Motor Vehicles Act, 1939: SECP proposes raise in compensation limit in case of death

The Securities and Exchange Commission of Pakistan (SECP) has proposed raise in compensation limit from Rs 20,000 to Rs 200,000 in case of death under the Motor Vehicles Act, 1939 for smooth implementation of the Motor Third Party Liability Insurance Scheme to compensate the road accident victims. Informed sources told Business Recorder here on Monday that the proposal is likely to be taken up in the 5th Meeting of National Financial Inclusion Strategy (NFIS) Steering Committee.
The SECP proposal is related to the legislative improvement for implementation of Motor Third Party Liability Insurance. According to the SECP, Motor Third Party Liability Insurance offers insurance protection against death and bodily injury to the victims of the road traffic accidents or their legal heirs. The law provides compensatory remedy for all such accident victims as provisions contained in the saved Chapter VIII of the repeated Motor Vehicles Act, 1939 make it compulsory for all the motor vehicles owners to have the motor third party liability insurance cover.
The compensation limit of Rs 20,000 prescribed for death or bodily injury under the existing saved Chapter VIII of the repealed Motor Vehicles Act, 1939 is meager amount which needs to be enhanced as it was last revised in 1949. Apart from the nominal amount of compensation prescribed almost seven decades ago, the existing procedure for determination of the liability through courts is so lengthy, costly and cumbersome which cannot be afforded by the claimants. Therefore the Securities and Exchange Commission of Pakistan prepared a proposal to amend the Motor Vehicles Act, 1939 for smooth implementation of the Motor Third Party Liability Insurance Scheme to compensate the road accident victims and forwarded the same to all the four provincial governments.
Major amendments proposed to be made in the said law are as follows:
Firstly, to introduce "no fault option" whereby the claim for death or bodily injury shall be payable to the victims of the road accidents or their legal heirs without obtaining any court order and irrespective of the fact as to whether or not the insured person was at fault.
Secondly, to increase compensation limit in case of death from Rs 20,000 to Rs 200,000. Thirdly, to introduce compensation limits separately for bodily injuries. In response, the Punjab government conveyed that Motor Vehicles Act, 1939 is a federal law and the Parliament is competent to alter, repeal or amend this Act under Article 270A (6) read with Article 1429a) of the Constitution. In the meantime, the Senate of Pakistan passed a bill to amend the Motor Vehicles Ordinance, 1965 for its application to the Islamabad capital territory in view of the above, the Commission requested the MOF to seek clarification from the Ministry of Law about subject law and the way forward.
The Ministry of Finance had conveyed the opinion of the Law and Justice Division that the "Motor Vehicles Act, 1939" is a federal law in terms of entry 29 read with entry 59 of the Federal Legislative List in the Fourth Schedule of the Constitution.
In respect of amendment in the Motor Vehicles Act, 1939 for effective implementation of Motor third Party Liability Insurance, the Ministry of Law and Justice, after its legal vetting, has directed the SECP to re-draft the amendments such that the ambiguity and undue complexity in the legal provisions is eliminated to the greatest extent possible, the SECP added.