Financial Daily from THE HINDU group of publications
Monday, Dec 26, 2005
Industry & Economy
Columns - Errors & Omissions Expected
Let not the claimants be put to undue harassment
FOR a victim of motor vehicle accident, pain doesn't end with getting out of treatment. Nor does it come to a close with the winning of a case for compensation at the Motor Accidents Claim Tribunal (MACT). Because, as a claimant, he or she has to follow `a tortuous route' to recover dues, as evident from a case that the Delhi High Court decided on December 9: The New India Assurance Co Ltd vs Kashmiri Lal and Others.
Mr Ashok Chhabra, advocate, appointed by the Court as Amicus Curiae (Latin term meaning `friend of the court'), explained that even after an award is passed in favour of a party under Section 168 of the Motor Vehicles Act, 1988, the insurance company takes considerable time in making payment even though a large number of them are public sector companies.
Section 168, which is about `Award of the Claims Tribunal', has sub-section 3 that reads as follows: "When an award is made under this section, the person who is required to pay any amount in terms of such award shall, within thirty days of the date of announcing the award by the Claims Tribunal, deposit the entire amount awarded in such manner as the Claims Tribunal may direct."
The `stipulated period of 30 days' has been completely eroded in practice, Mr Chhabra pointed out. "The tortuous route of Section 174 of the Act has thus to be resorted to routinely by the claimants and the recovery eventually depends upon the interest if any taken by the Collector to recover the awarded amount from insurer as arrears of land revenue," he said.
Section 174, titled `Recovery of money from insurer as arrears of land revenue' states that where any amount is due from any person under an award, the Claims Tribunal may, on an application made to it by the person entitled to the amount, issue a certificate for the amount to the Collector and that the Collector shall proceed to recover the same in the same manner as an arrear of land revenue.
However, Mr P.K. Seth, arguing for the insurance company, said that since Civil Procedure Code (CPC) was not directly applicable, "directions analogous to CPC so as to enable the Tribunal to become a Court" ought not to be given by the High Court.
Justice Mukul Mudgal of the High Court observed that the victims of motor accidents are either persons disabled or are legal heirs of the deceased. Compensation to such helpless victims is indeed "an ameliorative and social piece of legislation". Accordingly, the relief cannot be bound down by a narrow and constricted meaning of the Act and ought to receive a liberal interpretation, he said. "A public sector insurance company cannot be heard to urge that it would not pay amounts in respect of an MACT award which is enforceable except through the mode of arrears of land revenue," opined Justice Mudgal. Such a plea is wholly untenable in view of the time limit of 30 days prescribed under Section 168(3), he said.
Directions for expeditious payment
What is of far-reaching significance in the verdict is the Court's resolve to find "ways and means to ensure expeditious payment of compensation payable as per the award of a Tribunal in accordance with the mandate of Section 168(3)" because the writ petition was under Article 227 of the Constitution of India.
This Article speaks about `power of superintendence over all courts by the High Court'. Accordingly, every High Court shall have superintendence over all courts and tribunals throughout the territories in relation to which it exercises jurisdiction.
Therefore, Justice Mudgal laid down the following directions, "which are required to be followed by all MACTs" within Delhi:
a) Insurance company should inform, in the written statement submitted to the Court, the details of its Bank account and the Bank. For statement already filed in an existing claim, "all insurance companies are required to furnish the name of the concerned Bank and their account numbers within 3 months from today." b) Within 30 days of the award, the insurance company should "tender the payment awarded by the MACT by issuing cheques in the name of the claimant(s) unless and until a stay order has been obtained from the High Court." The award should mention "the names of the claimants who are to be paid the amounts along with the amount payable."
c) If after the expiry of 90 days payment has not been made, notice must be issued "to the Bank named by the Insurance Company directing such Bank to deposit the cheque drawn in the name of the claimant/claimants" within a week of receipt of such orders and cheques should be retained for being given to the claimant.
d) "Once the amount is deposited by cheque as per the aforesaid procedure the MACT is required to ensure that within a period of six weeks thereafter the amount is disbursed to the claimants under the supervision of the Presiding Officer by issuing the said cheque to the claimant so that the claimants are not put to undue harassment."
e) "In case for some reason it is not possible to make the payment to the claimant within six months of the issue of the cheques in the name of the claimant, then the MACT should ensure that such cheques are returned to the insurance companies in lieu of fresh cheques drawn in favour of the appropriate account of the MACT which are required to be deposited in an interest bearing short term fixed deposit for a six monthly period by the MACT."
f) "In case the MACT has to resort to the procedure prescribed under sub para (c) above which requires it to secure the amount through the banks upon a failure of the insurance company to deposit the amount within the time stipulated by Section 168(3) and the above procedure, cost of Rs 5,000 payable to the claimant is required to be imposed on the insurance companies."
g) "If directions given by the MACT to the Banks are not complied with, the MACT may order freezing of Bank Accounts to the extent covered by the award."
Justice Mudgal instructed that the District Judge ensured that a copy of the judgment be placed `before all MACTs forthwith'.
A ruling of great social importance that is worthy of adoption in other States too.
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