Court suggests cess on fuel to create fund for accident victims


This scheme can replace present system of third party insurance / One time third party insurance premium is another option

New Delhi: With a view to ensuring that all road accident victims get compensation on time, the Supreme Court has asked the Centre to create a Road Accident Fund (RAF) through levy of cess/surcharge on petrol and diesel and credit it to such Fund.

A three-judge Bench of Justice R.V. Raveendran, Justice Mukundakam Sharma and Justice K.S. Radhakrishnan said it was necessary for the Centre to formulate a more comprehensive scheme for payment of compensation to victims of road accidents, in the place of the present system of third party insurance.

The Bench passed this order while dealing with the problems of victims not getting compensation; widespread practice of using goods vehicles for passenger traffic; procedural delays in settlement claims and hardships to victims and their families and full compensation awarded by the courts not reaching the families. The Bench said the fund should be managed by RAF commissions, thereby eliminating the need for third party insurance. All accident victims, without exception, could be paid compensation from out of the fund.

The Bench said:

“An alternative scheme involves the collection of a one time [life time] third party insurance premium by a Central insurance agency in respect of every vehicle sold [in a manner similar to the collection of life time road tax]. The fund created by collection of such third party insurance can be augmented/supplemented by an appropriate road accident cess/surcharge on the price of petrol/diesel sold across the country. “Such a hybrid model which involves collection of fixed life time premium in regard to each vehicle plus imposition of a road accident cess may provide a more satisfactory solution in a cast country like India. This will also address a major grievance of insurance companies that their outgoings by way of compensation in motor accident claims is four times the amount received as motor insurance premium. The general insurance companies may, however, continue with optional insurance to provide cover against damage to the vehicle and injury to the owner.”

The Bench pointed out that India had the dubious distinction of being one of the countries with the highest number of road accidents and the longest response time in securing first aid and medical treatment. The Bench said there was an urgent need for laying down and enforcing road safety measures and establishment of a large number of trauma centres and first aid centres.Justice Raveendran, writing the order, said the Director-General of Police of the State should instruct all police stations to maintain Accident Information Reports (AIR) and submit the same to the jurisdictional Motor Vehicle Claims Tribunal within 30 days of registration of the First Information Report on the accident.

The Tribunals were directed to record the AIR received from the police stations in a Register and list the AIRs for hearing as miscellaneous petitions. The insurance companies should be directed to deposit the admitted amount or the amount determined with the claims Tribunal within 30 days. In cases of injuries to any accident victim where the liability was not disputed, the insurance company should offer treatment at its cost to the injured without waiting for an award of the Tribunal.“If insurance companies can meet the bills for treatment of those who have taken a medical insurance policy, we see no reason why they should not extend a similar treatment to the accident victims of vehicles insured with them,” the Bench said. It listed the matter for further directions.

The Link to the Hindu News Report

Court suggests cess on fuel to create fund for accident victims