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CASE NO.:

Appeal (civil) 2568 of 2001

Appeal (civil) 2569 of 2001

Appeal (civil) 2570 of 2001

Appeal (civil) 2571 of 2001

Appeal (civil) 2572 of 2001

Appeal (civil) 2573 of 2001

PETITIONER:

THE ORIENTAL INSURANCE CO. LTD.

Vs.

RESPONDENT:

HANSRAJBHAI V. KODALA & ORS.

DATE OF JUDGMENT: 04/04/2001

BENCH:

M.B. Shah & D.P. Mohapatra

JUDGMENT:

L...I...T.......T.......T.......T.......T.......T.......T..J

Shah, J.

Leave granted.

The common question involved in these appeals is whether

the compensation payable under Section 163A of the Motor

Vehicles Act, 1988 (hereinafter referred to as the Act) as

per the structured formula basis is in addition or in the

alternative to the determination of the compensation on the

principle of fault liability, after following the procedure

prescribed under the Act?

For convenience we would refer to few facts in Civil

Appeal arising out of S.L.P. (Civil) No.8742 of 1999 in

which the judgment and order dated 4.8.98 passed by the High

Court of Gujarat at Ahmedabad in FA No.2473 of 1996 is

challenged. Petition claiming compensation of Rs.

2,50,000/- was filed before the Claims Tribunal on the

ground that one bus bearing registration No. G.J.3T 9815

met with an accident and Mayur, son of respondent Nos. 1

and 2, aged about 6 years died as a result thereof. The

claimants also filed an application under Section 163A of

the Act for interim compensation on structured formula

basis. The Insurance Company- appellant contended that as

the bus was not insured with it, it was not liable to pay

compensation. The Claims Tribunal granted the prayer of the

respondents and directed the appellant to pay Rs.1,62,000/-

to the respondents as interim compensation. The appellants

preferred appeal before the High Court contending inter alia

that in order to provide quicker relief to the accident

victims, Section 163A was inserted and is not meant for

interim compensation but is an alternative to the

determination of compensation under Section 168. It was

further contended that the application under Section 163A

was a substantial application and not an interim

application. The High Court by judgment and order dated

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4.8.1998 held that the award under section 163A was an

interim award and the claimants were entitled to proceed

further with determination of compensation under Section 168

of the Act. That order is under challenge.

For determining the question involved, the scheme for

payment of compensation under the Act can be divided as

under: -

(i) Section 140For no-fault liability in case of death

or disablement;

(ii) Section 161In case of hit and run motor accidents,

where the identity of the vehicle cannot be ascertained

compensation amount is Rs.25000/- in case of death and

Rs.12500/- in case of grievous hurt;

(iii) Section 163ASpecial provisions as to payment of

compensation on structured formula basis without

establishing or proving any wrongful act or neglect or

default of any person;

(iv) Section 168Determination of compensation payable

in pursuance of any right on the principle of fault

liability.

Chapter XII provides for constitution of Claims

Tribunals by the State Government for the purpose of

adjudicating the claims for compensation and the procedure

thereof. The Claims Tribunal is required to determine the

application for payment of compensation either under section

140 or section 163A on the basis of no-fault liability and

also on the basis of right to receive the compensation on

the principle of fault liability on the basis of Law of

Torts, as modified by the Fatal Accidents Act, 1855 read

with Motor Vehicles Act, 1988.

For appreciating the rival contentions, it would be

necessary to refer to the relevant provisions of the

Sections 140 (Chapter X), 161, 162, 163A, 163B (Chapter XI)

and 167 (Chapter XII) of the Act which are as under:

140. Liability to pay compensation in certain cases on

the principle of no fault.

(1) Whether death or permanent disablement of any person

has resulted from an accident arising out of the use of a

motor vehicle or motor vehicles, the owner of the vehicle

shall, or, as the case may be, the owners of the vehicles

shall, jointly and severally, be liable to pay compensation

in respect of such death or disablement in accordance with

the provisions of this section.

(2) The amount of compensation which shall be payable

under sub-section (1) in respect of the death of any person

shall be a fixed sum of fifty thousand rupees and the amount

of compensation payable under that sub-section in respect of

the permanent disablement of any person shall be a fixed sum

of twenty-five thousand rupees.

(3) In any claim for compensation under sub-section (1),

the claimant shall not be required to plead and establish

that the 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 owners of the vehicle or vehicles

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concerned or of any other person.

(4) A claim for compensation under sub-section (1) shall

not be defeated by reason of any wrongful act, neglect or

default of the person in respect of whose death or permanent

disablement the claim has been made nor shall the quantum of

compensation recoverable in respect of such death or

permanent disablement be reduced on the basis of the share

of such person in the responsibility for such death or

permanent disablement.

(5) Notwithstanding anything contained in sub-section

(2) regarding the death or bodily injury to any person, for

which the owner of the vehicle is liable to give

compensation for relief, he is also liable to pay

compensation under any other law for the time being in

force;

Provided that the amount of such compensation to be

given under any other law shall be reduced from the amount

of compensation payable under this section or under section

163A.

141. (1) Provisions as to other right to claim

compensation for death or permanent disablement. (1) The

right to claim compensation under section 140 in respect of

death or permanent disablement of any person shall be in

addition to any other right, except the right to claim under

the scheme referred to in section 163A (such other right

hereafter in this section referred to as the right on the

principle of fault) to claim compensation in respect thereof

under any other provision of this Act or of any other law

for the time being in force.

(2) A claim for compensation under section 140 in

respect of death or permanent disablement of any person

shall be disposed of as expeditiously as possible and where

compensation is claimed in respect of such death or

permanent disablement under section 140 and also in

pursuance of any right on the principle of fault, the claim

for compensation under section 140 shall be disposed of as

aforesaid in the first place.

(3) Notwithstanding anything contained in sub-section

(1), where in respect of the death or permanent disablement

of any person, the person liable to pay compensation under

section 140 is also liable to pay compensation in accordance

with the right on the principle of fault, the person so

liable shall pay the first-mentioned compensation and

(a) if the amount of the first-mentioned compensation is

less than the amount of the second-mentioned compensation,

he shall be liable to pay (in addition) to the

first-mentioned compensation) only so much of the

second-mentioned compensation as is equal to the amount by

which it exceeds the first mentioned compensation;

(b) if the amount of the first-mentioned compensation is

equal to or more than the amount of the second- mentioned

compensation, he shall not be liable to pay the

second-mentioned compensation.

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161. Special provisions as to compensation in case of

hit and run motor accident. (1) For the purposes of this

section, section 162 and section 163

(a) grievous hurt shall have the same meaning as in

the Indian Penal Code, 1860 (45 of 1860);

(b) hit and run motor accident means an accident

arising out of the use of a motor vehicle or motor vehicles

the identity whereof cannot be ascertained in spite of

reasonable efforts for the purpose;

(c) scheme means the scheme framed under section 163.

(2) Notwithstanding anything contained in the General

Insurance Business (Nationalisation) Act, 1972 (57 of 1972)

or any other law for the time being in force or any

instrument having the force of law, the General Insurance

Corporation of India formed under section 9 of the said Act

and the insurance companies for the time being carrying on

general insurance business in India shall provide for paying

in accordance with the provisions of this Act and the

scheme, compensation in respect of the death of, or grievous

hurt to, persons resulting from hit and run motor accidents.

(3) Subject to the provisions of this Act and the

scheme, there shall be paid as compensation

(a) in respect of the death of any person resulting from

a hit and run motor accident, a fixed sum of twenty-five

thousand rupees;

(b) in respect of grievous hurt to any person resulting

from a hit and run motor accident, a fixed sum of twelve

thousand five hundred rupees.

(4) The provisions of sub-section (1) of section 166

shall apply for the purpose of making applications for

compensation under this section as they apply for the

purpose of making applications for compensation referred to

in that sub- section.

162. Refund in certain cases of compensation paid under

section 161. (1) The payment of compensation in respect of

the death of, or grievous hurt to, any person under section

161 shall be subject to the condition that if any

compensation (hereafter in this sub-section referred to as

the other compensation) or other amount in lieu of or by way

of satisfaction of a claim for compensation is awarded or

paid in respect of such death or grievous hurt under any

other provision of this Act or any other law or otherwise

so much of the other compensation or other amount aforesaid

as is equal to the compensation paid under section 161 shall

be refunded to the insurer.

(2) Before awarding compensation in respect of an

accident involving the death of, or bodily injury to, any

person arising out of the use of a motor vehicle or motor

vehicles under any provision of this Act (other than section

161) or any other law, the Tribunal, Court or other

authority awarding such compensation shall verify as to

whether in respect of such death or bodily injury

compensation has already been paid under section 161 or an

application for payment of compensation is pending under

that section, and such Tribunal, Court or other authority

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shall,

(a) if compensation has already been paid under section

161, direct the person liable to pay the compensation

awarded by it to refund to the insurer, so much thereof as

is required to be refunded in accordance with the provisions

of sub- section (1);

(b) if an application for payment of compensation is

pending under section 161 forward the particulars as to the

compensation awarded by it to the insurer.

Explanation.For the purpose of this sub-section, an

application for compensation under section 161 shall be

deemed to be pending

(i) if such application has been rejected, till the date

of the rejection of the application, and

(ii) in any other case, till the date of payment of

compensation in pursuance of the application.

163A. Special provisions as to payment of compensation

on structured formula basis.(1) Notwithstanding anything

contained in this Act or in any other law for the time being

in force or instrument having the force of law, the owner of

the motor vehicle of the authorised insurer shall be liable

to pay in the case of death or permanent disablement due to

accident arising out of the use of motor vehicle,

compensation, as indicated in the Second Schedule, to the

legal heirs or the victim, as the case may be.

Explanation.For the purposes of this sub-section,

permanent disability shall have the same meaning and

extent as in the Workmens Compensation Act, 1923 (8 of

1923).

(2) In any claim for compensation under sub-section (1),

the claimant shall not be required to plead or establish

that the death or permanent disablement in respect of which

the claim has been made was due to any wrongful act or

neglect or default of the owner of the vehicle or vehicles

concerned or of any other person.

(3) The Central Government may, keeping in view the cost

of living by notification in the Official Gazette, from time

to time amend the Second Schedule.

163B. Option to file claim in certain cases.Where a

person is entitled to claim compensation under section 140

and section 163A, he shall file the claim under either of

the said sections and not under both.

167. Option regarding claims for compensation in

certain cases.Notwithstanding anything contained in the

Workmens Compensation Act, 1923 (8 of 1923) where the death

of, or bodily injury to, any person gives rise to a claim

for compensation under this Act and also under the Workmens

Compensation Act, 1923, the person entitled to compensation

may without prejudice to the provisions of Chapter X claim

such compensation under either of those Acts but not under

both.

Further, Section 164 empowers the Central Government to

make rules for the purpose of carrying into effect the

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provisions of Chapter XI which include making such rules for

(a) the forms to be used for the purpose of the said chapter

and (f) the identification by certificates or otherwise of

persons or vehicles exempted from the provisions of the

Chapter. Learned counsel appearing on behalf of the

respondents, however, submitted that uptil now, the Central

Government has not framed any such rules as provided under

Section 164. Thereafter, Chapter XII deals with Claims

Tribunals. Section 165 provides for establishment of Claims

Tribunals for the purpose of adjudicating upon claims for

compensation in respect of accidents involving a death of,

or bodily injury to, persons arising out of or use of motor

vehicles, or damages to any property of a third party so

arising, or both, and Explanation to sub-section (1)

provides that claims for compensation in respect of

accidents involving the death of or bodily injury to persons

arising out of the use of motor vehicle includes claims for

compensation under Section 140 and 163A. Hence, the

application claiming compensation under Section 140 or 163A

and/or on the right to claim compensation on the principle

of fault liability is required to be filed before the Claims

Tribunal. Section 166 provides who can make application for

such compensation and where it could be filed.

Additionally, sub-section (4) of section 166 makes provision

that the Claims Tribunal shall treat the report of accidents

forwarded to it under sub-section (6) of Section 158 as an

application for compensation under the Act and sub-section

(6) of section 158 provides for submitting the report to the

Claims Tribunal by the officer in charge of the police

station as soon as any information regarding any accident

involving death or bodily injury to any person is recorded

or report under Section 158 is completed by a police

officer. Section 168 requires the Claims Tribunal to

determine the amount of compensation which appears to it to

be just and specify person or persons to whom compensation

is to be paid by making an award. Such award shall also

specify the amount which shall be paid by the insurer or

owner or driver of the vehicle involved in the accident or

by all or any of them, as the case may be. Proviso to

sub-section (1) of Section 168 makes it clear that in an

application which is filed under Section 165, if there is a

claim for compensation under Section 140 in respect of death

or permanent disablement of any person, the same is to be

disposed of in first place in accordance with provisions of

Chapter X (i.e. Sections 140 to 143).

Legislative HistoryStatement of Objects and Reasons:

From the provisions quoted above, it appears that no

specific mention is made that remedy provided under Section

163A is in addition or in the alternative to the

determination of compensation on the basis of fault

liability. Section 163A was not there in the original Act

of 1988. It was inserted by Act No. 54 of 1994 w.e.f.

14.11.1994. Hence, for arriving at the proper conclusion,

it would be necessary to cull out legislative intent by

referring to the legislative history as well as Objects and

Reasons for inserting the said provision.

The Law Commission of India in its 119th Report in the

Introductory Chapter observed [para 1.6] that previously

there was recommendation for inserting provision in the

Motor Vehicles Act to extend protection to victims of hit

and run accidents where the person liable to pay such

compensation or his whereabouts cannot be ascertained after

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reasonable effort by providing that in such an event, the

person entitled to such compensation shall be entitled to

receive it from the State. In para 1.7 for introducing

provision for no fault liability, the Commission observed as

under:

By 1980, a wind was blowing that compensation to the

victims of motor accidents should be by way of social

security and the liability to pay the same must be

No-fault liability. The law, as it stands at present,

save the provision in Chapter VIIA, inserted by the Motor

Vehicles (Amendment) Act, 1982, enables the victim or the

dependants of the victim in the event of death to recover

compensation on proof of fault of the person liable to pay

compensation and which fault caused the harm such as bodily

injury or death. In the event of death of a victim of a

motor accident and the consequent harm caused to his

dependants, the question whether the person responsible for

the action causing harm had committed a fault or it was an

inevitable accident, is hardly relevant from the point of

view of victim or his/her dependants. The expanding notions

of social security and social justice envisaged that the

liability to pay compensation must be a No-fault

liability.

Before the Motor Vehicles Act 1939 was repealed by the

present Act, the Legislature introduced Chapter VII-A in the

Motor Vehicles Act, 1939. While interpreting the said

provisions, this Court in Gujarat State Road Transport

Corporation, Ahmedabad v. Ramanbhai Prabhatbhai and Another

[(1987) 3 SCR 404] referred to the aforesaid recommendations

made by the Law Commission and observed thus: -

When the Fatal Accidents Act, 1855 was enacted there

were no motor vehicles on the roads in India. Today, thanks

to the modern civilization, thousands of motor vehicles are

put on the road and the largest number of injuries and

deaths are taking place on the roads on account of the motor

vehicles accidents. In view of the fast and constantly

increasing volume of traffic, the motor vehicles upon the

roads may be regarded to some extent as coming within the

principle of liability defined in Rylands v. Fletcher,

[1868] L.R. 3 H.L.330, 340. From the point of view of the

pedestrian the roads of this country have been rendered by

the use of the motor vehicles highly dangerous. Hit and

run cases where the drivers of the motor vehicles who have

caused the accidents are not known are increasing in number.

Where a pedestrian without negligence on his part is injured

or killed by a motorist, whether negligently or not, he or

his legal representatives as the case may be should be

entitled to recover damages if the principle of social

justice should have any meaning at all. In order to meet to

some extent the responsibility of the society to the deaths

and injuries caused in road accidents there has been a

continuous agitation through out the world to make the

liability for damages arising out of motor vehicles

accidents as a liability without fault. In order to meet

the above social demand on the recommendation of the Indian

Law Commission Chapter VIIA was introduced in the Act.

Sections 92-A to 92-E of the Act are to be found in Chapter

VIIA.

The Court further observed as under: - This part of

the Act is clearly a departure from the usual common law

principle that a claimant should establish negligence on the

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part of the owner or driver of the motor vehicle before

claiming any compensation for the death or permanent

disablement caused on account of a motor vehicle accident.

To that extent the substantive law of the country stands

modified. The special provisions contained in section 109-A

to section 109-C of the Act providing for a scheme for

granting relief to victims or the legal representatives of

victims of hit and run motor vehicle accident cases is

another novel effort on the part of the Government to remedy

the situation created by the modern society which has been

responsible for introducing so many fast moving vehicles on

roads.

Thereafter a Committee to Review the Provisions of Motor

Vehicles Act, 1988 and Central Motor Vehicle Rules, 1989

(hereinafter referred to as the Review Committee) was set

up by the Government of India in March 1990. The Review

Committee in its report suggested changes in a number of

provisions in the Act. The Review Committee considered that

determination of the claims cases pending before the Claims

Tribunal takes a long time. To obviate such delay,

proposals were made that finalisation of compensation claims

would greatly facilitate to the advantage of claimants, the

vehicle owners as well as the insurance companies, if a

system of structured compensation can be introduced. Under

such scheme the affected party can have the option of their

accepting the lump sum compensation as is notified in that

scheme of structured compensation or of pursuing his claim

through the normal channels. Thereafter, the Review

Committee considered the suggestion of General Insurance

Corporation that claimants should first file their claims

with Motor Accident Claims Tribunals and the insurers be

allowed six months time to confirm their prima facie

liability subject to defences available under the Act.

After such confirmation, the claimants should be required to

exercise their option for conciliation under Structured

Compensation Formula within stipulated time.

Finally, the Committee also observed: Para 4.11.2:

.In case a claimant opts for conciliation, necessary

consent award may be given by MACT and if he does not opt

for it, he may proceed with regular Motor Accidents Claims

Tribunal in the usual course. The Committee also

recommended that the decision of the insurer to accept

liability before the expiry of the stipulated period should

be the final one and after it is available it will be open

to the insured to claim compensation under the structured

compensation.

Further, the statement of objects and reasons for

amending the Act inter alia mentions that the

recommendations of the Review Committee were forwarded to

the State Governments for comments and they generally agreed

with these recommendations. The draft of the proposals

based on the recommendation of the Review Committee and

representations from the public were placed before the

Transport Development Council for seeking their views in the

matter. The Transport Development Council made certain

suggestions and the relevant suggestion is,(b) providing

adequate compensation to victims of road accidents without

going into long drawn procedure. The proposed legislation

inter alia provide for (h) increase in the amount of

compensation to the victims of hit and run cases;

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(k) a new pre-determined formula for payment of

compensation to road accident victims on the basis of

age/income, which is more liberal and rational.

The next question iswhether the recommendations made by

the Review Committee are reflected in the provisions, which

are inserted by the said Act. It is contended that the

relevant provisions nowhere provide that lump sum

compensation payable under the structured formula basis is

alternative and optional to the determination of

compensation under Section 168. As stated above, the

Legislature has not specified or clarified that compensation

payable under Section 163-A is in the alternative or in

addition. Therefore, we are referring to the reasons for

inserting Section 163A in context of other provisions. For

the purpose of interpretation in such cases, this Court in

Utkal Contractors and Joinery P. Ltd. & Ors. Vs. State

of Orissa & Ors. [(1987) 3 SCC 279] observed that reason

for a statute is a safest guide to its interpretation and

held thus (P.288-89): -

.The reason for a statute is the safest guide to its

interpretation. The words of a statute take their colour

from the reason for it. How do we discover the reason for a

statute? There are external and internal aids. The

external aids are Statement of Objects and Reasons when the

Bill is presented to Parliament, the reports of committees

which preceded the Bill and the reports of Parliamentary

Committees. Occasional excursions into the debates of

Parliament are permitted. Internal aids are the preamble,

the scheme and the provisions of the Act. Having discovered

the reason for the statute and so having set the sail to the

wind, the interpreter may proceed ahead. No provision in

the statute and no word of the statute may be construed in

isolation. Every provision and every word must be looked at

generally before any provision or word is attempted to be

construed. The setting and the pattern are important

Again, while the words of an enactment are important, the

context is no less important.

In this context if we refer to the Review Committees

Report, the reason for enacting Section 163A is to give

earliest relief to the victims of the motor vehicle

accidents. The Committee observed that determination of

cases takes long time and, therefore, under a system of

structural compensation, the compensation that is payable

for different classes of cases depending upon the age of the

deceased, the monthly income at the time of death, the

earning potential in the case of minor, loss of income on

account of loss of limb etc. can be notified and the

affected party can then have option of their accepting lump

sum compensation under the scheme of structural compensation

or of pursuing his claim through the normal channels. The

Report of the Review Committee was considered by the State

Governments and comments were notified. Thereafter, the

Transport Development Council made suggestions for providing

adequate compensation to victims of road accidents without

going into long drawn procedure. As per the objects and

reasons, it is a new pre-determined formula for payment of

compensation to road accidents victims on the basis of

age/income which is more liberal and rational. On the basis

of the said recommendation after considering the Report of

the Transport Development Council, the Bill was introduced

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with a new pre-determined formula for payment of

compensation to road accident victims on the basis of

age/income which is more liberal and notional, i.e.

Section 163A. It is also apparent that compensation payable

under Section 163A is almost based on relevant criteria for

determining the compensation such as annual income, age of

the victim and multiplier to be applied. In addition to the

figure which is arrived at on the basis of said criteria,

schedule also provides that amount of compensation shall not

be less than Rs.50,000/-. It provides for fixed amount of

general damage in case of death such as (1) Rs.2000/- for

funeral expenses (2) Rs.5000/- for loss of consortium if

beneficiary is the spouse (3) Rs.2400/- for loss of estate

(4) for medical expenses supported by the bills, voucher not

exceeding Rs.15000/-. Similarly, for disability in non-

fatal accident para 5 of the Schedule provides for

determination of compensation on the basis of permanent

disability. Para 6 provides for notional income for those

who had no income prior to accident at Rs.15000/- per annum.

There is also provision for reduction of 1/3rd amount of

compensation on the assumption that the victim would have

incurred the said amount towards maintaining himself had he

been alive. The purpose of this Section and the Second

Schedule is to avoid long drawn litigation and delay in

payment of compensation to the victims or his heirs who are

in dire need of relief. If such affected claimant opts for

accepting the lump-sum compensation based on structured

formula, he would get relief at the earliest. It also gives

vital advantage of not pleading or establishing any wrongful

act or neglect or default of the owner of the offending

vehicle or vehicles. This no fault liability appears to

have been introduced on the basis of the suggestion of the

Law Commission to the effect that the expanding notions of

social security and social justice envisage that liability

to pay compensation must be no fault liability and as

observed by this Court in Ramanbhais case (Supra), in

order to meet to some extent the responsibility of the

society to the deaths and injuries caused in road

accidents. However, this benefit can be availed of by the

claimant only by restricting his claim on the basis of

income at a slab of Rs.40,000/- which is the highest slab in

the Second Schedule which indicates that the legislature

wanted to give benefit of no fault liability to a certain

limit. This would clearly indicate that the scheme is in

alternative to the determination of compensation on fault

basis under the Act. The object underlining the said

amendment is to pay compensation without there being any

long drawn litigation on an predetermined formula, which is

known as structured formula basis which itself is based on

relevant criteria for determining compensation and the

procedure of paying compensation after determining the fault

is done away. 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

vehicles 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 140 for no

fault liability and determination of compensation amount on

fault liability was taking long time. That mischief is

sought to be remedied by introducing Section 163A 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

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fail to establish liability of the owner of the defaulting

vehicles.

Use of specific words also and in addition in

Sections 140 and 141:

The aforesaid conclusion gets support from the language

used in Sections 140, 141, 161 and 163A. Sections 140 to

143 provide for liability of the owner of the vehicle in

case of death or permanent disablement of any person

resulting from an accident arising out of use of a motor

vehicle or motor vehicles to pay compensation without any

pleading or establishing that death or permanent disablement

was due to any wrongful act, neglect or default of the owner

or owners of the vehicle or vehicles. By way of earliest

relief, victim is entitled to get the amount of compensation

of Rs.50,000/- in case of death and Rs.25,000/- in case of

permanent disablement. It is further provided that such

claim shall not be defeated by reason of any wrongful act,

neglect or default of the person in respect of whose death

or permanent disablement has occurred. Sub-section (5) of

Section 140 upon which much reliance is placed by learned

counsel for the Insurance Companies as well as the claimants

requires consideration and interpretation, which inter alia

provides that owner of the vehicle is also liable to pay

compensation under any other law for the time being in

force. The word also indicates that the owner of the

vehicle would be additionally liable to pay compensation

under any other law for the time being in force. The

proviso to sub-section (5) further clarifies that the amount

of compensation payable under any other law for the time

being in force is to be reduced from the amount of

compensation payable under sub-section (2) or under section

163A. This is further crystalized in Section 141 which

provides that right to claim compensation under Section 140

is in addition to any other right to claim compensation on

the principle of fault liability and specifically excludes

the right to claim compensation under the scheme referred to

in Section 163A. Section 163B also provides that where a

person is entitled to claim compensation under Section 140

and Section 163A, he can file the claim under either of the

said sections, but not under both. Similarly, Section

141(1) also crystalises that right to claim compensation

under Section 140 is in addition to the right to claim

compensation in respect thereof under any other provision of

the Act or any other law for the time being in force. Sub-

section (2) further provides that if the claimant has filed

an application for compensation under Section 140 and also

in pursuance of any right on the principle of fault

liability, the claim for compensation under Section 140 is

to be disposed of in the first place and as provided in

sub-section (3) the amount received under sub-section (2) of

Section 140 is to be adjusted while paying the compensation

on the principle of fault liability. On the basis of fault

liability if additional amount is required to be paid then

the claimant is entitled to get the same but there is no

provision for refund of the amount received under Section

140(2), even if the Claims Tribunal arrives at the

conclusion that the claimant was not entitled to get any

compensation on the principle of fault liability. Further,

Section 144 gives overriding effect to the provisions made

under Chapter X by providing that the provisions of the

chapter shall have effect notwithstanding any thing

contained in any provision of the Act or of any other law

for the time being in force. From the aforesaid Sections,

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one aspect is abundantly clear that right to claim

compensation on the basis of no-fault liability under

Section 140 is in addition to the right to claim

compensation on the principle of fault liability or right to

get compensation under any other law. Such amount is

required to be reduced from the amount payable under the

fault liability or compensation which may be received under

any other law. If nothing is payable under the Act then the

claimant is not required to refund the amount received by

him. As against this, there is specific departure in the

scheme envisaged for paying compensation under Section 163A.

Section 163A nowhere provides that this payment of

compensation on no fault liability on the basis of

structured formula is in addition to the liability to pay

compensation in accordance with the right to get

compensation on the principle of fault liability and unless

otherwise provided for the same cause, compensation cannot

be paid again.

Provisions for refund of compensation if compensation is

received under any other law or under the Act:

Further, as the legislature has not provided for refund

or adjustment of compensation received under the Act and

compensation payable under Section 163A, it would mean that

Scheme of payment of compensation under Section 163A is in

alternative to determination of compensation under Section

168. As stated above, sections 140(5) and 141(3) make

provisions for reduction of compensation paid under Section

140. Under proviso to sub-Section (5) of Section 140, the

amount of such compensation which the claimant is entitled

to receive under any other law is required to be reduced

from the amount of compensation payable under Section 140 or

under Section 163A. Under Section 141(3), if a person gets

the compensation on principle of fault liability, then also

provision is made for adjustment of compensation received

under section 140. There is no such provision for

adjustment of compensation received under section 163A from

the compensation receivable under the Act on the principle

of fault. Similarly, section 161 provides for payment of

compensation in case of hit and run motor accidents.

Under Section 161(3), in cases in respect of the death of

any person resulting from a hit and run motor accident, a

fixed sum of Rs.25,000/- is to be paid as compensation and

in case of grievous hurt, the amount fixed is Rs.12,500/-.

Thereafter, under Section 162, the legislature has provided

for refund of compensation paid under Section 161 on the

principle of hit and run motor accident by providing that

the payment of compensation under Section 161 shall be

subject to the condition that if any compensation is awarded

under any other provision of this Act or any other law

or otherwise, so much amount as is equal to the

compensation paid under Section 161 is required to be

adjusted or refunded to the insurer. Under section 162(2),

duty is cast on the Tribunal, Court or other authority

awarding such compensation to verify as to whether in

respect of such death or bodily injury, compensation has

already been paid under Section 161 and to make adjustment

as required thereunder. Result isclaimant is not entitled

to have additional compensation but at the same time he can

proceed by filing application under Section 165 or under the

Workmen Compensation Act (i.e. other law) and if he gets

compensation under either of the said provisions, the amount

paid under Section 161 is to be refunded or adjusted.

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The contention of the learned counsel for the claimants

that compensation payable under Section 163A is in addition

to the determination of compensation on the basis of fault

liability and thereafter it could be adjusted on the similar

lines provided under Section 140 read with Section 141 or

Section 162 cannot be accepted. The Legislature has

specifically provided scheme of adjustment of compensation

under Section 140 read with Section 141 and Section 162 if

the claimants get compensation under the Act, while there is

no such provisions under Section 163A. Addition or

introduction of such scheme in provisions would be

impermissible.

Use of different words such asany other law, under

this section any other law for the time being in force,

provisions of this Act or any other provision of this

Act in different sections:

The learned counsel for the claimants submitted that the

proviso to sub-section (5) of Section 140 would mean that

even in case where compensation is determined under the

structured basis formula under Section 163A, the claimant is

entitled to claim compensation on the basis of fault

liability and if he gets higher amount on the basis of fault

liability then from that amount compensation which is paid

under Section 163A is to be reduced. At the first blush the

argument of the learned counsel appears to be attractive as

the proviso to sub-section (5) of section 140 is to some

extent ambiguous and vague. It may mean that amount of

compensation given under any other law may include the

amount payable on the basis of fault liability, therefore,

in view of said proviso compensation amount payable under

any other law is to be reduced from the compensation payable

under Section 140 or 163A. For appreciating this contention

and for ascertaining appropriate meaning of the phrase

compensation under any other law for the time being in

force, the proviso to sub-section (5) is required to be

considered along with other provisions. The scheme of other

provision section 167 indicates that the aforesaid phrase is

referable to compensation payable under the Workmens

Compensation Act, 1923 or any other law which may be in

force but not to the determination of compensation under

the Act, and would not include the compensation which is

determined under the provision of the Act. This section

167 in terms provides that where death of, or bodily injury

to, any person gives rise to claim compensation under the

Act and also under Workmens Compensation Act, 1923, such

person cannot claim compensation under both the Acts.

Further, in Section 140(5), the legislature has used the

words under any other law for the time being in force and

under any other law. In Section 141 (1), the legislature

has used the phrase under any other provision of this Act

or of any other law for the time being in force. In

sub-section (2), the legislature has specifically provided

that a claim for compensation under Section 140 shall be

disposed of as expeditiously as possible and where

compensation is also claimed in pursuance of any right on

principle of fault, the application under Section 140 is to

be disposed of in first place. Whereas, there is no such

reference for payment of compensation under Section 163A.

Further, in Section 161(2), the legislature has used the

phrase any other law for the time being in force and

provisions of this Act. Similarly, in Section 162, the

legislature has used the words under any other provisions

of this Act or any other law or otherwise. As against

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this, in Section 163A, legislature has used the phrase

notwithstanding anything contained in this Act or in any

other law for the time being in force. When the

Legislature has taken care of using different phrases in

different sections, normally different meaning is required

to be assigned to the language used by the Legislature

unless context otherwise requires. However, in relation to

the same subject matter, if different words of different

import are used in the same statute, there is presumption

that they are not used in the same sense. {Re: Board of

Revenue v. Arthur Paul AIR 1956 SC 35 at 38}. In this

light, particularly Section 141 which provides for right to

claim compensation under any other provision of this Act

or of any other law for the time being in force, proviso

to sub-section (5) of Section 140 would mean that it does

not provide for deduction or adjustment of compensation

payable under the Act, that is, on the principle of fault

liability which is to be determined under Section 168.

Specific Language of Section 163A including its heading:

Lastly, for interpretation and construction of Section

163A, we would refer to its heading and language. The

heading is Special provisions as to payment of compensation

on structured formula basis. At the outset, we would make

it clear that for interpretation of the words of Section the

language of the heading cannot be used to control the

operation of the Section, but at the same time being part of

the statute it prima-facie furnishes some clue as to the

meaning and purpose of Section. [Re: K.P. Varghese v.

ITO [(1982) 1 SCR p.629 at 647]. In case of ambiguity or

doubt heading can be referred to as an aid in construing the

provision. This heading indicates that the legislature has

envisaged special provision for paying compensation on

structural formula basis instead of paying the compensation

by long drawn litigation after establishing fault liability.

Section also begins with non-obstante clause

notwithstanding anything contained in this Act or any law

for the time being in force. This would mean that it is not

subject to any adjudication of right to claim compensation

as provided under the Act. The owner of the motor vehicle

or the authorised insurer would be liable to pay

compensation due to accident arising out of the use of motor

vehicle. Section 163-B further clarifies that claim

petition can be filed either under Section 140 or under

Section 163A but not under both sections.

The learned counsel for the claimants however submitted

that if we compare the language used in Sections 163A and

140(1), it would be apparent that Section 140 contemplates

payment of compensation by the owner of the vehicle. As

against this, Section 163A contemplates payment of

compensation by the owner of the vehicle or authorised

insurer. It is submitted that even if we read the said

phrase as owner of the motor vehicle of authorised insurer

as owner of the motor vehicle or authorised insurer on the

assumption that of is wrongly used, then also it is their

contention that Section 163A envisages payment either by the

authorised insurer or by the owner of the motor vehicle. It

has wider implication and, therefore, compensation beyond

maximum of Rs.50000/- is provided in Second Schedule and

hence the payment under Section 163A should not be

considered as alternative to payment of compensation under

the fault liability. In our view, it is true that Section

140 talks of payment of compensation by the owner of the

vehicle, while Section 163A after reading of as or would

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mean that owner of the vehicle or the authorised insurer

would be liable to pay compensation under Section 163A. But

that would not make any difference because determination of

compensation under Section 163A is final and not as an

interim measure. As stated above, the legislature has

deliberately not provided that it is in addition to the

compensation payable on the principle of fault liability.

There is no provision for adjusting the compensation payable

under Section 163A with the other payment on fault liability

under the Act. In the result, the contention of the

claimants that right to get compensation under Section 163A

is additional to claim compensation on no fault liability is

rejected for the following reasons: - (1) There is no

specific provision in the Act to the effect that such

compensation is in addition to the compensation payable

under the Act. Wherever the Legislature wanted to provide

additional compensation, it has done so. [Sections 140 and

141]

(2) In case where compensation is paid on no fault

liability under sections 140 and 161 in case of hit and run

motor accidents, the Legislature has provided adjustment or

refund of the said compensation in case where compensation

is determined and payable under the award on the basis of

fault liability under section 168 of the Act. There is no

such procedure for refund or adjustment of compensation paid

where the compensation is paid under Section 163A.

(3) The words under any other law for the time being in

force would certainly have different meaning from the words

under this Act or under any other provision of this Act

(4) In view of the non-obstante clause notwithstanding

anything contained in this Act the provisions of Section

163A would exclude determination of compensation on the

principle of fault liability.

(5) The procedure of giving compensation under Section

163A is inconsistent with the procedure prescribed for

awarding compensation on fault liability. Under section

163A compensation is awarded without proof of any fault

while for getting compensation on the basis of fault

liability claimant is required to prove wrongful act,

neglect or default of the owner of the vehicle or vehicles

concerned.

(6) Award of compensation under section 163A is on

predetermined formula for payment of compensation to road

accident victims and that formula itself is based on

criteria similar to determining the compensation under

section 168. The object was to avoid delay in determination

of compensation.

In the result, the question involved in these matters is

answered accordingly. The appeals filed by the Insurance

Companies are allowed and the impugned judgments and orders

are quashed and set aside. However, there will be no order

as to costs.

Before parting with the judgment, we would like to draw

the attention of the Central Government for revision and

appropriate correction of the Second Schedule, which

provides for payment of compensation on structured formula

basis, by exercise of its power under Section 163A(3).

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The learned counsel for the parties submitted that in

U.P. State Road Transport Corporation and others v. Trilok

Chandra and others [(1996) 4 SCC 362 Para 18] this Court has

pointed out errors in the Second Schedule thus: We must at

once point out that the calculation of compensation and the

amount worked out in the Schedule suffers from several

defects. For example, in Item 1 for a victim aged 15 years,

the multiplier is shown to be Rs.3000. The total should be

3000x 15=45,000 but the same is worked out at Rs.60,000.

Similarly, in the second item the multiplier is 16 and the

annual income is Rs 9000; the total should have been

Rs.1,44,000 but is shown to be Rs.1,71,000. To put it

briefly, the table abounds in such mistakes. Neither the

tribunals nor the courts can go by the ready reckoner. It

can only be used as a guide. Besides, the selection of

multiplier cannot in all cases be solely dependant on the

age of the deceased. For example, if the deceased, a

bachelor, dies at the age of 45 and his dependants are his

parents, age of the parents would also be relevant in the

choice of the multiplier. But these mistakes are limited to

actual calculations only and not in respect of other items.

What we propose to emphasize is that the multiplier cannot

exceed 18 years purchase factor. This is the improvement

over the earlier position that ordinarily it should not

exceed 16. We thought it necessary to state the correct

legal position as courts and tribunals are using higher

multiplier as in the present case where the Tribunal used

the multiplier of 24 which the High Court raised to 34,

thereby showing lack of awareness of the background of the

multiplier system in Davies v. Powell Duffryn Associated

Collieries Ltd., [1942 AC 601 : (1942) 1 All ER 657].

In addition, the learned counsel also pointed out that

in case of fatal accident and disability in non-fatal

accident, it has been provided that notional income for the

claimant who had no income prior to accident shall be

Rs.15000/- per annum and still however the Second Schedule

provides table of income ranging from Rs.3000/- to

Rs.40000/- and the brake-up also does not provide any

calculation for Rs.15000/-, as the columns in the Schedule

inter alia provide for compensation for a person having

income of Rs.12000/-, and thereafter straightway at

Rs.18000/-. The learned counsel also submitted that despite

the specific provision in Section 163A(3) that the Central

Government may, keeping in view the cost of living, by

notification in Official Gazette from time to time amend the

Schedule, nothing has been done so far. Further, by order

dated 30.8.2000, this Court again noticed number of

anomalies in the Second Schedule and, therefore, thought it

fit to have assistance of either the Attorney General of

India or the Solicitor General of India. When the matter

was called out on 15.12.2000, Mr. Altaf Ahmad, ASG, stated

before the Court that the order passed by this Court on

30.8.2000 has already engaged serious attention of the

Ministry of Surface Transport Department and the Government

was considering the matter for bringing necessary correction

in the Second Schedule of the Motor Vehicles Act.

Thereafter, we again sought assistance of the Additional

Solicitor General on the interpretation of Section 163A and

also to verify whether there are corrections in the Second

Schedule. Learned Additional Solicitor General stated that

amendment might take some time. In this view of the matter,

we think it would be appropriate if the Central Government

takes necessary action as early as possible under Section

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163A(3).

Ordered accordingly.