Royal Sundaram Alliance Insurance vs S. Chitra and Others

P.P.S. Janarthana Raja, J.—When the appeal came up for admission, by consent, the main appeal itself is taken up for final hearing.

The appeal is preferred by the Appellant-Insurance Company against the judgment and decree dated 13.08.2010 made in M.C.O.P. No. 241

of 2008 on the file of the Motor Accident Claims Tribunal, (Chief Judicial Magistrate), Vellore.

The background facts in a nutshell, are, as follows:

On 13.02.2008, at about 06.30 a.m., the deceased Saravanan met with motor vehicle accident, while he was proceeding on N.H.46, near

Duraiseelan Mango Grove, the lorry bearing Registration No. KA-01-AC-5191 was driven by its driver in a rash and negligent manner and hit the

deceased. Due to the said impact, the deceased sustained head injuries and died on the spot. The claimants are the wife, minor daughter and

parents of the deceased. They claimed a sum of Rs. 16,00,000/- as compensation before the Tribunal. The said lorry was insured with the

Appellant-Insurance Company, who resisted the claim. On pleadings, the Tribunal framed the following issues:

Whether the driver of the fifth Respondent herein is responsible for the accident?

Whether the Appellant and fifth Respondent are liable to pay compensation to the claimants?

What is the quantum of compensation that the claimants are entitled to? 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 driver of the lorry, the fifth Respondent herein and awarded a

compensation of Rs. 8,78,000/- with interest at the rate of 7.5% per annum from the date of the claim petition and till the date of realisation with

cost. The details of the same are as under:

Loss of income to the family Rs. 8,10,000/-

Funeral expenses Rs. 4,000/-

Loss of estate Rs. 4,000/-

Loss of consortium Rs. 10,000/-

Loss of love and affection Rs. 50,000/-

Total Rs. 8,78,000/-

Aggrieved by that award, the Appellant-Insurance Company has filed the present appeal.

The learned Counsel appearing for the Appellant-Insurance Company has questioned only the quantum of compensation awarded by the

Tribunal by contending that the amount awarded by the Tribunal is excessive, exorbitant, without basis and justification. He further submitted that

the Tribunal has wrongly fixed the monthly income of the deceased. Therefore, the award passed by the Tribunal is not in accordance with law and

the same has to be set aside.

Learned Counsel appearing for the Respondents 1 to 4/claimants submitted that the Tribunal had considered all the relevant materials and

evidence on record and came to the right conclusion and awarded a just, fair and reasonable compensation. Hence, the order of the Tribunal is in

accordance with law and the same has to be confirmed.

Heard the learned Counsel on either side and perused the materials available on record. On the side of the claimants P. Ws.1 to 3 were

examined and documents Exs.P.1 to P.7 were marked. On the side of the Appellant-Insurance Company, no one was examined and no document

was marked. P.W.1 is the wife of the deceased. P.W.2, Dhandapani is an eyewitness to the accident. P.W.3 Kannadurai is the employer of the

deceased. Ex.P.1 is the copy of First Information Report. Ex.P.2 is the copy of post mortem certificate. Ex.P.3 is the copy of Insurance policy.

Ex.P.4 is the Legal heir certificate. Ex.P.5 is the copy of Motor Vehicle Inspector''s report Ex.P.6 is the copy of driving licence. Ex.P.7 is the

salary certificate. 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 driver of the lorry. The finding is based on valid materials and evidence.

In the case of Sarla Verma and Ors. v. Delhi Transport Corporation and Anr. (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 (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 dependants 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 dependants, the amount that the deceased would have earned during the

remainder of his life, the amount that he would have contributed to the dependants during that period, the chances that the deceased may not have

live or the dependants 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 dependants, 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 dependants. 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

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 (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.

(emphasis supplied)

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 Thomas2, 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. Veluswami4, 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 dependants many imponderables enter into the calculation. Therefore, the actual extent of the pecuniary loss

to the dependants 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 dependant 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 dependants 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 dependants, the amount that the deceased would have earned during the

remainder of his life, the amount that he would have contributed to the dependants during that period, the chances that the deceased may not have

lived or the dependants 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

dependants 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 Saravanan was aged about 27 years. In Ex.P.2, copy of Post mortem Certificate, it is mentioned that

at the time of accident, the deceased was aged about 27 years. Therefore, the Tribunal had fixed the age of the deceased as 27 years at the time of

accident. P.W.1 the wife of the deceased, in her evidence stated that the deceased was working as a labour in sand quarry and also doing other

part time work i.e. milk vending to door to door and was earning totally a sum of Rs. 15,000/- per month. P.W.3 was examined to prove the

income and occupation of the deceased. But the employer P.W.3 stated that he was working as Manager, but in the certificate in Ex.P.7 he was

shown as proprietor and hence the said certificate has not been accepted by the Tribunal. After considering the same, the Tribunal had fixed Rs.

5,000/- as the monthly income of the deceased and the annual income works out to Rs. 60,000/- (Rs. 5,000/- x 12). Out of the said sum, 1/4th

was deducted towards personal expenses and the balance amount of Rs. 45,000/- (Rs. 60,000/- -Rs.15,000/- ) was taken as annual contribution

to his family. The tribunal, taking into consideration Schedule II of the Motor Vehicles Act, 1988, adopted the multiplier of ''18'' and arrived at a

loss of income at Rs. 8,10,000/- (Rs. 45,000/- x 18 = Rs. 8,10,000/- ). The learned Counsel appearing for the Appellant-Insurance Company

vehemently contended that the Tribunal has wrongly fixed the monthly income as well as the annual income of the deceased. But, there is no

dispute regarding the multiplier adopted by the Tribunal. Considering the facts and circumstance of the case, it would be reasonable to fix Rs.

4,500/- as against Rs. 5,000/- fixed by the Tribunal and the total loss of income works out to Rs. 7,29,000/- (Rs. 4,500/- x 12 x 18 x 3/4) as

against Rs. 8,10,000/- awarded by the Tribunal. The Tribunal has awarded a sum of Rs. 4,000/- towards funeral expenses. Hence the amount

awarded under this head is very reasonable and the same is confirmed. The Tribunal has awarded a sum of Rs. 4,000/- under the head of loss of

estate. Hence the amount awarded under this head is very reasonable and the same is confirmed. The Tribunal has awarded Rs. 10,000/- towards

loss of consortium. The age of widow was 21 years at the time of accident. Hence, the amount awarded under this head is very reasonable and the

same is confirmed. The Tribunal has awarded a sum of Rs. 50,000/- towards loss of love and affection. Considering the age of the children and

parents, the amount awarded by the Tribunal is very reasonable and the same is confirmed. The Tribunal has awarded interest at the rate of 7.5%

p.a. from the date of petition till the date of realisation. The accident occurred on 13.02.2008. Keeping in view the prevailing rate of interest at the

time of the accident and the date of award, I feel that the rate of interest awarded by the Tribunal is very reasonable and the same is confirmed.

The details of the modified compensation as per the above discussion are as under:

Loss of income to the family Rs. 7,29,000/-

Funeral expenses Rs. 4,000/-

Loss of estate Rs. 4,000/-

Loss of consortium Rs. 10,000/-

Loss of love and affection Rs. 50,000/-

Total Rs. 7,97,000/-

Therefore, the claimants are entitled to the modified compensation of Rs. 7,97,000/- with interest at the rate of 7.5% per annum from the date of

petition till date of realisation.

The Appellant-Insurance Company is directed to deposit the modified compensation amount of Rs. 7,97,000/- with interest at the rate of

7.5% per annum, less the amount, if any, already deposited, within a period of eight weeks from the date of receipt of a copy of this order. On

such deposit, the major claimants viz., Respondents 1, 3 and 4 are permitted to withdraw their shares as apportioned by the Tribunal, after

adjusting the amount, if any, already withdrawn, on making proper application. In respect of the second Respondent/minor share is concerned, the

Tribunal is directed to invest the amount, in a fixed deposit, in any one of the nationalised banks, until she attains majority. The mother of the minor

is permitted to withdraw interest accrued thereon once in three months, on making proper application.

The Civil Miscellaneous Appeal is disposed of with the above modification. No costs. Consequently, connected Miscellaneous Petition is

closed.