Chapter 11 (Section 145 to 164) provides for compulsory third party insurance, which is required to

be taken by every vehicle owner. It has been specified in Section 146(1) that no person shall use or
allow using a motor vehicle in public place unless there is in force a policy of insurance complying
with the requirement of this chapter. Section 147 provides for the requirement of policy and limit of
liability. Every vehicle owner is required to take a policy covering against any liability which may be
incurred by him in respect of death or bodily injury including owner of goods or his authorized
representative carried in the vehicle or damage to the property of third party and also death or bodily
injury to any passenger of a public service vehicle. According to this section the policy not require
covering the liability of death or injuries arising to the employees in the course of employment except
to the extent of liability under Workmen Compensation Act. Under Section 149 the insurer have been
statutorily liable to satisfy the judgment and award against the person insured in respect of third
party risk.

Insurance Companies have been allowed no other defence except the

following:
(1) Use of vehicle for hire and reward not permit to ply such vehicle.
(2) For organizing racing and speed testing;
(3) Use of transport vehicle not allowed by permit.
(4) Driver not holding valid driving license or have been disqualified for holding such license.
(5) Policy taken is void as the same is obtained by non-disclosure of material fact.

Section 163A has been added in this Chapter by amending Act 54 of 1994 w.e.f. 14.11.94 whereby
special provision as to payment of compensation on structural formula basis has been provided. This
provision is being introduced to provide compensation to the third party victims without proving
negligence or tortious act. Schedule-II has been appended to the Act to give such structural formula.
Hon'ble Supreme Court has held that award under Section 163A is final, independent and not in
addition of award in claim petition under Section 166 where claim is sought on negligence basis.
Thus, one can claim compensation in either of the Section.

Claim Application:
Claim application can be filed under Section 163A for claim to be determined on structural formula
basis provided in Schedule-II. Schedule-II has been adjudged as suffering from severe mistakes and
the Supreme Court has held that total reliance cannot be placed on this schedule. Further the
Schedule do not provide any computation chart for the persons having more than Rs.40,000/-
annual income. Claim petition can also be filed under Section 166 of Motor Vehicle Act pleading
negligence where the claim shall be assessed by the Judge not on the basis of structural formula but
on the basis of evidence led.

The injured or the legal representatives of deceased can file claim application in a prescribed format
making driver, owner and insurer as party. Driver is not a necessary party in some states. For e.g. in
the Rajasthan Motor Accident Claims Tribunal Rules only owner and insurer are required to be party.
No limitation has been prescribed for filing of the claim application. Initially when the law has come
into force the limitation was 6 months which was later increased to one year and ultimately in the
garb of welfare legislation the provision of limitation has been deleted. In my humble view when
there is limitation prescribed for all type of causes, some limitation of 2 or 3 years must be
prescribed for filing of claim application. It should not be made indefinite, as it will cause serious
problems to the defendant. The procedure has been prescribed as a summary procedure for
determining the compensation.