Refund in certain cases of compensation paid under section 161
Section 163 of the Motor Vehicles Act, 1988 deals with refund in certain cases of compensation paid under section 161. [Refund in certain cases of compensation paid under section 161. The Act came into force on 01 Jul 1989.
1[Refund in certain cases of compensation paid under section 161. -- (1) The payment of compensation in respect of the death of, or grievous hurt to, any person under section 161 shall be subject to the condition that if any compensation (hereafter in this sub-section referred to as the other compensation) or other amount in lieu of or by way of satisfaction of a claim for compensation is awarded or paid in respect of such death or grievous hurt under any other provision of this Act or any other law for the time being in force or otherwise, so much of the other compensation or other amount aforesaid as is equal to the compensation paid under section 161, shall be refunded to the insurer.
(2) Before awarding compensation in respect of an accident involving the death of, or bodily injury to, any person arising out of the use of a motor vehicle under any provision of this Act other than section 161 or any other law for the time being in force, the Claims Tribunal, court or other authority awarding such compensation shall verify as to whether in respect of such death or bodily injury compensation has already been paid under section 161 or an application for payment of compensation is pending under that section, and such Tribunal, court or other authority shall--
(a) if compensation has already been paid under section 161, direct the person liable to pay the compensation awarded by it to refund to the insurer, so much thereof as is required to be refunded in accordance with the provisions of sub-section (1);
(b) if an application for payment of compensation is pending under section 161 forward the particulars as to the compensation awarded by it to the insurer.
Explanation.--For the purpose of this sub-section, an application for compensation under section 161 shall be deemed to be pending--
(i) if such application has been rejected, till the date of the rejection of the application; and
(ii) in any other case, till the date of payment of compensation in pursuance of the application.]
Section 163, The Motor Vehicles Act, 1988 (Act 59 of 1988).
Cross-references
Extracted from the operative text of the enactments themselves. Every destination below exists in our corpus.
Related judgements & precedents
These are some judgments that construed this section, and hold precedence value. They hold authority on how to read, interpret and use this section.
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Oriental Insurance Co. LTD vs Rajni Devi
Court's Decision & Legal Precedent
When the owner of a motor vehicle is himself involved in an accident and claims compensation for his death or injury, the provisions of Section 163-A of the Motor Vehicles Act, 1988 (which provide structured formula compensation in third-party claims) do not apply. Instead, the liability of the insurance company is determined by the contractual terms of the insurance policy. The insurance company's liability is limited to indemnifying the insured against liability to third parties, and if the insured cannot be held liable to a third party, the insurer's obligation to indemnify does not arise. In cases of vehicle owner death or injury, the claim must be based on the specific personal accident insurance terms of the policy, which typically cap coverage at a fixed amount.
On this section: Special provisions for payment of compensation on structured formula basis; Court held this section does not apply when the vehicle owner himself is involved in the accident as a victim
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S. Iyyapan vs United India Insurance Co. Ld.
Court's Decision & Legal Precedent
An insurance company cannot deny or avoid its statutory liability to pay compensation to third-party accident victims merely on the ground that the driver, although holding a valid and effective driving licence to drive a light motor vehicle, did not possess a specific endorsement to drive that particular light motor vehicle when used for commercial purposes. The driver's possession of a valid light motor vehicle licence is sufficient authority to operate any type of light motor vehicle regardless of whether it is used for personal or commercial transportation. The statutory obligation of the insurer under Section 149 of the Motor Vehicles Act, 1988 to satisfy judgments and awards in respect of third-party liability cannot be defeated on such technical distinctions between subcategories of light motor vehicles. The compulsory insurance legislation is fundamentally a social welfare measure designed to ensure that accident victims receive compensation, and all relevant provisions must be interpreted to effectuate this paramount protective purpose.
On this section: Claims petition procedure for compensation in motor accident cases
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Eshwarappa @ Maheshwarappa vs C. S. Gurushanthappa
Court's Decision & Legal Precedent
The liability of a motor vehicle owner under Section 140 of the Motor Vehicles Act 1988 to pay no-fault compensation for death or permanent disablement resulting from a motor accident is absolute and independent of the owner's knowledge, consent, or involvement in the accident, and such compensation is a fixed sum determined by law that cannot be reduced, refused, or delayed based on the circumstances of the accident, the fault of the vehicle operator, the unauthorized use of the vehicle, or the procedural timing of the claim, as the statutory scheme under Chapter X (read with Sections 146-147) embodies a public policy mandate that all accident victims receive minimum compensation from the insurance fund to ensure immediate relief without exception or procedural impediment.
On this section: Alternative compensation scheme; amount of compensation under other laws reduced from no-fault compensation under Section 140 or Section 163A
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National Insurance Co. LTD vs Gurumallamma
Court's Decision & Legal Precedent
In fatal accident cases under Section 163A of Motor Vehicles Act 1988, compensation must be determined strictly in accordance with the Second Schedule's structured formula based on the deceased's annual income, not by judicial application of multipliers. The multiplier method applies only to non-fatal disability cases. Where income is not documented, courts must reasonably estimate based on the nature of the deceased's occupation, and compensation is calculated as: Annual Income × Statutory Multiplier from Second Schedule, less one-third deduction for personal expenses, subject to minimum compensation of Rs. 50,000. Parliament has prescribed this statutory formula, and courts cannot override it with discretionary judicial determination, even when compensation amounts appear low.
On this section: Section 163A was inserted by Act No. 54 of 1994 as special measure to provide compensation to legal heirs of deceased in motor vehicle accidents. It contains non-obstante clause making owner or insurer liable to pay compensation as per Second Schedule to legal heirs. Court explained that this section mandates structured compensation formula, not subjective judicial discretion.
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Rajesh Kumar @ Raju vs Yudhvir Singh
Court's Decision & Legal Precedent
When a motor accident claim is filed under Section 166 of the Motor Vehicles Act, 1988, the provisions of the Workmen's Compensation Act, 1923 do not apply. The Explanation to Section 163A incorporating the Workmen's Compensation Act definition of disability applies only to Section 163A claims and not to Section 166 claims. A disability certificate issued years after an accident by a medical officer who was not examined and cross-examined cannot be used to overturn the Tribunal's factual findings regarding disability assessment, especially when such argument is raised for the first time before the appellate court and was not contested before the lower courts. The Motor Accident Claims Tribunal's and High Court's assessment of disability percentage based on available evidence must be respected unless there is clear illegality or manifest error.
On this section: Provides for compensation claims based on use of motor vehicle without requiring proof of fault or negligence. The explanation to this section incorporates the definition of permanent disability from the Workmen's Compensation Act, 1923, but only for the purpose of Sub-section (1) of Section 163A, not for Section 166 claims.
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Mohan Singh vs Kashi Bai
Court's Decision & Legal Precedent
The Second Schedule to the Motor Vehicles Act 1988, though specifically formulated for Section 163A claims, provides a structured formula and appropriate guidelines for multiplier selection in compensation claims under Section 166. Courts should ordinarily apply the multipliers specified in the Second Schedule based on the deceased's age at the time of accident, without deviation, unless exceptional circumstances warrant such deviation. When the loss of dependency (multiplicand) is established and not in dispute, the corresponding multiplier from the Second Schedule should be applied for compensation calculation.
On this section: Section for which Second Schedule was specifically formulated. Court considered whether guidelines from this schedule could extend to Section 166 claims.
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Shashikala vs Gangalashmamma
Court's Decision & Legal Precedent
When a self-employed person dies in a motor vehicle accident, future prospects must be included in the compensation calculation. The percentage addition to actual income should be determined based on the deceased's age, nature of profession, and earning potential, as established in National Insurance Co. Ltd vs Pranay Sethi. For a 46-year-old self-employed person in transport business, 25% addition to actual income is appropriate. The enhanced income is then subjected to standard deductions for taxes and personal expenses, and multiplied by an age-appropriate multiplier (13 for age 46) to determine loss of dependency. Additional amounts for loss of consortium, funeral expenses, and loss to estate must be included.
On this section: Basis for determining compensation in motor vehicle accident cases; cited implicitly through the framework of calculating loss of dependency and compensation awards
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Premkumari vs Prahlad Dev
Court's Decision & Legal Precedent
An insurance company cannot escape liability to pay motor accident compensation merely on the ground that the driver possessed a fake or invalid driving license. The insurance company must establish that the insured (vehicle owner) committed a breach of policy conditions by negligently failing to verify a driver's license or being aware that the license was fake. A vehicle owner who verifies that a driver possesses a license that appears genuine on its face and is competent to drive has not breached any policy condition. Therefore, in such cases, the insurance company remains liable to innocent third parties, though it may be entitled to recover the amount from the insured if breach is substantially proved. The compulsory insurance scheme under the Motor Vehicles Act is fundamentally designed to protect accident victims, and this protective purpose cannot be defeated by technical grounds related to driver licensing.
On this section: Relates to claims for compensation under the Act
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State of M. P. vs Badrilal (deceased) through L. Rs
Court's Decision & Legal Precedent
For a deceased aged 23 years at the time of motor accident, the correct multiplier to be applied for calculating loss of dependency compensation is 18 (not 13). The multiplier should be determined in accordance with the age-based standards established in Sarla Verma v. Delhi Transport Corporation. When an appellate court reduces a multiplier without recorded reasons and without any appeal by the opposing party, such reduction is legally impermissible. Compensation for future earning prospects should be calculated at an appropriate percentage (in this case, 30%) and added to the loss of dependency compensation. Interest at 6% per annum is payable on the enhanced compensation from the date of the accident.
On this section: The framework for determining and awarding compensation in motor accident claims; jurisdiction of MACT to award damages for death or injury
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Savitri Devi vs Oriental Insurance Co. LTD
Court's Decision & Legal Precedent
When a bachelor deceased is the sole earning member of a large family with multiple dependent members (including aged parents, handicapped siblings, and studying siblings), the deduction for personal and living expenses should be restricted to 1/3rd of the deceased's income rather than 50%, with 2/3rd being treated as contribution to the family, in accordance with the principles laid down in Sarla Verma v. Delhi Transport Corp.
On this section: Referenced as alternative provision under which compensation claims may be made
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Kumarakalava Gangaiah vs Syed Mahaboob Daula
Court's Decision & Legal Precedent
In motor accident death cases involving dependent family members, compensation must be calculated based on the deceased's actual earning capacity (determined through comparable precedents when documentary evidence is unavailable), applying the multiplier method established in Sarla Verma with appropriate deductions for personal expenses, and must include components for loss of estate, loss of consortium, and funeral expenses as established in National Insurance Company v. Pranay Sethi. Compensation can exceed the amount claimed in the petition when the evidence demonstrates the claimants are entitled to a higher amount, as there is no statutory restriction in the Motor Vehicles Act limiting awards to the claimed amount, and fair compensation should not be defeated by technical considerations.
On this section: Governs compensation claims in motor accident cases; the claimants sought enhancement of compensation under this section
The holding above is the ratio decidendi as extracted from the judgment by eCourts India, reproduced unaltered — it is a rendering of the court's reasoning, not a substitute for its words. Read the order itself before relying on it.
Judgments citing this section
These may be obiter dicta or a precedent, for you to study. These are the judgments where this section is quoted.
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… awarded by the Motor Accident Claims Tribunal, Attur in M.C.O.P.87/2016, the present appeal is filed by the appellant, the United India Insurance Company Limited, Tiruvannamalai. 2. The respondents 1 and 2 filed the claim petition under Sections 166 and 163-A of Motor Vehicles Act, in M.C.O.P.87/2016 before the Motor Accident Claims Tribunal, Subordinate Court, Attur, seeking compensation of Rs.30,00,000/- for the death of their son Nandhakumar in a road accident that occurred on 14.07.2015. 3. The brief case of the claimants is as follows : On 14.07.2015, …
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… As seen from the impugned award, there are no reasons given by the Tribunal for converting the claim filed by the appellant/claimant under Section 166 of Motor Vehicles Act to one under Section 163-A of Motor Vehicles Act. Before the Tribunal, the appellant has also not filed any document to prove that he had suffered loss of earning capacity on account of injuries sustained by him as a result of an accident caused by the vehicle insured with the second respondent. The exhibits Ex.P1 to P11 marked on the side …
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… Heard learned counsel for the appellant and learned counsel for the 3rd respondent insurer. 9. Though the tribunal has mentioned in the award, that it was a claim under Section 163 A of Motor Vehicles Act, 1988, actually the claim was one under Section 166 of Motor Vehicles Act, and the tribunal also treated that claim as one under Section 166 of the MV Act. So, this court also is treating it as a claim under Section 166 of the MV Act. 10. Learned counsel for the appellant would submit …
Made under this section, and citing it
2 instruments name this provision in its title or its text without being made under it.
Questions about Section 163
What have the courts held on Section 163 of the Motor Vehicles Act?
Oriental Insurance Co. LTD vs Rajni Devi (22 Apr 2008) is the leading judgment on this section among those set out below: Special provisions for payment of compensation on structured formula basis; Court held this section does not apply when the vehicle owner himself is involved in the accident as a victim. Another 10 judgments on this section are set out below, 9 of them from the Supreme Court. They run from 2008 to 2025.
How do I find court cases under Section 163 of the Motor Vehicles Act?
In judgments and charge sheets this section is written several ways, and each form finds a different set of orders. These search the full text of every order eCourtsIndia holds, best matches first: MV Act 163, section 163 MV Act, section 163 of the Motor Vehicles Act. Each opens the full list of orders on eCourtsIndia, where it can be narrowed by court, year and outcome. 11 reported judgments on this section are set out on this page, beginning with Oriental Insurance Co. LTD vs Rajni Devi (22 Apr 2008).
What should I read with Section 163 of the Motor Vehicles Act, and has it changed?
Its own text turns on section 161 (Special provisions as to compensation in case of hit and run motor accident), so none of them can safely be read on its own. 3 other provisions in this corpus refer back to it. 2 instruments name it without being made under it, most recently GSR 163(E) 25 feb 2022 Compensation to Victims of Hit & Run Motor Accidents, Scheme 2022 (2022), then draft GSR 526 (E) 2nd August 2021 Scheme for Compensation Hit and run (2021).
When did Section 163 of the Motor Vehicles Act come into force?
Section 163 of the Motor Vehicles Act, cited as MV Act 163, came into force on 01 Jul 1989, having been enacted on 14 Oct 1988. It is in force as at the date shown on this page.
Other sections of this Act
- 2. Definitions1948 words
- 88. Validation of permits for use outside region in which granted1560 words
- 51. Special provisions regarding motor vehicle subject to hire-purchase agreement, etc1199 words
- 150. Duty of insurers to satisfy judgments and awards against persons insured in respect of third party risks1102 words
- 96. Power of State Government to make rules for the purposes of this Chapter995 words
- 72. Grant of stage carriage permits868 words
Source and method. Compiled from the enactments of Parliament and of the State legislatures as published on India Code, and republished together with commentary and other original matter under section 52(1)(q)(ii) of the Copyright Act, 1957. Structured, cross-referenced and maintained by eCourtsIndia. Text as in force on 15 Oct 2026. This page is not a substitute for legal advice.