Section 163A of the Motor Vehicles Act

Source: Supreme Court  

Why in News? 

Recently, Justices Sudhanshu Dhulia and K. Vinod Chandran  have referred to a larger bench the question of whether legal heirs of vehicle owners who die in self-accidents can claim compensation under Section 163A of the Motor Vehicles Act (MVA) due to conflicting precedents. 

• The Supreme Court held this in the matter of Wakia Afrin (Minor) v. M/S National Insurance Co. Ltd.(2025). 

What was the Background of Wakia Afrin (Minor) v. M/S National Insurance Co. Ltd., Case ? 

• Two-year-old Wakia Afrin lost both parents when their vehicle crashed into a roadside building after going out of control due to a tyre burst, killing all four occupants including her father who was driving his own insured vehicle. 
• Wakia's aunt represented the orphaned child in filing compensation claims under Section 163A of the Motor Vehicles Act, 1988, seeking no-fault liability compensation for both parents' deaths. 
• The vehicle was insured with National Insurance Company Limited under a valid policy in the father's name, with owner-driver coverage limited to Rs. 2 lakhs. 
• 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 Orissa High Court overturned the award, ruling the claims were not maintainable because a dead person cannot be made a defendant. 
• Whether family members of a deceased vehicle owner can claim compensation under Section 163A's no-fault liability provision, or if such claims are restricted only to third-party victims. 
• Wakia, as sole heir inheriting her father's estate, cannot simultaneously bear liability for compensation and receive it. 

What were the Court’s Observations? 

• The Supreme Court found the High Court's reasoning fundamentally flawed, observing that Section 155 of the Motor Vehicles Act ensures claims survive against insurers even after the insured's death, as the liability shifts to the deceased's estate which the insurer must indemnify. 
• The Court critically observed that Section 163A covers every claim when a valid policy exists and is not restricted to third-party claims only, without requiring proof of negligence if death or permanent disability results from a motor accident. 
• The Court observed that Section 163A's non-obstante clause overrides all provisions of the Motor Vehicles Act, other laws, and insurance policy terms, having a superseding effect over insurance laws and contractual limitations. 
• The Court observed Section 163A as beneficial social security legislation designed for comprehensive no-fault liability coverage due to increasing motor accidents and difficulties in proving negligent driving on overcrowded roads. 
• The Court respectfully disagreed with various two-judge bench decisions that restricted Section 163A to third-party risks, noting considerable variance in observations but acknowledging the established principle limiting coverage to third-party risks under Sections 147 and 149. 
• The Court clearly observed that the claim for the mother's death must be admitted and the Tribunal's Section 163A award restored, as there was no dispute regarding this aspect. 
• The Court observed that while the policy limited owner-driver coverage to Rs. 2 lakhs, the question remained whether insurer liability could be confined to policy terms or determined under Section 163A's broader provisions. 
• The Court observed that the conflicting interpretations regarding insurer liability under Section 163A for owner/insured claims required authoritative pronouncement from a larger bench, expressing doubt about the correctness of coordinate bench decisions restricting the provision's scope. 

What is Section 163A of MVA ? 

• About  
  • Section 163A is a special provision in the Motor Vehicles Act, 1988, that provides compensation to victims of motor vehicle accidents based on a fixed formula, without requiring them to prove anyone's fault or negligence. 
• Key Features 
  • No-Fault Liability: This section creates a "no-fault liability" system, meaning victims or their families can claim compensation even without proving that the accident was caused by someone's mistake, carelessness, or wrongdoing. 
  • Fixed Compensation Formula: The compensation amounts are predetermined and listed in the Second Schedule of the Act, creating a structured payment system rather than leaving amounts to be decided case by case. 
  • Overriding Provision: Section 163A overrides all other provisions in the Motor Vehicles Act and any other existing laws or legal instruments, making it a superior provision that takes precedence over conflicting rules. 
• Who Can Claim? 
  • In Case of Death: Legal heirs of the deceased person can claim compensation In Case of Permanent Disability: The injured victim themselves can claim compensation 
• Who Must Pay? 
  • Vehicle Owner: The owner of the motor vehicle involved in the accident Insurance Company: The authorised insurer of the vehicle (if properly insured) 
• What Accidents Are Covered? 
  • The section applies to accidents that arise "out of the use of motor vehicle," which includes any accident involving a motor vehicle during its normal use on roads. 
• Types of Injuries Covered 
  • Death: Complete compensation as per the Second Schedule  
  • Permanent Disablement: Compensation based on the degree of disability as defined in the Workmen's Compensation Act, 1923 
• What Victims Don't Need to Prove 
  • Under Section 163A, claimants are NOT required to prove: 
  • That the accident was caused by wrongful act 
  • That someone was negligent or careless 
  • That there was any default by the vehicle owner 
  • That any other person was at fault 
• Government's Power to Update 
  • The Central Government can modify the compensation amounts mentioned in the Second Schedule from time to time, considering changes in the cost of living and inflation. 
• Why This Section Exists 
  • Social Security: It acts as a social security measure for accident victims and their families  
  • Quick Relief: Provides faster compensation without lengthy legal battles over fault  
  • Reduced Burden: Eliminates the difficult task of proving negligence in court 
  • Comprehensive Coverage: Ensures victims get compensation regardless of who caused the accident