The key changes in Motor Vehicles Act, 1988 by Amendments through THE MOTOR VEHICLES

(AMENDMENT) BILL, 2019.

The major changes in particular sections affecting the liabilities of insurer towards third party and
defenses are as under:-

New Inserted/Amended
1. Section 140 Entire chapter related to interim relief (Chapter X) in the principal Act has
been omitted in New Act.
1. Section 145 (c) “grievous hurt” shall have the same meaning as assigned to it in section
320 of the Indian Penal Code, 1860;
(c), (d) & (i)
(d) “hit and run motor accident” means an accident arising out of the use of
a motor vehicle or motor vehicles the identity whereof cannot be
ascertained in spite of reasonable efforts for the purpose;
(i) “third party” includes the Government, the driver and any other co-
worker on a transport vehicle.
2. Section 147 (2) Notwithstanding anything contained under any other law for the time
being in force, for the purposes of third party insurance related to either
(2)
death of a person or grievous hurt to a person, the Central Government
shall prescribe a base premium and the liability of an insurer in
relation to such premium for an insurance policy under sub-section (1)
in consultation with the Insurance Regulatory and Development
Authority.
3. Section 149 (1) The insurance company shall, upon receiving information of the
accident, either from claimant or through accident information report
or otherwise, designate an officer to settle the claims relating to such
accident.
(2) An officer designated by the insurance company for processing the
settlement of claim of compensation may make an offer to the claimant
for settlement before the Claims Tribunal giving such details, within
thirty days and after following such procedure as may be prescribed by
the Central Government.
(3) If, the claimant to whom the offer is made under sub-section (2),—
(a) accepts such offer,—
(i) the Claims Tribunal shall make a record of such settlement, and
such claim shall be deemed to be settled by consent; and
(ii) the payment shall be made by the insurance company within a
maximum period of thirty days from the date of receipt of such
record of settlement;
(b) rejects such offer, a date of hearing shall be fixed by the Claims
Tribunal to adjudicate such claim on merits.
4. Section 150 (ii) a condition excluding driving by a named person or by any person who
is not duly licenced or by any person who has been disqualified for
(2)(a)(i)(D)(ii)
holding or obtaining a driving licence during the period of
disqualification or driving under the influence of alcohol or drugs as
(2)(c) - New laid down in section 185; or
Addition in
Defenses of Insurer (c) that there is non-receipt of premium as required under section 64VB of
the Insurance Act, 1938.
(4)
(4) Where a certificate of insurance has been issued under sub-section (3)
of section 147 to the person by whom a policy has been effected, so
much of the policy as purports to restrict the insurance of the persons
insured thereby, by reference to any condition other than those in sub-
section (2) shall, as respects such liabilities as are required to be
covered by a policy under clause (b) of sub-section (1) of section 147, be
of no effect.

Omitted pay & recover clause in new act from section 149(4) -
Provided that any sum paid by the insurer in or towards the discharge of
any liability of any person which is covered by the policy by virtue only of
this sub-section shall be recoverable by the insurer from that person
5. Section 161 (2) Subject to the provisions of this Act and the scheme made under sub-
section (3), there shall be paid as compensation,—
(2)(a) & (b)
(a) in respect of the death of any person resulting from a hit and run
Hit & Run
motor accident, a fixed sum of two lakh rupees or such higher
Compensation
amount as may be prescribed by the Central Government;
(b) in respect of grievous hurt to any person resulting from a hit and
run motor accident, a fixed sum of fifty thousand rupees or such
higher amount as may be prescribed by the Central Government.
6. Section 164(1) (1) Notwithstanding anything contained in this Act or in any other law for
the time being in force or instrument having the force of law, the
Earlier known as
owner of the motor vehicle or the authorised insurer shall be liable to
163A
pay in the case of death or grievous hurt due to any accident arising
out of the use of motor vehicle, a compensation, of a sum of five lakh
rupees in case of death or of two and a half lakh rupees in case of
grievous hurt to the legal heirs or the victim, as the case may be.
section 164(1) has been introduced by which arising out of use of
motor vehicle without pleading negligence claimant would entitled to
get Rs. 5 lac in death case in Rs. 2.5 lac in grievous hurt case and once
claimant opt and received amount of such section their claim petition
before tribunal would be lapsed.
7. Section 164 (B)(5) (5) In all cases specified in clause (a) of sub-section (3), when the claim of
such person becomes payable, where amount has been paid out of this
Motor Vehicle
fund to any person, the same amount shall be deductible from the
Accident Fund
claim received by such person from the insurance company.
8. Section 166 In section 166 of the principal Act,— (i) in sub-section (1), after the proviso,
the following proviso shall be inserted, namely:—
“Provided further that where a person accepts compensation under
section 164 in accordance with the procedure provided under section
149, his claims petition before the Claims Tribunal shall lapse.”.
(ii) in sub-section (2), the proviso shall be omitted;
(iii) after sub-section (2), the following sub-section shall be inserted,
namely:—
“(3) No application for compensation shall be entertained unless it is made
within six months of the occurrence of the accident.”.
9. Section 173 In section 173 of the principal Act, in sub-section (2), for the words “ten
thousand”, the words “one lakh” shall be substituted.

Appeal can only be maintainable beyond award of Rs. one lakh.

Salient features of New M V Act

1. S. 140 has been omitted.

2. The word "the liability incurred " in S. 147 (2) (a) has been substituted by "The Central Govt. will
prescribe Base premium and maximum liability of an insurer in consultation with IRDA ".

3. New S. 149 provides for settlement by the Insurers in consultation with MACT.

4. In Old s. 149 (2) an additional defense of drunken driving by the driver of IV has been added.
Similarly non receipt of premium has been added.

Mainly pay and recover order has been deleted.

5. New S. 164 ( No fault liability ) has been added in place of 163 A, which provides Rs. 5 lakhs for
death and Rs. 2.5 lakhs in case of grievous hurt (as defined in s. 320 of IPC).

6. 164 (c)(2)(k) provides that the central Govt. Shall make decide minimum premium and
maximum liability u.s. 147 (2) as far as fault liability is concerned.

Old act 166 has been amended. It mainly provides that 1. If a person accepts compensation u.s
164 then his claim u.s. 166 would lapse. 2. Time limit of 6 months to file a claim has been
reintroduced.
Analysis about impact of proposed amendments:-

The adverse effect which can be faced by the insurance company is that the proposed amendment in
section 163A which will be called in new Act now as 164(1) in which it has been prescribed to pay
compensation in death cases as Rs.5 lakh and in grievous hurt cases (as defined in s. 320 of IPC) as Rs.2.5
lakh, the said proposed amendment can be misused to create fraudulent claims in a particular
fraudulent manner in specified areas where there is tendency of fake claims specially upon implanting
two wheelers.

The manner of fraudulent claims which were noticed in past times is that some injured persons or some
other person who got died by some other reason apart from road accident shows as pillion rider upon
two wheeler having comprehensive policy and as an afterthought FIR was lodged against unknown
vehicle hitting the said two wheeler upon which said victim was going as pillion rider, ultimately police
submitted final report that unknown vehicle was not traceable and claim was filed without pleading
negligence under 163A but number of such cases were quite law as second schedule amount in injury
cases was not so high or clear, but in the new act in grievous hurt cases it is minimum liability of 2.5 lakh
will attract the fraudulent case in above noted pastly experience manner and that would not be in the
interest of insurance company specially doing two wheeler insurance in rural areas.