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Motor Vehicles Act, 1988 – ss. 158(6), 166(4), 196 – Central Motor Vehicle Rules, 1950 – r. 150 – Motor accident – Compensation – In cases of hit and run unidentified vehicles; uninsured vehicles; gratuitous passengers; passengers in goods vehicles; procedural delays in adjudication/settlement of claims; and where compensation amount does not reach the claimants, directions issued and suggestions made by the Court – Directions to the police authorities and claims tribunals for implementation of provisions u/ss. 158(6), 166(4), 196 and r. 150 – Direction to Insurance companies to lodge complaint in cases of forged driving licences – Suggestions made for legislative/executive interference to amend and enact more comprehensive law – Suggestions also made to Insurance Companies. In the instant Special Leave Petition, the Court addressed to four problems generally faced in motor accident cases – (i) Victims who do not receive compensation in cases, that is (a) hit and run vehicles which remain unidentified. (b) offending vehicles not having insurance cover and (c) vehicles with third party insurance carrying persons not covered by insurance (gratuitous passengers and pillion riders etc.). (ii) Practice of using goods vehicles for passenger transport (iii) Procedural delay in adjudication/settlement of claims by Motor Accident Claims Tribunal. (iv) The entire compensation amount not reaching and benefitting the victims and their families. =Adjourning the matter, the Court gave following directions / suggestions: Suggestions For Legislative and Executive Intervention [Problems (i) and (ii)]: 1.1. To ensure that all accident victims get compensation, it is necessary to formulate a more comprehensive scheme for payment of compensation to the victims of road accidents, in place of the present system of third party insurance. [Para 22] 1.2. An alternative scheme involves the collection of a one time (life time) third party insurance premium by a Central Insurance Agency in respect of every vehicle sold (in a manner similar to the collection of life time road tax). The fund created by collection of such third party insurance can be augmented/supplemented by an appropriate road accident cess/surcharge on the price of petrol/diesel sold across the country. Such a hybrid model which involves collection of a fixed life time premium in regard to each vehicle plus imposition of a road accident cess may provide a more satisfactory solution in a vast country like India. This will also address a major grievance of insurance companies that their outgoings by way of compensation in motor accident claims is four times the amount received as motor insurance premia. The general insurance companies may however continue with optional insurance to provide cover against damage to the vehicle and injury to the owner. [Para 23] 1.3. A more realistic and easier alternative is to continue with the present system of third party insurance with two changes: (I) Define `third party’ – to cover any accident victim (that is any third party, other than the owner) and increase the premia, if necessary. (ii) Increase the quantum of compensation payable under Section 161 of the Act in case of hit and run motor accidents. [Para 24] 1.4. There is an urgent need for laying down and enforcing Road safety measures and establishment of large number of Trauma Centres and first aid centres. It is also necessary to consider the establishment of a Road Safety Bureau to lay down Road Safety Standards and norms, enforce Road safety measures, establish and run Trauma Centres, establish First Aid Centres in Petrol Stations, and carry out research/data collection for accident prevention. [Para 25] 1.5. The Central Government may consider amendment of the Second Schedule to the Act to rectify the several mistakes therein and rationalize the compensation payable thereunder. [Para 27] U.P. State Road Transport Corporation v. Trilok Chandra 1996 (4) SCC 362; Sarla Verma v. Delhi Transport Corporation 2009 (6) SCC 121, referred to. 1.6. Where there is no insurance cover for a vehicle, the owner should be directed to offer security or deposit an amount, adequate to satisfy the award that may be ultimately passed, as a condition precedent for release of the seized vehicle involved in the accident. If such security or cash deposit is not made, within a period of three months, appropriate steps may be taken for disposal of the vehicle and hold the sale proceeds in deposit until the claim case is disposed of. The appropriate Governments may consider incorporation of a rule on the lines of Rule 6 of the Delhi Motor Accident Claims Tribunal Rules, 2008 in this behalf. [Para 28] 1.7. In place of the provisions relating to Accident tribunals and award of compensation in the Motor Vehicles Act, 1988, and other statutes dealing with accidents and compensation, enacting a comprehensive and unified statute dealing with accidents may be considered. [Para 26] Direction to Police Authorities: [Problem (i)]: 1.8. Section 196 of the Act provides that whoever drives a motor vehicle or causes or allows a motor vehicle to be driven in contravention of the provisions of Section 146 shall be punishable with imprisonment which may be extended to three months, or with fine which may extend to Rs. 1000/-, or with both. Though the statute requires prosecution of the driver and owner of uninsured vehicles, this is seldom done. Thereby a valuable deterrent is ignored. Therefore, it is directed that the Director Generals to issue instructions to prosecute drivers and owners of uninsured vehicles under Section 196 of the Act. [Para 10] Direction to Police Authorities [Problem (iii)]: 2. The Legislature tried to reduce the period of pendency of claim cases and quicken the process of determination of compensation by making two significant changes in the Act, by Amendment Act 54 of 1994, making it mandatory for registration of a motor accident claim within one month of receipt of first information of the accident, without the claimants having to file a claim petition. Neither the police nor the Motor Accidents Claims Tribunals have made any effort to implement the mandatory provisions of the Act viz. s. 158 (6) and s. 166 (4). If these provisions are faithfully and effectively implemented, it will be possible for the victims of accident and/or their families to get compensation, in a span of few months. There is, therefore, an urgent need for the concerned police authorities and Tribunals to follow the mandate of these provisions. [Para 4] General Insurance Council v. State of A.P. 2007 (12) SCC 354, relied on. 2.1. The Director General of Police of each State is directed to instruct all Police Stations in his State to comply with the provisions of Section 158(6) of the Act. The Station House Officers of the jurisdictional police stations shall submit Accident Information Report (AIR) in Form No. 54 of the Central Motor Vehicle Rules,1989 to the jurisdictional Motor Vehicle Claims Tribunal, within 30 days of the registration of the FIR. The police should also collect and furnish the following additional particulars in the AIR to the Tribunal: (i) The age of the victims at the time of accident; (ii) The income of the victim; (iii) The names and ages of the dependent family members. [Para 8] 2.2. The AIR shall be accompanied by the attested copies of the FIR, site sketch/mahazar/photographs of the place of occurrence, driving licence of the driver, insurance policy (and if necessary, fitness certificate) of the vehicle and postmortem report (in case of death) or the Injury/Wound certificate (in the case of injuries). The names/addresses of injured or dependant family members of the deceased should also be furnished to the Tribunal. [Para 8] 2.3. Simultaneously, copy of the AIR with annexures thereto shall be furnished to the concerned insurance company to enable the Insurer to process the claim. [Para 8] 2.4. The police shall notify the first date of hearing fixed by the Tribunal to the victim (injured) or the family of the victim (in case of death) and the driver, owner and insurer. If so directed by the Tribunal, the police may secure their presence on the first date of hearing. [Para 8] 2.5. To avoid any administrative difficulties in immediate implementation of Sections 158(6) of the Act, such implementation to be carried out in three stages. In the first stage, all police stations/claims Tribunals in the NCT Region and State Capital regions shall implement the provisions by end of April 2010. In the second stage, all the police stations/claims Tribunals in district headquarters regions shall implement the provisions in the first stage by the end of August 2010. In the third stage, all police stations/Claims Tribunals shall implement the provisions by the end of December, 2010. [Para 9] 2.6. The Transport Department, Health Department and other concerned departments shall extend necessary co-operation to the Director-Generals to give effect to Section 158 (6). [Para 11] Directions to Motor Accident Claims Tribunals [Problem (iii)]: 3. The Registrar General of each High Court is directed to instruct all Claims Tribunals in his State to register the reports of accidents received under Section 158(6) of the Act as applications for compensation under Section 166(4) of the Act and deal with them without waiting for the filing of claim applications by the injured or by the family of the deceased. The Registrar General shall ensure that necessary Registers, forms and other support is extended to the Tribunal to give effect to Section 166(4) of the Act. [Para 12] 3.1. The Tribunals are required to follow the steps mentioned in para 13 without prejudice to the discretion of each Tribunal to follow such summary procedure as it deems fit as provided under Section 169 of the Act. Many Tribunals instead of holding an inquiry into the claim by following suitable summary procedure, as mandated by Section 168 and 169 of the Act, tend to conduct motor accident cases like regular civil suits. This should be avoided. The Tribunal shall take an active role in deciding and expeditious disposal of the applications for compensation and make effective use of Section 165 of the Evidence Act, 1872, to determine the just compensation. [Para 14] Suggestions to Insurance Companies [Problem (iii)]: 4.1. In cases of death, where the liability of the insurer is not disputed, the insurance companies should, without waiting for the decision of the Motor Accidents Claims Tribunal or a settlement before the Lok Adalat, endeavour to pay to the family (Legal representatives) of the deceased, compensation as per the standard formula determined by the decisions of this Court. [Para 15] 4.2. In cases of injuries to any accident victim, where the liability is not disputed, the insurer should offer treatment at its cost to the injured, without waiting for an award of the Tribunal. If insurance companies can meet the bills for treatment of those who have taken a medical insurance policy, there is no reason why they should not extend a similar treatment to the accident victims of vehicles insured with them. [Para 16] Suggestion to Insurance Companies [Problem (iv)]: 5.1. To protect and preserve the compensation amount awarded to the families of the deceased victim special schemes may be considered by the insurance companies in consultation with the Life Insurance Corporation of India, State Bank of India or any other Nationalized Banks. One proposal is for formulation of a scheme in consultation with Nationalized Banks under which the compensation is kept in fixed deposit for an appropriate period and interest is paid by the Bank monthly to the claimants without any need for claimants having to approach either the court or their counsel or the Bank for that purpose. The scheme should ensure that the amount of compensation is utilized only for the benefit of the injured claimants or in case of death, for the benefit of the dependent family. [Para 18] 5.2. The Insurance companies may also consider offering an annuity instead of lump sum compensation. They may prepare an annuity scheme with the involvement of Life Insurance Corporation of India or its own actuaries, under which they can pay a monthly annuity to the widow (for life) and to minor children (till they attain majority) and in addition a lump sum at the end of 20 or 25 years to the widow. The benefit of such annuity scheme may also be extended to victims who are permanently disabled in accidents. Once such schemes are in place, the victims and the Tribunal will have some choice in the manner of payment of compensation. [Para 19] Union Carbide Corporation v. Union of India 1991 (4) SCC 584; General Manager, Kerala State Road Transport Corporation v. Susamma Thomas 1994 (2) SCC 176, referred to. Suggestion to Insurance Companies [Problem (i)] 6. Whenever the insurance companies find that the driver of the insured vehicle possessed fake/forged driving license, they should lodge a complaint with the concerned police for prosecution. This will reduce the incidence of fake licences and increase the road travel safety. [Para 20] Case Law Reference: 2007 (12) SCC 354 Referred to. Para 4 1991 (4) SCC 584 Referred to. Para 5 1994 (2) SCC 176 Referred to. Para 5 2009 (6) SCC 121 Referred to. Para 17 1996 (4) SCC 362 Referred to. Para 27 CIVIL APPELLATE JURISDICTION : SLP (Civil) No(s). 11801-11804 of 2005. From the Judgment & Order dated 7.12.2004 of the High Court of Punjab & Haryana at Chandigarh in F.A.O. No. 4845, 4846, 4847 & 4848 of 2003. Gopal Subramonium, SG (A.C.) Manoj Swarup, Lalita Kohil (for Manoj Swarup & Co.) for the Petitioner. S.L. Gupta, Goodwill Indeevar, Anand Vardhan Sharma, for the Respondent.

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 IN THE SUPREME COURT OF INDIA

 CIVIL APPELLATE JURISDICTION

SPECIAL LEAVE PETITION (CIVIL) No. 11801-11804 of 2005

Jai Prakash ....... Petitioner

Vs.

National Insurance Co. Ltd. & Ors. ....... Respondents

 O R D E R

R.V. RAVEENDRAN, J.

 We propose to address four problems frequently faced

in motor accident claim cases under the Motor Vehicles

Act, 1988 (`Act' for short).

Problem (i)

2. The first problem relates to a section of motor

accident victims who are doubly unfortunate - first in

getting involved in an accident, and second, in not

getting any compensation. Let us elaborate. There are two

categories of victims in motor accidents - those who will
be able to get compensation and those who will not be

able to get compensation. Victims of motor accidents

involving insured vehicles, who are assured of getting

compensation from the insurer, fall in the first

category. Victims of motor accidents involving the

following categories of vehicles, who do not receive any

compensation fall under the second category:-

 (i) Hit and run vehicles which remain
 unidentified.

 (ii) Vehicles which do not have any insurance
 cover.

 (iii) Vehicles with third party insurance,
 carrying persons who are not covered by the
 insurance (gratuitous passengers in a goods
 vehicle or a car, and pillion riders on two
 wheelers etc.)

In hit and run cases, the victim has no one from whom he

can claim or get compensation. In regard to vehicles

which do not have any insurance or do not have an

insurance covering the risks relating to gratuitous

passengers/riders, even if the driver/owner may be made

liable under an award of the Tribunal, there is little or

no chance of recovery of compensation that may be

awarded. This is because normally driver and owners of

uninsured vehicles will not have the capacity to pay the

compensation or would have transferred their assets to
escape paying compensation. It is estimated that around

20% of the victims of motor accidents fall under the

unfortunate categories who do not get any compensation

(except some who may get a token amount under Section 161

or 140 of the Act). A person hit by an uninsured vehicle,

feels frustrated, cheated and discriminated, when he does

not get any compensation, but sees another person hit by

an insured vehicle getting compensation. The victim does

not choose the vehicle which hits him, nor any role in

causing the accident. But a victim is denied

compensation, if the vehicle which hits disappears

without trace, or if the vehicle is without insurance,

while a similar victim hit by an insured vehicle gets

compensation. Should the State, which by law provided for

compulsory third party insurance to protect motor

accident victims, ignore these 20% victims who do not get

compensation or provide them with some effective remedy?

Should the State go something to reduce the incidence of

non-insurance?

Problem (ii)

3. The second problem relates to the widespread

practice of using goods vehicles for passenger traffic.

Such use is primarily due to the following four reasons:
(a) Non-availability of regular mode of passenger
transport in several parts of the country, particularly
in rural areas, compelling people to use lorries and
other goods vehicles as modes of transport to reach their
destinations.

(b) Non-availability of contract carriages for group
travel during special occasions. Consequently, large
groups of people use, again mostly in rural areas, goods
vehicles (lorries and tractor-trailers) for group travel
on occasions like marriages, festivals, functions and
political rallies.

(c) Frequent break-down of buses/cars/other vehicles (on
roads with sparse traffic) due to bad maintenance of
roads or the vehicles, or other emergencies forcing the
stranded passengers to use goods vehicles to reach
nearest city or town from which they can get regular
recognized modes of transport.

(d) The temptation of lorry drivers to make a quick buck
by carrying passengers for a fare (with or without the
knowledge of the owner) coupled with the attraction of a
low fare for the poor and needy. (These passengers though
termed as `gratuitous' passengers, except in a few cases,
are fare paying illegal passengers).

Where persons travel in a goods vehicle either knowing or

not knowing that such travel is illegal (gratuitously or

by paying an illegal `fare' to the driver or owner) and
such the vehicle is involved in an accident resulting in

injuries to such passengers, various legal and moral

questions arise. Whether the victims are entitled to

compensation? Whether the insurer is liable? Whether the

owner, who may be unaware of such illegal carriage by the

driver, can be made liable? Whether the owner and driver

of goods vehicles should be made liable to pay

compensation, even where they were carrying passengers

stranded on the road, gratuitously only out of sympathy ?

Whether `illegal' passengers should be denied

compensation as a deterrent to discourage unauthorized

travel? Should we ignore the harsh reality that as long

as the causes necessitating or forcing people to resort

to such illegal travel in goods vehicles continue to

exist, people will continue to travel in goods vehicles,

unmindful of the risk, whether legal or illegal?

Problem (iii)

4. The third problem relates to the procedural delays

in adjudication/settlement of claims by Motor Accidents

Claims Tribunals (for short `Tribunals') and

consequential hardship to the victims and their families.

In cases where the accident victim dies, the family -

usually the widow and children - loses its sole bread
winner and are virtually driven to the streets. Many a

time, the widow and children are forced to take up

unaccustomed manual labour for their survival, the

children foregoing their education. Payment of

compensation without delay will help them to sustain

themselves and pick up the threads to live with dignity.

4.1) Most of the accident victims (who are injured) are

not able to access quality medical treatment for want of

funds, as their earning capacity is either permanently

lost or is put on hold on account of the injuries. They

get the compensation only after the treatment and after a

contested trial. Many a time lack of treatment or

inadequate treatment for want of funds, itself converts

what could have been a temporary disability into

permanent disability for the victim, thereby increasing

the compensation payable. The Insurance Companies know

full well that timely payment of compensation or timely

better treatment of the victims can ultimately reduce the

quantum of compensation payable by them. The insurance

companies also know that they will have to ultimately

reimburse the cost of medical treatment of the accident

victim with interest. But still they fail to extend

timely aid to the injured victims, but wait for the
injured to file a claim petition, after completing the

treatment at his own cost.

4.2) The Legislature tried to reduce the period of

pendency of claim cases and quicken the process of

determination of compensation by making two significant

changes in the Act, by Amendment Act 54 of 1994, making

it mandatory for registration of a motor accident claim

within one month of receipt of first information of the

accident, without the claimants having to file a claim

petition. Sub-section (6) of section 158 of the Act

provides:

 "As soon as any information regarding any
 accident involving death or bodily injury
 to any person is recorded or report under
 this section is completed by a police
 officer, the officer-in-charge of the
 police station shall forward a copy of the
 same within thirty days from the date of
 recording of information or, as the case
 may be, on completion of such report to
 the Claims Tribunal having jurisdiction
 and a copy thereof to the concerned
 insurer, and where a copy is made
 available to the owner, he shall also
 within thirty days of receipt of such
 report, forward the same to such Claims
 Tribunal and insurer".

Sub-section (4) of Section 166 of the Act reads thus:-
 "The Claims Tribunal shall treat any
 report of accidents forwarded to it under
 sub-section (6) of section 158 as an
 application for compensation under this
 Act".

Rule 150 of Central Motor Vehicle Rules, 1989 prescribes

the form (No.54) of the Police Report required to be

submitted under section 158(6) of the Act.

4.3) This Court in General Insurance Council v. State of

A.P. [2007 (12) SCC 354] emphasised the need for

implementing the aforesaid provisions. This Court

directed:

 "It is, therefore, directed that all the
 State Governments and the Union Territories
 shall instruct all police officers
 concerned about the need to comply with the
 requirement of Section 158(6) keeping in
 view the requirement indicated in Rule 150
 and in Form 54, Central Motor Vehicles
 Rules, 1989. Periodical checking shall be
 done by the Inspector General of Police
 concerned to ensure that the requirements
 are being complied with. In case there is
 non-compliance, appropriate action shall be
 taken against the erring officials. The
 Department of Road Transport and Highways
 shall make periodical verification to
 ensure that action is being taken and in
 case of any deviation immediately bring the
 same to the notice of the State
 Governments/Union Territories concerned so
 that necessary action can be taken against
 the officials concerned."
4.4) But unfortunately neither the police nor the Motor

Accidents Claims Tribunals have made any effort to

implement these mandatory provisions of the Act. If these

provisions are faithfully and effectively implemented, it

will be possible for the victims of accident and/or their

families to get compensation, in a span of few months.

There is, therefore, an urgent need for the concerned

police authorities and Tribunals to follow the mandate of

these provisions.

Problem (iv)

5. Courts have always been concerned that the full

compensation amount does not reach and benefit the

victims and their families, particularly those who are

uneducated, ignorant, or not worldly-wise. Unless there

are built-in safeguards they may be deprived of the

benefit of compensation which may be the sole source of

their future sustenance. This court has time and again

insisted upon measures to ensure that the compensation

amount is appropriately invested and protected and not

frittered away owing to ignorance, illiteracy and

susceptibility to exploitation. [See Union Carbide

Corporation v. Union of India - 1991 (4) SCC 584 and

General Manager, Kerala State Road Transport Corporation
v. Susamma Thomas - 1994 (2) SCC 176]. But in spite of

the directions in these cases, the position continues to

be far from unsatisfactory and in many cases unscrupulous

relatives, agents and touts are taking away a big chunk

of the compensation, by ingenious methods.

Reports of Amicus Curiae

6. In this background, to find some solutions, on

9.9.2008, this Court requested Shri Gopal Subramaniam, to

assist the Court as Amicus Curiae. The learned amicus

curiae with his usual thoroughness and commitment has

examined the issues and submitted a series of reports and

has also made several suggestions for consideration. He

has also referred to and relied on a series of zealous

directions issued by a learned Single Judge of the Delhi

High Court to expedite and streamline the adjudication of

motor vehicle claims and disbursement of compensation.

7. Having considered the nature of the problems and

taking note of the several suggestions made by the

learned Amicus Curiae and after hearing, we propose to

issue a set of directions to the police authorities and
Claims Tribunals. We also propose to make some

suggestions for implementation by Insurance Companies and

some suggestions for the consideration of the Parliament

and the Central Government.

Directions to Police Authorities

8. The Director General of Police of each State is

directed to instruct all Police Stations in his State to

comply with the provisions of Section 158(6) of the Act.

For this purpose, the following steps will have to be

taken by the Station House Officers of the jurisdictional

police stations:

(i) Accident Information Report in Form No. 54 of the
Central Motor Vehicle Rules,1989 (`AIR' for short) shall
be submitted by the police (Station House Officer) to the
jurisdictional Motor Vehicle Claims Tribunal, within 30
days of the registration of the FIR. In addition to the
particulars required to be furnished in Form No. 54, the
police should also collect and furnish the following
additional particulars in the AIR to the Tribunal: (i)
The age of the victims at the time of accident; (ii) The
income of the victim; (iii) The names and ages of the
dependent family members.

(ii) The AIR shall be accompanied by the attested
copies of the FIR, site sketch/mahazar/photographs of the
place of occurrence, driving licence of the driver,
insurance policy (and if necessary, fitness certificate)
of the vehicle and postmortem report (in case of death)
or the Injury/Wound certificate (in the case of
injuries). The names/addresses of injured or dependant
family members of the deceased should also be furnished
to the Tribunal.

(iii) Simultaneously, copy of the AIR with annexures
thereto shall be furnished to the concerned insurance
company to enable the Insurer to process the claim.

(iv) The police shall notify the first date of hearing
fixed by the Tribunal to the victim (injured) or the
family of the victim (in case of death) and the driver,
owner and insurer. If so directed by the Tribunal, the
police may secure their presence on the first date of
hearing.

9. To avoid any administrative difficulties in

immediate implementation of sections 158(6) of the Act,

we permit such implementation to be carried out in three

stages. In the first stage, all police stations/claims

Tribunals in the NCT Region and State Capital regions

shall implement the provisions by end of April 2010. In

the second stage, all the police stations/claims

Tribunals in district headquarters regions shall

implement the provisions by the end of August 2010. In

the third stage, all police stations/Claims Tribunals
shall implement the provisions by the end of December,

2010. The Director Generals shall ensure that necessary

forms and infrastructural support is made available to

give effect to Section 158 (6) of the Act.

10. Section 196 of the Act provides that whoever drives

a motor vehicle or causes or allows a motor vehicle to be

driven in contravention of the provisions of Section 146

shall be punishable with imprisonment which may be

extended to three months, or with fine which may extend

to Rs. 1000/-, or with both. Though the statute requires

prosecution of the driver and owner of uninsured

vehicles, this is seldom done. Thereby a valuable

deterrent is ignored. We therefore direct the Director

Generals to issue instructions to prosecute drivers and

owners of uninsured vehicles under Section 196 of the

Act.

11. The Transport Department, Health Department and

other concerned departments shall extend necessary co-

operation to the Director-Generals to give effect to

Section 158 (6).

Directions to the Claims Tribunals
12. The Registrar General of each High Court is directed

to instruct all Claims Tribunals in his State to register

the reports of accidents receive under Section 158 (6) of

the Act as applications for compensation under Section

166 (4) of the Act and deal with them without waiting for

the filing of claim applications by the injured or by the

family of the deceased. The Registrar General shall

ensure that necessary Registers, forms and other support

is extended to the Tribunal to give effect to Section 166

(4) of the Act.

13. For complying with section 166(4) of the Act, the

jurisdictional Motor Accident Claims Tribunals shall

initiate the following steps:

(a) The Tribunal shall maintain an Institution Register
 for recording the AIRs which are received from the
 Station House Officers of the Police Stations and
 register them as miscellaneous petitions. If any
 private claim petitions are directly filed with
 reference to an AIR, they should also be recorded in
 the Register.

(b) The Tribunal shall list the AIRs as miscellaneous
 petitions. It shall fix a date for preliminary
 hearing so as to enable the police to notify such
 date to the victim (family of victim in the event of
 death) and the owner, driver and insurer of the
 vehicle involved in the accident. Once the
 claimant/s appear, the miscellaneous application
 shall be converted to claim petition. Where a
 claimant/s file the claim petition even before the
 receipt of the AIR by the Tribunal, the AIR may be
 tagged to the claim petition.

(c) The Tribunal shall enquire and satisfy itself that
 the AIR relates to a real accident and is not the
 result of any collusion and fabrication of an
 accident (by any `Police Officer - Advocate -
 Doctor' nexus, which has come to light in several
 cases).

(d) The Tribunal shall by a summary enquiry ascertain
 the dependent family members/legal heirs. The
 jurisdictional police shall also enquire and submit
 the names of the dependent legal heirs.

(e) The Tribunal shall categories the claim cases
 registered, into those where the insurer disputes
 liability and those where the insurer does not
 dispute the liability.

(f) Wherever the insurer does not dispute the liability
 under the policy, the Tribunal shall make an
 endeavour to determine the compensation amount by a
 summary enquiry or refer the matter to the Lok
 Adalat for settlement, so as to dispose of the claim
 petition itself, within a time frame not exceeding
 six months from the date of registration of the
 claim petition.
(g) The insurance companies shall be directed to deposit
 the admitted amount or the amount determined, with
 the claims tribunals within 30 days of
 determination. The Tribunals should ensure that the
 compensation amount is kept in Fixed deposit and
 disbursed as per the directions contained in General
 Manager, KSRTC v. Susamma Thomas [1994 (2) SCC 176].

(h) As the proceedings initiated in pursuance of Section
 158(6) and 166(4) of the Act, are different in
 nature from an application by the victim/s under
 Section 166(1) of the Act, Section 170 will not
 apply. The insurers will therefore be entitled to
 assist the Tribunal (either independently or with
 the owners of the vehicles) to verify the
 correctness in regard to the accident, injuries,
 age, income and dependents of the deceased victim
 and in determining the quantum of compensation.

14. The aforesaid directions to the Tribunals are

without prejudice to the discretion of each Tribunal to

follow such summary procedure as it deems fit as provided

under Section 169 of the Act. Many Tribunals instead of

holding an inquiry into the claim by following suitable

summary procedure, as mandated by Section 168 and 169 of

the Act, tend to conduct motor accident cases like

regular civil suits. This should be avoided. The Tribunal

shall take an active role in deciding and expeditious

disposal of the applications for compensation and make
effective use of Section 165 of the Evidence Act, 1872,

to determine the just compensation.

SUGGESTIONS FOR INSURANCE COMPANIES

15. In cases of death, where the liability of the

insurer is not disputed, the insurance companies should,

without waiting for the decision of the Motor Accidents

Claims Tribunal or a settlement before the Lok Adalat,

endeavour to pay to the family (Legal representatives) of

the deceased, compensation as per the standard formula

determined by the decisions of this Court.

16. In cases of injuries to any accident victim, where

the liability is not disputed, the insurer should offer

treatment at its cost to the injured, without waiting for

an award of the Tribunal. If insurance companies can meet

the bills for treatment of those who have taken a medical

insurance policy, we see no reason why they should not

extend a similar treatment to the accident victims of

vehicles insured with them.

17. In countries like United Kingdom, the percentage of

motor accident claims, with reference to the accidents is

very low. This is because immediately after being
notified of the accident, the insurer makes its own

enquiries and satisfies itself about its liability and

voluntarily assesses and pays the compensation to the

victim. Only where the insurer denies the claim or where

the victim is not satisfied with the quantum of

compensation paid, the matter goes to court. There is no

reason why insurance companies in India should not adopt

such a procedure. In death cases, the calculation of

compensation is now standardized by several decisions of

this court [See for example: Sarla Verma v. Delhi

Transport Corporation - 2009 (6) SCC 121]. The insurers

can either by relying upon the police report (AIR) or by

enquiring with the family or the employer of the

deceased, ascertain the three inputs required for

calculation of the compensation, that is, age of the

deceased, income of the deceased and number of dependent

family members. With these particulars, the insurers can

easily calculate the compensation and offer a

compensation, either a lump sum or an annuity. Similarly

in cases of injuries, the insurers can offer treatment in

hospitals approved by it and meet the expenses or pay the

bills, or if the victim has already undergone the

treatment, reimburse the cost of treatment. It can also

reimburse other items of special damages, the damages for

pain suffering, which is also standardized in several
decisions of this Court. By such voluntary payment there

will be all round benefits. The insurers save interest

and litigation cost and discharge their obligation to the

society. The victims will be relieved from financial

hardship and benefit from timely effective treatment.

Burden on courts will be reduced and judicial man power

can be diverted to more complex cases.

18. To protect and preserve the compensation amount

awarded to the families of the deceased victim special

schemes may be considered by the insurance companies in

consultation with the Life Insurance Corporation of

India, State Bank of India or any other Nationalized

Banks. One proposal is for formulation of a scheme in

consultation with Nationalized Banks under which the

compensation is kept in fixed deposit for an appropriate

period and interest is paid by the Bank monthly to the

claimants without any need for claimants having to

approach either the court or their counsel or the Bank

for that purpose. The scheme should ensure that the

amount of compensation is utilized only for the benefit

of the injured claimants or in case of death, for the

benefit of the dependent family. We extract below the

particulars of a special Scheme offered by a nationalized

Bank at the instance of the Delhi High Court :
(i)The fixed deposit shall be automatically renewed till the
 period prescribed by the Court.

(ii)The interest on the fixed deposit shall be paid monthly.

(iii)The monthly interest shall be credited automatically in
 the saving account of the claimant.

(iv)Original fixed deposit receipt shall be retained by the
 Bank in safe custody. However, the original passbook shall
 be given to the claimant along with the photocopy of the
 FDR.

(v)The original fixed deposit receipt shall be handed over to
 the claimant at the end of the fixed deposit period.

(vi)Photo identity card shall be issued to the claimant and
 the withdrawal shall be permitted only after due
 verification by the Bank of the identity card of the
 claimant.

(vii)No cheque book shall be issued to the claimant without
 permission of the court.

(viii)No loan, advance or withdrawal shall be allowed on the
 fixed deposit without permission of the court.

(ix)The claimant can operate the saving bank account from the
 nearest branch of UCO Bank and on the request of the
 claimant, the bank shall provide the said facility.

19. The Insurance companies may also consider offering

an annuity instead of lump sum compensation. They may

prepare an annuity scheme with the involvement of Life

Insurance Corporation of India or its own actuaries,

under which they can pay a monthly annuity to the widow

(for life) and to minor children (till they attain

majority) and in addition a lump sum at the end of 20 or

25 years to the widow. The benefit of such annuity scheme

may also be extended to victims who are permanently
disabled in accidents. Once such schemes are in place,

the victims and the Tribunal will have some choice in the

manner of payment of compensation.

20. Whenever the insurance companies find that the

driver of the insured vehicle possessed fake/forged

driving license, they should lodge a complaint with the

concerned police for prosecution. This will reduce the

incidence of fake licences and increase the road travel

safety.

SUGGESTIONS FOR LEGISLATIVE/EXECUTIVE INTERVENTION

21. We may next refer to some vital areas where

intervention by the legislature and/or executive is

called for. The suggestions are intended to draw the

attention of the executive and legislature to the several

vexed issues, which when properly and expeditiously

addressed, will improve the system of compensating the

motor accident victims.

Ensuring that all accident victims get compensation

22. To ensure that all accident victims get

compensation, it is necessary to formulate a more

comprehensive scheme for payment of compensation to

victims of road accidents, in place of the present system
of third party insurance. For example, in South Africa

and some other African countries, Road Accident Funds

have been created, managed by Road Accident Fund

Commissions, thereby eliminating the need for third party

insurance. A fuel levy/surcharge is collected on the sale

of petrol and diesel and credited to such fund. All

accident victims, without exception, are paid

compensation from out of the said fund by the Commission.

But the feedback from operational statistics relating to

such funds is that the scheme, while successful in

smaller countries, may encounter difficulties and

financial deficits in larger countries like South Africa

or developing countries with infrastructural

deficiencies.

23. An alternative scheme involves the collection of a

one time (life time) third party insurance premium by a

Central Insurance Agency in respect of every vehicle sold

(in a manner similar to the collection of life time road

tax). The fund created by collection of such third party

insurance can be augmented/supplemented by an appropriate

road accident cess/surcharge on the price of

petrol/diesel sold across the country. Such a hybrid

model which involves collection of a fixed life time

premium in regard to each vehicle plus imposition of a
road accident cess may provide a more satisfactory

solution in a vast country like India. This will also

address a major grievance of insurance companies that

their outgoings by way of compensation in motor accident

claims is four times the amount received as motor

insurance premia. The general insurance companies may

however continue with optional insurance to provide cover

against damage to the vehicle and injury to the owner.

24. A more realistic and easier alternative is to

continue with the present system of third party insurance

with two changes:

(i) Define `third party' - to cover any accident victim
 (that is any third party, other than the owner) and
 increasing the premia, if necessary.

(ii) Increase the quantum of compensation payable under
 Section 161 of the Act in case of hit and run motor
 accidents.

25. India has the dubious distinction of being one of

the countries with the highest number of road accidents

and the longest response time in securing first aid and

medical treatment. There is therefore an urgent need for

laying down and enforcing Road safety measures and

establishment of large number of Trauma Centres and first

aid centres. It is also necessary to consider the

establishment of a Road Safety Bureau to lay down Road

Safety Standards and norms, enforce Road safety measures,
establish and run Trauma Centres, establish First Aid

Centres in Petrol Stations, and carry out research/data

collection for accident prevention.

26. Several countries have comprehensive enactments

dealing exclusively with accidents. In place of the

provisions relating to Accident tribunals and award of

compensation in the Motor Vehicles Act, 1988, and other

statutes dealing with accidents and compensation,

enacting a comprehensive and unified statute dealing with

accidents may be considered.

Rationalisation of II schedule to Motor Vehicles Act, 1988

27. The Central Government may consider amendment of the

Second Schedule to the Act to rectify the several

mistakes therein and rationalize the compensation payable

thereunder, repeatedly pointed out by this Court [See

U.P. State Road Transport Corporation v. Trilok Chandra -

1996 (4) SCC 362, and Sarla Verma (supra)].

Securing the compensation to the victims of accidents
involving uninsured vehicles

28. Where there is no insurance cover for a vehicle, the

owner should be directed to offer security or deposit an

amount, adequate to satisfy the award that may be
ultimately passed, as a condition precedent for release

of the seized vehicle involved in the accident. If such

security or cash deposit is not made, within a period of

three months, appropriate steps may be taken for disposal

of the vehicle and hold the sale proceeds in deposit

until the claim case is disposed of. The appropriate

Governments may consider incorporation of a rule on the

lines of Rule 6 of the Delhi Motor Accident Claims

Tribunal Rules, 2008 in this behalf.

CONSEQUENTIAL DIRECTIONS

29. The Supreme Court Registry is directed to send

copies of this order to (i) Chief Secretaries and

Director Generals of Police of all States, and (ii)

Registrar-Generals of all High Courts, for compliance

with the directions. The suggestions made may be placed

before the Central Government by the learned Solicitor

General. Registry may receive and put up any other

suggestions. List for further directions on 7.1.2010.

 ____________________J.
 (R V Raveendran) ____________________J.
 (Mukundakam Sharma)New Delhi; ____________________J.
December 17, 2009. (K.S. Radhakrishnan)

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