Nirmala Narsava and Others vs Vilas Ramachandra Shangda and Others

V.N. Rao, J.—This is yet another unfortunate motor accident resulting in the instantaneous death of N. Linga Reddy (hereinafter referred to as ''the deceased''), a Supervisor in P.W. D. (I and B), Sultanabad. The accident had taken place when the lorry bearing No. APA 3373 driven by R-1 dashed against the scooter bearing No. ATY 8822 at 2.30 p.m. on 15.8.1980 on which the deceased was going with another as pillion rider from Karimnagar to Bejjanki. His mother, widow and four minor children filed O.P. No. 110 of 1980 on the file of the Motor Accidents Claims Tribunal, Karimnagar u/s 110-A of the Motor Vehicles Act (hereinafter referred to as ''the Act'') claiming an amount of Rs. 3,74,700/- as compensation. The said claim was resisted by R-1 the driver, R-2 the owner of the lorry and R-3 the insurance company. The lower Tribunal held that the accident had taken place due to rash and negligent driving of the lorry by R-1. An amount of Rs. 20,000/- was awarded as compensation with interest at 6 per cent per annum from the date of application. In view of the material on record, the learned District Judge, Karimnagar rightly held that the accident was due to rash and negligent driving of the lorry by R-1. The said finding was not seriously challenged. So, the only other point for consideration in this appeal is in regard to the adequacy of the amount awarded as compensation.

The amount of compensation which appears to the Tribunal to be just has to be awarded u/s 110-B of the Act. When there was a spate of rail accidents in England, Fatal Accidents Act, 1846, popularly known as Lord Campbell''s Act, was brought into existence. As per the provisions of the said Act, such damages may be awarded as are proportionate to the injury resulting from such death to the dependants respectively. When road accidents were on the increase in England, Law Reform (Miscellaneous Provisions) Act, 1934 was brought into the statute book. While referring to the various decisions of the courts in England it was observed in McGregor on Damages in para 1551 that the dependant is entitled by clear principle of law to full compensation for the loss of pecuniary benefit due to the death of the deceased in motor accident. The various provinces in Canada adopted Lord Campbell''s Act. The courts in Canada followed the compensatory principle in awarding damages to dependants in fatal accident cases. What is recoverable by the dependants as per courts in Canada must be calculated on the basis of restitutio in integrum; the goal is to restore the dependant to the financial position he or she would have occupied but for the death.

In earlier years the courts in India assessed the compensation payable u/s 110-B of the Act, by following the interest method. As per the said method the annual loss of dependency as on the date of the death was first ascertained, then a sum was determined the interest on which is equivalent to the annual loss of dependency. Such sum was granted as compensation towards future toss of dependency. When such a sum is awarded, the dependant enjoys the periodical interest which is equivalent to the loss of dependency. But the lump sum amount which was paid did not extinguish. So it is a case of over compensation. Thus it was rejected by various courts in India. Even this Court had not chosen to follow the interest method in United India Fire and Genl. Ins. Company Ltd. v. Pallamparty Indiramma 1982 ACJ 521 (AP).

Later lump sum method was adopted. As per that method, the annual loss for each of the future years of expected life of the deceased is first ascertained. The sum is totalled up. While some courts felt that the said entire amount has to be paid as compensation without any deduction for uncertainties and accelerated payment, other courts felt that some deduction had to be made in regard to the two factors referred to. Anyhow, the said method did not find favour in the later years.

The various courts in India including the Supreme Court followed the traditional multiplier system for assessing the compensation. There is no need to refer to the various decisions of the Supreme Court wherein traditional multiplier system is adopted. Suffice it to refer to the case Municipal Corporation of Delhi v. Subhagwanti 1966 ACJ 57 (SC), which is one such decision. In traditional multiplier system, the annual value of the dependency at the time of the death of the deceased is multiplied by a multiplier depending upon the age of the deceased and the various other factors.

Whatever is the method that has to be adopted for assessing just or full compensation payable to the dependants of the deceased in motor accident cases, it is realised that such assessment is difficult and complicated. But at the same time the approach has to be made upon logical basis. In Harris v. Empress Motors Limited (1984) 1 WLR 212, it was observed as follows:

In the course of time the courts have worked out a simple solution to the similar problem of calculating the net dependency under the Fatal Accidents Acts in cases where the dependants are wife and children. In times past, calculation called for a tedious enquiry into how much housekeeping money was paid to the wife, who paid how much for the children''s shoes etc. This has all been swept away and the modern practice is to deduct a percentage from the net income figure to represent what the deceased would have spent exclusively on himself. The percentages have become conventional in the sense that they are used unless there is striking evidence to make the conventional figure inappropriate, because there is no departure from the principle that each case must be decided upon its own facts.

In para 1552 of McGregor on Damages (15th Edition) it was rightly observed that the claims for wrongful death are second only to claims for personal injury in providing evidence of the difficulty of making lump sum damages awards with any degree of accuracy.

Thus though it is clear that just or full compensation had to be awarded, it is now well settled that the basis should be the value of loss of dependency for assessing compensation payable towards pecuniary loss. In such a case the award could in theory take the form of periodic payments. But in our country, England, Canada, Australia and America, it had traditionally taken the form of a lump sum payment at the conclusion of the litigation. As the various factors which have been taken into consideration in arriving at such lump sum are neither accurate nor precise, some conjectures have to be necessarily made.

The various facets of the method of the assessment used by the courts are set out concisely by Lord Pearson in his speech in Taylor v. O''Connor 1971 AC 115 and it reads as follows:

There are three stages in the normal calculation, namely: (i) to estimate the lost earnings, i.e., the sums which the deceased probably would have earned but for the fatal accident; (ii) to estimate the lost benefit, i.e., the pecuniary benefit which the dependants probably would have derived from the lost earnings and to express the lost benefit as an annual sum over the period of the lost earnings; and (iii) to choose the appropriate multiplier which, when applied to the lost benefit expressed as an annual sum, gives the amount of the damages which is a lump sum.

In Keizer v. Hanna, (1978) 82 DLR 3d 449, it was observed by the Supreme Court of Canada as follows:

The proper method of calculating the amount of a damage award under the Fatal Accidents Act is similar to that used in calculating the amount of an award for loss of future earnings, or for future care, in cases of serious personal injury. In each, the court is faced with the task of determining the present value of a lump sum which, if invested, would provide payments of the appropriate size over a given number of years in the future, extinguishing the fund in the process.

In Jones and Laughlin Steel Corporation v. Pfeifer, (1983) 462 US 523 , the Supreme Court of America held as follows:

Our review of the foregoing cases leads us to draw three conclusions. First, by its very nature the calculation of an award for lost earnings must be a rough approximation. Because the lost stream can never be predicted with complete confidence, any lump sum represents only a ''rough and ready'' effort to put the Plaintiff in the position he would have been in had he not been injured. Second, sustained price inflation can make the award substantially less precise. Inflation''s current magnitude and unpredictability creates substantial risk that the damages will prove to have little relation to the lost wages it purports to replace. Third, the question of lost earnings can arise in many different contexts. In some sectors of the economy, it is far easier to assemble evidence of an individual''s most likely career path than in others.

It was also observed at para (6a) in the above case as follows:

The lost stream''s length cannot be known with certainty; the worker could have been disabled or even killed in a different, non-work-related accident at any time. The probability that he would still be working at a given date is constantly diminishing. Given the complexity of trying to make an exact calculation, litigants frequently follow the relatively simple course of assuming that the worker would have continued to work until a specific date is certain.

The observations in the various judgments of other countries referred to above, clearly elucidate the various factors that have to be taken into consideration in assessing the loss of dependency. They further disclose the difficulties and complexities involved in assessing the compensation. As it will be tedious and time-consuming to lead evidence in regard to various factors, the litigants preferred to have assumptions in regard to various aspects. The courts follow the rule of thumb unless there is striking evidence to deviate from the same. Even if lengthy and tedious evidence is going to be adduced in regard to the various aspects, still conjectures have to be made in regard to some of the factors. Even then, the courts are not in a position to assess the amount payable by way of compensation with exactness or precision.

Even various courts in our country also followed traditional multiplier system for assessing the damages. In such a method the value of the dependency is calculated by taking the annual figure of dependency as on the date of the death of the deceased (called as ''multiplicand'') and multiply it by figure, which while based upon the number of years that the dependency might reasonably be expected to last, is discounted so as to allow for the fact that a lump sum is being given now instead of periodical payments over the years and the latter figure has been called the multiplier.

Generally there is not much difficulty in calculating the annual figure of the dependency as on the death of the deceased. It is ascertained by deducting the amount that had to be spent for the personal expenses and expenses for his food, clothing etc. from his annual income but difficulty arises in choosing the multiplier. The maximum that is adopted as a multiplier is 20. But the various guidelines for choosing such a multiplier are not discernible from the various decisions. It is obvious that in the absence of sufficient guidelines for choosing the appropriate multiplier, award of varying amounts by different Tribunals in regard to cases of similar circumstances is not ruled out. If in one case a multiplier of 15 is taken and if in similar circumstances another Tribunal had taken 20, there will be wide divergence in the compensation awarded. As it is for the trial judge to choose the multiplier after the entire trial is over, neither the parties nor their counsel will be in a position to know as to what multiplier will be chosen, as there are no sufficient guidelines for choosing the multiplier.

To have uniformity and to obviate divergence in regard to the amount to be awarded as compensation in similar cases, in Chairman, Andhra Pradesh State Road Trans. Corporation v. Shafiya Khatoon 1985 ACJ 212 (AP), a Division Bench of this Court, to which one of us (Jeevan Reddy, J.) was a party, held that the Tables provided in Kemp and Kemp on Quantum of Damages (1967 Edition) can be followed to adopt the multiplier to arrive at just compensation to be awarded u/s 110-B of the Act. But in The Andhra Pradesh State Road Transport Corporation Vs. Narasavva and Others, , a Full Bench of this Court observed that the Annuity Tables provided in Kemp and Kemp on Quantum of Damages (1967 Edition) were not prepared for use in India and so we cannot use such Tables prepared on the basis of mortality rates of other countries. But in the same decision it was also observed that if in future the Annuity Tables are prepared in India, they may revive the discussion.

After the above Full Bench judgment was delivered, a case u/s 110-A of the Act had come up before our learned brother, Jagannadha Rao, J. In Bhagwandas Vs. Mohd. Arif, , Jagannadha Rao, J., relying on the basis of mortality Tables prepared in India and by adopting the reverse of the compound interest rate by taking 4 per cent as real interest, prepared Annuity Tables. We did not come across any decision or any article commenting that the above Annuity Tables were not properly prepared or that in view of the circumstances existing in our country, the rate of interest should be taken either more or less than 4 per cent in preparing such Tables.

The question that naturally arises for consideration is as to whether it is preferable to follow the Annuity Tables prepared by Jagannadha Rao, J., or to leave it to the various Tribunals to choose the appropriate multiplier. On the basis of the Tables referred to in Bhagwandas Vs. Mohd. Arif, , the multiplier relevant to the age can be chosen. Some of the circumstances where such a multiplier can be enhanced were referred to therein. If one has to choose a multiplier from such a Table, every Tribunal would choose the same multiplier for the same age and there can''t be any variance in multiplier in regard to the same age, except in the special circumstances in which it can be enhanced. Even the enhancement suggested in the said case is only by one or two points and hence there cannot be much divergence in choosing a multiplier. But if the Tribunals are allowed to choose the multiplier which may vary to an extent of five or more even in regard to the same age, there will be much divergence. In the absence of sufficient guidelines in choosing a multiplier the variance in the compensation to be awarded in similar circumstances may be to a large extent.

In this context it is apposite to refer to the observations in Smith v. Middleton (1972) SC 30, of Lord Emslie which were referred to with approval in Cookson v. Knowles 1979 ACJ 216 (HL, England), while dealing with the discretion to be exercised in awarding interest, a discretion which has to be exercised judicially. The said observations are as follows:

in a selective and discriminating manner, not arbitrarily or idiosyncratically, for otherwise the rights of parties to litigation would become dependent on judicial whim.

So, in Cookson v. Knowles 1979 ACJ 216 (HL, England), the desirability of laying down the guidelines as to what matters it is proper for the Judge to take into account in deciding how to exercise a discretion confided to him was referred to. So we feel that it is just and proper to lay down guidelines in choosing a multiplier.

It may be further noted that any rational method which is easy to adopt can be preferred to a method where a discretion had to be exercised without any proper guidelines.

In formulating the Tables in Bhagwandas Vs. Mohd. Arif, , actuarial system was followed. We have already observed that even the Full Bench of this Court in A.P.S.R.T.C. v. Ch. Narasava 1987 ACJ 419 (AP), expressed that if in future Annuity Tables are prepared in India, they may revive the discussion. Thus the Full Bench is not of the opinion that the adoption of Annuity Tables, if prepared for India, cannot be the proper basis. After referring to the various decisions of the House of Lords, it was observed at para 1558 in McGregor on Damages as follows:

However, although the courts have stated that there are sufficient objections to the actuarial method for it not to be accepted as controlling, they are still prepared to accept that actuarial evidence may be helpful; its status today is therefore that it is permissible but not required.

The courts in Canada held that in each case the court is faced with the task of determining the present value of a lump sum which, if invested, would provide payments of the appropriate size over a given number of years in the future, extinguishing fund in the process vide Keizer v. Hanna, (1978) 82 DLR 3d 449. The said aspect encouraged the use of statistical data and other expert evidence to produce premises from which the mathematical calculation can proceed. It was recognised in Canada that a statistical evidence is often the best available means of assessing probability and possibility rather than the actuality vide para 412 of Personal Injury Damages in Canada by Cooper-Stephenson and Saunders. So when Annuity Tables are prepared on the basis of the mortality Tables prepared in the country, it can be held that it is best available means of assessing the probability and possibility though it cannot be of actuality. It may be noted that actuality cannot be achieved in such cases, whatever method is adopted.

In Jones and Laughlin Steel Corporation v. Pfeifer, (1983) 462 US 523, after referring to the various judgments of the various countries, it was observed as follows:

In England, Lord Diplock has suggested that it would be appropriate to allow for future inflation ''in a rough and ready way'' by discounting at a rate of 4% per cent... The Supreme Court of Canada has recommended discounting at a rate of 7 per dent, a rate equal to market rates on long term investments minus a government expert''s prediction of the long term rate of price inflation.... And in Australia, the High Court has adopted a 2 per cent rate, on the theory that it represents a good approximation of the long term ''real interest rate''.

In America some courts have taken the same real interest rate as in Australia.

In view of the various interest rates adopted by various countries as referred to above, the choosing of 4 per cent as real interest rate for our country cannot be held as inappropriate. Anyhow as we have already observed, till now no court or academician commented that the real interest rate chosen for formulating Tables in Bhagwandas Vs. Mohd. Arif, , as unrealistic. There is nothing to indicate that the method adopted in formulating such Tables is not sound. The learned Judge, who formulated the above Tables, has good knowledge of mathematics. He explained as to how the Tables were formulated. Though it may be difficult for a layman to understand or appreciate the said calculations, still it is open to the statisticians and mathematicians to find out whether they were correctly tabulated or whether any error crept in. So we feel that there is a rational basis in formulating the Tables. By following such Tables, we may be near to the probability though we may not reach the actuality. Till now no method is broached or suggested to attain such actuality.

The choosing of a multiplier from the Tables referred to in Bhagwandas Vs. Mohd. Arif, , is easy and thus the method is simple. There will not be scope for much divergence if a multiplier is chosen from such Tables. Be that as it may, experts are rarely available to help court in choosing proper multiplier and even if available, they are not within easy reach of many claimants. By adopting such system, even the claimant can know about the amount that may be allowed as compensation if multiplicand is ascertained. In simple cases, there will not be much difficulty in ascertaining the multiplicand. Experience as trial Judge shows that in majority of cases, the multiplicand can be ascertained easily.

Due to spate of road accidents on account of faster communication, hundreds of petitions u/s 110-A of the Act are filed in each Tribunal in the State every year. As the courts are overburdened, the desirability of having such claims settled before Lok Adalats is felt. If there is a simple and rational method to ascertain the amount payable as compensation in such cases, it is easy for the Lok Adalats to settle such claims. If simple system having rational basis is available, even the insurance companies and the undertakings like A.P.S.R.T.C. which do not insure their vehicles will come forward with such settlements before Lok Adalats. We have already observed that by choosing the multiplier from the Tables referred to in Bhagwandas Vs. Mohd. Arif, , one can roughly assess the amount payable by way of compensation. So we feel that the choosing of a multiplier from the Tables referred to in the above judgment is preferable to the practice of leaving it to the Tribunal to choose a multiplier.

We have already adverted to some of the circumstances referred to in Bhagwandas Vs. Mohd. Arif, , which warrant increase of the multiplier to be chosen on the basis of the Tables referred to. We may add that such a multiplier can be enhanced even in case where there is clear evidence to show that there were bright prospects of promotion in case of employee or increase in income of wage earners or a professional or others. In England it was found necessary for the courts to call for adjustment in relation to hike in taxation, while awarding compensation under Fatal Accidents Act. After referring to the various judgments, it was observed in para 1557 of McGregor on Damages (15th Edition) that there was no unanimity as to whether multiplicand has to be increased or multiplier has to be increased to make such adjustment. So it was observed therein that within the framework of the general method of assessment established by the courts, it does not seem to matter which of the two factors in the computation bears the increase. So we feel that if there is clear evidence about the possibility of appreciable increase of earnings in future, the multiplier can be suitably increased by one or two.

Hence we feel that out of the various methods which are being followed, the choosing of the multiplier on the basis of the age of the deceased at the time of his death from the Annuity Tables referred to in Bhagwandas Vs. Mohd. Arif, , with the necessary adjustment is preferable and so we agree with the said method.

In this case the 2nd Appellant, i.e., widow of the deceased, was getting Rs. 500/- p.m. as pension. As per State Government Rules she is entitled to receive pension at that rate for only seven years or till the date of retirement of the deceased if survived and later it gets reduced. In N. Sivammal v. M.D., Pandian Roadways Corporation 1985 ACJ 75 (SC), it was held that there is no justification for reducing the amount which may be justly awarded as compensation in a motor accident case merely because the widow is entitled to pension at a particular rate for a period of seven years whereafter the amount will taper down. In view of the above decision of the Supreme Court, the pension received by the second Petitioner, the widow of the deceased, has to be disregarded in computing the amount payable as compensation.

The deceased was a Government employee aged 40 years at the time of fatal accident. As per multiplier Table in Bhagwandas Vs. Mohd. Arif, , multiplier of 12.79 has to be adopted.

The deceased was getting a monthly salary of Rs. 1,100/- . In view of the number of members of the family and the job which the deceased was attending to, it is reasonable to hold that the deceased was spending Rs. 400/- p.m. for his personal and household expenses and he was contributing Rs. 700/- p.m. for the family. Thus the annual loss of dependency can be estimated at Rs. 8,400/- . By adopting the multiplier of 12.79, the total loss of dependency comes to Rs. 1,07,436/- (Rs. 8,400/- � 12.79) which can be rounded off to Rs. 1,07,500/- .

In Flint v. Lovell (1935) 1 KB 354, it was stated that where the injury to the Plaintiff shortened his expectation of life he was entitled to damages in respect of this shortening, thus establishing a head of damages since known as loss of expectation of life. In Rose v. Ford, (1937) AC 826, Lord Atkin and Lord Wright expressed the view that there was nothing novel or unusual in the idea of taking this element of damages into calculation. Besides damages for loss of expectation of life, damages are being awarded for pain and suffering of the deceased. The damages under those two heads and damages for loss of amenities of life wherever they occur constitute damages towards non-pecuniary loss. In Fletcher v. Autocar and Transporters Ltd. 1969 ACJ 99 (CA, England), it was held that rich and poor, great and humble, should be treated alike, receiving similar amounts for pain and suffering. We feel that the same view can be taken even in regard to damages towards loss of expectation of life as conventional amount is being paid towards the same. In N. Sivammal v. Managing Director, Pandian Roadways Corporation 1985 ACJ 75 (SC), an amount of Rs. 3,000/- was awarded towards non-pecuniary damages and it was styled as conventional amount.

It may be noted that damages towards non-pecuniary loss are awarded to the estate, while compensation towards loss of dependency is awarded to the dependants. Whether the non-pecuniary damages have to be awarded if the claimants entitled to the compensation for loss of dependency are also entitled to the non-pecuniary damages, is a matter for consideration. This aspect was considered in Gobald Motor Service Ltd. v. R.M.K. Velluswamy 1958 ACJ 179 (SC). If X is the income and Y out of it is the amount spent for the dependants and Z out of it is the savings and R is the amount spent towards personal and household expenses of the deceased, then X = Y + Z + R. When Y is taken for computing the loss of dependency, Z is reckoned for computing loss to the estate. So when Z is not taken into consideration in computing the loss of dependency, then even if the damages towards loss of dependency and loss to the estate go to the same claimant, it will not be a case of permitting the claimants to recover twice over for the same loss. Thus though in this case the Petitioners are entitled to both pecuniary and non-pecuniary damages, it will not be a case of permitting them to take the compensation for the same loss twice. Hence non-pecuniary damages to be awarded have to be added up to the pecuniary damages.

It can be seen from para 1530 of McGregor on Damages (15th Edition) that in view of the fall in the real value of money, the conventional sum awarded is raised to � 1750 by 1985. Hence when our learned brother Jagannadha Rao, J., fixed the conventional award under pain and suffering and loss of expectation of life at Rs. 7,500/- for each in Y. Varalakshmi and Others Vs. M. Nageswara Rao and Others, , the same cannot be held as excessive. We fully agree with the same. Hence an amount of Rs. 15,000/- is awarded towards non-pecuniary damages.

The lower Tribunal awarded an amount of Rs. 5,000/- as compensation to the second Petitioner towards loss of consortium. In view of her age, we do not find the same as unreasonable. Hence a total amount of Rs. 1,27,500/- (Rs. 1,07,500 + 15,000 + 5,000) has to be awarded as compensation.

In Bishan Devi v. Sirbaksh Singh 1979 ACJ 496 (SC), the Supreme Court awarded interest from the date of claim. In Narcinva V. Kamat v. Alfredo Antonio Doe Martins 1985 ACJ 397 (SC), the Supreme Court granted interest at 12 per cent per annum for motor accident claim. Hence we direct that this amount of Rs. 1,27,500/- should carry interest at 12 per cent from the date of petition.

Out of the total amount of Rs. 1,27,500/- , the Appellant Nos. 3 to 6 are awarded Rs. 20,000/- each and the balance amount of Rs. 47,500/- is awarded to the 2nd Appellant who has to maintain the 1st Appellant also. The amounts payable to Appellant Nos. 3 to 6 including the interest that accrues up to the date of payment have to be deposited in bank in their respective names and the same can be withdrawn as and when the alliance of each of the daughters is fixed. But the periodical interest on the F.D.Rs. taken in the names of Appellant Nos. 3 to 6 as and when due can be withdrawn by the 2nd Appellant for their maintenance.

Thus the appeal is allowed in part accordingly with proportionate costs. Advocate''s fee is fixed at Rs. 500/- .