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Judgment
P.P.S. Janarthana Raja, J.—The appeal is preferred by the Appellant-Insurance Company against judgment and Decree dated 30.06.2008
made in M.C.O.P. No. 211 of 2006, on the file of Motor Vehicles Accidents Claims Tribunal, Subordinate Judge, Sankari.
Background facts in a nutshell are as follows:
One deceased Alaudeen met with an motor vehicle accident on 02.02.2006 at about 7.30 p.m. The said deceased was proceeding in his Bajaj M-
80 bearing registration No. TN-33-U-5701 in Bhavani Perundurai Main Road. When he was nearing in front of the shop of the said deceased, at
that time a Maxi Cab Mahindra Van bearing Registration No. TN-45-P-2831 belonging to the 6th Respondent and insured with the Appellant-
Insurance Company came in a rash and negligent manner and also at high speed and hit the deceased. Due to the same, the deceased sustained
fatal injuries. Immediately he was taken to the hospital, where he died later. The claimants are wife, 2 minor children and parents of the deceased.
They claimed a sum of Rs. 17,00,000/-as compensation. The Appellant-Insurance Company resisted the claim. On pleadings the Tribunal framed
the following issues:
Whether the accident had occurred due to the rash and negligent driving of the driver of the van insured with the Appellant-Insurance
Company?
Whether the claimants are entitled to compensation? If so, what is the amount?
After considering the oral and documentary evidence, the Tribunal held that the accident occurred only due to rash and negligent driving of the
driver of the van and awarded a compensation of Rs. 14,09,846/-with interest at 7.5% per annum from the date of the claim petition and the
details of the same are as under:
Loss of income to the family Rs. 10,20,000/-
Loss of consortium Rs. 20,000/-
Loss of love and affection
to children Rs. 20,000/-
Medical Expenses Rs. 3,19,846/-
For mental agony Rs. 20,000/-
Funeral expenses Rs. 10,000/-
Total Rs. 14,09,846/-
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. Further it was argued that
the Tribunal was wrong in awarding a sum of Rs. 10,20,000/-for loss of income to the family and a sum of Rs. 10,000/-towards funeral expenses.
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 5/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 counsel and perused the documents available on record. On the side of the claimants P Ws.1 to 2 were examined and documents
Exs.P1 to P20 were marked. On the side of the Appellant-Insurance Company no one was examined and no document was marked to
substantiate their claim. PW1 is the wife of the deceased Alaudeen. PW2 one Khadher Mohideen is the eye witness to the accident. Ex.P1 is the
copy of the First Information Report dated 03.02.2006. Ex.P2 is the Copy of the Post-mortem certificate dated 13.03.2006. Ex.P3 is the Motor
Vehicle Inspector''s Report dated 08.02.2006. Ex.P4 is the Motor Vehicle Inspector''s Report dated 03.02.2006. Ex.P5 is the Copy of the
Charge Sheet dated 19.06.2006. Ex.P6 is the Death Certificate dated 19.06.2006. Ex.P7 is the Legal Heir Certificate dated 20.07.2006. Ex.P8
is the Driving Licence of the deceased Alaudeen. Ex.P9 is the Medical Bills. Ex.P10 is the Treatment and Death Summary. Ex.P11 is the School
Transfer Certificate of Alaudeen dated 01.08.2006. Ex.P12 is the Industrial Registration Certificate dated 19.12.1996. Ex.P13 is the Industrial
Registration Certificate dated 01.12.2005. Ex.P14 is the Receipts for purchase of Spare Parts dated 22.02.1997. Ex.P15 is the Receipt for
purchase of Trade Rubber dated 30.07.1998. Ex.P16 is the Receipts for payment of loan amount. Ex.P17 is the Visiting Card. Ex.P18 is the
Labour Bills. Ex.P19 is the Accounts Book of Chennimalai Co-operative City Bank. Ex.P20 is the Receipts for payment of loan amount. 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 van and 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,
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 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 Thomas, M.N. Venkatachaliah, J. SCC 181 (as His Lordship then was) had observed that:
...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 Alaudeen was aged about 34 years. P.W.1, the wife of the deceased deposed that he was running a
Tyre Re-trading, Vulcanising and Puncture shop and was earning about Rs. 10,000/-per month. Ex.P11 is the School Transfer Certificate of the
deceased, in which the Date of Birth of the Deceased was mentioned as 30.06.1971. After considering the same, the Tribunal fixed the age of the
deceased at 34 years at the time of the accident. In respect of the income, there is no concrete evidence available to prove that the deceased was
earning a sum of Rs. 10,000/-per month. After considering the Exhibits P12, P13, P14, P15, P16, P17 and P18, the Tribunal fixed the monthly
income of the deceased at Rs. 7,500/-and determined the annual income at Rs. 90,000/-. Out of the said sum, the Tribunal deducted 1/3rd
towards personal expenses viz.,90,000/-x 1/3 = Rs. 30,000/-and arrived at an amount of Rs. 60,000/-(Rs. 90,000-Rs.30,000) as the deceased''s
annual contribution to the family. The Tribunal, after taking into consideration the age of the deceased Alaudeen as 34 years at the time of the
accident, has adopted the multiplier of 17 and arrived at the loss of income at Rs. 10,20,000/-(Rs. 60,000/-x 17). The learned Counsel appearing
for the Appellant-Insurance Company vehemently contented that the Tribunal is wrong in fixing the monthly income of the deceased at Rs. 7,500/-.
After considering the oral and documentary evidence I am of the view that, it is reasonable to fix the monthly income at Rs. 6,000/-. Out of the
said sum if 1/3rd is deducted towards personal expenses, the balance sum of Rs. 4,000/-is taken as the monthly contribution to his family. There is
no dispute regarding the multiplier adopted by the Tribunal and the multiplier of 17 was adopted, the loss of income is computed as follows: Rs.
4,000/-X 12 X17 = Rs. 8,16,000/-. The claimants are entitled to Rs. 8,16,000/-towards loss of income as against the sum of Rs. 10,20,000/-
awarded by the Tribunal. The Tribunal has awarded a sum of Rs. 20,000/-towards loss of consortium which I feel is very reasonable since the
widow was only 27 years old at the time of the accident and the same is confirmed. The Tribunal has awarded a sum of Rs. 20,000/-towards loss
of love and affection for children, which I feel is very reasonable since there are two minor children and the same is confirmed. The Tribunal has
awarded a sum of Rs. 20,000/-towards mental agony, which I feel is very reasonable and the same is confirmed. The Tribunal has awarded a sum
of Rs. 10,000/-towards funeral expenses. The learned Counsel for the Appellant-Insurance Company vehemently contented that the amount of Rs.
10,000/-awarded for funeral expenses is excessive. Hence it is reduced to Rs. 5,000/-as against the sum of Rs. 10,000/-awarded by the Tribunal.
The Tribunal has awarded a sum of Rs. 3,19,846/-for medical expenses. It is an actual expenditure incurred by the deceased. There is no dispute
in awarding the amount under this head since immediately after the accident the deceased was taken to Ramakrishna hospital, Coimbatore and
took treatment for 40 days. Ex.P9 is the series of medical bills. Therefore, the amount awarded by the Tribunal under this head is very reasonable
and the same is confirmed. The Tribunal has fixed the rate of interest at 7.5% p.a from the date of petition. The date of accident is 02.02.2006.
Keeping in view the prevailing rate of interest at the time of the accident, and the date of award, I feel that the 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. 8,16,000/-
Loss of consortium Rs. 20,000/-
Loss of love and affection
to children Rs. 20,000/-
Medical Expenses Rs. 3,19,846/-
For mental agony Rs. 20,000/-
Funeral expenses Rs. 5,000/-
Total Rs. 12,00,846/-
Rounded off to Rs. 12,00,000/-
Therefore, the claimant is entitled to the modified compensation of Rs. 12,00,000/-as against the compensation of Rs. 14,09,846/-awarded by the
Tribunal.
It is represented by the learned Counsel appearing for the Appellant-Insurance Company that the Appellant-Insurance Company has already
deposited Rs. 11,00,000/-with interest as per the order of this Court dated 04.03.2009. Under these circumstances, the Appellant-Insurance
Company is directed to deposit the balance amount of Rs. 1,00,000/-with interest of 7.5% within four weeks from the date of receipt of a copy of
this order. On deposit of the said sum, the claimants 1, 4 and 5 are permitted to withdraw their respective shares in the modified compensation of
Rs. 12,00,000/-(Rupees Twelve Lakhs Only) with 7.5% interest, less the amount, if any, already withdrawn on making proper application. The
share of the minor claimants are directed to be deposited in Fixed Deposit in anyone of the Nationalised Bank till they attain majority. The mother
of the minor children, the first Respondent herein is permitted to withdraw the accrued interest thereon once in three months.
With the above modification, the Civil Miscellaneous Appeal is