SC says compensation under Section 163A of the Motor Vehicles Act not limited to third-party claims

New Delhi, August 5, 2025 — In a significant ruling, the Supreme Court clarified that people beyond third parties can file motor accident compensation claims. The court stated that Section 163A of the Motor Vehicles Act covers more than just third-party claims. Legal heirs or family members of a vehicle owner can also seek compensation. The law still allows them to claim compensation, even if they don’t qualify as third parties in the usual sense.

This decision came during a case involving a minor girl who lost both parents in a car accident. While she received insurance compensation for her mother’s death, her claim for her father’s death was denied. The insurer argued that since the father was the vehicle owner and policyholder, his legal heir could not claim compensation.

The Supreme Court, however, referred the matter to a larger bench, citing conflicting judgments in previous similar cases. The bench noted that Section 163A is a special clause. It overrides other parts of the Act and allows faster, no-fault compensation.

“Section 163A is not restricted to third-party claims,” the court noted. “It permits claims without proving negligence if death or permanent disability is caused due to a motor accident.” The court further emphasized that the provision overrides Sections 147 and 149, alongside other laws regulating insurance terms.

The court said the clause aims to protect victims and their families from being denied justice due to strict definitions of who a policyholder is. The no-fault liability provision under Section 163A seeks to simplify access to compensation and avoid unnecessary legal complications.

Legal experts and families of accident victims have welcomed the ruling. They see it as a step toward wider access to insurance benefits in tragic cases. The judgment also promotes a more inclusive interpretation of motor accident claims. This applies whether the victim was the vehicle owner or a third party.

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