New Delhi: Six years after introducing a provision in the Motor Vehicles (MV) Act to deal with grant of interim compensation in cases of accidents by insured vehicles, the government has finally drafted a scheme to provide it to hit-and-run victims.
Prepared by the Union Ministry of Road and Transport, the scheme, under Section 164A of the MV Act, envisages immediate grant of compensation of Rs 2 lakh to the family of those who die during a road accident and Rs 1 one to the kith and kin of the injured.
The ministry has shared this proposal with the secretary of Department of Financial Services, Ministry of Finance, secretary of Department of Legal Affairs, Law Ministry and chairperson of IRDAI for their inputs. The scheme would be notified following the inputs and comments received from the relevant stakeholders.
The framework of the scheme was placed before the top court earlier this week. In an affidavit filed before the Supreme Court, which has been holding detailed hearings on augmentation of road infrastructure, the road ministry provided details of what the scheme embodies.
The ministry worked on the scheme after it was nudged by the top court. In April, the court reminded the Centre that though Section 164A was brought into force on 1 April 2022, the central government had not implemented the same by framing a scheme for interim relief.
Under the earlier regime of Act, the tribunals were empowered to grant such a relief. “Such an important provision has remained unimplemented for the last three years. This failure has to be deprecated,” the court said.
It had, therefore, directed the government to frame the scheme as “expeditiously” as possible, preferably within four months from the date of the order.
The MV Act is a comprehensive law that regulates all essentials related to road transport. It also includes a mechanism to calculate compensation to road accident victims that is determined by the Motor Accident Claims Tribunal (MACT)—a special court under the MV Act. The cases that go to such tribunals are those where vehicles involved in a road accident case are identified and insured.
India reported 4.6 lakh road accidents in 2024. Around 1.6 lakh were cases of death, while 2.2 lakh were of grievous hurt, according to the documents regarding the proposed scheme on interim compensation annexed with the Centre’s affidavit.
Before Section 164A was introduced, the interim compensation was Rs 1.5 lakh in road accident death cases and Rs 50,000 in cases of injury. On an application filed by the claimant, the tribunal used to order immediate disbursal of this amount to the family or the deceased of the injured.
However, the legal framework was changed with the introduction of Section 164A and was enforced in 2022, but was done without finalizing the scheme.
According to the proposed scheme, the interim compensation shall be paid by the authorised insurer of the vehicle causing the accident. The procedure outline would require the claimant to make an application for interim compensation through a designated electronic portal that will be specified by the Centre.
Upon receipt of the application, it shall be mailed to the police station, which, after verifying the credentials of the victim’s legal heirs or relatives, shall submit a verification report within 30 days. This report will then be mailed to the General Insurance Council, the representative body of insurers, who shall within 30 days either accept or reject the claim for interim compensation.
The proposed scheme does not clarify the grounds on which the insurance company can reject the claim. It only states that the rejection order should be accompanied with reasons that shall be communicated, in writing, to the claimant.
In case the claimant and the insurance company have a settlement or the claimant agrees to invoke the no-fault liability under the law, then in that case the interim compensation shall lapse.
Interim compensation would be deducted from the final award, which would be decided by the MACT under the regular compensation scheme. For this, the MACT will have to pass orders while finalising the compensation amount in response to the claim petition filed by the family of the victim or the injured person.
The scheme also allows recovery of the interim compensation amount in case the MACT passes an order against the claimant, denying them final compensation for the loss of their family member or injury caused to them. In such cases, the claims tribunal shall be competent to pass an order for recovery of the amount paid as interim relief from the owner of the motor vehicle to be paid to the insurance company.
(Edited by Tony Rai)
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