Term Compensation – Under Motor Vehicles Act

The term “compensation” has not been defined in the Motor Vehicles Act, 1988. By interpretive process, it has been understood to mean to recompense the claimants for the possible loss suffered or likely to be suffered due to sudden and untimely death of their family member as a result of motor accident. Two cardinal principles run through the provisions of the Motor Vehicles Act of 1988 in the matter of determination of compensation. Firstly, the measure of compensation must be just and adequate; and secondly, no double benefit should be passed on to the claimants in the matter of award of compensation. Section 168 of the Motor Vehicles Act, 1988 makes the first principle explicit. Sub-section (1) of that provision makes it clear that the amount of compensation must be just. The word “just” means — fair, adequate and reasonable. It has been derived from the latin word “Justus”, connoting right and fair. In State of Haryana v. Jasbir Kaur, (2003) 7 SCC 484, it has been held that the expression “just” denotes that the amount must be equitable, fair, reasonable and not arbitrary. In Sarla Verma v. DTC, (2009) 6 SCC 121, it was held that the compensation “is not intended to be a bonanza, largesse or source of profit”. That, however, may depend upon the facts and circumstances of each case, as to what amount would be a just compensation. Reliance General Insurance Company Ltd. v. Shashi Sharma, (2016) 9 SCC 627.

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Filed under compensation, Motor Vehicles Act

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