The bar association MACT challenges the removal of no-fault liability, the introduction of a limitation period, etc. ; Bombay HC request response from center

A public interest litigation filed in the Bombay High Court challenged the recent amendment to the Motor Vehicles Act 1988 (1988 Act) which removes “no fault liability” provisions, introduces limitation of claims and limits the liability of insurance companies.

A divisional bench headed by Chief Justice Dipankar Datta granted time on Thursday for the central government to file a response to the petition filed by the Bar Association of Motor Accident Claims Tribunal, Mumbai and released the case for November 28, 2022.

The petition, filed through solicitor Yatin Malvankar, challenges changes made by the Motor Vehicle Amendment Act, 2019 and rules claiming it was passed without regard to affected sections of society.

Only a few articles of the amended law regarding fine and penalties have been implemented as of 2019 and the rest of the provisions have been left pending. According to the petition, this led the petitioner to believe that the government considered the objections. However, the government implemented all the provisions from April 1, 2022. Thus, the petitioner applied to the court.

Chapter X of the 1988 Act provided for provisional liability and fixed the amount of compensation which the owner and the insurer of the vehicle involved in the accident had to pay to the victim. It provided for immediate liability, whether the driver was at fault or the victim. The 2019 amendment deleted Chapter X entirely.

The petition argues that the no-fault liability provision was introduced to grant immediate relief to accident victims and to ensure that the insurance company pays compensation to the victim.

Removing Chapter X of the 1988 Act is neither justified nor in the interests of accident victims, the petition states. The petition adds that this means there will be no immediate relief for victims of a car accident.

The 1988 Act did not provide for any liability for fault under Section 140 or Section 163A. The amended law contains no such provision, according to the petition.

Section 164 of the amended law provides that the vehicle owner or the insurer will have to pay Rs 5 lakh in case of death or Rs 2.5 lakh in case of serious injury to the victim.

The petition argues that if a person seeks compensation under Section 164, they are prohibited from seeking compensation under Section 166. The victim of an accident may be tempted to accept a settlement under of Section 164 without realizing that she may need for processing, petition states. This restricts the victim’s right to obtain just and fair compensation, thereby violating the right to life, according to the petition.

The amendment provides for the imposition of a limitation period of 6 months for filing a claim for compensation in the event of a road accident without making any provision for the excuse of delay. Article 159 foresees 3 months for the investigation and the preparation of the information report on the accident.

Thus, out of 6 months of the limitation period, 3 months are spent waiting for the accident report without which no claim can be filed, according to the petition.

The statute of limitations is arbitrary because the victim may suffer injuries due to which they cannot file a claim within 6 months, according to the petition.

The amendment to section 147 provides that the central government, in consultation with the IRDA, shall prescribe the base premium and the liability of an insurer in relation to the premium of the insurance policy.

The petition argues that the very purpose of enacting the 1988 Act was to create unlimited civil liability for insurance companies.

If the insurance is tied to the premium and made limited to third parties, the accident victim will have a slim chance of recovering just and fair compensation under Section 166, according to the petition.

By allowing the central government and the IRDA to set the base liability limit, the amended provision violates Articles 14, 19 and 21 of the Constitution, according to the petition.

The amended law omits the “pay and recover” provision that protected victims in the event of a breach of the terms of the insurance policy by the vehicle owner. This will make it difficult for victims to obtain compensation because the full compensation awarded by the court will only be payable by the owner in the event of a breach of the insurance conditions, the petition claims.

The petition further states that the government should not have added Section 2B to the law which exempts certain types of vehicles without providing alternative remedies for victims if those vehicles are involved in an accident.

The petition concludes by asserting that rapid relief for victims is impossible if the amended law is implemented as is.

The petition asks the court to declare the Motor Vehicle Amendment Act 2019 unconstitutional and strike down the amendment.

Case No. – Public Interest Litigation (L) No. 22297 of 2022

Case Title – MACT Bar Association, Mumbai v. Union of India and Ors.

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