The New India Assurance Company vs Smt. Vimla Devi & others

Sandeep Sharma, J.

1.By way of instant appeal, challenge has been laid to the Award, dated 30.5.2017, passed by the learned Motor Accident Claims Tribunal-II, Kinnaur

at Rampur Bushehar, Himachal Pradesh, in MAC petition No.63-R/2 of 2016/2015, whereby learned Tribunal while allowing the claim petition having

been preferred by respondents No.1 to 6 (for short ‘claimants’), awarded a sum of `24,53,000/- alongwith interest at the rate of 9% to the

claimants.

2.Briefly stated facts, as emerge from the record are that the claimants filed a claim petition under Section 166 of the Motor Vehicles Act ( for short

‘M.V.Act’), seeking therein compensation to the tune of `50,00,000/-on account of death of Sh.Mast Ram, being his dependents. On

19.07.2014, deceased Mast Ram, alongwith person namely Sh. Ved Prakash hired vehicle bearing registration No. HP-06A-4287 from Rampur to

Gaura Mashnoo, to carry welding machine and other welding material. But, unfortunately when aforesaid vehicle reached near Rattanpur, it met with

an accident, resulting into death of both Sh.Mast Ram and Sh. Ved Prakash. Driver Amar Singh also died on the spot.

3.Appellant-Insurance Company refuted the claim petition having been filed by the claimants on the ground that driver of the ill-fated vehicle was not

having effective and driving licence and the vehicle in question was being driven in violation of the terms and conditions of the insurance policy and as

such, appellant-Insurance company is not liable to indemnify the insured. Respondent No.2 i.e. owner of the vehicle claimed that the vehicle was

comprehensively insured with the insurance company and as such, insurance company is liable to indemnify the insured.

4.Learned Tribunal below on the basis of the evidence adduced on record by the respective parties, held claimants entitled to compensation to the tune

of `24,53,000/- alongwith interest at the rate of 9% per annum. Learned Tribunal below on account of loss of dependency granted a sum of

`17,28,000/-, whereas drawing strength from the ratio laid down in the judgment rendered by Hon’ble Supreme Court in Rajesh and others vs.

Rajbir Singh and others, (2013)9 Supreme Court Cases 54, awarded sum of `,1,00,000/- as loss of consortium to respondent No.1. i.e. wife of the

deceased Mast Ram, `25,000/-as funeral expenses. Apart from above, Tribunal also granted a sum of `1,00,000/ - under the head of loss of love and

affection to respondents No.2 to 6 each. Tribunal below further held claimants entitled to `1,00,000/- under the head of loss to the estate.

5.Mr. B.M. Chauhan, learned counsel representing the appellant-Insurance company, vehemently argued that the impugned award is against the law

and facts and as such, is liable to be set-aside. He further submitted that since compensation has not been awarded as per the settled principles for

assessment of compensation by the learned Tribunal below and as such, liable to be quashed and set-aside. Mr. Chauhan, also contended that the

deceased was alleged to be in self employment and as such, learned Tribunal below erred in law by awarding 50% increase over and above the

income assessed by it. While placing reliance upon the judgment rendered in National Insurance Company Limited v. Pranay Sethi and Ors., AIR

2017 SC 5157, Mr. Chauhan, contended that learned Tribunal has erred in awarding ` 25,000/- on account of funeral expenses and sum of `1,00,000/-

on account of love and affection to respondents No.2 to 6 each. He further contended that in terms of the aforesaid judgment rendered by the

Hon’ble Apex Court, only a sum of `40,000/-could be awarded under the head of loss of consortium to the wife of the deceased and `15,000/-

under the head of loss of estate. Lastly, Mr. Chauhan, contended that learned Tribunal below has also erred in law in awarding interest at the rate of

9% on the assessed compensation, whereas it ought to have awarded interest at the rate of 7% i.e. prevailing rate of interest at the time of passing

award. In support of his aforesaid contention, he placed reliance upon the judgment passed by the Hon’ble Apex Court in Laxmidhar Nayak and

Ors. v. Jugal Kishore Behera and Ors., in Civil Appeal No. 19856 of 2017 (arising out of SLP (C) No. 31405 of 2016).

6.Mr. Vivek Darhel, learned counsel representing claimants-respondents No.1 to 6, while supporting the impugned award, contended that there is no

illegality and infirmity in the impugned award passed by the learned Tribunal below and as such, same deserves to be upheld. He further contended

that it stands duly proved on record that income of the deceased at the time of the accident was `8000/- per month and as such, learned Tribunal

below while placing reliance upon the judgment rendered by Hon’ble Apex Court in Smt. Sarla verma & Ors. V. Delhi Transport Corporation and

Anr. AIR (2009) 9 SCC 126, rightly enhanced the income of deceased, who at that relevant time was 34 years of age, by 50% while computing future

prospects. Mr. Darhel, while referring to the judgment rendered by the Hon’ble Apex Court in Pranay Sethi’s case supra, fairly conceded that

the claimants are entitled to `15,000/- as funeral expenses and `40,000/- as loss of consortium, however, he disputed the contention raised by the

learned counsel representing the appellant-Insurance company that no amount could be awarded under the head “loss of love and affectionâ€​.

7.Having heard learned counsel representing the parties and carefully gone through the judgment rendered by the Hon’ble Apex Court in Pranay

Seth’s case (supra), this Court finds considerable force in the arguments of learned counsel representing the appellant-Insurance company that in

the case of deceased, who was self employed and below the age of 40 years, an addition of 40% of the established income should have been made

while computing the future prospects. In the case at hand, admittedly learned Tribunal below made an addition of 50% of actual established income of

deceased and as such, award on that account needs to be modified.

8.While making an addition of 40% of the actual established income of deceased, his monthly income comes out to `11,200/-(`8000+`3200=`11,200/-).

In the case at hand, 1/4th income of the deceased is liable to be deducted from his income for his personal expenses and after deducting 1/4th income

as personal expenses, his contribution towards the family comes to `8400/- Â (`11200-`2800=`8400/-) There is also no dispute with regard to multiplier

of ‘16’ applicable in the present case, as the deceased was 34 years of age at the time of the accident and as such, applying the multiplier of

‘16’ loss of dependency comes out to `16,12,800/-(`8400x12x16=`16,12,800). In view of aforesaid modification, claimants shall be entitled to an

amount of `16,12,800/ on account of loss of dependency. Learned Tribunal below while applying the law laid down by Hon’ble Apex Court in

Rajesh case (supra), awarded a sum of `1,00,00/- under the head of loss of estate and a sum of `1,00,000/- as loss of consortium to respondent No.1.

i.e. wife of the deceased, whereas in terms of the recent judgment rendered by Hon’ble Apex Court in Pranay Seth’s case, only a sum of

`40,000/-and `15,000/- can be awarded on account of loss of consortium and loss of estate.

9.Having perused the judgment rendered by the Hon’ble Apex Court in Pranay Seth’s case (supra), this Court is persuaded to agree with the

contention of Mr. B.M.Chauhan, learned counsel representing the appellant-Insurance company that no money could be awarded under the head,

“loss of love and affectionâ€. Hon’ble Apex Court has categorically held that head relating to loss of care and guidance for the minor children

does not exist. The Hon’ble Apex Court has further quantified the amount to the paid under the aforesaid conventional heads i.e. loss of estate,

loss of consortium and funeral expenses. Relevant paras of the aforesaid judgment are reproduced here in below:-

“47.In our considered opinion, if the same is followed, it shall subserve the cause of justice and the unnecessary contest before the Tribunals and

the courts would be avoided. 48.Another aspect which has created confusion pertains to grant of loss of estate, loss of consortium and funeral

expenses. InSantosh Devi (supra), the two-Judge Bench followed thetraditional method and granted Rs. 5,000/- for transportation of

the body, Rs. 10,000/- as funeral expenses and Rs. 10,000/-as regards the loss of consortium. In Sarla Verma, the Court granted Rs. 5,000/- under the

head of loss of estate, Rs.5,000/- towards funeral expenses and Rs. 10,000/- towards loss of Consortium. In Rajesh, the Court granted Rs. 1,00,000/-

towards loss of consortium and Rs. 25,000/- towards funeral expenses. It also granted Rs. 1,00,000/- towards loss of care and guidance for minor

children. The Court enhanced the same on the principle that a formula framed to achieve uniformity and consistency on a

socioeconomic issue has to be contrasted from a legal principle and ought to be periodically revisited as has been held in Santosh Devi (supra). On the

principle of revisit, it fixed different amount on conventional heads. What weighed with the Court is factum of inflation and the price index. It has also

been moved by the concept of loss of consortium. We are inclined to think so, for what it states in that regard. We quote:- “17. … In legal

parlance, “consortium†is the right of the spouse to the company, care, help, comfort, guidance, society, solace, affection and sexual relations with

his or her mate. That non-pecuniary head of damages has not been properly understood by our courts. The loss of companionship, love, care and

protection, etc., the spouse is entitled to get, has to be compensated appropriately. The concept of non pecuniary damage for loss of consortium is one

of the major heads of award of compensation in other parts of the world more particularly in the United States of America, Australia, etc. English

courts have also recognised the right of a spouse to get compensation even during the period of temporary disablement. By loss of consortium, the

courts have made an attempt to compensate the loss of spouse’s affection, comfort, solace, companionship, society, assistance, protection, care

and sexual relations during the future years. Unlike the compensation awarded in other countries and other jurisdictions, since the legal heirs are

otherwise adequately compensated for the pecuniary loss, it would not be proper to award a major amount under this head. Hence, we are of the view

that it would only be just and reasonable that the courts award at least rupees one lakh for loss of consortium.â€​

49.Be it noted, Munna Lal Jain (2015 AIR SCW 3105) (supra) did not deal with the same as the notice was confined to the issue of application of

correct multiplier and deduction of the amount.

50.This aspect needs to be clarified and appositely stated. The conventional sum has been provided in the Second Schedule of the Act. The said

Schedule has been found to be defective as stated by the Court in Trilok Chandra (supra). Recently in Puttamma and others v. K.L. Narayana Reddy

and another it has been reiterated by stating:- “…we hold that the Second Schedule as was enacted in 1994 has now become redundant, irrational

and unworkable due to changed scenario including the present cost of living and current rate of inflation and increased life expectancy.â€​

51.As far as multiplier or multiplicand is concerned, the same has been put to rest by the judgments of this Court. Para 3 of the Second Schedule also

provides for General Damages in case of death. It is as follows:- “3.General Damages (in case of death): The following General Damages shall be

payable in addition to compensation outlined above:-

(i)Funeral expenses- Rs.2,000/-.

(ii)Loss of Consortium, if beneficiary is the spouse- Rs.5,000/-

(iii)Loss of Estate - Rs. 2,500/-

(iv)Medical Expenses â€" actual expenses incurred before death supported by bills/vouchers but not exceeding â€" Rs. 15,000/-â€​

52.On a perusal of various decisions of this Court, it is manifest that the Second Schedule has not been followed starting from the decision in Trilok

Chandra (supra) and there has been no amendment to the same. The conventional damage amount needs to be appositely determined. As we notice,

in different cases different amounts have been granted. A sum of Rs. 1,00,000/- was granted towards consortium in Rajesh. The justification for grant

of consortium, as we find from Rajesh, is founded on the observation as we have reproduced hereinbefore.

53.On the aforesaid basis, the Court has revisited the practice of awarding compensation under conventional heads.

54.As far as the conventional heads are concerned, we find it difficult to agree with the view expressed in Rajesh. It has granted Rs. 25,000/- towards

funeral expenses, Rs. 1,00,000/-loss of consortium and Rs. 1,00,000/- towards loss of care and guidance for minor children. The head relating to loss

of care and minor children does not exist. Though Rajesh refers to Santosh Devi, it does not seem to follow the same. The conventional and traditional

heads, needless to say, cannot be determined on percentage basis because that would not be an acceptable criterion. Unlike determination of income,

the said heads have to be quantified. Any quantification must have a reasonable foundation. There can be no dispute over the fact that price index, fall

in bank interest, escalation of rates in many a field have to be noticed. The court cannot remain oblivious to the same. There has been a thumb rule in

this aspect. Otherwise, there will be extreme difficulty in determination of the same and unless the thumb rule is applied, there will be immense

variation lacking any kind of consistency as a consequence of which, the orders passed by the Tribunals and courts are likely to be unguided.

Therefore, we think it seemly to fix reasonable sums. It seems to us that reasonable figures on conventional heads, namely, loss of estate, loss of

consortium and funeral expenses should be Rs. 15,000/-, Rs. 40,000/- and Rs. 15,000/- respectively. The principle of revisiting the said heads is an

acceptable principle. But the revisit should not be fact-centric or quantum-centric. We think that it would be condign that the amount that we have

quantified should be enhanced on percentage basis in every three years and the enhancement should be at the rate of 10% in a span of three years.

We are disposed to hold so because that will bring in consistency in respect of those heads.

55.Presently, we come to the issue of addition of future prospects to determine the multiplicand.

56.In Santosh Devi the Court has not accepted as a principle that a self-employed person remains on a fixed salary throughout his life. It has taken

note of the rise in the cost of living which affects everyone without making any distinction between the rich and the poor. Emphasis has been laid on

the extra efforts made by this category of persons to generate additional income. That apart, judicial notice has been taken of the fact that the salaries

of those who are employed in private sectors also with the passage of time increase manifold. In Rajesh’s case, the Court had added 15% in the

case where the victim is between the age group of 15 to 60 years so as to make the compensation just, equitable, fair and reasonable. This addition

has been made in respect of self employed or engaged on fixed wages.

57.Section 168 of the Act deals with the concept of “just compensation†and the same has to be determined on the foundation of fairness,

reasonableness and equitability on acceptable legal standard because such determination can never be in arithmetical exactitude. It can never be

perfect. The aim is to achieve an acceptable degree of proximity to arithmetical precision on the basis of materials brought on record in an individual

case. The conception of “just compensation†has to be viewed through the prism of fairness, reasonableness and non violation of the principle of

equitability. In a case of death, the legal heirs of the claimants cannot expect a windfall. Simultaneously, the compensation granted cannot be an

apology for compensation. It cannot be a pittance. Though the discretion vested in the Tribunal is quite wide, yet it is obligatory on the part of the

Tribunal to be guided by the expression, that is, “just compensationâ€. The determination has to be on the foundation of evidence brought on record

as regards the age and income of the deceased and thereafter the opposite multiplier to be applied. The formula relating to multiplier has been clearly

stated in Sarla Verma (supra) and it has been approved in Reshma Kumari (supra). The age and income, as stated earlier, have to be established by

adducing evidence. The Tribunal and the Courts have to bear in mind that the basic principle lies in pragmatic computation which is in proximity to

reality. It is a well accepted norm that money cannot substitute a life lost but an effort has to be made for grant of just compensation having uniformity

of approach. There has to be a balance between the two extremes, that is, a windfall and the pittance, a bonanza and the modicum. In such an

adjudication, the duty of the Tribunal and the Courts is difficult and hence, an endeavour has been made by this Court for standardization which in its

ambit includes addition of future prospects on the proven income at present. As far as future prospects are concerned, there has been standardization

keeping in view the principle of certainty, stability and consistency. We approve the principle of “standardization†so that a specific and certain

multiplicand is determined for applying the multiplier on the basis of age.

58.The seminal issue is the fixation of future prospects in cases of deceased who is self-employed or on a fixed salary. Sarla Verma (supra) has

carved out an exception permitting the claimants to bring materials on record to get the benefit of addition of future prospects. It has not, per se,

allowed any future prospects in respect of the said category.

59.Having bestowed our anxious consideration, we are disposed to think when we accept the principle of standardization, there is really no rationale

not to apply the said principle to the self employed or a person who is on a fixed salary. To follow the doctrine of actual income at the time of death

and not to add any amount with regard to future prospects to the income for the purpose of determination of multiplicand would be unjust. The

determination of income while computing compensation has to include future prospects so that the method will come within the ambit and sweep of

just compensation as postulated under Section 168 of the Act. In case of a deceased who had held a permanent job with inbuilt grant of annual

increment, there is an acceptable certainty. But to state that the legal representatives of a deceased who was on a fixed salary would not be entitled to

the benefit of future prospects for the purpose of computation of compensation would be inapposite. It is because the criterion of distinction between

the two in that event would be certainty on the one hand and staticness on the other. One may perceive that the comparative measure is certainty on

the one hand and uncertainty on the other but such a perception is fallacious. It is because the price rise does affect a self-employed person; and that

apart there is always an incessant effort to enhance one’s income for sustenance. The purchasing capacity of a salaried person on permanent job

when increases because of grant of increments and pay revision or for some other change in service conditions, there is always a competing attitude

in the private sector to enhance the salary to get better efficiency from the employees. Similarly, a person who is self-employed is bound to garner his

resources and raise his charges/fees so that he can live with same facilities. To have the perception that he is likely to remain static and his income to

remain stagnant is contrary to the fundamental concept of human attitude which always intends to live with dynamism and move and change with the

time. Though it may seem appropriate that there cannot be certainty in addition of future prospects to the existing income unlike in the case of a

person having a permanent job, yet the said perception does not really deserve acceptance. We are inclined to think that there can be some degree of

difference as regards the percentage that is meant for or applied to in respect of the legal representatives who claim on behalf of the deceased who

had a permanent job than a person who is self-employed or on a fixed salary. But not to apply the principle of standardization on the foundation of

perceived lack of certainty would tantamount to remaining oblivious to the marrows of ground reality. And, therefore, degree-test is imperative. Unless

the degree-test is applied and left to the parties to adduce evidence to establish, it would be unfair and inequitable. The degree-test has to have the

inbuilt concept of percentage. Taking into consideration the cumulative factors, namely, passage of time, the changing society, escalation of price, the

change in price index, the human attitude to follow a particular pattern of life, etc., an addition of 40% of the established income of the deceased

towards future prospects and where the deceased was below 40 years an addition of 25% where the deceased was between the age of 40 to 50

years would be reasonable.

60.The controversy does not end here. The question still remains whether there should be no addition where the age of the deceased is more than 50

years. Sarla Verma thinks it appropriate not to add any amount and the same has been approved in Reshma Kumari. Judicial notice can be taken of

the fact that salary does not remain the same. When a person is in a permanent job, there is always an enhancement due to one reason or the other.

To lay down as a thumb rule that there will be no addition after 50 years will be an unacceptable concept. We are disposed to think, there should be an

addition of 15% if the deceased is between the age of 50 to 60 years and there should be no addition thereafter. Similarly, in case of self employed or

person on fixed salary, the addition should be 10% between the age of 50 to 60 years. The aforesaid yardstick has been

fixed so that there can be consistency in the approach by the Tribunals and the courts.

61.In view of the aforesaid analysis, we proceed to record our conclusions:-

(i)The two-Judge Bench in Santosh Devi should have been well advised to refer the matter to a larger Bench as it was taking a different view than

what has been stated in Sarla Verma, a judgment by a coordinate Bench. It is because a coordinate Bench of the same strength cannot take a

contrary view than what has been held by another coordinate Bench.

(ii)As Rajesh has not taken note of the decision in Reshma Kumari, which was delivered at earlier point of time, the decision in Rajesh is not a binding

precedent.

(iii)While determining the income, an addition of 50% of actual salary to the income of the deceased towards future prospects, where the deceased

had a permanent job and was below the age of 40 years, should be made. The addition should be 30%, if the age of the deceased was between 40 to

50 years. In case the deceased was between the age of 50 to 60 years, the addition should be 15%. Actual salary should be read as actual salary less

tax.

(iv)In case the deceased was self-employed or on a fixed salary, an addition of 40% of the established income should be the warrant where the

deceased was below the age of 40 years. An addition of 25% where the deceased was between the age of 40 to 50 years and 10% where the

deceased was between the age of 50 to 60 years should be regarded as the necessary method of computation. The established income means the

income minus the tax component.

(v)For determination of the multiplicand, the deduction for personal and living expenses, the Tribunals and the courts shall be guided by paragraphs 30

to 32 of Sarla Verma which we have reproduced hereinbefore.

(vi)The selection of multiplier shall be as indicated in the Table in Sarla Verma read with paragraph of that judgment.

(vii)The age of the deceased should be the basis for applying the multiplier.

(viii)Reasonable figures on conventional heads, namely, loss of estate, loss of consortium and funeral expenses should be Rs. 15,000/-, Rs. 40,000/-

and Rs. 15,000/-respectively. The aforesaid amounts should be enhanced at the rate of 10% in every three years.â€​

10.While applying ratio of aforesaid law laid down by the Hon’ble Apex Court in Pranay Sethi’s case, amounts awarded under the various

heads i.e. funeral expenses, loss of love and affection, loss of estate and loss of consortium, need to be re-assessed. Accordingly, the amount awarded

qua the funeral expenses, loss of estate and loss of consortium is modified to `15,000/-, `15,000/- and `40,000/- instead of `25,000/-, `1,00,000/- and

`1,00,000/-, as awarded by the learned MACT below. As has been observed above, no amount, if any, could be awarded under the head of “loss of

love and affection†and as such, amount award qua the same is quashed and set-aside. Consequently, in view of the aforesaid modifications made

hereinabove, now the respondents-claimants No.1 to 6 shall be entitled to following amount:- Compensation for dependency = ` 16,12,800/

Funeral expenses        =         `15,000/-.

Loss of consortium     =         `40,000/-

Loss of estate  =         `15,000/-

Total   16,82,800      Â

11.Though, reliance placed on the judgment rendered by the Hon’ble Apex Court in Laxmidhar Nayak (Supra), by learned counsel representing

the appellant-Insurance company in support of his contention that learned Tribunal below has fallen in grave error while awarded 9% rate of interest

to the claimants on the awarded amount, is wholly misplaced because there is no thumb rule/law that interest on the compensation/awarded amount

cannot be awarded at the rate of 9%, however, in the given facts and circumstances of the case, interest awarded at the rate of 9% is modified to

7.5% and as such, claimants shall be entitled to interest at the rate of 7.5% on the awarded amount. The award amount shall be apportioned among

the claimants/respondents No. 1 to 6 as under:-

1.Smt. Vimla Devi, wife of late Sh. Mast Ram Rs. 3,90,000/-

(including consortium)

2.Kumari Shalu, D/o late Sh. Mast Ram          Rs. 3,00,000/-

3.Master Abhishek son of late Sh. Mast Ram Rs. 3,00,000/-

4.Master Ankush son of late SH. Mast Ram   Rs. 3,00,000/-

5.Smt. Ganga Devi, mother of late Sh.Mast Ram        Rs.2,50,000/-

6.Sh. Dhani Ram, father of late Sh. Mast Ram Rs. 1,42,800/-

12.Needless to say, the amount awarded in favour of respondents/claimants No. 2 to 4(minor) shall be invested in their names, in the fixed deposit, till

their attaining the age of majority.

13.Consequently, in view of the detailed discussion made hereinabove and law laid down by the Hon’ble Apex Court, present appeal is partly

allowed and the impugned award passed by the  learned MACT below is modified to the aforesaid extent only. Present appeal is disposed of, so also

pending applications, if any.