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Involved in road accident? Here’s what to know.

In India all the laws relating to motor vehicles are governed under the Motor Vehicle Act, 1988. The scope of the Motor Vehicle Act is that this act regulates practically every aspect of road transport vehicles. The Indian Motor Vehicle Act, 1988 was established to solve the following issues-
1. To have strict procedures for granting licenses and calculating the validity period of such licenses.
2. To maintain road safety requirements, dangerous and explosive material transportation rules and pollution control measures.
3. To maintain the country’s rapidly growing quantity of personal and commercial cars.
4. To raise the amount of compensation available to hit and run cases.
5. To eliminate the time limit for traffic accident victims to file a compensation claim.

Driving license: License requirements

The legislation requires all the drivers to have a valid driver’s license and no vehicle can be operated unless it is registered under motor vehicle act.
Penalties related to driver’s license-
1. The driver must also be a major and should not be under the age of 18 years. Under section 3 read with section 181 of the motor vehicle act, a person who drives his vehicle without a valid license commits an offense.
2. A person who allows his vehicle to be driven by someone who does not have a valid driver’s license is violating the Motor Vehicles Act Section 5 in connection with section 150.
3. A breach of section 130(3) with section 177 of Motor Vehicles Act comes into picture when the driver does not have the required documents.
4. Section 130 read with section 177 of the Motor Vehicles Act states that driving a vehicle without appropriate insurance is illegal.

Offenses covered under Motor Vehicle Act

  • Driving without a license

  • Allowing someone to drive a vehicle who does not have a proper license

  • Not having relevant documents required to operate a motor vehicle on Indian roads

  • Driving without permit when required

  • Using the vehicle without having a vehicle fitness report

  • Driving the vehicle without the registration certificate

  • Usage of any vehicle by a minor

  • Riding two wheeler vehicle without helmet

  • Driving without fastening the seat belts

  • Exceeding the speed limit

  • Risky or rash driving

  • Driving against the flow of traffic in a one-way lane

The cases related to MACT are filed in the Motor Accidents Claims Tribunal and District Court. The latest amendment made in the Motor Vehicles Act was done in the year 2019 and the act was known as Motor Vehicles (Amendment) Act, 2019. The major changes that took place in the act were-
1. Road and Environment Health
2. Road safety
3. Fitness of Vehicle
4. National Road safety Board
5. Compensation for Victims of Road Accidents
6. Protection of Good Samaritan
7. Compulsory Insurance
8. Taxi Aggregators
9. National Transportation Policy
10. Training of drivers
11. National Register for Driver License and Vehicle Registration
12. Online Driving Licenses
13. Motor Vehicles Accident Fund
14. Better Insurance Facilities

The amendment led towards various benefits such as-
1. E-governance is the major highlight of this amendment. With this, it is no longer necessary to have certain specified educational qualifications for acquiring the transport licenses. This provides online learning for licenses and increases the driving license’s validity period.
2. The biggest benefit of this amendment for the ordinary citizen is the increase in compensation to victims and their families and better and quicker insurance facilities.
3. Included new provisions in order to improve the registration process of vehicles by making the process more easy with help of Sarathi and Vahan platforms. Provisions have been made to enable registration of vehicles at the end of the dealer.
4. Making the rules more stringent for the fitness of vehicles, the air pollution level in cities has dropped.
5. Because of digitalization and e-governance, the system is expected to be more efficient in its undertaking, minimizing the risks.

Motor Vehicles Act: Claiming of compensation

No prescribed limit is given under which the claim application has to be filed, but if the compensation is being claimed after a long period then it might result in raising doubts in the minds of the tribunals.
According to the section 165(1) of the Motor Vehicle Act, the Claims Tribunal can entitle compensation to the claimant in the following circumstances-

  • When the accident involves death or bodily injury to a person

  • When the accident results in the loss of any property of a third party

  • When such accidents arise out of the use of motor vehicles

The claim is assessed according to set rules and regulations. In one of the landmark judgments of National Insurance Company Limited vs Pranay Sethi, it laid down the guidelines that are needed to consider while doing assessment of compensation which is to be paid by the offender to the accident victims who are self-employed or have fixed salary or have a permanent salary. After the case of Sarla Verma vs Delhi Transport Corporation, further guidelines were laid down. Later on a specific set of rules were framed according to which the compensation needed to be calculated. The compensation was calculated as:

1. If the deceased had a permanent jobBelow 40 years of age, addition will be 50% of salary. Between 40-50 years of age, addition will be 30% of salary. Between 50-60 years of age, addition will be 15% of salary.
2. If the deceased had been self-employed or had a fixed salaryBelow 40 years of age, addition will be 40% of salary. Between 40-50 years of age, addition will be 25% of salary. Between 50-60 years of age, addition will be 10% of salary.
3. Assessment of compensation in case ofLoss of estate, compensation will be of Rs 15,000. Loss of consortium, compensation will be of Rs 40,000. Funeral compensation will be of Rs 15,000.

There are various types of claims-
1. No fault liability
This liability is dealt with under Section 140 of the Act. The claimant, in this case, doesn’t have to prove the fault on the part of the other party, there is no joint liability. But this liability arises only when the person claiming has been permanently disabled, or if he dies. The compensation that the claimant can claim is Rs 50,000/- in case of death, and Rs 25,000/- in case of permanent disability.
{Permanent disability refers to permanent loss of any muscle or joint muscle or permanent disfigurement of face or head or permanent deprivation of the sight of either eye or ear or any other body part.}
2. Hit and Run
Section 161 of the Act deals with the claims made under Hit and Run cases. In such cases, the accused hits the victim with his vehicle and instead of helping him chooses to run away. As per Section 161(3) in case a person is injured he is to be paid a sum of Rs 12,500/- and in case of death, his legal representatives will get Rs 25,000/-.
3. Structured Formulas Basis
The Motor Vehicles Act, 1988 was amended in the year 1994. This amendment introduced a new section of the Act i.e., Section 163 A. According to this section a claimant does not need to prove the fault of the driver. The owner, defined under Section 2(30) of the Motor Vehicles Act, 1988 or the insurer has to compensate the claimant, but on the condition that the identity of the accused has to be revealed. Also, there is another condition under which the claimant can either file a complaint under Section 140 or Section 163 A. If his complainant has already been granted compensation under Section 140 then under this section he will only get the balancing amount.

Not in every case there is only one party at fault. There are instances when the fault is of both the parties or more than two parties. In this situation two options are available with the parties-
1. Contributory Negligence
The claimant along with the driver had contributed to the accident. It is not only negligence on the part of the driver but the claimant too. So, if the claimant has equally contributed to the happening of the accident then his compensation would be reduced to half. Otherwise, his compensation will be reduced in proportion to his negligence.
2. Composite Negligence
In composite negligence, the accident happens because of the fault of two or more parties excluding the victim. Here, there is no fault on the part of the victim. Thus, when more than two parties are involved in an accident and claim compensation under the third-party, the compensation will be decided in respect of the composite negligence on the part of drivers of those vehicles.

Arbitration And Commercial Disputes Resolution

The term ADR stands for Alternative Dispute Resolution. It signifies any out of court settlement processes which can be adopted in order to settle out disputes. ADR consist of various dispute settlement mechanisms, such as-
1. Arbitration
2. Mediation
3. Conciliation
4. Negotiation
When the courts are overburdened with the cases, ADR serves the purpose of providing faster and simpler means of dispute resolution.

ArbitrationArbitration is the outside court settlement of dispute by one or more (odd number preferably) persons who are appointed as arbitrators by both the parties. It consists of a simplified trial, with simplified rules of evidence and with no discovery. Arbitration hearings are usually not a matter of public record. The arbitral award is binding on the parties just like a court decree or order.
MediationMediation usually involves a neutral third party who tries to facilitate the issues between the parties and guides them through dialogue to a win-win situation. Mediation settlements are non-binding in nature.
NegotiationIn this dispute resolution mechanism, there is no third party like lawyers, arbitrators or mediators involved. The two parties in dispute, sit together and discuss the terms that will serve best to both their mutual interests. When both the parties are willing to come to a compromise, in that case negotiation becomes a successful means of dispute resolution.
ConciliationIt is a flexible and informal process of ADR where the disputing parties resolve their disputes with the aid of one or conciliators who act in an impartial manner and aid the parties in reaching an amicable settlement. Compared to a mediator, a conciliator is more proactive in persuading the parties to reach a settlement by making proposals for settlement at any stage of the conciliation proceedings.

Comparison between ADR and Litigation

ADR is a semi-legal judging process where the arbitrator is appointed by the parties in order to judge the proceeding.Litigation is a complete legal judging process where a judge is an impartial party who listens to both parties of dispute and passes a judgment.
In ADR all the procedure and decisions are governed and controlled by the provisions of Arbitration and Conciliation Act, 1996.Litigation procedures and decisions are governed and controlled by the provisions of the relevant case laws.
ADR is a cost-efficient process as there is no involvement of court fees and resolution (if reached) is often faster.Litigation is an expensive process as court fees as well as advocates fees and other expenses are involved in it.
Typical time taken in an ADR process is about 2 days which may exceed to several weeks depending on the availability of the parties.Typical time can range widely from months to a few years. ~80 lakh cases are pending in India for more than 5 years.

Associated legislation:

  • Arbitration and Conciliation Act, 1996

  • Lok Adalat mentioned under section 20(1) of the Legal Services Authority Act, 1987.

  • Article 14 and article 21 of Indian Constitution which states Equality before law and Personal Liberty.

Commercial cases for Arbitration

Commercial issues which can be taken by the ADR are:
1. Contractual disputes, especially including breach of contract and lack of delivery.
2. Disputes between the shareholder, directors and other ranking business entities.
3. Professional and commercial negligence.
4. Construction disputes, including contractual, building, and regulatory issues.
5. Partnership disputes.
6. Reputation management, including countersuits, defamation, Non-Disclosure Agreement breach.
7. Patent and Intellectual Property disputes.

ADR in disputes related to patent:

In India the recognition and enforcement of patent rights are governed and regulated by the Patents Act, 1970. Section-104 of the Patents Act states that jurisdiction of Patent infringement rests with the district courts. However, in several cases, the High Court of Calcutta, Bombay, Madras and Delhi have exercised original jurisdiction. Section 103(5) of act provides that high court may order whole proceedings or any question or issue of fact to be referred to an arbitrator in case of the Government's use of a patented invention.
In the case of Booz Allen Hamilton v. SBI Home Finance the Supreme Court of India said that every civil or commercial dispute, either contractual or non-contractual, which can be decided by a court, is in principle capable of being adjudicated and resolved by arbitration unless the jurisdiction of arbitral tribunals is excluded either expressly or by necessary implication. The Court further went on to say that though it is a general rule that rights in personam are arbitrable and disputes arising from rights in rem require adjudication by the courts, are not suitable for arbitration; this is not a rigid or inflexible rule. “Disputes relating to subordinate rights in personam arising from rights in rem have always been considered to be arbitrable.”

ADR in disputes related to shareholders:

Many companies include the arbitration clause in their Article of Association for the purpose of resolving disputes arising between the company and the shareholder. Irrespective of this, the National Company Law Tribunal has the jurisdiction to decide upon cases and provide remedies in all company matters including any disputes between the shareholders and the company. Section 241 of the Companies Act, 2013 states that the National Company Law Tribunal has the exclusive jurisdiction to provide remedy in cases where either the affairs of the company are conducted in a manner prejudicial to the public interest or if the conduct of majority shareholders is oppressive. The arbitrability of shareholders disputes is one of the important aspects that have been incorporated as a mandatory arbitration clause in the Article of Association.
In the case of Booz Allen Hamilton v. SBI Home Finance the Supreme Court of India said that every civil or commercial dispute, either contractual or non-contractual, which can be decided by a court, is in principle capable of being adjudicated and resolved by arbitration unless the jurisdiction of arbitral tribunals is excluded either expressly or by necessary implication. The Court further went on to say that though it is a general rule that rights in personam are arbitrable and disputes arising from rights in rem require adjudication by the courts, are not suitable for arbitration; this is not a rigid or inflexible rule. “Disputes relating to subordinate rights in personam arising from rights in rem have always been considered to be arbitrable.

Landmark Judgements

1. Tata Capital Finance Limited vs Shri Chand Construction and Apartment Pvt. Ltd.
The High Court of Delhi held that an arbitration agreement that confers unequal power on one party to unilaterally abandon the arbitration proceedings, would be invalid in law, as such an agreement would lack ‘mutuality’, which is an essential feature of an arbitration agreement. The court further held that an arbitration agreement which provides for arbitration of the claims of one party and providing for a remedy of court or any other for a for the claim of the other party would also be invalid in law as the same would not only result in splitting of the claims and cause of action but also in the multiplicity of proceedings and conflicting decisions on the same cause of action.
2. Arun Srivastava vs M/S Larsen & Toubro Ltd.
The High Court of Delhi held that a petition under Article 227 would not be maintainable against an order referring the parties to arbitration under Section 8. The court observed that no provision for appeal against an order allowing Section 8 application is there in the act, therefore, the legislative intent is clear in terms that if there is a valid arbitration agreement, the court must refer the parties to arbitration and all the issues related to existence and validity of the arbitration agreement must be raised before the tribunal.

3. ArcelorMittal Nipon Steel India Ltd. vs Essar Bulk Terminal Limited.
The Supreme Court held that the bar under Section 9(3) would be inoperative if the court had already entertained an application and taken it up for consideration. The purpose of Section 9(3) is not to turn back the clock and refer the already decided applications under Section 9(1) to the Tribunal for fresh consideration under Section 17.

4. Quippo Infrastructure Ltd. vs A2z Infraservices Ltd.
The Calcutta High Court held that the constitution of the tribunal has to be given a wider interpretation so as to include assumption of jurisdiction by the arbitral tribunal after the arbitral proceedings have commenced in terms of Section 21 of the Arbitration Act, 1996.
5. DLF ltd. vs Leighton India Contractors Pvt. Ltd.
The High Court of Delhi held the scope of Section 9 of the Act is to merely preserve the subject matter of dispute till the arbitral tribunal is constituted and the same cannot be extended to directing specific performance of the contract itself. The Substantive questions and issues relating to illegality of action, entitlement, liability, damages, etc. have to be left for the Tribunal to adjudicate upon.

Stages of Arbitration

1. Arbitration agreement:
Section 7 of Arbitration and Conciliation Act, 1996 talks about the arbitration agreement. An arbitration agreement is the first step towards arbitration.
2. Number of arbitrators:
Section 10 of Arbitration and Conciliation Act, 1996 lays down the number of arbitrators that will adjudge the arbitral proceedings. This section provides the right to the parties to determine the number of arbitrators. If in any case the parties are unable to decide the arbitrators, then in that case the arbitral tribunal will provide a sole arbitrator.

3. Commencement of arbitral proceedings
Section 21 of of Arbitration and Conciliation Act, 1996 states the provision as to when the arbitral proceeding will begin. This section also states that if there is no arbitration agreement made between the parties, then the arbitration proceedings will begin from the date when the defendant will receive the notice of arbitration proceeding for dispute settlement from the petitioner.
4. Appointment of arbitrators
Section 11 of Arbitration and Conciliation Act, 1996, deals with the provisions of appointment of arbitrators. Parties have the right to decide the number of arbitrators as per section 10, with this the parties also have the right to decide the procedure of appointment of arbitrator. The arbitrator can be of any nationality as mutually decided by the parties. If in any case there is a dispute in relation to the appointment of the arbitrator the parties can approach the Supreme Court of the High Court (according to the clause included in the arbitration agreement) to appoint the arbitrator for them.

5. Statements of claims and defense
Section 23 of Arbitration and Conciliation Act, 1996 envisages the provisions of statement of claim and defense made by both the parties before the arbitral tribunal. According to this section, subject to mutual agreements between the parties or as per the order of the arbitral tribunal, the claimant shall submit his claims in details corroborated with facts, issues and relief to be sought. In response, the respondent is ordered to submit defense which is the counter-statement within the stipulated time. According to the recently added sub section (4) of section 23, the statements of claims and defense of both the parties should be finished within a maximum period of six months from the date of appointment of arbitrator.
6. Hearing and written proceedings
Section 24 of Arbitration and Conciliation Act, 1996 deals with the provisions of hearing and written proceedings before an arbitral tribunal. Subject to an agreement to the contrary between the parties, it depends on the arbitral tribunal to decide whether the arbitral proceedings will be held orally or on the basis of documents and other materials. The arbitral tribunal is also empowered to impose costs on the party seeking adjournment without sufficient cause. It may be noted in this regard that, although speedy disposal is of the essence in arbitration, it is only just that the parties be given sufficient notices at every stage of hearing and evidence submission and inspection.

7. Arbitral award
An arbitral award is a decision made by an arbitration tribunal in an arbitration proceeding that is believed to be equivalent to a court of law’s judgment concerning certain exceptions. The award may provide the parties with a number of remedies, including money, consent, injunction and other remedies. Depending on the nature of dispute the award may be interim, partial, or final.
8. Challenging of arbitral award
Section 34 of Arbitration and Conciliation Act, 1996 deals with the provisions of applications for setting aside of arbitral awards and was on the same subject matter to the section 34 of UNCITRAL Model Law on Arbitration. Section 34 (2) and section 34(2-A) of the act lays down the ground for setting aside of the arbitral award and section 34(3) lays down the time or talks about the limitation period within which the aggrieved party needs to approach the court for challenging an arbitral award. According to this section the aggrieved party has a period of 90 days or 3 months from the date of receipt of the arbitral award.

Cheque bounce? Consequences & Remedies

A cheque or check bounce is used to describe the unsuccessful processing of a dispensed check in India – primarily due to the lack of sufficient funds in the payee’s account, although there could be other reasons such as incorrect mentioned date, signature mismatch, mismatch of the amount and figures, damaged cheque, overwriting of the cheque, etc.
Currently, there are 33 lakh pending check bounce cases in India, with 5 states according for 2 out of each 3 such cases – Maharashtra (5.6 lakh cases), Rajasthan (4.8 lakh cases), Gujarat (4.4 lakh cases), Delhi (4.1 lakh cases), and Uttar Pradesh (2.7 lakh cases).

Scope of the offense:
Dishonor of cheque is not an offense in itself but to become an offense, the following ingredients should be there:

  • There should be a drawer that draws the cheque.

  • The cheque drawn should be in discharge of some liability.

  • Presentation of the cheque to the drawee bank.

  • The cheque returned by the bank unpaid on account of insufficient funds.

  • The cheque should be presented within six months from the date on which it was drawn or within the period of its validity, whichever is earlier.

  • Within thirty days of receiving a memo of return from the bank, a notice should be served to demand the payment of the said money.

  • The drawer fails to pay the said money within 15 days of the receipt of the said notice.

Negotiable Instrument (NI) Act Section 138

Section 138 of the Negotiable Instrument (NI) Act, 1881 is penal provision dealing with the punishment for the dishonor of the cheque. The original act was first drafted in the year 1866 but the sections 138 to 142 were added in the Act as amendments in 1988.
Section 6 of the NI Act makes it clear that the definition of a cheque includes an electronic image of a truncated cheque and a cheque in electronic form. The cheque is defined as a negotiable instrument drawn on a specified banker and not expressed to be payable otherwise on demand.
Under the NI Act, a bounced cheque is a criminal offense in India. If a cheque bounces, the person who deposited the cheque can file a complaint against the person who wrote the cheque (the drawer) in a criminal court. If the court finds the drawer guilty, he or she may be punished with imprisonment for a term of up to two years, or with a fine, or with both.
It is to be noted here that if the drawer pays the debt within 15 days, there would be no offense. The offense is said to be committed under Section 138 of the NI Act, only when he fails to pay the debt within 15 days and such person shall be punishable with imprisonment for a term which may be extended to two years, or with a fine which may extend to twice the amount of the cheque, or with both.


In the past when a cheque bounced, there were only civil and alternate dispute resolution available to the drawee. Later, criminal proceeding against the accused was added to the penalties.
The civil remedy for a bounced check is the filing of a civil suit for the recovery of damages and the criminal remedy available under Section 138 of the NI Act does not preclude the institution of a civil suit.

The quasi-criminal nature of Section 138 of the Negotiable Instrument Act can be better understood in two ways-
1. Incorporation of penal punishment of imprisonment is up to 2 years and a fine which may extend to twice the amount of cheque or with both.
2. Adoption of Code of Civil Procedure, 1908 while dealing with such cases.
The provisions from Section 138 to 142 were introduced with an objective to increase the credibility of a cheque for easy settlement of liabilities. Though the Act is primarily a civil law to ensure smooth functioning of any transaction, penal punishments were added in order to lower down the cases of dishonor.
It is worth pointing here that Section 29 of Code of Criminal Procedure, 1973 deals with the power of the magistrate to pass the sentence. So, for instance, a Judicial Magistrate of First Class would not be able to impose a fine of more than 10,000/-. This difficulty was removed by Amendment Act No.55 of 2002 thereby inserting Section 143(1) of the Negotiable Instrument Act and subsequently empowered the magistrates to impose a fine exceeding their limits ceiling being twice the amount of cheque.

Landmark judgements:

1. Dalmia Cement (Bharat) Ltd. VS M/S. Galaxy Trades & Agencies Ltd., 19th January, 2001
In this case the Supreme Court of India, laid down the reasons behind the enactment of Section-138 of the Negotiable Instruments Act, 1881. The facts of the case were completely based upon the dishonoring of the cheque because of which notice was issued to inform the accused party.
2. Canara Bank VS Canara Sales Corporation, 1987 AIR 1603, 1987 SCR (2) 1138
This case serves as the basis of understanding the relationship shared between the banker and its customers that are tied with threads of duties and equity, during the time of negligence by either party. In this case, the respondent had a current account in the plaintiff’s bank which was eventually found to be linked with fraudulent activities.
3. M/S Meters and Instruments Private Limited & Anr. VS Kanchan Mehta, 5th October, 2017
Tthe Supreme Court, looked over the concerns of objects related to Section-138 of Negotiable Instrument Act with other statutory provisions mentioned in the Chapter XVII of the Negotiable Instrument Act, 1881.

Associated legislation:

  • Arbitration and Conciliation Act, 1996

  • Lok Adalat mentioned under section 20(1) of the Legal Services Authority Act, 1987.

  • Article 14 and article 21 of Indian Constitution which states Equality before law and Personal Liberty.

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