THE ORIENTAL INSURANCE CO. LTD. ETC. versus HANSRAJBHAI V. KODALA AND ORS. ETC. ETC.

Citation: [2001] 2 S.C.R. 999 · Decided: 04-04-2001 · Supreme Court of India · Bench: M.B. SHAH

Cited by 1 judgment(s) · cites 2 · see the full citation network in Lexace

Judgment (excerpt)

THE ORIENTAL INSURANCE CO. LTD. ETC. 
A 
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v. 
HANSRAJBHAI V. KODALA AND ORS. ETC. ETC. 
APRIL 4, 2001 
[M.B. SHAH AND D.P. MOHAPATRA, JJ.] 
B 
Motor Vehicle Act, 1988 : 
Sections 140, 161, 163A, 168-Second Schedule-Compensation under 
Section 163A on structured formula basis and Compensation under Section 140 c 
on principle of fault liability-Held, compensation under Section 163A is in 
altemativt? and not i"'! addition to the detennination of compensation under 
Section 140-Section J 63A intmduced to avoid long drawn litigation and delay 
in payment o.f compensation-Suggestion to Central Government for revising 
the Second Schedule keeping in view the cost of living. 
Interpretation of Statutes : 
D 
Legislative liisto1y-Statement of Objects and Reasons-Aid for con-
st ruction-Held, reason for the Statute is a safest guide for purposes of inter-
pretation. 
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Different phrases in different Sections in an Act-Meaning of-Held, 
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different meaning to be assigned unless context othenvise requires . 
• 
Heading of a Section-Aid for construction-Held, language of heading 
cannot be used to cont1vl operation aftlze Section-Heading provides meaning 
and purpose of the Section, which could be referred to in case of ambiguity. 
F 
Respondent-claimants filed applications under Section 163A of the 
Motor Vehicles Act, 1988 before Claims Tribunals for interim compensa-
tion on structured formula basis from appellant Insurance Companies. 
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The Claims Tribunals allowed the applications and directed the appellants 
to pay interim compensation to the respondents. On appeal, High Court 
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held that since the award under Section 163A of the Act was an interim 
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award, the claimants were entitled to proceed further with determination 
of compensation under Section 168 of the Act. Hence this appeal . 
.A( 
The appellant-Insurance companies contended that Section 163A 
was inserted to provide quicker relief to the accident victims; that the 
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999 
1000 
SUPREME COURT REPORTS 
(200 I] 2 S.C.R. 
A 
lump sum compensation payable under the structured formula basis is an 
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alternative and optional to the determination of compensation under Sec-
tion 168 and not meant for interim compensation; and that the applica-
tions made by the respondents before Claims Tribunal were substantial 
applications and not interim applications. 
B 
Respondent-claimants contended that compensation payable under 
Section 163A of the Act is in addition to the determination of compensa-
tion on the basis of fault liability under Section 140; and that if he gets 
higher amount under Section 140, then the amount can be adj1.-ted against 
the amount of compensation paid under Section 163A. 
c 
Allo\\ing the appeals, the Court 
HELD : 1.1. The purpose of Section 163A and the Second Schedule 
to the Motor Vehicles Act, 1988 is to avoid long drawn litigation and delay 
D 
in payment of compensation to the victims or his heirs who are in dire need 
of relief. If such affected claimant opts for accepting the lump-sum com-
pensation based on structured formula, he would get relief at the earliest. 
It also gives vital advantage of not pleading or establishing any wrongful 
act or neglect or default of the owner of the offending vehicle or vehicles. 
However, this benefit can be availed of hy the claimant only by restricting 
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his claim on the basis of income at a slab of Rs. 40,000 which is the highest 
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slab in the Second Schedule which indicates that the legislature wanted to 
give benefit of no fault liability to a certain limit. This would clearly 
indicate that the scheme is in alternative to the determination of compen-
sation on fault basis under the Act. The object underlining the said amend-
F 
ment is to pay compensation without there being any long drawn litigation 
on an predetermined formula, which is known as structured formula basis 
which itself is based on relevant criteria for determining compensation and 
the procedure of paying compensation after determining the fault is done 
away with. Compensation amount is paid without pleading or proof of 
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fault, on the principle of social justice as a social security measure because 
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of even increasing motor vehicle accidents in a fast moving society. For-
ther, the law before insertion of Section 163A was giving limited benefit to 
the extent provided under Section 140 for no fault liability and determina-
,. 
tion of compensation amount on fault liability was taking long time. That 
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