DR.

RAM MANOHAR LOHIYA

NATIONAL
LAW UNIVERSITY, LUCKNOW
A project submitted for the research work undertaken in the partial fulfillment of B.A.LL.B.
(hons.)-4th Semester course in Law of Torts-II in Faculty of Law, Dr. Ram Manohar Lohiya
National Law University, Lucknow

Object and scope of section140 of motor

vehicle act, 1988

Submitted By: Under the Guidance of:

Deepanshi Chowdhary Atul Sinha

Roll. No.- 48 Faculty of Law of Torts,

Semester- 4th Dr. Ram Manohar Lohiya National Law University

 TABLE OF CONTENTS

1. Introduction
2. Different from Strict Liability
3. Factors to be established to claim No Fault Liability
4. Retrospective application of Section 92-A of 1939 Act
5. Retrospective application of Section 140 of 1988 Act
6. Accident arising out of the use of a motor vehicle
7. Just Compensation
8. Nature, object and scope of Section 140
9. Need, nature, object and scope of Section 163-A
10. Salient features and comparison
11. Conclusion
12. Bibliography
 INTRODUCTION

The provision contained in section 140 of the Motor Vehicle Act is benevolent one and is
intended to offer prompt financial relief to the victim or the legal representatives of the
victim of the accident. A view that liability to pay compensation could arise even without
any rash and negligent driving of the vehicle was not accepted by the Supreme Court. The
Supreme Court was of the opinion that liability could not arise in absence of negligence on
the part of the owner of the vehicle.

By an amendment in the Motor Vehicle Act, 1939, in 1982, a new Chapter (VII-A consisting
of sections 92-A to 92-E) was inserted in the main Act, recognising ‘Liability without Fault’
in certain cases. This provision makes a departure from the established principle of Common
Law that a claimant can succeed only if he proves negligence on the part of either the owner
or the driver of the vehicle. To that extent the substantive law of the country stands modified.
The provisions regarding the no fault liability are now contained in Chapter X (Sections 140
to 144) of the Motor Vehicles Act, 1988. According to Section 140, no fault liability has
been recognised when death or permanent disablement has resulted from an accident arising
out of the use of the motor vehicle. The contention that the liability under Section 140 of the
Act cannot be saddled at the preliminary stage and it can only be saddled after a fully fledged
trail on the preliminary issue, cannot be accepted. The provisions under this section were
brought in the statute book to grant interim relief to the victim of the accident or his
dependants by way of interim compensation. This obviously is a beneficial provision to give
relief to a person who has suffered grievous injury or the dependants of the victim who are
left without a bread earner. The object thereof cannot be permitted to be frustrated. Of
course, if the vehicle in question is not insured at all, the question of making the insurer
liable would not arise. But the insurer cannot, by raising all possible pleas avoid payment and
thereby defeat the object of the provision.1

1
National Insurance Co. Ltd v. Chand Khan 2001 AIHC 92 (Ori.)
 DIFFERENT FROM STRICT LIABILITY

The “no fault liability” envisaged in Section 140 is different from the rule of strict liability.
In the former, the compensation amount is fixed and is payable even if any of the exceptions
to the rule can be applied. It is a statutory liability created without which the claimant should
not get any amount under the Court. Compensation on account of the accident arising from
the use of the Motor Vehicles can be claimed under the common law even without the aid of
a statute. The provisions of the Motor Vehicle Act permit that compensation paid under no
fault liability can be deducted from the final amount awarded by the Tribunal. These two are
resting on two different premises. We are, therefore, of the opinion that under Section 140 of
the Act, a victim in an accident while using the motor vehicles is entitled to get compensation
from a Tribunal unless any one of the exceptions would apply.2

FACTORS TO BE ESTABLISHED TO CLAIM NO FAULT LIABILITY

In order to claim no fault liability, following factors have to be established:

 Motor vehicle is used

 It was involved in the accident
 The accident resulted in the death or permanent disablement as contemplated in
Section 92-C.

The under-noted facts should be regarded as sufficient:

 Vehicle is involved in an accident.

 Owner has an insurance policy covering the liability under litigation.
 Owner is joined as a party to the petition
 permanent disability is suffered or death is caused due to accident as pleaded.

Before an order is passed under Section 140, the Tribunal must, on the basis of material on
record prima facie satisfy itself that:

 the accident arose out of the use of a motor vehicle

2
Kaishama Begum v. New India Assurance Ltd. AIR 2001 SC 485
  which resulted in death or permanent disablement of the person
 the claim is made against the owner and the insurer of the motor vehicle involved in
the accident made against the owner and the insurer of the motor vehicle involved in
the accident.

In a claim under Section 140 following facts have to be proved:

 that a vehicle was involved in the accident

 that the victim received injuries in the accident resulting his death or permanent
disability as specified under section 142 of the Act.
 that the vehicle was insured with the insurance company under Chapter XI of the
Act.
 that the claim was made on the owner or the driver of the vehicle including the
insurance company with whom the policy was obtained and that policy was in
operation as on the date of the accident.
 RETROSPECTIVE EFFECT OF SECTION 92-A OF 1939 ACT

The relevant date for determining the quantum of compensation is from the date of the
accident. Section 92-A of the 1939 Act cannot be construed as having retrospective effect. In
other words it is the date of the accident that is relevant and the liability has to be computed
with reference to the statutory provision in force as on the date of the accident.3

The provisions of section 92-A cannot be availed of by the parties involved in accidents
which took place before the date of coming into force of section 92-A. The very fact that the
provisions have been brought into effect 1-10-1982 and not from any date prior to it is a sure
indication that the Legislature never intended to give the benefit of the new provision based
on no fault liability to parties involved in accidents taking place prior to the coming into
force of the said provision.

The object of the enactment is to provide quicker relief to the victims of the motor accidents
irrespective of the fact whether there is negligence or not on the part of any of the parties to
the accident. The right of compensation based on the principle of no fault liability to the
victims and the corresponding liability of the owner and the insurer of the vehicle arises on
the occurrence of the accident. The accident is the cause of giving rise to the rights and
liabilities of the parties involved in it. The state of law existing on the date of the accident
should govern the rights and liabilities of the parties.4

However there is a contrary view in some of the cases. Section 92-A is intended to provide
social justice by giving compensation without proof of fault or negligence by the driver or
the owner of the vehicle. The benefit of section 92-A of the Act is to be extended to all cases
arising out of the motor vehicle accidents which are pending disposal even if the cause of
action occurred prior to the coming into force of the said provision of law.

In K. Nandkumar v. M D Thantai Periyar Transport Corporation, there was an accident on

15-1-1987 between the motor cycle on which the appellant was riding, and a bus belonging
to the respondent. The accident occurred due to the sole negligence of the motor cyclist in
which he suffered permanent disablement. It was held by the Supreme Court that the injured
claimant could not be denied compensation under section 92-A(4) of the Motor Vehicle Act,
3
Yashoda Kumari v. Rajasthan State Road Transport Corporation 1984 AccCJ 716
4
Nafis Begum v. New India Assurance Ltd. AIR 1991 Madh Pra 302
1939 on the ground that the accident occurred due to his sole negligence. He was awarded
compensation of Rs. 7,500 for the permanent disablement.

RETROSPECTIVE APPLICATION OF SECTION 140 OF 1988 ACT

It is true that the Act is social welfare legislation, but section 140 cannot be held to have
retrospective application in the absence of a clear intention from the scheme of the new Act.
Moreover this cannot be a guideline to interpret a statute in a manner which is against the
settled principle of law being followed up to this date, particularly when Section 217 of the
new Act in certain cases has made a provision that the pending application on the
enforcement of the Act shall be dealt with in accordance with the provisions of the new Act,
but such a provision has not been made for the applications under Section 110-A or for the
applicability of section 140 to a pending litigation. Therefore the provisions of section 140 of
the new Act are not made to operate retrospectively.

In Manjit Singh v. Rattan Singh, the Himanchal Pradesh High Court has held that the
amended section with effect from 14-11-94 which raises the compensation amount for no
fault liability from Rs. 25,000 to Rs. 50,000 is applicable retrospectively. Hence, for an
accident leading to death before 14-11-94, the amount of compensation payable assessed by
the Tribunal to Rs. 30,000 was raised to Rs. 50,000 by the High Court.

It appears that the above case needs reconsideration because in the interest of justice, the
compensation payable should depend upon the law as applicable at the time of the accident.
By an amendment of the Motor Vehicle Act with effect from 14-11-1994, a new provision
has been made, whereby the claimant’s right to compensation under any other law for the
time being in force, in addition to the above mentioned compensation has been spelled out.
The claimant shall not be required to prove any fault of the owner of the vehicle or any other
person for claiming compensation. It means that the claimant shall not be required to plead
and establish death or permanent disablement in respect of which the claim has been made
was due to any wrongful act, neglect or default of the owner or the owners of the vehicle or
vehicles concerned or any other person.

A claim for compensation under section 140 in respect of death or permanent disablement of
any person shall be disposed off as expeditiously as possible and where the compensation is
claimed in respect of such death or permanent disablement under section 140 and also in
accordance with the right on the principle of fault, the claim under Section 140 shall be
disposed off as aforesaid in the first place.

ACCIDENT ‘ARISING OUT OF THE USE’ OF A MOTOR VEHICLE

In section 140(1) the above expression has been employed. It must be said that the same is
employed very clearly so as to widen the area to be covered this expression when compared
with the expression ‘caused by’ the real scope of the expression becomes definite. Shivaji
Dayanu Patil case and the case of Sameer Chandra bring about the distinction very
efficiently by the Supreme Court.

In the first case accident occurred between a petrol tanker and a truck. After four hours of the
accident, explosion and fire took place due to which respondent‘s died. The Tribunal found
that the villagers tried to pilfer petrol from the tanker and while this pilfering the petrol there
was friction which caused ignition and explosion. Thus an outside agency was responsible
for explosion and fire. The High Court found that there was no evidence that deceased was
committing theft or pilferage of petrol at the time the explosion and fire occurred causing his
death. He was only a by stander. The High Court therefore allowed respondent’s claim. The
owner of the tanker and the insurer (petitioners) that there was no casual relationship
between the collision which took place at about 3 am and the explosion and fire in the petrol
tanker which took place four and half hours later. It cannot therefore be said that the
explosion and fire in the petrol tanker was an accident arising out the use of a motor vehicle.

The Supreme Court said that in the context of motor accidents the expressions ‘caused by’
and ‘arising out of’ are often used in statutes. Although both these expressions implies casual
relationship between the accidents resulting in injury and the use of motor vehicle but they
differ in the degree of proximity of such relationship. As compared to the expression ‘caused
by’ the expression ‘arising out of’ has a wider connotation. In section92-A the parliament
however chose to use the expression ‘arising out of’ which indicates that purpose of
awarding compensation under sec 92 A the casual relationship between the use of the motor
vehicle and the accident resulting in death or permanent disablement is not required to be
direct and proximate and it can be less immediate. This construction of the expression arising
out of the use of a motor vehicle in sec 92 A enlarges the field of protection made available
to the victim of an accident and is in consonance with the beneficial object underlying the
enactment. The collision, escape of petrol and explosion were all related events. Merely
because there was a gap of four to four and half hours between the said events it cannot be
necessarily inferred that there was no casual relationship between explosion and fire. The
respondent’s son’s death was therefore due to an accident arising out of the use of the motor
vehicle i.e. the petrol tanker.

The court further explains that the word used has a wider connotation to cover the period
when the vehicle is not moving and is stationary and the use of a vehicle does not cease on
account of the vehicle having been rendered immobile on account of a breakdown or
mechanical defect or accident. In the circumstances it cannot be said that the petrol tanker
was not in use at the time when it was lying on its side after the collision with the truck. This
view has been affirmed by the Supreme Court in Sameer Chandra case and has been
followed in the number of cases thereafter.

In Sameer Chandra case there was a bomb blast when the bus reached the last stoppage and
the passengers were alighting from it. At that period of normal situations were prevailing
which required the owner/driver of the vehicle to take extra care by carrying a police escort.
This was not done. Negligence of the owner/driver is therefore clear. It was held that the
accident arose out of the use of the motor vehicle. Tribunal awarded compensation of Rs.
1, 20,000 with 12% interest which was justified.
 JUST COMPENSATION

The compensation to be given must be just, fair and reasonable. The determination of
quantum of compensation must answer what society would deem to be a fair sum such as
would allow the wrongdoer to hold up his head among his neighbours and say with their
approval that he has done the fair thing. Technicality of law should not be permitted to stand
in the way in directing to pay fair compensation. Fairness is a rule to ensure that the vast
power in the modern state is not abused but properly exercised. Fairness is also a principle to
ensure that statutory authority arrives at a just decision either in promoting the interest or
affecting the rights of the persons. Fairness cannot have too much elaboration of procedure
since the wheels of administration must move quickly.

As observed in K Nanda Kumar case for entitlement to no fault compensation. Absence of

negligence on the part of the person suffering injury or permanent disability or death is not a
condition precedent. The provisions of the section being clear the statement of object and
reasons of the Act introducing the said section could not be resorted to, to reach a different
conclusion.
 NATURE, OBJECT AND SCOPE OF SECTION 140

Earlier for an injury done by an accident, the victim had to prove that the accident occurred
due to the negligence of the owner of the Motor Vehicle. This liability had to be done away
with as it became very difficult for the victims to get damages. Therefore, the proposal for
introducing no fault liability was made. In Kesarvana Nair v. State Insurance Officer, it was
opined by V R Krishnaiyar, J. that out of a sense of humanity and having due regard to the
handicap of an innocent victim, in establishing the negligence of the operator of the vehicle a
blanket liability must be cast upon the insurer, instead of being restricted to cases where the
vehicle operator has been shown to be negligent. This is more a matter of the legislature and
not for the Court, but this is a lacuna in the law which I think would be just to rectify.
After 1971 till 1982 an amendment was brought in the 1939 Act. By an amendment in the
Motor Vehicle Act, 1939, in 1982, a new Chapter (VII-A consisting of sections 92-A to 92-
E) was inserted in the main Act, recognising ‘Liability without Fault’ in certain cases. These
sections are same in the 1988 Act. (Sections 140-144). Some case laws on the same are
discussed below.

1. Eshwarappa @ Maheshwarappa And Anr v. C. S. Gurushanthappa And Anr . CIVIL

APPEAL NO. 7049 OF 2002
The drunk driver and his four friends died while rashly driving to a temple without informing
the car owner. Tribunal rejected the express prayer made on behalf of the appellants and
other claimants to at least grant the 'no fault compensation' as provided under Section 140 of
the Act on the ground that compensation section 140 of the Act can succeed only in case it is
raised at the initial stage of the proceedings . On appeal, HC confirmed the order of Tribunal
- Appellants filed appeal against said order submitting that they were entitled to the no fault
compensation' as provided u/s. 140 of the Motor Vehicles Act, 1988.the question involved in
the case was whether appellant entitled for no fault compensation. It was held that the
provisions of s. 140 of Act are indeed intended to provide immediate successor to the injured
or the heirs and legal representatives of the deceased. Hence, normally a claim u/s. 140 is
made at the threshold of the proceeding and the payment of compensation u/s. 140 is directed
to be made by an interim award of the Tribunal which may be adjusted if in the final award
the claimants are held entitled to any larger amounts. In case a claim u/s. 140 was not made
at the beginning of the proceedings due to the ignorance of the claimant or no direction to
make payment of the compensation u/s. 140 was issued due to the over-sight of the Tribunal,
the door would not be permanently closed Such a view would be contrary to the legal
provisions and would be opposed to the public policy. Hence, Tribunal was completely
wrong in denying to the appellant, the compensation in terms of s. 140 of the Act - Appellant
(as well as the other 3 claimants) were fully entitled to no fault compensation u/s. 140 of the
Act. Compensation was granted by the High Court.

2. Indra Devi & Ors. v. Bagada Ram & Anr CIVIL APPEAL NO. 1508 OF 2004

On March 31, 1999, Ramniwas while going on a motorcycle dashed against the rear side of
a truck that was headed in the same direction as the motorcycle. Ramniwas died in the
accident. His heirs and legal representatives, the appellants before this Court, moved the
MACT, Sojat, Branch Jaitaran, District Pali in MACT Case No.59 of 1999 against the owner
of the truck and its insurer, the New India Assurance Company Ltd. for compensation in
terms of section 166 of the Motor Vehicles Act, 1988. In course of the proceedings, the
appellants claimed no fault compensation under section 140 of the Motor Vehicles Act which
was granted to them by the Tribunal and the compensation amount was duly paid by the
insurance company. In the main proceeding, however, the Tribunal came to find and hold
that insofar as the accident is concerned there was no lapse on the part of the driver of the
truck nor was it due to any mechanical fault in the truck. The accident was caused due to the
careless and negligent driving of the deceased himself. On that finding, the Tribunal naturally
rejected the claim of compensation on the principle of fault. But it did not stop there and
went on to hold that the insurance company was entitled to the refund of the amount of no
fault compensation along with interest at the rate of 9% p.a. In the operative portion of the
judgment, the tribunal ordered as follows: “According to the above analysis, this claim is
dismissed. An amount of Rs.50,000/- has been given to the applicants by The New India
Assurance Co. Ltd. as an interim relief and The India Assurance Co. Ltd. will be entitled to
have it back with 9% interest p.a.” the High Court observed that The impugned direction was
clearly erroneous and unsustainable in law. The Tribunal has completely failed to realize the
true nature and character of the compensation in terms of section 140 of the Act. The
marginal heading to section 140 describes it as based ‘on the principle of no fault’. As the
expression ‘no fault’ suggests the compensation under section 140 is regardless of any
wrongful act, neglect or default of the person in respect of whose death the claim is made.
The order of the tribunal was set aside and compensation was granted under no fault liability.

3. Ravi v. Badrinarayan & Ors CIVIL APPEAL NO. 1926 of 2011

 Cruel hands of destiny played havoc with the life of Ravi, then aged 8 years, on account of
motor road accident, on 7.10.2001 at about 8.30 AM, when rear side of truck hit the victim,
causing multiple injuries to him. His claim under section 140 was dismissed by the Tribunal.
Thus, looking into the matter a it is clearly established by the High Court that in the said
accident, Appellant had suffered severe injuries of permanent nature which have not been
cured till date despite several surgeries looking into the nature of injuries which are
permanent in nature, High Court was of the opinion that a total amount of Rs. 2,50,000 to
be awarded to the appellant payable by respondents jointly and severally, would meet the
ends of justice.
 SECTION 163-A: NEED, NATURE, OBJECT AND SCOPE

Notwithstanding the no-fault liability concept, it was found that the interim relief did not
provide satisfactory succour and relief. It became necessary to provide for a regime where
wholesome compensation could be granted. While not insisting on the proof of fault, it was
therefore or deemed appropriate to introduce the Section 163-A mechanism, a beneficial
route within the beneficial legislation. It covers the strict liability claims arising out of
railway accidents, aviation disasters, injuries arising out of dangerous industries, etc through
beneficial legislation. Section 163-A of the Motor Vehicle Act was inserted by the Amending
Act 54 of 1994, creates a new right in favour of the claimants and this right is similar to the
right under Section 140 of the Act. Simultaneously it creates a new liability on the owners of
the motor vehicles. The purpose of the Legislature in introducing Section 163-A is to
enhance further the purpose of introducing Section 140 of the Act. Purpose of the Legislature
is to see that the victims or injured get instant relief so far as the pecuniary loss is concerned
because the loss suffered by them requires instant and immediate relief may be from the next
day of the accident. Section 163-A has brought a drastic change in the concept of tortuous
liability prevailing prior to it. It by non obstante clause permits even the tort feaser to claim
compensation on the principle of no fault liability. Thus where a driver died in an accident
because of his own negligence, it was held that the legal representatives could claim
compensation under Section 163-A.5

5
New India Assurance Ltd v. Muna Maya Basant (2001) 42 Gujrat LR 915 (DB)
 SECTION 140 AND SECTION 163-A: SALIENT FEATURES AND
COMPARISON

The salient features of Section 140 are as follows:

 Negligence need not be proved

 Fixed compensation
 This right is alternative to right under Section 163-A
 Adjustment
 Contributory negligence does not affect compensation
 Owners jointly and severally liable
 Motor Accidents Claims Tribunal to decide claims under this section

The salient features of Section 163-A are as follows:

 No fault liability principle

 Alternative to Section 140
 Wider ambit- more compensation can be provided.
 Minimum of Rs. 50,000 must be paid.

The points of difference in the above mentioned provisions are:

 Compensation provided in Section 140 is fixed whereas it is calculated according to

the age group in Section 163-A.
 Section 163-A especially mentions insurer.
 Section 163-A also considers other kinds of suffering endured by the victim
 Section 163-A takes a long time to get compensation as documents for other claims
have to be produced before the Court whereas under Section 140 relief is immediate.
 The chances of getting compensation under Section 163-A are lesser as compared to
Section 140.
 Under Section 140 anyone can claim whereas in 163-A only claimant or legal heir
can claim not legal representative.
 Section 163-A does not talk about contributory negligence.
 CONCLUSION

Motor Vehicle Act is a social welfare legislation in which compensation is provided to those
who sustain bodily injuries or get killed in the vehicle accident. This section imposes an
absolute liability upon the owner of the vehicle upon death or permanent disablement when
an accident arising out of the use of the motor vehicle has occurred. In that case the owner of
the vehicle shall jointly and severally be liable to pay compensation in accordance with the
provisions of this section. This section does not provide an exception where the owner of the
vehicle can absolve himself to pay compensation. Section 140 is for the benefit of the
claimant and has to be construed in that manner. Even if the claimant is himself at fault or
had contributed to the fault, his application under Section 140 cannot be defeated.

Section 163-A widens the right given under Section 140 and provides a new way to benefit
the claimant by providing for more compensation. Both of these Sections impose absolute
liability upon the owner of the motor vehicle in order to benefit the victim. A claimant cannot
invoke both of these sections simultaneously to get maximum compensation but has to
choose to claim compensation under either of the mentioned provisions. Section 140 is for
the poor who are in need of immediate relief whereas Section 163-A is for the rich who can
afford to wait for a longer period of time so as to get a wider relief.
 BIBLIOGRAPHY

BOOKS REFERRED

1. R K Bangia, ‘Law of Torts’.

2. B M Gandhi, ‘ Law of Torts’.
3. Ratanlal and Dheerajlal, ‘ Law of Torts’.
4. Justice R Kannan and N Vijayraghavan, ‘ Motor Vehicle Laws’.

WEBSITES REFERRED

1. www.lawyersclubindia.com
2. www.indiankannon.org
3. www.manupatra.com

Motor Vehicle Act, 1988.