Compensation for Third Party Accidents under the Motor Vehicles Act 1988: Increase in Scale

On 22 May 2018, the Central Government issued a notification by which the scale of compensation for third party fatal accidents and injury claims under the Second Schedule of the Motor Vehicles Act 1988 (MV Act) was amended. These claims for compensation are considered on a 'no-fault liability' basis as envisaged under §163A of the MV Act. In other words, the claimant is not required to prove or plead that death or permanent disablement was due to 'any wrongful act or neglect or default of the owner of the vehicle.'

The erstwhile Second Schedule of the MV Act provided for compensation on a 'structured formula basis' which was indicated in a tabular form. Broadly, compensation was formulated on the basis of the victim's age and income and suffered from several defects and inconsistencies as observed by the Supreme Court in Sarla Verma v Delhi Transport Corporation [(2009) 6 SCC 121]. Further, the Court noted in Sarla Verma that different tribunals were utilising