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Section 172: Award of compensatory costs in certain cases

Motor Vehicles Act • Official Statutory Text & Practice Guide

Statutory Regulation
Legal Standard
Competent Court / Tribunal
Act 1988
Section 171 All 217 Sections of Motor Vehicles Act Section 173

Legal Commentary & Landmark Judgments: Section 172

Section 172 of the Motor Vehicles Act, 1988 empowers Claims Tribunals to award special compensatory costs against parties that set up false, frivolous, or vexatious claims or defences, serving as a judicial deterrent against fabricated accident petitions and mala fide insurance delays.

  • Tribunal's Discretionary Power to Award Compensatory Costs: Section 172(1) confers express power upon the Claims Tribunal to award compensatory costs where it is satisfied that a claim petition or defence is false, frivolous, or vexatious to the knowledge of the party asserting it.
  • Statutory Ceilings and Judicial Calibration: Compensatory costs may be awarded against the offending party or their insurer up to statutory financial limits, taking into account the extent of harassment, protracted litigation, and suppression of material facts.
  • Non-Immunity from Criminal Prosecution: Section 172(2) expressly clarifies that an order awarding compensatory costs does not exempt the defaulting party from any criminal liability or prosecution under the Indian Penal Code (or Bharatiya Nyaya Sanhita) for perjury, false evidence, or fraud.
Key Landmark Precedents:
  • T.O. Anthony v. Karvarnan (2008) 3 SCC 748: The Supreme Court affirmed that motor accident tribunals possess the power to penalize fabricated claims and vexatious pleas, emphasizing that compensation proceedings are intended for genuine victims, not speculative or collusive litigation.
  • Ashok Sharma v. Ram Avtar, 2014 ACJ 125 (Del): The Delhi High Court held that where an insurance company raises frivolous and routine denials without any foundational evidence, causing decades of delay to indigent accident victims, the Tribunal and High Court are fully justified in imposing exemplary costs under Section 172.
Courtroom Practice & Strategic Litigation Guidance:

In drafting written statements for insurance companies, avoid routine, blanket denials of valid driving licences or insurance policies without prior verification. Conversely, if a claimant has planted an insured vehicle in place of an untraced vehicle, compile the mechanical inspection report, MLC timing contradictions, and call records to move an application for dismissal with special costs under Section 172.

Section 171 All 217 Sections of Motor Vehicles Act Section 173