Is insurer liable to pay compensation for motor accident deaths sans third party claim? Supreme Court refers issue to larger bench

The Supreme Court has referred to a larger bench the question of whether no-fault compensation under Section 163A of the Motor Vehicles Act, 1988 can be claimed for the death of the vehicle owner by the owner's heir, even in cases where the accident was not a result of a collision with a third-party vehicle [Wakia Afrin (Minor) v. National Insurance Co. Ltd]..As per Section 163A, the owner of the motor vehicle of the authorised insurer is liable to pay compensation to the legal heirs of the victim, in the case of death or permanent disablement due to accident arising out of the use of the motor vehicle..A Division Bench of Justices Sudhanshu Dhulia and K Vinod Chandran expressed doubts over the view taken in earlier judgments that no-fault compensation is meant to guard against third-party risks, meaning that it would not cover cases where the accident does not involve a third party's vehicle. "The liability is essentially of the owner but the provision, in addition to the insured/owner makes liable the authorized insurer too. Hence, when there is a valid policy issued in the name of the vehicle involved in the accident, a claim under Section 163A...covers every claim and is not restricted to a third party claim; without any requirement of establishing the negligence, if death or permanent disability is caused by reason of the motor accident.".Since this view conflicted with other coordinate bench rulings, the matter has now been referred to a larger bench."We are of the opinion that this issue concerning the liability of the insurer in a claim under Section 163A qua the owner/insured requires an authoritative pronouncement. The dictum arising from the various decisions of different benches of two Judges is that the claim under Section 163A is restricted to third party risks, which, with all the respect at our command, we are unable to agree with.".The Court was dealing with a case where a minor sought compensation for the death of her parents, caused when their vehicle collided with a wall after a tyre burst.The insurance company had opposed any grant of compensation in this case, pointing out that the minor child was the sole heir of the deceased vehicle owner's estate. If compensation is granted, it would result in an anomalous situation where she would be both liable for the accident (as the heir, and since there were no other offending vehicles) as well as the beneficiary of the compensation, the insurer argued. .Notably, a Motor Accident Claims Tribunal (MACT) had initially ruled in the minor child's favour, ordering the grant of about ₹4 lakh each as compensation for the deaths of her father and mother. However, in 2023, the Orissa High Court set aside this compensation award on noting that the offending vehicle's owner (the minor's father) had also died in the accident, leaving no other living person liable for the accident.This High Court ruling was challenged by the minor daughter, represented by her aunt, before the Supreme Court..The Supreme Court disagreed with the High Court's view that the compensation claim was not maintainable since the owner of the 'offending vehicle' had died. Rather, the top court observed, “Section 155 provides that even if the insured dies after the happening of an event which gave rise to a claim, it shall not be a bar to the survival of any cause of action arising out of the said event, against the insurer...The ground stated by the High Court definitely is not tenable.”The Court proceeded to restore the compensation of ₹4.08 lakh awarded to the minor child for her mother's death under Section 163A, MV Act.However, it noted that the liability with respect to the death of the minor's father (the vehicle owner) was limited to ₹2 lakh under the insurance policy. The question that remained was whether the minor child was entitled to additional no-fault compensation under Section 163A of the MV Act for her father's death as well. .The Court undertook an extensive review of prior judicial decisions on Sections 166 (fault-based compensation) and 163A (no-fault compensation). It noted that earlier benches had generally held that no-fault compensation generally only covered third-party risks or risks specified in Section 147 (requirements of policies and limits of liability), read with Section 149 (settlement by insurance company and procedure therefor).The Court, however, went on to express reservations about such a restrictive interpretation of Section 163A. It noted that Section 163A was a special provision with a non-obstante clause which overrides not only the entire provisions of the Motor Vehicles Act, but also any other law in force. "It is a beneficial piece of legislation brought in, keeping in mind the enhanced chances of an accident, resulting from the prevalence of vehicles in the overcrowded roads of today," it added. It, therefore, took the view that Section 163A may also cover cases where there are no third-party risks..Advocate Satya Kam Sharma represented the petitioner.Advocate Ambhoj Kumar Sinha represented the National Insurance Company. .[Read Judgment]