The New India Assurance Company vs Smt.Kala Devi & Others

Sandeep Sharma,J.

1.Instant appeal emanates from award dated 30.5.2017 passed by Motor Accident Claims Tribunal-II, Kinnaur at Rampur Bushahr, H.P. in MAC

Petition No.56-R/2 of 2015, whereby petition under Section 166 of the Motor Vehicles Act having been filed by respondents No.1 to 3 (hereinafter

referred to as the ‘claimants’), seeking therein compensation on account of death of Ved Prakash came to be allowed. On 19th July, 2014

persons; namely; Mast Ram and Ved Prakash had hired vehicle bearing No.HP-06A-4287 from Rampur to Gaura Mashnoo, to carry welding

machine and other welding material. Unfortunately, when vehicle reached near Rattanpur at about 6.00 P.M., it met with an accident, as a result of

which both the occupants of the vehicle; namely Mast Ram and Ved Prakash, died on the spot. Driver of the offending vehicle also died on the spot.

In the aforesaid background, claimants, claiming themselves to be the dependants of deceased Ved Prakash, filed claim petition, seeking therein

compensation to the tune of Rs.50 lacs on account of death of deceased Ved Prakash.

2.Appellant-Insurance Company refuted the claim of the claimants and claimed before Tribunal below that offending vehicle was being driven in

violation of terms and conditions of the insurance policy. Appellant-Insurance Company also claimed that driver of the vehicle was not having valid

and effective driving licence and as such it is not liable to indemnify the insured.

3.Though respondent No.4 i.e. owner of the vehicle, claimed that the vehicle in question was comprehensively insured with respondent No.1, but

categorically stated that monthly income of deceased Ved Prakash as reflected in claim petition has been exaggerated to claim higher compensation.

5.Learned Tribunal below, on the basis of evidence led on record by respective parties, allowed the claim petition vide award dated 30.5.2017 and held

respondents-claimants entitled to the compensation to the tune of Rs.17,65,000/-alongwith interest @ 9% per annum from the date of filing of petition

till final realization of amount.

6.In the aforesaid background, appellant-Insurance Company, being aggrieved and dissatisfied with the impugned award, has approached this Court

with a prayer to set aside the same.

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

facts and, as such, is liable to be set aside. While referring to the impugned award, Mr.Chauhan made an attempt to persuade this Court to agree with

his contention that Tribunal below, while accepting the claim petition having been filed by the claimants, has failed to appreciate the evidence in its

right perspective, as a consequence of which erroneous findings to the detriment of appellant-Insurance Company have come on record. Mr.Chauhan

contended that learned Tribunal below, while deciding issue No.1, has erroneously held that accident occurred because of rash and negligent driving

by the driver of the offending vehicle. While placing reliance upon judgment rendered by Hon’ble Apex Court in National Insurance Company

Limited vs. Pranay Sethi and Others, AIR 2017 SC 5157, Mr.Chauhan contended that learned Tribunal below has erred in law in awarding 50%

increase over and above the income assessed by it to assess future prospects. He further contended that in terms of aforesaid judgment passed by

Hon’ble Apex Court, no amount, if any, could be awarded under the head of “love and affection†and, as such, award made in this regard

deserves to be quashed and set aside. Mr.Chauhan also stated that in terms of judgment rendered by Hon’ble Apex Court in Pranay Sethi’s

case supra only an amount of Rs.40,000/- could be awarded on account of “loss of consortium†to the wife of the deceased, whereas, in the

instant case, an amount of Rs.1,00,000/- has been awarded under this head. Mr.Chauhan further contended that learned Tribunal has erred in

awarding Rs.25,000/- on account of funeral expenses and a sum of Rs.1,00,000/- on account of loss of estate to the respondents-claimants, whereas,

in the instant case, in terms of Pranay Sethi’s case supra, only a sum of Rs.15,000/- could be awarded, on account of funeral expenses and

Rs.15,000/- on account of loss of estate.

8.Ms.Bhavita Kumari, learned counsel representing the respondents supported the impugned award and contended that there is no illegality and

infirmity in the impugned award and as such same deserves to be up held. Learned counsel, while inviting the attention of this Court to evidence led on

record by respective parties, strenuously argued that the appellant-Insurance Company has miserably failed to prove its case and as such award being

strictly in consonance with evidence as well as law needs to be upheld. While referring to the quantum of compensation, learned counsel contended

that it stands duly proved on record that deceased was earning Rs.8,000/- per month and, as such, there is no force in the arguments of learned

counsel appearing for the appellant-Insurance Company that learned Tribunal below wrongly made addition @ 50% while computing future

prospectus. However, learned counsel representing the respondents-claimants fairly conceded that claimants are entitled to Rs.15,000/- on account of

funeral expenses and Rs.40,000/- on account of loss of consortium. However, learned counsel representing respondents-claimants No.1 to 3

categorically disputed the contention put forth by learned counsel representing the appellant-Insurance Company that no amount could be allowed to

the respondents-claimants on the head of “loss of love and affectionâ€​.

9.Having heard learned counsel representing the parties and perused the record, this Court is not inclined to agree with the submissions having been

made by learned counsel representing the appellant-Insurance Company that learned Tribunal below erred in concluding that deceased Ved Prakash

died in accident due to rash and negligent driving of driver of the offending vehicle. Similarly, this Court finds from the evidence led on record by the

respective parties that onus to prove that the deceased driver of the offending vehicle was not possessing valid and effective driving license at the time

of accident was upon appellant-Insurance Company, who has not been able to discharge the aforesaid onus, rather it stands duly proved on record that

Amar Singh i.e. driver of the offending vehicle was having valid and effective driving licence.

10.Having carefully perused the judgment rendered by Hon’ble Apex Court in Pranay Sethi’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 affection†by the Tribunal below while assessing the compensation on account of death of deceased Ved Prakash.

Hon’ble Apex Court in the judgment supra has categorically held that head relating to “loss of care and guidance for the minor children†does

not exist. As per judgment passed by Hon’ble Apex Court, there are only three conventional heads i.e. “loss of estate, loss of consortium and

funeral expensesâ€. Amounts payable under aforesaid heads have further been quantified in the judgment. At this stage, it would be profitable to take

note of the following paras of Pranay Sethi’s case supra:

“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. In Santosh Devi (supra),

the two-Judge Bench followed the traditional 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 socio-economic 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 beenÂ

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,   tc. 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  oss 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 otherwiseÂ

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  hat 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 (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 another38 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 â€

-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 apposite 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 42 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€​

11.While applying ratio of aforesaid law laid down by the Hon’ble Apex Court in Pranay Sethi’s case supra, 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 Rs.15,000/-, Rs.15,000/- and Rs.40,000/- instead of Rs.25,000/-,

Rs.1,00,000/- and Rs.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 “loss of love and affectionâ€​ and as such, amount award qua the same is quashed and set aside.

12.Similarly, this Court finds that learned Motor Accident Claims Tribunal below, while applying the law laid down by Hon’ble Apex Court in

Rajesh and Others vs. Rajbir Singh and Others, (2013)9 SCC 54, has enhanced the proved income of deceased by 50%, whereas in terms of latest

judgment passed by Hon’ble Apex Court in Pranay Sethi’s case supra, 40% additional income was required to be made in the case where

deceased was self employed or on a fixed salary and was between the age of 40 to 50 years. Admittedly, in the instant case, deceased was 36 years

of age and his proved income is Rs.8,000/- per month. Since he was self-employed and was below the age of 40 years, an addition of 40% of

established income should have been made by Tribunal below while computing the future prospects. By enhancing income of deceased by 40% of his

established income, his income comes out to Rs.11,200/- per month (Rs.8,000 + Rs.3,200 = Rs.11,200). Since deceased was having three dependants,

his 1/3rd income was liable to be deducted from his income for his personal expenses, his contribution towards the family comes to Rs.7,466/-

(Rs.11,200 â€" Rs.3,734 =Rs.7,466). After applying multiplier of 15, loss of dependency comes out to Rs.7,466 x 12 x 15 = Rs.13,43,880). In view of

aforesaid modification, claimants shall be entitled to a sum of Rs.13,43,880/- on account of loss of dependency.

13.In view of aforesaid modification made under various heads by this Court, while applying ratio of law laid down by the Hon’ble Apex Court in

Pranay Sethi’s case supra, respondents-claimants shall be entitled to the following amount:

Compensation for dependency           =         Rs.13,43,880

Funeral expenses        =                                 Rs.15,000

Loss of consortium     =                                Rs.40,000

Loss of estate  =                                           Rs.15,000

Total   =                                                Â

Rs.14,13,880

14.Though, reliance placed on the judgment rendered by the Hon’ble Apex Court in Laxmidhar Nayak and Others vs. Jugal Kishore Behera and

Others in Civil Appeal No.19856 of 2017 (arising out of SLP(C) No.31405 of 2016), by learned counsel representing the appellant-Insurance

Company in support of his contention that learned Tribunal below has fallen in grave error while awarding 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.

15.The award amount shall be apportioned among the claimants-respondents No.1 to 3 as under:-

1.Smt.Kala Devi, widow of deceased :          Rs.      7,26,940

(including consortium)Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â

2.Smt.Himi Devi, mother of deceased :          Rs.      4,67,120

3.Sh.Sain Ram, father of deceased     :          Rs.      2,19,820

Total:Â Â Â Â Â Â Â Â Â Â Â Â Â Â Rs.14,13,880

16.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 Motor Accident Claims Tribunal below is modified to the aforesaid extent only. Present

appeal is disposed of, so also pending applications, if any.