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MVA 1988 (Amended 2019)ORIGINALChapter VIII

Section 174-176

Recovery of Money from Insurer; Claims to be Paid Forthwith; Power of Central Government to Make Rules

Claims Tribunals
Fine: N/ACompoundable: N/AEndorsement: No
BARE ACT PROVISION

Legal Text

Section 174: Any amount payable under an award of the Claims Tribunal that has become final shall be paid by the insurer or owner, as the case may be, within thirty days of the date of the award becoming final, failing which the amount shall be recoverable as arrears of land revenue. Section 175: Where any money is payable by an insurer under this Chapter, the insurer shall pay forthwith without deduction of any amount on account of the negligence of the insured or any other person. Section 176: The Central Government may make rules for the purpose of carrying into effect the provisions of Sections 165 to 175.

Simplified Explanation

Sections 174–176 provide the enforcement and payment framework for MACT awards. Section 174 is the critical enforcement provision: once a MACT award becomes final (after the appeal period expires or after the appeal is dismissed), the insurer or owner must pay within 30 days. Failure to pay within 30 days triggers recovery proceedings as arrears of land revenue — a powerful enforcement mechanism that allows government machinery (District Collectors, Revenue Officers) to coercively recover the amount. Section 175 establishes the principle of no deduction — the insurer must pay the full awarded amount without any deduction for the insured's contributory negligence or other factors. This prevents insurers from making partial payments pending resolution of contribution disputes. Section 176 rounds out the chapter with the Central Government's rule-making power for all MACT-related matters — the basis for MACT procedural rules.

Historical Context

Section 174's land revenue recovery mechanism is a powerful but infrequently used enforcement tool. The more common enforcement mechanism is contempt proceedings before the High Court and IRDAI regulatory action against insurers who delay payment. The 30-day payment obligation is frequently violated in practice — a significant enforcement gap.

Critical Changes

2019 Amendment strengthened MACT enforcement mechanisms.

IRDAI can take regulatory action against insurers who systematically delay MACT payments.

Practical Scenarios

"MACT award of ₹30 lakh becomes final on 1 March — insurer must pay by 31 March; failing which, District Collector can initiate land revenue recovery."
"Insurer deducts 20% for contributory negligence before paying — Section 175 violation; full amount must be paid."

Common Queries

Under Section 174, a final MACT award is recoverable as arrears of land revenue — the government machinery can coercively recover the amount from the insurer. Additionally, contempt proceedings before the High Court and IRDAI regulatory action are available remedies.
Under Section 174, payment must be made within 30 days of the award becoming final. If the award is not appealed, it becomes final after the 90-day appeal period expires. If appealed and the appeal is dismissed, payment must be made within 30 days of the dismissal.