised racing and speed testing

(c) For purposes not allowed by the permit under which vehicle is used where the vehicle is a transport vehicle

(d) Without side car being attached where the vehicle is a motor cycle

(e) Usage of car by an unlicensed person

(f) Condition excluding liability for injury caused or contributed by conditions of war, civil war, riot or civil commotion

(g) The policy was obtained by non disclosure of a material fact or by representation of a fact which was false in some material particular

A settlement between the insurer and insured shall be valid only if the third party is also made a party to the settlement contract. Insolvency of the insured person will not affect the liability of the insured or claims by third parties.

Issuance of Certificate of Insurance

As per the Act, policy of insurance shall have no effect unless and until a certificate of insurance in the form prescribed under the Rules of the Act is issued. The only evidence of the existence of a valid insurance as required by the Motor Vehicles Act acceptable to the police authorities and R.T.O. is a certificate of insurance issued by the insurers.

Transfer of insurance upon sale of vehicle

Where a person holding a Certificate of insurance for a motor vehicle, transfers the ownership of the vehicle to another person, the certificate of insurance and the policy described in the certificate shall be deemed to have been transferred in favour of the person to whom the motor vehicle is transferred with effect from the date of transfer.

• The transferee shall apply within 14 days from the date of transfer in the prescribed form to the insurer for making necessary changes in regard to the fact of the transfer in the certificate of insurance and the policy described in the certificate in his favour and the insurer shall make the necessary changes in the certificate and the policy of insurance in regard to the transfer of insurance.

“Hit and Run” Accident

Section 161 defines “hit and run motor accident” as accident arising out of a motor vehicle or motor vehicles the identity of whereof cannot be ascertained in spite of reasonable efforts for the purpose. The Section provides for payment of compensation as follows in such cases:

(a) In respect of death of any person resulting from a “hit and run” accident, a fixed sum of Rs.25,000

(b) In respect of grievous hurt to any person resulting from a hit and run motor accident, a fixed sum of Rs.12,500

(c) Compensation known as Solatium is payable out of a “Solatium Fund” established by the Central Government

Motor Accidents Claim Tribunals

For speedy disposal of third party claims and at a minimum cost, the Claims Tribunals have been constituted by different State Governments. Only a nominal fee has to be paid for instituting a case and Court fee is not based on the value of the suit. Thus it is very much less expensive and poor third party claimants are not prevented from making proper claims. Where a Tribunal has been set up for an area, no Civil Court has any jurisdiction to entertain any claim falling under the tribunal’s jurisdiction.

Insurance Law And Practice - ICSI
Motor Vehicles Act 1988 Motor Vehicles Act 1988 Reviewed by Blog Editor on Thursday, May 18, 2017 Rating: 5

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