Govt Bodies Can't Escape Accident Compensation Liability Even If Statutory Fund Isn't Maintained: Delhi High Court

The Delhi High Court has held that government authorities and local bodies claiming exemption from compulsory motor insurance cannot escape their liability to pay accident compensation merely because the statutory fund required to meet such claims has not been established or maintained.

“Even if the fund is not maintained for any reason or is not being established, that cannot be to the disadvantage of the claimant who has suffered on account of the accident,” Justice Anish Dayal observed.

The Court held that a government authority owning a vehicle cannot wash its hands of the liability to compensate a person injured in an accident, or the legal representatives of a person killed in one, involving its vehicle.

The Court made the observations while allowing an appeal filed by Rohtash Kumar, an MCD truck driver, against a Motor Accident Claims Tribunal (MACT) order holding him and the Municipal Corporation of Delhi (MCD) jointly and severally liable to pay Rs. 22.05 lakh in compensation, along with interest at 9% per annum, to the legal heirs of a man who died in a road accident.

Justice Dayal directed the MCD to pay the entire compensation, together with accrued interest and further ordered that execution proceedings against the driver would not proceed and would be set aside.

The Court, however, left the MCD at liberty to take action against the driver in accordance with the applicable service and conduct rules.

The accident took place on December 18, 2014, when Sujeet Kumar, aged 26, was riding his motorcycle towards Dwarka. An MCD truck driven by Rohtash Kumar hit his motorcycle from behind, resulting in fatal injuries. He was taken to a hospital, where he was declared brought dead.

The MACT concluded that the accident occurred due to the rash and negligent driving of the MCD truck and awarded Ra. 22.05 lakh in compensation to the deceased's legal representatives.

The driver approached the High Court arguing that the entire compensation liability should be borne by the MCD, as he was driving the vehicle in the course of his employment. He relied on Section 146 of the Motor Vehicles Act, 1988, which deals with compulsory insurance against third-party risks and provides for exemptions in specified circumstances.

The MCD did not dispute that the vehicle was uninsured. However, it argued that it should be liable to pay only 50% of the compensation, with the remaining amount payable by the driver.

The Court noted that the driver was an MCD employee and that the vehicle was being driven in the course of his employment. It held that the MCD's vicarious liability as the vehicle's owner could not be displaced in the said circumstances.

It further observed that the Motor Vehicles Act is a beneficial piece of legislation and that its provisions must be interpreted in a manner that protects accident victims and their legal representatives.

“The exemption under Section 146 (2) was for government vehicles, was not to leave a claimant high and dry and without any compensation for having been injured or died as a result of an accident with a government vehicle. Quite to the contrary, the mandate that a fund would be established, effectively transfers the responsibility of shoring up the liability from an insurance company to the organization itself,” the Court said.

It also referred to Rules 148 and 151 to 158 of the Central Motor Vehicles Rules, 1989, which provide for maintaining records of vehicles and establishing, replenishing and administering funds to meet liabilities arising from their use.

The Court further observed that if an authority fails to establish or adequately maintain the prescribed fund, such failure cannot defeat the rights of accident victims.

“If the mandate for establishing a fund is not carried out, it cannot frustrate the object of the legislation. It is the bounden duty of MCD to establish and maintain an adequately funded pool to satisfy compensation awards. This is a statutory duty and cannot be easily diluted or ignored,” the Court said.

“In no circumstances can an injured claimant, or the legal representatives of a deceased victim, be left without compensation for the harm suffered in an accident involving a vehicle owned by a government entity,” it added.

Accordingly, the Court allowed the appeal and directed the MCD to pay the entire compensation awarded by the MACT, along with accrued interest.