The New India Assurance Co. Ltd. vs Subbulakshmi and Others

P.P.S. Janarthana Raja, J.—The appeal is preferred by the Insurance Company against the award dated 03.04.2008 made in MCOP No. 1198 of 2007 on the file of the Motor Accidents Claims Tribunal, Principal District Judge, Tirunelveli.

M.P.(MD)Nos.1 of 2010 and 1 of 2008 have been posted today. By consent of the learned Counsel on both the sides, the main CMA itself is taken up for final disposal.

Background facts in a nutshell are as follows:

The deceased-Vellaisami met with motor traffic accident that took place on 01.06.2007 at about 15.00 hours. He was proceeding in the TVS-50 XL moped bearing Registration No. TN-72-C-1833, to the TVS Workshop at Palayamkottai, on the left side of the Trivandrum Road from East to West direction. When he reached near Selvam Theatre at Palayamkottai, a bus bearing Registration No. TN-57-N-0376 belonging to the fifth Respondent herein came from behind in a rash and negligent manner and also at high speed and hit the moped in which the deceased was travelling. Due to the said impact, the deceased sustained grievous injuries all over the body. Immediately he was taken to the Tirunelveli Medical College Hospital at Palayamkottai, where the Doctor, on examination, declared him dead. The claimants are the wife, two minor children and the mother of the deceased. They claimed a compensation of Rs. 15,00,000/-before the Tribunal. The bus was insured with the Appellant / Insurance Company, who resisted the claim. On pleadings, the Tribunal framed the following issues:

"1. Whether the accident took place due to the rash and negligent driving of the driver of the bus belonging to the fifth Respondent or not?

Whether the claimants are entitled to compensation? If so to what extent?" 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 bus belonging to the fifth Respondent and awarded a sum of Rs. 8,91,000/-as compensation with interest at 6% p.a. from the date of petition. The details of the compensation are as follows:

Rupees Loss of dependancy 8,16,000/- Loss of consortium 20,000/- Loss of love and affection 50,000/- Funeral expenses 5,000/- --------------------- Total.... 8,91,000/- =====================

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

Learned Counsel for the Appellant / Insurance Company questioned only the quantum of compensation awarded by the Tribunal and submitted that the compensation awarded by the Tribunal is excessive, exorbitant and without any basis and justification. Hence the order passed by the Tribunal is not in accordance with law and the same has to be set aside.

Learned Counsel for the Respondents 1 to 4 / claimants has submitted that the Tribunal had considered all the materials and evidence available on record and awarded the compensation which is just, fair and reasonable. Hence the order passed by the Tribunal is in accordance with law and the same has to be confirmed.

Heard the counsel and perused the materials available on record. On the side of the claimants, P.W.1 to P.W.3 were examined and documents Ex.P1 to P10 were marked. On the side of the Insurance Company, no witness was examined and no document was marked. P.W.1 is the wife of the deceased. P.W.2 and P.W.3 are the eye-witnesses of the accident. Ex.P1 is the certified copy of First Information Report. Ex.P2 is the certified copy of Post Mortem Certificate. Exs.P3 and P4 are certified copies of Motor Vehicle Inspection Reports relating to the bus and the moped, respectively. Ex.P5 is the Legal Heirship Certificate. Ex.P6 are the Pay Slips relating to the deceased. Ex.P7 is the certified copy of Charge Sheet in Crime No. 683 of 2007 of Palayamkottai Police Station. Ex.P8 is the certified copy of Rough Plan. Ex.P9 is the certified copy of Observation Mahazar. Ex.P10 is the Driving License 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 driver of the bus belonging to the fifth Respondent. It is a question of fact and it is based on valid materials and evidence, and hence the same is confirmed.

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 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 there from 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 there from 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.

(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)"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) "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.

The deceased was 32 years old at the time of accident. Ex.P2 is the Post Mortem Certificate, in which it is stated that the deceased was 32 years old at the time of accident. Therefore, the Tribunal has fixed the age of the deceased as 32 years old. P.W.1, in her evidence has stated that the deceased was a Fitter Assistant in M/s. Sri Murugan Transport, Palayamkottai and that he was earning a sum of Rs. 4141.50 per month. Ex.P6 are the Pay Slips relating to the deceased, given by the employer, in which it is stated that the monthly salary of the deceased was Rs. 4141.50. Further, it was argued before the Tribunal that since the age of the deceased was 32 years old, he would have got more increment and would have earned more. After taking into consideration of the future prospects, the Tribunal has fixed the monthly income of the deceased at Rs. 6000/-. Out of the said sum, the Tribunal deducted 1/3rd towards personal expenses, and the balance sum of Rs. 4,000/-was taken as the monthly contribution of the deceased to the family, and accordingly calculated the annual contribution at Rs. 48,000/-(Rs. 4,000/-x 12). After taking into consideration the age of the deceased, i.e. 32 years, the Tribunal adopted the multiplier of 17 and determined the loss of dependancy at Rs. 8,16,000/-(Rs. 48,000/-x 17). Learned Counsel for the Appellant vehemently contended that the Tribunal has fixed the monthly income of the deceased at Rs. 6000/-by taking into consideration of the future prospects, for which there is no evidence available on record. After taking into consideration of the facts and circumstances of the case, this Court is of the view that it would be appropriate to fix the monthly income of the deceased at Rs. 5,200/-. Out of the said sum, if 1/3rd of the amount, i.e. Rs. 1733/-is deducted, the monthly contribution of the deceased to the family works out to Rs. 3467/-and the annual contribution works out to Rs. 41,604/-. The Tribunal has correctly adopted the multiplier of 17. If 17 multiplier is adopted, the loss of dependancy works out to Rs. 7,07,268/-. Therefore, the loss of dependancy stands modified to Rs. 7,07,268/-as against the sum of Rs. 8,16,000/-awarded by the Tribunal. The Tribunal has awarded a sum of Rs. 20,000/-towards loss of consortium. The age of the widow was 25 years at the time of accident. After taking into consideration the same, this Court is of the view that the amount awarded towards loss of consortium at Rs. 20,000/-is very reasonable and hence the same is confirmed. The Tribunal has awarded a sum of Rs. 50,000/-towards loss of love and affection to the two minor children and the mother of the deceased. The mother of the deceased lost the love and affection of her son. The children have lost the love and affection of their father. Taking into consideration of the same, this Court is of the view that the amount awarded towards loss of love and affection at Rs. 50,000/-is very reasonable and hence the same is confirmed. The Tribunal has awarded a sum of Rs. 5,000/-towards funeral expenses, which I feel is very reasonable and hence the same is confirmed. The Tribunal has awarded interest rate at 6% p.a., from the date of petition. Taking into consideration the date of accident, date of award and also the prevailing rate of interest during the relevant time, the rate of interest fixed by the Tribunal at 6% p.a. is very reasonable and hence the same is confirmed. The details of the modified compensation are as under:

Rupees Loss of dependancy 7,07,268/- Loss of consortium 20,000/- Loss of love and affection 50,000/- Funeral expenses 5,000/- ------------- Total.... 7,82,268/- ==============

The claimants are entitled to the modified compensation of Rs. 7,82,268/-with interest at 6% p.a. from the date of petition.

It is stated by the counsel for the Insurance Company that 50% of the award amount with accrued interest has already been deposited by order of this Court dated 23.12.2008. Under the circumstances, the Insurance Company is directed to deposit the modified compensation of Rs. 7,82,268/-with interest at 6% p.a. from the date of petition, less the amount already deposited, within a period of six weeks from the date of receipt of a copy of this order. On deposit of the same, the first and fourth Respondents, who are the wife and mother of the deceased are permitted to withdraw their respective shares, on making proper application. In respect of the minors'' shares, the same shall be deposited in a Nationalised Bank under Reinvestment Scheme till the minors attain the age of majority. The mother of the minors, the first Respondent herein, is permitted to withdraw the accrued interest from the bank once in three months, on making proper application.

The Civil Miscellaneous Appeal is disposed of with the above modifications. Consequently, M.P.(MD)Nos.1 of 2008 and 1 of 2010 are closed. No costs.