The Supreme Court of India has referred a critical issue concerning motor accident compensation to a larger three-judge bench, expressing doubts about a previous ruling that restricted claimants from seeking "no-fault" compensation under Section 163A of the Motor Vehicles Act after their "fault-based" claims were dismissed.

The case involves a tragic accident in 2000 where a father, child, and driver were killed. The claimants, family members, initially filed for compensation under Section 166 (fault-based) of the Act, which was rejected due to the driver's negligence. They then sought to convert their claim to Section 163A (no-fault), but this was denied based on a precedent set in Deepal Girishbhai Soni, which held that claimants cannot switch to Section 163A after failing under Section 166.

The Supreme Court, however, expressed reservations about this precedent, highlighting that Section 163A is a beneficial, non-obstante clause legislation designed to provide swift relief in motor accident cases, regardless of fault. The Court emphasized that the provision was introduced as a social security scheme to address the difficulties in proving negligence.

The Court argued that if a fault-based claim fails, the tribunal should offer claimants the option to pursue a no-fault claim, especially when third-party insurers are involved. They found it difficult to accept that claimants should be barred from seeking no-fault compensation simply because their fault-based claim was unsuccessful, given the beneficial nature of Section 163A.

Recognizing the binding nature of the existing three-judge bench ruling, the Court has referred the matter to the Chief Justice of India for the constitution of a new three-judge bench to reconsider the interpretation of Section 163A. This move signals a potential shift towards a more claimant-friendly approach in motor accident compensation cases, ensuring that victims and their families receive timely and just relief.

Section 163A, Motor Vehicles Act - 1988  

Motor Vehicles Act, 1988