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1 REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

Civil Appeal No. 9694 of 2013  (@Special Leave Petition (Civil) No.7586 of 2012)

United India Insurance Company Ltd. ... Appellant

Versus

Sunil Kumar & Anr.        … Respondents

REFERENCE ORDER  

K.S. Radhakrishnan, J.

1. Leave granted.

2. Heard learned counsel for the parties.  Learned counsel  

appearing for the Respondent submitted that in view of the  

judgment  of  this  Court  in  United  India  Insurance  

Company Ltd. v. Shila Datta and others [(2011) 10 SCC  

509], this matter will have to be referred to a larger Bench,  

especially with regard to points no.(iii) to (v) referred to in  

the above-mentioned judgment, which are in conflict with the

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2 judgment of this Court in  National Insurance Co. Ltd. v.   

Nicolletta  Rohtagi [(2002)  7  SCC  456].   The  impugned  

order,  we  notice,  is  based  on  the  principle  laid  down  in  

Nicolletta Rohtagi’s case (supra), the correctness of which  

is  doubted in  Shila Datta’s  case  (supra).   In  the  present  

case, the claim petition was filed by the Respondent under  

Section  163-A  of  the  Motor  Vehicles  Act,  1988,  claiming  

compensation  for  the  injury  sustained  by  him  in  a  road  

accident  occurred  on  20.11.2006.   The  Tribunal  after  

recording the evidence and after hearing the parties, vide its  

order  dated  16.8.2011  passed  an  award  for  a  sum  of  

Rs.3,50,000/- along with interest at the rate of 7% per annum  

from  the  date  of  the  filing  of  the  petition  till  realization.  

Aggrieved  by  the  same,  the  Insurance  Company  filed  an  

appeal  before  the  High  Court  of  Delhi.   The  High  Court  

placing  reliance  on  the  judgment  in  Nicolletta  Rohtagi’s  

case  (supra)  dismissed  the  appeal  since  the  Insurance  

Company  failed  to  comply  with  Section  170  of  the  Motor  

Vehicles Act and the Insurance Company has come up with  

this appeal.  Learned counsel for the Respondent contended

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3 that the question whether permission is required or not under  

Section 170 stands referred to a larger Bench.

3. We have yet another issue to be examined.  As already  

indicated that  in  the instant  case,  claim petition was filed  

under Section 163-A of  the Motor  Vehicles Act,  which was  

resisted by the Insurance Company contending that the same  

is not maintainable since the injured himself was driving the  

vehicle  and that  no disability  certificate was produced.   A  

Two-Judge  Bench  of  this  Court  in  National  Insurance  

Company Limited v. Sinitha and others  [(2012) 2 SCC  

356]  examined  the  scope  of  Section  163-A  of  the  Motor  

Vehicles Act and took the view that Section 163-A of the Act  

has been founded under “fault liability principle”.  Referring  

to  another  judgment  of  a   co-equal  Bench  in  Oriental  

Insurance Co. Ltd. v. Hansrajbhai V. Kodala [(2001) 5  

SCC  175],  the  learned  Judges  took  the  view  that  while  

determining whether Section 163-A of the Motor Vehicles Act,  

1988  is  governed  by  the  fault  or  the  no-fault  liability  

principle, Sections 140(3) and (4) are relevant.  The Bench

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4 noticed  under  Section  140(3),  the  burden  of  pleading  and  

establishing whether or not wrongful act, neglect or default  

was  committed  by  the  person  (for  or  on  whose  behalf)  

compensation is claimed under Section 140, would not rest  

on the shoulders of the claimant.  The Court also noticed that  

Section 140(4) of the Motor Vehicles Act further reveals that  

a claim for compensation under Section 140 of the Act cannot  

be defeated because of any of the fault grounds (wrongful  

act, neglect or default).   

4. The Division Bench in Sinitha’s case (supra), then took  

the view that  under  Section 140 of  the Act  so also under  

Section 163-A of the Act,  it  is  not essential  for  a claimant  

seeking compensation to plead or establish that the accident  

out  of  which the claim arises suffers  from wrongful  act  or  

neglect or default of the offending vehicle.  The Bench then  

expressed the view that the legislature designedly included  

the  negative  clause  through  Section  140(4)  of  the  Motor  

Vehicles Act, but consciously omitted the same in the scheme  

of  Section 163-A of  the Act  intentionally  and purposefully.

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5 The Court also concluded, on a conjoint reading of Sections  

140 and 163-A, the legislative intent is clear, namely, that a  

claim for compensation raised under Section 163-A of the Act  

need not be based on pleadings or proof at the hands of the  

claimants showing absence of wrongful act, being neglect or  

default, but the Bench concluded that it is not sufficient to  

determine whether the provision falls under the fault liability  

principle.   The  Court  held  that  to  decide  whether  the  

provision  is  governed  by  the  fault  liability  principle,  the  

converse has to be established i.e.  whether a claim raised  

thereunder  can  be  defeated  by  the  party  concerned  (the  

owner or the insurance company) by pleading and proving  

wrongful act, neglect or default.   Interpreting Section 163-A  

of the Act, the Judges in Sinitha’s case (supra) held that it is  

open to the owner or the insurance company, as the case  

may be, to defeat a claim under Section 163-A of the Act by  

pleading  and establishing  through cogent  evidence a  fault  

ground  (wrongful  act  or  neglect  or  default).    The  Court  

concluded that Section 163 of the Act is founded under the  

fault liability principle.  

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5. We find difficult to accept the reasoning expressed by  

the Two-Judge Bench in Sinitha’s case (supra).  In our view,  

the  principle  laid  down in  Hansrajbhai  V.  Kodala’s  case  

(supra) has not been properly appreciated or applied by the  

Bench.  In fact, another Division Bench of this Court vide its  

order dated 19.4.2002 had doubted the correctness of the  

judgment  in  Hansrajbhai  V.  Kodala’s  case  (supra)  and  

referred the matter to a Three-Judge Bench to examine the  

question  whether  claimant  could  pursue  the  remedies  

simultaneously under Sections 166 and 163-A of the Act.  The  

Three-Judge Bench of this Court in Deepal Girishbhai Soni  

&  Ors.  v.  United  India  Insurance  Co.  Ltd.,  Baroda  

[(2004) 5 SCC 385] made a detailed analysis of the scope of  

Sections  166  and  163-A  and  held  that  the  remedy  for  

payment  of  compensation  both  under  Sections  163-A  and  

166 being final and independent of each other, as statutorily  

provided, a claimant cannot pursue his remedies thereunder  

simultaneously.  The  Court  also  extensively  examined  the  

scope  of  Section  163-A  and  held  that  Section  163-A  was

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7 introduced in the Act by way of a social security scheme and  

is a Code by itself.  The Court also held that Section 140 of  

the  Act  deals  with  interim  compensation  but  by  inserting  

Section 163-A, the Parliament intended to provide for making  

of  an  award  consisting  of  a  pre-determined  sum  without  

insisting on a long-drawn trial or without proof of negligence  

in causing the accident.  The Court noticed that Section 163-

A  was  inserted  making  a  deviation  from the common law  

liability under the Law of Torts and also in derogation of the  

provisions  of  the  Fatal  Accidents  Act.    The  Three-Judge  

Bench also held that Section 163-A has an overriding effect  

and  provides  for  special  provisions  as  to  payment  of  

compensation on structured formula basis.  Sub-section (1) of  

Section  163-A  contains  a  non-obstante  clause,  in  terms  

whereof  the owner  of  the  motor  vehicle  or  the authorized  

insurer is liable to pay, in the case of death or permanent  

disablement due to accident arising out of the use of motor  

vehicle, compensation, as indicated in the Second Schedule,  

to the legal heirs or the victim, as the case may be. The Court  

also held that the scheme of the provisions of Section 163-A

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8 and  Section  166  are  distinct  and  separate  in  nature.  In  

Section  163-A,  the  expression  "notwithstanding  anything  

contained in this Act or in any other law for the time being in  

force" has been used, which goes to show that the Parliament  

intended to insert a non-obstante clause of wide nature which  

would mean that the provisions of Section 163-A would apply  

despite the contrary provisions existing in the said Act or any  

other law for the time being in force.  Section  163-A of the  

Act covers cases where even negligence is on the part of the  

victim. It is by way of an exception to Section  166 and the  

concept of social justice has been duly taken care of.  The  

above-mentioned  Three-Judge  Bench  judgment  was  not  

placed before the learned Judges who decided the Sinitha’s  

case (supra).   

6. We find, both Sections 140 and 163-A deal with the case  

of  death  and  permanent  disablement.  The  expression  

“permanent  disablement”  has  been  defined  under  Section  

142, so far as Section  140 is concerned.  So far as Section  

163-A is  concerned,  the  expression  "permanent  disability"

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10 permanent disablement be reduced on the basis of share of  

such person in the responsibility for his death or permanent  

disablement.    

7. We find,  in  Sinitha’s case (supra),  one of the factors  

which weighed with the learned Judges was the absence of a  

similar provision like sub-section (4) of Section 140 in Section  

163-A  which,  according  to  the  learned  Judges,  has  been  

intentionally and purposefully done by the legislature.  We  

find it difficult to accept that view.  We are of the view that if  

such an interpretation is given, the very purpose and object  

of Section 163-A would be defeated and render the provision  

otiose and a claimant would prefer to make a claim under  

Section 140, rather than under Section 163-A of the Act by  

exercising option under Section 163-B of the Act.  Because, if  

a  claim  under  Section  140,  is  raised  because  of  Section  

140(4), such a claim would not be defeated by the owner of  

the vehicle or the insurance company, as the case may be,  

and  the  claimant  may  get  a  fixed  sum  prescribed  under  

Section 140(2).    Sub-section (4)  of  Section 140 has been

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11 introduced by the legislature since claim under Section 140  

would be followed by Section 166.  So far as Section 163-A is  

concerned, claim is restricted on the basis of pre-determined  

formula, unlike in the case of application under Section 166.   

8. We  are,  therefore,  of  the  view  that  liability  to  make  

compensation under Section 163-A is on the principle of no  

fault  and,  therefore,  the  question  as  to  who  is  at  fault  is  

immaterial  and foreign to an enquiry under Section 163-A.  

Section  163-A  does  not  make  any  provision  for  

apportionment of the liability.  If the owner of the vehicle or  

the  insurance  company  is  permitted  to  prove  contributory  

negligence or default or wrongful act on the part of the victim  

or  claimant,  naturally  it  would  defeat  the  very  object  and  

purpose  of  Section  163-A  of  the  Act.   Legislature  never  

wanted the claimant to plead or establish negligence on the  

part of the owner or the driver.  Once it is established that  

death or permanent disablement occurred during the course  

of  the  user  of  the  vehicle  and  the  vehicle  is  insured,  the  

insurance company or the owner, as the case may be, shall

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12 be  liable  to  pay  the  compensation,  which  is  a  statutory  

obligation.    

9. We, therefore, find ourselves unable to agree with the  

reasoning of the Two-Judge Bench in Sinitha’s case (supra).  

Consequently, the matter is placed before the learned Chief  

Justice of India for referring the matter to a larger Bench for a  

correct interpretation of the scope of Section 163-A of the  

Motor Vehicles Act, 1988, as well as the points no.(iii) to (v)  

referred to in Shila Datta’s case (supra)  

……..……………………..J. (K.S. Radhakrishnan)

……………………………J. (A.K. Sikri)

New Delhi, October 29, 2013