Compensation in ‘Hit and Run’ cases (After 2019 Amendments)
Under Section 10, “Compensation in ‘Hit and Run’ Cases (After 2019 Amendments),” and sub-section 10.1, “Legal Provisions,” the 2019 Amendments introduced significant changes, including higher compensation payouts for victims, stricter penalties for statutory violations, and statutory clarity regarding the “golden hour” principle to facilitate critical emergency care immediately after an accident.
161. Special provisions as to compensation in case of hit and run motor accident.
Under Section 161, “Special Provisions as to Compensation in Case of Hit and Run Motor Accident,” the Central Government provides structured compensation to victims suffering death or grievous hurt in hit-and-run accidents, notwithstanding other laws.
Under sub-section (2), compensation is ₹2,00,000 for death and ₹50,000 for grievous hurt, or higher amounts as prescribed.
Sub-section (3) empowers the Central Government to notify a scheme through itself or the General Insurance Council covering applications, deadlines, and authority decisions.
Sub-section (4) allows such schemes to provide interim relief, impose penalties for violations, and delegate powers to designated authorities.
162. Scheme for golden hour.
Under sub-section (2), the Central Government is required to formulate a dedicated scheme for cashless medical treatment of accident victims during the critical “golden hour” immediately following a crash.
To ensure immediate life-saving care without out-of-pocket expenses, the provision also authorizes the creation of a specialized fund for reimbursement and administration of such emergency treatment.
163. Refund in certain cases of compensation paid under section 161.
Under Section 163, “Refund in Certain Cases of Compensation Paid under Section 161,” compensation for death or grievous hurt in a hit-and-run case is conditional.
Under sub-section (1), if the claimant later receives compensation under any other law, an amount equal to the Section 161 payout must be refunded to the insurer to prevent double recovery.
Sub-section (2) requires the Claims Tribunal, court, or authority to verify whether Section 161 compensation has been paid or an application is pending before granting regular compensation.
If already paid, the liable party must reimburse the insurer; if pending, the award details must be sent to the insurer.
The Explanation clarifies that an application remains pending until rejection or actual payment.
10.2 Case-based Illustration
In State Tr. P.S. Lodhi Colony New Delhi v. Sanjeev Nanda, commonly known as the BMW Hit-and-Run case, the Supreme Court addressed the serious social menace of drunk driving and the legal duties of motorists after accidents.
A 21-year-old driver negligently struck pedestrians and police officers, dragged several victims under his car, and fled the scene despite their need for urgent medical help.
Considering Sections 185, 203, 205 and 134 of the Motor Vehicles Act, 1988, along with expert evidence, the Court confirmed that the driver exceeded permissible blood-alcohol limits and emphasized alcohol’s effect on depth perception, motor coordination, and reaction time.
The Court also held that an international driving licence does not establish competence on Indian roads without a valid local licence, and that drivers must secure immediate medical care and report accidents.
Failing these duties and fleeing the scene was held punishable under Section 304(II) of the Indian Penal Code.
Instead of relying only on imprisonment, the Court directed two years of community service and a ₹50 lakh fine for compensating victims of untraceable hit-and-run cases, emphasizing social restitution and deterrence.
Threeti & others v. Motor Accidents Claims Tribunal & Ors.
In Threeti & others v. Motor Accidents Claims Tribunal & Ors., judicial precedent under the Motor Vehicles Act, 1988 balanced strict legal provisions with practical human behavior.
The court clarified that Section 140 (no-fault liability) applies when at least one involved vehicle is identified, while Section 161 hit-and-run applies only when no vehicle can be identified despite diligent efforts.
The court rejected denying claims merely because an FIR lacked a vehicle number, recognizing that victims naturally prioritize urgent medical help rather than memorizing a number.
In a case involving a sole breadwinner survived by his wife and three minor children, the court increased compensation from ₹4 lakh to ₹6 lakh with 7% interest to meet the ends of justice.
Victims may claim under Section 166, requiring proof of negligence, or Section 163-A, providing structured compensation without proving fault.
Tribunals should rely on police inquiries, accident forms, and the preponderance of probabilities rather than penalizing witnesses for failing to recall vehicle numbers.
11. Insurer’s Liability for ‘Use of the Vehicle’ in a ‘Public Place’
Section 11 outlines the criteria for “Insurer’s Liability for ‘Use of the Vehicle’ in a ‘Public Place’” under Section 147 of the Motor Vehicles Act.
In simple terms, an insurer is financially responsible for harm or property damage only when two conditions are met: the damage must result directly from the actual operation or use of the vehicle and must occur in a public place.
Thus, insurance coverage applies when a vehicle causes harm while being used in areas accessible to the general public.
11.1 Use of the Vehicle
Under motor vehicle insurance law, the concept of “use of the vehicle” extends beyond active driving and includes vehicles that are stationary, parked, or even rendered inoperable by removing the battery.
In Elliot v. Grey, it was held that active operation at the exact moment of the incident is not necessary for a vehicle to remain in use.
Similarly, in Oriental Fire & General Ins. Co. v. S.N. Rajguru, the Bombay High Court held the insurer liable when a parked oil tanker exploded near a public footpath, killing a bystander.
The Supreme Court further applied this principle in New India Assurance Co. Ltd. v. Yadu Sambhaji More and Shivaji Dayana Patel v. Vatschala Uttam More, holding that delayed hazards, such as a tanker overturning, leaking fuel, and exploding hours later, can arise from the use of a motor vehicle and remain covered by insurance.
11.2 In a Public Place
The Motor Vehicles Act generally restricts an insurer’s liability to accidents occurring in a “public place,” defined as an area where the public has an unrestricted right of access without permission.
Courts apply this to public roads and transport terminals, and insurers may remain liable when an accident on a public road indirectly harms someone just inside a private boundary.
In contrast, restricted areas requiring entry permits, such as factory grounds or port jetties, are treated as private places, making the vehicle owner primarily liable.
However, if an insurer voluntarily issues a broader policy, it may cover accidents on private property, as shown by a policy covering a fatal accident in a private agricultural field.
The text therefore suggests amending the Act to impose insurer liability regardless of whether the accident occurs on public or private property.
12. With and Without Fault Liability
12.1 Statutory Recognition, Amendments and Omissions of Chapter X and its provisions
Section 12 explains the legal evolution of “With and Without Fault Liability” under Indian motor vehicle law.
Initially, some High Courts granted compensation without requiring proof of driver negligence, but the Supreme Court in Minu B. Mehta v. Balkrishna overturned this approach, holding that liability required proof of negligence by the owner or driver.
To balance this requirement, “no-fault liability” was introduced through Chapter X (Sections 140–144) of the Motor Vehicles Act, 1988.
However, from September 1, 2019, Chapter X was omitted, eliminating standard interim compensation payouts and making its historical background important for understanding motor accident compensation.
140. Liability to pay compensation in certain cases on the principle of no fault.
Section 140 establishes the principle of “no-fault liability” for motor vehicle accidents resulting in death or permanent disablement.
Under this provision, vehicle owners are strictly required to pay a fixed compensation—set at ₹50,000 in the case of death and ₹25,000 for permanent disablement—without requiring the victim or claimant to prove negligence or fault on the part of the vehicle owner or driver.
Furthermore, even if the victim shared in or caused the fault leading to the incident, the compensation cannot be denied or reduced.
While this rule does not prevent additional legal claims under other prevailing laws, any financial relief awarded through those other legal routes will be deducted from the compensation due under this section or Section 163-A.
A. Sridhar v. United India Insurance Company
In A. Sridhar v. United India Insurance Company, the Supreme Court held that when a road accident occurs due to an oil spill on the roadway, negligence lies with the driver operating the vehicle at the time, rather than with the vehicle itself or any third-party vehicle.
Therefore, the insurer cannot be held liable under standard third-party negligence claims, and compensation must instead be considered strictly on a “no-fault” liability basis.
Ishwarappa v. C.S. Gurushanthappa
In Ishwarappa v. C.S. Gurushanthappa, the Supreme Court emphasized that Section 140 of the Motor Vehicles Act, 1988 provided immediate financial relief through an interim award on a no-fault basis.
Under this now-repealed provision, compensation was fixed at ₹50,000 for death and ₹25,000 for permanent disablement, without requiring proof of negligence or allowing reduction for contributory negligence.
Claimants seeking higher damages had to establish fault, while Section 140 claims were given priority and vehicle owners and insurers were held jointly and severally liable.
Although Section 163-A also initially removes the need to prove fault, insurers may defeat such claims by proving negligence, unlike the absolute no-fault liability under Section 140, which was omitted on September 1, 2019.
12.2 Is the amendment of S. 140 applicable retrospectively?
Section 140 of the Motor Vehicles Act establishes “no-fault liability,” providing immediate financial relief to accident victims without requiring proof of driver or owner negligence.
An application under Section 140 stands independently and cannot be dismissed merely because a main claim under Section 166 was not filed or was rejected due to limitation.
Although compensation is generally governed by the law in force on the accident date, courts have sometimes treated increased payout limits, such as the 1994 increase from ₹25,000 to ₹50,000, as retrospective beneficial measures in pending cases, as in Manjit Singh v. Rattan Singh.
Section 140 or 163-A payments may be deducted from other recoveries to prevent duplicate compensation.
As remedial social legislation, Section 140 and its predecessor, Section 92-A of the 1939 Act, require liberal interpretation to provide quick relief to victims, as emphasized in Oriental F. & G. Insurance Co. v. Shantibhai.
K. Nandkumar v. M.D. Thantai Periyar Transport Corporation
In K. Nandkumar v. M.D. Thantai Periyar Transport Corporation, an accident on January 15, 1987, left a motorcyclist permanently disabled.
Although the accident resulted entirely from the motorcyclist’s sole negligence, the Supreme Court held that he could not be denied compensation under the “no-fault liability” provision of Section 92-A(4) of the Motor Vehicles Act, 1939.
Since no-fault compensation operates independently of who caused the accident, the rider was awarded ₹7,500 for permanent disability.
13. Duty of the Insurer to Satisfy Judgment Against Person Insured in Respect of Third Party Risks (S. 150)
13.1 Legal Provisions Post 2019 Amendments
Following the 2019 amendments to the Motor Vehicles Act, Chapter XI was restructured to define third-party insurance liabilities and procedures.
Section 147 outlines basic policy requirements and coverage, Section 149 establishes the procedure for claim settlements, and Section 150 places a strict legal duty on insurers to satisfy court judgments awarded against policyholders for third-party risks.
Thus, once a tribunal or court orders compensation for third-party damages, the insurer must pay the amount on behalf of the insured driver or owner.
150. Duty of insurers to satisfy judgments and awards against persons insured in respect of third party risks.
Under Section 150 of the Motor Vehicles Act, once a judgment or tribunal award for third-party liability is made against an insured person, the insurance company is legally obligated to satisfy the award up to the sum assured, including applicable interest and costs, even if it has grounds to avoid or cancel the policy.
The insurer must receive formal notice and may contest the claim only on specified statutory defenses, such as unlicensed or impaired driving, unauthorized vehicle use, fraud, or non-payment of premiums.
Any policy clause limiting liability beyond these grounds is legally void.
The provision also covers recognized foreign judgments from reciprocating countries, while vehicle owners must provide insurance details when required.
In New India Assurance Co. v. Norati Devi, the Supreme Court further held that even where an insured diplomat receives diplomatic immunity, the insurer remains liable to satisfy the compensation claim.
13.2 Doctrine of Stare Decisis
Under Section 13.2, “Doctrine of Stare Decisis,” the law emphasizes consistency and stability in judicial rulings.
The established rule that an insurer must satisfy a compensation decree passed in favor of a third party in the first instance is a long-standing principle that courts should not ordinarily deviate from.
Thus, established precedents requiring insurers to pay third-party victims upfront are well-settled standards that should be strictly upheld rather than repeatedly re-examined.
13.3 Defences Available to Insurance Company
13.3.1 Driving License Related
Under Section 13.3.1 regarding license-related defenses, insurance companies often contest liability by alleging that the driver lacked the appropriate category of license.
In one case, although the vehicle was registered as a commercial taxi, it was being used for personal purposes by a company director holding a valid personal motor car license.
Since the taxi was not carrying passengers for hire or reward, the court held that the standard license was sufficient and the insurer remained liable.
Conversely, in Oriental Insurance Co. Ltd. v. Angad Kol, the Supreme Court held that a commercial auto driver without a transport endorsement breached the policy terms.
The insurer was therefore directed to pay the victim’s family first, with the right to recover the amount from the owner and driver.
Person holding learner's licence—Duly licenced person—Entitled to drive vehicle
Under motor vehicle legal jurisprudence, a driver holding a valid learner’s license is considered duly licensed to operate a vehicle, making the insurance company obligated to satisfy third-party compensation claims arising from an accident.
13.3.2 Vehicle Driven by Minor at the Time of Accident
Conversely, as established in United India Insurance Co. Ltd. v. Rakesh Kumar Arora and National Insurance Co. Ltd. v. Kaushalya Devi, if a vehicle is driven by a minor, the insurer is absolved of contractual liability, and the owner’s fault in permitting the minor to drive is irrelevant under Sections 4 and 5 of the Act.
Furthermore, in National Insurance Co. Ltd. v. Vidhyadhar Maharinwala, the insurer was exonerated where the driver’s license had expired on the date of the accident, even though it was valid earlier and renewed later, as the inactive license constituted a breach of the insurance agreement.
13.3.3 Types of License
Under Section 13.3.3, Section 147(1)(b)(ii) mandates compulsory insurance for passengers in public service vehicles, but coverage is restricted to the vehicle’s official seating capacity under Section 58 and permit terms under Section 72.
Overloading constitutes a serious breach and may lead to permit cancellation under Section 86.
In National Insurance Co. Ltd. v. Anjana Shyam, the Supreme Court held that “any passenger” means only passengers legally authorized to be carried.
Thus, while Chapter XI protects third-party victims, an insurer cannot be compelled under Section 149 to cover extra, unauthorized passengers carried in violation of registration and permit conditions; liability remains limited to the maximum passenger capacity permitted by law.
Tourist vehicles
Rule 128(a) framed under the Motor Vehicles Act, 1988 lays down statutory specifications for tourist vehicles and prohibits carrying luggage on the roof.
In M/s. Sharma Transports v. State of Maharashtra, the Supreme Court upheld the validity of this rule, holding that the restriction is neither arbitrary nor violative of Article 19(1)(g) of the Constitution.
The Court held that banning roof luggage is a reasonable restriction in the interest of public safety and passenger well-being.
13.4 Insurer Has to Prove Breach of Policy
Under Section 13.4, an insurance company seeking to avoid financial liability must establish both its legal defenses and a clear breach of policy conditions by the vehicle owner, bearing the full burden of proof.
A key issue is the distinction between a “light motor vehicle” and a “transport vehicle.”
Even if a commercial transport vehicle falls within the weight limit of a light vehicle, the law requires the driver to hold a separate transport license endorsement.
Therefore, absence of the proper endorsement can be relied upon by the insurer to prove a policy breach.
United India Insurance Co. Ltd. v. Rakesh Kumar Arora
While insurance companies generally bear the burden of proving that a vehicle owner breached policy conditions to avoid liability, an exception applies to underage driving.
In United India Insurance Co. Ltd. v. Rakesh Kumar Arora, the Supreme Court held that when a minor drives a vehicle, the insurer need not separately prove a breach of the insurance contract.
Since Sections 4 and 5 of the Motor Vehicles Act, 1988 prohibit minors from driving and owners from allowing them to do so, the statutory violation itself relieves the insurer of liability without requiring additional evidence of policy breach.
Burden of proof on insurance company regarding driving licence
Under the section regarding the burden of proof on an insurance company concerning driving licenses, an insurer cannot escape liability without actively raising and proving the defense in court.
The burden of proving that the driver lacked a valid driving license rests entirely on the insurance company, which must specifically state the defense in its pleadings and support it with evidence.
Therefore, if the insurer neither pleads nor provides evidence of the absence of a license, it fails to discharge its burden of proof and cannot be exempted from paying compensation.
Automobile workshop a 'Public Place'
Under the legal classification of an automobile workshop as a “Public Place,” an insurer cannot deny coverage for an accident occurring within workshop premises.
Since members of the public generally have access to an automobile repair workshop, courts treat it as a public location rather than a restricted private space.
Therefore, an insurance company cannot avoid compensation liability by claiming the accident occurred in a private area, particularly when the vehicle is covered under a comprehensive insurance policy.
13.5 Settlement by Insurance Company and Procedure (S. 149)
Under the legal classification of an automobile workshop as a “Public Place,” an insurer cannot deny coverage for an accident occurring within workshop premises.
Since members of the public generally have access to an automobile repair workshop, courts treat it as a public location rather than a restricted private space.
Therefore, an insurance company cannot avoid compensation liability by claiming the accident occurred in a private area, particularly when the vehicle is covered under a comprehensive insurance policy.