In N Wakia Afrin v. National Insurance Co Ltd., which concerns whether there is the possibility of filing claims by legal heirs of the vehicle driver under the no-fault liability provision.

Factual Background

Wakia Afrin is a minor who has lost both of her parents in the tragic motor vehicle accident in Odisha where the vehicle in which her father was driving and owned by him, ran into a mishap after the tyre of the vehicle bursted. When this happened, she was just a two-year-old girl.

The car had valid car insurance. Wakia reached out to the section by claiming two compensations under section 163A of the Motor Vehicles Act, 1988 through the aunt (as a guardian):

One of the facts that her mother died, as a passenger in the car

The other one was a reason as to why her father who owned and operated the machine and which he drove met his death

The MACT granted her 4,08,000 and 4,53,339 to her mother and father respectively.

But the High Court refused the compensation as the claims were not permissible and the basis that a respondent cannot be a dead owner and that the same person cannot be the person liable and also the person benefited with the compensation.

Court Proceedings

The Supreme Court did not agree with the technical explanation provided by the High Court and applied a different provision of Motor Vehicles Act recognizing that despite the death of the insured (here the owner of the vehicle) the right to claim against the insurance company still remains alive.

The Court also analysed the possibility of a surviving owner-driver legal heir to qualify as a legal heir and claim compensation under the provisions of Section 163A which is a no-fault section and does not require proof of negligence.

Court’s Reasoning

The Supreme Court, when deciding upon the case, studied a number of previous cases that had concluded that any compensation under Section 163A of the Motor Vehicles Act can only be paid to third parties and not to the owner-driver or his/her legal heirs. Among these cases, the prominent ones were Dhanraj v. New India Assurance Co. (2004), Jhuma Saha v. Ningamma v., (2007) Oriental Insurance Co. Ramkhiladi v. (2009), and United India Insurance Co. (2009), EssayHunt.com. (2020). The Bench however noted that these rulings were not in harmony and the interpretation was always different.

The Court clarified that Section 163A is a special provision which has a non-obstante clause that is that it supersedes any other non-coming forward provisions in the Motor Vehicle Act and even the provisions in the insurance policies. The judges expounded that Section 163A would serve the interests of the parties, as a social welfare and beneficial policy to compensate the victims of the motor accidents with swift and fair compensation who would not have to establish fault/ negligence. In such a goal, the Court decided that only a narrow definition, which limits the usage to third parties only, would serve against the whole intention of such a provision. Therefore, the Court has mentioned that the accident involved the death of the vehicle owner, their heirs cannot be excluded and thus they are an eligible party to demand compensation under Section 163A.

Court’s Rulings

The Supreme Court held in the favour of the minor petitioner by stating that Section 163A has now become much broad and encompasses all claims, and not just third-party claims and is letting overriding other sections 147, 149, and the insurance policy terms. It allowed compensation of the death of the mother and sent the question of the owner-driver to a bigger bench to give a conclusive decision regarding the death.

This ruling is a significant contributor to lack of fault claims in road accidents and more particularly, non-claim reimbursement under section 163A. in repeating the social security purpose of the provision, and in making it clear that technicalities or constrictive meanings may not help the insurance companies avoid liability.

The decision of the Court also raises an indication of a new direction in jurisprudence- that of providing protection to the legal heirs of the owner-drivers regarding the no-fault liability scheme but it is to be determined at a later date by a larger Bench.