FACTORS TO BE TAKEN INTO ACCOUNT WHILE COMPUTING COMPENSATION

UNDER MOTOR VEHICLES ACT

INTRODUCTION

The Motor Vehicle Act, 1988 envisages multiple provisions with respect to compensation to
victims in case of accidental injury or death caused due to motor vehicles plying on the roads.
The said consolidates and amends the previous law relating to motor vehicles i.e. The Motor
Vehicles Act, 1939.

RELEVANT PROVISIONS

 Sections 140 provides for interim compensation on ‘No Fault’ Basis. According to this
provision Rs. 50,000/- is to be given to the kith and kin of the deceased and Rs.
25,000/- to the grievously injured victim.
 Section 163 provides for compensation on the basis of structured formula given under
Second Schedule, the compensation can be claimed in case of death or permanent
disablement of a person in a motor vehicle accident.
 Section 163-A articulates the Alternative method of compensation or Payment of
Compensation on structured formulae basis. Under this provision the owner of the
motor vehicle of the authorized insurer shall be 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.
 Section 166 provides that in case of hit and run motor accidents the compensation of
Rs. 25,000/- shall be paid if the accident results in death of any person and Rs. 12,500/-

LANDMARK JUDGMENTS

 Supe Dei v. National Insurance Company Limited [(2009) 4 SCC 513]

The Apex Court in this case has opined that the position is well settled that the Second
Schedule under Section 163-A to the Act which gives the amount of compensation to be
determined for the purpose of claim under the section can be taken as a guideline while
determining the compensation under Section 166 of the Act.

 Sarla Verma v. DTC [(2009) 6 SCC 121]

 The Court laid down the facts which are needed to be established for assessing
compensation in case of death :
1. Age of the deceased
2. Income of the deceased
3. Number of dependants

RECENT JUDGMENTS

 National Insurance Company Limited v Pranay Sethi and Ors. [SLP (CIVIL) NO.
25590 OF 2014]
The Apex Court in this landmark judgment laid down following guidelines which the
tribunal should keep in mind while determining the compensation under MV Act:
1. Addition of future prospects to determine the multiplicand– The determination of
income while computing compensation has to include future prospects so that the
method will come within the ambit and sweep of just compensation as postulated
under Section 168 of the Act.
2. The selection of multiplier shall be as indicated in the Table in Sarla Verma case.
3. The age of the deceased should be the basis for applying the multiplier.
4. Reasonable figures on conventional heads, namely, loss of estate, loss of
consortium and funeral expenses should be Rs. 15,000/-, Rs. 40,000/- and Rs.
15,000/- respectively. The aforesaid amounts should be enhanced at the rate of 10%
in every three years.