Motor Vehicles Act framework

Compensation for motor accidents is governed by the Motor Vehicles Act, 1988 as substantially amended by the MV (Amendment) Act, 2019. Claims are filed before the Motor Accident Claims Tribunal (MACT) under Section 165. Three heads of compensation: (i) Section 161 (earlier 140) — no-fault liability ₹50,000 for death, ₹25,000 for grievous injury; (ii) Section 163 — hit-and-run compensation by Solatium Fund; (iii) Section 168 — “just compensation” on adjudication.

Calculation of just compensation

The multiplier method codified in Sarla Verma v. DTC (2009) and refined in National Insurance v. Pranay Sethi (2017) 16 SCC 680: (i) determine deceased’s annual income (actual or notional); (ii) add 40–50% for future prospects depending on age and employment; (iii) deduct 1/3rd / 1/4th / 1/5th for personal expenses based on family size; (iv) multiply by multiplier per age slab (e.g., 14 for 21–25 years, 11 for 41–45 years). Add conventional heads — funeral, loss of consortium, loss of estate.

Documents to assemble

FIR copy; charge-sheet / DD entry; post-mortem report; medical records and disability certificate; salary slips / ITRs / income proof; legal heir certificate; bank account details; license, RC and insurance of offending vehicle; photographs of the accident scene and vehicle damage; witness affidavits. The investigation officer’s report and Mechanical Inspection Report are particularly valuable.

Interim relief and structured settlements

Interim no-fault compensation under Section 161 is statutorily ₹50,000 for death and ₹25,000 for grievous injury — available within 4–6 months. Section 173 (earlier 140) makes this independent of fault. Structured settlements in catastrophic injury cases are increasingly common — annuity policies, monthly payouts and lump-sum components.

Insurance defences and recoveries

Insurers contest: (i) license valid? (ii) was vehicle driven with consent? (iii) was driver under intoxication? (iv) was the vehicle overloaded? Even where breach is found, the Supreme Court in Swaran Singh v. State of Punjab (2004) 3 SCC 297 held the insurer must pay and then recover from the owner — the “pay and recover” doctrine. This protects the victim from insurer-owner disputes.