Motor Vehicle Act (MACT Law) in India

This blog is meant to help and educate people especially advocates and law students on Motor Vehicle Law in India. The blog was written on Nov 2017. Please check if there has been any amendments or updates to the Motor Vehicles Act.

You may read this blog completely once. You may not understand it. When you read this completely again, you will understand it much better. So remember to read this blog again if confused.

Emphasis has been on the concept and knowledge instead of the sections of the MV Act which can be easily found from the act itself.

There are two types of insurance in India. One is Life Insurance and another is General Insurance. General Insurance is a contract of indemnity under which the person is compensated for the loss on occurance of an event.

General Insurance are of several types such as fire insurance, marine insurance, property insurance etc. The branches can be many as per the requirement of the market. The recent trend was insurance of mobile phones etc.

Motor Insurance is the biggest and most profitable form of general insurance to Insurance Companies.

Motor accidents, motor insurance in India is governed by Motor Vehicles Act. This act is a development of the concept of torts law of negligence. But the Act is now self reliant and has developed to a great extent and hardly there comes a situation where the Law of Negligence needs to be referred. This is also because of the large number of cases that have come up on Motor Vehicles Law.

Thus if someone has to study the motor insurance law then the Act alone is sufficient along with few important cases.

Lets start the Discussion...

As per Motor Vehicles act there are two types of insurance-

1) Third Party ( Act only) policy - covers only third party accidents
2) Comprehensive ( Package ) Policy - covers third party accident along with damage to own vehicle or driver's body.

It is important to understand what third party is. For the sake of insurance following are the parties to contract-

1) First party- Insurance Company
2) Second Party- Insured (the person who has come to insurance company to take insurance)
3) Third Party- Anything other than first and second party. The third party can also be an animal or a property or any vehicle etc.

A person approaches insurance company and asks for insurance for his car. ( Assuming that if his car hits a third person, then the insurance company will come in and compensate the third person on insured person's behalf.) He fills proposal form which when accepted by Insurance company becomes a contract. Thus the person proposes to company and company grants insurance based on doctrine of Utmost Good Faith. Which means that insurance company will not enquire anything about the car but will grant insurance assuming that the insured is having valid licence and all other necessary papers. These document requirements are written on the terms and conditions of contract and if they are violated, the insurance company doesnot come to rescue of the insured and the insured will have to pay compensation from his pocket for the loss he has done.

Thus to get the insurance, the person will have to make payment to insurance company which is called as premium. Section VB of the Insurance Act says that coverage of insurance will begin only when the premium is received by the insurance company and not before that. Thus if payment is done through cheque and if it bounces then Section VB is not complied and hence no insurance coverage can start

Lets understand few important short forms most often used-

DL- Driving License
IV- Insured Vehicle
TP- Third Party
TPPD- Third Party property damage
MACT- Motor Accident Claims Tribunal
MV Act- Motor Vehicles act
GVW- Gross vehicle weight ( this is the weight of vehicle along with maximum goods it can carry)
LMV- Light Motor Vehicle
OD- Own damage
PA- Personal Accident
Claimant- Person who filed case after suffering loss. He may also be the dependant of the person died in accident (deceased).

As per MV act there are few types of vehicles. Each type of vehicle requires own set of documents such as Driving Licence, Permit, Certificate of Fitness-

1) Two wheeler- Requires DL of MCWG (Motorcycle with gear)
2) Private Car- Requires DL of LMV (Light Motor Vehicle)
3) Passenger carrying vehicle- Requires DL of transport category, permit and fitness
4) Goods carrying vehicle- Requires DL of transport category, fitness and requires permit (if GVW less than 3000 Kg then permit not required. Above that permit required)


Here two wheeler is ordinary bikes, scooters. Private car is personal family car that is not run as taxi. Passenger carrying vehicle is any vehicle that carries persons for commercial purpose and earns money such as taxi car, autorikshaw, buses etc. Goods vehicle are any vehicle that carries goods such as minitrucks, pickups, heavy trucks etc.


Further, the vehicle whose GVW is less than 7500 Kg are considered light motor vehicle and above that are considered Heavy vehicles. MV act specifies Heavy vehicles as above 12000 Kg but does not specify about medium vehicles-

1) Less than 7500 Kg- Light Motor Vehicle (LMV)
2) Between 7500-12000 Kg- Medium vehicles but act doesnot specifically mentions this word.
3) Above 12000 Kg- Heavy vehicles.


Thus there are three documents that are important in MV act-

1) Driving licence
2) Permit
3) Certificate of Fitness

1) Driving Licence- MCWG and LMV licences are issued for a validity of 20 years. These type of licences are used for personal purposes and person carrying these licences cannot drive vehicle earning money (commercial vehicles). These licences expire when a person reaches age of 50 years and needs to be renewed again at this stage. There is another category of licence called as transport licence. These licences are meant to be for vehicles that earn money such as autorikshaw, buses trucks etc. Thus a driver must have transport licence in order to drive commercial vehicles. The validity of transport licence is of 3 years and needs to be renewed after 3 years. Thus the type of licences are-

MCWG- Motorcycle with gear. Can ride two wheeler

LMV- Light Motor vehicle. Can driver private car only. Not two wheeler or mini truck.

LMVT- Light Motor Vehicle Transport. Can drive minitruck/autorikshaw and all commercial vehicles under GVW weight of 7500 Kg. This licence can also drive private car as this licence is senior to LMV licence

Transport/HGV/HPV- Driver holding these licence can drive all commerical vehicle (vehicle earning money) be it small or heavy. But not two wheeler as only MCWG licence holder can drive two wheeler. Transport licence also has validity of 3 years and needs to be renewed.



2) Permit- Permit is required for all passenger carrying vehicles that earn money such as taxi, autorikshaw, buses etc. Permit is required for all goods carrying vehicles of GVW weight above 3000 Kg. For goods carrying vehicle under 3000 Kg weight permit is not required.

Permits are of several types-

 National permit- Valid for 5 years and is valid for 3-5 states movement.
 All India permit- Valid for 5 years and is valid for all over India movement.


3) Certificate of fitness- This is required for all commercial vehicles. Since manufacturing of vehicle till the period of 2 years fitness is not required but after that fitness is necessary for commercial vehicles.


For the purpose of claiming compensation from MACT, invalid or non availability of fitness is not considered major violation. But invalid or non availability of DL and permit are major violations and insurance company will try to get away from its responsibility citing that the conditions are not fulfilled.


In case of accidents to third party, the Acts mandate that compensation  will be decided by a court which will be called as Motor Accidents Claims Tribunal (MACT). These MACT are precided by judge of Additional District Judge or District Judge level. Civil Judges cannot preside them.

The process is summary process based on CPC. There is no limitation in MACT cases thus old accidents can also be claimed for compensation.


It is important to understand that MACT is meant for third party disputes i.e. dispute not between insurance company and insured but another person. Example- if insured's car hit another motorcycle rider (TP motorcycle rider) then this is a third party case. In this if the insured has all the important documents and fulfills all conditions of insurance company then insurance company will come to save the insured and pay compensation to the TP rider.

For disputes between insured and insurance company MACT is not having jurisdiction. But instead the consumer forum will decide such cases as it is between seller and consumer. Ex- if insured's car hit tree and thus major damage is caused to car, then the insured can claim compensation to repair car from insurance company. If insurance company refuses to pay then the insured can approach consumer forum.

It is important to understand that only Comprehensive policy also called as package policy covers Own Damage (OD) and Personal accident (PA) claims. Act only also called as Third Party policy does not cover  OD and PA claims.

TP claims means claim arising out of damage to third Party which may be man, vehicle, animal, house, any other property
OD claim means claim arising out of damage to own vehicle (insured vehicle)
PA claim means claim arising our of death or injury to insured. PA means Personal Accident.

Thus-

 1) Third Party ( Act only) policy - TP claims
2) Comprehensive ( Package ) Policy - TP + OD + PA claims


Dispute settlement and adjudication-

Every third party dispute needs to be settled through MACT and MV Act applies on it.

Basically, every third party accident needs to be reported to police and FIR must be lodged. If the chargesheet is against the insured vehicle and IV driver then it is sufficient to give impression that the accident is done by IV. However insurance company tries to do everything possible to prove that IV is not involved in case and also that the insured has violated the terms and conditions and therefore insurance company is not liable to pay.

There are few important sections under MV Act-


There are two ways to file case in MACT. One is Sec 166 and another is Sec 163A. Under Sec 166 the claimant has to prove the negligence of the IV driver. While under Sec 163A negligence need not be proved. If a chargesheet filed by police on the basis of FIR contains name of the accused as IV driver and IV is chargesheeted i.e. number of the insured vehicle appears in chargesheet then the negligence is considered established and case under Sec 166 can easily be filed. And in more than 95% cases the petitions are filed under Sec 166 of MV Act. Under Sec 166 compensation is decided as per case laws such as Sarla Verma / Delhi Transport (2009 case), Rajesh / Rajveer (2013 case). Compensation granted is high under this Section. Under Sec 163A the compensation is granted strictly as per Schedule 2 of MV Act. Compensation granted is generally low under this section.


Sec 3/ Sec 181 - Talks about DL requirement and punishment

Sec 66/ Sec 192A- Talks about permit requirement and punishment

Sec 140- No fault Liability (NFL). Under this section Rs 50,000 has to be paid for death and Rs 25000 for injury by insurance company to the claimant (petitioner who has suffered loss). Under this fault/negligence need not be established by claimant. These are temporary arrangements by court so as to compensate the claimant as most of the time cases take years to dispose of. NFL are kind of interim relief to the claimant in monetary terms. Application under NFL can only be filed in cases filed under Sec 166 of MV act and not under 163A of MV Act. The NFL amount is later adjusted with the final compensation.

Sec 149(2)- Talks about defences available to insurance companies. These defences may be such as-

No/Invalid DL- When IV driver doesnot have required driving licence as per vehicle category. Sec 3/181 violated
No/Invalid permit- When IV doesnot have permit or have invalid permit for the location, or the permit has expired
Hire and reward- When private car is used for commercial purpose such as taxi. This is considered violation because insurance company did not get proper premium for taxi which is more as compared to private car. Taxi also required permit and transport licence.

There are other defences also-

Unauthorised/Gratuitous passenger- When the Goods Vehicle carries person by taking money. In fact goods vehicle are supposed to take only goods but by carrying paid passengers they violate the conditions. Similarly when tractor carries more than one person (driver) they are called unauthorised person. Thus if anything happens to that passenger, insurance company can claim violation by the insured and thus insured has to pay compensation to that person from his own pocket.

Oversitting- If a bus can carry 20 passengers and if more than that are sitting then insurance company has to pay compensation to only 20 person and not beyond that in case of accident.

Driver implant- Sometimes when accident takes place and insured come to know that the driver of insured vehicle was not having valid driving licence., he can substitute that driver with another driver having valid licence. This is done so as to protect own liability. This is fraud. Insurance company hire investigators to find out such fraud and defends in case of fraud so as to get absolved.

Vehicle Implant-  Sometimes when accident takes place and insured come to know that the vehicle of insured was not having valid insurance, he can substitute that vehicle with another vehicle having valid insurance. This is done so as to protect insured's own liability. This is fraud. Insurance company hire investigators to find out such fraud and defends in case of fraud so as to get absolved.


Sec 170- Under this section, insurance company files application so as to contest case on behalf of insured and driver also if it finds there is relation between the insured and the claimants. If allowed by the court, the insurance company can not only defend on the statutory defenses but also factual defences such as fraud. If not allowed then insurance company has very limited ground of defence such as in Sec 149(2) such as no/invalid DL, permit, hire-reward etc.


It is pertinent to mention here that as per IRDA (Insurance Regulatory and Development Authority) circular in 2009, the pillion rider ( person sitting on the back of two wheeler) and occupants other than driver in car are also third party and can claim from the insurance company of the same vehicle on which sitting.

Types of negligence-

1) Contributory negligence
2) Composite negligence

1) Contributory negligence- In the accident between the IV and TP vehicle. If it is found that the negligence was of TP vehicle also as it came from wrong side and hit IV and as a result the TP driver got injured then there is contributory negligence in this case. Court will consider dividing the compensation to be given to the injured TP driver which may be even 50%. Thus if compensation was to be awarded of 1 lakh and if contributory negligence is established with the help of evidences and spot map on chargesheet, then the injured claimant may get only 50,000. THis may also be 40% or 30% or 20% as per court's discretion.

2) Composite negligence- In the accident between an autorikshaw and a car, the occupant on the back of the autorikshaw got injured, he can claim compensation from the insurance company of autorikshaw as well as insurance company of car. As he is third party for the autorikshaw as well as car.



Process that needs to be followed in MACT-

MACT proceeding is based on CPC but is a summary trial.

1) Petition is filed by claimant or dependants of the deceased
2) Notices are issued
3) On receiving notice, the driver, insured and insurance company file reply/ rejoinder
4) Judge finalises issues and grounds of contention based on petition and reply
5) Petitioner brings evidence and witnesses which is cross examined by opposite parties
6) Opposite parties especially insurance company brings witnesses and evidences who are cross examined
7) Final Arguments takes place after evidences
8) Decision / Award




Calculation and deciding compensation-

If a case has been filed under Sec 166 of the motor vehicles act then such cases invites lots of case laws. Three of the most important case laws are-

1) Sarla Verma / Delhi Transport Corporation (2009)
2) Rajesh / Rajbeer (2013)
3) Ningamma / United India Insurance


1) Sarla Verma-

The following chart below may be referred to what has been laid down in Sarla Verma case. The chart may be saved, printed, laminated and kept in wallet who often needs this chart-

Sarla Verma is a famous case that tells about what will be the multiplier as per age of the deceased and what should be dependency for calculation of compensation.

If a TP two wheeler rider dashes IV car and dies then calculation will be as follows. We will see his age as per Post Mortem report or the mark sheet if given or the DL or the adhar card etc. Suppose the age is 30 years. And number of claimants are 3 ( in this case they will be considered dependents of the deceased) who are mother, father, wife then the calculation will be-

Yearly income x Multiplier as per age x dependency= compensation

If in case the deceased doesnot have proof of earning such as salary receipt, income tax return etc then notional income is considered which varies from place to place. We are considering his notional income as 5000. Thus,

(5000x12) x 17 x 1/3 = 680,000

Look at the age and multiplier given below the name Sarla verma in the chart. If age is 30 then multiplier of 17 is to be used. Look at the Dependency family given in last column of the chart. If dependents are 2 to 3 then dependecy of 1/3 is to be applied.

It is pertinent to mention that dependants can be close and direct relatives and not distant relatives.

Apart from compensation under formula, for death cases compensation is also further enhanced under following other heads-

1) Funeral expenses - 25000
2) Loss of consortium (in case of married person)- 50,000 (for wife)
3) Loss of love and affection - 20,000 (for parents)
4) Medical expenses incurred during hospitalization before death- 10,000 ( as per medical bills produced)
5) Loss of estate- 50000
...........................................
Total- 155,000

Total- formula compensation + other heads compensation

Total- 680,000+155,000= 835,000

Thus total compensation will be 835,000 along with interest of ___% from date of filing petition.

Please note that amounts under other heads may be given as per judge's discretion. But formula remains fixed as per chart. Interest will be as per judge's discretion.

Sarla Verma is famous only for deciding the above chart.


2) Rajesh / Rajveer case (2013)

This case increases the amount for funeral expenses to 25000 and for loss of consortium to Rs 100,000. It also introduces concept of future prospect. That is the percentage of increase income as per age.