Drawbacks in the proposed amendment to the Motor Vehicles Act quantified by the Central Government.
Respected Sir/Madam
It has been brought to our notice in the last week of December, 2011, in an Article published in English Daily Newspaper, DNA regarding proposed amendment to the Motor Vehicles act, 1988 by deleting the present sections (Section 140 to Section 173 of Motor Vehicles Act, 1988) and enacting a special new Act by name Motor Vehicles Insurance and Compensation Act.2011.
The Legislature has taken a cognizance of the increasing Road accidents and therefore enacted a special Act by name Motor Vehicles Act, 1939. Pursuant to the directions given by the Hon'ble Apex Court, the Government has established a special court by name 'The Motor Accidents Claims Tribunal' for the early hearing and giving the speedy reliefs and adequate compensation to the victims of road accidents by amending the Motor Vehicles Act from time to time. Considering the report of various Committees submitted in the year 1984 and the directions of the Hon'ble Apex Court given in various judgments, the Legislature came to the conclusion that the provisions of old Act (1939) are causing more hardship & inconvenience to the victims of road accidents in. getting sufficient compensation.
The Motor Vehicles Act being the social legislation, the wider and more reliefs were granted by the new Act of 1988. In the Motor Vehicles Act, 1988, in the year - 1994, the 'major amendment was introduced whereby the limitation which was a hurdle for awarding just compensation *in the genuine claims was deleted and the Legislature empowered the lower judiciary to entertain the claim applications without looking into the date of accidents. Similarly, the claim was permitted to be filed at the residential area of the applicant. By the said enactment the Legislature also removed the cap of limited liability imposed by the Act of 1939.
The Motor Vehicles Act, 1988 has brought a great relief to the victims and thereby adequate just compensation is awarded to the victims. The Legislature has incorporated Section 146 of the said Act with a specific intention that there should be a compulsory insurance of a vehicle before it is plied on the road to protect the victims of the road accidents in case of any mishap. By this enactment, the Legislature has guaranteed the victims to get full compensation as awarded by the Court of Law and thereby they were sure & secured about their rights.
By taking the spirit of directions given by the Hon'ble Apex Court, State Governments have constituted several Tribunals in their respective States and thereby the speed of awarding compensations and early reliefs is increased.
This has strengthened the hands of The Motor Accidents Tribunals in awarding adequate and just compensations to the victims of the road accidents as provided by the Motor Vehicles Act, 1988.
Though everything was going smoothly, all of a sudden we noticed this proposed amendment to the Motor Vehicles Act, 1988 by way of enacting Motor Vehicles Insurance and Compensation Act, 2011. If we read the objects and reasons for enactment of the new Act, it mentions that the proposed amendment enactment is created for the benefit of and for welfare of the road traffic accident victims. However, the real intention and meaning of the proposed amendment is totally against the interest of road traffic accident victims.
The following proposed provisions are very harmful and dangerous to the benefit of the road accident victims but also the owners of the vehicle involved in the accident viz.
(a) Section 4 of the proposed amended Act suggests that the maximum liability of the Insurance Company is Rs. 10,00,000/- (which was unlimited in Sections 145 and 147 (l)(b)(i) of Motor Vehicles Act, 1988) Sec- 147 reads as under:
"Against any liability which may be incurred by him in respect of the death of or bodily [injury to any person, including owner of the goods or his authorized representative carried in the vehicle] or damage to any property of a third party caused by or arising out of the use of the vehicle in a public place."
(b) The above provision was introduced taking into consideration the directions given by the Supreme Court by various judgments from time to time and the reports of various Committees established for that purpose and as per the suggestions of the Law Commission on the point of hardship suffered by the victims.
(c) If the proposed amendment by way of Section 4 is introduced, It will cause more hardship to the victims of the road accidents as the balance amount of compensation awarded will be difficult to recover from the owner of the vehicle as the financial condition of the owner of the vehicle may not be sound to satisfy the said award. Even if we make efforts to recover this amount, the victim will have to put another battle/ litigation for recovery of the balance amount which will result in multiplication of litigation and again it is a time consuming process and there will be delay in getting just compensation.
(d) If we read the objects and reasons of incorporation of the above Act, it clearly indicates that the imposition of limited liability / cap of limited liability is made purely considering the ground of premium. We may suggest that instead of limiting the liability, the cap of limited liability can be easily lifted by rationalizing the amount of premium which will solve the problem of Insurance Company, Owners of the vehicle and the victims of the road accident.
(e) It is pertinent to note that prior to year 2000 there were four subsidiary companies working under the General Insurance Corporation of India and they were the nationalized companies. After the year 2000 the globalization policy came into existence and the Insurance Sector was opened to the private Insurance Companies for their participation in General Insurance business. Initially, few private companies entered into the said business, but the said number is now gradually increasing which shows that the General Insurance Business is a profit making business and therefore every now and then the new private company is venturing in to the general insurance business. It must observe that any prudent businessman will not enter into the business which is the loss making business.
(f) Section 20 of the said proposed amendment mentions regarding the refund of compensation in certain cases paid under Section 18 it reveals that the payment of compensation in respect of the death of, or grievous. hurt to, any person under Section 18 shall be subject to the condition that if any compensation (hereafter in this Sub-Section referred to as the other compensation) or other amount in lieu of or by way of satisfaction of a claim for compensation is awarded or paid in respect of such death or grievous hurt under any other provision of this Act or any other law or otherwise so much of the other compensation or other amount aforesaid as is equal to the compensation paid under Section 18 shall be refunded to the insurer. This is against the Principles of Natural Justice.
(g) This amendment is against the suggestions and the observations made by the Hon'ble Apex Court in case of Helan C. Rebello v/s. M.S.R.T. Corporation reported in 1999-ACJ-Pg.10-SUPREME COURT and in case of National Insurance Co. Ltd. v/s. Indira Srivastav reported in 2008(l) TAC Page 424 SUPREME COURT.
By the aforesaid judgments the Hon'ble Apex Court has disallowed the contention of the Insurance Company regarding the deductions of compensation amounts received by the victims by virtue of their special contracts with the Insurance Companies and/or the amounts received from other sources which are otherwise not concerned regarding the said road accidents and in normal course the said person is entitled for the said amount by virtue of his personal or special contract for which he had paid the premium and therefore, the above clause incorporated 'in the said proposed amendment is against principles of natural justice and it is harmful to the Social Legislature. It will also affect on the business of the Insurance Company and it will adversely affect the insurance business.
(h) Section 28 refers to the settlement between the Insurers and the claimants out side the Court which will give rise to the corruption at the insurance level. This will make the power of Court as a mere rubber stamp of authenticity. This process of out of Court settlement frustrates the very purpose of settlement before Lok Adalat, mediation and conciliatory proceedings.
(i) Section 34 deals with the restriction / ban on claimants to go in Appeal after receiving the compensation from the Tribunal being the aggrieved person. The aforesaid provision is in contravention with the Law and the procedure laid down by Code of Civil Procedure 1908 and the various Apex Court Judgments. The right to appeal is generated at the time of filing of a Suit or Application and, therefore, this right can not be taken away which results in denial of justice and therefore this provision is unconstitutional.
(j) Section 39 refers to impounding of vehicle by Police and retaining the same till disposal of the claim application. It is necessary to consider that for recovery of the balance compensation if that vehicle is seized by the Police and it remains in the compound of the Police Station within a period of 2 years the value of the vehicle will be nothing more than salvage and, therefore, the recovery of the balance amount is next to impossible.
(k) Section 40 of the said proposed amendment limits the period of three years for claiming compensation from the date of accident. In the Motor Vehicles Act, 1988, in the year 1994, the major amendment was introduced whereby the limitations which was a hurdle for awarding compensation in the genuine claims was deleted and the Legislature empowered the lower judiciary to entertain the claim applications without looking into the date of accidents.
Similarly, the claim was permitted to be filed at the residential area of the applicant. By the said enactment the Legislature also removed the cap of limited liability imposed by the Act of 1939 and therefore this proposed amendment is against the principles of natural justice and against the rights of victims to claim the compensation.
(l) As regards to the Schedules I and II it was introduced in Section 163(A) of the Motor Vehicles Act, 1988 [and also the same schedule is mentioned in the proposed act] considering the situation prevailing at that time. At present there are drastic changes in the said situation and there is a price hike and much inflation and devaluation of Rupee and the higher cost of living requires up gradation of the Schedule, There are various directions issued by the Hon'ble Apex Court specifying the defects in the said Schedules and directed to rectify and revision of the same. The retaining of the same Schedules is without considering the present position and therefore it has to be discarded. The percentage of disablement mentioned relating to the injuries should be applied taking in to the consideration the use of particular part of the body.
If we consider the provisions of Minimum Wages Act., Rs. 150/- per day is taken as minimum wage therefore notional income be taken at least Rs.45,000/- p.a. and accordingly the further schedule be prepared.
It is therefore, surprising to note such drastic and harmful amendments to the Motor Vehicles Act recommended by the R. K. Kaul Committee limiting the liability of Insurance Companies for payment of compensation and depriving the legitimate rights of the victims of the road accidents to get the compensation and burdening the vehicle owners to pay the excess amounts of compensation from their pockets though their vehicle are validity insured, which is of course against interest of the public at large and causing hardship to victims of road accident.
Another aspect is in number of cases, the victims will be indirectly dragged in another litigation for recovery of the balance amount from the owners of the vehicles which is practically impossible and expensive as the vehicle owners may not be in a financially sound position to pay the balance awarded amounts. For the recovery of the said amounts from the owners of the vehicles, the amount awarded against the Insurance Companies may be exhausted while recovering the amount from the owners. The victims may require to run from pillar to post.
The said amendment as suggested under the pretext of heavy losses suffered by Insurance Companies due to the payments of Third party claims.
But in fact the losses suffered by the Insurance Companies are not because of third party claims but the delaying tactics in early settlement of claims resulting in payment of interest. The increase of un warranted overhead expenses of Insurance Companies, their mismanagement and hyper technical decisions in dealing with third party claims which causes loss to Insurance Company.
It is necessary to consider that the reason behind the increase in road accidents are
1. Insufficient, incapable and non-roadworthy public transport.
2. The worst conditions of the road.
3. Increase in the traffic on the road.
4. Width and capacity of the road.
5. Increasing number of Vehicles.
6. Insufficient Traffic Police to manage traffic on the road.
7. Non induction of dividers, where ever necessary.
Taking into considering the above submissions, we are of the opinion that it will result in an eventual denial of just compensation to the unfortunate road accident victims which may occur because of the proposed amendment suggested by R. K. Kaul Panel Report, if brought into force.
Considering the seriousness of this dangerous proposed enactment It is necessary to agitated this before table of Parliament. We have initiated the agitation. We need your support to save the victims of road accident and the public, at large from such dangerous enactment. We there fore request you take up this issue before the Parliament and protect the victims and public at large.
Thanking You.
BAR ASSOCIATION OF MACT MUMBAI
It has been brought to our notice in the last week of December, 2011, in an Article published in English Daily Newspaper, DNA regarding proposed amendment to the Motor Vehicles act, 1988 by deleting the present sections (Section 140 to Section 173 of Motor Vehicles Act, 1988) and enacting a special new Act by name Motor Vehicles Insurance and Compensation Act.2011.
The Legislature has taken a cognizance of the increasing Road accidents and therefore enacted a special Act by name Motor Vehicles Act, 1939. Pursuant to the directions given by the Hon'ble Apex Court, the Government has established a special court by name 'The Motor Accidents Claims Tribunal' for the early hearing and giving the speedy reliefs and adequate compensation to the victims of road accidents by amending the Motor Vehicles Act from time to time. Considering the report of various Committees submitted in the year 1984 and the directions of the Hon'ble Apex Court given in various judgments, the Legislature came to the conclusion that the provisions of old Act (1939) are causing more hardship & inconvenience to the victims of road accidents in. getting sufficient compensation.
The Motor Vehicles Act being the social legislation, the wider and more reliefs were granted by the new Act of 1988. In the Motor Vehicles Act, 1988, in the year - 1994, the 'major amendment was introduced whereby the limitation which was a hurdle for awarding just compensation *in the genuine claims was deleted and the Legislature empowered the lower judiciary to entertain the claim applications without looking into the date of accidents. Similarly, the claim was permitted to be filed at the residential area of the applicant. By the said enactment the Legislature also removed the cap of limited liability imposed by the Act of 1939.
The Motor Vehicles Act, 1988 has brought a great relief to the victims and thereby adequate just compensation is awarded to the victims. The Legislature has incorporated Section 146 of the said Act with a specific intention that there should be a compulsory insurance of a vehicle before it is plied on the road to protect the victims of the road accidents in case of any mishap. By this enactment, the Legislature has guaranteed the victims to get full compensation as awarded by the Court of Law and thereby they were sure & secured about their rights.
By taking the spirit of directions given by the Hon'ble Apex Court, State Governments have constituted several Tribunals in their respective States and thereby the speed of awarding compensations and early reliefs is increased.
This has strengthened the hands of The Motor Accidents Tribunals in awarding adequate and just compensations to the victims of the road accidents as provided by the Motor Vehicles Act, 1988.
Though everything was going smoothly, all of a sudden we noticed this proposed amendment to the Motor Vehicles Act, 1988 by way of enacting Motor Vehicles Insurance and Compensation Act, 2011. If we read the objects and reasons for enactment of the new Act, it mentions that the proposed amendment enactment is created for the benefit of and for welfare of the road traffic accident victims. However, the real intention and meaning of the proposed amendment is totally against the interest of road traffic accident victims.
The following proposed provisions are very harmful and dangerous to the benefit of the road accident victims but also the owners of the vehicle involved in the accident viz.
(a) Section 4 of the proposed amended Act suggests that the maximum liability of the Insurance Company is Rs. 10,00,000/- (which was unlimited in Sections 145 and 147 (l)(b)(i) of Motor Vehicles Act, 1988) Sec- 147 reads as under:
"Against any liability which may be incurred by him in respect of the death of or bodily [injury to any person, including owner of the goods or his authorized representative carried in the vehicle] or damage to any property of a third party caused by or arising out of the use of the vehicle in a public place."
(b) The above provision was introduced taking into consideration the directions given by the Supreme Court by various judgments from time to time and the reports of various Committees established for that purpose and as per the suggestions of the Law Commission on the point of hardship suffered by the victims.
(c) If the proposed amendment by way of Section 4 is introduced, It will cause more hardship to the victims of the road accidents as the balance amount of compensation awarded will be difficult to recover from the owner of the vehicle as the financial condition of the owner of the vehicle may not be sound to satisfy the said award. Even if we make efforts to recover this amount, the victim will have to put another battle/ litigation for recovery of the balance amount which will result in multiplication of litigation and again it is a time consuming process and there will be delay in getting just compensation.
(d) If we read the objects and reasons of incorporation of the above Act, it clearly indicates that the imposition of limited liability / cap of limited liability is made purely considering the ground of premium. We may suggest that instead of limiting the liability, the cap of limited liability can be easily lifted by rationalizing the amount of premium which will solve the problem of Insurance Company, Owners of the vehicle and the victims of the road accident.
(e) It is pertinent to note that prior to year 2000 there were four subsidiary companies working under the General Insurance Corporation of India and they were the nationalized companies. After the year 2000 the globalization policy came into existence and the Insurance Sector was opened to the private Insurance Companies for their participation in General Insurance business. Initially, few private companies entered into the said business, but the said number is now gradually increasing which shows that the General Insurance Business is a profit making business and therefore every now and then the new private company is venturing in to the general insurance business. It must observe that any prudent businessman will not enter into the business which is the loss making business.
(f) Section 20 of the said proposed amendment mentions regarding the refund of compensation in certain cases paid under Section 18 it reveals that the payment of compensation in respect of the death of, or grievous. hurt to, any person under Section 18 shall be subject to the condition that if any compensation (hereafter in this Sub-Section referred to as the other compensation) or other amount in lieu of or by way of satisfaction of a claim for compensation is awarded or paid in respect of such death or grievous hurt under any other provision of this Act or any other law or otherwise so much of the other compensation or other amount aforesaid as is equal to the compensation paid under Section 18 shall be refunded to the insurer. This is against the Principles of Natural Justice.
(g) This amendment is against the suggestions and the observations made by the Hon'ble Apex Court in case of Helan C. Rebello v/s. M.S.R.T. Corporation reported in 1999-ACJ-Pg.10-SUPREME COURT and in case of National Insurance Co. Ltd. v/s. Indira Srivastav reported in 2008(l) TAC Page 424 SUPREME COURT.
By the aforesaid judgments the Hon'ble Apex Court has disallowed the contention of the Insurance Company regarding the deductions of compensation amounts received by the victims by virtue of their special contracts with the Insurance Companies and/or the amounts received from other sources which are otherwise not concerned regarding the said road accidents and in normal course the said person is entitled for the said amount by virtue of his personal or special contract for which he had paid the premium and therefore, the above clause incorporated 'in the said proposed amendment is against principles of natural justice and it is harmful to the Social Legislature. It will also affect on the business of the Insurance Company and it will adversely affect the insurance business.
(h) Section 28 refers to the settlement between the Insurers and the claimants out side the Court which will give rise to the corruption at the insurance level. This will make the power of Court as a mere rubber stamp of authenticity. This process of out of Court settlement frustrates the very purpose of settlement before Lok Adalat, mediation and conciliatory proceedings.
(i) Section 34 deals with the restriction / ban on claimants to go in Appeal after receiving the compensation from the Tribunal being the aggrieved person. The aforesaid provision is in contravention with the Law and the procedure laid down by Code of Civil Procedure 1908 and the various Apex Court Judgments. The right to appeal is generated at the time of filing of a Suit or Application and, therefore, this right can not be taken away which results in denial of justice and therefore this provision is unconstitutional.
(j) Section 39 refers to impounding of vehicle by Police and retaining the same till disposal of the claim application. It is necessary to consider that for recovery of the balance compensation if that vehicle is seized by the Police and it remains in the compound of the Police Station within a period of 2 years the value of the vehicle will be nothing more than salvage and, therefore, the recovery of the balance amount is next to impossible.
(k) Section 40 of the said proposed amendment limits the period of three years for claiming compensation from the date of accident. In the Motor Vehicles Act, 1988, in the year 1994, the major amendment was introduced whereby the limitations which was a hurdle for awarding compensation in the genuine claims was deleted and the Legislature empowered the lower judiciary to entertain the claim applications without looking into the date of accidents.
Similarly, the claim was permitted to be filed at the residential area of the applicant. By the said enactment the Legislature also removed the cap of limited liability imposed by the Act of 1939 and therefore this proposed amendment is against the principles of natural justice and against the rights of victims to claim the compensation.
(l) As regards to the Schedules I and II it was introduced in Section 163(A) of the Motor Vehicles Act, 1988 [and also the same schedule is mentioned in the proposed act] considering the situation prevailing at that time. At present there are drastic changes in the said situation and there is a price hike and much inflation and devaluation of Rupee and the higher cost of living requires up gradation of the Schedule, There are various directions issued by the Hon'ble Apex Court specifying the defects in the said Schedules and directed to rectify and revision of the same. The retaining of the same Schedules is without considering the present position and therefore it has to be discarded. The percentage of disablement mentioned relating to the injuries should be applied taking in to the consideration the use of particular part of the body.
If we consider the provisions of Minimum Wages Act., Rs. 150/- per day is taken as minimum wage therefore notional income be taken at least Rs.45,000/- p.a. and accordingly the further schedule be prepared.
It is therefore, surprising to note such drastic and harmful amendments to the Motor Vehicles Act recommended by the R. K. Kaul Committee limiting the liability of Insurance Companies for payment of compensation and depriving the legitimate rights of the victims of the road accidents to get the compensation and burdening the vehicle owners to pay the excess amounts of compensation from their pockets though their vehicle are validity insured, which is of course against interest of the public at large and causing hardship to victims of road accident.
Another aspect is in number of cases, the victims will be indirectly dragged in another litigation for recovery of the balance amount from the owners of the vehicles which is practically impossible and expensive as the vehicle owners may not be in a financially sound position to pay the balance awarded amounts. For the recovery of the said amounts from the owners of the vehicles, the amount awarded against the Insurance Companies may be exhausted while recovering the amount from the owners. The victims may require to run from pillar to post.
The said amendment as suggested under the pretext of heavy losses suffered by Insurance Companies due to the payments of Third party claims.
But in fact the losses suffered by the Insurance Companies are not because of third party claims but the delaying tactics in early settlement of claims resulting in payment of interest. The increase of un warranted overhead expenses of Insurance Companies, their mismanagement and hyper technical decisions in dealing with third party claims which causes loss to Insurance Company.
It is necessary to consider that the reason behind the increase in road accidents are
1. Insufficient, incapable and non-roadworthy public transport.
2. The worst conditions of the road.
3. Increase in the traffic on the road.
4. Width and capacity of the road.
5. Increasing number of Vehicles.
6. Insufficient Traffic Police to manage traffic on the road.
7. Non induction of dividers, where ever necessary.
Taking into considering the above submissions, we are of the opinion that it will result in an eventual denial of just compensation to the unfortunate road accident victims which may occur because of the proposed amendment suggested by R. K. Kaul Panel Report, if brought into force.
Considering the seriousness of this dangerous proposed enactment It is necessary to agitated this before table of Parliament. We have initiated the agitation. We need your support to save the victims of road accident and the public, at large from such dangerous enactment. We there fore request you take up this issue before the Parliament and protect the victims and public at large.
Thanking You.
BAR ASSOCIATION OF MACT MUMBAI