What is The Motor Vehicles Act, 1988?

13 Sep 2019  Read 33637 Views

The Law relating to Torts is based on the principle that every injury should have a remedy. The concept of compensation and providing damages step in at this very instance. “Compensation” is defined in Oxford dictionary as something signified to be given in recompense as opposed to the “damages” which is a value estimate.

The implications of the word – ‘compensation’ is quite wide. It seeks to provide for the actual or the anticipated losses and does so under various heads and is often awarded subjectively on a case-to-case basis. There cannot hence be a hard and fast rule for this although there are various legislations that support this concept. The Motor Vehicles Act, 1988 has been described to be a welfare legislation aimed at providing relief to the aggrieved parties.

The Motor Vehicle Act, 1939 consolidated all the laws relating to motor vehicles but it had to be constantly amended in order to keep it up to date. With the advancement in road transport technology and development of the road network coupled with the change in the pattern of passenger transport, it was important that the act was amended in order to incorporate all the modern techniques relating to motor vehicles.

A review group was thus set up in order to form a comprehensive legislation and based on the suggestions given, the Motor Vehicles Act, 1988 came into being on July 1, 1988. Sections 140-144 (Chapter X) dealt with no fault liability, while Sections 145-164 (Chapter XI) deals with insurance in third party claims and Sections 165-176 (Chapter XII) goes on to deal with claim tribunals. The act is considered to be a welfare legislation. It is primarily focussed on giving relief to innocent persons on the road who are often victims to accidents and then find themselves not having a claim to the compensation that they should otherwise receive.

A driving license was made mandatory for any of the drivers through the provisions of the MVA, 1988. The act also required the registration of a vehicle under the act which had a validity period of 15 years after which it could be further renewed for another 5 years. These provisions form the tip of the iceberg which extends to cover multiple other sections which goes a long way in making the MVA, 1988 a welfare legislation.

Various Aspects of the Motor Vehicles Act

Insurance and Third-party Claims -

Compulsory Insurance was introduced in order to safeguard the interests of the third party who would be a probable victim of an accident or an injury by the use of a motor vehicle. This gives the victim or the third party for that matter to make claims either from the owner of the motor vehicle or from the insurance party or from both of them as need be and as given in the provisions.

As per Section 147(5) of the Motor Vehicles Act, 1988 (MVA Act), the insurer has the responsibility to indemnify the persons or the class of persons that the corresponding policy aims to cover. This insurance to the third party was considered to be mandatory under the statute and was not to be overridden on the basis of any clause present in that insurance policy. It was laid out in National Insurance Co. Ltd. v Faqir Chand that “third party” was to include everyone except for the contracting parties to the insurance policy.

Section 146 of the act considered insurance to be a necessity for the third party. It was also said that no person should be allowed to use a motor vehicle without signing to an insurance policy. In order to cover for its purpose as welfare legislation, the insurance company was considered to be a “State” as under the definition mentioned in Article 12 of the constitution.

And hence there was a duty on the insurers, under Section 149 to make sure that the judgments and the awards against persons insured in third party risks were satisfied. Section 145 of the MVA, 1988 defined a third party to be any part other than the two contracting parties to the insurance policy.

Gratuitous passengers were excluded from the scope of being considered a “third party”. The Impecuniosity of the owner was not to alter the claims that the third party will have in case of an accident. It was also said that any Government Vehicles were to be exempted from insurance, under Section 146(2) and Section 146(3), which is then covered by a special fund organised for the same purpose.

The purpose for ensuring that a vehicle is ensured is for providing the victims of an accident with an easy mode of claiming damages and compensation. This was also enacted in order to excuse the victims of pursuing their claim from one forum to another and to no avail in most cases. It was later said that Section 147 had to be given a much more practical and effective meaning by widening its scope. This was in order to do good the numerous categories of people who were entitled to claim compensation either from the insurer or the insured, or in some case, the both.

The policy as provided in the act was to include and cover only third-party claims and nothing more. A passenger traveling in a private car or a pillion rider driving a scooter were to be kept outside the scope of the insurance claims. It was also held that the insurance company would not be held liable for the accident to the pillion rider as long as the scooter owner had a policy that did not cover for the rider as well. Similarly, it was ruled that if the owner of the goods were to travel with the goods in a vehicle, the insurance company was not to be liable in case of an accident that were to occur in the process.

The Concept of “No-fault Liability”

In the case of Haji Zakaria v Naoshir Cama, there was a contention raised as to whether the liability to pay compensation could be imposed even when there was no rash or negligent actions on part of the owner. But this was not accepted by the Supreme Court. The apex court opined that there could be no liability where there was an absence of negligence in the part of the owner or the driver or the motor vehicle.

 The principle of “No Fault Liability” was developed in order to provide some sort of relief to the victims of ‘hit and run’ cases. For the purposes of social justice, the principle laid out that the driver or the owner was to be held liable without taking contributory negligence into consideration. The denial of compensation to the victim on the grounds that negligence and the fault of the driver were not established was highly against the principles of a welfare state.

Strict Liability & No-Fault Liability There was a contention as to how the principle of “No-fault liability” differed from that of “Strict liability”. In the case of the former, the compensation was fixed while in the case of the latter, it is not. This principle which guides “No-Fault Liability” is quite different from that of the basic common law principle which states that the claimant should establish negligence on the part of the driver or the owner of the vehicle in order to claim compensation. This departure was accommodated, however, in Sections 140-144 of the Motor Vehicles Act, 1988.

Under Section 140, it was determined that compensation was to be paid in the case of death or of permanent injuries arising out of the use of a motor vehicle. A person was to be awarded a fixed amount of Rs 50,000 in the case of death and an amount of Rs 25,000 in the case of permanent disablement.

The claimant was not required to establish the presence of negligence on the part of the owner or the driver of the motor vehicle under Section 140 based on the principle of “No Fault Liability”. The contributory negligence of the claimant was not to be taken into consideration to determine the liability on the owner or the driver of the motor vehicle.

It was also interpreted under this section that the claimant was entitled to compensation under any other sections of the same act or any other provisions that would provide relief in addition to the fixed amount prescribed under Section 140 of the Motor Vehicles Act, 1988. The means of this interim compensation under Section 140 came into force in the year 1994 and was said to have no retrospective effect.

The liability of the owners of the vehicle was fixed to be joint and several under Section 140(1)(3) of the act and no fault was to be established on the part of the owner or the driver under the same provision.

The phrase “accident arising out of the use of a vehicle” was used instead of “accident caused by the use of a motor vehicle”. This only went on to reinforce MVA, 1988 stance as welfare legislation thus enabling the aggrieved to make better and efficient claims. By the inclusion of the use instead of the cause, the scope was expanded quite widely. The test was to check whether the accident caused was in proximate distance to the motor vehicle and this was irrespective of the motor vehicle being stationary or otherwise.

The expression “arising out of the” was used in order to widen and expand the scope of what had to be covered. In the case of Shivaji Dayanu Patil v Vatschala Uttam More and in the case of Samir Chandra v Assam State Transport Corporation the distinction was well laid out and the significance was properly analysed.

In the case of Shivaji Dayanu, a collision occurred between a petrol tanker and a truck. It was almost after 4 hours that an explosion took place resulting in the death of the son of the respondent. It was also found that villagers tried to steal and pilfer oil from the site of the accident in those 4 hours, leading to friction which caused the explosion. The claim was allowed by the High Court.

It was later contested by the owners and the insurers (the petitioners) that there was no causal relationship between the collision and the explosion that took place hours later. It was here that the Supreme Court interpreted the phrase “arising out of” to have a wider connotation.

It was ruled that causal relationships need not be direct and proximate but it was enough even if it was less immediate. This interpretation and usage of the phrase allowed the accessibility of this provision to a larger group of victims and stood true to the label of being called a ‘welfare legislation’. It was found that the collision and the explosion were related events and there could be no proper inference that there was no causal relationship.

It was also said that this phrase could be expanded enough to include the time even when the vehicle is not moving or has been rendered immobile due to some defect. The fact matrix of that of Shivaji Dayanu adhered to this expansion and was followed in a lot of cases since then.

In the Samir Chandra case, a bomb blast occurred at the time when the passengers were alighting after the bus was parked and was not moving any more. The negligence of the owner was evaluated in this incident and hence it was declared that the accident arose out of the use of the motor vehicle. In the case of Varalakshmi v APSRTC, stones were hurled at a moving bus when the passengers were inside. The window screen was smashed in the process and a passenger was injured.

Since the accident arose out of the use of a motor vehicle, the owner and the insurer were to be held liable. The interpretation of the legislation was widened enough to include the motor vehicle even when it was in motion and otherwise. Even if a trailer connected to a motor vehicle were to get detached and cause an accident, the owner of the motor vehicle was to pay compensation.

This scope was expanded in order to provide the victim with an opportunity for maximum compensation. If the compensation were to exceed the amount prescribed as in Section 140 and if it were to go beyond the interim compensation, there was a provision provided under the act to receive compensation under Section 163(A) and it was to be permanent. This provision was also based on the principle of “No-Fault Liability”.

This was beneficial for the heirs of the deceased as it would have been difficult for them to prove the negligence on the part of the defendant and then claim damages, otherwise. The compensation, under this section, was to be sought as provided in Schedule 2 of the act which was recently amended in the year 2018.

Claims Tribunal and its Awards

A forum called the Claims Tribunal or the Motor Accidents Claims Tribunal was set up in order to enable speedy and cost-effective remedies to the victims of accidents arising out of a motor vehicle. Before the establishment of such a tribunal, a suit for action had to be filed before the civil court with ad valorem court fees.

Post the establishment of the claim tribunals, no such fees had to be paid. In the case of Oriental Fire and General Insurance Co. v Kamal Kamini Das, the purpose of these provisions were explained. It was brought about in order to facilitate a cheap and efficient mode of enforcing liability due to the accidents arising out of the use of motor vehicles.

The tribunal, depending on whether it has got more than two members, would have one of them as the chairman. And further qualifications of being a member of the tribunal were laid down in Section 165(3).

Section 165(4) determined that the area of jurisdiction for such tribunals were to be decided by the State Government. They encourage matters relating to compensation regarding death or bodily injury or for damages to a third party or for both.

The definition of “Motor Vehicle” or “Vehicle” as given in Section 2(28) was also interpreted to by the tribunal to benefit the victims of the accident. It was to include all mechanically propelled vehicles and chassis and trailers in addition. the jurisdiction of the tribunal extends to entertaining an application for claim of compensation. They can enforce it against the owner, driver or the insurer but they are not allowed to against any other person or authority.

It was a must that the determination of the quantum of compensation was to be fair, just and reasonable. With the amendment of 1994, it was decided there would be no limitation in filing claims before the tribunal in case any accident was to arise. It was also provided that such an application was to be made before 12 months from the date of occurrence of the accident. This was due to the intervention of Section 29(2) of the Limitations Act that applied here. The Tribunal was provided with no authority to entertain the delay beyond a period of 12 months and hence the jurisdiction had a cap in that respect.

Every legal representative of the person suffered death or any other disablement had the right to claim the compensation and this was based on the principle of every right having a remedy. And for this, the definition of “legal representatives” under the Civil Procedure Code was taken into consideration. A widow who remarried was not entitled to compensation for the death of her late husband.

This was because she was considered to be no longer dependent on the deceased. For the same reason, a married daughter could also not claim compensation on the late father. Only the widow of the deceased who has not remarried was considered to be entitled to the compensation.

In the case where a person had a claim under both the MVA, 1988, and the Workmen’s Compensation Act, 1923, it was said that they were entitled to make a claim under either one of these acts and not under both. The option had to be chosen and the award was to be passed before it could become final and binding.


There has been a plethora of developments in this society to which one has been a witness to. And as any prudent person would do, the lawmakers of this nation have seen to it that the laws are in tandem with the fast-moving world and its attractive prospects. In a nation such as ours, it is always important for law-makers to make sure that the law catered to the growing developments and the fast changes that occurred in society. One such legislation that exemplified this ideal was the Motor Vehicles Act, 1988 which was amended multiple times in order to stand true to its tag of being called welfare legislation. Various provisions were included and the scope was expanded in order to benefit the people and their claims for compensation.

The Indian Motor Vehicles (Amendment) Act, 2017 was considered surely to be an asset in the regime of motor vehicle laws in India. It was a much-desired upgrade. Body cameras were to be installed on traffic police with a constant check maintained by the RTOs for any sorts of corruption. It was also recommended that imprisonment for 7 years were to be granted instead of the existing 2-year period. Mandatory third-party insurance for all vehicles was also proposed. Penalties for traffic violations were to be made stringent so as to serve the purpose of deterrence.

The Motor Vehicles Act, 1988 was introduced and brought into force to fulfill the purpose of welfare legislation. With the introduction of third party insurance claims and compensations based on the principle of “no-fault liability”, the objective was met to an extent. There were numerous precedents that were set over the years which showed the widening of the scope of various provisions in order to benefit the aggrieved parties and the people who made claims under the act.

 Under Section 140, one could claim interim compensation which was a fixed amount, and also had the provisions to claim more compensation in addition to what was already claimed. The interpretation of the phrase “arising out of the use of a motor vehicle” was wide enough to include a whole array of mechanically propelled vehicles even if they were in motion or not. This was in order to provide the maximum benefit to the parties concerned.

About the Author: Philip Ashok Alex | 5 Post(s)

Philip is a second year law student at National Law University, Delhi who takes keen interest in constitutional law and matters relating to contemporary affairs of law. He takes profound interest in legal writing.

Liked What You Just Read? Share this Post:

Finology Blog / Legal / What is The Motor Vehicles Act, 1988?

Wanna Share your Views on this? Comment here: