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CLAIMS TRIBUNALS

(Ss. 165 To 176)

QUESTION BANK

Q.1. Discuss provisions relating to the ‘Claims Tribunals’.

Q.2. Discuss provisions relating to an application for compensation.

Q.3. Discuss provisions relating to procedure, power, and award of Claims

Tribunal.

SHORT NOTES

1. Claims Tribunal.

2. Award of Claims Tribunal.

SYNOPSIS

1. SETTING OF ‘CLAIMS TRIBUNALS’ (S. 165)-

Constitution of Claims Tribunals and qualification of members (S. 165 (2)-

2. APPLICATION FOR COMPENSATION (S. 166)-

a) Persons who can apply for compensation-

b) Which Tribunal can hear the application? / Jurisdiction of Tribunal-

3) OPTION REGARDING CLAIMING COMPENSATION (S. 167)-

4) PROCEDURE, POWER, AND AWARD OF THE CLAIMS TRIBUNAL (Ss. 168, 169, 170)-

a) Procedure of Claims Tribunal (S. 168 and 169)-

b) Award of Claims Tribunal (Ss. 168, 171, 172)-

The Motor Vehicle Act created a new forum, 'Motor Accident Claims Tribunals', which is, for brevity, known as 'Claims Tribunal.' The Act barred the jurisdiction of Civil Courts from hearing accident claims.

1. SETTING OF ‘CLAIMS TRIBUNALS’ (S. 165)-

S. 165 lays down that for the purpose of adjudication upon claims for compensation in respect of death or injury to a third person or damage to property arising out of the use of motor vehicles, the State Government may constitute a Claims Tribunal for the area. Claim for compensation includes claims under S. 164 of the Act.

Constitution of Claims Tribunals and qualification of members (S. 165 (2))-

A Claims Tribunal shall consist of members the State Government may think fit to appoint, and where it consists of two or more members, one shall be appointed as a Chairman thereof. The section further lays down the qualifications required of a person to be appointed as a member. It provides that a member must be

(a) a Judge of a High Court, or

(b) a District Judge, or

Where there are two or more Claims Tribunals constituted for any specific area, the State Government may, by order, regulate the distribution of business among them.

2. APPLICATION FOR COMPENSATION (S. 166)-

The section provides for the form of application for compensation and the persons who may claim compensation-

a) Persons who can apply for compensation (S. 166 (1))-

According to the section, an application for compensation arising out of an accident may be made-

(i) by the person who has sustained the injury, or

(ii) by the owner of the property, or

(iii) where death has resulted from the accident by all or any of the legal representatives of the deceased, or

(iv) by any agent duly authorised by the person injured or all or any of the legal representatives of the deceased, but if all the legal representatives of the deceased have not joined as applications, the application shall be made on behalf of or for the benefit of all the legal representatives of the deceased and the legal representative who have not so joined, shall be impleaded as respondents to the application.

Thus, the part mentions the persons who can apply for compensation.

b) Which Tribunal can hear the application? / Jurisdiction of the Tribunal (S. 166 (2))-

Every application for compensation shall be made at the option of the claimant-

(i) either to the Claims Tribunal having jurisdiction over the area in which the accident occurred, or

(ii) to the Claims Tribunal within the local limits of whose jurisdiction the claimant resides, or carries on business, or

(iii) within the limits of whose jurisdiction the defendant resides.

The application shall be in such form and contain such particulars as may be prescribed.

The Claims Tribunal may treat a report of an accident by police under S. 158 (6) as an application for compensation.

c) Period of limitation (S. 166 (3))-

No application for compensation shall be entertained by the Claims Tribunal unless it is made within six months of the occurrence of the accident. As per the 2019 amendment a claim petition must be filed within 6 months of the occurrence of the accident. Earlier, there was no period of limitation prescribed for filing a claim petition.

d) Police Report as an application (S. 166 (4))-

As per S. 166 (4), the Claims Tribunal shall treat the Detailed Accident Report (DAR) submitted by the police to it under Section 159 as an application for compensation.

As per S. 159, the police officer has a mandatory duty to submit an Accident Information Report (AIR) within 48 hours and a Detailed Accident Report (DAR) to the Tribunal (within whose jurisdiction the accident occurred) and the Insurer within 90 days.

Thus, the claimants need not file a separate claim application before the Tribunal, but the Detailed Accident Report (DAR) submitted by the police (as above) is treated as an application for compensation by the Tribunal. The Tribunal then proceeds as if it were a claim petition filed by the claimant. The Tribunal then sends the notices to the claimants and the respondents, including the insurer, informing the claim and asking for their say. Upon receipt of the DAR, the Insurance Company must make a settlement offer within 30 days. If accepted, the Tribunal passes a consent award, bypassing the need for a lengthy inquiry. But if the claimants do not appear or have already filed the claim petition, the Tribunal closes the claim filed upon the DAR.

3) OPTION REGARDING CLAIMING COMPENSATION (S. 167)-

Where death or bodily injury to any person gives rise to a claim for compensation under this Act and also under the Employee's Compensation Act, 1923, the person entitled to compensation may claim compensation under either of these two Acts and not under both.

Thus, the section directs the application to elect between the abovementioned remedies if he can claim either the provisions of the Motor Vehicle Act or the Employee's Compensation Act, 1923.

4) PROCEDURE, POWER, AND AWARD OF THE CLAIMS TRIBUNAL (Ss. 168, 169, 170)-

a) Procedure of Claims Tribunal (S. 168 and 169 and 170)-

On receipt of an application for compensation (made under S. 166), the Claim Tribunal shall-

(i) after giving notice of the application to the insurer, and

(ii) after giving the parties (including the insurer) an opportunity to be heard,

(iii) hold an inquiry into the claim-

(a) in holding an inquiry, the Tribunal may follow the rules made or such summary procedure as it thinks fit.

(b) for holding an inquiry, the Claims Tribunal shall have all the powers of the Civil Court.

(iv) where in the course of any inquiry, the Claims Tribunal is satisfied that-

(a) there is collusion between the person making a claim and against the person whom the claim is made; or

(b) the person against whom the claim is made has failed to contest the claim; it may, for the reasons to be recorded in writing, direct that the insurer who may be liable in respect of such claim shall be impleaded as a party to the proceeding. The insurer then can contest the claim on all or any of the grounds available to it (S. 170).

b) Award of Claims Tribunal (Ss. 168, 171, 172)-

After the inquiry is completed, the Claims Tribunal makes an award and determines the amount of compensation that appears to be just. It further specifies the persons to whom compensation is to be paid and the persons by whom the compensation is to be paid, i.e., the insurer, owner, or driver of the vehicle, or by all or any of them.

The Claims Tribunal shall arrange to deliver copies of the award to the parties concerned expeditiously and, in any case, within fifteen days from the date of the award.

When an award is made, the person required to pay any amount in terms of the award shall deposit the entire amount awarded in such a manner as the Tribunal may direct within thirty days from the date of the announcement.

The Tribunal may direct that simple interest be paid in addition to the amount of compensation at such rate and from such date (not before applying) as it thinks fit (S. 171).

The Tribunal may award compensatory costs where it is found that there is misrepresentation in the case or defence, or it is vexatious (S. 172).

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Important Case Laws for discussion [Not Compulsory]-

There are some important rulings of the Supreme Court that shaped the compensation procedure and law. These judgments are very important in deciding the compensation amount. Taking into consideration their importance, they are discussed as follows.

1. Sarla Verma v. Delhi Transport Corporation [(2009) 6 SCC 121]

a. The Facts of the Case-

The litigation arose from a fatal road accident on April 18, 1988, when Rajinder Prakash, a thirty-eight-year-old assistant scientist working with the Bureau of Indian Standards, was run over by a Delhi Transport Corporation bus while riding his scooter. His widow, Sarla Verma, along with their three minor children and parents, filed a claim petition before the Motor Accident Claims Tribunal seeking fifteen lakh rupees in compensation.

b. Decision of the Tribunal-

The Tribunal calculated the dependency by deducting one-third of his income for personal expenses, applying a multiplier of sixteen, and awarding five lakh sixty-eight thousand two hundred rupees.

c. Decision of the Delhi High Court-

On appeal, the Delhi High Court lowered the multiplier to thirteen, basing it on the age of the claimants rather than the deceased. The claimants challenged this reduction in the Supreme Court.

d. The Supreme Court Ruled-

To establish a standardized formula, the Supreme Court ruled that a tribunal must determine three essential inputs: the tribunal first to determine the age of the deceased to apply the appropriate multiplier, then the additions to be made for future prospects, and the deductions to be made for personal and living expenses,

i. Principles on the Multiplier and Conventional Heads-

The court resolved the chaos surrounding multipliers by introducing a single, definitive table based strictly on the age of the deceased.

The multiplier starts at eighteen for victims aged fifteen to twenty-five years, reduces to seventeen for those aged twenty-six to thirty, sixteen for thirty-one to thirty-five, fifteen for thirty-six to forty, fourteen for forty-one to forty-five, thirteen for forty-six to fifty, eleven for fifty-one to fifty-five, nine for fifty-six to sixty, seven for sixty-one to sixty-five, and is capped at five for anyone above sixty-five years of age.

ii. Future Prospects-

Regarding future prospects, the court recognized that a person in stable employment would receive promotions and increments over time. It mandated that for victims with permanent, secure jobs, an addition of fifty percent of the actual salary must be made if the deceased was below forty years of age. This addition is restricted to thirty percent if the deceased was between forty and fifty years, and fifteen percent if they were between fifty and sixty years. No future prospects are added if the deceased was above sixty years of age.

But if in the above cases the job of the deceased victim or the injured is not permanent, or is on fixed salary or carries his own business, etc., then the addition is forty percent, twenty-five percent, and ten percent respectively in the above cases.

iii. Principles on Personal Deductions

To prevent arbitrary guesses regarding how much a deceased person would have spent on themselves, the court established a systematic deduction rule based on the number of dependent family members. If the deceased was a bachelor, the personal deduction is strictly fifty percent of the income, as a single person generally spends more on themselves, though this can be restricted to one-third if the size of the family is large. For married individuals, the deduction is scaled according to family size: a one-third deduction is applied if there are two to three dependent family members, a one-fourth deduction if there are four to six dependents, and a one-fifth deduction if there are more than six dependent family members.

e. Significance of the Ruling-

The legacy of the Sarla Verma decision lies in its practical utility. By converting subjective, discretionary calculations into a predictable mathematical sequence, the Supreme Court brought immense uniformity to Motor Accident Claims Tribunals nationwide. It simplified negotiations for insurance companies and streamlined the judicial process, ensuring that victims' families receive a calculated and "just" compensation without enduring decades of unpredictable litigation.

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2. National Insurance Company Ltd. v. Pranay Sethi [(2017) 16 SCC 680]

The jurisprudence of motor accident compensation in India reached its maturity when a five-judge Constitution Bench of the Supreme Court decided the above landmark case. This judgment did not overwrite Sarla Verma; rather, it clarified, refined, and expanded its principles, particularly regarding "future prospects" for self-employed individuals, to establish a comprehensive and final legal framework.

The judgment was delivered on October 31, 2017, by a unanimous five-judge Constitution Bench of the Supreme Court of India, which was led by then Chief Justice Dipak Misra and included Justices A.K. Sikri, A.M. Khanwilkar, D.Y. Chandrachud, and Ashok Bhushan.

a. The Facts and the Legal Conflict-

The case did not arise from a single accident, but rather from a reference to a larger Constitution Bench to resolve deep conflicts between several three-judge bench decisions. While Sarla Verma (2009) had streamlined compensation, subsequent judgments like Reshma Kumari (2013) and Rajesh v. Rajbir Singh (2013) began taking contradictory views.

The primary point of conflict was "future prospects." Sarla Verma had ruled that future prospects (adding a percentage of income for career growth) could only be granted to deceased persons who had permanent, secure jobs. However, in Rajesh, a three-judge bench extended this benefit to self-employed persons and those on fixed or temporary salaries, adding a flat percentage to their income. Additionally, tribunals were inconsistent in awarding non-pecuniary damages under conventional heads, sometimes awarding massive sums and other times negligible amounts. The Constitution Bench was set up to establish authoritative, final guidelines on these issues.

b.Hon’ble Supreme Court ruled and laid down following principles-

i. The Unified Principles on age and Mutiplier-

The Court strictly validated the "Sarla Verma Table" for multipliers based on the age of the deceased, starting at a multiplier of 18 for those aged 15 to 25, and progressively decreasing to a multiplier of 5 for those above the age of 65.

ii. The Unified Principles on Future Prospects-

The Constitution Bench in Pranay Sethi recognized that excluding self-employed individuals or those on fixed salaries from the benefit of "future prospects" was highly unjust, as inflation and career progression affect everyone. The Court, therefore, standardized the additions for future prospects across all categories of employment:

(1). For deceased persons with established permanent jobs (salaried):

(a) Add 50% of the actual salary if the deceased was below 40 years of age.

(b). Add 30% of the actual salary if the deceased was between 40 and 50 years of age.

(2). For deceased persons who were self-employed or on a fixed salary without secure permanent jobs:

(a) Add 40% of the established income if the deceased was below 40 years of age.

(b) Add 25% of the established income if the deceased was between 40 and 50 years of age.

For both categories, no addition for future prospects is made if the deceased was above 60 years of age.

iii. The Unified Principles on Personal Deductions-

The Constitution Bench fully upheld and consolidated the rules laid down in Sarla Verma regarding personal deductions and multipliers, declaring them to be legally sound and binding. For personal deductions,-

(i) if the deceased was a bachelor, 50% of the income is deducted.

(ii) If the deceased was married,-

(1) the deduction is one-third for 2 to 3 dependents,

(2) one-fourth for 4 to 6 dependents, and

(3) one-fifth for more than 6 dependents.

iv. Redefining and Indexing "Conventional Heads"-

Prior to this ruling, tribunals awarded widely varying sums for non-pecuniary losses. Pranay Sethi introduced strict, uniform caps for these "conventional heads" to prevent arbitrary awards, while introducing an inflation-adjustment mechanism:

(a) Loss of Estate: Fixed at ₹15,000.

(b) Loss of Consortium: Fixed at ₹40,000 (This was later expanded in subsequent rulings to include marital, parental and filial consortium at ₹40,000 per dependent).

Crucially, the Court ruled that these conventional head amounts must be increased by 10% every three years to adjust for inflation.

c. Significance of the Joint Jurisprudence-

The combined effect of the Sarla Verma and Pranay Sethi judgments has created a foolproof, standardized mathematical equation for motor accident claims in India. By merging the two rulings, the current formula used by tribunals to compute the Loss of Dependency is:

Actual Income + Future Prospects (as per Pranay Sethi) - Personal Deductions (as per Sarla Verma) = Annual Contribution x Multiplier (as per Sarla Verma) = Loss of Dependency.

To this final Loss of Dependency, the standardized conventional heads, i.e. loss of estate, consortium, and funeral expenses, are added to calculate the final "just compensation." This unified framework has brought complete judicial discipline, objectivity, and speed to accident claim settlements across the country.

Thus, from the simple example we can calculate the compensation as follows.

If the deceased was 24 years married person having 4 family members i.e. his wife, a child and parents, i.e. mother and father. If he were a permanent employee and was earning Rs. 50,000/- per month, his calculation of compensation would be as follows.

(i) Monthly Income ……………..Rs. 50,000/-

(ii) Added 50% as per his age for future prospectus being a permanent employee i.e …….Rs. 25000/-

(iii) Thus, the total income for the calculation of compensation is 75000/-

(iv) 25% is to be deducted for the deceased’s personal expenses, i.e. 18750, since the number of dependents is 4.

(v) Thus, dependency comes to……. Rs. 56250/-

(vi) The amount of Rs. 56250 is to be multiplied bSy 12 months for a year i.e. 675000/- and then the appropriate multiplier as per the age of the deceased (i.e. 25 years) is 18, so the amount comes to be Rs. 1,21,50,000/-

(vii) Conventional sums of Rs. 15000/- for the loss of Estate, Rs. 15000/- for Funeral Expenses and Rs. 40,000 as a consortium is to be added in the above amount. However, the above conventional sums are to be increased by 10% every three years, and an amount for the consortium is to be granted to each applicant. Thus, the total compensation comes to be 1,21,50,000 + 15000 + 15000+ 160,000 (40000 X 4 dependents)= 1,23,40,000/- (one crore twenty three thousand and forty thousand only). The amount to be added by an appropriate percentage of interest from the date of the filing of the claim petition till the date of actual realisation of the amount.

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