Interim Compensation Before Final Award: How Section 140 Helps

The Hospital Bill Is Today. The Tribunal Date Is Two Years Away.

Your brother is in the ICU. The doctor has handed you an estimate — three lakh rupees for the next two weeks, more if surgery becomes necessary. The accident happened four days ago, on a highway in Maharashtra, when a tanker hit his motorcycle. You have the FIR. You have the insurance details of the tanker. A lawyer has explained that the claim petition will be filed before the Motor Accidents Claims Tribunal, but a final award will take a year, often two, sometimes three.

What about today? What about tomorrow? What about the loans you are taking from neighbours and from your wife's brother to keep the IV drip running?

This is the gap that Indian motor accident law tries to close through a remedy called interim no-fault compensation. You do not have to wait for the final award. You do not have to prove who was at fault. The law lets you walk into the tribunal in the first weeks after the accident and ask for a statutory minimum amount that the insurance company must pay you almost immediately. This article explains exactly how it works, how much you can get, and what families miss out on when they do not ask for it.

What Is No-Fault Liability and Why Was It Created?

Until 1982, an injured person or the family of a deceased had to prove that the driver or owner of the offending vehicle was negligent in order to recover any compensation. That meant collecting eyewitness statements, contesting denials of negligence, and waiting years for the tribunal to be convinced. Many families simply gave up. Parliament saw the problem and inserted a new principle: even before fault is decided, a minimum statutory amount should reach the family quickly. This is the philosophy of no-fault liability.

In the Motor Vehicles Act, 1988, this idea sat in Section 140 (and at the same level the related provisions in Sections 141 to 144). When the Motor Vehicles (Amendment) Act, 2019 reorganised the statute, the no-fault interim compensation provision moved to Section 164, with revised statutory amounts and a clearer no-fault structure. The principle is the same: negligence is not a ground to refuse benefit. As courts have repeatedly held, the claimant only needs to show that a vehicle was involved in the accident, and that the death or grievous injury arose out of the use of that vehicle.

This is not a small charity payment. The Supreme Court has held that no-fault liability under Section 140 is a statutory absolute liability — distinct from the rule of strict liability — and the amount is fixed by the statute itself, payable irrespective of any defence the insurer or owner may raise on the merits of the claim.

How Much Is the Interim No-Fault Amount?

The figures depend on which version of the law applies to your accident.

Old Section 140 — accidents before the 2019 amendment came into force

Under the original Section 140 of the Motor Vehicles Act, 1988, the family of a person who died in a motor accident was entitled to a no-fault compensation of Rs. 50,000. For permanent disablement of the injured, the no-fault amount was Rs. 25,000. The Supreme Court rejected challenges to these figures, holding that Parliament had set them as a humane statutory floor and they were not violative of Article 14 of the Constitution. The amount of interim compensation under Section 140 had to be in accordance with the law as it stood on the day of the accident.

New Section 164 — accidents on or after the 2019 amendment

The 2019 amendment, recognising decades of inflation, revised the figures sharply upward. The no-fault interim amount today is Rs. 5,00,000 (five lakh rupees) in case of death and Rs. 2,50,000 (two lakh fifty thousand rupees) in case of grievous hurt. The text of Section 164 makes this payment a statutory entitlement that the insurer cannot refuse on the ground that the deceased or injured was negligent or contributed to the accident.

A few state-level rules also prescribe additional procedural details — for instance, the Karnataka Motor Accident Claims Tribunal Rules, Bombay Motor Vehicles Rules, West Bengal Motor Vehicles (Accidents Claims Tribunals) Rules, and J&K Motor Vehicles Accidents Claims Tribunal Rules — but these only set timelines and procedure. They do not reduce the statutory amount.

You Do Not Have to Prove Fault. Only These Three Things.

The most common reason families miss out on interim compensation is that they assume they must first prove the truck driver was rash, or the bus driver was drunk, or the car was overspeeding. None of that is needed for the interim payment. The Supreme Court has clarified that in no-fault liability cases, negligence is no ground to refuse benefit. It is sufficient to show that the vehicle against whose owners the claim has been filed was involved in the accident.

Specifically, the tribunal at the stage of interim award only has to be prima facie satisfied about three things:

1. That death or permanent disablement of the claimant has been caused by an accident involving a motor vehicle.
2. That the offending vehicle was covered by a valid insurance policy at the material point of time.
3. That the materials on record do not, on the face of it, disclose any breach of the conditions of the policy of insurance.

That is it. There is no need to call eyewitnesses about who was driving how. There is no need to wait for the police chargesheet. The detailed enquiry is to be postponed for the final stage under Section 168. The very purpose of granting an interim award would be defeated if the tribunal were to enter into a protracted enquiry about whether the driver had a valid licence, whether the vehicle was overloaded, or whether the insurance policy had some technical violation. Such defences are kept aside for the final award.

Who Pays the Interim Amount — Driver, Owner, or Insurance Company?

The interim amount is paid by the insurance company in almost every case. Section 145(c) of the Motor Vehicles Act defines insurance liability to include any liability arising under no-fault provisions. So the insurer is statutorily required to discharge no-fault compensation along with its other obligations. The Supreme Court has held that if a policy is in force covering liability against third parties, the insurer is liable to pay interim compensation by virtue of Section 145(c) even though the claimant is not classified as a person against whom an order can be passed under Section 140.

Even where there is a dispute about ownership (say the vehicle was sold but registration not transferred), both the registered owner and the transferee can be held jointly liable for the interim award. Even where the identity of the second vehicle involved is unclear, an application under Section 140 cannot be defeated on the ground that one of the offending vehicles has not been detected.

For families this means a simple comfort: as long as the offending vehicle was insured and the policy was alive on the accident date, the interim cheque comes from the insurer, not from your local truck owner who may not have ready cash.

Defences the Insurance Company Cannot Use to Block Interim Payment

Insurance companies often resist no-fault claims by raising technical objections. The Motor Vehicles Act is clear: most of the usual defences are not available at the no-fault stage. Specifically:

• Contributory negligence of the deceased. Even if the deceased was partly at fault, no-fault interim compensation must still be paid.
• Driver's licence dispute. The validity of the driver's licence is to be examined at the final award stage, not while passing the interim order.
• Vehicle was stationary. Where a jeep stopped to give way and a motorcycle hit it, the accident still arose out of the use of the motor vehicle. Section 140 covers accidents that occur even when the vehicle is stationary.
• Overloading or carrying passengers in goods vehicles. Where the policy issue is one of breach of condition, the insurer can pay first under no-fault liability and then recover from the owner if the breach is proved at the final stage.
• The owner had sold the vehicle. The registered owner cannot escape no-fault liability on the ground of a private transfer until proper registration transfer is shown on record.

The Supreme Court has held that any compromise by which even no-fault liability under Section 140 is not paid is not a valid compromise. In other words, the family cannot be cheated out of this minimum payment by being made to sign quick papers in the hospital corridor.

How Quickly Should the Tribunal Decide?

Speed is the entire point. Most state rules prescribe a short time-frame within which the no-fault application should be disposed of — typically thirty to ninety days. Courts have repeatedly held that the very object of the legislation would be frustrated if the tribunal were to enter into protracted enquiries before passing the interim order.

In one decision, the High Court directed payment of the entire amount of the interim award without keeping any portion in fixed deposit, because the claimants required to meet certain contingencies and needed money for further treatment. In another, the Supreme Court criticised an order that kept Rs. 10,000 out of a Rs. 50,000 interim award in fixed deposit, holding that the very philosophy of Section 140 — prompt and immediate compensation — cannot be allowed to be frustrated.

If a tribunal is sitting on your interim application for months, your lawyer can mention the matter urgently and seek an early hearing. High Courts cannot ordinarily interfere with a no-fault order through writ jurisdiction, but a delay in passing the order itself can be raised before the appropriate forum.

Does the Interim Amount Get Deducted from the Final Award?

Yes — and this is important for families to understand. The interim no-fault amount is not extra over the final award. It is an advance that reduces what is finally payable. Section 141 makes the relationship between Section 140 and the final award under Section 168 clear: when the final compensation is calculated, the no-fault amount already paid is set off.

So if the final award is Rs. 18,00,000 and you have already received Rs. 5,00,000 as interim no-fault payment, the balance Rs. 13,00,000 is what the insurer will pay at the final stage with interest from the date of the petition. You are not getting less by taking the interim payment — you are simply getting an early instalment of the same final compensation. The Supreme Court has held that the person liable to pay under both fault and no-fault liability shall pay first under no-fault liability, and if that amount equals or exceeds the fault liability, no further amount is payable.

This is also why families should never refuse the interim payment thinking it will reduce their final entitlement. It does not. It simply puts money in your hands now, when you need it most.

What If the Final Claim Is Decided Against You — Do You Repay?

This is the most reassuring feature of no-fault liability. Even if the final claim under Section 168 is dismissed — perhaps because the tribunal accepts the insurer's defence on a technical ground — the interim no-fault amount is not recovered from you. The Supreme Court has confirmed this principle: even if the application for compensation before the tribunal is ultimately rejected, the no-fault amount stays with the family. The whole purpose of Section 140 is to give an immediate floor of compensation that cannot be undone by later litigation.

There are narrow exceptions. If the tribunal finds that the policy was clearly void or the vehicle was uninsured on the date of accident, the insurer may be allowed to recover the interim sum from the owner — but the family is not asked to refund. The risk shifts between the insurer and the owner, not back to you.

For a grieving family, this means the interim payment is a real safety net. You can use it for hospital bills, last rites, or for keeping the household running, without fearing that some technical defence will force you to return the money two years later.

What If There Is a Workmen's Compensation Angle Too?

Many road accidents happen during the course of employment — a driver of a truck, a worker travelling for the company, a helper in a goods vehicle. In such cases the family has a choice. Section 167 of the Motor Vehicles Act gives the claimant the option to proceed either under Chapter XII of the Motor Vehicles Act (the MACT route, including Section 140 no-fault) or under the Employees' Compensation Act, 1923 (formerly the Workmen's Compensation Act). What is prohibited is claiming under both at the same time.

The Supreme Court has held that where the deceased was a workman, the legal representatives have the option to choose the forum. The quantum of compensation available under the Motor Vehicles Act is not limited to that available under the Employees' Compensation Act, because the calculation principles are different. In practice, the Motor Vehicles Act route is usually more generous and gives access to no-fault interim payment as well.

If the family has already taken some interim no-fault payment under Section 140 and then approaches the Workmen's Compensation Commissioner, the amount already paid will have to be adjusted. The right approach is to consult a lawyer at the very start, choose the better route, and stay there.

What Should I Actually Do Now?

Where a Motor Accident Lawyer Saves the Family Most Pain

The interim no-fault amount sounds simple on paper, but in practice families lose months to procedural confusion. Insurers sometimes file objections to delay the payment. State rules vary slightly. The order itself has to be passed in a specific form, and the cheque collection has to be tracked through the tribunal's account. A lawyer who handles motor accident claims regularly will know the local registrar, the form numbers, and the practical shortcuts.

At Pinaka Legal, our advocates routinely pursue interim no-fault applications alongside main claim petitions for families across Delhi NCR — and for families whose accidents took place outside the city but who choose to file in their home tribunal. A single conversation in the first week after an accident can unlock five lakh rupees of statutory relief by the end of the first month or two. That money is often the difference between continuing critical hospital care and being forced to discharge a patient against medical advice.

Money Today, Justice Tomorrow — The Quiet Promise of Section 140

Indian motor accident law is often criticised for being slow. The criticism is true for final awards. But for interim compensation, the law has done something genuinely humane. It says: while we work out who was at fault and how much you should ultimately receive, here is a floor of money you can rely on right now, without proving anything beyond the existence of the accident and a valid policy.

If you are reading this with a hospital bill in one hand and a death certificate in the other, the takeaway is simple. Walk into the tribunal — or send your lawyer — within the first weeks. Ask for the interim no-fault amount as your right, not as a favour. The cheque that follows is not the final justice your family deserves. But it is the beginning of it. And in the worst weeks of your life, beginnings matter.

Frequently Asked Questions

What is interim compensation under Section 140 of the Motor Vehicles Act?

It is a statutory minimum amount that the insurance company of the offending vehicle must pay to the family of a deceased or to a person who suffered permanent disablement, even before the final claim is decided. Under the original Section 140, the amount was Rs. 50,000 for death and Rs. 25,000 for grievous injury. Under the 2019 amendment (now Section 164), the figures are Rs. 5 lakh for death and Rs. 2.5 lakh for grievous injury.

Do I have to prove that the driver was at fault to get interim no-fault compensation?

No. That is the whole point of no-fault liability. The claimant only has to show that a motor vehicle was involved in the accident and that the policy was in force. Negligence, contributory fault, or even the driver's licence are not grounds to refuse interim payment. All such defences are kept aside for the final award stage under Section 168.

How much is the no-fault interim payment after the 2019 amendment?

After the Motor Vehicles (Amendment) Act, 2019, Section 164 raised the no-fault interim amount to Rs. 5,00,000 in case of death and Rs. 2,50,000 in case of grievous hurt. This is the floor amount payable irrespective of the merits of the final claim. Older accidents are governed by the law in force on the date of the accident, where the older figures of Rs. 50,000 and Rs. 25,000 still apply.

Can the insurance company refuse to pay the interim no-fault compensation?

Only on very narrow grounds. The insurer cannot refuse based on contributory negligence, an alleged invalid licence, a stationary vehicle, or pending investigations into who was driving. The only grounds the tribunal examines at the interim stage are whether the vehicle was involved in the accident causing death or grievous injury, and whether the policy was valid on the date of the accident.

Does the interim payment reduce the final compensation?

Yes. The interim amount is treated as an early instalment of the final award. When the tribunal calculates the final compensation under Section 168 and the multiplier method laid down in Sarla Verma and Pranay Sethi, the interim amount already paid is set off. You receive the balance with interest from the date of the petition. You do not get less by accepting the interim payment — you just get a part of the total amount earlier.

Do I have to repay the interim amount if my final claim is dismissed?

No, not from your side. Even if the final claim under Section 168 is rejected, the interim no-fault amount stays with the family. The Supreme Court has held that the interim amount paid under Section 140 is not refundable by the claimant. In rare cases the insurer may recover the amount from the owner where the policy is found to be void, but the family is not asked to refund.

How long does it take to receive the interim no-fault payment?

Most state rules prescribe disposal within thirty to ninety days of the interim application. Tribunals usually pass the order much faster than the final award. Courts have repeatedly held that delay in interim payment defeats the very purpose of Section 140. If the tribunal is slow, your lawyer can mention the matter and seek an early order in view of medical urgency.

Can a passenger in a goods vehicle claim interim no-fault compensation?

It depends. The Supreme Court has held that passengers carried in a goods vehicle are sometimes excluded from no-fault liability where the policy did not specifically cover them or where carrying passengers in a goods vehicle is unlawful. However, where the policy covers risk to passengers or where premium has been paid for such cover, the no-fault claim is maintainable. A lawyer should check the policy terms before filing.

Is a pillion rider on a motorcycle covered by Section 140?

Older judgments have held that a pillion rider is not automatically covered under no-fault liability unless extra premium was paid for that risk. However, the law has evolved and many tribunals now extend no-fault relief to pillion riders where the policy covers third-party risk broadly. Your lawyer can examine the policy schedule before raising the claim.

Does interim compensation apply when the accident happens during employment?

Yes, but with a choice. Under Section 167, the family can choose between proceeding under the Motor Vehicles Act (which includes no-fault interim compensation) or under the Employees' Compensation Act, 1923. You cannot claim under both. The Motor Vehicles Act route is usually more generous because the final compensation is not capped by the formulas of the Employees' Compensation Act.

What if the offending vehicle is not insured at all?

Where the vehicle is uninsured, the insurer's liability under Section 140 may not arise, but the owner remains personally liable. The State Government's Solatium Fund or Hit-and-Run Compensation Fund may also be available in narrow cases. Your lawyer can assess which route applies. In any event, the family should still file the main claim petition under Section 166 so that the owner's personal liability is fixed.

Should I take the interim amount even if my lawyer says the final award will be huge?

Yes. The interim amount is a free instalment of the same final award. Refusing it means waiting two or three more years for the entire sum. There is no legal or strategic reason to refuse interim no-fault compensation — it does not weaken the main case, it does not commit you to any settlement, and it gives the family immediate liquidity for medical and household needs.

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