UNITED LNDIA INSURANCE CO. LTD. versus SUNIL KUMAR & ANR.
[2017] 11 S.C.R. 130, Supreme Court of India, 2017
Outcome: Hearing Adjourned
Segment: Ratio
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(2017] I l S.C.R. 130 
UNITED lNDIA INSURANCE CO. LTD. 
v. 
SUNIL KUMAR & ANR. 
(Civil Appeal No. 9694of2013) 
NOVEMBER 24, 20 l 7 
[RANJAN GOGOi, ADARSH KUMAR GOEL AND 
NAVIN SINHA, JJ.] 
Motor Vehicles Act, 1988 - s.163A - Compensation - Claim 
proceedings u/s. l 63A - Defence/plea by tile insurer of negligence 
on the part of the driver/owner of tile vehicle - Held: It is not open 
for the insurer to raise the defence/plea of negligence - Grant of 
compensation u/s. 163-A on the basis of the stmctured formula is in 
tile nature of a final award and the adjudication thereunder is 
required to be made without any requirement of any proof of 
negligence of the driver/owner of the vehicle(s) involved in the 
l1cciclent. 
Adjourning the matter, the Court 
HELD: It is clear that grant of compensation under Section 
163-A of the Motor Vehicles Act, 1988 on the basis of the 
structured formula is in the nature of u final award and the 
adjudication thereunder is required to be made without any 
requirement of any proof of negligence of the driver/owner of the 
vehiclc(s) involved in the accident. This is made explicit by 
Section I 63A(2). Though the said section of the Act docs not 
specifically exclude a possible defence of the Insurer based on 
the negligence of the claimant as contemplated by Section 140(4), 
to permit such defence to he introduced by the Insurer and/or to 
understand the provisions of Section l63A of the Act to he 
contemplating any
such situation would go contrary to the very 
legislative object behind introduction of Section l63A of the Act, 
namely, final compensation within a limited time frame on the 
basis of the strnctured formula to overcome situations where the 
claim of compensation on the basis of fault liability was taking an 
unduly long time. In fact, to understand Section 163A of the Act 
to permit the Insurer to raise the defence of negligence would 
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UNITED INDIA INSURANCE CO. LTD. v. SUNIL KUMAR 
131 
&ANR. 
be to bring a proceeding under Section 163A Of the Act at par A 
with the proceeding under Section 166 of the Act which would 
not only be selt~contradictory but also defeat the very legislative 
intention. Thus, in a proceeding under Section 163A of the Act it 
is not open for the Insurer to raise any defence of negligence on 
the part of the victim. As the final disposal of the appeal may take B 
some time, 50% of the compensation that is presently lying in 
dcpo.sit in the Registry in terms of the Order dated 24-02-2012 
should be released to the claimant on due identification. (Paras 
8, 9, 11)[135-B-E; G] 
National Insurance Company Limited v. Sinitha and 
others (2012) 2 SCC 356 : [20U] 16 SCR 166; United 
India Insurance Company Limited v. Shila Datta and 
others (2011) lO SCC 509: (2011) 14 SCR 763; Deepa/ 
Girishbhai Soni and others v. United India Insurance 
Co. Ltd.. Baroda (2004) 5 SCC 385; Oriental Insurance 
Co. Ltd. v. Hansrajbhai v. Koda/a and other (2001) 5 
SCC 175 : )2001] 2 SCR 999 - referred to. 
Case Law Reference 
[2011] 1.6 SCR 166 
referred to 
Para l 
[2011] 14 SCR 763 
referred to 
Para 2 
(2004) s sec 385 
referred lo 
Paras 
[2001) 2 SCR 999 
referred to 
Para 6 
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 9694 
of2013. 
From the Judgment and Order dated 10.10.2011 of the High Court 
of Delhi at New Delhi in MAC Appeal No. 900 of201 I. 
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Amit Kumar Singh, Mrs. E. Enatoli
Serna (for Mis. Law 
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Associates), Advs. for the Appellant. 
Ajay KumarTalesarn,Amit Singh Chauhan, Ms. Nidhi, Vipin Nair, 
P. B. Surcsh, Abbay Pratap Singh, Ad vs. for the Respondents. 
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SUPREME COURT REPORTS 
(2017] l 1 S.C.R. 
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The Judgment of the Court was delivered by 
RANJAN GOGOi, J. I. Unable to agree with the reasoning 
and the conclusion of a two judge bench of this Court in National 
Insurance Comvany Limited vs. Sinitha a11d others' a coordinate 
bench of this Court by order dated 29'" October, 2013 has referred the 
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instant matter fem a resolution of what appears to be the following question 
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oflaw. 
"Whether in a claim proceeding under Section 163 A of the Motor 
Vehicles Act, 1988 (hereinafter referred to as "the Act") it is 
open for the Insurer to raise the defence/pica of negligence?" 
2. A second question as to what would be the true scope and 
meaning of the provisions contained in Section 170 of the Act more 
specifically as set out in Queries (iii) to (v) in paragraph 10 of the report 
of United India /11sura11ce Comoany Limited versus Shila Datta and 
others', also arises. However, the aforesaid Question stands referred 
to a Larger Bench in Shila Datta(supra) itself. We are told that answers 
to the questions referred are awaited. In view of the above, we would 
be required to answer only the first question arising in the reference 
which has been set out herein above. 
3. In Si11itha's case (supra), a two judge bench of this Court 
understood the scope of Section l 63A of the Actto be enabling an Insurer 
to raise the defence of negligence to counter a claim for compensation. 
The principal basis on which
the conclusion in Sinitha's case (supra) 
was reached and recorded is the absence of a provision similar to sub-
section (4) of Section 140 of the Act in Section l63A of the Act. Such 
absence has been understood by the Bench to be a manifestation of a 
clear legislative intention that unlike in a proceeding under Section 140 
of the Act where the defence of the Insurer based on negligence is shut 
out, the same is not be the position in a proceeding under Section 163A 
of the Act. 
4. We have considered the matter and have heard the learned 
counsels for the parties. 
5. In Deevat Girishbhai Soni and others vs. United India 
/11s11ra11ce Co. Ltd., Barodd' the issue before a three judge bench of 
'(2012) 2 sec 356 
'(2011 l 10 sec 509 
'12004) 5 sec 385
UNITED INDIA INSURANCE CO. LTD. v. SUNIL KUMAR 
133 
& ANR. [RANJAN GOGOI, J.] 
this Court was with regard to the mutual exclusiveness of the provisions 
of Section I 63A and Section 166 of the Act. While dealing with the said 
question, this Court had the occasion to go into the reasons and objects 
for the incorporation of Section 140 and l 63A of the Act which came in 
by subsequent amendments, details of which are being noted separately 
herein below. The Bench also took the view that while Section 140 of 
the Act deals with cases of interim compensation leaving it open for the 
claimant to agitate for final compensation by resort to the provisions of 
Section 166 of the Act, Section 163A of the Act provides for award of 
final compensation on a structured formula following the provisions of 
Second Schedule appended to the Act. Both Sections i.e. Sections 140 
and l 63A are based on the concept of 'no fault liability' and have been 
enacted as measures of social security. It was further noted that in a 
proceeding under Section J 63A of the Act the Tribunal may be required 
to adjudicate upon various disputed questions like age, income, etc, unlike 
in a proceeding under Section 140 of the Act. 
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6. Deepal Girishbhai Son i's case (supra), in fact, arose out of a 
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reference made for a decision on the correctness of the view expressed 
in Oriental Insurance Co. Ltd. vs. Hansrajbhai V. Koda/a and other' 
that determination of compensation in a proceeding under
Section 163A 
of the Act is final and further proceedings under Section 166 of the Act 
is barred. The opinion rendered in Hansra/bhai V. Koda/a (supra) 
contains an elaborate recapitulation of the reasons behind the enactment 
of Section 92A to 92E of the Old Act (i.e. Motor Vehicles Act. 1939) 
(corresponding to Sections 140 to 144 of the present Act) introducing 
for the first time the concept of 'no fault liability' in departure from the 
usual common law principle that a claimant should establish negligence 
on the part of the owner or driver of the motor vehicle before claiming 
any compensation for death or permanent disablement caused on account 
of a motor vehicle accident. In the said report, there is a reference to the 
deli.berations of the Committee constituted to review the provisions of 
the Motor Vehicles Act, 1988 and .the suggestions of the Transport 
Development Council on th\' basis ofwhich .the draf\ "sill of 1994 was 
enacted, iliter alia, to provide for: 
'(2001) s sec 175 
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SUPREME COURT REPORTS 
[2017] l l S.C.R. 
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"(h) increase in the amount of compensation to the victims ofhit-
and-run cases; 
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(k) a new predetermined formula for payment of compensation 
to road accident victims on the basis of age/income, which is more 
liberal and rational." 
7. As observed in Hansrajbhai V. Koda/a (supra) one of the 
suggestions made by the Transport Development Council was "to provide 
adequate compensation to victims of road accidents without going into 
long drawn procedure." As a sequel to the recommendations made by 
the Committee and the Council. Section 140 was enacted in the present 
Act in place of Section 92A to 92E of the Old Act. Compensation payable 
thereunder, as under the repealed provisions, continued to be on the 
basis of no fault liability though at an enhanced rate which was further 
enhanced by subsequent amendments. Sections 140 and 141 of the 
present Act makes it clear that compensation payable thereunder does 
not foreclose the liability to pay or the right to receive compensation 
under any other provision of the Act or any other law in force except 
compensation awarded under Section l 63A of the Act. Compensation 
under Section 140 of the Act was thus understood to be in the nature of 
an interim payment pending the final award under Section 166 of the 
Act. Sectior) 163-A, on the other hand, was introduced in the New Act 
for the first time to remedy the situation where determination of final
compensation on fault basis under Section 166 of the Act was 
progressively getting protracted. The Legislative intent and purpose was 
to provide for payment of final compensation to a class of claimants 
(whose income was below Rs.40,000/- per annum) on the basis of a 
structured formula without any reference to fault liability. In fact, in 
Hansrajbhai V. Koda/a (supra) the bench had occasion to observe 
that: 
"Compensation amount is paid without pleading or proof of fault, 
on the principle of social justice as a social security measure 
because of ever-increasing motor vehicle accidents in a fast-
moving society. Further, the law before insertion of Section 163-
A was giving limited benefit to the extent provided under Section
UNITED INDIA INSURANCE CO. LTD. v. SUNIL KUMAR 
135 
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J 40 for no-fa ult liability and determination of compensation amount 
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on fault liability was taking a Jong time. That mischief is sought to 
be remedied by introducing Section 163-A and the disease of delay 
· is sought to be cured to a large extent by affording benefit to the 
victims on structured-formula basis. Further, if the question of 
determining compensation on fault liability is kept alive it would 
result in additional litigation and complications in case claimants 
fail to establish liability of the owner of the defaulting vehicles." 
8. From the above discussion, it is clear that grant of compensation 
under Section 163-A of the Act on the basis of the structured formula is 
in the nature of a final award and the adjudication thereunder is required 
to be made without any requirement of any proof of negligence of the 
driver/owner of the vehicle(s) involved in the accident. This is made 
explicit by Section l 63A(2). Though the aforesaid section of the Act 
does not specifically exclude a possible defence of the Insurer based on 
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the negligence of the claimant as contemplated by Section 140(4), to 
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permit such defence to be introduced by the Insurer and/or to understand 
the provisions of Section 163A of the Act to be contemplating any such 
situation would go contrary to the very legislative object behind introduction 
of Section l 63AoftheAct, namely, final
compensation within a limited · 
time frame on the basis of the structured formula to overcome situations 
where the claims of compensation on the basis of fault liability was · E 
taking an unduly long time. In fact, to understand Section 163Aofthe 
Act to permit the Insurer to rai~e the defence of negligence ;would be to 
bring a proceeding under Section l 63A of the Act at par with the 
prnceeding under Section 166 of the Act which would not only be self. 
contradictory but also defeat the very legislative intention. 
9. For the aforesaid reasons, we answer the question arising_by. 
holding that in a proceeding under Section 163A of the Act it is not open 
for the Insurer to raise any defence of negligence on the part of the 
vi(,'lim. 
I 0. The appeal will now be listed before regular Bench for disposal 
on merits, after the opinion of the larger Bench on the true scope and 
meaning of the provisions contained in Section 170 of the Moto~ Vehicles 
Act, 1939 is rendered. 
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[2017] ll S.C.R. 
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11. As the final disposal of the appeal may take some time, we 
are of the view that 50 % of the compensation that is presently lying in 
deposit in the Registry in terms of the Order dated 24-02-2012 should be 
released to the claimant on due identification. 
Nidhi Jain 
Matter adjourned.