Can Owner of Vehicle be Deprived of Compensation under Motor Vehicles Act, 1988 ?

Can Owner of Vehicle be Deprived of Compensation under Motor Vehicles Act, 1988 ? 

Issue concerning the liability of the insurer in a claim under Section 163A of MV Act, 1988 qua the owner/insured requires an authoritative pronouncement.

The finding that Claim under Section 163A is restricted to third party risks is doubtful. It was held that Section 155 provides that even if the insured dies after the happening of an event which gave rise to a claim, it shall not be a bar to the survival of any cause of action arising out of the said event, against the insurer.  Section 163A is a special provision brought in, which is a non-obstante clause which overrides not only the entire provisions of the Motor Vehicles Act, 1988 but also any other law for the time being in force and any instrument having the force of law. Non-obstante clause having a superseding effect over the laws of insurance or even the terms in the policy, which definitely is an instrument having the force of law. It has also to be noticed that Section 163A makes liable the owner of the vehicle or the authorized insurer to pay in accordance with the IInd Schedule in the case of death or permanent disablement due to the accident arising out of the use of a motor vehicle.

When there is a valid policy issued in the name of the vehicle involved in the accident, a claim under Section 163A, as per the words employed in the provision, according to us covers every claim and is not restricted to a third party claim; without any requirement of establishing the negligence, if death or permanent disability is caused by reason of the motor accident. This would also take in the liability with respect to the death of an owner or a driver who stepped into the shoes of the owner, if the claim is made under Section 163A dehors the statutory liability under Section 147 or the contractual liability as reduced to writing in an insurance policy. It is a beneficial piece of legislation brought in, keeping in mind the enhanced chances of an accident, resulting from the prevalence of vehicles in the overcrowded roads of today. It was a social security scheme, brought about considering the need for a more comprehensive scheme of ‘no-fault’ liability for reason of the ever-increasing instances of motor vehicle accidents and the difficulty in proving rash and negligent driving. 

Refer Wakia Afrin v. NICL [2025] GCtR 1381 (SC)