Claims For Compensation Under Chapter 8 Of The Motor Vehicle Act, 1939.

[Cites 126, Cited by 0]

Law Commission Report

Claims For Compensation Under Chapter 8 Of The Motor Vehicle Act, 1939.

LAW COMMISSION OF INDIA

EIGHTY - FIFTH REPORT

CLAIMS FOR COMPENSATION UNDER
CHAPTER" 8 OF THE MOTOR VEHICLES
ACT, 1939

1980

Justice P. v. Dixit Do. No. F. 2(4)/79-LC

NEW DELHI
Dated, the 30th May, 1980

My dear Minister,

I am forwarding herewith the eighty-ﬁfth Report of the Law Commission
containing proposals for amendments of certain provisions contained in Chapter
VIII of the Motor Vehicles Act, 1939, bearing on the question of insurance of
motor vehicles and adjudication of claims for compensation in respect of the
accidents by motor vehicles.

2. Under the law as it is, 21 Claims Tribunal can pass an award with regard
to payment of just compensation only after ﬁnding that the accident of the
nature speciﬁed in sub--section (1) of Section 110 was the result of the negli-
gence on the part of the driver or owner of the vehicle (Vide Sinu Vs. Ba!
Krishan (1977) SCR, Vol. ll, page 886). Since this case was decided, the
Supreme Court has been suggesting with some persistence that the Motor
Vehicles Act should be amended so as to incorporate in it the principle of "no
fault liability" in road accidents. (Concord Insurance Company Vs. Nirmla Devi
1979 (3)S.C.R. 694; Rattan Singh Vs. State of Punjab S.C.W.R. d. 10/1/1980
Vol. 35, Part 1, page 29).

3. The incorporation of the principle that compensation should be obtain-
able without the necessity of proving negligence on the part of the person who
caused the accident, no doubt, involves an alteration of the existing laws. But
the alteration is both just and necessary. The persons generally involved in motor
accidents are pedestrians, children, women and illiterates. Some of them are
too poor to have the help of a competent lawyer in establishing negligence in
claim cases. These cases are contested strenuously by the insurance companies
raising all sorts of technical objections for minimising their own liability. The
result is that proceedings before the Claims Tribunal drag on for a long time
before any award is passed. Sometimes the time consuming costly litigation
makes the award of compensation, when and if it is made, virtually meaningless.
Claims Tribunals are constituted for expeditious disposal of motor vehicles
claims but in actual practice there is no expeditious disposal. The inordinate
delay in the disposal of these claims is mainly on account of the ditﬁculty and
the time taken in trying the issue of negligence in the use of the vehicle. The
principle of "no fault liability" is not a novel. One is familiar with the consept
of absolute liability for payment of compensation under the Workmerfs Coni-
pensation Act, 1923. The principle has already attracted attention in many
countries like U.K., Australia, New Zealand and many States of the United
States of America.

4. The Commission has, therefore. suggested that a new provision should
be inserted in Chapter VIII of the Motor Vehicles Act, 1939 providing that in
"claim cases", the claimant third party shall not be required to plead and estab-
lish that the injury or damage suffered by him was the result of wrongful act
or neglect or default in the use of the vehicle, and further the claim for com-
pensation shall not be defeated or reduced by reason merely of any wrongful act,
neglect or default of the party suffering injury or damage. The Commission has
taken advantage of this opportunity for suggesting other amendments for securing
speedy disposal of claim cases, for early payment of the amount of compensation
awarded, for restricting the right of appeal against an award only to those cases
where the amount in dispute in appeal exceeds Rs. 5,000, for award of interest
on the compensation amount and placing a monetary limit on the liability of the
insurer. Some other amendments have also been suggested. They are of a minor
nature. All these amendments have been fully explained in the Report.

80-MlB(D)451MofLJ&CA---1

5. The Commission is grateful to Shri P. M. Bakshi, Member Secretary"
for his valuable assistance in the preparation of this Report. The Commission
would also like to thank Shri Vuzc, Additional Secretary, for his collaboration.

With kind regards.

Yours sincerely,

Sd/--
(P. V. DIXIT)

Shri P. Shiv Shankar,
Minister of Law, Justice & Company Allairs,
Government of India.

CHAPTER 1.
CHAPTER 2.
CHAPTER 3.

CHAPTER 4.

CHAPTER 5.

CHAPTER 6.

CHATTER 7.
CIL\PTER 8.

CHAPTER 9.

CHAPTER 10.
CHAPTER 11
CIIAPTER. 12.
CHAPTER 13.
CHAPTER 14.
CHAPTER 15.
CuAr'TEn 16.
CHAPTER 17.

CHAPTER 18.

A'~pendix I.
.\ppendix '.'..
c\'>pen<ii.\' 3.
Appendix 4.

CONTENTS

Introductory . . . . , , _ , , ' _
The present law, and general recommendation as to Chapter 8 . . .
Liability without fault : section 92A (new) . . . ,
Beneficiaries of compulsory insurance : section 95(1) . . . . .
Limits on liability of the insurer : section 95(2) . . . .

Duty to furnish particulars of insurance and accident : section 109 and sections
109A and 10913 (new). . . . . . . . . . _

The Claims Tribunal : section 110 , . . . _ , , _
Application for compensation : section 110A

Effect of death, and meaning of "Legal representative" : section 110A (1) (b)
and section 2(11) (proposed). . . . . . . _

Option regarding claims for compensation : section IIOAA . .

. Parties : section 110B. . . . . . . . . . .
Appearance of parties 2 section 1l0BB (proposed) . . . . .
Evidence and procedure : section 1100 . . . . . . .
Interest : section ll0CC . .

Appeal and execution : sections 110D and 110E and new section IIOEE

Limitation : section 110A (15)

Rules : sections ill and 111A . . . . . . . .
Summary of recommendations . . . . . . . .
APPENDICES

Extracts from the Indian Railways Act, 1890 . . . . . .
Extracts from the Workmcxfs Compensation Act, 1923 . . . .
Extracts from the Carriage by Air Act, 1972 . . . . .

Position in selected countries as to compensation for accidents caused. by
motor vehicles . . .

PAGE

Scope of the
Report.

Observations of
Supreme Court.

CH A PT ER 1
INTRODUCTORY

1.1 This Report: is concerned with an important matter dealt with in
Chapter 8 of the Motor Vehicles Act, 1939--compensation to be awarded in
respect of death of, or bodily injury to, persons arising out of the use of motor
vehicles or damage to the property of a third party so arising.' The subject has
been taken up by the Law Commission in View of its vital relavance to social
justice and delay in the administration of justice.

Certain hardships and practical dilliculties that have been experienced in the
working of the Act render it desirable that the law should be revised. These hard-
ships and dililculties, broadly speaking, relate to the principles on which liability
of the various parties arises, the jurisdiction of tribunals constituted under the
Act and the smooth working of those tribunals----those tribunals being the machi-
nery created by the Act for determining the amount of compensation to be
awarded for death or bodily injury arising as above.

1.2. In one recent case? of claim by a widow for compensation for the death
of her husband who had been run over by a truck, the Supreme Court observed
that the case had brought out all the defects in the present law under the Motor
Vehicles Act?-'

( 1) The law as it stands today requires the claimant of compensation to
prove that the driver of the vehicle was guilty of rash and negligent driving. This
becomes impossible, as records of the police investigation are not made available
to the Accident Claims Tribunal and ollicers who investigate the accident are
seldom available to give evidence.

(2) The company which has insured the vehicle--and hence is liable to
pay the compensation----raises untenable pleas and drags the claimants for years.
(This case had dragged on for 18 years).

Long litigation is beyond the ﬁnancial capacity of the claimants, who have
to borrow money to see the litigation thorough. In the end, the compensation
money goes to those who have been assisting the litigation, instead of the depen-
dants of the victim

In this case, the insurance company had ﬁled a written statement before the
Tribunal that the truck involved in the accident had been stolen prior to the
accident and hence neither the owner nor the insurance company was liable. The
owner later ﬁled a written statement that the truck had not been involved in any
accident. The Tribunal (and, on appeal, the High Court) accepted the story of
the insurance company that since the widow could not establish the identity of
the driver, she could claim no compensation. The Supreme Court reversed this
decision of the High Court on the basis of the contradictions in the written state-
ments of the insurance company and the owner, along with other evidence.

(3) The Supreme Court observed that the principle of "no fault liability
for motor accidents" must be incorporated in the law against insurers and owners
of vehicles. The dependants of victims can then claim an absolute minimum com-
pensation without having to prove rash and negligent driving on the part of the
driver. The following suggestions were made on this point:

(a) The minimum payment could vary with the number of dependants of
the victim and with the period of their dependency. These payments
could be made monthly through one of the nationalised banks nearest
to the residence of the dependants.

'Chapter 8, sections 93 to 97 and 110 to 111A, Motor Vehicles Act, 1939.

"Bishan Devi Vs. Sirbaksh Singh, A.I.R. 1979 S.C. 1862 (November); (1980) 2 S.C.C. 373 (Febrauary
1, 1930).

"See also para 3.29, infra.
'See further para. 3.s, infra.

(b) A monthly payment (instead of a lump sum, as under the present law)
would substantially reduce the burden on the insurer and consequently
on the insured.

(c) If the dependents are dissatisﬁed with the minimum payment, they may
be allowed to pursue their remedies before the Tribunal.

We shall, in due course, examine the matters referred to in this judgment.

50096 1.3. We may make it clear that this Report does not deal with the whole
of the Motor Vehicles Act. It is primarily concerned with compensation for acci-
dents, and certain questions relating to the machinery for the adjudication of
claims for such compensation.

Claims under the 1.4. For understandin the im ortance of the statuto scheme' relatin to

. . 3 . P .''Y . . 3
MW" V°'"°'°S claims for compensation for accidents caused by motor vehicles, it is necessary to
A°t' go into history of the legislation on the subject.

At common law, even where there was an insurance in respect of an accident
caused by a motor vehicle, the injured party could not sue the insurer (directly
or indirectly) in the name of the assured, to compel the insurer to pay the
insurance money to him. The reason was that under the common law, a stranger
to a contract could not sue upon it. In England, the Third Parties (Rights against
Insurers) Act, 1930, was enacted to confer on third parties rights against the
insurer of third party risks in the event of an assured becoming insolvent and in
certain other events. But this Act could not come to the aid of a person injured
by an insolvent whose vehicle was not z'm;ured. The Road Traffic Act, 1930,
was then enacted, prohibiting the use of a motor vehicle on a road, unless the
owner or other person using it took a policy of insurance or gave security against
liability to third parties. Yet another lacuna was detected in the legislative scheme.
The insurer and the insured could, while satisfying the requirement of compulsory
insurance, introduce stipulation in the policy, the breach of which would render
it void and by this device the insurer could escape liability to third parties. There-
fore, the Road Tratﬁc Act, 1934, was passed to prevent the insurer from escaping
the liability under the insurance policy by compelling him to satisfy the judgment
obtained against the assured, and also by rendering ineffective certain clauses in
the policy which might be aimed at avoiding the liability arising under it. This
was the position upto 1939, in England.

Obiects of Chapter 1.5. In India, the provisions of Chapter 8 of the Motor Vehicles Act, 1939,

3- particularly sections 94 to 96, were modelled on English statutes then in force.
The objects of the Chapter were: (1) to enable a claimant to recover the what-
ever sum he is in law entitled to, despite the inability of the owner or the driver
to pay; (2) to prevent the insurer from escaping liability on the ground of breach,
on the part of the insured, of any term of the contract; and (3) to entitle the
claimant to recover compensation directly from the insurer.

Hitherto, legislation on the subject of compensation for death or injury from
accidents caused by motor vehicles has proceeded mainly on two lines.

(i) Insertion of provisions for enforcing liability towards third parties
against the insurer, even though the contract of insurance was between
the owner and the insurer, thus modifying the general rule of the law
of contract that a third party cannot sue on a contract.

(This change was effected in 1939 and came into force in 1946).

(ii) Creation of a special forum for the trial of claims for compensation,
thus modifying the jurisdiction of the courts within the general hierarchy

of courts.
Compulsory insn- 1.6. Insurance against liability incurred to a third party could have been
rance. effected even before the Act. But before the Act, the third party, i.e. the party

injured by the accident had no right to obtain the beneﬁt of motor insurance from
the insurer, there being no privity of contract between the third party and the
insurer. The Act for the first time conferred this beneﬁt. The provisions for the

insurance of motor vehicles against third party risks actually came into force in
1946.

'Paragraphs 2. 3 to 2.5, infra,

Forum for ad-
judieation.

Object of iuiiemliiig Bill
Of 1955,

Aemendment of

1956.

Amendment of 1969.

1.7. Until 1956, however, there was no adequate machinery for the adjudi-
cation of claims for compensation for such accidents. It was in 1956 that certain
important amendments were made in the Act which completely changed the
complexion of the proceedings that might be taken under the Act.

1.8. In introducing the Amendment Bill' of 1955, the then Minister of
Transport thus explained the object of the Bill":--

"The State Governments are being empowered to set up tribunals to
determine the award of damages in cases of accidents involving the death of,
or bodily injury to, person arising out of the use of motor vehicles and also
to adjudicate on the liability of the insurer in respect of payment of damages
awarded. At present, a court decree has to be obtained before the obliga-
tion of the insurance company to meet the claims can be enforced. The
ainciidnient is designed to remove the existing difficulty experienced by
persons of limited means in preferring claims on account of injury or death
caused by motor vehicles."

1.9. To carry out the above object, the amendment of 1956 introduced
sections 110A to 110F. Prior to this amendment, the claimant had in every case
to sue the insured person in the ciivl courts", and notice had to be given to the
insurer if the claimant desired to avail himself of the beneﬁts of section 96. By
the amendment, the legislature substituted, for the ordinary remedy of a civil
suit. a special remedy which is summary in nature.

The amended Act provides for the constitution of a Claims Tribunal and
confers jurisdiction on it to adjudicate upon claims for compensation in respect
of accidents involving death or bodily injuries to persons arising out of the use
of motor vehicles.' Section 110A provides for the procedure for putting up a
claim for compensation. Section 110B provides for an award of the Claims
Tribunal to be made after giving the parties an opportunity of being heard, and
after an inquiry into the claim.

Under section 110C, subject to any rules that may be made in that behalf,
the Tribunal may follow such summary procedure as it thinks ﬁt. Section 110D
provides for an appeal from the award made by the Claims Tribunal. Under sec-
tion 110E, compensation money awarded by the Tribunal can be recovered from
the insurer, as arrears of land revenue. Section 110F excludes, where a Claims
Tribunal has been constituted for any area, the jurisdiction of the Civil Court
to entertain any question relating to any claim for compensation which may be
adjudicated upon by the Claims Tribunal for that area. The Civil Court is also
debarred from issuing any injunction in inspect of any action taken or to be
taken by or before the Claims Tribunal in respect of a claim for compensation.

These provisions show the importance attached by the legislature to the
need for prompt disposal of such claims, while leaving unaffected the principles
of substantive law as to liability.

1.10. By the Amendment Act 56 of 1969, a proviso was added to section
110 of the Motor Vehicle Act, besides making a substantive amendment in the
main paragraph of that section. Originally, section 110 permitted petitions before
the Claims Tribunal only for compensation for death or bodily injury arising out
of the accident. Now, after the aiiiendnient of 1969, the third party can make a
claim for damage to property also when cau.<_ed_by the accident. The substantive
provision creating a minimum statutory liability,--fsection 95--has also been
amended so as to provide that an amount not exceeding Rs. 2,000 in respect of
the damage to property of the third party, can be recovered from the insurance

company.

1Lok Sabha Bill No. 57 of 1955 which became the Motor Vehicles (Amendment) Act (100 of 1956)

zsmtement of Objects and Reasons; Gazette of India, Extraordinary Part II, Section 2, No. 47
November 12, 1955, pages 555, 626.

'Tara. 1.7, supra.

egee, further, para. 2.4, infra.

Motor car as
the cause of con-
gestion.

Various alternati-
ves adopted.

Devices adopted
in various count-
ries to effect re-
form.

Strict liability and
common law.

The amount for which the insurer would be liable was also raised by the
same amending Act. It was also provided that where the death of, or bodily
injury to, any person gave rise to a claim for compensation under the Motor
Vehicles Act, 1939, and also under the Workmen's Compensation Act, 1923, the
person entitled to compensation could claim compensation under either, but not
under both of these enactments. Further amendments were made in 1978.

1.11. These amendments have substantially served their purpose, but the
time has now come to have :1 fresh look at the law. Rapidity of the growth of
motor vehicles has created certain problems, outstripping the means employed to
cope with the problems. The motor car has created congestion, not only on the
roads, but also in the courts. For this reason there has, in almost all countries,
been deep dissatisfaction as to the handling by courts of claims for compensa-
tion in respect of death or bodily injury caused by motor vehicle accidents. The
common law rule of liability based on fault and compensation payable only by
the person committing the tort (or a person who is liable for his default), is
believed to be working injustice.

1.12 In order to modify the common law rules of liability and the machi-
nery for determining compensation as to accidents caused by the use of motor
vehicles, numerous measures have been suggested in various countries.' Many
of them have been implemented by legislation. For example, there has been
legislation in some countries under which, in the case of such accidents, fault
need not be proved. Such legislation has come to be known as providing for "no
fault" liability."

In some countries, schemes have been enacted, whereunder the State would
take over the liability for compensation, which is to be awarded irrespective of
fault, though subject to a pecuniary limit''. In such schemes other consequential
measures are contemplated for providing the necessary ﬁnances to the State.

Then, there have been moves for shifting the burden of proof. While the
requirement of fault may be retained, the burden of proof--that is to say, the
burden of disproving fault---may be shifted to the owner of the vehicle. Measures
have also been enacted in certain countries giving the victim a direct remedy
against the insurer (and not merely against the wrong-doers). This is, in essence,
a modiﬁcation of the common law rule, whereunder privity is required to create
liability.

1.13. The devices adopted to effect reform on the subject also vary from
country to country. In some countries, such reform has been effeced by judicial
decisions.' In some other countries, on the other hand, it has assumed the shape
of legislation. England has effected it in part by legislation, and, in part, by
certain administrative arrangements, particularly, those constituting the Motor
Insurers Bureau.

The content of the reform effected in various countries also varies as will
be evident from the detailed study' that we append.

1.14. Imposition of strict liability for death or injury caused by motor
vehicles is admittedly a departure from the general approach of the common law.
No doubt, the common law does furnish certain examples of special rules creating
strict (absolute) liability in particular situations, e.g., ﬁre (though later modiﬁed
by statute)." Further, by statutes passed from time to time,--for example, statutes
relating to workmen's compensation, nuclear installations and the like--important
amendments have been made, eroding the common law rule of liability based on
fault. But the common law itself has never gone so far, in the case of accidents

'Chapter 3, infra and Appendix 4, infra.

'See further para. 1.14 and 3.14 infra.

'E.G. New Zealand Accident Compensation Act, 1972 (see Appendix 4, infra)-
'E.G. France (See Appendix 4).

'Appendix 4.

"Fires Prevention (Metropolis)Aet,I'774,

Question of elimi-
nation of fault.

Commpensation by
the State not
discussed.

Reforms rel itbillg
to Tribunals and
procedure.

Last Reports of
Law Commission.

caused by motor vehicles. The reason is that Anglo-American law does not
classify the driving of a motor vehicle Li: a "dangerous activity". Even the driving
of a defective vehicle is not an abnonnally dangerous activity that can be made
subject to strict liability}

1.15. The present legal frzzrncworlc in India combines the aspect of com-
pensation with some degree of personal liability, in order to deter the reckless
and the careless. A solution based on zr r'c--assessment of the significance of the
law of tort within the existing legal concept would, of course, be easily acceptable
to all concerned. But a more radical rcform---elimination of fault----need not be
ruled out? Accordingly \ve propose to consider in detail in this Report" the ques-
tion of elimination of fault as an element of liability.

1.16. We do not, however, propose to consider' the question of compensa-
tion by the State to all victims of accidents caused by motor vehicles. Even the
very limited recommendation for such compensation made by the Law Commis-
sion in one of its earlier Reports for "hit--and--run" cases has not been itn'pIe~
mcnted so far.' In this position, we do not think that any more comprehensive
scheme of compensation by the State stands a reasonable chance of acceptance
in the immediately foreseeable future.

What is proposed in the present Report is a detailed examination of
Chapter 8 of the Motor Vehicles Act, 1939, in so far as it is concerned with
claims for compensation for death or injury caused by accidents arising out of
the use of motor vehicles. Our principal objective will be to suggest rationalisation
of the provisions as to liability, improvement in the machinery for adjudication
of compensation and other reforms intended to tidy up the relevant provisions.

1.17. Realising that it is desirable that cases arising out of the use of the
motor car should not chr-l.:e the ordinary channels of litigation, the legislature in
India has already provided special tribunals in the Motor Vehicles Act for the
expeditious disposal of such litigation. However, in order that this object may be
effectively achieved, it is necessary that the tribunals contemplated by the Act
should be constituted in adequate numbers, and also that their procedure should
be streamlined and made as speedy as possible, consistent with the demands of

justice. Our recommendations to be made in this regard will bear this aspect also
in mind.

1.18. Before we proceed to discuss in detail various aspects of the subject,
we may refer, in brief, to some of the past Reports of the Commission which are
relevant to the subject of compensation for accidents caused by the use of motor
vehicles. As already stated,' compensaton for injury caused by automobiles in
"hit--and-run" cases was the subject matter of a Report forwarded by the Law
Commission several years ago." The need for expediting the trial and disposal
of claims instituted before Tribunals constituted under the Motor Vehicles Act,
1939, was stressed by the Law Commission in its Report on arrears in courts,

dealing, respectively, with trial courts', and High Courts and other appellate
courts."

'Phillips Vs. Britrzmzia H_ygicm'c Oil, (1023) 2 KB. 832. See further para. 3- 14, infra,
'-'Chapter 3, infra.
"Chapter 3, infra.

'Law Commission of India, 51st Report (Compensation for injury caused by automobiles in
hit-and-run cases) (September, 1972).

"Para 1 .16, supra.

"Law Commission of India, 51st Report (Compensation for injury caused by automobiles in hit,
and-run eases) (September, 1972).

7LztW Commission of India, 77th Report (Delay and Arrears in Trial Courts), page 37, paragraph
10.3 and 10.4.

"Law Commission of India, 79th Report (Delayand Arrears in High Courts and other Appellate
Courts), para 7- 10, category III (b). See also para 7-9, infra. '

Analysis of Chait-
ter 8.

Substaiitlve pro-
visions.

Grouping of p ro.
visions.

Selir-me of sections
94-] 11.

CHAPTER 2

THE PRESENT LAW, AND GENERAL RECOMMENDATION AS TO
CHAPTER 8.

2.1. Chapter 8 of the Act, entitled "Insurance of Motor Vehicles against
third party risks", deals not only with insurance against such risks, but also with
liability in respect of death or bodily injury resulting from an accident caused
by the use of motor vehicles. The Chapter contains provisions of a substantive
character, as well as provisions of a procedural character. Amongst the important
substantive provisions may be mentioned provisions relating to liability of the
insurer and quantiﬁcation of that liability. Amongst provisions of a procedural
character may be mentioned those concerned with Claims Tribunals.

2.2. The substantive provisions in this Chapter posses certain peculiar and
interesting: features. The legislature has not attempted to codify the principles on
which liability may be fixed, this matter being left to the rules otherwise applicable,
that is to say, the Law of Torts. In general, in the Law of Torts, in the absence
of special rules creating absolute liability. the wrong-doer is liable only for
intentional or negligent wrongdoing.' This position remains unaffected by
('liaptcr 8. The impact of Chapter 8 lies in this, that the liability becomes
enforceable at the victim's instance not only against the persons otherwise liable
(owner of the defaulting mofor vehicle or his servant or agent, as the case may
be), but also against the insurer. (The liability is enforceable, in case of the
victim's death, at the instance of certain other persons). The owner of the
motor vehicle is, by law, compelled to insure himself against the risk of liability
that may be incurred to a third party, and the insurer. within the limits laid
down in the Chapter, is made liable to the third party even though there is no
contract between them.

2.3. The provisions in Chapter 8 can be grouped as below :--

Secrimi Topic

The requirement of insurance of motor vehicles against
third party risks.

Section 93-95A.

Sections 90-102. The liability of the insurer vis-a-vis the person
alleged to have suffered death or 'bodily injury
arising out of the use of the insured motor
vehicles.

Provisions relating to the certiﬁcate of insurance, its
effect, production and notiﬁcation.

Sections 103-] 07.

Section 108. Co-operative insurance.

Duty ( of certain authorities) to furnish particulars of
vehicles involved in accidents.

Sections 110-110F. Claims Tribunals.
Sections lll-]1IA. Rules.

Section 109.

2.4. The scheme of the present provisions, in so far as they are relevant
to the subject matter of this Report, may be brieﬂy stated. Section 93 contains
certain deﬁnitions. Section 94 makes it imperative that there must be an insurance
policy in relation to a motor vehicle to cover third party risk before the motor
vehicle can be used or allowed to be used in a public place. Section 95 deals with
the requirements of the insurance policy. It also lays down the limits of the
insurer's liability. Section 96 imposes on the insurer an obligation to satisfy a
judgment which might have been passed against the insured in respect of a third
party risk. It also enumerates the grounds of defence available to the insurer.

lsge further para 3'4, infra, 6

Tripartite charac-
ter.

Deﬁnitions.

Chapter 8 Re-
commend ation too
revise heading.

_ Section 97 deals with the rights of third parties against the insurer on the
insolvency of the insured. Section 98 casts a duty on a person against whom the
claim is made to give information as to the insurer. Section 99 relates to settlement
between the insurer and insured persons. Section 100 assigns meaning to the
expression "liabilities to third parties . . . . . . . . . . . . . . Section 101 relates to
insolvency of insurer. Section 102 deals with effect of death.

.Sections_103 to 108 deal with certain matters of detail, concerning insurance.
Section 109 imposes a duty on the registering officer or on the officer in charge
of a police station to furnish particulars of a vehicle involved in an accident.

Then follow a number of provisions '(sections 110 to 110E) concerned with
Claims Tribunals, their composition, applications before them, their awards,
appeals, powers and procedure. Jurisdiction of the Civil Court is barred if a
Claims Tribunal is created (section 110F).

Sections 111 and 111A deal with rules.

2.5. It should be pointed out that as a result of the provisions made in this
Chapter, a transaction of insurance assumes a tripartite character. Normally,
insurance, like any other contract, creates a legal link only between the parties
to the transaction. The rights of third parties are only against the person insured,
there being no direct cause of action in favour of the third parties against the
insurer. To this, an exception is created by Chapter 8, the principal provision
material in this regard being section 96(1), which deals with the duty of the
insurer to satisfy a judgment against persons insured in respect of third party
risk. Of course, this broad proposition is to be read subject to the limits of
liability as imposed in section 95(2), and is applicable only in respect of that
liability which is within the fold of section 95(1). But the point to be noted is
that sections 94--96 make an inroad on the common law rule that a third party
cannot derive beneﬁt under a contract.

2.6. Chapter 8 itself does not contain deﬁnitions of general application.
The principal expression "motor vehicle" has been deﬁned in section 2(18).
Certain other expressions not material for the present purpose are also deﬁned

in section 2.

2.7. The present heading of Chapter 8 of the Act--"lnsurance of motor
vehicles against third party risk"------is inadequate, and should be suitably revised.
The sections contained in the Chapter do not deal only with insurance (as the
present heading would indicate); they deal also with several other matters, some
of which are of great legal as well as of social signiﬁcancei'. We therefore recom-
mend that the heading should be revised so as to read "Insurance of Motor
Vehicles and Adjudication of Claims for Compensation in respect of accidents

caused by motor vehicles".

'See also para 1-9, supra.
'See also para 2' 1, supra.

Peculiar fcittures
Of accidents by
motor vehicles.

Time taken in
proof of negli-
gence.

Trafﬁc accidents.

Scope of the
Chapter.

Statutory ex cop-
tions to princi-
ple of fault.

CHAPTER 3
LIABILITY WITHOUT FAULT
[Section 92A (New)]

1. Fauit as a condition of liability.

_ We propose to consider in this Chapter the question whether liability
for injury from accidents caused by motor vehicles should continue to be governed
by the traditional doctrine of fault (which is the present law),' or whether there
is need for ahrogating or modifying that doctrine. This inquiry becomes desirable
in view of certain practical ditiiculties that have been experienced under the
present system." While, with the increasing use of motor vehicles, accidents are
also on the increase, yet experience shows that proof of the actionable element
required to create tortious liability also becomes increasingly difficult in View of
the peculiar circumstances of an accident on the road.

3.2. The question is important, as the persons generally involved in motor
accidents are pcclestritins. illiterate persons, children or women. Some of them
are too poor to afford the help of a competent lawyer for establishing negligence
in claim cases". These cases are contested strenously by the insurance company,
raising all sorts of technical objections for minimising its own liability. As a result,
proceedngs before the Claims Tribunal drag on for a long time before any award
is passed. Sometimes, the time-consuming and costly litigation makes the award
of compensation, if and when it is made, virtually meaningless. The Claims
Tribunals are constituted for the expeditious disposal of motor vehicles claims;
but in actual practice there is no expeditious disposal. The inordinate delay in the
disposal of these claims is mainly on account of the lilﬁculty and the time taken
in trying the issues of negligence in the use of the Vehicle.

3.3 Traffic accidents have developed into one of the great economic and
social problems of today. The personal sufferings and economic losses of survivors
and disabled persons are grrrat and so are the economic losses and the inconveni-
cnce caused to the society, through loss of production. increased social expenses,
and strain on the capacity of hospitals and other institutions. These considerations
have, in many countries, led to the evolution of special rules applicable to liability
for motor vehicles aceitlents.

3.4. Tortious liability for injury caused by an accident is, at present, subject
to proof of fault, except in certain special situations.

Some of these special situations are governed by common law rules familiar
to students of the law of torts.

Some of them are governed by special statutory provisions'.

3.5. It may, for example, be noted that in a proceeding governed by the
Carrriage by Air Act, the plaintiff need not prove negligence. It is for the air
carrier to disprove it, by showing either that he had taken all measures to avoid
accident, or that it was impossible to take such measures5.

'(I'«I21{/gr/inz. Vs. Krlrzznhzbrzz', A.I.l't. 1979 Karn. 106.
2For the present scheme of the Act. See U71 2'/ml In'Iz'rL Vs. Union of India, (1979) 1 M.L.J. 487.

3See para 12 supra.
4(a) Section 82. Tmliaii l{ailwa_\'S Act. 1890.
(1)) S rutiion 3, \Voi'l{ii1,":i'S C m1p('nSation Act, l9'.?3.
(o) The Carriage by Air Act. L972, l"ir.<:t Schrwliile, (See Appendices)
="('m-i'i;i«;_o by Air, 1972 (69 of i972), section 5(i) read with the Schedule, Chapter 3, para. 56.

Burden of proof
in special cases.

Present position.

Remedies attemp-
ted to mini-
mise litigation.

Difficulties of
proof.

Legislative. service
to avoid disputes
as to fault.

It appears1 that Montreal Protocols Nos. 3-4, 1975, which amend the
Warsaw Conventions on the subject, make elaborate provisions as to certain
other matters. But the principle of strict liability remains unchanged.

In fact, liability is exonerated only if death or injury has resulted solely from
the state of health of the passenger or if the carrier proves contributory negligence.
In the latter case, there is some relaxation in favour of the carrier.

3.6. I may also be noted that though the determination of liability is subject

to the law of torts, yet the burden may shift to the driver in special cases, e.g., a

tlpxr tpppigg on its oil side in corcumstances from which unduly high speed can
e in erre 2

_ 3.7. Apart, however, from special rules or statutory provisions, and leaving
aside special situations, and according to the position generally understood at
present, fault is required, before liability can be established 3 ' either against the
nerson driving a vehicle causing an accident or against any other person alleged
to be vicariously liable. This principle has not been abrogated by the statutory
provisions niaking the insurer liable to third parties, as enacted in the Motor
Vehicles Act'.

'= (

.a.6 This position lias, by niany persons, been regarded as not satisfactory.
Legislatures in many countries have addressed thciiisclvcs to the task of ﬁnding
out a suitable remedy that would minimise litigation and its attendant evails of
delay and arrears in this field. It is realised that accidents by motor vehicles take
place suddeuly----sometimes in a split second. Very often, there are no witnesses
to the occurrence. Even if there are witnesses, they are not able to recollect with
accuracy the details of the accident in a manner that would enable the court
to ﬁx liability on common law principles. It therfore becomes dillicult to establish
the facts necessary for a determination of the question whether the person driving
the vehicle was at fault.

3.9. Diliiculties of proof, of course, do not necessarily justify a relaxation
of the actionable elements of liability in every case. But it is the view of many
persons that'' because of these dillicultics which are peculiar to modern highway
traffic, justice suffers, in as much as the person who could have recovered com-
pensation is unable to do so, not because fault die': not exist, but because it could
not be proved.

Added to these considerations is the aspect of delay and arrears in courts
and tribunals. By the time the injured person (or if he is dead, his legal represen-
tatives) can recover compensation, considerable expenses has to be incurred by
him. At the end, the amount recovered becomes inadequate and, by reason of
intervening inﬂation, totally unrealistic.

ll. Strict liability.

3.10. Many of the solutions adopted in this context were inspired by the
urge to reduce the adverse impact of delay and arrears in this ﬁeld. A legislature
may remove the core of conflict from an established type of dispute by the simple
expedient of deﬁning the right in such absolute terms that it can no longer be
seriously challenged. For example, a law giving the passenger an absolute "no
fault" right to recover economic loss makes it needless to argue whether the
driver or anyone else was negligent in causing the injury. It thus eliminates one
of the important causes of delay in the particular ﬁeld.

1(,'f_ Carriage by Air and Road Act, 1979 (e. 28), First: Seliedule, Chapter III, Articles 17 and 23.
sgangmam. Vs. Kama-labia, A.I.R-. 1979 Karn. 106.

'Balm Sivzgh Vs. Citampa Devi, A.I.R. 1974 All. 90, 92.

4Ja.g;'it Singh Vs. Ram Clumd, A.I.R. 1969 Delhi 183.

~"Kamlu Deni Vs. Iiislzan (/'hand, AIR. 1971 M1'. 113.

"State of I'1t;tjr.'}J Vs. V. Krllirr, ,>\.I.Il. 1969 Punjab 172.

'Section 95.

"See further para 3- 43, infra.

Strict liability.

Legislative deVico
to avoid dis-
putes as to
quantum.

Common law.

Liability for motor
vehicles .

Scope of reforms
based on "No fault."
liability.

No~fa11lt. system.

_3.l1. On this basis, strict liability in the realm of torts has been created'---
to give only a few examples---in regard to :-- I

(1) product failures;
(2) automobile accidents.
In family law, it has been created for 2--

(3) marital break up.

Strict liability has also been created in criminal law for certain offences------a
matter which the law Commission of India had occasion to consider at length a
few years ago."

3.12.Impositiori of strict liability focusses itself on the saving of judicial
time by eliminating one of the issues that may otherwise arise. A similar approach
could be adopted to liquidate contentions over how much the victim's loss is
worth. This can be done:----

(a) by prescribing for each injured victim a ﬂat sum (regardless of how
much he suffered), or

(b) by installing a scheme by which the pecuniary value of beneﬁt in regard
to each speciﬁc type of injury sustained is assessed----as in the Work-
men's Compensation Act.

3.13. To revert to the question of liability, at common law, strict liability
existed only in a few special cases, for instance, with respect to the maintenance
of dangerous animals, for defamation and under the rule in Rylands v. Fletcher.'

In addition, a rebuttable presumption (known as the doctrine of res ipsa
Ioquizur) deduced fault or negligence from the nature of the thing or act itself,
such as defective construction or neghgent use.

3.14. However, Anglo-American law at a critical period of legal develop-
ment missed the chance of classifying_the driving of a car as an abnormally
dangerous activity subject to strict liability', 5»

III. No fault system.

3.15. There has been an endeavour towards reform which seeks to ﬁnd more
just solutions for ordinary claims based on negligence, particularly with respect
to the great number of automobile accidents. These reforms seek to abolish the
fault principle in tort law and to award compensation without proof of fault

("No--Fault").

Further reform movements, although yet in their infancy, seek to extend the
"no fault" principle to almost all c1aims,--principally to products liability, but
also to other kinds of liability, such as medical malpractice.

3.16. In a "No--fault System", compensation is granted for certain injuries
without proof of fault. "Compensation" in this contest means compensation for
actual losses, but not for intangible damage. The in]ured person will, under 21
"no fault" system, be in a better position, compared with traditional tort law,
since he will be entitled to receive immediate compensation for his actual loss
(expenses, loss of proﬁts or wages) without lengthy litigation or proof of fault.

lsee (July 10, 1977) Economist.

aLaW Commission of India,----
'a) 29th Report (Proposal to include certaiii social and economic offences in the I.P.C.}, and
K

(b) 47th Report (Trial and punishment of social and economic offences).

zgylemd Vs. Fleoher, uses) LR. 3 H-I» 330-
.Phm,-ps VS_ B¢ﬂa.nnia Hygeinic Laundry, (1923) 1 KB. 539; (1923) 2 KB. 832.

5Cf. para 1'14- S"10T'1-'-

Various systems of
compensation for
harm.

Liability based
on fault.

Qualiﬁcation to
fault theory.

Englishand Ameri-
can law.

IV. Compensation systems---Varieties of.

317. We do not propose to go into details of the different compensation
systems in force for providing beneﬁts to victims of accidents. But it is important
to bear. in mind that several systems for the compensation of harm exist. Their
very existence shows that the law has not hesitated to adopt a special approach,
wherever special reasons seemed to justify It. These special reasons would, of
cnurse, include considerations of social justice and the practical necessities of the
si uation.

3.18. As to the variety of systems, there may be'--(1) a pure system of neg-
ligence law (this is the traditional common law rule), or (2) a system of
negligence law supplemented by liability insurance (i.e. the position under the
present Motor Vehices Act in India)?

Then, there may be (3) a system of strict liability (butﬂwithout insurance
covering the liability), or (4) strict liability, 'also supplemented by liability
insurance?

In these cases, the tort-feasor remains liable and his liability constitutes the
initial basis of actionability,----though the liability can be shifted to the insurer,
or may even be required by law to be so shifted.

(5) Besides these systems, there may be a "loss-insurance" system, such as
the workmen's compensation law.

In the systems just now referred to, the victim provides for himself for the
future (or is made to so provide).

(6) Finally, there may be a system of social security. The primary liability
in such a scheme is on the State or on another agency oflicially created.

V. Developments as to insurance.

3.19. In general, the western law of liability for unlawful harm is based on
the principle of fault. The conceptions of dolus' (fraud or bad faith) and culptr'
(fault or negligence) inherited from the Roman law, run through the 'centuries
and remain the basis of the modern 1aw,----though their practical effect is greatly
broadened in recent times by the development' of the law of negligence, both in

the common law and in the civil law'.

3 20 In the major western legal systems. however, the principle of fault
has in general been qualiﬁed in some form by giving the principle of absolute
liability in respect of dangers created by the respondent, a substantially wider

application than was known to Roman Law".

3 21 In English law, we have the rule in Rvlands Vs. F letcher," in American law the -rinciple of liability for ultra--hazardous activities; in French law", the thedrie duprcsoue Cree; in Gﬁrmaii law, the principle of responsibility for risks."-

i7Adaptetl on & Keeton, Cases & Materials on Tort (1977), page 776.

2For Engilish law, see para 5'4. "if"-

3, 362, infra, read with section 95.

"Cf. recc mmeiidation in par 4N0cho1as, Introduction to Roman Law (1975), page 170.

2NicliolaS, Introduction to Roman Law (1975), pages 170 and 22.}. 6P 1.1, Winﬁeld, "The History of Negligence in the Law of Torts" ( Review, pages 184-201. .

-,Jenks' Common Law of Mankind (1958), page 160. sdf Puckland and MacNair, Roman Law and Comm" LaW(1936>' Pages 313314- "Rylands Vs. Fletcher. (1868) LR' 3 H'L' 330' .

1°Plaiii0l Traite elemoiitaire du droit civil (3rd ed . by Ripe "Jenks, Common Law of Mankind (1953): Page 1.60 . "U K Foreign Office, Manual Of German Law (1900):

1926) 42 Law Quarterly' rt, 1949), Vol. 2, pages 315-317 Vol 1, pages 108, 110.

Emphasis on in-

Sll raneo .

Need for reform.

ronouneements of High Courts.

Flow in patna ruling.

Supreme Court.

decision.

View of Supreme Court.

I-2 . In some systems, however, it has been very sparingly accepted--for instance, in Roman--Dutch law as applied in South Africa, though apprantly not to the same extent in Roman--Dutch law as applied in Sri Lanka'.

3.22. All these relaxations of the rule limiting liability emphasise, more than ever, the problem of what is to be done with the damage which, as between the parties, is made to "lie where it falls". The obvious answer is that it should be covered by insurance,----voluntary, compulsory or governmental,--according to the policy of the State concerned".

VI. Indian law-need for reform.

3.23. So much regards the general trends on the subject of liability for acci- dents caused by motor vehicles. We now turn more speciﬁcally to the need for reform of Indian law.

3.24. Diﬂiculties and impediments in the expediﬁous disposal by Claims Tribunals of claims for compensation under the Act have been adverted to by some High Courts, since 1969. The Patna High Court" went to the length of ruling that in claim cases it was not essential to allege and prove negligence for making the Insurance Company liable for payment of compensation and that the liability of the Insurance Company was absolute, though limited to the extent provided in the policy. As against this view, many other High Courts held that the liability to compensation arises only on the ﬁnding of negligence. The later view was upheld by the Supreme Court'. But need for reform was noted in Kesavan Nair Vs. State Insurance Officer." Krishna Iyer J. (as a Judge of the Kerala High Court), while holding that the insurer is liable to pay only if the insured is liable to pay, observed :--

"Out of a sense of humanity and having due regard to the handicap of the innocent victim in establishing the negligence of the operator of the vehicle a blanket liability must be cast on the insurer, instead of its being restricted to cases where the vehicle operator has been shown to be negligent. This is more a matter for the legislature and not for the court. But this is a lacuna in the law which I think it would be just to rectify."

3.25. This plea for reform of the law itself shows that the present position is diﬂferent. The flaw in the Patna decision' referred to above (which dispenses with proof of fault) lies in the assumption that car insurance policy covering third party risk is a contract of indemnity even as between the insurer and the third party. This is not so. The policy is a contract of indemnity only as between the owner of the vehicle and the insurer. The liability of the assured to pay compen- sation in respect of death or bodily injury to a third party---and thus the right of the third party against the insurer----can arise only out of some tortious act of the assured. There is, therefore, no strict liability on the part of the Insurance Company to pay compensation, as the law now stands.

3.26. It is not necessary to go further into the question whether, under the existing provisions of the Motor Vehicles Act, proof of negligence is_necessary for award of compensation, as the matter is now concluded by a decision of the Supreme Court7.

3.27 According to the Supreme Court" 2--

"The owner's liability arises out of his failure to discharge a duty cast on him by law. The -right to receive compensationean "only be against a person who is bound to compensate due to_the failure to perform a legal obligation. If a person is not liable legally he 1S under no duty to compensate ee, Introduction to Roman-Dutch Law (3rd ed. 1931), P3-g6~'3333-334- '-'La.wson, Negligence in the Civil Law (1950), page 34- 3New India Assurance Co. Ltrl. Vs. Sumilra. Devi, (1971) A.C.J. 58 (Patna).

'Mina B, Jllehta, pata 3'27, infra.

5Kesm:un Nair Vs. Stae Insurance 0ﬁ'icer------ (1971) A.C.J. 219 (Kaela)-

5Ngw India Assurance Co. Ltd. Vs. Sumitra Devi, (1971) A.C-.J. 58 (Patna) (para3'24, supra). 7g[.L'm; B_ jlfglgm Vs_ Bulk-Iislmm Rmnchmz-elm Nayrm, (1977) 2 S.C.R. SS6; A.I.R. 1977 S.C. 1248. 8_.1[inu B, Mglrta. VS. Brrllcria'}ina Ramchandra 1\'crg,an, A.I~R- _1977 S-C- 1248, 1257, 1259, (1977) 2 S.C.R. 886.

Siiggestions made by later decsions of the Supreme Court.

the Supreme Court has been repeatedly emphasising the need for amending Motor Vehicles Act so as 13 anyone else. The Claims Tribunal is a Tribunal constituted by the State Government for expeditious disposal of the motor claims. The general law applicable is only common law and the law of torts. If, under the law, a person becomes legally liable, then the person suffering the injuries is entitled to be compensated and the Tribunal is authorised to determine the amount of compensation which appears to be just. The plea that the Claims Tribunal is entitled to award compensation which appears to be just when it is satis- ﬁed on proof of injury to a third party arising out of the use of a vehicle on a public place without proof of negligence, if accepted, would lead; to strange results."

3.28. Since the decision of the Supreme,Court in Minu B. Mahta's case 1-2 the to incorporate in it the principle of "no fault liability"

in regard to road accidents. In a subsequent case, "Krishna Iyer J. has observed :--

Judgment of Sue preme Court Dim-

culties enumerated in 8. other judgment.

"An explosive escalation of automobile accidents, accounting for more deaths than the most deadly diseases, has become a lethal phenomenon on lndiaii Roads ever_i_/where. The rural impact of this tragic development on our legislatures. courts and law enforcing agencies is insuﬂicient, with the result that the poor who are, by and large, the casualty in most of these cases. suffer losses of life or limb and are deprived of expeditious legal reme- dies in the shape of reasonably quantiﬁed compensation promptly paid-- and this, even after compulsory motor insurance and nationalisation of insurance business . . . . . . .. Medieval roads with treacherous dangers and total disrepair, explosive increase of heavy vehicles often terribly overloaded and without cautionary signals. reckless drivers crazy with speed and tipsy with spirituous "potions, non-enforcement of trafﬁc regulations designed for safety but offering opportunities for systematised corruption and little else and, as a cumulative effect, mounting highway accidents, demand a new dimension to the law of torts through no fault liability and processual celerity and simplicity in compensation claims cases. Social justice, the command of the Constitution, is being violated by the State itself by neglecting road re- pairs, ignoring deadly overloads and contesting liability, after natonalising the bulk of bus transport and the whole of general insurance business. The juris- prudence of compensation for motor accidents must develop in the direction of no-fault liability and the determination of the quantum must be liberal. not nigtzardly, since the law values life and l?mh in a free country in generous scales."

The learned Judge has re-iterated this view in many cases decided later.

3.29. It will be appropriate to quote from a judgment of the Supreme Court.

'where some of the diﬂiculties experienced in the present system have been adverted to, at some 1ength":---

"M. The instant case brings into focus the difficulties experienced by dependants in obtaining relief before the Motor Accidents Claims Tribunal. The victim in this case Bhagwan Das was run over by a motor vehicle on the night between 8th and 9th July, 1961 leaving behind him his wife Bishan Devi and four minor children. For eighteen long Vears they have been before courts asking for some compensation for the death of their bread-winner due to rash and negligent driving of a motor vehicle.

"One is tempted to remark that they would have been better off but for their hope of getting some relief in courts. They_ not only had to spend their time in courts but to borrow to ﬁvht for their rights. It is common knowledge that such helpless and desperate condition is exploited by un- scrupulous persons who manage to get away with the bulk of the compensa- tion money if and when the claimants succeed in getting it.

VC1Miy,,1L 3_ Mehm Vs. Ballcrishna Ramchandra Nayan, (1977) 2 S-C-Rn 886; A-I-R 1977 3-C-

3o.L/B(D)4,;57MofIJ&CA--2 l24R. 1257.

2Pam 3-27, supra.

ago,-word Ins,"-,m(-g (I0. ''5, Ni;-malrl Dan". U979) 3 S.C.R. 694: A.l.R. 1979 S.C. 1666, 1667.

paragraphs 1 and 3 (ﬂctober). _ 'Bishan Devi Vs. Sirbalcsh Singfv, A.l.R. 1979 S.C. 1862, 1866, 1867' (November) (Kallaﬁam J.).

'See also pars, 1-2, supra.

Recent judgment of the Supreme Court.

Justification.

"_15. The law as it stands requires that the claimant should prove that the driver of the vehicle was guilty of rash and negligent driving. The burden thus placed is very heavy and ditlicult to discharge by the claimant. The records of police investigation are not made available to the Tribunal. The otlicers who investigated the accident are seldom available to give evidence before the Claims Tribunal and assist in coming to a proper conclusion. The insurance company in quite a few cases, as in the present one, takes an unreasonable stand and raises all sorts of untenable pleas just to thwart relief to the dependants. In many of the claims it turns out to be beyond the capacity of the claimant to maintain his claim in a court of law.

"16. Due to the inordinate delay in disposal of claim petitions before the Motor (Accidents) Claims Tribunal the badly needed relief to the claimants is not available for several years. Further time is taken in appeals. All along, the dependants will have to carry on without any relief. It has been time and again pointed out by courts that insistence of proof of rash and negligent driving causes considerable hardship on the claimants.

"17. We may point out that repeated suggestions have been made by this Court and several High Courts expressing the desirabilty of bringing a social insurance which would provide for direct payment to the dependants of the victim. This Court in Minu B. Mehla Vs. Balkrishna Ramchamlra Nayan' has referred to the decision of the Kerala High Court in Kesavan Nair Vs. State Insurance Oﬂicerz, where the High Court expressed thus 2--

"Out of a sense of humanity and having due regard to the handicap of the innocent victim in establishing the negligence of the operator of the vehicle a blanket liability must be cast on the insurers."

"The Madras High Court in M/s. Ruby Insurance Co. Ltd. Vs. V. Govindaraj, A.A.O. Nos. 607 of 1973 and 296 of 1974 decided on 13-12-1976 has suggested the necessity of having social insurance to provide cover for the claimants "irresprc!ive of proof of negligence to a limited extent, say, Rs. 250 to Rs. 300 a month."

3.30. The following observations made in a recent judgment of the Supreme Court3 may also be noted in this context :--

"This petition for special leave under Art. 136 is by a truck driver whose lethal hands at the wheel of a heavy automobile has taken the life of a scooterist--a deadly spectable becoming so common these days in our towns and cities. This is a case which is more a portent than an event and is symbolic of the callous yet tragic traﬂic chaos and treacherous unsafety of public trans- portation . . . . . . . . the besetting sin of our highways; which are more like fatal facilities than means of mobility. More people die of road accidents than by most diseases, so much so the Indian highways are among the top killers of the country. What with frequent complaints of the State's misfea- sance in the maintenance of roads in good condition, the absence of public interest litigation to call state transport to order, and the lack of citizens' tort consciousness, and what with the negelect in legislating "into law no- fault liability and the induction on the roads of heavy duty vehicles beyond the capabilities of the highways system, Indian Transport is acquiring a menacing reputation which makes travel a tryst with Death."

3.31. It is needless to add that we have borne these observations in mind when making our recommendations on various matters in this Report.

VII. Need for reform as to fault principle.

3.32. Coming, ﬁrst, to the matters that fall to be considered, the most important question relates to the principle of liability. In our opinion, the incor- poration of the principle of liability without fault in the Motor Vehicles Act by an amendment is essential in the interests of justice. He who creates a risk must bear the consequences.

W Tm... 12. 'ii;iiul"ii§.l}7ziTi;ishna Ramchanda Nrwan, (1977) A.C.J. 119; A.I.1t. 1977 so. 1248, 1259.

2Kesavan Nair Vs. State Insurance Oﬂicer, (1977) A.C.J. 219.

"Rattan Singh Vs. State of Punjab, (10-1-1980) S.C.W.R. Vol. 35, Part 1, pages 29, 31.

Two major considera-

tions justifying fault' lialiility.

ltetlu :tion of delay.

I10 15 3.33. It is perhaps unnecessary to set out elaborately the arguments in favour of the introduction of no fault liability. In the course of the discussion of the position elsewhere, we have already mentioned most of the arguments relevant to the subject. We have also made a refrence to judicial pronouncements in India which strongly support reform of the law on the subject. However, for convenience, it may be stated that two major considerations justify the introduction of no fault liabilty in this particular sphere--namely, social justice and practical necessity.

In a sense, social justice would be the inspiring principle of all such legisla- tion. But here that aspect becomes of particular importance. The motor car is productive of death or bodily injury more frequently and more intensely than most other activities. The harm that is caused by its operation is, in its magnitude and frequency, peculiar and of an extraordinary character. One could even put the rationable of the matter by stating that "fault" comes into being from the very use of the motor vehicle, and existence of fault need not be proved again separately on each individual occasion when an accident is caused by the use of the motor vehicle.

In England, the Select Committee, to which the U.K. Bill proposing no fault liability was referred, considered that a motor-car on the road could properly be regarded as falling within the rule '-2 in Rylands Vs. Fletcher and that the obligation to compensate innocent pedestrains ought to be regarded as a duty of the motoring community as a whole, rather than of the individual motorists who cause the damage?

These are facets of social justice. In addition, there is the practical aspect. The practical necessity for reform of the law by introducing no fault principle lies in the almost insurmountable difficulties of proof that are encountered by every victim of an accident caused by a motor vehicle, when he is called upon to prove fault as a pre-condition of such liability.

3.34. The incorporation of "No-fault liability" principle will considerably reduce the delay that occurs in the disposal of claims cases by the Claims Tri- bunal, making it easy for the person sustaining injury in an accident of the nature speciﬁed in section 110(1) (or the heirs of a person killed in such an accident) to obtain compensation without being required to ﬁght a long--drawn battle for obtaining it. The difficulties of litigants have been judicially adverted to. and we have already referred to some of the pronouncements on the subject. As late as May, 1980, a reported judgment of the Supreme Court refers to them', and also makes certain (not very charitable) comments on the manner in which a public transport corporation conducted its defence in that particular case.

This aspect of difliculty of proof has been well stated in a recent English artic1e°--

"There is the notorious dilﬁculty of ascertaining the facts, especially after a long lapse of time There is the unreliability of witnesses (_if indeed they are available) to events which are often of spilt-second duration. And there is the difﬁculty--and consequent uncertainty--in distinguishing negli- gent from non--negligent conduct in a context where, we are told, 'even a good driver (whatever that may mean) makes on the average a mistake_every two miles or, according to another study, nine mistakes every ﬁve minutes.

"All these factors make the bringing of a tortvaction for a motor vehicle injury a precarious undertaking, especially for the plaintiff who cannot claim Legal Aid."

188 H.L. Deb. 5th Series, Col. I046.

21¢, is ntcresting to note that the Bill Wassupportei by Viscount Sankey and Lord Buckmaster:

34 H.L. Deb. cols. 551, 562-

3Cf_ Douglas Payne, "Compensating the Accident Victim" (1960) 13 C.L.P. 95, 93. 94- 'See paragraphs 3- 28 to 3- 30, supra.

5Rajastlum State Road Transport Corp. Vs. Nwrain Shanlcer. A-I-R' 1980 s'C' 695' 698- P3" 3 (MW)! oxormw S, Mm-sh, "The Pearson Report" (Oct, 1979) 95 L.Q.R,. 513, 524.

Position else.

where as to no fault.

Speeches in the House of Lords.

US 3.35. These, then, are the major considerations for reforming the law on the lines suggested. The principle of "no fault liability" has already attracted attention in many other countries,' where the soundness of the major reasons advanced in the preceding paragraphs has, in substance, been accepted.

The developments are not so -recent as may appear at the ﬁrst sight. In England, a Bill, which would have made motorists strictly liable to pedestrians, without proof of fault, was, in fact, given a third reading by the House of Lords in 1934, though it was not proceeded with in the House of Commons.

3.36. It would be of interest to quote some of the speeches made in the Debates in he House of Lords on the Bill of 1934.2 Lord Danesfort said-

"The object of the Bill is to enable non-motoring users of the road, such as pedestrains "and pedal cyclists, when they are injured on the roads by a motor vehicle, to obtain compensation, and in the same way for com- pensation to be obtained when a pedestrian is killed. My Bill proposes that this compensation should be obtainable without the necessity of proving negligence on the part of the person who caused the accident, provided---aud this is a most important proviso--that the death or injury was not caused by the negligence of the person so killed or injured. If it is shown that the accident was caused by the negligence of the person killed or injured men, under the Bill, no claim for compensation arises.

"This is admittedly an alteration of the existing law, but I hope to show your Lordships that the alteration is both just and necessary. May I say a few words about the dangers of the roads today? The position is really an intolerable one. The injuries on the roads have reached a ﬁgure which imposes intolerable suffering on tens of thousands of pedestrains and their relatives, and the ﬁgures have stirred the conscience of the nation."

* * * ll III "Such being the appalling toll of the roads on pedestrains, may I shortly call your Lordships' attention to the difficulties under the existing law in the way of pedestrains--and in the term "pedestrains" I include pedal cyclists---obtaining compensation? The ﬁrst fundamental diﬁiculty arises from this fact. The motorist is always insured; he is bound to be by Act of Parliament; the pedestrian is rarely if ever insured; and the result is that the pedestrian, at his own cost, has to ﬁght powerful insurance com- panies, who in cases of death or serious disability, will -raise all possible defences. I do not blame them for that. In minor cases I believe it is true that the insurance companies often behave generously enough, and pay compensation, though perhaps it may be inade uate, without bringing the injured person into Court, but in the more serious cases they feel bound in their own interest to ﬁght them and to -raise every possible legal defence that is open to them.

"Let us see what those legal defences are. The padestrian goes into Court to claim compensation. The ﬁrst obstacle which he has to surmount is the duty which is thrown upon him of proving negligence on the part of the driver. That is no "easy task. If the pedestrian is killed then, of course, the main witness in support of the claim is not available. If, on the other hand, the pedestrian is seriously injured, his recollection, no doubt, is confused and is not very perfect, and he has to try to get outside witnesses in support of the claim on the ground of negligence against the motorist. It is exceedingly difficult and expensive to get those outside witnesses, and it is not at all easy for a pedestrian who is ﬁghting his own case to go to that expense. The result is that in many cases the pedestrian is compelled to take what compensation the insurance company chooses to give him rather than indulge in a terribly costly litigation which his resources are unable to meet. I believe it is not too much to say that the dice are loaded against the pedestrian when he seeks compensation.

'For details, see Appendix -4.

'Vol. 84. H.L. Debate, ooles. 543, $145,684..

_ "But let me assume that the pedestrian has got over the first diﬂiculty III the Law Courts and has successfully proved negligence on the part of the motorist. What ha pens then? It is open to the insurance company to say : 'True it is that t e driver was negligent, but you were also negligent'. In others they raise what is called in law, as your Lordships know, the defence of contributory negligence. The claimant has "rebut that defence. If he succeeds in doing so, well and good. If he fails, his claim is very liable to be defeated in toto. I doubt if there are many branches of the law on which there has been more litigation, and more very costly litigation, than this question of contributory neglince.

St * * =|= * "The justification for this Bill does not rest solely on the sufferings and the helplessness of the victims. There is a broader basis of justiﬁcation for the Bill. It is this. Parliament has altered the law of this country in order to enable the motorists to travel at speeds and under conditions which, without that legislation, would have been utterly impossible. The result of this change in the law has brought about appalling dangers to pedestrians. The highways, instead of being reasonably safe places for pedestrians, have become almost the most dangerous places in the country. As compared with railways, of course, they are inﬁnitely more dangerous. I need hardly remined your Lordships that a pedestrian has a Common Law right to use the roads: a Common Law right in common with all His Majesty's subjects, to use the roads in a reasonable manner. Now, "however, if he uses the roads in a reasonable manner he gets killed. Is not the truth of the matter that a resolution has been effected in road traffic by legislation in favour of motorists? I ask your Lordships whether it is not reasonable that the law should be altered in favour of the pedestrian to the extent------I think the moderate extent----which I propose.

"The principle of the alteration which I propose---namely, that the inju-red person should get compensation without having to prove negligence on the part of the driver--is no revolutionary proposal. It involves a princi- ple which has already important legal and legislative analogies."

"As regards legislative analogies I need only refer to the Workmen's Compensation Act where the employer is bound by law to pay compensa- tion to his workmen who are injured, although there is no negligence on the part of the employer, and the only exception is where the workmen has been guilty of serious and wilful misconduct."

is * * * Ill "I will now refer very shortly to the provisions of the Bill itself." Clause 1 provides that:

"Where bodily injury is caused by or arises out of the use of a motor vehicle on a road, damages shall be recoverable in respect of such injury from the person using the motor vehicle or from any person causing or permitting him to use it unless the injury was caused by the negligence of the person so injured."

"That is the exception which I think it is proper to make, and possibly a further exception might be made in Committee by introducing, as in foreign countries, the accident which arises under force majeure. Then the clause proceeds :

"Provided that this section shall not apply to bodily injury suffered by a person who at the time of the occurrence of the event out of which the bodily injury arose was using or being carried in or upon a motor vehicle."

"The effect of that is that the Bill does not apply to an accident caused by one motorist to another.

"The reason for leaving out such a case is that it simpliﬁes the Bill and, further, that where one motorist causes injury to another the case is essentially different from that in which a motorist causes injury to a pedes- train. Where one motorist causes injury to another both are insured, and an action for compensation is fought out by the insurance companies, and no diﬂiculties exist of the extent of character which arise in the case of a pedestrian.

Clause 2 of the Bill provides :

"The liability imposed by this Act shall be a liability within the meaning of Part II of the Road Tratﬁc Act, 1930."

"The eﬁect of that clause is that the motorist will have to insure against the liability imposed upon him by this Bill. No doubt, some increase of premium may have to be paid, but it ought not to be excessive. I have been told that it is not fair that the careful motorist should have to pay a premium because other motorists are reckless, but that is the existing law. There is no exemption from insurance in the case of the careful motorist. Every motorist, careful or "not, has to insure, and properly so, and so it would be under this Bill".

Clause 3 is merely a deﬁnition clause, saying that----

'motor vehicle' and 'road' in this Act have the same meaining _as_ in the principal Act and the expression 'bodily injury' includes fatal injury."

"Then, there is a saving clause as to other remedies 2 "Except as expressly provided by this Act nothing in this Act contained shall be deemed to aﬂect the rights of action or other remedies which any person would have had if this Act had not been passed."

"That would preserve, for instance, rights under Lord Campbell's Act. where in certain cases the dependants of a person killed have a right of action against the person through whose misconduct the death arose."

v.5 ant Sanka .3 3.37. The Lord Chancellor (Viscound Sankey) in the course of the Debates sﬁeggh. y expressed these views':

"My Lords, with your permission, I desire to say a few words upon the legal issues which are involved in this Bill. It is difficult to offer any strong opposition to the Second Reading of the Bill. On the contrary, some of its proposals are attractive. I would go further and say that some of them are not unreasonable, and must command a considerable measure of sym- pathy. As the law at present stands a pedestrian who has been injured by a motor vehicle on a road has to prove, in order to obtain damages, that the person driving the car was guilty of negligence which caused the accident and the injury.

"The purpose of the Bill, as expressed in the first clause, is to shift the onus of proof and in some respects to alter the incidence of liability, by limiting the defence to showing that the accident was caused by the negli- gence of the pedestrian. It is a usual principle of English law that the plaintiff in such a case must prove that the defendant has been negligent, and probably those of us who have had experience of trying these cases would say that the plaintiﬁ succeeds in the majority of cases. There is, however, more than one principle in the law, and in the application of principles there is always a law of diminishing returns. The further some principles "are extended the less useful or expedient they are apt to be found. There is another principle in our law which says that a person who keeps a savage animal, such as a tiger or a lion, does so at his peril, and if he brings such an animal on the highway and if the animal escapes or gets out of control the owner is liable for the consequences, apart from any negligence on his part.

Ivor. 84, 1i.L. Debates, col. 554.

Lord BuclmiaHtei"e' speech.

[9 "This is no new principle, but a principle which has been in our law' for generations, and it does not seem to be a very alarming or revolutionary change to apply it to a potentially dangerous machine like a motor vehicle. At any rate, it does not seem unjust to say that where a motor car has injured a pedestrian the onus should at least be on the driver to establish some lawful defence, if he is to escape paying damages. What defences should be open to him may be another question, with which I will deal in a minute, but it canot well be disputed that a motor car which is being driven at a high speed is a potentially dangerous machine. I need hardly remind your Lordships that a railway train has ﬁxed rails, a fenced track and signals, while a motor car on the high road has none of these, and motors are often driven at the speed of an express train.

"Those of us who have tried such cases know well the rule of thumb, which is more or less accurate, that half the number of miles per hour is the number of yards per second, so that ﬁfty miles per hour is twenty-ﬁve yards per second. That is to say, while I count one, two, a motor travelling at ﬁfty miles per hour will have gone ﬁfty yards, and that does not give a pedestrian very much time to cross the road when a motor which is ﬁfty yards oil is coming along. The difficult question is not that of putting the onus on the motorist, but on deciding what defences shall be open to him, and it is there the Bill may be going rather too far. The only defence per- missible under it is for the defendant to satisfy the Court that the accident was caused solely by the negligence of the pedestrian.

=51 it It * it "This Bill, if it passes, will make a considerable difference in insurance policies. That is a subject on which I am not able to give your Lordships much assistance, but the information supplied to me is this. Informal in- quiries have been made as to the possible effect which the passing of this Bill would have upon the rates of premium charged for policies complying with "Part II of the Road Traffic Act, but it seems doubtful whether the companies will be able to give any very deﬁnite ﬁgure. That a substantial increase in these rates would be necessary can hardly be doubted. In the first place an entirely new class of accident would rank for compensation---- namely, where there has been no negligence on the part of the motorist, or no proved negligence. Secondly, the number of cases in which excessive or even unfounded claims would be pressed by unscrupulous litigants would undoubtedly be increased and the evil is one which already is a matter of serious concern to insurance companies."

3.38. Lord Buckmaster expressed himself thus in the Debates'----

"It seems to me that this Bill deals with a very real existing mischief. It happens that owing to action I took a short time ago in this House I have been the recipient of an enormous number of letters from those who have suffered accidents at the hands of motor cars. Some are terrible to relate, but the ones which moved me most have been tales of poor men who say they can get no remedy because they ﬁnd themselves immediately up against a wealthy insurance company and they have no money to go to lawyers to ﬁght them. Anyone who knows anything of the history or negligence actions in the Courts knows that is true and the man, unless he obtains leave to sue in forma pauperis, cannot get anybody except what are known as speculative lawyers, who are by no means the most desirable class in the community to encourage. Apart from that, this man has a formidable wealthy opponent and cannot get what a man who. is in a position to ﬁght can get. Even if he could he has, as has been_said, to be put to great expense in getting witnesses. Further, he may be in the most diﬂicult position that, owing to the blow that may have nearly cost him his life, he is not able to give clear and deﬁnite evidence as to what has occurred. I heard the noble Earl, l have no doubt inadvertantly, refer to the unfortu- nate motorist, but he suffers no such shock when he is running down a pedestrian.

* * :1: * '4' iv01_ 34, H.L. Debates, col. 563.

Lord speech.

Danosfort's 20 "We are dealing with the case of a motor car running a man down. I say that in that case the man run down is practically incapacitated from giving a clear account and that the motorist is not. If there is some rare occasion whe-re that "is not so it is a matter too small for the law to consider. l believe the right course is to provide that there should be an insurance against every accident caused to a pedestrian by a person driving a motor vehicle and that insurance should cover everything. The present insurance seems to me to be the most mischievous you could create because it insures a man against the consequences of his wrong-doing. So far from discourag- ing him from doing wrong it encourages him. Why should these reckless people pause ? If they injure anyone they do not suffer in person or in pocket and it is about time the law was changed.

"On a former occasion the noble Earl, Lord Howe, made some most valuable suggestions as to what might be done, but I do not think they are relevant on this Bill which merely affects the question of civil liability. Those who drive motor cars have received a very great concession at the hands of the public. They have obtained dominion of the road, and foot passengers, who were formerly equally entitled to their use, are now71othing but people permitted to use the roads on tolerance, and they have positively been permitted by Statute to drive these cars at any place they please on the country "roads subject to ineﬁectual restrictions about reckless and dange- rous driving. When they have that right it is only fair that they should have some further obligation cast on them. Of what the result of the exer- cise of the right has been the ﬁgures are only too evident. It is no use saying those ﬁgures refer to sentiment. They refer to innocent people killed and wounded on the King's highway in numbers that stagger us to believe. I say the Bill ought to pass, and that steps ought to be taken swiftly and drastically to secure that once more there shall be security for the people to use the roads of this country which are their rightful heritage."

3.39. Lord Danesfort, later in the Debates, quoted' clause 1 :--

Damages recoverable in case of bodily injury.

1. (1) Where bodily injury to a person is caused by or arises out of a use of a motor vehicle on a road or in a place to which the public have a right of access damages shall be recoverable from the owner of the motor vehicle in respect thereof without proof of negligence or intention "or other cause of action as though the injury had been caused by his wilful act, neglect or default, except where the injury was solely due to the negligence of the injured person :

Provided that-

(a) where the injury was contributed to but not solely due to the negligence of the injured person there shall be taken into account in computing the damages the degree in which the negligence of such person contributed to the accident; and

(b) where bodily injury is caused or arises as aforesaid in circumstances in which--

(i) damages are recoverable from the owner in respect of the said injury by virtue only of the foregoing provisions of this section;

and »

(ii) a legal liability is created in some person other than the owner to pay damages in respect of the said injury; and

(c) this sub--section shall not apply to bodily injury suffered by a person who at the time of the occurrence of the accident was driving or being carried in or upon a motor vehicle.

(2) Where bodily injury is caused as aforesaid, the fact that any ﬁnan- cial payment is made or oﬁered or any other assistance given or offered to 1V0l.88. H.l. Debates, 001 1035.

the person injured by the owner of the motor vehicle or any other person shall not of itself be regarded as implying "any admission of negligence in the driving or management of the motor vehicle."

Objection a.ntioi- 3.40. Lord Danesfort, during one of the readings, anticipated one objection rated. thus'-- , , s V "It may be said----it has been said, and probably will be said again--- that it is hard on the motorist to have to pay, as he undoubtedly would have to pay, a somewhat increased premium to insure him against liability under this Bill. I doubt if the premium would be very considerable, but I would ask your Lordships to consider this. The motorist has, under the exisf law, which has been altered in his favour, the right to go over the roa at any speed he likes, and that causes this devastation and suffering. I ask which would be the harder case---to ask the motorist under these conditions to pay a somewhat increased premium to cover his liability in respect of these immense concessions which have been made to him by the law, or to deny, as the law at present denies, to something like 3,000 pedestrians every year who are killed and something like 60,000 or 70,000 pedestrians who are injured, the right to obtain adequate compensation for themselves or their dependants, for death or injury."

Thirdmading' 3.41. During the third Reading, Lord Danesfort explained the principle by quoting the Select Committee" :--

"The Select Committee go on to say in paragraph 10----perl1aps Lordships will pardon my reading this paragraph, because it really summa- rises far better than I can do the principle of the' Bill : ..

"By reason of the precedents referred to above the Committee have regarded themselves as free to consider, entirely on its merits, the question as to whether, in the cases with which the Bill deals, good reason was shown for making a further departure from the general principles of the law of negligence. The Committee have come to the conclusion that some such departure is justiﬁed. They think, on the one hand, that a motor car upon the road, especially in View of the vast and constantly increasing volume of motor traffic, may be regarded to some extent as coming within the principle of liability deﬁned in Rylands versus Fletcher. From' the point of view of the pedestrians on the other hand, it seems to the Committee that the roads of this country have----at all events in certain places and at Certain St'-aSOIlS--b6en rendered, by the use of motor vehicles, places to which it is dangerous for pedestrians to resort; that, nevestheless, it is necessary for pede;

trians to resort to the roads ; and that where a pedestrian, without neglt-' gence on his part, is injured by a motorist whether negligent or not, he should be entitled to recover damages."

The last paragraph to which I need refer is paragraph 11 2 " It may be said against this that it is hardship on the motorist to be made to pay damages for ran accident which was not attributable to his fault. The Committee take the view that this is, perhaps, .a j ' leading way of regarding the question and would put it rather t the payment or compensation to innocent pedestrlans Who Sllﬁel' Injury is a duty, not so much of the individual motorist who does the damage, as of the motoring community as a whole, and that the increased liabi- lity of the motorist ought to be covered, as provided for in the Bill, by insurance against the increased thtrd~party risk."

3.42. It would be pertinent in this connection to refer to the Report of the Law Commission of India on "compensation for in'uries caused by automobiles in hit-and-run cases", where the position was state as under' 2--

Observations in 51st Report of the Law Commission of India.

we}, 36, BL. Debates, cols. 1046-1047.

'-'V 01. 93, H.L. Debates, col. 148 (Third Reading). '_ 3Law Commission of India, 51512 Report (Compensatipn £or.inj_uries caused by automobiles in l_rit--a.nd-run cases). page 2. Pam 6 (September. 1973)- §_'4 Arguments in support of no fault liability.

Arguments against no' fault liability.

, "6. A brief survey of the systems of compensation for accidents caused by automobiles shows that these fall under one or other of the following categories :--

(a) (i) Compensation by the person who, by his fault, causes the accident "(such person may be brieﬂy called the 'person responsible for the accident').

(ii) Such compensation by the person responsible for the accident, irres-

pective of fault.

(b) Compensation by the insurer of the person responsible for the accident.

(c) Compensation by the State or by an agency set up or recognised by the State, compensation bung payable irrespective of fault.

(d) Compensation by the insurer of the victim."

"I0. Category (b) is illustrated by the provisions of the Motor Vehicles Act which enable the injured person to recover compensation from the insurer of the person responsible for the accident. There are certain conditions and restrictions imposed in this behalf, which are, of course, matters of detail."

The Commission, however, noted the difliculty of establishing negligence pointed out in the case of Kesavan Nair Vs. State Insurance Oﬁicer.' 3.43. The case for the imposition of a rule of strict liability ﬁnds strong support in the rules applicable to certain analogous situations. Pointing out that strict liability was imposed at common law prior to Fletcher v. Rylands, one study? shows the application of a rule of strict liability in a number of instances, e.g., for harm done by trespassing animals; on a bona ﬁde purchaser of stolen goods to their true owner; on a bailee for the misdelivery of bailed property regardless of his good faith or negligence ; and on innkcepers and hotels at common law.

There are a few other examples of strict liability : The Supreme Court of Minnesota, for example," imposed liability without fault for damage to a dock inflicted by a ship moored there during a storm.

The rule of strict liability rests not only upon the ultimate idea of rectifying a wrong and putting the burden where it should belong as a matter of abstract justice, that is, upon the one of the two innocent parties whose acts instigated or made the harm possible, but it also rests on problems of proof'.

One of these common features is that the person harmed would encounter a diﬂicult problem of proof if some other standard of liability were applied'.

Problems of proof which might otherwise have been faced by shippers, bailors, or guests at hotels and inns certainly played a signiﬁcant role in shaping the strict liabilities of carriers, bailees and innkeepers. Problems of proof in suits against manufacturers for harm done by defective products became more severe as the composition and design of products and the techniques of manufacture became less and less matters of common experience; this was certainly a factor bringing about adoption of a strict liability standard.

3.44. The major points advanced by those who would like the system of liability based on "fault" to continue may be stated in outline as follows :--

(i) First, it is stated that the system of negligence is not' designed to compensate for all losses and should not be regarded as deficient merely because it fails to provide compensation for certain accidental losses. In other words, a distinction should be made between more deserving and less deserving victims. A standard of negligence (it is stated) most nearly approaches the popular concept of justice.

'Kesavan Nair V. State Insurance Oﬂicer, (1971) A.C.J. 219 (Ker.).

spwk, "Negligence & Liability without fault, in Tort Law" (1971) 46 Wash. L. Rev. 225, referred to in Kceton & Keeton, Tort-S (1977), page 092.

'Vincent V. Lake Erie Transport Col.,(l9l0) 109 Minn- 455. 124 N-W. 221; Kenton &. Keeton , Tor-ta (1977), page 592.

¢K5et,un an Keaton, Torts (1977), page, 592.

'See also part 8 - 9. WP"-

Introduction of liability without fault recommen-

ded.

Position in other countries.

Variety of schemes.

Limitations re-

commended in cases of no fault liabi-

life-

'.53 The essential soundness of this approach, as a general rule, cannot be doubted. But in the ﬁeld under consideration, there are certain special factors which seem to justify modiﬁcation of the general approach.

(ii) Secondly, it is stated that moral accountability, which is a funda- mental tenet of the common law system should not be undermined to meet the exigency of the situation. In reply to this, it could be stated that the ap_proach.te be adopted is not merely of moral accountability, but one of social justice, including the reason that he who creates a risk ought to attract liability to compensate though upto a certain pecuniary limit--for the attendant harm'.

(iii) Tliirdly, it is often stated that the principle of negligence deters careless conduct and its removal would cause an increase in careless driving and accidents. This, however, does not appear to be borne out by experience in other ﬁelds--such as workmen's compensation or railways---- where liability is either understood to be absolute or speciﬁcally laid down to be so.

(iv) Fourthly, it is stated that if social justice is the basic approach, then there ought to be rather a system social welfare applicable prefer- ably to all deserving persons and not merely to victims of automobile accidents. Somewhat based on the same appro;:cli is the contention often advanced that the problem of delay in courts and tribunals ought to be tackled comprehensively and not merely by concentrating on motor vehicles claims. ' This is an attractive argument, and, upto a point, it is even sound. But it is to be pointed out that the disproportionately high cost and undue delay which is met with in the ﬁeld uiidci consideration justiﬁes a selective approach.

3.45. Having regard to the considerations set out in this Chapter, it appears to be appropriate to provide for liability without fault in relation to death or bodily injury caused by accidents from motor vehicles. Such a liability would rest on the risk created by the use of a motor vehicle, and not on fault.

3.46. Before we make concrete recommendations as to the various points arising on the subject, we may note that considerable developments in this ﬁeld have taken place. It would be tedious to give details thereof in this Report. How- ever, we are appending to this Report" a brief summary of the position in selec- ted other countries.

3.47. These schemes present considerable variety. In particular. some of these schemes envisage the creation of a state administered fund from which damages are paid, thus bringing into existence a species of social insurance.

In India, it may not, at present be possible to go to that length. But it is still practicable to consider a reform of the law in certain speciﬁc directions. The broad objectives of reform should be to impose (i) liability without fault on the motorist, (ii) coupled with liability insurance.

Insurance against liability to third parties is already compulsory under the Motor Vehicles Act. The main impact of the reforms recommended in this Report would be to expand the ambit of liability and, consequentially, of course, to increase the ambit of payments that would have to be made by the insurer.' VIII. Limitations on liability without fault.

3.48. While, for the reasons given above, we contemplate "no fault" liabi- lity, it is. in our opinion. also necessary to provide forlimiting the quantum of the liability if fault is dispensed with (i.e. if the liability rests purely on the 'See further para 3' 62 (a), infra.

'Appendix 4.

'For the English law, see para 6- 5, infra.

Limitations in other countries.

I in] .= ' Position in Nordic countries.

Position in U.S.A. Maximum amount Table V, _ to be annexed.

Provision: in Rail-

ways Act.

basis of risk). This is desirable in order to prevent a steep rise in premium, a11d also to leave some scope for watching the working of the proposed reform. It may be noted that such a limitation forms part of the points suggested for reform by the Supreme Court' in one of its Judgments" on the subject.

3.49. In some other countries also, while the victim of the injury who is entitled to compensation under the various liability rules may enforce his claim directly against the insurance company, he can do so subject only to certain monetary limits.

3.50. For example, in many Nordic countries,3 the liability of the company to pay under a motor vehicle accident policy is limited to maximum amount, either as regards personal injury or as regards property or as regards both. The limits have been gradually increased in step with the inﬂation and with the general rise in the standard of living. By way of illustration, we may set out the limits in some of the Nordic countries which are understood to be as follows:

For each person For all damage to injured property in the same accident;

K"- A '*"'*"--'I F_"

National U.S. Dollars Nu-tional U.S. Dollars currency (Approx.) cuI'rcncy (App:-ox.) Finland . . (No limits) ((No limit) 250,000 59,500 Norway . 200,000 28,000 100,000 14,000 Sweden l000,000 193,500 1000,000 193,500 (Before 1st. January, 1970) In Sweden, there is no limit as to compensation for personal injury after 1970.

150,000 20,000 Denmark . . . . . 120,000 16,000 also imposed a pecuniary limit on the beneﬁts to be claimed under the scheme. There are separate limits in regard to (i) damages under the head of medical beneﬁt, and (ii) damages on account of loss of earnings. The ﬁgures vary from State to State, depending on the economic conditions in the State and other factors. It appears that Connecticut, Floroda, Georgia, Hawaii, Kansas, Kentucky, Massachussets, Navada, North Dakota and Utah are amongst the 'low beneﬁt' states. Most of them provide Personal Injury Protection (No fault), medical and wage loss coverage, totalling less than 15,000 dollars.

The limitations I maximum) that we have in mind will be apparent from our detailed recommendations,' to be indicated later.

3.52. As to the maximum amount that should be allowed to be recovered on the basis of "on fault" liability, we have considered the question if the Fourth Schedule to the Workmen's Compensation Act, 1923 could, with some modi- ﬁcations and ampliﬁcations, be adoped as a model. But we do not consider it appropriate to adopt it for the present purpose. The scheme as provided in that Schedule requires elaborate determinations with expert assistance, and, in any case, is based on the postulate that the victim is a wage-earner. These features would not always be present in regard to the claims with Wl'lICl1 we are concerned in this Report.

3.33. We consider a simple limit to be preferable. While the analogous provision in the Railways Act' (as to monetary limit) lays down Rs. 50,000, our intention is to provide Rs. l,00,000 per claimant for claims under the Motor Vehicles Act.' 'Bis/w.n Dem.' V. Sirbakah Single, ALR. 1979 S.C. 1862, 1866, 1867, para 21. 'Para 3' 29, supra.

°Gomard, "Compensation for Automobile Accidents" (1970) 18 AJ. C.L. 80, 98-99. 'See para 3' 62 and para 3 ~ 63, infra.

5Section 82A (2), Indian Railways, Act-, l980 (Appendix 1).

'For details, see para 3-63 infra.

3.imits Narrow view=.

Ciii'ribL1t0ry negli-

g.'Ii('('.

View of m nst Himl; Courts.

Position in England.

Modiﬁcation of contributory negli-

gence rule in some countries on con-

tinent-.

The theory here is that the money should be distributed among those who suffer, in the way most advantageous to them and that is better that each injured person should get a reasonable compensation than that some victims should, get full indemnity and others nothing. Limited amounts of compensation for injiiries due to motor trailic would be supportable on this basis.' 3.54. The precise limit that the legislature should ﬁx in this behalf must always remain a matter of controversy; opinions are bound to differ. The..loss of income of these suffering personal injuries or (in case of death) the conse- tiuential loss caused to those who canclaim compensation on death, ranges with- in veiy wi_de_ limits. The law can only strike a middle. Of course, even then, whatever hmit is laid down at a particular time might, in view of inﬂation, need periodical revision.

IX. Contributory and comparative negligence 3.55. So far, we have dealt with the scheme of the proposed amendment and its impact in the generality of cases. It is now necessary to advert to the posi- tion that we contemplate as regards one possible defence of a special character contributory negligence and comparative negligence. _The question whether, in India, contributory negligence is a total defence in the ﬁeld of general liability in tort need not be discussed in detail.

3.56. Most High Courts seem" to take the view that though India has no legi.:la.ion correspoiiding to the English Act on the subject,' yet our Courts are free to apply a rule of comparative negligence. On this approach, contributory negligence does not bar recovery, though it may reduce the amount to be re- covered by a person who has contributed to an accident.

3.57. In England, the defence of contributory negligence was abolished in 1945 for the entire ﬁeld of the law of torts. Contributory negligence can no longer defeat a claim in toto,,bi_1t can reduce the amount of damages recoverable by the plaintiff, in England. This reform of the law (subject to speciﬁc statutory exceptions) is applicable to the entire ﬁeld of tortious liability.

It is enough to quote the material statutory provision in England, which is as follows":---

"Where any person suﬁers damage as the result partly of his own fault and partly of any other person or persons, a claim in respect of that damage shall not be defeated by reason of the fault of the person suffering the damage but tl1'e*daina*g'es recoverable in respect thereof shall be reduced to such extent as the Court thinks just and equitable having regard to the claimant's share in the responsibility for the damage." ' 3.58. In some other countries also---e.g. in Sweden-traﬂic accident inusrance still relies on the "comparative negligence" rule of the .genera1_la_w of tort. The court has a discretionary pow if to reduce the award if the victim has negli- gently contributed to the accident, due regard being had to the degree of fault on either side. The rule is applied even to the detriment of the dependants of a person who is killed in a traffic accident to which the decedent's negligence has contributed." The general rules of tort law are modiﬁed only in one respect: slight negligence on the part of the victim is disregarded ("when there is only little to blame the victim"). In the rest of the cases, in such countries,_where the person suffering damage has contributed to his loss by his own negligence; the damages due to him under the law of torts are, as a rule, apportioned. He will receive only a fraction of what he would otherwise receive.

'Compare Strahl, "Tort Liability and Insurance" (1959), Vol. 3, Scandinavian Studies in Law,

199. 222.

"Rural Transport Service V. Betzuni Bibi, A.I.R. 1980 Cal. 165, 169 (reviews cases).

'See para 3- 57, infra.

asection 1 (1), Law Reform (Contributory Negligence) Act, 1945 (8 & 9 Geo. 6 c. 28).

sselmer' "Interaction between insurance and tort theories" (1970) 18 A.J.C.L. 145, I62.

°Hellner, "Tort liability and liability insurance" (1962) 6 Scandinavian Studies in Law» 131» "*9 Difﬁculties of proof even in a System of cum-

paratsive negligence.

Recommendation Contributory negli-

gence to bi-

disregarded.

.' Cases of suicide ' exclutlutl.

Main features of proposed Seh('m0 and their rationale.

'26 3.59. In our view, however, in the particular types of accidents with which we are concerned, the mere substitution of a rule of comparative negligence may not mitigate the difficulties experienced at present. It would be preferable to suggest a simpler rule which can be easily worked.

Even in a system based on comparative negligence, the assigning of a speci- ﬁc ercentaoe factor to the amount of ne li ence attributable to a articular P D _ _ 8 8 _ P party could be a matter of perplexity 1Il motor VChlClC cases.

3.60. We would, therefore, exclude the operation of the defence of contri- butory negligence or comparative negligence.' Our recommendation, of course, is conﬁned to the subject of harm caused by accidents resulting from the use of motor vehicles.

3.61. While on the subject of fault of the victim, it may be mentioned that one argument that is generally advanced by Insurance Companies,--and even by some Ju<tges,--a.g:iinst "no fault liability" is that if a person actually throws himself in front of a vehicle with the intention of committing suicide, and is ('('I1I§t"(1llCIl'i_.' killett or irijm-ml. then there can be no justification whatsoever, for the payment of any compensation to the person or his heirs. The short answer to this is that compensation is payable only if there is an accident of the nature speciﬁed in section 110(1) of the Motor Vehicles Act. An occurrence can be said to be "accidental" only when it is not due to design; for, if an act be intentional, it would clearly be no accident.

X. Saamniary and raiionale of points made as to liability without fault 3.62. Before we malts concrete recommendations for legislative amend- ment on the points discussed in this Chapter, we would like to summarise the rationale underlying the important features of "no fault" liability as envisaged in our scheme and also the rationale underlying the imposition of pecuniary limitations on liability in "no fault" cases--since these limitations form an integral part of our scheme.

(a) Subject to a pecuniary limit, the level of protection against :i1ca:;::rahlc economic loss is to be treated as risk of motoring.' The assumption is that a motorist who creates a risk of injury or death must pay for that injury or death without regard to fault. This would, however, be conﬁned to claims before Tribunals created under the Act.

fault" liability as envisaged by us would be conﬁned to claims be- fore the Tribunal. Claims before ordinary courts should be decided on fault basis only. This, however, would be the position only where a Claims Tribunal has not been constituted at all for the area concerned.

(b) Through the medium of insurance and by making the insurer liable, the cost of providing the compensation would, in substance, be dis- tributed among all motorists, without regard to fault in particular accidents. This will be applicable only toclaims before the Tribunal.

(c) In such cases, contributory negligence should neither be a defence, nor be a ground for apportionment according to "fault".

(d) The above scheme of liability on "no fault" basis will apply only to the Claims Tribunal.

(C) The "fau'.t" principle (and related rules of tort law) will continue 2:: the basis of a'?.crating the burden in other cases, i.e. in claims ﬁled before ordinary courts where no Tribunal has been created. Such cases, however, will be rare. Ordinary courts can award compensation irrespective of limits, if fault is proved.

'See para 3 63, infra.

"Cf. para 3 44'(ii), 8uIm1- New Chapter to be inserted.

Other alternatives considered for higher recovery on the basis of fault.

(f) But even in cases where the fault principle continues, compulsory insurance which the motorist (under the present law) must carry to protect against tort liability will (as at present) continue to afford some protection, provided fault is proved.

XI. Recommendations as to liability without fault and related matters 3.63. In the light of the preceding discussion, we recommend that the following new Chapter and section should be inserted in the Motor Vehicles Act, 1939 :--

CHAPTER 7A Liability without fault "92A. (1) In a claim for compensation in respect of death or bodily injury caused by an accident of the nature speciﬁed in sub-section (1) of section 110, preferred before a Claims Tribunal, the claimant shall not be rer_um'e(1 to plead and establish that the injury or damage suffered was due to the wrongful act, neglect or default of the person who caused the accident."

[Section 110(1), main paragraph reads:--

"( 1) A State Government may, by notiﬁcation in the Oﬁicial Gazette, constitute one or more Motor Accidents Claims Tribunals (hereinafter referred to as Claims Tribunals) for such area as may be speciﬁed in the notification for the purpose of adiudicating upon claims for compensation in respect of accidents involving the death of. or bodily injury to, persons arising out of the use of motor vehicles, or damages to any property of a third party so arising, or both."] "(2) A claim for compensation in respect of such death or bodily injury preferred before a Claims Tribunal shall not be defeated by reason merely of the wrongful act, neglect or default of the person suffering injury or damages nor shall the quantum of compensation recoverable in respect of such rIm'.'z or /7n(!il_\«' injury be reduced merely on the basis of the share of such person in the responsibility for such death or bodily injury.

(3) The quantum of compensation payable on such a claim shall not exceed the following limit, that is to say,--

"(a) in the case of bodily injury, rupees one Iakh for each person who claims compensation;

(b) in the case of death, rupees one lakh for each person for whose beneﬁt the claim is made."

3.64. We may mention in this context that in the course of our considera- tion of the question of "no fault" liability, we had occasion to consider a number of alternatives for dealing with the situation where the claimant is in a position to prove fault. A claimant may like to seek an amount in excess of the maximum limit of compensation which we have provided on "no fault" basis. One alter- native that we considered was to provide (while retaining the exclusive iurisdic-- tion of the Claims Tribunal) that the claimant at his option may. on the basis of fault, claim a higher amount of compensation before the Claims Tribunal. Another alternative that we considered was to allow the claimant an option in regard to the forum. that is to say, while proceedings before the Tribunal would be exclusively on no fault basis and would be subject to the prescribed maxi- mum, proceedings before the ordinary civil court would be on the basis of fault and would not be subject to any maximum.

'Para 3 ' 63, supra.

Cases before the Tribunal to be decided on no fault basis.

Clairns \ before.

orlllhnry c\o1irtS to be governed by fault.

Of course, it was implicit in this alternative that the exclusive character of the jurisdiction of the Claims Tribunal would be modiﬁed, inasmuch as, even it" a Tribunal is already created for an area, a claimant claiming a higher award on fault basis would have to be allowed to go before an ordinary civil court.

3.65. On a careful consideration, we have come to the conclusion that it is not necessary to adopt either of the two alternatives mentioned above and that the best course would be to make a clean sweep of the distinction between liability based on fault and liability based on no fault basis. All cases before the Tribunal should be tried only on one basis, namely, "no fault" subject to a speciﬁed maximum. There would be no option given to the claimant, nor would he have any temptation to claim, by alleging fault, a higher compensation (either on his own or on the advice of others).

To give an option to a claimant to go to a civil court for claiming damages higher than what he would get under the "no fault system" would be to jeopar- dize altogether the very existence and" functioning of the Claims Tribunals. The danger of the claimants being advised by lawyers to institute proceedings in a court for that purpose is real.

3.66. There still remains one question to be considered, namely, where the claimant must go before anordinary civil court,--a situation that can arise if no Claims Tribunal is created for a particular area,--should the principle of fault continue ? Such situations should, of course, be rare, Prima facie, the intention of the legislature is that Tribunals should be created in adequate number all over the country. We think that in these rare cases, the present law may well continue to operate. Accordingly, we are not making any speciﬁc provision for introducing the principle of "no fault" in claims that are tried by ordinary civil courts' in the absence of Claims Tribunals.

Scope of the Chapter.

Section 95 (1), proviso.

Persons exclu-

ded by virtue of section 95(1), proviso.

CHAPTER 4 BENEFICIARIES or COMPULSORY INSURANCE SECTION 95(1) 'Ill The question of substantive principles of liability having been disposed of, the next question to be considered concerns the persons who can claim the beneﬁt of the provisions of the Act relating to claims enforceable against the insurer. Under section 95(1), proviso, the beneﬁt of the remedy' conferred by the Act against the insurer IS limited to certain categories of persons'.

There are, however, certain minute limitations created by the relevant pro- visions. An examination thereof reveals that both the contents of the relevant provisions and the manner in which the limitations have been expressed have led to certain practical problems. The fundamental question to be considered is, whether it is in conformity with current notions of social justice to allow the section to be hedged in with many minute limitations, restricting the categories of persons who can avail themselves of the direct remedy conferred on third parties against the insurer.

Section 94 imposes an obligation to insure against third party risk. Section 95(1) provides that the policy must be issued by an authorised insurer or by a co-operative society allowed to transact such business, and must insure the person or classes of persons speciﬁed in the policy (subject to the prescribed monetary limits), against the speciﬁed liability.

4.2. Section 95(1), proviso, reads as under:--

"provided that a policy shall not be required'.-

ri) to cover liability in respect of the death, arising out of and in the course of his employment, of the employee of a person insured by the policy or in respect of bodily injury sustained by such an employee arising out of and in the course of his employment other than a liability arising under the Workmen's Compensation 'Act, 1923 in respect of the death of, or bodily injury t0, any 50313 employee:--

(a) engaged in driving the vehicle, or "(b) if it is a public service vehicle, engaged as a conductor of the vehicle or in examining tickets on the vehicle,.or

(c) if it is a goods vehicle, being carried In the vehicle; or .

(ii) exce t where the vehicle is a vehicle in which passengers are carried for lliire or reward or by reason of or in pursuance of contract _of employment, to cover liability in respect of the death of or bodily injury to persons being carried in or upon or entering or mountitlilg or alighting from the vehicle at the tune of the occurrencﬁ Of 9 event out of which a claim arises, or

(iii) to cover any contractual liability".

persons excluded from 4.3. It would be helpful to consider who are the some of the principal the scope of the beneﬁts. The following 593"' to be examples of persons so excluded:----

By virtue of plause (i) Of The PT9Vi5'1'; the S cover liability arising to an employee In t 6 00111' certain speciﬁed cases.

policy shall not be rﬂqulred e of employment, except in 1Pa.ra. 4~ 2, infra.

'Contrast the English LaW. MPH 5' 5v i"f'"' 29 80-M[B(_D)457M0fLJ&CA---1.' Anomally caused by present position as' owner of gnoils.

'By virtue of clause (ii) of the proviso, the following are excluded from the requirement to cover liability in relation to them:

(i) Passenger of a private car carried gratuitously' A gratuitous passenger sustaining injuries in an accident is not covered because (unless he is travelling in pursuance of a contract of employment), section 95(1), proviso (ii), would exclude hirnz.

However, according to' certain decisions,"-4, where the policy is so drawn as to cover gratuitous passengers, then the insurer would be liable even for bodily injury or death caused to a gratuitous passenger.'

(ii) Ticketless traveller The question whether a ticketless traveller is entitled to the beneﬁt of the provisions of the Act was raised in one case before the Supreme Court,° but having regard to the facts and circumstances of the case, it was not necessary to investigate it.

(iii) Hirer of a truck The hirer of :1 truck is not covered, because section 95(1), proviso (ii), excludes him? While reaching this conclusion, the Calcutta High Court did describe the position as 'unfortunate'.

(iv) Owner of goods, travelling with the goods Two high Courts have taken the view that an owner travelling along with his g'ouds in the goods vehicle cannot recover the insurer compensation for death or personal injury?'-9 This view has been taken on a construction of section 95(1), proviso (ii).

In contrast, according to a Karnataka case," the owner travelling with his goods really pays for his own carriage also, and is covered.

4.4. We think that the present provision needs improvement. As to the owner of goods,' it may be noted that the employee of the owner of the goods is not excluded, and would be entitled to sue the insurance company." If so, it is illogical that the owner of the goods himself cannot sue."

'Of. A'. Gopalalcrishnan. Vs. Sanlcaraman, A.I.R.1968 Med. 436.

2(a) Push.pabcu' Vs. Ra-njit 0 ct P 190., A.I.R. 1977 S. C. 1735, 1746, para 20.

(b) Him Dem' Vs. Bhaba Kant, A.I.R. 1977 Gauhati 31. 38, paragraphs 19, 20 (F. B.).

(:2) Jam Shree Safii Digvijay Singh Ji Vs. Dand Tyabii, A.1.R. 1978 G11}. 153, 154. P'"'9~g"'Ph5 26, 27.

(d) Subhash Clumrier Vs. State of Haryana, A.I.R. Punjab & Haryana. 54:. 56, para 9 (reviews cases).

"]\'mn Indian I nsrrrame Co. Ltd., Vs. M ohinder Lal, (1978) Accident. Claims Journal 10. 'Assam Corporation. Vs. Bivu Rani, A.I.R. 1975 Gauhati 3, referred to also in Him Deri Vs. Rlznlw Kant. A.I.R. 1977 Gauhati 31, 38, paragraphs 19, 20 (F.B.). "Premier .-lssurancc C'o., Vs. Parameshuxlrbai, A.I.R. 1976 Patna. 137. "Mruihya. Pmdeslz State Road Transport Corp. Vs. Zenibha,-i, A.I.R. 1977 S. C. 2206. 'Im1'2'an Mutual General Insurance 00., Vs. Manzoor Aslum, A.I.R. 1977 Cal. 34, 37, para. 17. 3South Indian Insurance C'am.pany Vs. Subramaniam, A.I.R., 1972 Mall 49. 52. paragraphs

5 and 6.

9()r1'e,m'rzl Fire and General Insurance 00., Vs. Gurdev Kam, A.I.R- 1957 P11nl9'b- 486 490 (F. 3.).

"'ChamirLppa VS. L(l.l','h7(17t, A.I.R. 1979 Karnataka 93, 103 (May). See also T. M. Renukappa Vs. Falimizla, A.I.R. 1980 Karn. 25 (Feb.).

"Para +3 (1)). supra.

'2 Vangzu1.rrl Insm'rmr'e C'o., Vs. Chinnrmmal, A.I.R.. 1970 Mail 236- 1-"Pa.ra 4-2, supra.

Need for change.

Social justice and judicial observa.

tions siiggosting reform.

Present position not justiﬁed.

Recommendation as to section 95(1) proviso, 3] Whatever be the true construction of the present languages of the section it seems to be anomalous that a person who legitimately travels with the goods to look after his own goods cannot avail himself of the beneﬁcial provision of the Act. The fact that he has not made payment for carrying him as a passenger- even if that be the factual situation in a particular case--should not in our opinion, be regarded as material in legislation primarily enacted to implement a principle of social justice. From the aspect of social justice, the position should be the same whether the claimant is the owner of the goods or is an employee of the owner of the goods.

4.5. It is now time to consider whether the present position needs change. In general, the policy of the law as embodied in Chapter 8 of the Motor Vehicles Act is to provide for compensation not on the basis of quid pro quo or contract, but as a measure of social justice.' The very fact that liability to a third party is required to be insured and the third party (within the limits laid down in the Act) is afforded a remedy against the insurer, shows that the true principle is social justice.

4.6. It may be pointed out that in one of the Punjab cases," the following observatioir; have been made while rejecting the claim for compensation made by the owner of the goods, who was travelling with the goods:--

"No doubt, this is a hard case, but it is a case of a statutory omis- sion'--" for in this part of country small businessmen in protection of their goods, and to do their business personally, very often themselves travel on a goods carrier and that is probably the reason why R. 4.60(1) says that 'no person shall be carried in a goods carrier other than a bona ﬁde employee of the owner or the hirer of the vehicle, and except in accordance with this rule.

"This sub-rule recognises that the hirer of the vehicle may travel as a passenger on a good carrier, but the proviso to sub-rule (2) of this rule limits the number of such persons to a maximum of six. The learned counsel for the respondents has pointed out that in this "case number of persons travelling on the goods carrier in question was more than that number, but that does not bring in the liability of the insurer, and it may be a factor which may operate against the owner or the driver of the vehicle for disobedience of this sub-rule. The omission in the statute, however, can- not be supplied by a strained or incorrect interpretation of the statutory provision by a court. It can only be supplied by a legislative amendment."

4.7. It appears to us that the same reasoning applies to the other restrictions contained in the section 95(1), proviso (ii). Even as regards gratuitous passen- gers,5 the present provision excluding them from the beneﬁt of direct remedy does not appear to be justiﬁed. In this context, we may note that in England such an exclusion \vas previously contained in section 203, Road Traﬂic Act, 1960, but was promptly removed in response to a suggestion for law reform made by the Court of Appeal.' 4.8. Our recommendation, then, is to delete clause (ii) ofjthe proviso to section 95(1). Clause (i), which excludes employees, may be retained. Employees would be governed by the Workmen's Compensation'_Act, and the present restriction should, therefore, cause no hardship. Clause (in) may also continue.

'See para 4-7, infra.

'Oriental Fire do General Inmrance 00., Ltd., Vs. Gurdev Kaur, A.I.R. 1967 Punjab 486, (90 para. 8 (F. B.).

'Emphasis added.

'See also para. 4-3. supra.

5Para 4-3(ii), supra.

'Carmel! Vs. Motor Imurer'a Bureau, (1969) 3 W.L.R. 231, 237.

CHAPTER 5 LIMITS ON LIABILITY OF THE INSURER SECTION 95(2) S°°l'°' 5.1 A major question to which attention may now be directed relates to the various monetary limits on the liability of the insurer, as laid down in section 95(2), quoted below:----

'(2) Subject to the proviso to sub-section (1), a policy of insurance shall cover any liability incurred in respect of any one accident up to the follow ing limits, namely :--

(a) Where the vehicle is a goods vehicle, a limit of ﬁfty thousand rupees in all, including the liabilities, if any, arising under the Workmen's Compensation Act, 1923, in respect of the death of, or bodily in-

jury to, employees (other than the driver), not exceeding six in number. being carried in the vehicle;

(b) Where the vehicle is a vehicle in which passengers are carried for hire or reward or by reason of or in pursuance of a contract of employment :--

"(i) in respect of persons other than passengers carried for hire or reward, a limit of ﬁfty thousand rupees in all;

(ii) in respect of passengers :--

(I) a limit of ﬁfty thousand rupees, in all where the vehicle is registered to carry not more than thirty passengers;

(2) a limit of seventy-ﬁve thousand rupees in all where the vehicle is registered to carry more than thirty but not more than sixty passengers;

(3) a limit of one lakh rupees in all where the vehicle is registered to carry more than sixty passengers; and (4) subject to the limits aforesaid, ten thousand rupees for each individual passenger where the vehicle is a motor cab and ﬁve thousand rupees for each individual passengers in any other case;

"(c) save as provided in clause (d), where the vehicle is a vehicle of any other class, the amount of liability incurred;

(d) irrespective of the class of the vehicle, a limit of rupees two thou-

sand in all in respect of damage to any property of a third party."

Need to delete the 5.2. These limits were inserted at a time when the concept of social justice "m'*=S- had not developed fully. They apply only as against the insurer. It is a matter for serious consideration whether today there should be any such monetary limits on the liability of the insurer only. These monetary limits, ﬁxed somewhat arbi- trarily on the basis of the nature of the vehicle and its size, and applicable only against the insurer, appear somewhat anachronistic. There appears to be no justification for imposing a pecuniary limit on the liability of the insurer, when there is no such limit on the liability of the person insured.

B moval o ' ' Il.:.der scwctiofn 5.3. It may be mentioned that some three years back, the _Supreme (_?t_)urt sjlsgésied by of India also made a suggestion for removal of the present limit of liability.-

5"1"""" c°'"'- After referring to the element of discrimination found in section 95, the Sup- reme Court observed:--

Wiiranyusirjtrs. B. L. Gupta, A.I.R. 1977 s. C. 1353. 1863. para 10- .32 33 "Such an invidious distinction is absolutely shocking to any judicial or social conscience and yet section 95(2) (d) of the Motor Vehicles Act seems to suggest such a distinction. We hope and trust that our law-makers will give serious attention to this aspect of the matter and remove this serious lacuna in section 95(2) ((1) of the Motor Vehicles Act. We would also like to suggest that instead of limiting the liability of the Insurance Companies to a speciﬁed sum of money as representing the value of human life, the amount should be left to be determined by a Court in the special circumstances of each case. We further hope our suggestions will be duly implemented and the observations of the highest court of the country do not become a mere pious wish.

Renlﬁwtl 01" Limit 5.4 Removal of the limit on the liability had earlier been suggested in the s .t.lb H';_h » v - - .

C':)§§::.'i§ng--fml Aft. tudgments of certain High Courts, for example, Bombay.'

5.5. In this context, it may be noted that the English Act has a very wide provision,' which reads:--

"145. Requirements in respect of policies of Insurance.

(1) ln order to comply with the requirements of this Part of this Act, a policy of insurance must satisfy the following conditions.

(2) The policy must be issued by an authorised insurer, that is to say, a person or body of persons carrying on motor vehicle insurance business in Great Britain.

(3) Subject to sub-section (4) below, the policy:--

(a) must insure such person, persons or classes of persons as may be speciﬁed in the policy in respect of any liability which may be incurred by him or them in respect of the death of or bodily in-

jury to any person caused by, or arising out of the use of .the vehicle on a road; and

(b) must also insure him or them in respect of any liability which may be incurred by him or them under the provisions of "this part of this Act relating to payment for emergency treatment.

(4) The policy shall not, by virtue of sub-section (3)(a) above, be required to cover.

(a) liability in respect of the death, arising out of and in the course of his employment, of a person in the employment of a person insured by the policy or of bodily injury sustained by such a per- son insured by the policy or of bodily injury sustained by such a person arising out of and in the course of his employment; or

(b) any contractual liability."

Section 95 (2) 5.6. (a) For reasons already stated,2 we think that there is ample justiﬁca- Recommendation bo tion for removing the limit at present laid down in section 95(2), and, accord- delete limit. in 1 . d - d 1 -

gy, we iecommen its eetion.

(b) This is, of course, a matter different from the one to which we have adverted while recommending' the introduction of "no fault" liability.

In the context of no fault liability, we have recommended the imposi- tion of a monetary limit. The limit so recommended will not be conﬁned to the insurer. It will apply to the owner, driver or other person liable also. The justiﬁcation for such a limit has been discussed at length' in the relevant Chapter and we need not repeat the reasoning.

'Marine and General Insurance Co. Vs. Ballcriahna Ramchartdra Navan, A.I.R. 1977 Born. 53, 59 60, para. 33, also referring to the Kerala judgment in Keaavan Nair Vs. State, (1971) Accident Claims Journal 2l9;l971) Kerala Law Times 380.

'Paragraphs 5-2 and 5-3, supra.

'Paragraphs 3'52 and 3'53, supra.

'Paragraphs 352 and 3-53, mqzra.

Section 95(2)---

Albernative re-

commendation to insert. uniform limit of Rs. two lskhs.

Revised section 95(2).

5.7. However, if our recommendation' to delete the limit in section 95(2) is not accepted, and the principle of having some pecuniary limit in section 95 (2) is retained, we would recommend the substitution in that sub-section of a uniform limit of Rs. two lakhs per claimant, instead of the present smaller limits. The present limits, besides being inadequate, are not uniform.

Having regard to considerations of social justice, we think that if the limits cannot be abolished, then they should be revised as above. This recommendation will apply to "fault" liability cases, where the claims are ﬁled before the ordinary courts. For "no fault cases", i.e. for claims ﬁled before the Tribunal on the basis of no fault, the limits would be ﬁxed according to our recommendation, made separately? in that regard.

5.8. If this alternative scheme (increase of the limit without abolition) is adopted, section 95(2) should be revised as under:--

"(2) Subject to the proviso to sub-section (1), a policy of insurance shall cover any liability incurred in respect of any one accident up to the following limits, namely:---

(a) in the case of bodily injury, rupees two lakhs for each person who claims compensation;

(b) in the case of death, rupees two lakhs for each person for whose beneﬁt the claim is made:

Provided that nothing in this sub-section shall affect any provision of this Act laying down limits as to the quantum of cornpcizmiicin payable in claims before the Claims Tribunal."

'Para. 5 ' 6(a), supra.

"Para, 3 ' 52, supra.

.\'uppl_y of parti-

culars by register-

ing aiithorit-y for police t.o Tribunal for injured person.

Section 109- Supply of copies information.

Duty to give infor-

mation.

CHAPTER 6 DUTY T0 FURNISH PARTICULARS OF INSURANCE AND ACCIDENT:

SECTION 109 AND SECTIONS 109A AND 109B (NEW)

6.1. Much delay in the disposal of claim cases is caused also on account of the fact that the person injured----and even the Claims Tribunal--face consi- derable dilliculty in tracing the particulars of the insurance company with which the vehicle involved in the accident has been insured. It should be remembered that the proceedings before the Tribunal cannot affect the insurance company unless the insurance company is made a party to the proceedings, and this can be done only when the particulars of the policy are made available. A suitable provision making it obligatory on the Registering or the Police Authorities to supply these particulars to the Tribunal or to the person injured should there- fore be made.

6.2. For ﬁling a claim under the Act, certain particulars are required, and section 109, to some extent, addresses itself to that aspect. It is, however, found in practice that the required particulars are not easily available to a claimant. To remedy this hardship, certain obligations should be imposed on the police to transmit the information required for ﬁling the claim.

6.3. The Committee appointed some time ago by the Government of India (in the Ministry of Law) to examine the question of legal aid and advice avail- able to the weaker sections of the community' had occasion to discuss why remedies are not availed of in the case o_f a large number of victims of accidents arising from the use of motor vehicles. The Committee suggested that people should be made aware of the right to claim compensation and to approach the Claims Tribunal for the purpose.

The Committee has observed that "one other radical and yet simple stratagem. . .Can be adopted for the purpose of removing the handicap arising from legal unawareness". After referring to the procedure being followed in the State of Jammu and Kashmir, the Committee recommended that a duty should be cast on the Police Oﬂicer and the Doctor to submit details of the accident to the Claims Tribunal. We quote below the relevant passage from the Report of the Committee: , , _,

- J' 1 LC' "7.04. Whenever there is an accident arising out of the use of a motor vehicle, it would ordinarily almost invariably be reported to the police and where any person is injured, he would ordinarily be taken to a hospital except where the injury is of a minor character. It may, therefore, be provided that whenever an accident is reported at a police station, the police should be required, legislatively or by administrative instructions, to note down in a printed proforma supplied to the police station by the State Government or the State Board, various particulars in regard to the accident, such as the name and address of the injured person and where the injury has resulted in death, the name and address of the deceased as also the names and addresses of his dependents, the number of the motor vehicle involved in the accident, the name of the driver, if available, the place and time of the accident and the details of the manner in which the accident took place. The police should immediately take steps to find out from the records of the registering authority the name and address of the owner of the motor vehicle and the name of the insurance company with which the motor vehicle is insured and incorporate these particulars in the printed proforma.

'Report on National Judicature, Equal Justice--Socia.I J usﬁice (August 1977), Challtcl' 7: P3395 44, 45, paragraph 7'04.

Recommends ti on to insert new sections imposing obligation on the lice and the ospital authorities to communicate certain information as to accidents.

Position in Tamil Nadu.

Rule in Tamil Nadu.

Recommendation to insert sections 109A and 109B.

"The police should then forward the printed proforma to the Claims Tribunal having jurisdiction over the area where the accident took place Where an injured 'person or a deceased is brought to a Primary Health .Centre or a Hospital, private, municipal or Government owned, the olﬁcer lnchafge 1111151 also ﬁll in a similar printed proforma after gathering parti- culars from the injured person or the relatives of the deceased accompany- ing_the body and forward it to the Claims Tribunal. The Registrar of the Claims Tribunal should then get in touch with the police station having Jurisdiction over the place of the accident and require the police to obtain and furnish the name and address of the motor vehicle owner and the name of the insurance company. We should suggest that the police and the hospital authorities. should be laid under an obligation not only to gather the reqiusitejparticulars and ﬁll in the printed proforma and forward it to the Claims Tribunal but also inform the injured person or the relatives of the deceased that they are entitled to ﬁle a compensation claim before a particular Claims Tribunal and also hand over to them written intimation to that effect, "The Claims Tribunal, on receipt of the printed proforma, should forward it to the legal services committee attached to the Claims Tribunal and where an injured person or the dependants of the deceased come to the Claims Tribunal directly for claiming compensation, they must also be referred to the legal services committee."

6.4. We find the suggestion made on the subject by the Committee' on Legal Aid and Advice substantially sound, and recommend that it should be iinmplemented by inserting suitable provisionsz at an appropriate place in the Chapter.

6.5. We may mention that in Tamil Nadu, the Legal Aid Board has launched a programme of assistance to victims of motor vehicle accidents who are not able to aflord a lawyer} The Tamil Nadu Government have issued from time to time administrative orders as well as rules under the rule-making power. There had been frequent complaints of exploitation of these unfortunate people. From the beginning, it was felt that this was an area where the Board could help.

6.6 In August, 1976 the State of Tamil Nadu introduced a rule' which requires the investigating police oﬁicer to obtain an application for compensation signed by the victim (or by the legal representatives of the deceased victim) and to send it to the Claims Tribunal, without waiting for the result of the investiga- tion into the accident.

We do not, however, consider it necessary to_ go .to_that length. In our opinion, it is enough if a duty to transmit information is imposed, as above.

6.7. In the light of the above discussion, we recommend that two new sectious--sections 109A and 109B--should be inserted on the following lines:--

"109B.(1) Where an accident arising out of the use of a motor vehicle and involving the death of, or bodily, injury 30. an)' Pet'-5'0"

occurred and has been reported to the officer mcharge _of a police station under section 109, such ojfﬁcer shall for'thwr'th forward the material particu- lars of the accident, in such form as may; P79-Ycfilied. 10 the Claim-9 "Tribunal constituted under section 110 and ving jurisdiction over the area.

'Para. 6-3, supra.

'Para. 6-7, infra.

'P. B. Patwari, "Saga of Unique etc. Justice (3 April. 1930) M-L~J- 39-40, 41- ' ' , V h'l A 'd tCl ' T 'banal Rules, Rule 3A (August, 1976). P-13- P&t"Wf;1.l:lln:1)]"§:.gd«9l1l.71'f'I¥Jt':lqU:8l:O:3 J'\Ts|1:i?.-«Io: (3al\n11:'il,n1980) M.L.J. 39, 41.

Obligation of the linspital amino-

rityics to (:0mmunic;1te ccrtuin informa-

tinn as tho accidents.

:57 (2) The Claims Tribunal to whom the material particulars of an accident have been forwarded under sub-section (1) may order the oﬂicer incharge of the police station to furnish such further particulars relating to the accident as the Tribunal -may consider necessary and such oﬁicer carry out the order forthwith.

(3) The officer incharge of the police station shall also forward a copy of the particulars of the accident, forwarded under sub-sections (I) and (2), to the injured person, and if a death has been caused by the accident, to the legal representatives of the deceased person, and shall inform them of their right to ﬁle before the Claims Tribunal an application for compensation in respect of the death of bodily injury, and shall obtain a written acknowledgement of such information having been communicated.

"I09B. (I) Where an accident of the nature speciﬁed in section 109/! has occurred and any person injured or dead as va« result of the accident has been brought to a hospital, the person "incharge of the hospital' shall forward the material particulars of the accident, in such form as may be prescribed, to the Claims Tribunal having jurisdiction over the area.

(2) The Claims Tribunal may order the person incharge of the hospital to furnish such further particulars relating to the accident as the Tribunal may consider necessary and such person shall carry out the order forthwith".

'The expression "person incharge of the hospital could be suitably deﬁned, if necessary.

Scope.

;i.!f"

App()llillll('l'1i of members of the Tribunals.

séction 110(1), pi-0v-so-- Clainis for damage to pro-

party.

r Difliciilt-ins created by section I l0(1 ), proviso.

CHAPTER 7 THE CLAIMS TRIBUNAL: SECTION 110

7.1. We propose to deal in this Chapter with certain procedural matters, conﬁning ourselves to those provisions that appear to need either a change, or at least some discussion of matters that require consideration.

7.2. Section 110(1) empowers the State Government to constitute Claims Tribunals for adjudicating the speciﬁed questions. The Tribunals are to be constituted by a notiﬁcation, for such area as may be speciﬁed in the notiﬁca- tion '1'liei"e is a proviso to the sub-section, to which we shall advert later.' Sub--sect1ons (2) and (3) deal with the composition and qualification of the Tribunal! and sub--section (4) with the distribution of business amongst the Tribunals?

The Law Commission of India, in its Report on Delay and Arrears in Trial Courts, made certain recommendations as to the authorities by which the appointment of members of the Tribunals should be made, including arrange- ments for the distribution of business. We shall revert to the topic later'.

7.3 We now come to the proviso to section 110(1), (as amended in 1909 ). Section 110(1), main paragraph, empowers the Tribunal to adjudicate not only claims for compensation for death or bodily injury, but also claims for damage to any property of a third party so arising or both. The proviso to this sub-section, however, enacts that "where such claim includes a claim for compensation in respect of damage to property exceeding Rs. 2,000, the claimant may, at his option, refer the claim to a civil court for adjudication and where a reference is so made, the Claims Tribunal shall have no jurisdiction to entertain any question relating to such claims".

7.4. The proviso to section 110(1), quoted above, creates ditliculties' where the claim exceeds Rs. 2,000. The claimant can, in such cases, "refer the claim to the civil court for adjudication", under the proviso as it now stands.

The choice of the forum thus lies with the claimant. Such a procedure creates practical difficulties and complications, in this particular case. The practical difficulties and complications arise from the fact that if the claimant decides to "refer the claim to a civil court for adjudica- tion", then two parallel proceedings in respect of the same accident would be going on at two different places. Several common questions of fact or law may arise in such proceedings and these questions may be decided differently in the parallel proceedings. This is not a satisfactory situation. It should not be left to a claimant to decide the nature of the Tribunal in which he will proceed if such ct course is likely to create scope for conﬂicting decisions. It is true that certain laws,----e.g. the Act providing for workmen's compensation----leave it open to the worl<.man to pursue his claim either in the ordinary'court or before the commissioner. But that Act does not contemplate the tiling. of parallel proceedings in different Tribunals that may possibly lead to conﬂicting decisions. Only one proceeding can be ﬁled. In contract, under the Motor Vehicles Act, if the claimant chooses to approach the civil court, the claim for personal injury would be under adjudication in a Claims Tribunal, while. the claim for damage to property (exceeding Rs. 2,000) would go on in lh6.ClVll court. The possibility of conﬂicting adjudications is obvious; such a conﬂict (between the ordinary court and the Claims Tribunal) is bound to create confusion.

'Para 7'3, 1'12]/'tz.

20f. Law Commission of India. 77th Report (Delay and Arrears in Trial Courts), paragraphs 10-3 and 104.

3S0-e also para 1-S, supra.

'Para 7'10, infra.

'Para T3, supra.

Pra ctical of proviso.

impact Need for section 110, proviso debata-

ble--Deletiion recommended.

Recommendation.

Section 110(2), Section 110(3).

Section 110(4).

'Power to transfer suit appeals and other proceed-

ings.

7.5. This demonstrates the need for considering at greater length the question whether the present provision restrictive of the competence of Claims Tribunals is satisfactory. We must point out that in this particular case, the restriction on the competence of Tribunals is not of mere academic interest. In regard to pleadings, court fees and limitation, there is an important diﬂerence between an ordinary civil court and the Claims Tribunal constituted under the Motor Vehicles Act. Proceedings under the Motor Vehicles Act do not, for example, require elaborate pleadings. There is no ad valorem court fees under the Act, unlike in civil suits. The period of limitation for a claim under the Motor Vehicles Act is six months. In contrast, in the civil court, the period of limitation is much longer'.

7.6. Prima facie, therefore, there is a case for deleting the proviso to section 110 in the light of the above considerations. We have not been able to think of any counter-balancing considerations that would justify its retention. If the intention is that claims for a high amount, i.e. exceeding a particular ﬁgure, should be tried only by ordinary courts, then the same reasoning should apply to claims for personal injuries which exceed that particular ﬁgure. But there is no such pecuniary limit on the competence of the Tribunal in regard to claims for compensation for personal injuries.

Nor is the proviso needed to protect the interests of the Insurance Company. There is, as the law now stands, no diﬁerence in the statutory liability of the insurance company, whether the proceedings are held under the Motor Vehicles Act or under the ordinary law.

7.7 In view of what is stated above. we recommend that the proviso to section 110(1) should be deleted.

7.8. Section 110(2) needs no comment.

7.9. Section 110(3) prescribes the qualiﬁcations of a member who is appointed to preside over the Accident Claims Tribunal, and requires that he should be a person who:--

"(a) is, or has been, a judge of a High Court, or

(b) is, or has been, a district judge, or

(c) is qualiﬁed for appointment as a judge of the High Court".

The sub--section needs no change.

7.10. Section 110(4) provides that where two or more Claims Tribunals are constituted for any area, the State Government may, by general or special order, regulate the distribution of business among them.

Distribution of business should be vested in the High Court'.

Accordingly, in this sub-section, the High Court should be substituted in place of the "State Government".

appropriately 7.11. In regard to section 110, it is also appropriate to mention the con- troversy that has arisen on the question whether the provisions of section 24 of the Code of Civil Procedure (transfer of suits and proceedings) apply so as to empower the High Court to transfer cases from one Claims Tribunal to another.

One view is that section 24 does not apply in regard to proceedings before the Tribunal? This is based on the reasoning that the "Claims Tribunal" consti- tuted under section 110 is a mere "Tribunal", and not a court.

'Articles 81, 82 and 113, Limitation Act, 1963.

"Para '7-2, supra.

'Laxnu'narain M in-a Vs. Kailaah Narain Gtqzta, A.I.B. 1974 Raj. 155.

I 40 A contrary view as to the status of the Tribuna1'--" has been taken in some other cases, though this speciﬁc point was not in issue.

R d 4' - - - . - .

toecogxlrsrénzxta aszczlzion 7.12. In our opmton, It would be proper to vest a power m the High 110(5). Court to transfer cases. We recommend that new sub--sections should be inserted in section 110 to achieve the above object, as follows:--

[C-P-S- 23. C-P-0-1 "110(5) On the application of a party, and after notice to the parties, and after hearing such of them as desire to be heard, or of its own motion, the High Court may, at any stage, if satisﬁed that an order under this section is expedient for the ends of justice, direct that any proceeding be transferred from a Claims Tribunal in the State to another Claims Tribunal in the State.

"I10(6). Every application under this section shall be made by a motion which shall be supported by an affidavit.

"110(7). The Tribunal to which such proceeding is transferred shall, subject to any special directions in the order of transfer, either re-try it or proceed from the stage at which it was transferred to it.

"l10(8). In dismissing any application under this section, the High Court ,ma\y, if it is of opinion that the application was frivolous or vexa- tious, order the applicant to pay, by way of compensation to any person who has opposed the application, such sum, not exceeding one thousand rupees, as it considers appropriate in the circumstances of the case."

'Krishan Gopal Vs. Dallotray, A.I.R. 1972 M. P. 125. 'Sharda,ben Vs. M. I . Pandya, A.I.R. 1971 Guj. 151.

Section ll0A( l ).

Section ll0A(2).

Section ll0A(3)-----

Limitation.

No change.

Another question to be considered later.

CHAPTER 8 APPLICATION FOR COMPENSATION : SECTION 110A.

8.1. An application for compensation under the Act is governed by section 110A. Sub-section ( 1) of the section deals with the persons by whom the appli- cation can be ﬁled.

8.2. The forum for ﬁling the application (claim) is thus dealt with in section 1l0A(2):------

"(2) Every application under sub-section (1) shall be made to the Claims Tribunal having jurisdiction over the area in which the accident occurred, and shall be in such form and shall contain such particulars as may be prescribed." I Q In this sub-section, the words "in such form" should be replaced by the words "according to such form", in order to eliminate objections based on mere technicalities.

8.3. Limitation for the application (claim) is thus provided in sub-section' (3) of section 1l0A:--

"( 3) No application for compensation under this section shall be entertained unless it is "made within six months' of the occurrence of the accident:

Provided that the Claims Tribunal may entertain the application after _ the expiry of the said period of six months if it is satisﬁed that the appli-' cant was prevented by sufficient cause from making the application in time."

8.4. This sub-section needs no change. It originally prescribed a period of sixty days in that behalf. This created some hardship, and the period was later increased.

8.5. We propose to consider separately another question which (though also relatable to section 110A), has a wider importance? namely, the question' of limitation in regard to cases where the claim arises before the constitution of the Claims Tribunal for a particular area.

'See amendment by Act 56 of 1969.

"See Chapter 16, infra.

Etfect. of death---

Death of the Wrong-

doer.

Survival of the < ause of action-----

Death of tort feasor, Death of the claimant during pend'ei"icy of the claim.

Section ll0A(l)

(b)--"Lega.l repre-

sentative".

Meaning of "Legal representative".

CHAPTER 9 EFFECT or DEATH, AND THE MEANING or "LEGAL REPRESENTA- . TIVE: SECTION 110A(1)(b) 9.1. We propose to consider in this Chapter the position regarding the effect of death of the party to the proceedings in claims before the Tribunal. Broadly speaking, in a suit in a civil court, two questions--one substantive and the other procedural --come up for consideration when a party dies--(l) Does the cause of action survive after the death? (2) Assuming that the cause of action so survives, is any particular formal step to be adopted to bring the legal representative of the deceased party on the record?

9.2. The substantive question is dealt with in section 306 of the Indian Succession Act;' a cause of action for personal injury not causing death does not siirvive in favour of, or against, the wrong-doer's legal representatives under that section. In regard to certain cases, the Legal Representatives Suits Act, 1855 is also relevant.

Therefore, w/zen a tort-fcasor dies, proceedings for damages for bodily injury caused by him do not survive under the Succession Act and the question of substituting his legal representative? does not, in civil suits, arise.

But, in regard to proceeding under the Motor Vehicles Act, the Motor Vehicles Act expressly over--rides section 306 of the Succession Act,3 and provides that the death of a person in whose favour a certiﬁcate of insurance had been issued shall not be a bar to survival of any cause of action (arising out of the event which has given rise to a claim) against his estate or against the insurer. The cause of action thus survives under the Motor Vehicles Act where the wrong--doer is the holder of a certiﬁcate of insurance.

Moreover, in practice, most claims under the Motor Vehicles Act would be against the insurer and the wrong--doer's death does not therefore have much practical importance.

9.3. As to cases where the claimant dies during the pendency of the pro- ceedings, there is no special provision in the Motor Vehicles Act. so that the substantive question as to the effect of death on the cause of section is left to be dealt with by section 30* of the Indian Succession Act.' If the death was the result of the bodily injury in question, the cause of action survives under that section. ' 9.4. As to cases where the (prospective) claimant dies before the ﬁling of the claim, the position needs to be examined. Here again, if death resulted from the bodily injuryf the cause of action would survive under section 306.

9.5. But there is some conﬂict as to the persons who can take proceedings as "legal representatives" under section 110A(l) (b) of the l_VIotor_Vehicles Act. Under section 1_10A(1) (b), an application for compensation arising out of an accident involving the death of a person capsed by the use of a motor vehicle may be made by the "legal representatives of the deceased.

'Section 306, Indian Succession Act, 1925.

'Order 22, Rule 1, Code of Civil Procedure, 1908.

"Section 102, Motor Vehicles Act, 1939.

'Pam 9'2, supra.

'For injury to property, see para 9-5, infra, and the Legal Representatives suits Act, 1855.

Position l1ll(l('l' Fatal Accidents Act.

Natiire of right ('ot1t\'I'i'e(l by Fat ;1| :\ct-i:l.~nt.~' Act.

('.ontro\'m':s_\' as to nu-anin<_r of "Lotral rt-p1'(~.st-nt:iti\'t-" in Motor' \'el1iclv.s' AOL Question for consideration.

The expression "legal representative" is not, however, deﬁned in the Act. The Code of Civil Procedure deﬁnes this term as meaning a person who, in law represents the estate of a deceased person and as including any person who intermeddles with the estate of the deceased and where a party sues or is used in a representative character, the person on whom the estate devolves on the tleatl: of the party so suing or sued.

9.6. In the Fatal Accidents Act,2 the working is slightly different. That Act provides that an action or a suit for damages in respect of the death of-a person caused by the wrongful act, neglect or default of another person shall be for the beneﬁt of the wife, husband, parent and child, if any, of the person whose death shall have been so caused. and shall be brought by and in the name of the executor, administrator or "representative" of the person deceased. The Act further3 provides that no more than one suit or action shall be broughi for, and in respect of, the same subject matter of complaint.

9.7. The precise nature of the right conferred by the Fatal Accidents Act has been considered more than once'. The word "representative" in this' Act is 110t equivalent to "heirs", since, by the Legal Representatives Suits Act passed on the same day, the right is given to bring a suit against heirs or representatives of the deceased wrong-doer. The word "representative" means and includes in this context all or any one of the persons' for whose beneﬁt a suit under the Fatal Accidents Act can be maintained. They are the persons taking the place of the deceased in obtaining reparation for the wrong done. Where there is no executor or administrator, or where there is one and he fails or is unwilling to sue, then the suit may be instituted by, and in the name of. the representative of the person deceased, but only one suit is allowed to enforce the claims of all the persons beneﬁcially entitled. The right of each beneﬁciary is only to re- ceive compensation in proportion to the loss occasioned to him by the death of his deceased relative.

Thus, in the Fatal Accidents Act, the expression "representative" means not the legal representative in the strict sense, but the wife. husband, parent and children of the deceased, and any one of them can also bring the suit for the beneﬁt of others'.

9.8. So much as regards the legislative precedents. As to the Motor Vehicles Act itself, the Act contains no deﬁnition of "legal representative", and there is a want of uniformity in the rules and in the judicial decisions as to the precise scope of the expression. Fos example----to take rules ﬁrst----in some States' the expression "legal representative" is deﬁned as having the meaning assigned to it" in clause (11) of section 2 of the Code of Civil Procedure, 1908.

However, the Mysore High Court' struck down such a rule on the ground that the power to make rules under section 111A is only to carry into effect the provisions of section 110A and rules cannot restrict the right given by section 110A to only some of the persons contemplated by that section.

9.9. Amongst the High Courts, there is a conflict of views.

'Section 2(11), Code of Civil Procedure, 1903.

2So(-.tion lA. Fatal Accidents Act, 1855 (13 of 1855).

3Section 2, Fatal Accidents Act, 1855 and proviso.

40f, Johnson Vs. The Madras Railway Company, (1905) I.L.R. 28 Cal. 479.

5Spouse, parent: or child.

"Jeet Kumari Vs. Ch'ift!l9'0":'7 E"'9i"ee7i"9 &' Eh'/c""'° Suppl?' 0°" A'I'R' 1947 Cal' 195» 198:

199, paragraphs 16-17.

7Biha,r, Assam, West; Bengal, Tamil Nadu, U. P. and Union Territory of Delhi.

"See para. 9-4, swpra.

oM_ Vasaalingaih Vs. T. P. Papanna, A.I.R. 1972. Mysore 63- Various shades of view---Firsz view.

Second. view.

Third view.

Recommendation to. define "legal retaIaeeentatiVe"-

Recommendation to insert section 3U 1.3- .

9.10. According to. one view,.1**5the claim under the Motor Vehicles Act would be governed by the substantive provisions of the Fatal Accidents Act.

9.11. According to a second view, the Fatal Accidents Act does not control the matter; on this basis the sister of the deceased was held to be entitled to tile in claim, even though she does not ﬁnd a mention in the Fatal Accidents Act."

9.12. According to a third view,' while the right to compensation is con- ﬁned to those who are mentioned in section 1A of the Fatal Accidents Act, the claim can be brought by the representatives. That expression is not limited to those entitled to the beneﬁts of the Fatal Accidents Act. Thus, in a Madras case, the married sister of the deceased (who had died a bachelor) was allowed to ﬁle a claim. It was held that an application can be put by a "legal representa- tive", and that the Motor Vehicles Act is free of any reference to the Fatal Accidents Act. Apparently, on this reasoning, the grandfather and the father were held to be legal representatives for the purposes of the Motor Vehicles Act, though they also do not ﬁnd a mention in the Fatal Accidents Act'.

9.13. On a careful consideration of the matter, we are of the view that the law on this important point should be settled, and to achieve that object, a precise deﬁnition of the expression "legal representative" should be inserted in the Act.

9.14. Further, in our opinion, it would be appropriate to assign to the ex- pression "legal representative" the same meaning as has been given to the expression "representative" for the purposes of the Fatal Accidents Act"'. This would effectively carry out the purpose of social justice underlying Chapter 8 of the Act, to which the Fatal Accidents Act is the nearest approximation.

We would also prefer to make the provision to be inserted on the subject self-contained.

9.15. Accordingly, we recommend that in section 2 of the Act, which contains the deﬁnitions, clause (11) should be inserted as under 2--

"(l1) 'legal representatives', in relation to claims under Chapter VIII of this Act, means the spouse, parent and children of the decen-

sed."

'Dewar; Haml Olmnd Vs. Ilinnicipal Corporation of Delhi, A.I.R. 1973 Delhi 67, G9, 70, para- graphs 9-10 (Ansari J.).

'P. B. Kader Vs. Tlmchamma, A.I.R. 1970 Kerals. 24:; 'Karmic. om Vs. Kislum chm, A.I.R. 1970 M-. P. ms.

'(a) M. Bhsavalingaiah Vs. T. P. Papamm, A.I.R. 1972 lll_VS. 63, 66, paragraphs 23-24.

(h) M. Amppan Vs. Moktar Séngh, A.I.R. 1970 Mys. 65. 70, para 10 (Parent)-

5Northem India. Tm'n.s;port Insurance Co. Ltd. Vs. Amrrwati, A.I.R. 1966 Pun)'. 288, 293, para 14 (l').B.).

'Veena Knmari Kohii Vs. Punjab Roadways, (1967) Accidents Claims Journal 297 (Punjab) (Sister).

7VanguarrI Insurance Co. Vs. Oimllu Hanumantha Rao, (1975) Accidents Claims Journal 132 (A. 1%).

'Mohammad Habibnllu Vs. K. Setimmmal, A.I.R. [967 Med. 123, 1:24, paragraphs 3-4. 'State'of Orissa Vs. Kept'! Bisuxm, H976) Accidents Claims Journal 395 (01'iSSa)t "Para, 9-12, supra.

CHAPTER 10 OPT ION REGARDING CLAIMS FOR COMPENSATION : SECTION 110AA Section 110AA- 10.1. This takes us to section 110AA, which is a negative provision_and reads----

"ll0AA. Option regarding claims for compensation in certain cases. Notwithstanding anything contained in the Workmen's 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 Workmcn's Compensation Act, 1923, the person entitled to'compensation may claim such compensation under either of those Acts, but not under both."

No change. 10.2. The section deals with a very special case, and needs no change.

80-LlB(D)457MofLJ&CA---4 *5 l Scope.

Section 1103--

Persons entitled to claim com-

pensation --contro-

versy as to case of death.

Controversy as to persons entitled to claim compen-

sation.

Delhi view.

Ker-ale. View.

No change in sec-

ﬁon 110B.

CHAPTER 1 1 PARTIES : SECTION 1108 11.1. This Chapter is concerned with the parties to proceedings by way of claims for compensation.

11.2. The persons who can claim compensation are dealt with in the ﬁrst part of section 110B. It reads----

"110B. Award of the Claims Tribunal. On receipt of an application for compensation made under section 110A, the Claims Tribunal shall, after giving the parties an opportunity of being heard, hold an inquiry into the claim and may make an award determining the amount of compensa- tion which appears to it to be just and specifying the person or persons to whom compensation 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."

The controversy that has arisen rests mainly on the question whether, in case of death, the persons entitled to compensation, are the same as those entitled under the Fatal Accidents Act, or whether the matter has to be decided independently of that Act.

11.3. The Karnataka High Court, for example, holds that the brother and sister of the deceased are entitled' to compensation as ''legal representatives'',2 provided they can prove their dependency on the deceased. It construes the ex- pression "persons" in section 110B as meaning the persons who are "legal re- presentatives", and takes the latter expression, in its turn, as including brothers and sisters.

A contrary View has, however, been taken by the Delhi" and Kerala High Courts,' which deny any such right to brothers and sisters.

11.4. The Delhi High Court has expressly held5 that brothers are not enti- tled to compensation under the Motor Vehicles Act, and that only the persons mentioned in section 1A of the Fatal Accidents Act are so entitled.

11.5. The Kerala High Court has also held,' in a case involving death caused by a motor accident, that brothers and sisters are not entitled to rank as dependants under the Fatal Accidents Act. The judgment, though not direc- tly discussing the question of construction of the Motor Vehicles Act, seems to imply that the Fatal Accidents Act would govern right to compensation.

11.6. As the controversy relates to the persons in whose favour section 110B can operate, we have considered the question whether any clariﬁcation deﬁning the scope of that section in this regard is needed. However, we have come to the conclusion that it is not required. We have separately made a re- commendation for an amendment deﬁning "legal representatives". This amend- ment will not only apply to section 110A, but would also indirectly serve to limit the scope of section 110B. We do not therefore consider a separate amend- ment of section 110B necessary on the point just now discussed.

'General Manager, Karnataka State Road Transport Corporation, Bangalore Vs. Peerappa Parasappa Sangolli, A.I.R. I979 Karnataka 154, 157-159, paragraphs 12-14 (August.-Sept'/ember issues .

EC-'f. Meghjibhai Vs. Uhaiu-rbkai, A.I.R. 1977 Guj. 195.

'Dewar; H ari (Ihand Vs. Delhi Municipality, A.I.R. 1973 Delhi 67, 70, para 10 (Ansari J.).

'P. B. Kader Vs. Tlaalchamma, A.I.R. 1970 Ker, 241.

'Dewar; Hari Ch-and Vs. Delhi Municipality, A.I.R. 1973 Delhi 67, 70, para 10 (A.nsa.1'iJ.).

'P. B. Kader Vs. Thalchamma, A.I.R. 1970 Ker. 241.

"See: recommendation as to section 2(ll) Para. 9-15, supra.

Section 110B to be amended to cover all persons liable.

Position examined.

11.7. The above discussion was concerned with the persons to whom com- pensation can be awarded. There is some deﬁciency in the law as to the persons against whom liability arising from an accident can be enforced. It is to be noted that the liability of the owner of vehicle--or, for that matter, the liability of any other person for death or bodily injury caused by the use of a motor vehicle,----arises not under the Motor Vehicles Act, but under the general rule of the law of Torts, modiﬁed (where applicable) by the Fatal Accidents Act' or other statutory provisions. The owner and driver are not the only persons who may become liable? There may be other persons who are liable, particularly if, at the time of the accident, they were in possession or control of the car, either personally or though servants acting in the course of their employment.

11.8. It appears to us that section 110B needs to be ampliﬁed on this point. It should be noted that the Act is not conﬁned to a claim against parti- cular categories of persons, such as the insurer, the owner and the driver. Even the jurisdiction of the Claims Tribunal is unrestricted in this respect, under section 110. If all the situations in which a cause of action may arise are not taken care of by section 110B, then a certain amount of incompleteness would survive in section 110B. All claims under section 110 are not fully taken care of by section 110B. And yet the jurisdiction of civil courts would be barred by reason of section 110F. This would not be a satisfactory situation. This difli- culty arising from section 110B particularly needs to be remedied.

There may be several situations in which a person who is neither the owner nor the driver might, under common law principles, become liable for an acci- dent caused by the use of a motor vehicle. A claim for compensation in such a case would fall within section 110(1), being a claim for compensation "in respect of accidents involving the death of or bodily injury to persons arising out of the use of motor vehicles. .. . . . . . ..". But section 110B--the provision which requires the Tribunal to make an order as to quantum of compensation against owner, driver or insured,----leaves out the case. The following are a few illustrative situations : --

(i) A ca-r is given to a prospective purchaser, whose driver drives the car and causes an accident. In such a case, apart from the driver, the prospective purchaser would also be liable.

(ii) The car is sent to a garage? The repairer and his driver who caused the accident.

(iii) The registered owner may loan the car to X, who allows his driver to drive the car and the victim is injured.

(iv) The registered owner asks a passenger to close the door. The passen-

ger closes the door, but, in doing so, negligently slams the door on the ﬁngers of the victim.

It is also worthy of notice that section 110 [unlike section 95(1) (b) and also unlike section 94(1)] is not conﬁned to the use of a motor vehicle in a public place. The provisions of section ll() are wide enough to cover accidents which occur in a private place'.

To cover all these cases, in which section 110 would come into play, section 110B should be expanded.

1AnIyamma, Vs. Narasimhiah, A.I.R. 1972 Mys. 73, 75.

"Branch Manager, Hindustan General Insurance Co. Vs. Saramma, A.I.R.. 1969 Al'. 390. "Cf. Gom'm:l.arajul'u Vs. Gomlmlaraja, A.I.R. 1966 Med. 332.

4L.I.C. Vs. Karthyani, A.I.R. 1976 Orissa 21, 24:, Para. 13 (S. Acharya. J.).

80-L]B(D)457MofLJ&CA--4 Recommendation to amend section 110B.

Amendment of section 110B to save limits as to quantum of com-

pensation recom-

mended.

11.9. To achieve this object, we recommend that in section 110B, after the words "by the insurer" or "owner or driver of the vehicle involved in the accident", the words "or any' other person who was in possession or control of the vehicle at the time of the accident" should be inserted. The amendment will eliminate the controversy arising from the obscurity of the expression "owner", as revealed by the case law'-', and will make the section comprehensive'.

11.10. While this amendment would widen the scope of the power of the Tribunal, there is also need for an amendment of the section on another matter, by drawing attention to the limits on compensation that can be awarded. When making this comment, we do not have in mind the existing limits on compensation laid down in section 95(2). These limits, according to our recommendation,' should be abolished. Even if they are retained, our recommendation is to in- crease them, and they will apply onlry to ordinary courts.

We are primarily concerned with the limits which, according to our recom- mendation in this Report', will become applicable as regards the quantum of compensation that can be awarded on a "no fault" basis (i.e. in claims tried by the Claims Tribunals on that basis). v In our opinion, it is desirable to ensure that the wide language of section 110B should not become a source of oversight, thereby leading to litigants and others to overlook the limits. We therefore recommend that in section 110B, a new sub-section should be inserted on the subject discussed above, after re- numbering the present section as sub-section (1).

The following is a very rough draft of what we have in rnind:---

"(2) Nothing in this section shall affect any provision of this Act imposing a maximum limit on the amount of the compensation that can, in respect of any accident, be claimed by any person before the Tribunal."

1Goolbai Vs. Peslonji, .-\.I.R. 1935 Born. 333. 'In re Bhagwant Gopal, A.I.R. 1943 Nag. 22.

'King Vs. Ba Ba. Sein, A.I.R. 1938 Rang. 400.

'State Vs. Prgma Bai, A.I.R. 1979 M. P. 85, 87.

5Also see para. ll~7, supra.

'Paragraphs 56 to 58. Sup"-

7Pa.ra. 3'63, supra.

Appearance through legal practitioner.

Madhya Pradosh rule.

Section 110BR to be inserted.

CHAPTER 12 APPEARANCE OF PARTIES: SECTION l10BB (PROPOSED) 12.1. The next question concerns appearance by parties through legal practitioners, before the Claims Tribunal. The Act does not make any express provision on the subject. Like many other matters of procedure it is left to rules. However, some dilﬁculty is created in this regard by the manner in which the rules are framed in some States, which in substance, provide that the Tribunal may in its discretion allow any party to appear through legal practitioner.

In our opinion, having regard to the nature of the proceedings before the Tribunal, which though summary in character, may, often involve intricate ques- tions of fact and law, it is proper that the Act should provide a right to appear through legal practitioners.' The State rules on the subject will, of course, then become inoperative."

12.2. We may in this connection, refer to the Madhya Pradesh rule', which' provides that any appearance, application or act required to be made or done by any person before a Claims Tribunal (other than an appearance of a party which is required for the purpose of his examination as a witness) may be made or done on behalf of such person by a legal practitioner, or by an oﬂicer of an insurance company, or with the permission of the Claims Tribunal, by other person so authorised. It is desirable to insert a similar provision permitting a party to appear by a legal practitioner or by other authorised person in pro- ceedings relating to claims for compensation under the Act.

12.3. In the light of the above discussion, we recommend the insertion of the following new section :--

110B. Any appearance, application or act required to be made or done by any person before a Claims Tribunal (other than an appearance of a party which is required for the purpose of his examination as a witness) may be made or done by such person or, on behalf of such person,»-

"(a) by a legal practitioner,

(b) in the case of any insurance company, by an olﬁcer of the company, or

(c) with the permission of the Claims Tribunal, by any other person, duly authorised by the ﬁrst-mentioned person."

'Compare section 30(ii), Advocates Act, 1961.

2Andhra Pradesh, Rule 520; Assam, Rule 9; Delhi, Rule 8- 11; Maharashtra, Rule 308; Tamil Nadu, Rule 9 and so on.

"Rule 18, Madhya Pradesh Motor Accidents Claims Tribunal Rules, 1959.

Mode of recording evidence.

Procedure in the Act.

Provisions to be made in rules.

CHAPTER 13 EVIDENCE AND PROCEDURE: SECTION 110C

13.1. We now come to the question of evidence and procedure in proceed- ings before the Claims Tribunal. .

The Tribunal has power to take evidence on oath.' The Act does not lay down, in detail, the mode of recording evidence; the matter is left to be dealt with by rules to be made by the State Governments." Generally, these rules require that the "Iribunal should make a brief memorandum of the substance of the evidence of each witness. Though the award of the Tribunal is subject to certain monetary limits," a verbatim record of the evidence is not, as a rule, required, though sometimes medical evidence is required to be recorded verbatim.

The position does not seem to need modiﬁcation.

13.2. As to procedure, the Act provides' that in holding inquiries the Tribunal may. subject to rules, follow such summary procedure as it thinks ﬁt. State Governments have, under their rule--making power,' adopted or copied various rules contained in the Code of Civil Procedure on speciﬁc matters. But it is often found that these rules are not comprehensive and leave out important matters that arise frequently in practice.

Because of want of speciﬁc rules, the awards of the Tribunals are, in many cases, sought to be challengtd in appeal 6-7on minute points of procedure causing avoidable delay and injttstice. To give one example, there has arisen a question whether a claimant before the Tribunal can sue as an indigent person. Fortunately, the question has been answered in the aﬂirmatives.

There are many other points of a procedural nature which, if dealt with by rules, would avoid controversies and expedite disposal.

13.3. All this shows the need for well-drafted and comprehensive rules as to matters for procedure. We do not consider it necessary to recommend an amendment of the Act for the purpose mentioned above, but we would draw the attention of the State Governments to the need for making comprehensive rules on the subject of procedure, so as to expedite disposal and avoid contro- versies on matters of detail.

'Section 1100(2).

2Seetion ll1A, main paragraph.

"Section 110]).

'Section 11()C(1).

5Section ll1A(l)).

"Cnlczctta Slate Transport Corporation Vs. Laxmi Rani Pal, A.I.R. 1977 Cal. 249, 250, para 5 (Re-oxantination of witnesses).

7M. Krz'sImrm. Vs. Prmkrzj Jethalal Shah, A.I.R. 1970 Mad. 259, approved in P. Sanmugham VS. Ma(Irr1.s Molar General Ins. Co. Ltrl., A.I.R. 1974 Mad. 363, 366 paragraphs 10, ll (Commissions).

"I)ars7mna Dori Vs. Sher Singh, A.I.R. 1978 P & H 265, 267, paragraphs 2-3.

Section ll0CC.

Two periods to be dealt With.

Interest prior to making of claim.

Position under Interest Act, 1978.

Later Acts.

CHAPTER 14 INTEREST: SECTION 110CC 14.1. The subject of interest on awards is dealt with in section 110CC, which reads :--

"Where any Court or Claims Tribunal allows a claim for compensation made under this Chapter, such Court or Tribunal may direct that in addition to the amount of compensation simple interest shall also be paid at such rate and from such date not earlier than the date of making the claim as it may specify in this behalf." ' ' In this connection. it may be noted that extensive amendments have been made by the legis1ature--many of them on the recommendation of the Law Commission,' in the general law relating to interest. It is proper to take note' of them2 and to examine how far section 110CC needs reform in the light of those amendments?

14.2. It will be convenient to deal ﬁrst with the interest awardable for t period before the making of the claim, and then with the interest awardabc for the period subsequent to the making of the claim.

14.3 As to interest prior to the making of the claim under the present 4 law as contained in the Act. interest is not granted from the date of the accident. but only from the date of the claim. Such has been the judicial construction.' Section 110CC, by its express terms, also does not provide for such interest.

14.4. Similar position prevailed in civil courts in regard to interest on damages before 1978. Until very recently, in a civil court, interest could not be awarded on unliquidated damages.' It could only be awarded on a liquidated sum--"debt or sum certain", as is often put.

14.5. Notice should, however, be taken of the wider power' to award interest conferred by the revised statutory law of interest----the Interest Act, 1978--on all courts, including Tribunals. That Act speciﬁcally empowers the court to award interest on damages, and "court" (as deﬁned in the Act)' includes a Tribunal and an arbitrator.

It is enough to quote section 3(1) and 3(2) of that Act which read'-

"3(1). In any proceedings for the recovery of any debt or damages or in any proceedings in which a claim for interest in respect of any debt or damages already paid is made, the court may, if it thinks ﬁt, allow interest to the person entitled to the debt or damages or to the person making such claim, as the case may be, at a rate not exceeding the current rate of interest, for the whole or part of the following period, that is to say,-

1Law Commission of India,-

(a.) 54th Report (Code of Civil Procedure, 1908).

(b) 63rd Report (Interest Act, 1839).

'Para 14-3, infra.

"For the suggested amendment, see para 14~ 6, infra. 4(a) Orissa Jllining Corporation Vs, Kopula, I.L.R. (1975) Cutt. 1072.

(b) New India Assurance 00. VS. Stcrjg/amoni, A.I.R. 1980 Orissa 17, 19, para l2.

ssee Law Commission of India, 63rd Report (Interest Act, 1839), page 21, para 5~ 1.

"Section 3, Interest Act, 1978.

"Section 2(1), Interest Act, 1978.

9380519" 3(1) and 3(2), Interest Act, 1978.

Sl Need .for parity as regards period before claim.

Period after the making of the claim--nced for parity.

Section 11000 Recommendation as to rate of in-

terest. and mak-

ing interest man-

datory.

Recommendation to revise section 1 IOCC.

(a )_ If the proceedings relate to a debt payable by virtue of a written instrument at a certain time, then, from the date when the debt is payable to the date of institution of the proceedings;

(b) if the proceedings do not relate to any such debt, then, from the date mentioned in this regard in a written notice given by the person entitled or the person making the claim to the person liable that interest will be claimed;

Provided that where the amount of the debt or damages has been repaid before the institution of the proceedings, interest shall not be allowed under this section for the period after such repayment.

(2) Where, in any such proceedings as are mentioned in sub-section

(a) judgment, order or award is given for a sum which, apart from interest on damages, exceeds four thousand rupees, and

(b) the sum represents or includes damages in respect of per- sonal injuries to the plaintiff or any other person or in respect of a pcrson's death, then, the power conferred by that sub-section shall be exercised so as to include in that sum interest on those damages or on such part of them as the Court considers appropriate for the whole or part of the period from "the date mentioned in the notice to the date of institution of the poceedings, unless the Court is satis- ﬁed that there are special reasons why no interest should be given in respect of those damages".

14.6. In our opinion, justice requires that the Court or Tribunal adjudi- eating a claim under Chapter 8 of the Motor Vehicles Act should, in this particular sphere, have the same powers as a Court which tries a civil suit. It would therefore be appropriate to revise section 110CC to confer such a power.

14.7. As to the period after the making of the claim, the subject (in regard to civil courts) is governed by section 34 of the Code of Civil Procedure. This position should also be reﬂected in the section dealing with the power of the Court or Tribunal under Chapter 8, and at this stage also, the Court or Tribunal should, in our opinion, have the same power as a civil court.

14.8 Coming to the rate of interest, generally, in the past, 6 per cent interest has been allowed on amounts awarded under the Act.' In some cases only 4 per cent was allowed." In our view, the rate of interest should be speciﬁcally mentioned in the section and it should ordinarily be 12 per cent per annum. The award of interest at this rate would expedite realisation of the amount awarded. It may be noted that section 34" of the Code of Civil Procedure, 1908 (as amended), allows interest upto 12 per cent for "commercial transactions". The case for a suitably high rate of interest on compensation awarded under the Motor Vehicles Act is still stronger.

Further, it is, in our opinion. desirable to override contrary laws and to make the grant of interest mandatory unless reasons exist to the contrary.

14.9. In the light of the above discussion, we recommend that section l10CC should be revised as under :--

1(a) Hanuman Das V. Uslm Rani, A.I.R. 1978 Punj. 8: Hal'. 177-180, para 14.

(b) Sushil Kumar V. Binodini Bath, A.I.R. 1977 Orissa. 112.

"Kailash Wati Vs. State, A.I.R. 1975 H. P. 35.

"Section 34, Code of Civil Procedure, as amended in 1976.

"110CC. Where any Court or Claims Tribunal allows a claim for compensation made under this Chapter, such Court or Tribunal shall have the same power to direct the payment of interest on the sum awarded as a civil court trying a civil suit has under the law for the time being in force, including the Interest Act, 1978 and "section 34 of the Code of Civil Procedure, 1908, and shall, notwithstanding anything to the contrary contained in any law for the time being in force, make a direction accordingly unless the Court or Tribunal, for reasons to be recorded, considers such a direction unjust 2 Provided that unless the Court or Tribunal, for reasons to be recorded, directs otherwise, the rate of interest shall not less than twelve per cent per annum for the period beginning with the date of making of the claim.

Section I l0D( 1)--

Appevﬂln Ruéommendation to amend section ll0D(I).

Section 1lOD(2)----

Appeal in petty cases.

Section ll0E-------

Recommendation for deposit of amount of award.

CHAPTER 15 APPEAL AND EXECUTION : SECTION 110D AND 110E AND NEW SECTION IIOEE

15.1. An appeal is provided by section 110D against the decision of the Claims Tribunal. Sub-section (1) provides that the appeal shall lie to the High Court at the instance of any person aggrieved by an award of :1 Claims Tribunal. The period of limitation is ninety days relaxable by the High Court for sufficient cause.

15.2. It is often noticed that appeals are ﬁled by the insurer on insubstantial, if not ﬂimsy grounds, thereby causing avoidable hardship to the claimant who has succeeded in his claim after considerable labour and expense. In our view, it is necessary to require deposit of the amount awarded by the Tribunal before an appeal can be filed. It may be noted that under the Workmen's Compen- sation Act,' the entire amount of money has to be deposited in the Court before preferring an appeal from the decision of the Commissioner under that Act.

Section 30(1), 3rd proviso, Workmen's Compensation Act reads :-----

"Provided further that no appeal by an employer under clause (a) shall lie unless the memorandum of appeal is accompanied by a certiﬁcate by the Commissioner to the cﬁect that the appellant has deposited with him the amount payable under the order appealed against."

A similar_ provision should be introduced in the Motor Vehicles Act, requiring deposit of the entire amount awarded, before ﬁling an appeal."

15.3. The next point concerns sub-section (2). At present, under section l10D(2), no appeal lies against an award of the Tribunal when the amount in dispute does not exceed Rs. 2,000. This ﬁgure was inserted in 1956. Since then, there has been a steep fall in the purchasing power of the rupee. In view of this development, we recommend that subsection (2) of section 110D should be revised by substituting. for the words "two thousand rupees", the words "five thousand rupees".

15.4. Section 110E provides that where any money is due from any person under an award, the Claims Tribunal may, on an application made to it by the person entitled to the money, issue a certiﬁcate for the amount to the Collector and the Collector shall recover the same in the same manner as arrears of land revenue. Every one knows the long delay that is involved in the complex and time--consuming process of the recovery of any amount as an arrears of land revenue. Considerable delay is therefore caused in the payment of the compen- sation amount to the person entitled to it. It is, therefore, desirable that :1 speciﬁed provision should be included in the Act, laying down that when an award is made under section 110B, the person directed to pay and involved in the accident shall deposit the amount in the Claims Tribunal within thirty days of the date of the making of the award. The amount may be deposited either in cash or by a cheque on a Scheduled Bank.

In the event of an appeal being ﬁled by the assured or the person against whom the award is made, the amount deposited in the Claims Tribunal should be made payable to the person entitled to it, only on his furnishing a bank guarantee for the return of the amount if the High Court sets aside the award or in appeal reduces the amount of compensation.

'Section 30(1), 3rd proviso, Workmen's Compensation Act, 1923. 'Sea para 15-6, inﬂ-a---proposed section IIOEE. 51- Deposit in High Court.

New section 1 IOEE recom-

mended.

Deposit of amount awarded.

15.5. The procedure just now indicated in regard to the deposit of the amount of compensation should also be made applicable for the deposit of amount in the High Court when, the High Court on a disposal of the appeal, awards compensation for the first time or enhances the amount awarded by the Claims Tribunal.

15.6. In the light of the above discussion, we recommend the insertion of the following new section in the Act :-- H "IIOEE. (1) When an award is made under section 110B the person against whom it is made shall within thirty days of the date 0} the making of the award deposi: the entire amount awarded in the Claims Tribunal, eiher in cash or by a cheque on a scheduled bank.' (2) Where an appeal against such award is ﬁled in the High Court by the person aggrieved by the award, the amount deposited in the Claims Tribunal shall not be paid to the person entitled thereto except on his furnishing a bond, with a scheduled bank as surety, to the effect that if the High Court in appeal sets aside the award or reduces the amount of compensation, he shall "return the amount of such part thereof as may be necessary for compliance with the decision of the High Court.

(3) Where no such appeal is ﬁled within the period allowed for ﬁling an appeal or where the appeal, if ﬁled. is dismissed by the High Court, the amount deposited in the Claims Tribunal shall, if not already paid {under sub-section (2), be paid to the person entitled thereto.

(4) Where an appeal against an award is ﬁled_and the High Court awards compensation for the first time or enhances the amount awarded by the Claims Tribunal, the provisions of sub-section (1), (2) and (3) shall, with such modiﬁcations as may be necessary, apply in relation to deposit in the High Court of the amount awarded by the High Court of the amount representing the increase ordered by the High Court, as the case may be, as they apply in relation to deposit of an amount awagded by the Tribunal." o 'The expression "Scheduled bank" may be suitably deﬁned.

Soope of the Chapter.

Limit. of jurisdic-

tion----Territorial.

Pecuniary limits.

Section l10}<'----

Discrepancy with section 110(1), provis0 (Damage to property).

seeupii. 110F-

Caulls of action arising before constitution of Tribunal.

CHAPTER 16 JURISDICTION AND LIMITATION SF_("l"lON 1101* AND 110A(3)

1. Limits of Jurisdiction 16.1. Wt propose to deai in this Chapter with a few points concerning the jurisdiction of Claims Tribunals constituted under the Act, We shall be primarily concerned with sections 110A and 11017. The matter could be conveniently considered under a few possible heads of limits of jurisdiction--territorial limits, pecuniary limits, pre--cxisting causes of action and the like.

16.2. As to territorial jurisdiction, section 110A(2) provides for the ﬁling of an application in a tribunal within the local limits of whose jurisdiction the accident occurred. This subsection has raised no problems so far.

16.3. As regards the general pcczmiary jurisdiction of Claims Tribunals, there is no provision laying down limits thereon.

II. Damage to property 16.4. Some dilliculty exists in regard to claims for proprietary damage made by third parties. Under the proviso to section 110(1), (as it now stands), claims above rupees two thousand in relation to damage to a third party can, at the option of the claimant, be referred to tltc civil court; but, under section 110F, where any Claims Tribunal has been constituted for any area, no civil court shall have jurisdiction to entertain any question, relating to any claim for com- pensation which may be adjudicated upon by the Claims Tribunal for the area (the rest of the section is not material. as it relates to the grant of injunction).

If, as already recommended by us.' section 110(1), proviso is deleted, this point would not survive.

III. Causes of action arising before constitution of the Tribunal 16.5. The jurisdiction of a Claims Tribunal would obviously be exercisable as to future causes of action. As regards a cause of action arising before the constitution of in Claims Tribunal, obscurity seems to have prevailed for some time. The majority of the High Courts took the view that once a Tribunal is constituted. the jurisdiction of civil court is barred in respect of all claims pre- ferred after the constitution of Tribunal even though the accident occurred before such constitution.'-, The High Court of Madhya Pradesh,' however, held that a suit for damages in an ordinary civil court is not barred where the cause of action arose before the Claims Tribunal was constituted. -

1See discussion as to section 110(1). proviso. para 7- ll . supra.

'(a.) Devendm Kumar Vs. P-ilolthri Brick Kiln, A.I.R.. 1972 All. 61.

(b) I7.O.K. Bus Service Vs. H. G. Sethria, A.I.R. 1965 Mad. 1-L9; virtually dissenting from Chandraselrharan, Vs. Na-rrzyanasundm-am, (1963) 76 M.L.W. (S.N.) 44.

'United Motor ck General Insurance Vs. Km-tar Sinqh, A.I.R.. 1965 Punjab 102, 105, 106, Para.- gmphs 7, 10 (discusses the question of pending proceedings also).

aM_ Ayappan Vs. Mukhtar Singh, A.I.R. 1970 Mys. 67. ssmhma Mehia VS. 0. P. Tran-sport Ltdl, A.I.R. 1964 M. P. 133.

5'7 _Su(premet Court 16.6. The Supreme Court has now held' that as soon as the Claims Tribunal 1" gm°"' .lS.COl'lSlllllteCl, the jurisdiction of the ordinary civil court is ousted. The person llljU1'6d would have a vested right of action, lrut not a vested right of forum and the change of forum under sections 110A and 110F must be given eﬂect to. The legislature did not think it necessary to affect pending suits, but wanted the cheap remedy to be available as soon _as the Tribunal was constituted by the State Govermnent in all cases, lI'l'eS])€CIlV€ of the date of the accident, provided the remedy of going to the court was not barred on the date of the constitution ot the Tribunal.

mtm-,uIr_V as to 16.7. Recognising that on this construction, certain diﬂiculties might arise limitatim in relation to limitation, the Supreme Court also held that the time forﬁpthe purpose of ﬁling the application under section 110A did not start running before the constitution of the Iribunal. In the case before the Supreme Court, time had started running for barring of the suit, but before its expiry, the forum was changed and for the purpose of the changed forum, time could not be deemed to have started running before a remedy of going to the new forum had been made available? The following passage from the judgment of the Supreme Court represents the principle enunciated by the Supreme Court on the question of limitation" :--

"Apropos the bar of limitation provided in section l10A(3), one can say, on the basis of the authorities aforesaid, that strictly speaking the bar does not operate in relation to an application for compensation arising out of an accident which occurred prior to the constitution of the claims Tribunal. But since in such a case there is a change of forum unlike the fact of the said cases the reasonable view to take woud be that such an application can be ﬁled within a reasonable time of the constitution of the Tribunal, which ordinarily and generally, would be the time of limitation mentioned lI1 sub-section (3). If the application could not be made within that time from the date of the constitution of the Tribunal, in a given case, the further time taken in the making of the application may be held to be the reasonable time on the facts of that case for the making of the appli- cation or the delay] made after the "expiry of the period of limitation pro- vided in sub-section (3) from the date of the constitution of the Tribunal can be condoned under the proviso to that sub-section. In any view of the matter, in our opinion, the jurisdiction of the civil court is ousted, as soon as the Claims Tribunal is constituted and the ﬁling of the application before the Tribunal is the only remedy available to the claimant. On the facts of this case, we hold that the remedy available to the respondents was to go before the Claims Tribunal and since the law was not very clear on the point, the time of about four months taken in approaching the Tribunal after its constitution can be held to be either a reasonable time or the"de1ay of less than two months could well be condoned under the proviso to sub- section (3) of section 110A." .

Need to mend 16.8. Subject to what we are going ti) say about limitation,' we would WW0" 11°F - like to incorporate the proposition laid down by the Supreme Court' by a suit- able amendment dealing with jurisdiction in regard to an accident occurring before the creation of a Claims Tribunal. We, therefore, recommend that an Explanation should be added to section 1l0F as follows :--

'New Indian Insurance 00. Lld., Vs. Shams' Mishra, A.I.R. 1976 S. C. 237. "Page 241, para '7 in the A.I.R. 1976 S. C. 237.

"Para 242, para. 10 in the A.I.R. 1976 S. C. 237.

'Para. 16-9, infra-

"Paru, 16' 7, supra.

secnun l10A(3)----

Reoonimepdation for llzlthendment.

Recommendation to amend Section 110A (3).

"Explanation----The Claims Tribunal shall have jurisdiction whether or not the accident occurred before the Tribunal was constituted, but nothing herein contained shall aﬂect any proceedings pending before a Civil Court involving any question relating to any claim for compensation arising out of any accident which occurred before the constitution of the Claims Tribunal."

IV. Limitation for claims 16.9. At the same time, the starting point for limitation for a claim on a cause of action which arose before the constitution of the Tribunal' should be altered by suitably amending section 1l0A(3).

A time limit of six months is prescribed by section 11OA(3) for making an application for compensation. This time limit is to be computed from the date on which the accident occurred, subject to a proviso which is not material for the present purpose. In our opinion where the Tribunal is constituted after the occurrence of the accident, the period of limitation (six months) should be counted from the date of the constitution of the Tribunal. If the time limit is computed from the date of occurrence of the accident, certain practical problems may arise in regard to a cause of action which arose prior to the constitution of the Tribunal. These practical difficulties would be avoided if the amendment suggested above is carried out.

The reason is that "to require a claimant to apply to the Tribunal within sixty days? of the accident when the Tribunal itself did not exist within that period is to ask him to do the impossible."

16.10 We therefore recommend that the following further proviso should be inserted below section 110A(3) :--

"Provided that where the accident occurred before the date of constitution of the claims Tribunal, the period of six months speciﬁed in this sub-section shall be computed from the date of constitution of the Claims Tribunal if on that date a suit for damages, or compensation in respect of the accident is not barred under the law of limitation for the time being in force."

'Of. para 16-7, supra.

ﬂsixty days was the earlier limitation period. It is now six months.

3145,11' pmiwgh Vs, State of M. P., (1962) M.P.L.J. 465, quoted in Sushma Meiita vs. 0.P.T., A.]_R_ 1964 M_P. 133, 135, para 12.

Present position.

CHAPTER 17 RULES : SECTIONS 111 AND 111A

17.]. It remains now to notice brieﬂy the provisions as to rules in Chapter 8 of the Act. Section 111 confers a power to make rules on the Central Govern- ment; section 111A (inserted in 1956) confers a power to make rules on the State Government also. The power of the Central Government is to make rules for the purpose of carrying into effect the provisions of this Chapter, while the power of the State Government is to make rules for the purpose of carrying into effect the provisions of sections 110 to 1l0E----broad1y speaking, the sections concerned with the Claims Tribunal. In both the cases, there is the usual pro- vision under which the Government concerned may, without prejudice to the generality of the power conferred on it, make rules dealing with certain matters speciﬁcally enumerated in the relevant section.

We have already drawn attention' to the need for comprehensive rules on the subject. We have no further comments in the matter.

'Para. 13' 3, supra.

CHAFTER 18 SUMMARY OF RECOMMENDATIONS We summarise below the recommendations made in this Report :--

CHAPTER 2--The present law and general recommendation as to Chapter 8.

(1) The present heading of Chapter 8 of the Motor Vehicles Act, 1939 should be revised so as to read "Insurance of Motor Vehicles and Adjudication 991 of Claims for compensation in respect of accidents caused by Motor Vehicles .

Cl~IAP'l'F.R 3--Liability without fault (2) By inserting new section 92A (to be placed under a new Chapter 7A), the doctrine of liability without fault should be introduced in the Act and strict liability imposed in regard to death or bodily injury caused by an acci- dent of the nature speciﬁed in section 110(1). This will apply to all claims for compensation in respect of such accidents tried before the Claims Tribunal.' (3) On the introduction of such liability, there should be a monetary limit, prescribing the maximum compensation that can be awarded by the Claims Tribunal for death or personal injury. The maximum amount awardable (after inserting "no fault liability") should be Rs. one lakh.3 CHAPTER 4--Beneﬁciart'es of compulsory insurance: section 95(1) (4) Section 95(1) proviso (ii), which excludes certain persons from the beneﬁt of a direct remedy against the insurer, otherwise available to a claimant for compensation, should be deleted.' CIIAPTER 5--Monetary limits on the liability of the insurer : section 95(2) (5) In section 95(2), which imposes a pecuniary limit on the liability of the insurer on the basis of the class of vehicle and other criteria speciﬁed in the section, the limit should be either delected, or raised to Rs. two lakhs per claimant (in regard to claims before ordinary courts)?

[This is in regard to claims before ordinary courts which would have jurisdiction only when no Tribunal has been constituted. In regard to claims before Claims Tribunal, there is a separate recommendation as to the pecumary limits of compensation for death or bodily injury.]' CHAPTER 6--Duty to furnish particulars of insurance and accident: section:

109A and 109B (proposed) (6) Two new sections--section_s 109A and 109B---.s_hould be inserted, imposing obligations on the police and _the hospital authorities to communicate certain information relating to the accident and other speciﬁed matters to the Claims Tribunal and also to the injured person or his legal representatives.' 'Para 2-7.

'Para 3-63.

'Para 3'63.

'Para 4-8.

'Paragraphs 5-6, 5-7 and 58.

'See item (3), ntpra.

"Para 6-7.

80 61

CHAl"lER 7---T he Claims Tribunal: section 110 (7) Section 110(1), proviso. which gives a third party an option to make a claim in the civil court in cases of proprietary damage excedeing Rs. 2,000, should be deleted.' (8) Section ll0(4) should be aniended so as to vest the power to distribute business amongst the Claims Tribunals in the High Court and not (as at present) in the State Government.' (9) In section 110, a provision shoud be inserted empowering the High Court to transfer proceedings from one Claims Tribunal to another (in the State) in the ends of justice?

CHAPTER 8----/lpplicatiort for compensation : section 110A (10) Section ll()A( 2) should be amended as recommended in the Report. (This is a minor verbal change).' .

CHAPTER 9---Ii'ﬁ'ect of death and the nzeaning of "legal representative" : section 110A(1)(b) and section 2(l1) (proposed) (11) In section 2, clause (11) should be inserted providing a deﬁnition of the expression "legal representatives", as meaning the spouse, parent and children (of the deceased).' CHAPTER 11------Pa;-ties: section 110B (12) In section 110B, 21 provision should be inserted empowering the Tribunal to make an order for compensation. :0 be paid by a person who (though not the owner or driver) was in possession or control of the vehicle at the time of the accident."

At the same time, a saving should be inserted regarding provisions ﬁxing a maximum limit' for the compensation that could be awarded.

CuA1»'rI-.'R 12---Appr3£:'r(mCe: section 110BB (proposed) (13) A new section IIOBB should be inserted to provide for appearance before the Claims Tribunal through a legal practitioner or other authorised person.' CnAi*'ru1«: l3~-----li'w'a'ence am.' procedure: section 110C (14) Attention of State Governments should be drawn to the need to make comprehensive rules of procedure.' CI§Al'Tl:R 14 ---Interest : :«:r'cn'on 110CC (proposed) (15) A new section l10CC should be inserted to provide that in proceed- ings on a claim for compensation, the Court or Tribunal shall have the same power to direct the payment of interest on the sum awarded as a civil court has under the law (including the Interest Act, 1978 and section 34 of the Code of Civil Procedure, 1908). This provision will have effect notwithstanding any- thing to the contrary to any other law. Further, unless there are reasons to the contrary, it should be mandatory to give a direction for the payment of interest.

1Para 7'7.

9Para. 7' 10.

3Para. 7- 12.

'Para. 8'2.

5Para 9' 15.

'Para. 11'9.

7I'ara 11' 10.

9Para. 12'3.

"Para 13-3.

80--L]B(D)457MofI.J&0A--5 62 . The rate of interest should ordinarily be twelve per cent, and interest should begin with the date of making the claim.' CHAPTER l5-----Appeal and execution: scrlioizs 110D and 110E, and proposed section 110EE (16) Provisions should be introduced. requiring a person against whom an award is made by the Claims Tribunal to deposit the entire amount awarded.

Detailed provisions are also recommended as to deposit of the amount where the award is made for the ﬁrst time on appeal (or amount awarded in appeal) and as to the eﬂect of appeal on an amount already deposited.' CHAPTER 16--~Jurisdiction and limizaiion: sections 110F and 110A(3) (17) In section 1l0F, an I-Explanation should be added to provide that the Claims Tribunal, once constituted, shall have jurisdiction even if the accident occurred before its constitution. But pending proceedings shall not be affected.' (18) In section 110A(3), a further proviso should be inserted to provide that where the accident occurred before the date of constitution of the Claims Tribunal, the period of limitation (six months) speciﬁed in this sub-section, shall be computed from the date of constitution of the Claims Tribunal, unless a suit for damages or compensation for the accident has already become barred under the law of limitation' for the time being in force.

Sd/-

P. V. Dixit Chairman Sd/-

S. N. Shanlqar Member Sd/-

Gangeshwar Prasad Member Sd/-

P_ M, Bakshi Member Secretary 27th May, 1980.

'Pam 14~9.

2Para. 15~6.

3Para 16-8.

"Pam 16-10.

A PPENDIX 1 EXTRACT FROM THE INDIAN RAILWAYS ACT, 1890 82A. Liability of railway administration in respect of accident to train:

carrying passengers :----~ (1) When in the course of working a railway an accident occurs, being either a collision between trains of which one is a train carrying passengers or the derailment of or other accident to a train or any part of a train carrying passengers, then, whether or not there has been any wrongful act, neglect or default on the part of the railway administration such as would entitle a person who has been injzn-ed or has suﬂered loss to maintain an action and recover a'amages in respect ;'hereof, the Railway administration shall, notwithstanding any other provision of law to the contrary, be liable to pay compensation to the extent set out in sub-section (2) and to that extent only for loss occasionedby the death of a passenger dying as a result of such accident and for personal injury and loss, destruction or deterio-

ration of animals or goods owned by the passenger and accompanying the passenger in his compartment or on the train, sustained as a result of such accident.

(2) The liability of a railway administration under this section shall in no case exceed ﬁfty thousand rupees in respect of any one person.' 'See amending Act 45 of 1973.

APPENDIX 2 EXTRACT FROM THE WORKMEN'S COMPENSATION ACT, 1923

3. Employer's liability for compensation.--(l) If personal injury is caused to a workman by accident arising out of and in the course of his employment, his employer shall be liable to pay compensation in accordance with the pro- visions of this Chapter :

Provided that the employer shall not be so liable :--

(a) in respect of any injury which does not result in the total or partial disablement of the workman for a period exceeding three days;

(b) in respect of any injury not resulting in death, caused by an accident which is directly attributable to--

(i) the workman having been at the time thereof under the inﬂuence of drink or drugs, or

(ii) the wilful disobedience of the workman to an order expressly framed, for the purpose of securing the safety of workmen, or

(iii) the wilful removal or disregard by the workman of any safety guard or other device which he knew to have been provided for the purposes of securing the safety of workmen.

APPENDIX _ 3 Extract from the carriage by Air Act, 1972 First Schedule, Chapter III, Rules 17-21 CHAPTER III LIABILITY OF THE CARRIER

17. The carrier is liable for damage sustained in the event of the death or wounding of a passenger or any other bodily injury suffered by a passenger if the accident which caused the damage so sutained took place on board the aircraft or in the course of any of the operations of embarking or disembarking.

18. (1) The carrier is liable for damage sustained in the event of the destruction or loss of, or of damage to, any registered luggage or any goods, if the occurrence which caused the damage so sustained took place during the carriage by air.

(2) The carriage by air within the meaning of sub-rule (1) comprises the period during which the luggage or goods are in charge of the carrier, whether in an aerodrome or on board an aircraft, or, in the case of a landing outside an aerodrome, in any place whatsoever.

(3) The period of the cari'iagc by air does not extend to any carriage by land, by sea or by river performed outside an aerodrome. If, however, such a carriage takes place in the peforrnance of a contract for carriage by air, for the purpose ot loading, delivery or transhipment, any damage is presumed, subject to proof to the contrary, to have been the result of an event which took place during the carriage by air.

19. The carrier is liable for damage occasioned by delay in the carriage by air of passengers, luggage or goods.

20. (1) The carrier is not liable if he proves that he and his agents have taken all necessary measures to avoid the damage or that it was impossible for him or them to take such measures.

(2) In the carriage of goods and luggage the carrier is not liable if he proves that the damage was occasioned by negligent pilotage or negligence in the handling of the aircraft or in navigation and that, in all other respects, he and his agents have taken all necessary measures to avoid the damage.

21. If the carrier proves that the damage was caused by or contributed to by the negligence of the injured person the court may exonerate the carrier wholly or partly from his liability.

Introdilctm-y.

Austria.

ehewan.

APPENDIX 4 POSITION EN SELECTED} CGUNTREES AS TO COMPETNSATEON FOR Alli'?-?¢'i0BlIuE ACCEDENTS Several schemes providing for 'no fault compensation for auomobile acci- dent's have come to be enacted in some of the C'ommon'.vcalih countries and aiso in some juf ""Ietions oufsiil-.3 the ('omrr;onwc:.~lth. it woiilil be tedious to give details of the legjislation in Ecmie in the various countries. The material on the subjecé is overwhelmingly wrist The following, is a brief statement of the position in selcsied countries.' s It may be mentioned 'that, these schemes mostly contemplate the payment of compensation without proof of fault. Payment in such cases is mostly made by a corporation created by law or from a fund maintained by the State and is generally subject to ceitain monetary limitations. Compensation exceeding: that limit can, however. be claimed under the oi'dinar;; process. The fund from which payment is made is ﬁitziiicerl by contributions levied from the insurers.

In some countries" payment is made by the insured person or by the insurer. but the State undertakes liability if there is no insurance or if the owner is no' ideniiﬁxi.

in few other countries, fault is not abolished, but the burden of proof of fault reversed.

Brief discussion of the position in selected countries follows.

Legislation in Austria" represents a pruning down of the available defences and a consequential expansion of liability. In regard to a road traﬂic accident, the law of that country' allows only the defence that the accident was due to an uiiavoid-a.l)1e event that is caused neither by a defect in the condition of the vchirrle nor by trziliire of its mechanism.

In one of the Provinces in Canada,, the legislation goes the whole way. The Province of Saskatchewan was the first to legislate on the subject. of no fault compensation. In 194-6 was passed an Act which (as amended) is the Automobile Accident Insurance Act, 1963-1964' of Saskatchewan.

Under this statute, drivers are required to purchase insurance from a Govern- ment insurance ofﬁce, which, in turn, provides a fixed scale of compensation, withoza' the need to establish fault, for accident victims, including drivers. This is not an exclusive method of recovery, and the victim may sue to obtain addi- tional compensation upon the ordinary common law principles. The amount paid under :the~.schen:e is deduateal from any verdict obtained at common law. The drunken, the un-insured or the suicidal driver is excluded from the beneﬁts. The Saskatchewan plan was not directed to relieving cou-rt congestion or to nieetinrg ""ii'lClSmS nrgainst the trial of automobile cases by judge or jury.

5.:

'C'orm.m'cs covercd--Austi-la. Canada, Denmark, Englanrl, Finland, France. (West) Germany Japan, New Zealand, N0rW.1_v, thvedtzn, Switzerlancl and U.S.A. (Illinois, Mtnssaehussets, Michigan and New York.) '-'E.g. Japan.

3Flcming, comment in (1975) A.J.C.L. 513, 518, fn. 30. 'Austrian Railway & Motor Vehicle Liability Act, (E.K.H.G.) 1959, section 9- l.

-":'vIr. Justice Herron and Mr. .It1stieeAspra.y, Paper nn 'Motor Car and the Law' page 12 (Coininm\Vei.l.'.h Tiny .".1'iF4.'i'enno, 1033}.

Sn.r:':;1tcheVVan Le,~'~;|ation.

Fund created to cover the scheme.

The frequency of motor accidents accounts for legislation in Saskatchewan providing for payment of a ﬁxed and limited amount of compensation to the injured party regardless of negligence.' Its self-advertised primary object was to prevent destitution resulting to persons injured by automobile accidents by guaranteeing the recovery of some sum by the injured. Periodical payments are featured during disability. Its scale of beneﬁts is law, e.g., $ 5,000 for the primary defendant in the case of death.

Under the Saskatchewan scheme, an application for a vehicle registration or for a driving licence must be accompanied by a certiﬁcate of accident insur- ance, the insurer being the provincial government insurance ofﬁcer. Persons injured by the operation of motor vehicles may, under the terms of this insurance, recover speciﬁed beneﬁts without proof of fault. The scheme, as a general rule (with exceptions as to drunken driving, driving without licence and certain other special circumstances). reduces liability based on fault as regards the owner and the operator as already stated. Claims based on negligence are not eliminated.' The Saskatchwan Automobile Insurance Act, provides3 that "every person is hereby insrred" against loss resulting from bodily injury sustained in an accident while driving or riding in a moving motor vehicle in Saskatchewan, or as a result of a collision with or being run over by a motor vehicle, regardless of fault.' The certiﬁcate of insurance projects not only the person named in the certiﬁcate. but also any other person in Saskatchewan riding in the vehicle while it is being operated by a properly licenced driver. Any person injured, who is not named as an insured, is also 'deemed to be a party to the contract and to have given consideration therefor, and is protected. The certiﬁcate itself Drotects all persons domiciled in Saskatchewan injured while driving or riding in a vehicle outside Saskatchewan anywhere on the North American continent.' Protection under the Saskatchewan Act is coincidental with the licencing of the vehicle and the issue of a driver's licence, the premium being paid at the time when such licences are issued. A resident of the province will lose the protection of the Act only, ( l;- where he is 1u1der the inﬂuence of intoxicating liquor or drugs to such extent as to be incapable of property controlling the vehicle;

(2) where he dri'-as without a licence or in a vehicle not properly regis-

tered ; and (3) where he rides on a part of the vehicle not designed to seal passengers or carry a load.' This coverage (in Saskatchewan) is secured under an exclusive provincial insurance fund. All drivers and car owners must pay for government insurance annually, concurrently with their applications for renewal of licences and registrations. The terms of the insurance contract are contained in the statute, and the registration certiﬁcate of the driver's licence, coupled with the statute, constitute the only "policy of insurance". This lapses with the expiration of the licence and registration.' 1see (1952) 66 Harv. L. R. 191.

"Mr. Mustice Herr-on and Mr. Justice Aspray, Paper on 'Motor Car and the Law' page 12 (Commonwealth Law Conference, 1965).

"Note in (1961) 39 Can. Bar Rev. 107, 110.

'S. S., 1946, C. 11, s. 12(1), now R.S.S., 1953, C. 371, s. 19(1). 5R.S.S., 1953, C. 371, s. 192 19(2).

°R.S.S., 1953, C. 371, s. 29-30.

7R.S.S., 1953, C. 371, s. 19(2).

C|nada---- Other Provinces.

Denmark.

The law is adnnnistercd by the Su<,l.atchewan Government Insurance Office, a Crown corporation, which was ﬁrst incorporated by an Act of the legislature for the purpose of effecting insurance in competition with private companies.' In respect of its functions under the Automobile Accident Insurance Act, however, it is a statutory body and the procedure resembles that of an administrative board under workmen's compensation legislation.

The scheme in Sat-J;a'cli<:waii has been amended several times and is now found as the /'iutrnnobilc f=.ccident Insurance Act of 1963, 5 Rev. Stat. Saskatchewan, Ch. 409 (1965). The full statutory text requires some 60 pages."

A brief sketch of its provisions follows.":----

(i) All drivers are required, as a condition of driving, to secure a certi- ﬁcate of En.~:urarce by paying a basic premium; paragraphs 3(1), 3(5).

(ii) All insurance is provided lzy the Saskatchewan Government Insurance Office. Paragraph 2(p).

(iii) For his premium the driver buys, in effect, three kinds of coverage:

accident protection (Part Il), property loss (collision, theft, casualty) protection (Part III). and liability insurance (Part IV).

(iv) It is the accident insurance that is the key to the compensation plan.

If provides accident coverage for "every person" suffering bodily injury from the use or operation of a motor vehicle.

(v) There is an elabroate schedule of beneﬁts. For total disability, the maximum beneﬁt is 25 per week for a maximum period of 104 weeks, paragraph 22(2) : for partial disability, the amount is $ 12.50 per week, paragraph 22(3). In case of death the beneﬁts are $ 5,000 for the primary dependant and $ 1,000 to each secondary dependant; if the rlerredcnt (rieceased) vvas a hotixewife, the award is $ 2,000; and if a child, it varies from $ 100 to $ 1.000 depending on the age of the child. Paragraph 24.

(vi) Common law actions for negligence are left intact by the Act, subject to deduction of any accident insurance beneﬁts paid under the Act. Paragraph 77.

(vii) Since the province has an independent scheme of health insurance, it is no'; necessary for this Act to cover medical expenses resulting from .'l?.'."3 !!:"'_( .".lS.

In many other provinces of Canada, while liability continues to be based on negligence, the victim's prospects for collection of damages have been im- proved by the enactment of "safety--responsibility" legislation. There were also enacted "impounding Acts". These Acts provide that after an accident, a vehicle involved in the accident. shail be impounded at the instance of a public oliicial unless proof of ﬁnancial responsibility has been furnished. The vehicle impounded is not released until all claims are settled or security given for the payment and until proof of ﬁnancial responsibility for the future is given.

In Denmarlc. the existing (Denish) Road Trffic Act' imposes a duty to obtain third--party motor insurance. It deﬁnes the scope of the insurance as covering claims made under the special compensation rule of the Act. This rule imposes liability upon the owner or user of the motor vehicle under a fault rule providing for a reversed burden of proof (that is, a presumption of liability)*'.

1R.S.S., 1953, C. 37], s. 3, 4 and 5.

"Gregory & Kalven, ('Mes and Materials on Torts (1969), page 898.

"For details. see Keeton and 0'Conuell. Basie Protection for the Traffic Victim (1965), pages l40----l48.

4(}0ma.r<l, "Cornnensation for auto a.ecidnn'os" (1970) 18 A.J.C.L. 80, 82. 5I.0Vbel{en(1tg'0l'clS0 (Consolidation Act) No. 231, 27th June, 1961, as amended, S. 66(1) and s. 65.

Eng|and---stiitu' ::i_v provision.

Engl and----extrn--

St&l':U. tory magi' j .

nary.

Motor Insurer Bureau in Englnml.

Denmark has, for time being, retained fault liability with a reversed burden in proot. A certain hesitancc to abandon the present systems has been expressed noting that these systems grant compensation to the great majority of injured persons, and that they have been built into the practices of courts and ot insu- rance coinpziiiics'.

in Iinglziiitl, the Road Traﬂic Act, 1972" which re-enacts earlier legislation requires every person who uses a vehicle on a road to take out a policy of insu- rance indemnifying him in respect of any liability which may be incurred by him in respect of the death, or bodily injury to, any person (including a passen- gej") Caused b)', 0r arising out of, the use of the vehicle on a road. Further, a third person _who suffers bodily injury as a result of a tortious act of the insured is given a direct right of action against the insurers, provided that the liability of the insured is first established".

These provisions first passed in 1930 left one gap-a motorist might have no, or no ctrective, insurance. This gap was ﬁlled by an extra-statutoiy piece of iritichincry described below.

The statutory provision---section 145 of the Road Traffic Act 1972-- reads:

_ "iii-5. (l) In order to comply with the requiremerits of this Part of this Act, a policy of insurance must satisfy the following conditions.

(2) The policy must be issued by an authorised insurer. that is to say, a person or body of persons carrying on motor vehicle insurance business in Great Britain.

(3) Subject to sub-section (4) below, the policy:--

(a) must insure such person, persons or classes of persons as may be specified in the policy in repect of any liability which may be incurred by him or them in respect of the death of or bodily injury to any person caused by, or arising out of, the use of the vehicle on a road; and (1)) must also insure him or them in respect of any liability which may be incurred by him or them under the provisions of this part of this Act relating to payment for emergency treatment.

(4) The policy shall not, by virtue of sub-section (3) (a) above, be required to cover--

(a) liability in respect of the death, arising out of and in the course of his employment, of a person in the employment of a person insured by the policy or.of bodily injury sustained by such a person arising out of and in the course of his employment; or

(b) any contractual liability."

The extra-statutory, machinery is in the form of an agreement.

In 1946, the Motor Insurers' Bureau in England entered into an agree- ment on the subject with the government (later replaced in November, 1_972 by another agreement). Under the agreement, the Bureau undertook to satisfy un- satisﬁed iudgrnents in respect of any. liability', required to be covered by a policy of motor vehicles insurance in speciﬁed cases. The Bureau even makes pay- ments in the' case of an unidentiﬁed hit--and-run driver-----a matter governed by separate agreement.

]GOll1£l.l'(1v "Compensation for auto accidents" (1970) 18 A-J-0'1" Sow 84' '=§_~et.ions 13 anil H5, Road Traf'ﬁe Act, 1972- , (1967): Q.B. 363.

3Pos-[ Oﬂice V. Norwich Union Insurance Society Ltd. . M.l.B., (1964) 2 All E. R. 742.

'(-.1) For the text of the 1946 agreement see Hardy V (la) Also see Law ommission of India, 51 St R°P°1'i'* P3395 7"'10: P"""g""'Phs 22'26 '''d (October 24, 1968) New Law Journal.

Finland.

France.' French Civil Code and the legislative frame work as to torliious liability.

_ There is no legal liability on the part of the Bureau to the third party as he 1S'l'10lZ privy to the Agreement, although the Minister might obtain speciﬁc performance .

with ':-rfovztngns for r:omr.iailsoi'y third party insurance, together The g t g e. re erre to above, do not, of course, cover every accident.

.ys em was not intended to provide universal compensation, but only compulsory cover for negligence. The Bureau will repudiate liability when the accident has been caused in circumstances not legally required to be covered by insurance-~-e.g. wholly on private land as distinct from a road. Hence it is a conoitioii preceiiczit to recovery rind-::r such a system of liability insurance that a_ judgment should be obtained against the defendant if liability is contested by his insurance company. The Bureau may require the party bringing the pro- cecdmgs to ta}-:2'. all rt-sortable steps to obtziin judgement against all tortfeasors rcsponﬂzule, and in of-ncr ways the 1972 rigrccment gives it wide powers to control the steps to taken by the injured party".

Hence it may _still be necessary to embark on the lengthy and expensive process of a trial In order to prove fault, and if this cannot be proved, the gilair-tzfl fnclay is in no better position than he was forty years ago?

' In the Nordic countries, the expediency of maintaining presumptive lia- . ' I. 51'",'l ;if,é:=.r%,-inc: irisurancc co'/'crane to this "revert-;ed fault" rule, was actively rlel. rl. The FlllE'llSl'x Act" of 1959 has now practically abolished' the personal liability of the owner and of the user, in so far as the insurance covers the loss or damage. Their liability has been replaced by a compulsory insurance system for the direct beneﬁt of the injured person'.

In certain other countries on the, Continent, while, traditionally, liability has been based on fault, a broader liability was developed, inter alia, in motor vehicles cases by judicial interpretation. An example of such an approach is furni- shed by the position in France, Where the result was reached on an interpreta- tion of a provision of the French Civil Codel.

The legislative framework of delictual liability in France is comparatively straight forward and is detailed in just ﬁve articles of the Civil Code". The tradi- tional basis of liability is fault, understood as an intentional, reckless or negli- gent act°. In addition, there are some special cases where the plaintiff need not prove fault in order to establish liability" ; where the defendant is answerable for the acts of certain classes of persons (e.g. parents for the acts of their children; masters for the acts of their servants); where the defendant has the use, direction and control of an animal; and where the defendant is the owner of a building which, through structural defects or lack of repair has caused damage by its collapse.

In these cases, the burden of proof is shifted: responsibility is presumed with- out proof of fault and can be rehutted only by defendanfs proof of an absence of casual connection between the act in question and the damage to plaiiitiff or.

in some cases, other particular facts.

* --------

'Gurtner V. Circuit, (1963) 2 Q. B. 587; (1968) 1 All E. R. 328, 333.

"White V. London Transport Executive, (1971) 2 QB. 721.

3Ag in Hu.mm- V. Wright, (1938) 2 All E. R. 62L 'Finnish Tra-the Insurance Act. 6th June, 1959.

5Gomard, "Compensation for Auto Accidents" (1970) 18 A.J.C.L. 30, 35- "Finnish Motor Vehicle Insurance Act (26th June, 1959).

'French Civil Code, Article 1384. para l-

SI-Iar-ding, "Fault in French Law of Deliet" (July 1979) Vol. 28, Part 3, I.C.L.Q- 525, 5526, "See Arts. 1382 and 1383 of the Civil Code.

"Civil Code, Arts. 1384 1301383.

Judicial construc-

tion of Article 1384.

Coiriril.-'it.ory nr:§'{.

ligenztc in Frail-2.-.

For 21 m in Fr-n..1ez=.

West. (ierma'1\'-

the l<'_r_;isl.t ., 1' ram exvnrk.

"I1 7'2"." i "an, '- 'tn ' -~' ' liter- .i,..,ori..nt IS Aiucle 1384, alme a 1 of the Code. According to one translation' of the provision in question~ ' "_A person is responsible not only for the damage caused by his own act, out axo tr.::: whch has been caused by the acts of . . . . . . . . . . . . .. lhines Which are under his care." "

[On _est responsible non seculement du dommage que I'on caus per son propre lait, mars. an;-.:oi'e :3; cclui qui est cause par lcs faits . . . . . . . . . . . . (lcs til10SCS que Pon a Sous as garde]*.

The same pmvisi-on l'.-as been thus" translated in another book on French law:-----

"A person is liable not only for the damage he causes by his own act but also for that which is caused by the acts . . . . . . . . . . . . . . . . . .of things which he has under his contro ."

This provision has had interesting history. For most of the nineteenth cen- tury. Fmnch courts read this clause as being simply introductory to be the special cases dealt with by Articles 1385 and 1386 (damage by animals and collaps- ing structures). However, with the increasing industrialisation and mechanisa- tion of .<o«:i-xty and the resultant enl:1:'_uerl risk of accidents which were often anonymous in character (i.e. where it was diﬂicult to establish fault on the part of a particular person) and moreover a growing feeling that the law of delict should serve the ends of compensation as much as those of penalising wrong- docrs Article 1384(1) came to be given a much wider interpretation.

"Thing? was interpreted as even something as diffuse as electricity or gas', and liability was imposed, without proof of fault, for damage caused by such thincr. (which were usually dangerous. such as motor Vehicles and machines), nrovideti that thev were under defendant's "garde" or, more exactly, under "use. dircetfon and control'--".

Contributory negligence is. however, recognised in France as a defence in certain cases by iudicial decisions. The matter is too intricate to permit dis- cussion in this brief study. But it mav be noted that one writer' has critised this appi'oacl~ as "an introduction or fault into article 1384(1), liability and therefore . . . . . . . . . . . . contrary both to the logic of the provisions interpreta- tion zznzi to the policy behind that interpretation"".

It \'~J('.'«'sl(l 'no. of interest to note that in France' liability for motor acci-

dents has been entirely taken out of the hands of administrative courts and subjected to the principles of private law and the jurisdiction of ordinary courts.

In tlvr 'Vt' Repitlt-!7c of Germany, somewhat similar developments have resulted, l<=xt ii":-. .. have been achieved more by direct legislative provision than by judicial decisions For tortious liability in general, the relevant articles of the Code of Civil (in West Germany) is Article 823, paragraph 1, of the Burger- licltes Geseizbuch (B.G.B.).

'Article 1384. para 1, French Civil Code.

2HﬂTlllﬂ7, "French Law of Deliets" (1979 July) Vol. 28, Part 3, I.C-L-Q- 525- 3Amos & Walton, Introduction to French Law (2nd Edn. 1963), pages 226, 237 (Article 1381).

'Sen Encyelopedie Dalloz, 4, No. 139, 141.

-'*(',h. mum. 2 Dee. 1941, D. C. 1942, J. 25.

"Harrling, "Fault. in French Law of Deliela" (July 1979) Vol. 28, Part 3, I.C.L.Q. 525, 526.

"'}lar¢linr:, "Fault in the French Law of Delict" (July 1979) I.C.L.Q. 525, 529.

3Kn.lm-l"renn«l. L'~:'_'-v and Rurldon, "Source Book of Franc?' Lﬁw" (1973) page 203 (Lawofl

l)omrnlmi~. 15157).

Apportionment On the basis of contributory neg-

lizence.

Position as to 0DiiiSl()t'.S. R-'Gad Tralﬁc Act The Civil Aspect.

Contributory neg ii gcncci Germany----Roa(l Tra.ﬂic accidents in G-0rmnn_V----Some matters of detail.

ii reads:~ '_".s';nj.'one wC=ao::c intentional or negligent act causes unlawful harm to the dc, body, health,' liberty, property or any other right of another is liable to make preparation for the resulting damage".

scs on any person who infringes a statutory to pay A1'tlclc 823, pa:'2:g,;'apli 2 im provzson intended for the protection of others, the same obligation ctinipensatitzn.

V ..'--. ";_:::;I;ii i:aw----~The Road Traffic Act------rnakcs certain special provisions ';<-: ',::'f':'.c :i:.'<ic.;'.~. Ln (',\/est) Germzzity.

The , 1122:': .1? the work accidents insurance scheme.

Hence, in general, in West Germany, compensation for injuries must be sought by either proof of fault under Article 823 of the Code Civil or by reliance on the Road 'l'i'a!'v:":c Act of E952, or by claiming under the work accidents lY}"'.lf£1!'!Cl3 scheme.

This is the position as to creation of liability. The question of its apportion-- men': :r:idcr- section 254(1) of the Civil Code (West Germany) is also of interest. If i'::: p.::1ntiﬁ's fault has contributed to the damage, than the defen- dant's ohligaiioii-~ and the extent of his obligation----depend upon the circum-- stances and. particular, on how far the injury has been caused predominantly by one or the other party.' However, in the situation where both the plaintiff and the defendant are in .corm'oi of a niotrrr \'c»s'iic-ie_, both are strictly liable for any damage caused by i.ii<:'r vehicles on 13.19. basis of the operational risk ilietriebsgefahr) involved in ue'in§_: the vchi-:les."

The Road Traﬁic Act, 1952 (Germany), imposes strict liability" on the l<.<:c,>::=: if" '.'= ' :'*, tliough, if he can show that the accident was due to an '"t1nnvoEdal:le . that is caused neither by a defect in the condition of the '-c3'.'.iclC, no-1' hi' :1 it-;=:;e of its rnechanisrn" and that he or his driver had shown the care of a 'skilled driver, he can avoid liability. The driver, as such, may also he found liable under a separate provision of the Act which reverses the '~*--.'" ion of proof.

There is a maximum sum awardable (at present DM 2SO,(l(l(l' by way of lump sum or DM 15.000 by way of annuity, in respect of one accident)._ These damages do not include compensation for pain and suffering or aesthetic loss. and hence questions of fault will often have to be adjudged on, for an action under the Road Traffic Act does not preclude a suit under Article 823 of flat', 9.6.3» xv-yqgxn law concerning road traﬁic accidents is detailccl and an article' on West German legisla-

as showing the attention T__?'-lid to The West G-' mmplicated. The followiml quotation from tion on this subject would be of interest, 'H-n'rc_"nI>Y' t:F\ﬂu't E,' thq Frcqcfl Til": gf ijgiict," I979), 23, Part 3, 1.0.-L.Q.. 525.

529. 38433 the Sfrassaniierkehrsgesetz of Dec. 19, 1952. 3§cetion 7. West Germany Road Trafﬁe Law.

'The exchange rate of the German Mark on May 1- 1978 was £1='DM 3' 93' 5H 0 Ham," =\,q0to1-T.~3,t'ficAmiden+sai1dWestGerman Law" (N76) 126 NW? 14- J-

1201-i202.

certain matters of detail in order to facilitate proof :--

"A German driver who is involved in a ioad traffic accident and knows that an accident has occurred is obliged not only to disclose his name, address, car registration number and insurance details but also to do all that he can to give a clear picture of the facts connected with the accident and to keep to a minimum any damage which could result therefrom [paragraph 71(2)3, The General Conditions of Motorised Vehicle Insurance].

"This requirement can lead to practical difficulties since, to fulfil it totally, it is often necessary tha. the vehicles involved remain exactly where the accident occured. Sometimes this is possible, until the police arrive. Yet, traﬁic conditions can necessitate that the vehicles be removed from the highway because they constitute "an obstacle, dangerous to other road users. If such be the case it will suﬂice if the C0llision--_oo3iti0n of the vehicles is ciearly marked out on the road, together with any skid marks, before they are removed. Chalk markings, measurements taken with a tape-measure, a sketch or photograph will sulﬁce. The Federal Court of Justice (BGH) has decided that full compliance with paragraph 7 can be excused only if it is absolutely necessary to remove the vehicles in the interests of maintaining a safe ﬂow of tratiic (BGH II ZR 35/59). At night, for example, it would be unreasonable to leave collision-vehicles and injured persons on a busy road (BGH IV ZR 527/58). A German driver who, without good reason, does not comply fully with paragraph 7 runs the risk of losing his insurance indemnity, for, although his insurance company must meet third party claims, it will be entitled to recoup any sums paid out from the driver himself.

"A driver involved in a road traﬁic accident has a duty also to prevent further accidents arising from his mishap. He must stay by his vehicle to warn other road users, and, when the police arrive, may only leave it when ordered to do so by the police (BGI-1 VI ZR 195/59). Warning triangles should also be placed on the road at "least 50m to 80m from the accident spot; at night they. should be illuminated (BHH Vers R 69,668). Other road users must exercise due care if they see that an accident has occurred or signs which might so indicate, eg a stationary police vehicle with ﬂashing blue warning light.

"On being involved in an accident and knowing that an accident has occurred there is a duty to stop. Paragraph 142 of the Penal Code (St GB), formerly headed Verkehrsunfellﬂucht ("hit and run" trafﬁc accident), was revised in 1976 and is now entitled Underlaubtes Entfernen Vom Unfallort (illegal leaving of the scene of the accident). The para- graph, which imposes criminal sanctions in certain circumstances, in primarily concerned with the procedure to be followed when an accident takes place so that civil law remedies can be the more easily pursued and the settlenzent of insurance claims facilitated. It states, inter alia, that any person whose conduct, in the given circumstances, may have contributed to the accident must remain at the scene of the accident. _'Any person' includes other road users, passengers and also pedestrians, it' there is a possibility that they caused, or partially. caused, the accident. All such persons "must declare that they were involved in the accident, but none needs to say how he was involved. In fact, the elimination, concealment or removal of evidence, even taking a drink to alter the alcohol level in one's blood to defeat a blood test, is not punishable under paragraph 142. (But such conduct makes one liable to a ﬁne under paragraph 34 of the Strassenverkehrsordnung (Road Traffic Act). Also, the_ Federal Court of Justice has decided (BGH II ZR 53/65) that such action can result in the loss of one's insurance indemnity, since paragraph 1, supra, lwould tnot ' statement as to one s own Invo vemen in tbl'1e6O21i)(fCelr(¥CeI(1llZ).iSEIi](?tn apluhrigliiihigt under paragraph 142. So, if, after an accident, an involved party just stands there without saying a word he is 74 h'able'to prosecution under paragraph 142. But, an involved person, who talscly describes his iiivoivciiient, is not. in both ins.ances, iiozvcvcr, no would contravene tne requircnleiits Lil paragraph 7, supra, _ "Paragraph 142 recognises that there inight wcii circumstances in which one has to leave the scene of the accident at 0'i*Cc e g to transport ' ' '-- ... ,. .=..,: , A , -. . ...

dl1>1l1_|l:lI.'c.d personlto hospital 0; to obtain medical attention for oneseii (even it it should ruin out that the ingurics were only minor); "perhaps to evtide tnreaieiied violence trom the ozner part. In such cases the formali- ties required by. paragrapli_142 must =.:=c completed as soon as possible later (unverzuglichnachtraglich), on returning to the police.

I "If an accident takes place and no one else is present, a problem arises. For example, one bumps into an empty parked car or damages a iericc on a lonely country road. An d';.)lCiC:.l1l has talrcit place and the.'-4 £5 a duty to stop. But for how long'! In the tits; exziinple one might wait tor half an hour, leave ones name and address under the windscrecii wiper and then inforin the no-arcs'; police station of ones involvement in an accident giving the registration of the damaged car. In the second cxziniplc, one would not be expected to camp all night at the scene of the accident before trying to ﬁnd the owner of the fence-----one would inform:

the nearest police station. The test is 2 did the driver act reasonably and responsibly in the circtimstances? It should be added that if a driver zicts as described in such circumstances as just instanced ie would not fail to comply with paragraph 7, supra, (nor paragraph 142) and so would not lose his insurance protection (BGI-I II ZR 24/65).

"If, however, an accident occurs and no-one is injured except the driver himself or there is no damage to property other than that of the driver himself, there is no duty under paragraph 142 to stop nor to report the accident to the police (BGH St R 148/55) even it the driver was in any way unﬁt to drive at the time of the accident.

"Paragraph 142 makes it clear that repentance is irrelevant. Thus, if a driver has an accident decides not to stop, then repents and returns to the scene of the accident 'to do the decent thiiig', the driver is guilty of illegally leaving the place of the accident and can be imprisoned for up to three years or ﬁned. The fact of repentance may, however, lead the police not to prosecute or, if they do, result in at reduced sentence or fine.

In 1974 there were 32,372 successful prosecutions under paragraph 152.

"when a road tratlic accident occurs it is always advisable to call the police to the scene of the accident. The police are obliged to investigate any accident, being considered 'to be in the position to ascertain the necessary facts with the requisite expertise and reliability'. Even if _the accident damage is only to property (Sachschaden) and is of a minor nature the police cannot refuse to investigate (Bayr OLG lb st 288/65). When the "police arrive the parties to the accident are not obliged to make any statement (except to fulﬁl the requirements of paragraph 142) and are advised to check the accident sketch and report made by the police since, in subsequent proceedings, whether civil or criminal, there will be a rebuttable presumption by the court that both documents are accurate and complete. In cases where only very minor damage is caused, e.g. a dented mudguard, the participants may decide to settle repair costs between themselves. This could be unwise on the party of the defaulting driver, since the other driver might still decide to report the accident to the police, and to the other party's insurance company, especially if be discovers the damage to be more extensive than originally diagnosed. In such a case he would put himself in a much stronger position than the other party since he has asked the police (the [H0961 authority) to iI1V6§tl- gate the collision. The driver who was willing to settle would also be acting Japa.n--Liability under the Civil C0de--Conditions of civil liability.

Legislation in J apan.

contrary to his insurance contract in that he, by paying or promising to pay for the danitzge he caused, coi1Li'a\'eried paragraph 7 11(1) of the General Conditions or lvlotoris-ed 'v ehicie insurance which states: On causing damage which involves liability to third parties the insured person is not permitted, without the previous "consent of the insurer, to admit or to satisfy :1 claim totally or partialiy. In all but exceptional circumstances he might wcfl lose the protection of his insurance company (pztragriipli 7 11(2) of the General Conditions and BGH 11 ZR 173/03)". L V In Japan, the basic provision of the Jnpaiiese Civil Code reguiatinsz tortious liability is article 709, which provides:

"A person who, wilfully or negligently, has injured the right of another is bound to compensate him for the damage which has arisen therefrom."

Article 72;':<1':.) ot the Civil Code of Japan, dealing with the pl.iii1til'E's negli- gence, provides 2' "if there has been fault on the injured party, the court may take it into account in determining the amount of compensation tonilainages." This is the ci'vil--la\v rule of comparative ricgligence; tault on the cart or the injured party does not necessarily "extinguisli the wrongdoer's liability, but only reduces the damages he must pay. inns if a pedestriari or a cyclist who was in_§iircd by an automobile was himself at fault, the (l.':Il'lL't';L'.S are reduced according to the degree of fault of the parties at-.:l at the discretion of the court. When two automobiles collide, reciprocal liabilities generally arise."

The court then reduces the amount of damages owed to each party under the principle of comparative negligence, and the difference is paid by the party owing the larger amount. These computations are often difficult to make and may, in some cases, hinder or prevent settlement out of court.

When a driver is employed by a taxi company, a trucking company, or an individual, the employer is ordinarily liable for injury caused by the employee, assuming that the latter would be held liable under article 709. Article 715(1) of the Japanese Civil Code prescribes the employer's liability in these terms:' "A person who employs another for the purpose of any undertaking is bound to compensate for damages which his employee has inflicted on a third party in the execution of this undertaking. Provided, however, that this does not apply if the employer has exercised adequate care in the selec- tion of the employee and the superintendence of the undertaking, or if the damage would have arisen even though adequate care had been exercised."

Literally, this provision exempts an employer from liability if he can prove that his selection and supervision of the driver were faultless; but the courts have long refused to allow such proof. The employer who has paid such compensation may demand reimbursement from the employee, however, under article 715(3), although often he does not do so.

The Japanese Automobile Damage Compensation Security Act primarily compels' liability insurance covering ﬁxed amounts, but the government makes a contribution to the cost and there is an entirely new system of "provisional payments". "The mere fact of . . . . . . death or injury (having been caused) by the operation of an automobile entitles the victim to demand payment from the insurer in an amount of about one-third of the compulsory policy limits. Reimburse- ment of amounts, thus 'provisionally' paid in the absence of liability, is limited to a claim by insurer against the government which in turn may, but hardly ever will, recoup itself from the victim".

'Von Mehren (Ed.), Law in Japan (1963)» Page 401- avon Mehl-en (Ed.), Law in Japan (1963), pages 401, 402.

svon Meh;-en (Ed.), Law in Japan (1963), page 402.

4Ehrenzweing in (1956) 5 American Journal of Comparative Law 273.

Liability in J span.

Use of concepts.

I This last p1'(JVl.'i'iUl1 goes some way towards the approacii of compciimtion irrespective of fault.' The Damage Law can be best discussed by being broken down into three topics: liability, compulsory liability insurance, and governmental compensation of injured persons not otherwise compensated through insurance?

As to liability, article 3 of the Damage Law" provides as follows:

"A person who, for his own beneﬁt, places an automobile in operational use, if he has injured the life or body of another, is bound to compensate him for the damage which has arisen therefrom. Provided, however, that this does not apply if he can prove that he and the driver did not neglect care in the operation of the automobile, that there was wilfulness or negligence on the part of the injured party or a third party oiher than the driver, and that there was no structural defect nor functional disorder in the auto- mobile."

Some concepts in article 3 of the Automobile Damage Law are used in a special sense'. The term "automobile", as deﬁned in article 2(2) of the Road Transport Vehicle Law, includes almost every kind of motor vehicle except motoi'--,bil<es, that is, passenger cars, trucks, buses, motorcycles, and motor scooters.

The "owner of an automobile or a person otherwise having the right to use an automobile, who, for his own beneﬁt, places an automobile, in operational use"

is deﬁned as a "holder" of a motor vehicle. This term does not include an un- authorised operator, such as a thief. However, the broader language of article 3 is less restrictive and embraces the unauthorised operator as well. But a mere "driver?" engaged by an owner, since he is not operating the vehicle "for his own beneﬁt", is not liable under article 3 but only under Civil Code.

"Operation" is deﬁned in article 2(2) of the Damage Law as the ordinary use of motor vehicle without regard to whether it is used in the transportation of persons or goods. This deﬁnition is applied somewhat arbitrarily, however. If an unoccupied motor vehicle starts moving because it was improperly parked, or if a pedestrian is injured when a door of a parkedpvehicle is opened, an injury inﬂicted results from the "operation" of the vehicle. But when one driver, working on'his vehicle at a service station, ignited a ﬁre by dropping a spark that fell on a gasoline can, the injured service-station attendant was held to have no rights under the law because the accident did not result from the operation of a motor vehicle.

Article 3 C()\-'l3['S. injuries to a taxi passenger, for there are no speciﬁed in'ured persons who can claim recovery. As is pointed out below, however, it is diiputediwhether article 3 applies to injuries suffered by passengers who are either guests or members of the holder's family. i 3 is limited to the damages arising from death or ' ' ~ d' l , the rovisions of the Civil Code govern claims for persorrliil iiiiiiiaigé a%li)ef elggliision oil property--damage coverage in the law is due

l)m'il'iee)l1eavy economic burden on holders of motor vehicles that would result fgom nearly strict liability and compulsory insurance for property damage.

, 1' bilit d article 3. Thus. if an employer is the 1d Th%1h(]?1l1?]:Il bigirse trligt lcilnly lihematfsrence of fault in his employee. but also htoh erinateters sucli as the fault of the injured person. The liabihty of the driver too 'ﬁll-s employer remains under article 715(3) of the Civil Code, if the employer can prove fault of the employee.

Coverage under article 'See Sir John Barry: "Compensation Without I.itl¥atl°"" (1954) 37 A"St' LI' 339' 349' "Von Mehren (Ed.), Law in Japan (1953), Page 406- 3The Automobile Damage Gompensation Se°"'il." Law lJ"?"'"' lN°' 97 °f 1955)' Avon Mehren (Ed.), Law in JEIJBI1 (1963): P5395 406 H1' 77 This right of indemniﬁcation, however, comes into existence only when the total damage exceeds the amount covered by the compulsory insurance', because the insurance covers both the holder and the driver. Other matters not speciﬁ- cally mentioned article 3, such as the measure or damagcs'~ and comparative negligence, are still governed by the. provisions of tlie_Civil Code (Japan). "

Compulsory liability No one is to operate a motor vehicle unless it is covered by insurance Insurance In Japan as required by article 5 or the law. When a contract or libility insurance has been concluded, the insurance company issues a certiﬁcate to the insured;'the docu- ment must be kept in the vehicle during operation and.must be presented to the proper administrative ollicers upon request and when any interest in the vehicle is to be transferred. An insurance company may not retuse to write a contract of liability insurance. In order to make these provisions effective, violation of any of them is punishable by ﬁne or imprisonment; for example, operating an un- insured vehicle may be punished by a ﬁne of not more than 30,000 yen or im- prisonment for not more than three months.

The law does not provide who shall procure the policy of liability insurance; in practice, the holder generally takes it out.

Under the liability-inusrance system, the insurer must indemnify the holder for any liability he has under article 3, up to certain limits. The amounts of in- surance payments are prescribed by article 2 of the Enforcement order, imple- menting article 13 of the law, as follows: for death, 5,00,0U0 yen; for serious injury, l,00,000 yen ; for slight injury, 30,000 jqen. These are the maximum bene- ﬁts payable under compulsory insurance; when actual damages are less than those amounts, payments equal to the actual damages are to be made.

The provisions on compulsory insurance do not apply to_motor.vehicles ope- rated by the state, public corporations, prefectural governments, and the live major . J apancse cities. These holders presumably have the means to pay damages and are willing to do so. For holders of large ﬂeets of vehicles, the law provides a system of selt-insurance instead of liability insurance. Such possessors must obtain the approval of the Minister of Transportation; the standards for the grant of approval are ownership of more than two hundred vehicles (a bus being treated as two vehicles), the ability to pay damages, and the absence of danger of frequent accidents. Regulations provide that the self-insurer must maintain a reserve fund and must manage the assets thereof in order to meet whatever motor-vehicle lia- bility it might incur. i G'0Vel'llII1t,-iii', com- In the usual case in Japan, the injured person has no ditficulty in obtaining Pellsatiml in Java" compensation for his injuries to the extent of the coverage of the liability insu- rance, but in some exceptional cases there is no such coverage. In these, the govern- ment pays compensation to the injured person, just as insurance companies often make direct payment to injured persons. Then the government is subrogated to the injured person's rights and may seek reimbursement from the injurer, who remains primarily liable. Thus an injured man always has the benefit of some kind of liability insurance. Governments do not ordinarily pay compensation for injuries incurred through an accident between private persons----in Japan, the only other example is the case of damage from atomic energy----a_nd_tliis exceptional and progressive provision shows that the relief of persons injured in lIl0iOl'-_V€l'llCl6 accidents is considered a problem of vital importance.

The government compensates injured persons for loss of life or personal injuries resulting from the operation of a motor vehicle in two types of cases. The first is that in which the injured person cannot demand damages under article 3 because the holder of the vehicle is unknown, that is, the case of hit--and'-run ._ driver. Even if the driver or the holder of the automobile was covered by liability? insurance, the injured person cannot take the beneﬁt of the insurance. The second ..'. case is that in which the required coverage has not been taken out, either bccausﬁ the holder has not obtained liability insurance, whether forgetfiilly, neglectfullyfe or intentionally, or because the accident was caused by a thief or other unautlp-' rised driver whom the compulsory insurance does not cover. -' :50-L{B(D)457MufLJ&Cr&~ 6 I Newzealand.

Abolition of tort action.

New Zealand.

Compensa.tion----

Soope of --- in New Zealand.

Injuries covered In New Zealand.

Statatitory Coup mission.

Proccd iii'c---Farina! application.

New Zealand has adopted a comprehensive plan for dealing with all acci- dental iiijmies, no matt'cr'how caused.

The New Zealand legislation has abolished all rights' of action in tort for per- sonal injury or. death and has provided instead, for L4)tate--funded compensation in respect of an those V~.'l;0 suiiei'ed injury or death due to an accident, whether or not caused by the act or default of another.

"line New L:';;l:2lllLl Act has been described as "the most ambitious reform of tort law in the common law word' ~'. It makes provision for the compensation of-- ti) earners who sufier personal injury by accident regardless of place, time or cause;

(ii) all persons 'who, in New Zealaiid, suffer personal injury by vehicle accident;

(iii) certain dcpciidantsof those c'=j"ncrs and motor vehicle accident victims where death results trom the injury.

The only (very limited) survival of the fault principle is that a person who wilfully inflicts injuries on himself has no claim, but even then dependants may be coinpcnsatcd if in special need.

The. Acﬁ establishes an E2-.rner's Scheme and 21 Motor Vehicle Accident Scheme, the former dealing with personal injuries to earners (but not limited to injuries arising out ()f€D.'lplOyl'l1€'l1l), and the latter covering the entire population with respect to injuries inflicted by motor vehicles. Where the schemes operate, tort action is abolished.

Compensation under the New 'Zcaland scheme includes medical and related beneﬁts, compensation for lost earning capacity at a rate of 80% of earning up to :5 200 a week, lumpsum payments for non--pecuniary losses in cases of permanent loss or impairment of bodily function to a maximum of 3 5,000 and coi'np::iisaiion for pain and suffering and loss of amenities to a niilxlmulll of 7,500. Other in_i,ury--relatcrl expenses are cove:-'ed as well. Death beneﬁts include funeral expenses, and an allowance for a dependant widow or widower of 50% of the amount that would have been payable to the deceased for loss of earning capacity. The dependants' allowance is higher where other dependants are involved.

a motor As to the injuries covered, the New Zealand scheme provides for com- pcnsatioii for personal injury accideiit as also 50: death. it should be noted that the scheme purpcriz: to 'o a i::iiﬁ3d and comprehensive scheme of accident compensation, inasmuch as it is not conﬁned to injuries caused by motor vehicle accidents. The CGl11pCllF;LiliUi"l awarded under ih:s scheme is irrespective of fault. As a result, personal injury by accident is taken out of the ﬁeld of the law of torts. ' '~

3..

'1 The away-zl of compensation is by a Corrmission constituted for the pur- po:-'c under the Act. It is a liody corporate w,,ih three members appointed for a three year term, on the i'eco:nmcnda~*'.ioii of the Minister of Labour.

The procedure is brieﬂy this.' The applicant for compensation submits a formal application to the Coinriiission, and in iiiany cases the decision is made by the staff of the (foniinission. w:.=.h scope for an application for review to the Commission (with hearing). There is an appeal to an iiiclepeiidcnt appeal authority and a further appeal (with leave) to the Sziprcmc Court. An appeal, with leave, can be ﬁled in the court of appeal against the decision of ti:-2. Supreme Court. There are detailed pi'ovirs§ons tor the 'tlSS€fS'll€l1E of earnings.

'Tho Accidents l.'oiiip(.=iisi:-! Vin Act. [972 (New Zcalaiid). 'Gcoﬂ"i'oy W. Pdllllt'-L', " C-onip -zisatioii For Personal liijury : A Requiem for the Common Law in Ne-,\\' Zealnml" (U373) 21 Amer. J0'!I'. Com. Law I. 3A(:cident Ci)mpoz)Sal;i0n Act, 1972. New Zeland Statutes, 1972, Vol. 1, No. 43. 'See Hepplo, Tort (1979) Appendix 5, pages 715---722 and -Supplement page 73.'.

Earners' in New Zea] mul.

Funds created New Zealand.

scheme in 79 Part III of the New Zealand Act provides for the establishment of an earners' scheme under which cover may be either (a) continuous cover, or

(b) work accident cover'.

(:1) Continuous cover :

This entitles an earner to rehabilitation assistance and compensation in respect of personal injury, "if the accident occurs at any time while the cover continues whether or not the accident arises out of and in the course of his employment."

Part IV of the Act provides that all persons "shall have cover under the motor vehicle accident scheme in respect of personal injury by a motor vehicle accident in New Zealand and death resulting therefrom", if the vehicle was regis- tered and licenced or required to be registered and licensed'. Cover also extends to accidents involving motor vehicles of visitors to New Zealand,' towed regis- tered and unregistered vehicles} agricultural trailers" and invalid carriages".

The New Zealand Act creates two main funds from which compensation is to be paid: an Earners' Compensation Fund and a Motor Vehicle Accident Com- pensation Fund'. There is also an Active Service Compensation Fund in respect of accidents in the armed forces, and a General Fund to which most adminis- trative expenses are charged and the income of which is largely derived rate- ably from the other Funds'. ' The Motor Vehicle Fund receives money from two sources:

(a) levies charged on every licensed and registered motor vehicle (the amount payable being an adaption of premiums payable under the former third party liability system, e.g., $ 11.35 on private motor cars, $ 7.90 on motor cycles)",

(b) an annual ﬂat rate levy of $ 2 on every driver's licence". There is. power to prescribe diﬁerent levies for different classes of drivers" and to impose penalty rates on drivers with bad records.' The Earners' Fund in New Zealand pays compensation due to earners, in-

cluding that payable in respect of motor vehicle accidents arising out of and in the course of employment. This fund receives money from levies on employers in respect of earnings of employees and levies on the self-employed". The levies are payable at rates prescribed by order-in-council" and by notice in writing the A.C.C. may impose a penalty rate of levy on any employer or self-employed person whose accident record 'is signiﬁcantly worse than that normally set by others of the same class". The A.C.C. may also set a rebate of levy where an accident rate is 'signiﬁcantly better than that normally set by others of the same class'". The levies must be within limits speciﬁed in Part I of the First Schedule (Between 0.25 per $ 100 and $ 5 per 3? 100)", subject to a maximum amount (at present $ 10, 400) of the earnings on which levies are payable".

'S. 6 Alternatively, one member must be so qualiﬁed.

"S. 7.

"S. 92.

'S. 93.

5S. 94.

"S. 95.

'S. 96.

BS. 31.

vs. 32 (3).

"First Schedule, Pt. II.

"First Schedule, Pt. III.

"S. 100.

1"S. 10t)(d).

"S. '71.

"S. 72.

IVS. 73(1) (a). This may not exceed the normal rate for that class by more than 100 per cent. "S. '73. (1) (a).

"First Schedule Pt. L "S. 74.

Norway.

Accident insurance in Norway.

Sweden----general position.

Swedish law oi' torts.

S0 ' In Norway, as early as 1912, strict liability was introduced for road traffic accidents. The Norwegian Motor Traffic Act (1912) imposed strict liability for loss_or damage caused by motor vehicle (with an exception for contributory negligence). As a result of fairly recent amendments, .the general liability of owners of motor'-ems has in the main been abolished. The traditional personal liability (whether based on a reversed fault rule or on a strict rule) has receded into the background and has been replaced in the main by a system of compul- sory ﬁrst party motor insurance".

Personal liability (of the owner and user) is thus abolished, in so far as insurance covers the loss or damage'. Their liability is replaced by the insurance system for the direct beneﬁt of the injured person'. If the loss or damage exceeds the limits of the policy personal liability survives.

The development of the Norwegian compulsory tratlic accident insurance for motor vehicles is of great interest. But we may conﬁne ourselves to some of the salient features of the present system'.

Every registered motor vehicle in Norway must carry traffic accident in- surance for the beneﬁt of all potential accident victims, including the passengers, except the driver himself. The victim has a direct claim against the insurer. As long as the claim does not exceed the compulsory insurance limit-----Norwegian kt. 200,00 (about 28,000 Dollars) for each person wounded or killed---negligence on the part of the owner or the driver of the vehicle is irrelevant, The only requisites are that the damage in question was caused by the vehicle, that the vehicle was not being utilised for other purposes than_ as a means of transporta- tion, and that it was not parked in a place to which the public had no access. Claims in excess of Norwegian kr. 200,000 follow traditional rules of tort law, and negligence or mechanical defects must be proved. Such claims may be reduced to an equitable amount, if full liability is considered too heavy a burden on the tortfeasor".

It may be noted that under the Norwegian Motor Vehicle Liability Act (section 10), insuraiice companies are liable also to pay compensation to victims of uninsured automobilesl. Under section 13 of the same Act, the company which pays has recourse against the person who should have taken out insurance and also against the driver.

Sweden has recently introduced "no fault" liability for road traﬁic accidents. But the process has been gradual, and its evolution is of interest.

Until recently, Sweden retained fault liability (for road accidents), though with a reversed burden of proof.

General liability in Sweeden for personal injury is governed by the Tort Liability Act of 1972, which requires a person causing personal injury inten- tionally or through negligence to compensate the person injureda. An intentional or grossly rggligent act on the part of the injured person may operate _to reduce the damages payable, and there may also be a reduction if the liability would be excessively onerous for the defendant, having regard to his ﬁnances, though this must not operate unfairly towards the person injured.

1Goinard, "Compensation for Auto Accidents" (1970) 13 A.J.C.L. 80, S2, 83.

"See also Hellner in (1972) 16 Scandinavian Studies in Law, page 187.

3Motor Vehicle Liability Act, 3rd Feb. 1961 Norway.

'Gomaru, "Compensation for Auto Accidents" (1970) 18 A.J.C.L. 80, 85, 88.

5Se1mer, "Interaction between Insurance & Tort Theories" (I970) 18 A.J.C.L. 145, 149. Gsclmep' strimeruction bet-Ween Insurance & Tort Theories" (1970) 18 A.J.C.L. 145, 149.

"Gomard, "Compensation for Automobile Accidents" (1970) 18 American Journal of Compara- tive Law, 80. 97- asee Hellmer, "New Swedish Tort Liability Act" (1974) 22 Am. J . Com. L. page 1.

Swedish Act of 1916 as to motor Vehicles.

Swedish Act of 1975 as to trallic danlagc.

Personal injury Boards in Sweden.

But the Swedish law of general tort liability does not govern injuries suffered in a road accident.

Statutory liability' for road accidents was based on two main principles :-----

(i) rebuttable presumption of fault, and

(ii) liability of the owner of a car for the presumed fault of the driver.

As to the ﬁrst principle, reference may be made to an important Swedish piece of legislation. This legislation imposed a liability" upon any person using or allowing a motor vehicle to be used for tratﬁc on public roads unless he proved that the injured person himself had contributed towards the injury, or it appeared from the circumstances that the injury could not been averted by using all the attention and care required on the part of the driver".

The burden of proof was thus imposed upon the owner or user to show that a negligent act has not been committed. This statutory rule which imposes liability on the holder of the automobile unless he can prove absence of negli- gence in operating the vehicle and keeping it in good order, differs from the Anglo-American use of the maxim res ipsa loquitur, in so far as the reversal of the burden of proof applies to all cases covered by the statute, not only to those where the conditions necessary for the application of the maxim are present.

The second principle (vicarious liability) is nothing peculiar and need not be discussed.

Subject to these special rules, the general doctrine of fault continued to govern liability in Sweden for road accidents upto 1975.

A certain hesitance to abandon the tort system was expressed, noting that these systems granted compensation to the great majority of injured persons, and that they had been built into the practices of courts and of insurance companies'.

This position continued upto 1975.

After 1975, in Sweeden, personal injury claims relating to road accidents came to be governed by the (Swedish) Tratlic Damage Act of 1975. This Act' creates a "no fault" scheme of compensation based on compulsory insurance, wizh claims being made directly againsz the insurer. Contributory negligence may reduce or bar damages if it constitutes gross negligence or wilful misconduct (e.g. self-induced injuries), or if the driver is drunk and negligent. Though action in tort is not barred, the fact that compensation (even under the no fault scheme) is assessed on the same principles as tort damages makes future tort actions unlikely. An insurer has a right of recourse against the insurer of another vehicle which was responsible for the accident, and also against any person who caused the accident deliberately or by gross negligence.

A special feature of the Swedish law governing tort compensation for death and personal injury is that the assessing of the awards is very much centralized. The insurance companies are obliged to consult central "personal injury boards"

(there are separate boards for tralﬁc insurance cases and other liability insurance cases), before settling with the injured party".

1The Motorists Liability Act, 1916 (Sweden).

"In Denmark the stricter liability rule was introduced in 1903. Liability to insure was introdu- ced in Denmark in 1918; in Sweden in 1929 (The Traffic Insurance Act, 1929).

"Gomard, "Compensation for Automobile Accidents" (1970) 18 A.J.C-.L. 80, 83. 'Gomard, "Compensation for Auto Accidents" (1970) 18 A.J.C.L. 80, 84. 5Tra,tﬁc Damage Act, 1975 (Sweden).

°Selmer, " Personal Injury Law in Nordic countries" (1970) 18 A.J.C.L. 54, 56.

Procedure of Boards. ' Switzerland .

The statutory Traffic Board in Sweden settles all disputed claims involving disability of 10 per cent or more, and fatal accident claims. The Board makes recommendations, which are not of binding effect, but they are normally followed by the insurers. In most cases, courts accept the ﬁgure suggested by the Board.

The Swedish Traffic Board is composed of four lawyers who are judges or former judges by profession (herein called the "judicial members"), and 16 insurance company officials, mostly lawyers (herein called the "insurance members"). The chairman, who must be one of the judicial members, is appointed by the Government, and the other members by the Swedish Association of Traffic Insurance Companies, subject to approval by the Insurance Inspectorate. When the Board deals with particular claims, it sits in panels of only four persons (two judicial members and two insurance members); if the voting is even, the vote of the chairman is decisive. The Liability Board is composed of two judicial members and eight insurance members, all of whom are appointed by the Asso- ciation of Swedish Insurance Companies; a quorum requires one judicial member and three insurance members'.

Each of the boards has a full-time working secretary (in the Taﬁic Board, a lawyer). The annual costs for the whole activity of the Traﬂic Board (includ- ing salaries to three other employees) amount to less than 300,000 Sw. kroner (about S 60,000); the yearly expenses of the Liability Board can be calculated at about half this amount. In view of these rather modest resources, the yearly results of the board's activities are impressive. The Traffic Board deals nowadays with more than 1800 claims a year (1871 in 1967, 1885 in 1968); the Liability Board with 300--400 (372 opinions 1967, 300 in 1968)?

Some general traits of the procedure of the Traffic and Liability Boards may be of interest; on the whole, cases are dealt with in the same way in both. The insurer which refers the question of damages to the board delivers the docu- ments in the case, stating the settlement that it proposes and the reasons for its position; this proposal is only preliminary, and the insurers feel at liberty to raise or reduce the amount at a later stage. At the same time, the insurer presents a short memorandum containing all the essential facts of the case, including medical testimony and reports made by some insurance company employee about the economic and social circumstances of the claimant. The memorandum and the proposal are distributed to the members of the board in good time before the meeting. If the victim is represented by counsel, the insurer will generally have provided counsel with all relevant information. Counsel are permitted to see the memorandum too, although it is not regularly communicated to them, but the proposal of the insurer is considered conﬁdential. As for the claimant who has no lawyer, it is not always thought adviseable that he should read all the medical testimony and reports on his living conditions; in other respects, he is treated in the same way as his legal adviser would be.

In Switzerlandf under the Swiss Road Trafﬁc Law, the only defence allowed is that the accident was due to an unavoidable event caused neither by a defect in the condition of the vehicles nor by failure of mechanism'.

It appear' that the Swiss Act" extends to damage to property as well as to death and bodily injury. The injured person is entitled to compensation unless the defendant proves that the accident occurred fortuitously or through 'serious fault' on the part of the injured person or some third party and that neither he nor any person for whom he was responsible was guilty of fault and that the vehicle concerned was not in a defective condition. If both parties are partly to 1BengtSS0n, "Personal Injury Boards in Sweden" (1970) 18 A.J.C.L. 108, 110.

'Be11gtsson, "Personal Injury Boards in Sweden" (1970) 18 A.J.C.L. 108, 111.

'Article 591, Swiss Road Traﬂic Law (1958).

'Fleming, Comment in (1975) 23 A.J.C.L. 513, 518 and footnote 30. _ 'Society of Conservative Lawyers, Your Rights, Your Courts, Your Injuries (1970)., page, 81.

°Ha.ftpﬂicht and Versicherung Inkrafttreten l-1-1980 (Vol. 20-ll-1959). Articles 58 , 59 , 60. 61, 65, 75 and 76.

U.S.A. Schemes in USA.

(1') Illinois.

Limitations Illinois plan.

in 83 blame, liability is apportioned taking account not merely the degree of fault on each side but also 'the operational risks of a vehicle'. As in many 'risk' system countries, the result of this provision is that in many cases, even if the fault is equal, a greater proportion of the blame will be put upon the vehicle user upon the basis that he is using something which is inherently dangerous.

In U.S.A., the subject of "no fault" liability has received the maximum attention. Literature on the subject is proliﬁc. Although statutory developments are of a comparatively recent origin, academic studies of "no fault" began much earlier, and the debate has since then continued unabated.

In fact, as early as 1925, one Judge' proposed certain reforms including compulsory insurance on the subject.

Some other Judges in U.S.A. also have strongly favoured the introduction of "no fault" liability. For example, Judge Friendly, writing a few years ago, ex- pressed" himself in favour of the removal of all automobile accident cases from all judicial systems, federal and state. He suggested that this may be done even by a national "no fault" insurance law, if the states did not promptly proceed to adopt their own. Many persons were of the view that some system of "no fault"

insurance must come, for the present system is extraordinarily ineﬁicient in providing compensation for the ordinary claims resulting from automobile colli- sions". These moves have borne fruit.

In many States in the U.S.A., statutory schemes have now been introduced for the compensation of victims of motor vehicles accidents. These schemes may be broadly classiﬁed into (i) those where beneﬁts are paid through a fund con- tained and administered by a Government agency, and (ii) those in which bene- ﬁts are paid through private enterprise insurers.

In some of the schemes, what has come to be known as "partial tort exemption" is incorporated'. Such an exemption bars claims in respect of pain and suffering for less serious injuries. In some of the other schemes more cover- age is added without, however, changing the basic system of negligence law and liability insurance'.

By way of illustration, the position in a few States is brieﬂy stated below.

In Illinois, the compulsory no-fault scheme, in effect since January 1, 1972,' pays for medical, hospital and funeral expenses incurred within a year of the accident that caused the injury, to a maximum of only 55 2,000. The maximum income continuation beneﬁt is $ 150 a week, with a 52 week limit. Provision is also made for the payment of an amount upto S 12 a day for one year on account of loss of services where an injured person is not a wage earner.

An interesting feature of the Illinois plan is its provision for an optional additional coverage paying all medical, hospital and funeral expenses with no time limit, but with a maximum of 53 2,000 for funeral expenses, a limit of $ 50,000 per person and S 100,000 per accident. This optional coverage would also extend wage loss beneﬁt for five years and would pay survivors' beneﬁts for ﬁve years as well. Also noteworthy in this plan, which preserves the negligence action, is the limitation imposed on recovery for pain and suffering. Such recovery can be had only in cases of dismemberment and disﬁgurement, and is limited to 50% of the first $ 500 and 100% of the excess.

13, b S, M , J f th Superior Court in Cincinnati, "Compulsory automobile insurance"

(1925) Acn1.e!l§a.r As:i':Jo1tl1(r¥§:l{,)pag: 731, referred to in Bombaugh, "Uniform Motor Vehicles Accidents Reparation Act" (1973) 59 Am. Bar AS311. JOE?» 45-

'Henry J. Friendly, Federal Jurisdiction (1973), pages l33-----138; See Clement Haynsworth in Book 1{.eview(1973-1974), 87 Yale L.J. 1032, 1035, 1086. 'Clement Haynsworth, Book Review in (1973-1974) 87 Yale L.J. 1082, 1085, 1088. clgeeton & Keeton, Cases and Materials in Torts (1977), pages 790, 800, 801. 5p_A_ 77_1430, amending Illinois Insurance Code of 1937.

(ii) Massachusetts.

(iii) Michigan.

Unique aspect of Michigan1a.w-----

Proprietary loss-

(iu) New York.

Tribunals in New York.

One of the earliest plans in the United States for compensation for accidents caused by motor vehicles was the "Personal Injury Protection Plan" enacted in Massachusetts.' Its "no fault" limits are low: 38 2.000 per person? The tort action continues to exist, with amounts paid by the Personal Injury Protection Plan deducted,_ and with damages for pain and suffering available only in cases of serious injuries.

It should be observed, of course, that the vast majority of automobile acci- dent injuries come within the limit of the Massachusetts plan.

Perhaps the most complete and generous plan in the U.S.A. is the one enacted in the state of Michigan late in 1972, to come into effect in the autumn of 1973 4. Under the Michigan scheme, compulsory personal protection in- surance is intended to pay for all medical and hospital expenses and for all recovery and rehabilitation costs. Lost income is to be made up with a 15% deduction (the deduction takes account of the fact that the beneﬁts are tax free) and with a maximum of 1,000 dollars per month and a limit of 3 years. In this sense, the limit for wages comes to 36,000 dollars. There is no limit for medical expenses'.

Provision is made in the Michigan law for periodic adjustments to reﬂect changes in the cost of living. In addition, upto $ 20 a day for other expenses may be claimed for a three year period. Death beneﬁts include upto $1,000 for funeral expenses and payment of economic support to dependants at up to $ 20 a day per person to :1 maximum of $ 1,000 a month over 3. three year period. Beneﬁts received from collateral sources are deductible from amounts payable under the personal protection insurance.

An injured party, in Michigan, is still entitled to bring a negligence action, but the personal protection insurer may recover (from the damages awarded) any amount paid out under the policy, or deduct the recovery from any beneﬁts owing. Recovery for non-pecuniary losses is limited to cases of death, serious disability or disﬁgurement.

The unique aspect of the Michigan legislation is its compulsory "property protection insurance", which pays property losses, irrespective of fault, upto a maximum of one million dollars.

In New York, the Comprehensive Automobile Insurance Reparations Act' passed by the State legislature in January, 1973 is similar to the Michigan plan, but provides no death beneﬁts and no property damage coverage. It pays medical, hospital and associated expenses, and psychiatric costs, as well as the cost of physical and occupational therapy and rehabilitation. Lost earnings have a 20% deduction. The maximum is 50,000 Dollars per claimanﬂ. The New York plan pays upto $ 25 a day for other necessaiy expenses for a maximum of a year. Damages for iion--pecuniary losses are limited to cases of serious injury. The right to bring an action in negligence is saved, but there can be no recovery for any loss covered by the personal injury insurance.

The law in New York has been recently amended in 19773. One important feature introduced by the amendment of 1977 is the scheme of having two tribunals for the determination of two types of questions and also the introduc- tion of guidelines for assessing medical fees.

1Personal Injury Protection Act. Mass. Gen. Laws Ann. e. 90, sec. 34A, D, M. N, 0 (S1IPP- 1972); c. 176, secs. 22E-H, 113B-C (1972); c. 231, sec. 6D (Supp. 1972)-

xﬁepple, Tort (1979), Appendix G, pages 725-726.

aﬁepple, Tort: (1979), Appendix G, pages 725-726.

'Michigan Compiled Laws Annotated, S. 500-3103 et seq-

'Keeton & Keeton, Tort (1977), page 802 (Chart).

sM(,Kinney's Insurance Law, Art. XVIII, section 6'10 et sec. (elfective J an. 1, 1974). 7Hepple, Tort (1979), 726, footnote 1.

Sﬁichﬁfa. Naimark, "No Fault: In surauce in New York State" (September, 1978), Vol. 33, N0- 3, Arbitration Journal, pages 37-40.

Other States in U.S.A. Uniform Motor Vehicle Accident Reparation Act.

Beneﬁts under the uniform Act in U.S.A. 85 Under the amended New York law, there are two basic tribunals, one for determining questions of a medical nature and the other for determining questions of a non--medical nature. "Non»-medical" questions would include questions relating to loss of wages, miscellaneous expenses and the ambit of coverage of policy.

The medical tribunal in New York is to consist of medical experts, but it has also the power to require the claimant for compensation to submit to medical examination by a doctor appointed by the medical tribunal.

Non--medical questions are decided in New York by another tribunal. generally COIlSllllLlI€(.l by the American Arbitration Association which has been given a recognised legal status in the New York law.

As regards the actual assessment of medical expenses the use of the sche- dule of fees prevalent in workmen's compensation law is prescribed as a guide- line by the amendment of 1977. This amendment was in response to the earlier practical experience of the arbitrators who had to deal with the matter. They were of the view that such questions should not be left to the discretion of the arbitrator.

It seems that there was a feeling that insurance companies tried to hold the recovery for medical beneﬁts to a low ceiling.' The notion of "no-fault" liability has proved successful in some other States in the U.S.A. having "no-fault" statues2"4.

There has also been prepared a uniform law, in the U.S.A. by the title of the Uniform Motor Vehicle Accident Reparation Act which, however, has not yet been enacted in any State'.

In the Uniform Act, there is a reparation system in which each person insures himself against the loss incurred in operating a motor vehicle. This principle is regarded as essential to the full and eﬂicient compensation of motor vehicle losses and the rational allocation of the resulting cost'.

All persons insured in an automobile accident are assured of beneﬁts for their injuries without regard to fault.

The Uniform Act establishes certain compulsory minimum beneﬁts called "basic reparation beneﬁts" which are to be paid without regard to fault to persons suffering loss from injury arising out of the maintenance or use of a motor vehicle. Only the following persons are wholly excluded from the beneﬁts:---

(1) Persons who intentionally injure themselves or others (and their survivors);

(2) person who "convert" motor vehicle--but they can claim under their ' own insurance or if they are under the age of 15 year".

1Ri(-hard Naimark, "No Fault Insurance in New York State" (September 1978) Vol. 33, No. 3_ Arbitration Journal. pages 37--40.

2 A k, s 5, Colorado, Connecticut,' Delaware, Florida. Georgia, Hawaii, Kansas Kentucky, Marylanld,rLl\"[:ssachusetts, Michigan, Minnesota, Nevada, New Jersey, North Dakota, Oregon, Ponhsylvania, South Carolina, South Dakota and Utah.

'Commerce Clearing House, Automobile Law Reporter (Insurance), page 1935 et sec. 4Uniform Motor Vehicle Accident Reparation Act.

sjgombaugh, "Uniform Motor Vehicles Accidents Reparation Act" (1973) 59 Am. Bar Assn. Jonr. 45.

aﬁnmbnuoh. uUnifm.m'M0{;0r Vehicles Accidents Reparation Act" (1973) 59 Am. Bar ASSn.

,]our. 45.

Payment of beneﬁts under the Uniform Act.

There seems to be no over-all limit in point of dollars or for time with respect to benefits for loss of work, economic loss to survivors and replacement service loss. ' "

With two exceptions, the basic reparation beneﬁts of a basic reparation insured are always paid by his own insurance company.' A basic reparation insured is a person identified by name as an insured in a contract of basic repara- tion insurance, his spouse, or other relative residing in the same household, and a minor in his custody or the custody of a relative residing with the named insured. An exception to the general rule is made for injuries to the driver or other occupant of a. vehicle that occur while the vehicle is being used in the business of transporting persons or property. The other exception is an injury to an employee, his spouse, or other relative residing with him, if the accident causing the injury occurs while the injured person is driving or occupying a vehicle furnished by an employer. In both of these cases the insurance covering the vehicle is responsible for the benefits.

An injured person who is not a basic reparation insured recovers basic reparation beneﬁts from the insurer of the vehicle he occupied or if, a pedestrian, from the insurer of any involved vehicle. The insurer paying basic reparation beneﬁts to an uninsured pedestrian is entitled to contribution from the insurers of all involved JCl'llCl6S. An unoccupied parked vehicle is not an involved vehicle unless it was parked so as to cause unreasonable risk of injury.

1Bombaugh, "Uniform Motor Vehicles Accidents Reparation Act" (1973) 59 American Bar Association Journal 45, 47.

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Claims For Compensation Under Chapter 8 Of The Motor Vehicle Act, 1939.