Study Material (Motor TP)

Motor Third Party Insurance (TP Policy/Liability only policy/Act Policy) is issued
under the provisions of Motor Vehicles Act, 1988. It is compulsory under law. It is
designed to protect the interest of third parties. When a motor vehicle is in use in a
public place, when running or stationery, it can accidentally cause harm to others.
Members of public i.e. pedestrians, passengers in bus, people travelling in the
opposite vehicle, cyclists, employees engaged in the commercial vehicle etc. may be
injured or killed in accident. Property belonging to third party may be damaged. The
object of motor third party insurance is to cover the risk of vehicle owner who is
likely to incur liability for payment of compensation to third party.
Motor TP Insurance is different from other branches of insurance. It covers statutory
liability which is unlimited, whereas other branches of insurance covers contractual
liability limited to the sum insured. Financier has an interest in the other branches
whereas no such term is there in third party policy.
Motor vehicles belonging to Central and State Government, any Local Authority, any
State Transport Undertakings are exempted from the provision of compulsory
insurance provided under Section 146(3) of Motor Vehicles Acts 1988, provided any
such authority has to establish and maintain a fund to meet the liability arising out of
the use of any vehicle belonging to such authority.
Motor TP Policies are governed by Motor Vehicles Act, WC Act, Legal Services
Authority Act, Courts, Lok Adalat etc. The terms Tort, Negligence, in course of
employment, Vicarious liability are relevant for the purpose of dealing third party
claims. Death/injury/property damage of third party is caused due to the fault of the
driver. The vehicle owner being the master becomes vicariously liable for the fault
committed by the servant (driver) under the law of Tort. Similarly employer is liable
for the damage caused to employees connected to the vehicle in course of
employment. It is necessary to understand the relevant sections of various Acts as
mentioned below :

Relevant Sections of the Motor Vehicles Act, 1988

Section 133 - Duty of owner, driver or conductor to give all information

relating to accident to police officer on demand.

Section 134 Duty of driver to take all reasonable steps to secure all

medical attention for the injured person.

Section 146 Compulsory insurance against third party risk .
Section 147 Requirements of policies and limits of liability.

Section 148 Validity of policies of insurance issued in reciprocating

countries .
Section 160- Registering authority or the Police officer shall furnish information if
asked for relating to particulars of vehicle involved in accident
Section 158(6)-Statutory duty of Police to forward report about recording of any
accident or completion of such report within thirty days to claims tribunal and
concerned Insurer .
Section 170- Insurer to obtain permission to contest the claim on all or any of the
grounds without prejudice to the provisions contained in Section 149(2).
Section-197-Taking Vehicle without authority.
Section-194- Driving Vehicle exceeding permissible weight.
Section-192- Using Vehicle without registration
Section- 192-A- Using vehicle without permit.
Section -184- Driving dangerously.
Section -185- Driving by a drunken person or by a person under the influence of
drugs.
Section -183- Driving at excessive speed .
Section 3 & 4 read with Sec 181- No DL / Invalid DL / ineffective DL.
Section 163 ASpecial Provisions as to payment of compensation on structured formula basisclaimants need not prove negligence of driver compensation to be assessed as per
the schedule-Notional income of Rs.15,000/- p. a , in case of non earning personclaim not entertainable if annual income exceeds Rs.40,000/Section 149(2)-Deals with the statutory defenses of the Insurerbreach of a
specified condition of the policy etc.
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Section 140- No fault liability

Death Rs.50,000/Permanent disability-Rs.25,000/Section 166-Application for compensation under fault liability limitation removed
for accidents occurred on or after 14/11/1994-Jurisdiction widened.
Section 167 Option regarding claims for compensation either under MACT or
under WC Court.
Section 169(2) - Power of the Claims Tribunals enforcing attendance of witnesses
and for discovery and production of documents and material objects.
Section 174 read with Section 149(4)-Recovery from insured in Fake DL cases.
Section 173 - Appeal-90 days Statutory Deposit.

Relevant sections of Employees Compensation Act, 2009

(Workmens Compensation(Amendment) Act,2009)
Section 2(dd)(ii)(c) Employee under Motor policy means a person recruited as
driver, helper, mechanic, cleaner or any other capacity engaged in connection with
the motor vehicle.
Section 4 Assessment of compensation by WC Commissioner Formula to be
adopted for calculation taking the relevant factor from Schedule IV.
Section 30-Appeal before High Court - Substantial question of law Against penalty
- scope to entertain appeal is limited.
Section 30-A-Prayer to be made before commissioner to withhold release of amount
deposited till disposal of appeal.

The Legal Services Authorities (Amendment) Act, 2002

Object To provide free and competent legal services to the weaker section of the
society and to organize Lok Adalats to ensure speedy and inexpensive justice
through conciliation
Section 19 (5)-To determine and to arrive at a compromise settlement between the
parties to dispute in respect of:
a) any case pending before court; or
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b) any case not filed in court, but falling within the jurisdiction of Lok Adalats.
Section 20 Court to refer any case to Lok Adalat for settlement where both the
parties agree or one of the parties make an application to the court for referring the
case to the Lok Adalat for settlement and the court is primafacie satisfied that there
are chances of settlement and the matter is fit for Lok Adalat settlement.
No case shall be referred without giving reasonable opportunity of being heard to the
parties.
Section 22 - Permanent Lok Adalat shall have the same powers vested in a civil
court.
Section 22(E) - Award of permanent Lok Adalat shall be deemed to be a decree of
Civil Court.
Award Passed by Lok Adalat is final and cannot be questioned in any court and not
appealable.
Conciliatory Settlement/Lok Adalats
To settle cases on conciliation where quantum is the only dispute and liability of
company is otherwise in order.

Various forums for compromise settlement

Lok Adalat organised from time to time ,
Permanent & continuous Lok Adalat
Conciliation meeting called by court
RICC & DICC
Common Mechanism Centre For Compromise Settlement Of Motor Third Party
Claims (CMCSTPC)
Joint memo to be signed by both party after the amount is agreed by both party and
consent order to be passed by Lok Adalat/Court.
Jalad Rahat Yojana (JRY) --Prelitigation settlement Through conciliatory committee
Only injury cases of majors(non-minors) can be decided.

Documents Verification for Compromise/Settlement

Common Documents in Death & Injury Cases
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FIR, Charge-sheet/ Final form, Seizure List, MVI report, site plan, claim form,
Investigation report, DL, Permit etc.
Additional documents in Death cases.
Post Mortem Report with Dead body challan
Inquest Report/Spot Mahazar
Additional Documents in Injury Cases
Injury Report/Wound Certificate (Medical Examination on police requisition ),
Outdoor ticket /discharge certificate of initial and subsequent treatment, medical
papers with bills, disability certificate if any, accident register at hospital.
Common Documents in case of Service holders/Students/IT assessee
Salary Certificate, Service record with date of birth, High School/School leaving
certificate, Education/qualification /occupation proof, IT returns with assessment of
IT authority, business proof etc.
Additional documents in TPPD
Extent of damage to property ,insurance details of TP vehicle if damaged .
IPC Sections relevant to MV Act
Section 279 - Rash and negligent driving or riding on a public way.
Section 337 - Causing Hurt by act endangering life or personal safety of
others.
Section 338 - Causing Grievous hurt.
Section 304(A) - Causing death by negligence.
TP Claim Investigation
Genuineness of Accident.
Obtaining witness statement.
Obtaining GR Records.
Verification of age, income, occupation and dependency of victims.
Verification of Medical records/expenses.
Verification of vehicular documents i.e. DL, RC, Permit , Insurance policy etc.

CONTRACT OF INDEMNITY INSURER PROMISES TO MEET THE

LIABILITY SHOULD THE VEHICLE CAUSE DEATH OF OR BODILY
INJURY TO ANY THIRD PERSON
Sec. 147 Requirements of policies and limits of liability concerned with
the liability towards a third party
Expression third party would mean any one and every one, except the
insurer and the insured
Distinction between passenger and third party persons or classes of
persons required to be covered by the policy of insurance u/s 147, would all
fall under the broad genus of third party
Insurance with two insurers effect claimants can recover amount from
either paying insurer can settle its score with the other insurer Ganga Ram
Patel vs. Md. Jahid Khan, 2008 ACJ 2763 (MP) (DB)
Pillion rider insurer not liable under Act only policy risk covered under
package policy as per TAC circular UII vs. M Laxmi, 2009 ACJ 104 (SC)
Gratuitous passengers in goods vehicle- insurer not liable CRPF jawan going
on a goods carriage to join his duty along with a box, suitcase and bed holder
no liability NIC vs. Phool singh, 2008 ACJ 58 (SC)
Occupants in private car risk covered under package policy TAC circular
dt. 17.03.1978 & IRDA circular dated 16.11.2009
Owner of goods and their representatives policy covers the risk of owner of
goods or his authorized representative accompanying the goods in the goods
vehicle, provided the entire vehicle is hired by the goods owner and there is
documentary proof of hiring.
Vehicle hired by deceased for transporting goods - Headload workers not
treated as owner of goods luggage or personal effects are not goods.
Passenger in goods vehicle vehicle owner has no statutory responsibility to
get his vehicle insured for covering any passenger travelling in the goods
vehicle
Employees of insured IMT 18 makes it clear that risk of driver, conductor,
cleaner or person employed in loading or unloading are covered but not
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exceeding 7 (seven ) in number liability restricted upto WC limit if no

additional premium paid
Public place Statute mandates the necessity for a valid policy in force if the
vehicle is intended for use in a public place Tribunal had jurisdiction to try
an accident case occurring in a private place package policy cover is not
restricted for use of the vehicle in a public place
Difference between Sec.140, Sec.163A and Sec.166 of MV Act
The issue of negligence need not be touched under sec.140 and sec.163A of MV
Act, 1988 whereas in case of sec.166 of MV Act proof of negligence of the driver
of offending vehicle is an essential requirement. If there is prima facie proof of
accident, the victim of the accident is entitled to get compensation under sec.140
and 163A of MV Act. In both these sections the claimant is not required to plead
or establish negligence on the part of the driver of the offending vehicle. But in
proceeding under sec.166 of MV Act burden lies on the claimants to prove rash
and negligent driving on the part of the driver of the offending vehicle.
Negligence
Negligence means the omission to do something which a reasonable man would
do or the doing of something which the reasonable and prudent man would not
do. Thus, it is not only commission of an act but is also an omission to do
something which a reasonable man would do or is obliged to do.
Negligence does not always mean absolute carelessness, but want of such a
degree of care as is required in particular circumstances.
Negligence as a tort is the breach of a legal duty to exercise due care.
Res ipsa loquitur: It means accident speaks for itself. Whenever the
presumption of Res ipsa loquitur is raised, the claimant need not adduce any
evidence to prove negligence, rather the burden shifts upon the respondents to
explain the accident to rebut the negligence on the part of the driver.
Last opportunity rule: It means that as between the driver of the offending
vehicle and the victim of the accident whether the driver had with him the last
opportunity to avoid the accident. Thus, whoever had the last opportunity, he will
be held responsible.
Defense available with the respondent: Against the plea of negligence, the
driver/ respondent can take following defense:
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(a) Act of God (Vis Major): Accident caused due to natural causes directly and
exclusively, without human intervention, and the same could not have been
prevented by any amount of foresight and pains and care reasonably expected
from the driver.
(b) Victim, the wrongdoer: Own negligence of the victim- self negligence- claim
not maintainable.
Classification of negligence
(a) Sole negligence
(b) Composite negligence
(c) Contributory negligence
DIFFERENCE BETWEEN COMPOSITE AND CONTRIBUTORY NEGLIGENCE :

SOLE NEGLIGENCE: Where in an accident two or more vehicles are involved

but the accident has occurred due to negligence of one vehicle only, the driver
of the offending vehicle is solely negligent.
COMPOSITE NEGLIGENCE : Where a person is injured or died as a result of
negligence of two or more wrong doers, each wrongdoer is jointly and
severally liable for payment of entire damages and the injured / LRs of the
deceased have the choice of proceeding against all or any of wrongdoer
CONTRIBUTORY NEGLIGENCE : Where a person is injured or died as a result
of partly due to negligence of another person/or persons, and partly by his own
negligence, then negligence on the part of the injured/deceased is referred to as
his contributory negligence.
DIFFERENCE BETWEEN HIRE AND REWARD:

Hire means availing the motor vehicle for use or service in exchange for payment
whereas Reward means something given or received in return for service or merit.
PAY AND RECOVER THEORY:

In case the driving license of the driver of the insured/ offending vehicle is found to
be fake, the tribunal directs the insurer to pay the awarded amount to the third party
and to recover the same from the insured by filing recovery petition under sec.174
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r.w. 149(5) MV Act before the same MACT. The Tribunals are passing pay and
recover awards following the decision of the Supreme Court in the case of National
Insurance Co. Ltd. Vs. Swaran Singh (2004) ACJ 1.

Difference between fake, ineffective and invalid DL

Fake DL - On verification from the licensing authority if the DL is found to have
been issued in some other name or the DL is not at all issued.
Ineffective DL - means with regard to the type of the vehicle i.e. DL issued for
LMV but the driver was driving HGV.
Invalid DL - means with regard to the period of DL i.e. on the date of accident
the DL was not in force.

Questions (MOTOR TP)

1. The provisions of Motor Vehicles Act, 1988 came into force with effect from
a. 1st January 1988
b. 1st January 1989
c. 1st July 1989
d. 1st July 1988
2. Omnibus means any Motor vehicle which can carry
a. Six persons
b. Twelve persons
c. More than six persons excluding the driver
d. Twelve persons including the driver
3. Motor cycle with engine capacity not exceeding 50cc can be driven in a public
place by a person
a. Who has attained eighteen years
b. Who is not below 16 years
c. Who is not a minor
d. None of the above
4. Under section 6 of Motor Vehicle Act, 1988
a. No person can hold DL for Heavy Goods Vehicle if he possess DL for
LMV
b. No person can hold two licenses
c. No person can be issued permanent DL unless he possess a Learners
license
d. No person can hold any other DL except a Learners license, while he
holds any DL for the time being in force.
5. A driving license issued or renewed to drive a transport vehicle, be effective for a
period of
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a.
b.
c.
d.

Ten years
Five years
Three years
None of the above

6. A transport vehicle shall not be deemed to be validly registered, unless it carries

a. Permit
b. Pollution certificate
c. Fitness certificate
d. All the three stated above
7. In case of death of the Permit holder, the permit may be used by
a. Legal heirs of the permit holder
b. Person succeeding to the possession of the vehicle covered by the
permit
c. Permit cannot be used
d. Both (a) and (b)
8. Every person driving or riding on a motor cycle of any class or description should
wear protective headgear u/s 129 of MV Act, 1988
a. True
b. False
c. Person sitting in the side car is not exempted
d. Only rider of motor cycle has to use
9. Under which section of MV Act, 1988, the owner, driver and conductor of the
offending vehicle should give all information to the police officer on demand?
a. 139
b. 145
c. 133
d. None of the above
10.In an accident on 15.10.1989, fixed sum of Rs.25,000/- is payable towards No
Fault liability for
a. Death
b. Permanent partial disability
c. Permanent disability
d. Any injury
11.Under Section 142 of MV Act,1988, Permanent disfiguration of face is
a. Grievous injury
b. Permanent total disability
c. Permanent partial disability
d. Permanent disability
12.No person shall use, except as a passenger, a motor vehicle in a public place,
unless there is a policy of insurance in force as per MV Act, 1988
a. u/s 160
b. u/s 139
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c. u/s 146
d. u/s 145
13.As per Section 147 of MV Act, 1988, the policy of insurance with limited liability
immediately before commencement of the Act, shall continue to be effective for a
period of
a. One month
b. Four months
c. Till the date of expiry of policy
d. Four months or date of expiry whichever is earlier
14.Breach of a specified condition of the policy is a defence available to insurer
a. u/s 147
b. u/s 148
c. u/s 149(2)
d. None of the above
15.Liability of insurer in respect of Third party property damage is limited to
a. Rs.2,000/b. Rs 8,000/c. Unlimited
d. Rs. 6,000/16.Non disclosure of material fact by insured amounts to
a. Policy is voidable
b. Policy is void
c. Not a defence available
d. Policy is valid unless cancellation notice is sent
17.The matter which influence the judgment of a prudent insurer in determining
whether he will take the risk is called
a. Material fact
b. Material fact and material particular
c. Relevant fact
d. Proposal
18.Under which Section of MV Act, 1988, the judgment passed by a court in a
reciprocating country is binding on the insurer in India
a. Section 147
b. Section 150
c. Section 149(1)
d. Section 149(3)
19.As per Section 157 of MV Act, 1988 transfer of ownership of vehicle amounts to
a. Policy becomes invalid
b. Policy deemed to have been transferred to new owner
c. Policy is operative if transfer endorsement is issued
d. Transfer of policy is mandatory
20.An amount of Rs.12,500/- is payable in case of hit and run motor accident
a. For injury causing disability
b. Grievous injury
c. Grievous hurt
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d. Any injury
21.Administration of Solatium Fund is vested in
a. Central Government
b. General Insurance Corporation of India
c. Flag Company
d. District Magistrate
22.___________ amount is prescribed as notional income under the Structured
compensation table prescribed u/s 163-A
a. Rs.40,000/- p.a.
b. Rs.3,000/- p.m.
c. Nil
d. Rs.15,000/- p.a.
23. Report submitted before MACT by police u/s 158(6) can be treated as
a. Proof of accident
b. Driver is negligent
c. Application for compensation u/s 166
d. Vehicular documents are in order
24. Which statement is true
a. Claim U/S 166 of MV Act, 1988 should be filed within three years of
accident
b. Separate petition u/s 140 should be filed alongwith petition u/s 166 for
grant of No Fault liability award
c. Claim either under Section 140 or under section 163-A is entertainable,
but not under both
e. Negligence is to be proved in a case filed u/s 163-A
25.In case of death of a labourer engaged in truck for loading and unloading purpose,
compensation case can be filed
a. Before MACT
b. Before Employees Compensation commissioner
c. Before any of the above two court
d. Civil court
26. Awarding interest by MACT where any claim is allowed
a. Mandatory
b. Discretionary
c. No interest if paid within 30 days
d. At the rate of 12 % p.a.
27. Appeal if any against MACT award is to be filed
a. Within 60 days from the date of award
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b. Within 90 days from the date of award u/s 171

c. Within 90 days from the date of award u/s 173
d. No time limit
28. Duty of the driver to take certain precautions at unguarded railway level
crossings is provided in MV Act, 1988
a. Under Section 131
b. Under Section 141
c. Under Section 132
d. Under Section 130
29. Driver Charge-sheeted u/s 181 read with Section 3 of MV Act, 1988 relates to
a. No valid permit
b. Non possession of DL
c. Drunken driving
d. No helmet
30. Section 189 of MV Act, 1988 provides punishment for
a. Driving vehicle when mentally unfit to drive
b. Racing and trials of speed
c. Driving dangerously
d. Abatement of certain offences.
31. In case of filing of appeal against MACT award, appellant has to deposit
a. 50% of the MACT award
b. Rs.25,000/c. 25% of the MACT award
d. 50% of the award or Rs.25,000/- whichever is less
32. Employees Compensation Act, 2009 came into force with effect from
a. 1st October 2009
b. 2nd November 2009
c. 1st January 2010
d. 18th January 2010
33. Main issue to be decided in a case under Employees Compensation Act
a. Employee must file the claim within six months
b. Death/Injury must arise out of employment and in course of employment
c. Driver of the vehicle is rash and negligent in causing the accident
d. Age of the employee should not exceed 50
34. Minimum Compensation for Permanent total disablement under Employees
Compensation Act, 2009
a. Rs.1,20,000/b. Rs.1,40,000/c. Rs.1,00,000/13

d. None of the above

35. Compensation in a claim before Employees Compensation Commissioner is
assessed
a. Under Section 6
b. Under Schedule II
c. Under Section 3 read with Schedule III
d. Under Section 4 read with Schedule IV
36. Claim for compensation under Employees Compensation Act, 2009 is made
a. U/S 20
b. U/S 21
c. U/S 22
d. U/S 23
37. Time limit for filing appeal u/s 30 of Employees Compensation Act is
a. 30 days
b. 60 days
c. 90 days
d. 45 days
38. Amount to be deposited to file appeal u/s 30 of Employees Compensation Act
a. Entire award amount
b. Rs.50,000/c. Only the principal award amount
d. 50% of the award amount or Rs.25,000/- whichever is less
39. Negligence on the part of deceased motorcyclist hit by offending truck is called
a. Composite negligence
b. Sole negligence
c. Contributory negligence
d. No negligence
40. Package policy does not cover the risk of occupant in private car
a. True
b. True if additional premium is not paid
c. Not true
d. True if premium for PA Cover is not paid
41. Financial authority for Lok Adalat settlement is limited to
a. Rs.5,00,000/b. Rs.25,00,000/c. No limit
d. Individual authority attending Lok Adalat
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42. No Fault liability amount fixed for death under the old Motor Vehicles Act was
a. Rs.50,000/b. Rs.40,000/c. Rs.25,000/d. Rs.15,000/43. The decision of Supreme Court which is followed by almost all the MACTs for
assessment of compensation is
a. Santosh Devi Vs. New India
b. Sarala Varma Vs. DTC
c. Nagappa Vs. Guru Dayal
d. None of above
44. In case of dishonor of cheque, policy cancellation notice is to be served
a. On the vehicle owner
b. On the RTO
c. On both vehicle Owner and RTO
d. On vehicle Owner, RTO and Police Station where the owner ordinarily
resides
45. The Conciliatory Forum for Common sitting by the four PSU General Insurance
Companies for compromise settlement of MACT cases devised by GIPSA is
a. Common Conciliation Centre
b. Pre conciliation sitting for Lok Adalat settlement
c. Conciliatory Forum
d. CMCSTPC
46. Scheme for payment of compensation in Hit and Run cases came into force with
effect from
a. 1st July 1989
b. 1st October 1982
c. 1st October 1988
d. 2nd November 1994
47. Gross Vehicle Weight means
a. Total weight of the vehicle
b. Unladed weight of the vehicle plus the equipments ordinarily used with
the vehicle.
c. Total weight of the vehicle and load certified and registered by the
registering authority as permissible
d. Total weight transmitted by the several wheels

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48. Which statement is true

a. Insurer is not liable for payment of interest in a WC case
b. Insurer is not liable for payment of penalty in a WC case
c. Insurer is liable both for interest and penalty in a WC case
d. Insurer is liable both payment of interest from the date of award and
not from the date of accident in a WC Case
49. Which statement is true
a. Every award of the Lok Adalat shall be deemed to be a decree of a
civil court
b. No appeal shall lie to any court against the Lok Adalat award
c. All proceedings before the Permanent Lok Adalat shall be deemed to
be judicial proceedings
d. All the above
50. Which statement is true
a. Decision of criminal case against driver is not binding on the MACT
for deciding the issue of negligence
b. Charge-sheet submitted by police against the driver is the conclusive
proof of negligence in a case filed before MACT
c. 161 statements recorded by police can be cited as concrete proof of
negligence of driver
d. Burden of proving drivers negligence is on the respondent in a MACT
proceeding.
51. SLP before Supreme Court against the order of High Court is filed
a. Under Section 173 of MV Act, 1988
b. Under Section 79 of Civil Procedure Code
c. Under Article 136 of Constitution of India
d. Under Article 142 of Constitution of India
52. No appeal can be filed against MACT award if the amount in dispute in the
appeal is
a. Less than Rs.25,000/b. Less than Rs.10,000/c. Less than Rs.50,000/d. Less than Rs.40,000/-

Answer to questions (Motor TP) :

1(c), 2 (c), 3(b), 4 (b), 5 (c) , 6 (c), 7 (b), 8 (a), 9 (c), 10 (c), 11 (d), 12 (c), 13 (d),
14(c), 15 (d), 16 (b), 17 (b), 18 (d), 19 (b), 20 (c), 21 (b), 22 (d), 23 (c), 24 (c), 25 (c),
26 (b), 27 (c), 28 (a), 29 (b), 30 (b), 31 (d), 32 (d), 33 (b), 34 (b), 35 (d), 36 (c),
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37(b), 38 (a), 39 (c), 40 (c), 41 (d), 42 (c), 43 (b), 44 (c), 45 (d), 46 (b), 47 (c), 48 (b),
49 (d), 50 (a), 51 (c), 52 (b).

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