Need to amend accident payout rules: HC

MUMBAI: Rising value of rupee, inflation and increasing food prices cannot be ignored when awarding compensation to road accident victims or their kin under the special no-fault liability clause, the Bombay high court has ruled.

Justice A P Bhangale said that though the government had not brought in required changes to the compensation formula since 1994, "courts' hands were not tied". Six years after Thane resident Ajit Patil (20) died in a road accident, the HC upheld the accident tribunal's order awarding his aged parents Rs 3.22 lakh, along with interest.

Justice Bhangale said that a "statutory obligation is cast upon the Centre, that [it] may keep in view the cost of living" and amend the rules from time to time in the official gazette. "Though this may not have been done by the Centre, the tribunal or court cannot... remain like helpless spectators and ignore ground reality in relative value of sum of Rs 15,000 in 1994, and the current value of rupee, when claims are decided," he said.

The HC agreed that under the special provision introduced in 1994 (section 163 A of the Motor Vehicles Act), any deviation from the formula laid down by the government

was not ordinarily permissible. "But considering that the [rules] were inserted with effect from 1994, the increasing prices of ... food, clothing, shelter and inflation cannot be ignored."

The special rules provided for a speedy way to claim compensation under the no-fault liability clause if the annual income of the victim was less than Rs 40,000. A formula was set, under which the base annual income even for those who did not have an income, at a notional income of Rs 15,000. Victims claiming compensation under 163-A were not required to prove negligence or rash driving on the part of the driver who caused the accident.

In Patil's case, the tribunal considered his annual income at Rs 36,000. But the insurance firm claimed the tribunal could not have deviated from the formula under the rules, which the HC didn't accept.

The case

On December 31, 2007, Thane Ajit Patil (20), who was riding a motorcycle, dashed against a jeep on the Mumbai-Agra highway near Shahpur

In 2011, the tribunal considered Patil's annual income at Rs 36,000, and ordered the insurance firm to pay Patil's aged parents Rs 3.22 lakh compensation

The firm disputed the order and moved the high court