Interim compensation for a road-accident victim — without proving anyone's fault
When a person is killed or permanently disabled in a road accident, the family's first encounter with the legal system used to be a long civil-style trial before the Motor Accidents Claims Tribunal under Section 166 of the Motor Vehicles Act, 1988, in which the claimant carried the burden of proving negligence on the part of the owner or driver of the vehicle, with the insurer raising every available defence on policy breach, limit of liability, validity of the driving licence and the rest. Parliament had recognised, by 1982, that this route was too slow to deliver relief at the moment of trauma — the period between accident and award could run to four or five years even under a well-managed Tribunal. Section 92-A was inserted into the Motor Vehicles Act, 1939 in 1982 to carve out a no-fault interim route, and was carried forward into Chapter X (Sections 140 to 144) of the Motor Vehicles Act, 1988 with effect from 1 July 1989. The Motor Vehicles (Amendment) Act, 2019 — in force from 1 April 2022 for the relevant Chapter X provisions — re-engineered the regime: the old Section 140 fixed sums of Rs 50,000 for death and Rs 25,000 for permanent disablement were replaced by Section 164, which fixes the interim-compensation entitlement at Rs 5,00,000 for death and Rs 2,50,000 for grievous hurt, and the parallel Section 163A structured-formula route was repealed. This guide tracks both regimes — the pre-2022 Section 140 still applicable to older accidents and the post-2022 Section 164 — through the statutory text, the leading judgments, the procedure before the Tribunal, and the election a worker's family must make under Section 167 between the Motor Vehicles Act and the Employees' Compensation Act, 1923.
The conceptual problem the no-fault rule solves is the gap between the moment of injury and the moment of compensation. The common-law principle, settled for India by the Supreme Court in Minu B Mehta v Balkrishna Ramchandra Nayan, (1977) 2 SCC 441, is that the owner or insurer of a motor vehicle is liable only where the claimant proves negligence on the part of the owner or driver — a proposition that the same Court would soften over the next four decades but that remained the default. Parliament's response in 1982 was to depart from that default in a confined way. The departure had three features: (a) the compensation under the new regime was a fixed sum, not an at-large award; (b) the claimant had to prove only the accident, the vehicle and the death or permanent disablement, not the negligence behind any of them; and (c) the defence of contributory negligence by the victim was foreclosed. These three features make the no-fault claim a different proceeding from the Section 166 fault-based claim that runs alongside it — and they explain why the Supreme Court has, in case after case, refused to import fault-based limitations into the no-fault provision.
Section 140 — the no-fault liability provision in the pre-2022 regime
Section 140 of the Motor Vehicles Act, 1988, as it stood before the 2019 amendment was brought into force, provided that where death or permanent disablement of any person had resulted from an accident arising out of the use of a motor vehicle or motor vehicles, the owner of the vehicle was, or the owners of the vehicles were, jointly and severally liable to pay compensation in respect of such death or disablement under the provisions of the section. The amount of compensation was fixed: Rs 50,000 in respect of the death of any person and Rs 25,000 in respect of the permanent disablement of any person. The amount of Rs 50,000 was itself an enhancement, by the Motor Vehicles (Amendment) Act, 1994 with effect from 14 November 1994, from the originally enacted Rs 25,000; the Himachal Pradesh High Court in Manjit Singh v Rattan Singh took the view that the enhancement operated retrospectively, but the prevailing view, treated by most High Courts and consistent with the rule that compensation crystallises on the date of the accident, is that the amount applicable is the amount in force on the date of the accident.
Section 140(2) was the heart of the provision. It declared that the claimant in a no-fault claim under Section 140 was not required to plead or establish that the death or permanent disablement was due to any wrongful act or neglect or default of the owner of the vehicle or any other person — the negligence element, that is, the gravamen of an ordinary tort suit, was statutorily dispensed with. Section 140(3) supplied the converse protection: the claim under Section 140 could not be defeated by reason of any wrongful act, neglect or default of the person in respect of whose death or disablement the claim was made, nor could the quantum be reduced on account of such conduct. The defence of contributory negligence — almost always raised in a fault-based MACT claim — was thus statutorily unavailable. The Supreme Court in K Nandkumar v Managing Director Thantai Periyar Transport Corporation, (1996) 3 SCC 134 applied the principle in a striking factual setting: the motorcyclist had himself been at fault in the accident and had sustained permanent disablement; the Court held that he could not be denied no-fault compensation on the ground that the accident was caused by his sole negligence — that is precisely the kind of fault enquiry the section dispenses with.
Section 140(4) preserved the cumulative character of the no-fault relief: the right to claim compensation under Section 140 was in addition to any other right to claim compensation under any other provision of the Act or any other law. The interim sum paid under Section 140 was, however, to be deducted from the eventual compensation awarded under a Section 166 fault-based claim — see the proviso to Section 141, which read with Section 140 ensured that the no-fault payment functioned as an advance against the final award and not as a standalone bonus.
Sections 141, 142 and 143 — the architecture around Section 140
Section 141 of the Motor Vehicles Act, 1988 made the no-fault right under Section 140 a parallel and not an alternative remedy. Sub-section (1) of Section 141 stated that the right to claim compensation under Section 140 was in addition to any other right to claim compensation in respect of the death or permanent disablement under any other provision of the Act or any other law for the time being in force. Sub-section (2) was procedural: where a claim was made under Section 140 alongside a claim under any other provision of the Act, the Tribunal was directed to dispose of the Section 140 claim "in the first place" and as expeditiously as possible — the legislative intent being that the interim award should not wait on the final hearing. Sub-section (3) put the deduction rule in place: any amount paid under Section 140 was to be deducted from the compensation eventually awarded under any other provision of the Act.
Section 142 of the Motor Vehicles Act, 1988 defined "permanent disablement" for the no-fault regime by reference to the First Schedule to the Workmen's Compensation Act, 1923 (now the Employees' Compensation Act, 1923) — read together with the loss of the use of a member or sense, total loss of sight or hearing, mental or physical incapacity of a permanent nature exceeding the prescribed threshold. The cross-reference to the Workmen's Compensation regime mattered: it imported into the Motor Vehicles Act the same medical-and-functional definition that the workplace-injury jurisprudence had built up over the decades, so the Tribunal in a no-fault claim did not have to develop a fresh definition.
Section 143 of the Motor Vehicles Act, 1988 extended the no-fault regime to insurance policies. It provided that the no-fault liability under Section 140 was to be covered by the policy of insurance issued under Section 147 — the insurer was on the hook for the no-fault sum as it was for the fault-based award. Section 144 of the Act gave the no-fault provisions overriding effect: the provisions of Sections 140 to 143 had effect notwithstanding anything contained in any other provision of the Act or of any other law. The combined operation was that the no-fault claim, once made out on the three facts of accident, vehicle and death or disablement, attracted a fixed sum payable by the owner and the insurer jointly, with limited procedural defences available to either.
The procedure and the Tribunal's role
The procedure under Section 140 was tight by design. The claimant or the legal representatives filed an application before the Motor Accidents Claims Tribunal having jurisdiction under Section 165 (typically the Tribunal of the area where the accident occurred or where the claimant resided). The application could be filed as a standalone Section 140 application without a Section 166 fault-based claim attached; the Karnataka High Court and several other High Courts had clarified that a Section 140 application was not contingent on a pending or successful Section 166 claim. The Tribunal, on being satisfied of the three primary facts — the accident, the involvement of the vehicle and the death or permanent disablement of the claimant — was to make the award "forthwith". The proviso to Section 166 of the Act in fact required that where a claim under Section 140 was not made along with the Section 166 application, the applicant had to include in the application a statement to that effect — a recognition that the no-fault claim was the default first step.
The Supreme Court in Eshwarappa @ Maheshwarappa v C S Gurushanthappa, (2010) 4 SCC 759 set out the standard of proof the Tribunal was to apply. The three primary facts — the accident, the vehicle and the death or permanent disablement — had to be established on a preponderance of probabilities. The Court reiterated that the burden on the claimant was light: the claimant did not have to lead evidence on the manner of the accident, the driver's conduct, the road conditions, the speed of the vehicle, the time of day, the vehicle's mechanical condition or any of the other matters that occupied a Section 166 fault-based trial. The insurer's defences under Section 149(2) — driving without a licence, breach of policy condition, vehicle being used for an unauthorised purpose — were procedurally unavailable in the no-fault leg of the proceeding, though the insurer retained the right to recover from the owner in a separate proceeding where the policy breach was made out. The Supreme Court in Manjuri Bera v Oriental Insurance Co Ltd, (2007) 10 SCC 643 went a step further on the joint-and-several point — the insurer of a vehicle involved in a no-fault claim was liable to satisfy the award even where the policy breach defence might have succeeded in a fault-based claim, leaving the insurer to its recovery against the owner.
Section 164 — the 2019 amendment regime, in force from 1 April 2022
The Motor Vehicles (Amendment) Act, 2019 introduced a substantial re-engineering of the Chapter X regime. The new Section 164, inserted in place of the old Section 140, provides that the owner of the motor vehicle or the authorised insurer shall be liable to pay in case of death or grievous hurt due to an accident arising out of the use of motor vehicle a compensation of a sum of Rs 5,00,000 in case of death and a sum of Rs 2,50,000 in case of grievous hurt to the legal heirs or the victim, as the case may be. The new Section 164 was notified to come into force from 1 April 2022. For accidents on or after that date, the interim-compensation entitlement is Rs 5,00,000 or Rs 2,50,000 — a tenfold step-up on the pre-2022 Section 140 figures.
The 2019 amendment also repealed Section 163A of the Motor Vehicles Act, 1988 — the parallel structured-formula route that had let claimants elect, under the Second Schedule, an annual-income-multiplier compensation without proof of negligence. Section 163A had been introduced in 1994 to operate alongside Sections 140 and 166, and the Supreme Court in Oriental Insurance Co Ltd v Hansrajbhai V Kodala, (2001) 5 SCC 175 had held that a claimant could elect Section 163A in lieu of Section 166 but could not pursue both. The 2019 repeal of Section 163A folds the structured-formula concept into the new Section 164 — claimants whose accident is on or after 1 April 2022 receive the Section 164 interim sum and pursue the balance, if any, under Section 166 in the fault-based track.
The Supreme Court in Reliance General Insurance Co Ltd v Mampi Sinha, 2022 SCC OnLine SC 1287 applied the post-2019 Section 164 regime to a fatal-accident claim and confirmed that the interim award of Rs 5,00,000 is payable by the insurer in the first instance, subject to the insurer's residual right of recovery against the owner where a policy breach is made out. The Court also held that the claimant under the new Section 164 has the same election as under the old regime — pursue the interim sum and a Section 166 fault-based award alongside, with the Section 164 sum being deducted from the final award, or accept the Section 164 sum as a settled and exhaustive recovery if the claim is not pressed further. The election point matters because, post-2019, the Section 164 sum is high enough that for many low-dependency claimants it may be a rational stopping point.
Section 167 — the election between the MV Act and the Employees' Compensation Act, 1923
Section 167 of the Motor Vehicles Act, 1988 supplies the election rule where the death or bodily injury gives rise to a claim under both the Motor Vehicles Act and the Employees' Compensation Act, 1923 (formerly the Workmen's Compensation Act, 1923). The provision states that the claimant may claim such compensation under either of these Acts but not under both. The dual-claim issue arises whenever an employee dies or is permanently disabled in a road accident in the course of employment — for instance, a driver of a goods vehicle, a conductor of a public service vehicle, a delivery rider on a two-wheeler. The Supreme Court in K Janardhan v United India Insurance Co Ltd, (2008) 8 SCC 518 set out the structure of the election: a claimant who has filed before the Commissioner under the Employees' Compensation Act, 1923 cannot, on the dismissal or settlement of that proceeding, restart before the Motor Accidents Claims Tribunal — the election crystallises on the filing of the first claim, and the Tribunal will not entertain a fresh claim on the same accident.
The compensation under the Employees' Compensation Act, 1923 is calculated on a different basis — a percentage of monthly wages multiplied by a relevant factor from the schedule, taking into account the employee's age and the nature of the injury — and is paid by the employer or, where the employer has insured, by the insurer. The election under Section 167 is, accordingly, not a formality: it has real financial consequences. The Supreme Court in Dhanraj v New India Assurance Co Ltd, (2004) 8 SCC 553 underlined that the insurer's liability under the Motor Vehicles Act in respect of a workman is, in the absence of an extra premium, limited to the liability under the Employees' Compensation Act, 1923 — so a worker's family that proceeds before the Tribunal under Section 166 on a workplace road accident may, where the policy is an Act-only policy, recover no more than the Employees' Compensation Act sum even before the Tribunal. The election under Section 167 therefore has to be made with an eye on the policy in question.
Section 161 and the hit-and-run route — the parallel regime for unidentified vehicles
The no-fault liability provision in Sections 140 and 164 is not the only no-fault route in the Motor Vehicles Act, 1988. Section 161 provides a separate route for hit-and-run accidents — accidents arising out of the use of a motor vehicle the identity of which cannot be ascertained despite reasonable efforts. The compensation under Section 161, originally Rs 25,000 for death and Rs 12,500 for grievous hurt under the 1988 Act and the Solatium Schemes 1989 and 2001 made under it, was raised to Rs 2,00,000 for death and Rs 50,000 for grievous hurt under the Compensation to Victims of Hit-and-Run Motor Accidents Scheme, 2022 notified under the post-2019 Section 161 regime. The Section 161 route is not strictly a sub-set of the Section 140 / 164 no-fault liability — it is a separate scheme administered, post-2019, through the Motor Vehicle Accident Fund constituted under Section 164B of the Act. The companion article on the hit-and-run scheme tracks Section 161 in detail; for present purposes, the practical point is that a Section 140 / 164 claim presupposes an identifiable vehicle whose owner and insurer can be made parties, while a Section 161 claim is the fallback route where the vehicle is not identifiable.
The boundary between the two routes was tested by the Bombay High Court in a case where the lorry sped away from the accident scene but a co-involved vehicle was identifiable; the High Court held that Section 140 — and not the hit-and-run route in Section 161 — applied, because at least one of the vehicles involved in the accident could be identified. The principle is general: Section 161 is reserved for the case where no involved vehicle is identifiable at all.
The interim award and the final compensation — how they interact
The interim award under Section 140 (pre-2022) or Section 164 (post-2022) does not extinguish the claimant's right to a higher fault-based award under Section 166. A claimant who has received Rs 50,000 under the old Section 140 retains the right to file a Section 166 fault-based application — in fact the standard practice is to file the Section 166 application first and seek the Section 140 interim award within it, by way of a separate prayer under the proviso to Section 166. The Tribunal awards the interim sum at an early hearing, before the negligence-and-quantum trial begins. When the final award under Section 166 is pronounced — applying the multiplier method as restated by the Constitution Bench in National Insurance Co Ltd v Pranay Sethi, (2017) 16 SCC 680 — the interim sum already paid is deducted, and the balance is the amount the insurer is directed to deposit. The Pranay Sethi multiplier-with-future-prospects formula does not enter into the Section 140 / 164 calculation, which remains the fixed statutory sum; it controls only the Section 166 fault-based final award.
The Supreme Court in United India Insurance Co Ltd v Patricia Jean Mahajan, (2002) 6 SCC 281 — a foreign-resident high-income claim — set out the principle that compensation in motor-accident claims is to be just and reasonable, neither a windfall nor a pittance, and that the structured no-fault sum operates as a floor and not a ceiling. The Court in Beli Ram v Rajinder Kumar, (2020) 18 SCC 670 reiterated that the no-fault interim sum was always intended to deliver immediate relief, and the Tribunal should not, in pursuit of evidentiary completeness, delay the no-fault payment to the rhythm of the Section 166 trial.
The four practical features that distinguish the no-fault claim
Four features distinguish a no-fault claim under Section 140 / 164 from a Section 166 fault-based claim, and a claimant or counsel filing the claim should keep all four in front of them.
The first is the burden of proof. In the no-fault claim, the claimant proves only the accident, the vehicle and the death or permanent disablement; the insurer cannot put the claimant to proof of negligence. In the Section 166 claim, the claimant carries the full burden — manner of the accident, breach of duty of care, causation, the quantum on a Pranay Sethi multiplier basis. The early no-fault award is therefore reachable in months; the final fault-based award takes years.
The second is the unavailability of insurer defences. The insurer's defences under Section 149(2) — driving without a licence, vehicle being used for an unauthorised purpose, breach of policy term, fraudulent inducement — are procedurally unavailable in the no-fault leg. The insurer pays the interim sum and is left to its recovery against the owner where the policy breach is made out. In the fault-based claim, the Section 149(2) defences are live and routinely contested.
The third is the unavailability of the contributory-negligence defence. The pre-2022 Section 140(3) and the post-2022 Section 164 — read with Section 144's overriding effect — both foreclose contributory negligence as a defence to the no-fault claim. A motorcyclist who has caused his own permanent disablement, as in K Nandkumar, still recovers the fixed sum. In the fault-based Section 166 claim, contributory negligence operates to reduce the award in the proportion the Tribunal finds.
The fourth is the cumulative-but-deductible operation. The no-fault sum is in addition to the fault-based claim and any other claim under any other law (Section 141(1) read with Section 144), but is deducted from the final fault-based award under Section 141(3). So the claimant does not "lose" the interim sum by also pursuing Section 166 — but does not "double-recover" either. The post-2022 Rs 5,00,000 interim sum under Section 164 is, however, large enough that for a low-income claimant whose Section 166 award might be modest, the Section 164 interim itself may be the headline figure.
The claimant's practical sequence
The claimant's sequence in a no-fault claim runs through five steps. Step one is the FIR — although Chapter X does not formally make the FIR a precondition, the Tribunal will treat the police First Information Report and the Detailed Accident Report (DAR) under Section 159 of the Act as the primary documentary record. Step two is the medical evidence — death certificate and post-mortem in a fatal-accident claim; the disability certificate from the appropriate medical board in a disablement claim. Step three is the application before the Motor Accidents Claims Tribunal under Form 1 (or the state-prescribed format), including the Section 140 / 164 prayer either as a standalone application or as a prayer within a Section 166 application. Step four is the Tribunal's interim award, which under the statutory scheme is to be made forthwith and is typically pronounced within a few hearings of the application. Step five is the final disposal — either acceptance of the interim sum as a closure of the claim or pursuit of the Section 166 fault-based award, with the interim sum being deducted from the eventual award.
The limitation point matters. The old Section 166(3), which had imposed a six-month limitation on motor-accident claims, was deleted by the 1994 amendment, and for decades there was no statutory limitation on a Section 166 claim. The 2019 amendment reintroduced a limitation: a fresh sub-section (3) inserted in Section 166 requires the application to be made within six months of the occurrence of the accident. The provision was notified into force from 1 April 2022. Claims arising from accidents on or after that date — that is, claims under the new Section 164 / Section 166 regime — must therefore be filed within six months. Claims on accidents before 1 April 2022 continue to be governed by the no-limitation rule that the pre-2022 Section 166 contained.
Reading the regime today — pre-2022 and post-2022 in parallel
For practical purposes the no-fault regime today operates in two parallel tracks. Accidents before 1 April 2022 are governed by the old Section 140 — Rs 50,000 for death, Rs 25,000 for permanent disablement, no Section 166 limitation, Section 163A structured-formula route available as an election. Accidents on or after 1 April 2022 are governed by the new Section 164 — Rs 5,00,000 for death, Rs 2,50,000 for grievous hurt, six-month limitation on Section 166 fault-based claims, Section 163A no longer available. The case law from the Supreme Court — Eshwarappa, Manjuri Bera, Hansrajbhai V Kodala, Dhanraj, K Janardhan, Patricia Jean Mahajan, Pranay Sethi, Beli Ram, Mampi Sinha — applies across both tracks except where the doctrinal point it lays down has been displaced by the 2019 statutory text.
The no-fault provision was the legislature's recognition that the period between accident and award is itself a hardship that the fault-based system, however good its substantive law, could not address. The pre-2022 Rs 50,000 was always too low to do the work the section was meant to do; the post-2022 Rs 5,00,000 brings it closer, though still not to parity with the typical Section 166 award. The claimant who keeps the architecture in mind — fixed sum, no negligence required, no contributory negligence defence, interim and cumulative, deductible from the final award, exclusive election under Section 167 against the Employees' Compensation Act, 1923 — recovers what the section was designed to deliver: relief at the moment of trauma, paid by the people the statute holds liable, without the year-long wait that the fault-based system implies.