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Judgment
P.P.S. Janarthana Raja, J.—The appeal is preferred by the appellant-Insurance Company against the award dated 23.11.2006 made in
MCOP. No. 73 of 2005 by the Motor Accident Claims Tribunal (Chief Judicial Magistrate), Coimbatore.
Background facts in a nutshell are as follows:
The deceased-Malaravan met with an accident on 04.05.2005 at about 10.00a.m. The deceased was proceeding from North to South direction
on Coimbatore to Trichy road, just opposite to HMS Sangam, Singanallur and after crossing the center median, stopped a while for traffic
clearance. At that time, a Scooty bearing registration No. TN-37AJ 6741, which came from East to West direction in a rash and negligent manner
hit the deceased, due to which, he had sustained severe head injuries and multiple injuries. Immediately he was admitted in Dr. Rajendra Kumar
Clinic and later at Coimbatore Medical College Hospital, Coimbatore for better treatment, where he died on 05.05.2005. The claimants are father
and mother of the deceased. The claimants claimed a sum of Rs. 10,30,000/- but restricted their claim to Rs. 10,00,000/- as compensation before
the Tribunal. The appellant-Insurance Company resisted the claim. On pleadings the Tribunal framed the following issues:
1.Whether the accident had occurred due to the rash and negligent driving of the driver of the Scooty-the third respondent herein?
2.Whether the claimants are entitled to the compensation? If so, how much?
Any other relief?
After considering the oral and documentary evidence, the Tribunal held that the accident had occurred only due to the rash and negligent driving of
the third respondent and awarded a compensation of Rs. 3,64,720/- with interest at 7.5% per annum from the date of petition and the details of
the same are as under:
Loss of income Rs. 3,60,720/-
Funeral expenses Rs. 2,000/-
Loss of love and affection
(each Rs.1,000) Rs. 2,000/-
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Total Rs. 3,64,720/-
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Aggrieved by that award, the appellant-Insurance Company has filed the present appeal.
The learned Counsel appearing for the appellant-Insurance Company questioned only the quantum of compensation awarded by the Tribunal
and contended that the amount awarded by the Tribunal is excessive, exorbitant, without basis and justification. He further submitted that the
Tribunal has wrongly adopted the multiplier of 12 instead of adopting the multiplier of 10 as per the decision of the Apex Court in the case of New
India Assurance Company Ltd. Vs. Smt. Shanti Pathak and Others, and that therefore, the award passed by the Tribunal is not in accordance with
law and the same has to be set aside.
Inspite of notice, there is no representation on behalf of respondents 1 and 2/claimants.
Heard the counsel. On the side of the claimant, P.Ws.1 to 3 were examined and documents Exs.P1 to P9 were marked. On the side of the
appellant-Insurance Company, RW1-Nityanandan, who is the third respondent herein, was examined and Ex.R1 was marked to substantiate their
claim. PW1 is the father of the deceased. PW2 is one Raghavan, who is an eye witness to the accident. PW3 is one Jeyaprakash, who is the
employer of the deceased. Ex.P1 is the copy of the First Information Report. Ex.P2 is the copy of the charge sheet. Ex.P3 is the Motor Vehicle
Inspector''s Report. Ex.P4 is the copy of the rough sketch. Ex.P5 is the copy of the post mortem certificate. Ex.P6 is the death certificate. Ex.P7 is
the legal heir certificate. Ex.P8 is the salary certificate. Ex.P9 is the school transfer certificate of the deceased. After considering the above oral and
documentary evidence, the Tribunal had given a categorical finding that the accident had occurred only due to the rash and negligent driving of the
third respondent herein and the finding is based on valid materials and evidence.
In the case of Sarla Verma and Ors. v. Delhi Transport Corporation and Anr. reported in (2009) 4 MLJ 997, the Apex Court has considered
the relevant factors to be taken into consideration before awarding compensation and held as follows:
Before considering the questions arising for decision, it would be appropriate to recall the relevant principles relating to assessment of
compensation in cases of death. Earlier, there used to be considerable variation and inconsistency in the decisions of Courts Tribunals on account
of some adopting the Nance method enunciated in Nance v. British Columbia Electric Rly. Co. Ltd. (1951) AC 601 and some adopting the
Davies method enunciated in Davies v. Powell Duffryn Associated Collieries ltd. (1942) AC 601. The difference between the two methods was
considered and explained by this Court in General Manager, Kerala State Road Transport Corporation, Trivandrum Vs. Mrs. Susamma Thomas
and others, . After exhaustive consideration, this Court preferred the Davies method to Nance method. We extract below the principles laid down
in General Manager, Kerala State Road Transport Corporation v. Susamma Thomas (supra).
In fatal accident action, the measure of damage is the pecuniary loss suffered and is likely to be suffered by each dependent as a result of the death.
The assessment of damages to compensate the dependents is beset with difficulties because from the nature of things, it has to take into account
many imponderables, e.g., the life expectancy of the deceased and the dependents, the amount that the deceased would have earned during the
remainder of his life, the amount that he would have contributed to the dependents during that period, the chances that the deceased may not have
live or the dependents may not live up to the estimated remaining period of their life expectancy, the chances that the deceased might have got
better employment or income or might have lost his employment or income altogether.
The manner of arriving at the damages is to ascertain the net income of the deceased available for the support of himself and his dependents, and to
deduct therefrom such part of his income as the deceased was accustomed to spend upon himself, as regards both self-maintenance and pleasure,
and to ascertain what part of his net income the deceased was accustomed to spend for the benefit of the dependents. Then that should be
capitalised by multiplying it by a figure representing the proper number of year''s purchase.
The multiplier method involves the ascertainment of the loss of dependency or the multiplicand having regard to the circumstances of the case and
capitalizing the multiplicand by an appropriate multiplier. The choice of the multiplier is determined by the age of the deceased (or that of the
claimants whichever is higher) and by the calculation as to what capital sum, if invested at a rate of interest appropriate to a stable economy, would
yield the multiplicand by way of annual interest. In ascertaining this, regard should also be had to the fact that ultimately the capital sum should also
be consumed-up over the period for which the dependency is expected to last.
It is necessary to reiterate that the multiplier method is logically sound and legally well-established. There are some cases which have proceeded to
determine the compensation on the basis of aggregating the entire future earnings for over the period the life expectancy was lost, deducted a
percentage therefrom towards uncertainties of future life and award the resulting sum as compensation. This is clearly unscientific. For instance, if
the deceased was, say 25 years of age at the time of death and the life expectancy is 70 years, this method would multiply the loss of dependency
for 45 years - virtually adopting a multiplier of 45 - and even if one-third or one-fourth is deducted therefrom towards the uncertainties of future life
and for immediate lump sum payment, the effective multiplier would be between 30 and 34. This is wholly impermissible.
In U.P. State Road Transport Corporation and Others Vs. Trilok Chandra and Others, , this Court, while reiterating the preference to Davies
method followed in General Manager, Kerala State Road Transport Corporation v. Susamma Thomas (supra), stated thus:
In the method adopted by Viscount Simon in the case of Nance also, first the annual dependency is worked out and then multiplied by the
estimated useful life of the deceased. This is generally determined on the basis of longevity. But then, proper discounting on various factors having a
bearing on the uncertainties of life, such as, premature death of the deceased or the dependent, remarriage, accelerated payment and increased
earning by wise and prudent investments, etc., would become necessary. It was generally felt that discounting on various imponderables made
assessment of compensation rather complicated and cumbersome and very often as a rough and ready measure, one-third to one-half of the
dependency was reduced, depending on the life span taken. That is the reason why courts in India as well as England preferred the Davies formula
as being simple and more realistic. However, as observed earlier and as pointed out in Susamma Thomas case, usually English courts rarely
exceed 16 as the multiplier. Courts in India too followed the same pattern till recently when tribunals/courts began to use a hybrid method of using
Nance method without making deduction for imponderables.... Under the formula Advocated by Lord Wright in Davies, the loss has to be
ascertained by first determining the monthly income of the deceased, then deducting therefrom the amount spent on the deceased, and thus
assessing the loss to the dependants of the deceased. The annual dependency assessed in this manner is then to be multiplied by the use of an
appropriate multiplier
In the case of Syed Basheer Ahamed and Others Vs. Mohd. Jameel and Another, , the Apex Court has held as follows:
Section 168 of the Act enjoins the Tribunal to make an award determining ""the amount of compensation which appears to be just"". However,
the objective factors, which may constitute the basis of compensation appearing as just, have not been indicated in the Act. Thus, the expression
which appears to be just"" vests a wide discretion in the Tribunal in the matter of determination of compensation. Nevertheless, the wide amplitude
of such power does not empower the Tribunal to determine the compensation arbitrarily, or to ignore settled principles relating to determination of
compensation.
Similarly, although the Act is a beneficial legislation, it can neither be allowed to be used as a source of profit, nor as a windfall to the persons
affected nor should it be punitive to the person(s) liable to pay compensation. The determination of compensation must be based on certain data,
establishing reasonable nexus between the loss incurred by the dependants of the deceased and the compensation to be awarded to them. In a
nutshell, the amount of compensation determined to be payable to the claimant(s) has to be fair and reasonable by accepted legal standards.
In Kerala SRTC v. Susamma Thomas, M.N. Venkatachaliah, J. (as His Lordship then was) had observed that: (SCC p.181, para 5)
...The determination of the quantum must answer what contemporary society ''would deem to be a fair sum such as would allow the wrongdoer
to hold up his head among his neighbours and say with their approval that he has done the fair thing''. The amount awarded must not be niggardly
since the ''law values life and limb in a free society in generous scales''.
At the same time, a misplaced sympathy, generosity and benevolence cannot be the guiding factor for determining the compensation. The object of
providing compensation is to place the claimant(s), to the extent possible, in almost the same financial position, as they were in before the accident
and not to make a fortune out of misfortune that has befallen them.
The question as to what factors should be kept in view for calculating pecuniary loss to a dependant came up for consideration before a three-
Judge Bench of this Court in Gobald Motor Service Ltd. v. R.M.K. Veluswami, with reference to a case under the Fatal Accidents Act, 1855,
wherein, K. Subba Rao, J. (as His Lordship then was) speaking for the Bench observed thus: (AIR p.1)
In calculating the pecuniary loss to the dependents many imponderables enter into the calculation. Therefore, the actual extent of the pecuniary loss
to the dependents may depend upon data which cannot be ascertained accurately, but must necessarily be an estimate, or even partly a conjecture.
Shortly stated, the general principle is that the pecuniary loss can be ascertained only by balancing on the one hand the loss to the claimants of the
future pecuniary benefit and on the other any pecuniary advantage which from whatever source comes to them by reason of the death, that is, the
balance of loss and gain to a dependent by the death must be ascertained.
Taking note of the afore extracted observations in Gobald Motor Service Ltd. in Susamma Thomas it was observed that: (Susamma Thomas
case, SCC p.182, para 9)
The assessment of damages to compensate the dependents is beset with difficulties because from the nature of things, it has to take into account
many imponderables e.g. the life expectancy of the deceased and the dependents, the amount that the deceased would have earned during the
remainder of his life, the amount that he would have contributed to the dependents during that period, the chances that the deceased may not have
lived or the dependents may not live up to the estimated remaining period of their life expectancy, the chances that the deceased might have got
better employment or income or might have lost his employment or income altogether.
Thus, for arriving at a just compensation, it is necessary to ascertain the net income of the deceased available for the support of himself and his
dependents at the time of his death and the amount, which he was accustomed to spend upon himself. This exercise has to be on the basis of the
data, brought on record by the claimant, which again cannot be accurately ascertained and necessarily involves an element of estimate or it may
partly be even a conjecture. The figure arrived at by deducting from the net income of the deceased such part of income as he was spending upon
himself, provides a datum, to convert it into a lump sum, by capitalising it by an appropriate multiplier (when multiplier method is adopted). An
appropriate multiplier is again determined by taking into consideration several imponderable factors. Since in the present case there is no dispute in
regard to the multiplier, we deem it unnecessary to dilate on the issue.
After considering the principles enunciated in the judgments cited supra, let me consider the facts of the present case.
At the time of the accident, the deceased was aged about 32 years. PW1, the father of the deceased deposed that he was an Electrical Sub-
Contractor and earning Rs. 6000/- per month. PW3-Jayaprakash, who is an employer stated in his evidence that the deceased was working from
April, 2003 to 03.05.2005 as Electrical Sub-Contractor and earning Rs. 6,000/- per month. He also marked Ex.P8 salary certificate and Ex.P9-
School Transfer Certificate. In Ex.P5-Post mortem certificate, the age of the deceased was mentioned as 30. Considering the same, the Tribunal
has taken the age of the deceased as 30 years at the time of the accident. The Tribunal, considering the the evidence of PW1 and PW3, fixed the
monthly income of the deceased at 2,500/-. Out of the said sum, the Tribunal has deducted 1/3rd i.e. Rs. 830/- towards personal expenses of the
deceased and balance sum of Rs. 1670/- has been taken as the contribution of the deceased to his family. Considering the age of the deceased at
30 years at the time of the accident, the Tribunal has adopted the multiplier of 18 and awarded a sum of 3,60,720/- (Rs. 1670/- x 12 x 18)
towards loss of income. The learned Counsel appearing for the Insurance company vehemently contended that the Tribunal wrongly adopted the
multiplier of 18. The Apex Court, in the case of New India Assurance Company Limited v. Shanti Pathak and Ors. reported in 2007 ACJ 2188,
has held that where the claimants are parents of the deceased, the choice of multiplier would depend upon the age of the claimants and not that of
the deceased and in paragraph 6 it has been held as follows:
Considering the income that was taken, the foundation for working out the compensation cannot be faulted with. The monthly contribution was
fixed at Rs. 3500. In the normal course we would have remitted the matter to the High Court for consideration on the materials placed before it.
But considering the fact that the matter is pending since long, it would be appropriate to take the multiplier of 5 considering the fact that the mother
of the deceased was about 65 years at the time of the accident and age of the father was more than 65 years. Taking into account the monthly
contribution at Rs. 3500 as held by the Tribunal and the High Court, the entitlement of the claim would be Rs. 2,10,000. The same shall bear
interest @ 7.5% p.a. from the date of the application for compensation. Payment already made shall be adjusted from the amount due.
In the present case, the claimants are father and mother. The age of the second respondent-mother is 43 years at the time of the accident. If the
age of the mother is taken into consideration, the correct multiplier that should be adopted is 10. The Tribunal has fixed the salary of the deceased
at Rs. 2,500/-. Considering Ex.P8-salary certificate and evidence of PW3, the employer of the deceased, I feel that it would be appropriate to fix
the salary of the deceased at Rs. 3000/- per month and out of the said sum, if 1/3 rd is deducted i.e., Rs. 1000/- towards personal expenses of the
deceased, the balance sum of Rs. 2,000/- (Rs. 3,000-1,000/-) would be the monthly contribution to the family of the deceased and the annual
income works out to Rs. 24,000/- (Rs. 2,000 x 12). As stated above, if multiplier 10 is adopted, the loss of income works out to Rs. 2,40,000/-
(Rs. 24,000 x 10) as against Rs. 3,60,720/- awarded by the Tribunal. The Tribunal has also awarded a sum of Rs. 2,000/- towards funeral
expenses, which I feel is very low and the same is modified to Rs. 5,000/- under this head as against Rs. 2,000/-. The Tribunal has also awarded a
sum of Rs. 1000/- each towards loss of love and affection, which I feel is very low. The deceased is a only son. Considering the same, it would be
appropriate to award a sum of Rs. 20,000/- (each Rs. 10,000/-) under this head as against Rs. 1,000/- each. The Tribunal has awarded interest at
the rate of 7.5% per annum, which I feel is very reasonable and the same is confirmed. The modified amount of compensation is as follows:
Loss of income Rs. 2,40,000/-
Funeral expenses Rs. 5,000/-
Loss of love and affection
(each Rs.10,000) Rs. 20,000/-
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Total... Rs. 2,65,000/-
Therefore, the claimants are entitled to the modified compensation of Rs. 2,65,000/- with interest at 7.5% p.a. from the date of petition.
The learned Counsel appearing for the appellant-Insurance company has submitted that already entire award amount has been deposited as
per order of this Court dated 11.07.2007. The claimants are permitted to withdraw the modified award amount of Rs. 2,65,000/- with interest at
7.5% p.a. from the date of petition, after adjusting the amount, if any, already withdrawn. The appellant-Insurance company is also permitted to
withdraw the balance amount on making proper application.
With the above modification, the Civil Miscellaneous Appeal is disposed of. No costs. Consequently, M.P. No. 1 of 2008 is closed.