REPORTABLE

IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 7049 OF 2002

Eshwarappa @ Maheshwarappa and Anr.                 Appellants

Versus

C. S. Gurushanthappa and Anr.        Respondents

JUDGMENT

AFTAB ALAM,J.

1. A certain Basavaraj was the driver of a privately owned car. In the  

night of October 28, 1992 he took out the car for a joyride and along with  

five persons, who were his neighbours, proceeded for the nearby Anjaneya  

temple for offering  pooja.  On way to the temple the car met with a fatal  

accident in which Basavaraj and four other occupants of the car died; the  

fifth  passenger  sustained  injuries  but  escaped  death.  One  of  the  persons  

dying in that motor accident was Nagaraj, whose parents are the appellants  

before this Court.

2. The heirs and legal representatives of the deceased driver, Basavaraj  

filed a claim for compensation under the Workmen’s Compensation  Act,  

1923.  They  got  nothing.  The  Commissioner  under  the  Workmen’s

Compensation Act found and held that the accident did not take place in  

course of employment and rejected the claim for compensation.

3. The  heirs  of  the  four  occupants  of  the  car,  dying  in  the  accident  

(including the present appellants) and the fifth passenger suffering injuries in  

the  accident  sought  compensation  before  the  Motor  Accidents  Claims  

Tribunal. Their claims proved to be equally barren.

4. The appellants took the matter in appeal before the High Court where  

they were equally unsuccessful. They are now in appeal before this Court by  

special leave.  

5. The  counsel  appearing  on  behalf  of  the  appellants  raised  a  very  

limited issue. He submitted that in any event the appellants were entitled to  

the  ‘no fault  compensation’  as  provided  under  section  140 of  the  Motor  

Vehicles  Act,  1988  but  they  were  denied  even  that  by  the  Tribunal  for  

reasons that are totally unsustainable in law.

6. We are, therefore, required to see how and why the appellants were  

denied compensation under section 140 of the Act and how far the denial  

was justified. The appellants filed a claim petition (MVC 1404/92) before  

the District Judge and MACT, Chitrandurga under section 166 of the Motor  

Vehicles Act seeking compensation for the death of Nagaraj. The appellants’  

petition, along with four other claim petitions (filed by the heirs of the other  

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three  occupants  dying  in  that  car  accident  and  the  fifth  occupant  who  

suffered injuries  in that  accident),  was  disposed of  by the Tribunal  by a  

common order dated May 9, 1996. From the order of the Tribunal, it appears  

that in four of the five cases before it, including MVC 1404/92, IAs were  

filed  seeking  interim  compensation  of  rupees  twenty  five  thousand  

(Rs.25,000.00) only (as the law stood at that time) in terms of section 140 of  

the Act. For some reason, however, no order was passed on the IAs and the  

Tribunal proceeded to examine the claimants’ claim on merits under section  

166 of the Act.

7. The Tribunal, in its order summarized the cases of each of the five  

claimants separately, noting the facts peculiar to the four deceased and the  

fifth injured occupant of the ill fated car. It also framed the issues arising in  

each case separately. In regard to Nagaraj, the son of the appellants, it noted  

that at the time of his death he was eighteen years old. According to the  

appellants, he worked at a sweetmeat stall and earned rupees eight hundred  

(Rs.800.00) only per month. He was going to Anjaneya temple in the car  

being  driven  by Basavaraj  and in  the  accident  he died  on  the  spot.  The  

appellants claimed compensation of rupees one lakh (Rs.1,00,000.00) only.  

In his case the Tribunal framed four issues which are as under:

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1. Whether  the  petitioners  prove  that  Nagaraj  died  due  to  

injuries  sustained  in  a  motor  accident  that  occurred  on  

28.10.92  at  11:45pm  near  Bheemasamudra  Cross  on  

Holalkere road due to rash and negligent driving of the car  

MYG 1624 by its driver?

2. Whether  the  petitioners  prove  that  they  are  the  legal  

representatives of Nagaraj, the deceased and are entitled to  

compensation?

3. What  is  the  quantum  of  compensation  to  which  the  

petitioners are entitled and from which of the respondents?

4. Whether  the  respondents  prove  that  the  accident  did  not  

occur during the course of employment of the driver of the  

car MYG 1624 and that they are not vicariously liable to pay  

compensation?

8. The first two issues in the case of Nagaraj, as in all the other cases,  

were answered by the Tribunal in the affirmative. On issue no.3 appellant  

no.1, the father of the deceased Nagaraj stated on oath that his son was aged  

eighteen years and used to work in the hotel of one Siddappa who paid him  

rupees thirty (Rs.30.00) only per day, but the Tribunal disbelieved him and  

rejected his testimony. On the basis of the post mortem report, the Tribunal  

held that Nagaraj, at the time of his death, was aged about fifteen years. It  

further held that there was no evidence to show that at the time of his death  

Nagaraj  earned  anything,  pointing  out  that  in  paragraph  22 of  the  claim  

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petition nothing material was mentioned about the loss of earning due to his  

death.  Then,  rather  gratuitously  it  fixed  the  amount  of  compensation  at  

rupees  thirty  thousand  plus  two  thousand  (Rs.30,000.00  +  Rs.2,000.00)  

observing as follows:

“Hence the maximum compensation that can be granted to the  petitioner  herein would be only about Rs.30,000-00 as being  just and reasonable and a sum of Rs.2,000-00 toward funeral  and obsequious expenses etc. and therefore the petitioners are  granted sum total compensation amount of Rs.32,000-00.”

9. Having,  thus,  put  the  worth  of  the  life  of  Nagaraj  at  rupees thirty  

thousand (Rs.30,000.00) only the Tribunal proceeded to consider whether  

the appellants were entitled to receive even this amount from the owner of  

the car or the insurance company (second part of issue no.3 and issue no.4).  

It  held that neither  the owner of the car  nor the insurance company was  

liable  to  pay  anything  to  any  of  the  claimants,  including  the  appellants,  

because Basavaraj had taken out the car of his employer unauthorisedly and  

against his express instructions and had caused the accident by driving the  

car very rashly after consuming liquor. At the time of accident the car had  

been taken completely away from the control of its owner. In a sense it was  

stolen  by  the  driver,  even  though  temporarily.  The  accident  was,  thus,  

completely outside the insurance policy. No compensation was, therefore,  

payable to any of the claimants under section 166 of the Motor Vehicles Act.  

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10. Up to this stage no exception can be taken to the view taken by the  

Tribunal. But surprisingly the Tribunal also rejected the express prayer made  

on behalf of the appellants and other claimants to at least grant the ‘no fault  

compensation’  as  provided  under  section  140  of  the  Act.  The  Tribunal  

discussed the issue over six pages in its judgment before turning down the  

claim. It  seems to  have taken the  view,  that  had  the  claim for  ‘no fault  

compensation’ been made at the beginning of the proceeding, it might have  

considered it favourably. But the claim was pressed at a belated stage when  

it was considering the claim for compensation under section 166 of the Act  

and  more  importantly  had  found  that  the  owner  of  the  car  had  no  

responsibility for the accident. In this connection, the Tribunal observed as  

follows:     

“However, in these cases as already referred to above, if at the  initial stage itself if the learned counsel Sri. M. Gnana Swamy  had pressed the Tribunal to pass interim award on I.A.I in all  the four cases, then the I.A.I filed in all four cases would have  been definitely allowed and this Tribunal would have directed  both the respondents 1 & 2 and more particularly respondent  No.2 to deposit the interim compensation amount leaving open  the  liability  aspect  at  the  fag  end  of  these  cases  i.e.,  at  the  arguments  stage.  Now that stage is already over and as such  now this Tribunal has to consider equally as to whether at this  stage as per the principle of no fault liability under s.140 of the  Motor Vehicles Act, 1988, these petitioners are entitled for the  interim in compensation amount.”

         ……………….  

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“Now as  regards  the  no  fault  liability  as  already  referred  to  above,  perhaps  the  petitioners  would  have  been  granted  the  interim compensation  amount  at  the  initial  stage,  but  now it  cannot be done, since the merits of the cases are being dealt  with after hearing the arguments at the final stage and the main  cases are being disposed of on merits as such.”

         …………………….

“Hence  in  view  of  my  finding  that  the  car  was  being  used  totally outside the course of the employment of the driver of the  car  and totally  without  the knowledge and consent of  the  1st  respondent,  I  hold that  even as regards this  no fault  liability  claim also, the 1st respondent or for the matter 2nd respondent  amount to any of the petitioner’s hearing. Hence this being the  position, I am constrained to observe and hold that although as  per the available evidence on record the petitioners are entitled  for compensation amount as granted to them, in view of my  earlier finding on issue No.3 in all the petitions, but all the same  these petitions have got to be dismissed on account of the fact  that neither the first respondent nor the second respondent is  liable  to  pay  compensation  amount  to  any  other  petitioners  herein.”

11. The appellants took the matter in appeal but the High Court in its brief  

order did not at all advert to this aspect of the matter.

12. Coming back to the order passed by the Tribunal, we are completely  

unable to appreciate the reasons assigned for denying the appellants the ‘no  

fault compensation’ as provided under section 140 of the Act.  The Tribunal  

was gravely in error in taking the view that a claim for compensation under  

section 140 of the Act can succeed only in case it is raised at the initial stage  

of the proceedings and further that the claim must fail if the accident had  

taken place by using the car without the consent or knowledge of its owner.  

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Section 140 is the first section of chapter X of the Act. It is a small chapter  

consisting  of  only  five  sections  (from 140 to  144)  and has  the  marginal  

heading  “Liability  without  Fault  in  Certain  Cases”.  Section 140 reads  as  

under:

“140. Liability to pay compensation in certain cases on the  principle of no fault. (1) Where death or permanent disablement of any person has  resulted  from an accident  arising out  of the use of a motor  vehicle or motor vehicles, the  owner of the vehicle shall, or, as  the case may be, the owners of the vehicles shall,  jointly and  severally,  be  liable  to  pay  compensation  in  respect  of  such  death or disablement in accordance with the provisions of this  section.

(2) The amount of compensation which shall be payable under  sub-section (1) in respect of the death of any person shall be a  fixed  sum  of  fifty  thousand  rupees  and  the  amount  of  compensation payable under that sub-section in respect of the  permanent disablement of any person shall be a fixed sum of  twenty-five thousand rupees.

(3)  In any claim for compensation under sub-section (1),  the  claimant shall  not be required to plead and establish that the  death or permanent disablement in respect of which the claim  has been made was due to any wrongful act, neglect or default  of the owner or owners of the vehicle or vehicles concerned or  of any other person.

(4) A claim for compensation under sub-section (1) shall not be  defeated by reason of any wrongful act, neglect or default of the  person in respect of whose death or permanent disablement the  claim has been made nor shall  the quantum of compensation  recoverable in respect of such death or permanent disablement  be  reduced  on  the  basis  of  the  share  of  such  person  in  the  responsibility for such death or permanent disablement.

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(5)  Notwithstanding  anything  contained  in  sub-section  (2)  regarding death or bodily injury to any person, for which the  owner of the vehicle is liable to give compensation for relief, he  is also liable to pay compensation under any other law for the  time being in force:

       Provided that the amount of such compensation to be  given under any other law shall be reduced from the amount of  compensation  payable  under  this  section  or  under  section  163A.”

On a plain reading of the provisions it is evident that all that is required to  

attract the liability under section 140 is an accident arising out of the use of a  

motor  vehicle(s)  leading  to  the  death  or  permanent  disablement  of  any  

person. Sub-section (2) provides for a fixed amount as compensation.  [In  

case of death, currently it is rupees fifty thousand (Rs.50,000.00) only; at the  

time the accident from which the appeal arises took place the fixed amount  

in case of death was rupees twenty five thousand (Rs.25,000.00) only]. Sub-

section (3) provides that even though the death or permanent disablement  

resulting from the motor  accident  might  not  be due to any wrongful act,  

neglect or default of the owner of the vehicle, it would have no effect either  

on  his  liability  or  on  the  amount  of  compensation.  Sub-section  (4)  

conversely  provides  that  the  motor  accident  resulting  in  the  death  or  

permanent disablement might be entirely due to the wrongful act, neglect or  

default of the person in respect of whose death or permanent disablement the  

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claim is made but that too would have no effect either on the right to receive  

the  compensation  or  the  amount  of  compensation.  Sub-section (5)  which  

begins with a  non obstante clause makes it  further clear that the liability  

under section 140 is independent of the liability of the owner of the vehicle  

to pay compensation under any other law for the time being in force. The  

proviso  to  sub-section  (5),  of  course,  provides  that  the  amount  of  

compensation under any other law would be reduced from the amount of  

compensation payable under section 140 or under section 163A of the Act.  

13. Then there is section 141 which reads as under:

“141. Provisions as to other right to claim compensation for  death or permanent disablement. (1)  The  right  to  claim  compensation  under  section  140  in  respect of death or permanent disablement of any person shall  be in addition to any other right, except the right to claim under  the  scheme  referred  to  in  section  163A  (such  other  right  hereafter in this section referred to as the right on the principle  of  fault)  to claim compensation in respect  thereof  under  any  other  provision of  this  Act or  of  any other  law for  the time  being in force.

(2) A claim for compensation under section 140 in respect of  death or permanent disablement of any person shall be disposed  of  as  expeditiously  as  possible  and  where  compensation  is  claimed  in  respect  of  such  death  or  permanent  disablement  under section 140 and also in pursuance of  any right  on the  principle of fault, the claim for compensation under section 140  shall be disposed of as aforesaid in the first place.

(3)  Notwithstanding  anything  contained  in  sub-section  (1),  where in respect of the death or permanent disablement of any  person, the person liable to pay compensation under section 140  

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is also liable to pay compensation in accordance with the right  on the principle of fault, the person so liable shall pay the first-  mentioned compensation and-

(a) if the amount of the first-mentioned compensation is  less  than  the  amount  of  the  second-mentioned  compensation, he shall be liable to pay (in addition to the  first-mentioned  compensation)  only  so  much  of  the  second-mentioned  compensation  as  is  equal  to  the  amount  by  which  it  exceeds  the  first  mentioned  compensation;

(b) if the amount of the first-mentioned compensation is  equal  to  or  more  than  the  amount  of  the  second- mentioned compensation, he shall not be liable to pay the  second-mentioned compensation.”

Sub-section (1) of section 141 makes the compensation under section 140  

independent of any claim of compensation  based on the principle of fault  

under any other provision of the Motor Vehicles Act or under any other law  

but subject to any claim of compensation under section 163A of the Act.  

Sub-sections  (2)  and  (3)  further  provide  that  even  while  claiming  

compensation under the principle of fault (under section 166) one may claim  

no fault compensation under section 140 and in that case the claim of no  

fault compensation shall be disposed of in the first place and the amount of  

compensation paid under section 140 would be later adjusted if the amount  

payable as compensation on the principle of fault is higher than it.   

14. Finally,  section  144  gives  overriding  effect  to  the  provisions  of  

Chapter X. Section 144 reads as follows:

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“144. Overriding effect.-The provisions of this Chapter shall  have  effect  notwithstanding  anything  contained  in  any  other  provision of this Act or of any other law for the time being in  force.”

15. Seen  in  isolation  the  above  provisions  might  appear  harsh,  

unreasonable and arbitrary in as much as these create the liability  of the  

vehicle(s) owner(s) even where the accident did not take place due to  any  

wrongful act, neglect or default of the owner or owners of the vehicle or  

vehicles concerned but entirely due to the wrongful act, neglect or default of  

the person in respect of whose death or permanent disablement the claim has  

been  made  but  the  above  provisions  must  be  seen  along  with  certain  

provisions of Chapter XI. Section 146 forbids the use of the vehicle in a  

public place unless there is in force, in relation to the use of the vehicle, a  

policy of insurance complying with the provisions of that chapter.  Section  

147  contains  the  provisions  that  are  commonly  referred  to  as  ‘Act  only  

insurance’. The provisions of sections 146 and 147 are meant to create the  

large pool of money for making payments of no fault compensation. Thus  

the liability arising from section 140 would almost invariably be passed on  

to the insurer to be paid off from the vast fund created by virtue of sections  

146 and 147 of the Act unless the owner of the vehicle causing accident is  

guilty of some flagrant violation of the law.  

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16. Seen thus, the provisions of chapter X together with sections 146 and  

147 would appear to be in furtherance of  the public policy that in case of  

death  or  permanent  disablement  of  any  person  resulting  from  a  motor  

accident a minimum amount must be paid to the injured or the heirs of the  

deceased,  as  the  case  may  be,  without  any  questions  being  asked  and  

independently of the compensation on the principle of fault.  

17. The  provisions  of  section  140  are  indeed  intended  to  provide  

immediate succour to the injured or the heirs and legal representatives of the  

deceased.  Hence,  normally  a  claim  under  section  140  is  made  at  the  

threshold of the proceeding and the payment of compensation under section  

140 is directed to be made by an interim award of the Tribunal which may  

be adjusted if in the final award the claimants are held entitled to any larger  

amounts. But that does not mean, that in case a claim under section 140 was  

not made at the beginning of the proceedings due to the ignorance of the  

claimant or no direction to make payment of the compensation under section  

140 was issued due to the over-sight of the Tribunal,  the door would be  

permanently closed. Such a view would be contrary to the legal provisions  

and would be opposed to the public policy.  

18. In light of the discussions made above, we are unhesitatingly of the  

view, that the Tribunal was completely wrong in denying to the appellant,  

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the compensation in terms of section 140 of the Act. We find and hold that  

the appellant (as well as the other 3 claimants) were fully entitled to no fault  

compensation  under  section  140  of  the  Act.  We,  accordingly,  direct  the  

insurance company to pay to the appellant Rs.25,000/- along with simple  

interest @ 6% p.a. from the date of the order of the Tribunal till the date of  

payment.  The  other  3  claimants  are  not  before  this  Court,  but  that  is  

presumably because they are too poor to come to this Court. Since, we have  

allowed the claim of the appellants, there is no reason why this order should  

not be extended to the other 3 claimants as well. We, accordingly, do so. The  

insurance  company  is  directed  to  make  the  payment  as  directed  in  this  

judgment within 3 months.  

19. In the result, the appeal is allowed but with no order as to costs.  

…………………................J                                                                               (AFTAB ALAM)

…………..………................J                                                                               (R.M. LODHA) New Delhi August 18, 2010.  

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