Bombay High Court
United India Insurance Company ... vs Mr. Manjari Dilip Chunekar And Ors on 11 September, 2015
Bench: A.S. Oka
fa.91.15.doc
SQP IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CIVIL APPELLATE JURISDICTION
FIRST APPEAL NO. 91 OF 2015
United India Insurance Company Ltd.,
Motor Third Party HUB RO-2,
5th Floor, Union Cooperative Insurance Building,
Sir P.M. Road, Fort, Mumbai - 400 001
(Original Opposite Party No.2) ...Appellant
Versus
1. Manjari Dilip Chunekar,
Age - 42 years
(Original Applicant No. 1)
2. Kshitija Dilip Chunekar,ig
Age : 20 years
(Original Appliant No. 2)
Both R/at Hemashree Apartment
Charai, Thane
3. Sushila Madhukar Chunekar,
Age : 70 years,
R/at 1994, Sadashivpeth,
Modiwale Colony,
Pune - 411 030
(Original Applicant No. 3)
4. Shahaji Hindurao Malik,
269, Mangalwarpeth, Karad
(Owner of MTL 5919)
(Original Opposite Party No.1) ...Respondents
Mr. Rahul Mehta I/b KMC Legal Venture for the Appellant in FA/91/2015
and for Applicant in CAF/1753/2014
Mr. Sunil S. Bhide for the Respondent Nos. 1 to 3
SQ Pathan 1/44
::: Uploaded on - 11/09/2015 ::: Downloaded on - 11/09/2015 23:58:16 :::
fa.91.15.doc
CORAM : A. S. OKA &
REVATI MOHITE DERE, JJ.
RESERVED ON : 24th JUNE, 2015
PRONOUNCED ON : 11th SEPTEMBER, 2015
JUDGMENT (Per Revati Mohite Dere, J.) :
1. This is an appeal filed by the Insurance Company challenging
the judgment and award dated 21st October, 2013, by which the learned
District Judge-6, an Additional Member, MACT, Thane was pleased to
award compensation of Rs. 88,46,000/- to the respondent-claimants, with
interest @ 12% per annum (p.a.), from the date of filing of the claim
petition till realization.
2. Considering the nature of controversy and the fact that the
claim petition is of 1996, the appeal deserves to be taken up for final
hearing forthwith. Accordingly, parties were put to notice earlier.
3. The learned Counsel for the appellant has impugned the
aforesaid judgment and award on several counts- (i) that the issue of
negligence has not been proved; (ii) that the last income tax return filed by
SQ Pathan 2/44
fa.91.15.doc
the deceased for the year 1996-97 ought not to have been considered, as the
same was filed after the demise of the deceased; (iii) that the income of the
deceased has not been properly calculated by the Tribunal, keeping in mind
the pronouncements of the Apex Court in that regard and has erroneously
come to the conclusion that the deceased was drawing a salary of Rs.
60,000/- per month, in the absence of any material to substantiate the
same; and (iv) that the interest awarded to the respondent-claimants was
exorbitant and contrary to the well settled principles laid down in motor
accident cases.
4. The learned Counsel for the respondent-claimants supported
the impugned judgment and award. He contended that the first respondent-
claimant had brought on record all the documents on the basis of which the
award was passed and that evidence was adduced in support of the same.
He further submitted that the leave to defend granted to the appellant under
Section 170 of the Motor Vehicles Act, 1988 (`M. V. Act') was contrary to
the provision, as it was not a reasoned order and as such the appeal filed
under Section 173 of the M. V. Act, was not maintainable.
SQ Pathan 3/44
fa.91.15.doc
5. Before we deal with the submissions advanced by the learned
Counsel for the parties, it would be necessary to advert to the facts and the
evidence that has come on record in the present case.
Deceased Dilip Madhukar Chunekar was the husband of the
first respondent, father of the second respondent and the son of the third
respondent. On 30th March, 1996, Dilip Chunekar, his brother Satish, sister-
in-law Madura Chunekar, brother-in-law Anil and maternal brother Suresh
Madhukar Athalye were proceeding in a car, bearing No. BLD/2931 from
Pune to Satara to meet the ailing father of the deceased. The deceased was
driving the car at the relevant time. When the vehicle reached Shirvar near
Pune-Satara Road, there was a traffic jam and all vehicles had come to a
halt. A truck bearing No. MTQ/8521 was ahead of the vehicle, driven by
the deceased and was in a stationary condition. Dilip Chunekar also
stopped his vehicle behind the said truck. A truck bearing No. MTL/5919,
suddenly came from behind in excessive speed and rammed into the
vehicle driven by the deceased Dilip. The said truck was being driven in a
rash and negligent manner, resulting in the collision with the vehicle,
driven by the deceased. As a result of the impact, the car of the deceased
SQ Pathan 4/44
fa.91.15.doc
rammed into the stationary vehicle standing ahead resulting in fatal injuries
to the deceased and his sister-in-law Smt. Madura and grievous injuries
to the other co-passengers in the vehicle. According to the respondent-
claimants, due to the gross negligence of the driver of the vehicle i.e. truck
No. MTL/5919, the aforesaid accident took place, resulting in the untimely
deaths of Dilip and Madura. A criminal case was registered as against the
driver of the offending vehicle. It is not in dispute that the driver of the
offending truck bearing No. MTL/5919 was convicted in the said case.
Pursuant to the said accident, the respondent-claimants filed a claim
petition before the Tribunal, Thane being MACT Application No. 1012 of
1996. The said claim petition was filed in the year 1996 as against the
owner of the truck Shahaji Hindurao Mulik i.e. the fourth respondent and
the present appellant. The compensation sought in the claim petition, was
Rs. 50,00,000/- . It appears, that subsequently as the owner of the vehicle
did not contest the said petition, the appellant company sought leave to
defend under Section 170 of the M. V. Act, which came to be granted by
the Tribunal vide order dated 20th January, 2003. Thereafter, an
application came to be filed by the respondent-claimants seeking
amendment of the claim petition. The said application was filed on 29 th
SQ Pathan 5/44
fa.91.15.doc
January, 2011. The material amendments sought were set out in the
Schedule to the amendment, annexed to the said application. Clauses (5)
and (8) of the said Schedule read thus :
"5. In para 5 Monthly Income of the deceased may be
permitted to be amended from `Rs. 25,000/- to Rs. 30,000/-
pm' to `Rs.45,000/- pm'."
"8. In para 13, 14(g) & in prayer (a) amount of
compensation claimed `Rs.50,00,000' be deleted &
`Rs.1,50,00,000' (Rupees One Crore Fifty Lacs Only) be
inducted."
The said amendment application was opposed by the appellant
- Insurance Company. The Tribunal was however, pleased to allow the
said amendment application, being Exhibit 141 vide order dated 16 th
January, 2012. Accordingly, permission was granted to the respondent -
claimants to make necessary amendments as sought for, in the said
application. In view of the amendment, the appellant company was
permitted to cross-examine the first respondent-claimant. The respondent-
claimants in order to prove their claim, examined the first respondent;
Satish Madhukar Chunekar - the brother of the deceased on the point of
negligence; Mukund Chandrakant Bhise, Chartered Accountant and Shri
Avinash Mehendale, Chartered Accountant.
SQ Pathan 6/44
fa.91.15.doc
Manjiri Chunekar, wife of the deceased filed her affidavit of
evidence in August, 2005. In her affidavit, she has stated that the accident
took place on 30th March, 1996. She has stated that when the vehicle
which was driven by her husband (deceased) stopped behind the stationery
truck, the offending truck came from behind in an excessive speed, and in
a rash and negligent manner rammed into her husband's stationery vehicle,
resulting in the car being sandwiched between the stationery truck standing
ahead and the offending vehicle. It is stated that due to the negligence of
the driver of the offending truck, her husband and sister-in-law suffered
fatal injuries and the other co-passengers in the car received grievous
injuries. She has stated that her husband at the relevant time was 44 years
of age and was in good health. She has further stated that her deceased
husband had set up his own business in the year 1984 in the name and style
of `Micro-Med (India) Ltd.' and that he was the proprietor of the said
company. She has further stated that the deceased had also started another
company in the name and style of `M/s. Don Whitely Scientific
Equipments Pvt. Ltd.' in the year 1989 and that she and her deceased
husband were Directors of the said Company. According to the first
respondent, the deceased was earning Rs. 4,00,000/- annually from the said
SQ Pathan 7/44
fa.91.15.doc
business. She has further stated that they were dependent on the deceased
and that on account of his untimely death, they had lost monthly/annual
income. She has further stated that the accident in which her husband died,
was a result of the sole negligence of the driver of the offending truck and
hence, claimed damages under various heads, from the owner of the vehicle
i.e. the fourth respondent and the present appellant. In addition to the
affidavit of evidence filed, the first respondent - claimant was also
examined by her Advocate, wherein, she produced her affidavit of evidence
being Exhibit 35, the certified copy of the FIR, spot panchnama, inquest
panchnama, post-mortem notes, death certificate, which were marked as
Exhibits 36 to 40. She also produced a copy of the insurance policy, which,
by consent was marked as Exhibit 41. She also produced the RTO report,
which was marked as `Article A'. She also produced the income tax returns
for the year 1994-95; 1995-96 and 1996-97 which were marked initially as
Articles B, C and D respectively and later as Exhibits 43, 44 and 45.
Pursuant to the leave to defend granted to the appellant vide order dated
20th January, 2003, the first respondent-claimant was cross-examined at
length. In her cross-examination, the first respondent has stated that
presently, she was running the business of Micro-Med (India) Ltd. and Don
SQ Pathan 8/44
fa.91.15.doc
Whitely Scientific Equipments Pvt. Ltd.; that Micro-Med (India) Ltd. was a
proprietary concern of her husband and that she took over the business,
after her husband's death in the road accident; that she too was a Director
of `Don Whitely Scientific Equipments' along with her husband; and that
after his death, the second respondent was taken as a Director; that the
business of Micro-Med (India) Ltd., a partnership concern, is now being
run by her and her daughter Kshitija, and that they were the partners; that
the shares standing in her husband's name were transferred in her and her
daughter's name; that Micro-Med (India) Ltd. was not involved in any
manufacturing activity, but was involved in controlling of hospital
infections, by way of testing and consultations; and that `M/s. Don Whitely
Scientific Equipments Pvt. Ltd.' was involved in the manufacturing of
medical equipments; that during the lifetime of her husband, the proprietary
concern `Micro-Med (India) Ltd.' was also manufacturing microbiological
equipments, however, the manufacturing activity had to be stopped after
his demise; and that the activity of the partnership firm is now restricted
only to consultancy activities. She has admitted that the entire affairs of
the company were being managed by her deceased husband and herself.
She has also admitted that the return for the assessment year 1996-97 was
SQ Pathan 9/44
fa.91.15.doc
signed by her on behalf of her husband, six months after his demise. She
has in her cross-examination also stated that the business of Micro-Med
was being run from 1984 and that she is ready to produce balance-sheets
of profit and loss account, of both the businesses from the year 1991-92
onwards. She has accepted that for the year ending 31 st March, 2004, the
net profit was Rs. 4,00,000/- and that the profit of the firm `Micro-Med'
was between Rs. 40,000/- and Rs. 50,000/- during the same period. She has
denied the suggestion made by the appellant's counsel,
ig that after the
demise of her husband, the income from both the businesses had not
adversely affected them. The first respondent has in fact volunteered in her
cross-examination and deposed that if the deceased was alive, due to his
business skills and acumen, the businesses would have attained
international reputation and the income there from, would have multiplied
by number of years. She has stated that after her husband's demise, the
business has just survived and that there is no noticeable increase in the
income. She has also deposed that the entire income from the businesses is
split between her and her daughter, who is married.
The respondent-claimants examined Satish Chunekar, the
SQ Pathan 10/44
fa.91.15.doc
brother of the deceased and an eye-witness of the accident. The said
witness has deposed with regard to the manner in which the accident took
place; how the offending truck had come in a very fast speed, ten minutes
after their car had come to a halt; and the manner in which the said
offending vehicle dashed into their car in a rash and negligent manner. He
has stated that in the said accident, his wife Madura and brother Dilip
suffered fatal injuries and died on the spot. There is nothing substantial
which has come in the cross-examination of the said witness so as to
disbelieve the manner in which the accident took place. Suggestions made
to the said witness; that the deceased was driving at a fast speed; and due
to application of sudden breaks, the accident occurred, have been
categorically denied by the said witness.
Mukund Bhise, a Chartered Accountant, was examined by the
respondent-claimants. The said witness has produced certain documents
which were marked as Exhibits 104 and 105. The Exhibits 104 and 105,
dated 20th June, 2005 have been issued by the Chartered Accountant firm,
of the said witness giving details of the gross business receipts, business
income and income-tax of Micro-Med (India) Ltd. and Don Whitely
SQ Pathan 11/44
fa.91.15.doc
Scientific Equipments Pvt. Ltd. respectively. He has admitted in his cross-
examination that during the life time of the deceased, he was not working
as a Chartered Accountant for the said companies and that Exhibits 104 and
105 were prepared by him at the instance of the first respondent - claimant,
on the basis of the Xerox copies supplied by her.
It appears from the record, that Shri Veer, an Income Tax
Officer, was sought to be examined by the respondent-claimants to prove
the documents i.e. Exhibits 43 to 45 (Acknowledgments of the Income-tax
returns for the year 1994-95, 1995-96 and 1996-97) and that the said
witness was offered for cross-examination to the Advocate for the
appellant. It also appears that the advocate for the appellant admitted that
the said documents were acknowledgments of the income-tax returns and
being public documents, it was not necessary to cross-examine the said
witness and therefore, the said witness came to be discharged. The same is
recorded in the order dated 9th January, 2006, passed by the Tribunal.
Shri Avinash Mehendale, the Chartered Accountant of the said
two companies, was examined as the last witness by the Court
Commissioner on behalf of the respondent - claimants. He has stated that
SQ Pathan 12/44
fa.91.15.doc
he had prepared the income-tax returns for both the private limited
companies, prior to death of the deceased as well as after his death.
The Tribunal after considering the evidence and material on
record awarded compensation of Rs. 88,46,000/- with interest @ 12% p.a.
from the date of the application till realisation of the said amount. In
addition to this, the Tribunal awarded conventional damages of Rs.
50,000/- towards loss of consortium to the first respondent; Rs. 25,000/- to
each of the respondent-claimants for loss of love and affection; Rs.
25,000/- towards loss of estate and Rs. 10,000/- towards funeral expenses.
The Tribunal whilst computing compensation, took the income of the
deceased from both business as Rs. 60,000/- p.m. By adding 30% towards
future prospects (i.e. Rs. 60,000/- + 30% = Rs. 78,000/-), the annual
income was calculated at Rs. 9,36,000/-. Keeping in mind the dependency
formula applicable, which was 1/3rd, the income was calculated at Rs.
6,24,000/- p.a. Thereafter, considering the age of the deceased i.e. 44
years, the Tribunal applied the multiplier of 14 and thereafter came to a
figure of Rs. 88,46,000/-. Out of the said amount, Rs. 50,00,000/- was
awarded to the first respondent; Rs. 30,00,000/- to the second respondent;
SQ Pathan 13/44
fa.91.15.doc
and Rs. 8,46,000/- to the third respondent. From the said amounts, a
certain amount was directed to be invested in fix deposit with a
Nationalised Bank. On the said compensation of Rs. 88,46,000/-, interest
@ 12% p.a. was made payable from the date of filing of the petition till
realization.
6. Perused the judgment and award of the Tribunal, as well as the
evidence and documents on record. In the light of the evidence and
material that has come on record, it would be necessary to deal with each of
the issues raised, both, by the learned Counsel for the appellant as well as
by the learned Counsel for the respondent - claimants.
7. At the outset, we would like to deal with the objection raised
by the learned Counsel for the respondent-claimants, with regard to the
maintainability of this appeal filed under Section 173 of the M. V. Act.
According to the learned Counsel for the respondent-claimants, the leave to
defend granted to the appellant under Section 170 of the M. V. Act, was not
a reasoned order and hence contrary to the law laid down by the Apex
Court. The said contention is devoid of merit and deserves to be rejected
at the outset, for the reasons set out herein under.
SQ Pathan 14/44
fa.91.15.doc
8. It is not in dispute that the owner of the vehicle i.e. the fourth
respondent and the present appellant were being defended by the same
Advocate, before the Tribunal. It is also not in dispute that the Advocate
withdrew his appearance on behalf of the owner of the offending vehicle
and filed an application on 7th December, 2002, on behalf of the Appellant-
Insurance Company, under Section 170 of the M. V. Act, seeking leave to
defend the case on merits. Para 1 of the said application preferred by the
appellant reads as under :
"1. The Opponent No. 2 submits that the opponent
No. 1 against whom the claim has been made, has failed
and neglected to contest the claim on merits and as such
it is in the interest of justice and equity to grant the
permission to the opponent No.2 to defend and/or
contest the claim on all or any of the grounds that are
available to the Owner of the Vehicle involved in the
accident and against whom the claim has been made."
9. The Tribunal was pleased to allow the said application vide
order dated 20th January, 2003. The said order reads thus:
"No say filed. Opponent No. 2 want to defend this
application on merit as opponent No. 1 has neglected to
defend. Hence, permission as prayed is granted."
SQ Pathan 15/44
fa.91.15.doc
10. Before we deal with the submission advanced by the learned
Counsel for the respondent-claimants that no reasons were recorded in the
aforesaid order, as mandated by Section 170 of the M. V. Act, it would be
necessary to reproduce the said Section. Section 170 of the M. V. Act reads
as under :
"170. Impleading insurer in certain cases.
Where in the course of any inquiry, the Claims Tribunal is
satisfied that-
(a) there is collusion between the person making the claim
and the person against whom the claim is made, or
(b) the person against whom the claim is made has failed
to contest the claim,
it may, for reasons to be recorded in writing, direct that the
insurer who may be liable in respect of such claim, shall be
impleaded as a party to the proceeding and the insurer so
impleaded shall thereupon have, without prejudice to the
provisions contained in sub-section (2) of section 149, the
right to contest the claim on all or any of the grounds that
are available to the person against whom (the claim has
been made." (emphasis supplied)
11. Under the said Section, the Tribunal has to record its
satisfaction with regard to clause (a) or (b), by giving reasons in writing,
before granting leave to defend to the Insurer. In order to enable the
Tribunal to pass an order in terms of Section 170, it is necessary for the
SQ Pathan 16/44
fa.91.15.doc
Insurer to file an application under Section 170. Thus, unless the procedure
is followed, an Insurance Company cannot have a wider defence on merits,
than is available to it, by way of statutory defence. In the present case, we
are concerned with clause (b) of Section 170 of the M.V.Act. As the
person against whom the claim was made, had failed to contest the claim,
the appellant - company filed the application (Exhibit 23) under Section
170, seeking leave to defend the claim petition. The said application was
allowed in terms of the order dated 20th January, 2003 set out hereinabove.
The question before us, is whether the said order can be said to be a
reasoned order in terms of Section 170 of the M.V.Act. The Apex Court in
the case of United India Insurance Co. Ltd. vs. Jyotsnaben Sudhirbhai
Patel & Ors.1 had considered the effect of the expression "for reasons to be
recorded in writing in Section 170 of the M.V. Act". The impugned order
in that case was a non-speaking order passed by the Tribunal under Section
170(b). The question before the Apex Court was, whether an appeal
preferred by the appellant therein, before the High Court was maintainable
or whether it was barred by the provisions of the M. V. Act. The Apex
Court after considering the provisions of Section 149(2) and Section 179 of
(2003) 7 SCC 212
SQ Pathan 17/44
fa.91.15.doc
the M. V. Act and after considering various judgments of the Apex Court,
including the case of Shankarayya & Anr. vs. United India Insurance Co.
Ltd. & Anr.2 , in para 14, observed as under :
"14. In the instant case, the Insurance Company was
impleaded as third respondent. The driver and owner of the
vehicle, though appeared before the Tribunal, did not contest
the proceedings. They did not file the written statement nor
did they choose to give evidence before the Tribunal.
Admittedly, the appellant filed an application under Section
170 of the Act seeking permission of the Tribunal contest the
proceeding giving the necessary details. The award passed by
the Tribunal also evidently shows that pursuant to this
permission, the counsel for the appellant-Insurance Company
cross-examined the witnesses produced by the claimant to
prove the negligence of the offending vehicle. Unfortunately,
however, the Tribunal, while passing its orders on the
petition filed under Section 170 of the Act only stated that
the prayer was granted, though the mandate of Section
170(b) of the Motor Vehicles Act states that the Tribunal
while passing an order shall record its reasons. This Court
in Shankarayya's case (supra) had emphasised this aspect.
But it is very much evident in this case that the driver and
the owner of the motor vehicle did not file the written
statement and failed to contest the proceedings. The
Tribunal could have merely recorded that fact while
allowing the application. In a situation contemplated by
Clause (b) of Section 170, nothing more was required than
recording that indisputable fact. For failure to do so, the
appellant shall not suffer prejudice. Therefore, the
appellant-Insurance Company was justified in contesting the
proceedings on the grounds other than those enumerated
under Sub-section (2) of Section 149 of the Act, pursuant to
the permission granted by Court. For the same reason, the
Insurance Company can be legitimately considered to be
'person aggrieved' within the meaning of Section 173 of the
Act."
2 (1998) 3 SCC 140
SQ Pathan 18/44
fa.91.15.doc
12. In the present case, the appellant-insurer contested the
proceedings before the Tribunal, on the ground that the owner of the
offending truck had failed and neglected to contest the claim on merits.
The Tribunal has noted this indisputable fact i.e. the fourth respondent had
neglected to defend, in its order and had accordingly granted the appellant,
leave to defend the claim. From a perusal of the order passed by the
Tribunal dated 20th January, 2003 below Exhibit 23, it appears that the
order is clearly in terms of clause (b) of Section 170 of the M. V. Act and
cannot be said to be an unreasoned one. Thus, what was recorded as a
reason, was an indisputable fact i.e. the owner had neglected to defend.
Thus, as observed by the Apex Court in Jyotsnaben Sudhirbhai Patel
(supra), there is recording of the indisputable fact in the order granting
leave to defend and as such the requirement of Section 170 of the M. V.
Act, has been complied with, in letter and spirit. No elaborate reasons were
required. It is evident from the record of the case, that the owner of the
offending vehicle had failed to defend the said case and had not even filed
his written statement in the said proceedings. Although, the Tribunal could
have also recorded the said fact, while allowing the said application, not
SQ Pathan 19/44
fa.91.15.doc
mentioning the same, would not in any way vitiate the order, granting leave
to defend. As is observed by the Apex Court in the case of Jyotsnaben
Sudhirbhai Patel (supra), for failure to do so, the appellant shall not suffer
any prejudice. In fact, in a situation contemplated by clause (b) of Section
170, nothing more was required than recording of the indisputable facts.
Under these circumstances, the appellant-Insurance Company is completely
justified in contesting the proceedings on merits, other than those
enumerated under Section 149(2) of the M. V. Act.
13. Thus, in the light of what is discussed above, we do not find
any merit in the objection raised by the learned counsel for the respondent -
claimants. We find that the appellant - insurance company was an
`aggrieved person' within the meaning of Section 173 of the M. V. Act and
as such, the present appeal was clearly maintainable and no fault can be
found in the order dated 20th January, 2003 granting leave to defend to the
appellant-insurance company.
SUBMISSIONS OF THE APPELLANT
14. Now, coming to the submissions advanced by the learned
Counsel for the appellant, on the point of negligence, we may note, that
SQ Pathan 20/44
fa.91.15.doc
negligence has been proved by the respondent-claimants, by adducing
evidence in this regard. Satish Chunekar (witness No. 2), an eye witness
and a co-passenger in the car, which was driven by the deceased, was
examined to prove that the driver of the offending vehicle was rash and
negligent. There is nothing substantial brought on record by the appellant,
in the cross examination of the said witnesses so to disbelieve his
testimony. Apart from the evidence of Satish Chunekar, it may be noted
that the driver of the offending vehicle was convicted in the criminal case
and the said judgment and order of conviction has also been placed on
record, which is at Exhibit 94. There is no material placed on record to
show that the conviction was overturned. It also appears from the record,
that the appellant-insurance company had intended to examine the driver
of the offending vehicle, and had infact preferred applications for
summoning him before the Tribunal. Initially, summons was served on the
driver of the offending vehicle and thereafter, bailable warrant came to be
issued. However, the driver of the offending vehicle failed to appear and
therefore the appellant - Insurance company filed a closure purshis, stating
that they were unable to secure the presence of the said witness. Thus, we
do not find any merit in the submission of the learned Counsel for the
SQ Pathan 21/44
fa.91.15.doc
appellant that negligence of the driver of the offending vehicle was not
proved, in the light of what is discussed hereinabove.
15. From the material on record, it is clearly evident that the driver
of the offending vehicle had driven the truck in a rash and negligent
manner and had dashed the car of the deceased which had come to a halt,
due to a traffic jam and as such was responsible for the accident, in which
the deceased Dilip lost his life.
16. The second submission of the learned Counsel for the
appellants is that the income-tax return for the year 1996-97 ought not to
have been considered, as the same was filed after the demise of Dilip by the
first respondent - claimant i.e. on 27 th September, 1996 (six months after
the demise of the deceased). He submitted that the income tax returns for
the year 1994-95 shows that the income of the deceased was Rs. 81,790/-
and for the year 1995-96, it was Rs. 1,91,560/-. He submitted that the
income for the year 1996-97 reflects an income of Rs. 4,22,503/- and as
such, could not be relied upon, considering that the same was filed after the
demise of the deceased. He also submitted that the income-tax returns of
SQ Pathan 22/44
fa.91.15.doc
three years i.e. Exhibits 43 to 45 were not proved.
17. As far as the contention of the learned counsel for the
appellant, that the income tax documents were merely marked as Articles
and the contents thereof were not proved, is devoid of merit, inasmuch as,
the respondent - claimants had produced Mr. Veer, an Income-tax Officer
to prove the said acknowledgments of the filing of Income Tax Returns,
which are at Exhibits 43 to 45. It appears from the record i.e. Exhibit 1,
that the Advocate for the appellant had declined to cross-examine Shri S.
R. Veer, when he was offered for cross-examination. The order below
Exhibit 1 dated 9th January, 2006 reads as under :
"Adv. Shri R. M. Sonak for the applicant present.
Opponent No. 1 exparte. Adv. Shri S.E.Darandale for
opponent No.2 present. In view of observations in order dated
21/11/2005 on application by ld. Advocate for the applicant
for admission of the documents article `B', `C' and `D' which
are admitted and marked as Exh. 43 to 45 subject to cross-
examination on correctness thereof, the applicant has
produced witness Shri S. R. Veer. He is offered to Adv. Shri
Darandale for opponent No.2 for cross examination. Adv.
Shri Darandale declines to cross-exam. in view of admitted
position that the said acknowledgment for filing income tax
returns are public documents and the said acknowledgment
only mentions the taxable income of the assessee/deceased.
Witness is discharged. (emphasis supplied)
2. ........ ........ ......... ......... ."
SQ Pathan 23/44
fa.91.15.doc
18. Thus, the income tax acknowledgments which were filed at
Exhibits 43 to 45 can certainly be taken into consideration and read in
evidence. As is recorded in the aforesaid order, the advocate for the
appellant had declined to cross examine the Income Tax Officer, as he
admitted that acknowledgments for filing of income tax returns were public
documents. In view of the said position, it now cannot be contended that
the contents thereof were not proved or that the said documents were not
proved. Infact, the correctness of the said acknowledgments of Income
Tax Returns, at Exhibits 43 to 45 have gone unchallenged, as is evident
from the order dated 9th January, 2006. In any event, a Tribunal constituted
under the Motor Vehicles Act, 1988 is not bound by the strict Rules of
Evidence. Thus, there is no merit in the contention raised by the learned
counsel for the appellant, that the Income Tax documents have not been
proved by the respondent - claimants.
19. With regard to the submission, that the income tax returns for
the year 1996-97 be ignored as the same was filed 6 months after the
demise of the deceased, it is pertinent to note, from a perusal of the cross-
examination of the first respondent - claimant, that no suggestion
SQ Pathan 24/44
fa.91.15.doc
whatsoever, was put to the said witness that the income mentioned in the
income-tax return for 1996-97 had been inflated after the demise of the
deceased. As no suggestion was made to the said witness, it was not
necessary to lead further evidence in support thereof. In fact, in the absence
of any suggestion, that the income was inflated in the subsequent returns
of 1996-97, it can be said that the respondents - claimants were not put to
notice of the said ground, which is now sought to be raised. Considering
that the first respondent - claimant was admittedly the author of the income
tax return filed for the year 1996-97, a suggestion ought to have been
given to her that the same was inflated. In the absence of any suggestion to
that effect, the income mentioned in Exhibit 45 has virtually gone
unchallenged. Thus, the said income of the year 1996-97can certainly be
considered, while considering the income of the deceased on the date of his
death.
20. The third issue raised by the learned Counsel for the appellant
is that the Tribunal has erroneously come to the conclusion that the income
of the deceased was Rs. 60,000/- per month (Rs. 30,000/- from each
business) and consequently erred in awarding compensation of Rs.
SQ Pathan 25/44
fa.91.15.doc
88,46,000/-. As far as the said submission of the learned Counsel that the
amount of Rs. 60,000/- which is reflected in the impugned judgment and
award is without any basis, will have to be accepted in the light of the
evidence which has come on record. Nowhere, in the evidence of the first
respondent, it has come that the deceased was drawing an income of Rs.
60,000/- per month. The income-tax return for the year 1996-97, shows
that the income of the deceased from salary was Rs. 45,000/- and income
from business was Rs. 3,74,686/-. This document was produced by the
respondent-claimants in support of their claim to show that the gross total
income of the deceased for 1996-97 was Rs. 4,22,503/-. It is thus not clear,
as to on what basis the Tribunal had come to a conclusion that the income
of the deceased was Rs. 60,000/- per month. The learned counsel for the
respondent-claimants was also unable to substantiate the same. In the
absence of any material in support of the same and considering the income-
tax returns for the year 1996-97, the finding that the deceased was drawing
an income of Rs. 60,000/- per month will have to be set-aside. There was
no justification for the Tribunal to come to a conclusion that the deceased
was drawing a salary of Rs. 60,000 per month.
SQ Pathan 26/44
fa.91.15.doc
21. Coming to the next question, as to how then should the income
of the deceased be computed from both, the firm and the company, in order
to arrive at a just and reasonable compensation? A perusal of the evidence
of the first respondent - claimant shows that her husband had done his
B.Sc. in Zoology and was an MBA. Her evidence also reflects that her
deceased husband was an Entrepreneur, who had renovated a number of
equipments for Micro Biology and Bio-technology, and was well respected
for his work by the heads of Industries in the said field. It is also evident
from her evidence that the company was doing extremely well, till the
untimely death of the deceased and that the returns filed, clearly show that
there was a rise in the salary and business income of the company and firm
respectively, by more than 100% p.a.
22. The evidence of the first respondent - claimant also shows that
the Company Micro-Med was manufacturing scientific equipments and
offering consultancy to various hospitals; that Don Whitely Scientific
Equipments Pvt. Ltd. was in collaboration with a British Company, and that
the equipments were only being manufactured by their Company in India;
that the deceased was trained in U.K for the same; that there was a major
SQ Pathan 27/44
fa.91.15.doc
change in the running of the companies after the death of the deceased and
that it was difficult to replace him, who was an entrepreneur in the said
field; that the deceased was running his business and was taking out a
minimal amount from the company as salary; that after the demise of the
deceased Dilip, the first respondent could not find one person for both
these activities i.e. for manufacturing and marketing, which were being
looked after by the deceased Dilip and hence, she was constrained to
appoint two persons for the same job; that she had to mortgage her
jewellery with the Thane Janata Sahakari Bank Ltd. to raise funds; she had
to send the persons appointed by the Company to U.K., for training; that
after the demise of her husband, the workers were instigated to file a case
against her in the Labour Court, as a result of which, the company suffered
losses in the business, resulting in her selling two residential flats. All the
aforesaid evidence has gone unchallenged, inasmuch as, there is no cross-
examination by the appellant company on the said evidence. It is thus
evident that after the demise of the deceased, the respondent - claimants
faced difficulties financially, resulting in the income coming down
drastically. Merely because the first respondent - claimant has admitted
that the shares of the company were transferred in the name of the first
SQ Pathan 28/44
fa.91.15.doc
respondent and her daughter, by itself, does not show that any material
benefit had accrued to them. Her evidence also shows that there was a loss
in the business from 1996-97, soon after the demise of her husband and that
in 2004, it had drastically come down to Rs. 40,000/- to Rs. 50,000/- p.a.
In fact, a perusal of Exhibits 43, 44 and 45 show that the income of the
deceased from his business had increased from the year 1994-95 to 1995-
96 by more than 100%, and again from 1995-96 to 1996-97, there was a
similar increase. It may be noted that the gross total income shown for the
assessment year 1994-95, was Rs. 85,242/- and that tax of approximately
Rs. 11,674/- was paid for the said year. The salary shown in the said
returns was Rs. 16,000/- and income from the business was shown as Rs.
65,789/-. For the assessment year 1995-96, the total income shown was
Rs. 1,91,560/-. For the said year, tax of approximately Rs.51,000/- was
paid. The salary shown in the said returns was Rs. 16,000/-; and the
income from business was shown as Rs. 1,75,562/-. The deceased died on
30th March, 1996. The tax returns for the assessment year 1996-97 were
filed on 27th September, 1996, reflects income from salary as Rs. 45,000/-;
and income from business as Rs. 3,74,686/- and the gross total income
shown was Rs. 4,22,503/-. It appears that advance tax of Rs.39,000/- was
SQ Pathan 29/44
fa.91.15.doc
paid by the deceased, prior to his demise, in three installments. Thus, a
perusal of the said documents i.e. Exhibits 43 to 45 clearly show that there
was a substantial rise i.e. by more than 100%, in the gross total income of
the deceased. The rise from 1994-95 to 1995-96 is approximately the same
as the rise from 1995-96 to 1996-97. Considering the fact, that the said
documents i.e. Exhibits 43 to 45 have gone unchallenged and considering
the fact that no suggestion was made to the first respondent, that the said
document which is at Exhibit 45 is an inflated document, it was not
necessary for the respondent-claimant to lead any further evidence to
prove the contents of the said document and hence, the said document,
which is at Exhibit 45 can certainly be relied upon while assessing and
computing the quantum of compensation.
23. Now, what is the multiplicand that can be applied to the present
case? There are catena of judgments, more particularly, the judgment of
the Apex Court in the case of Sarla Verma (Smt.) & Ors. vs. Delhi
Transport Corporation & Anr.3, which sets out how the multiplicand is to
be calculated. The said judgment has been reiterated by the Supreme Court
3 (2009) 6 SCC 121
SQ Pathan 30/44
fa.91.15.doc
in several cases. The Apex Court has held, that there are only three facts
which are required to be established by the claimants for assessing
compensation in case of death - (a) age of the deceased; (b) income of the
deceased; and (c) the number of dependents. The issues to be determined
by the Tribunal to arrive at the loss of dependency are - (i)
additions/deductions to be made for arriving at the income; (ii) the
deduction to be made towards the personal living expenses of the deceased;
and (iii) the multiplier to be applied with regard to the age of the deceased.
24. It has also been held that to have uniformity and consistency,
the Tribunals should determine compensation in cases of death, by
following the well-settled steps, which are as under :
Step 1 (Ascertaining the multiplicand)
The income of the deceased per annum should be determined. Out of
the said income a deduction should be made in regard to the amount
which the deceased would have spent on himself by way of personal
and living expenses. The balance, which is considered to be the
contribution to the dependent family, constitutes the multiplicand.
Step 2 (Ascertaining the multiplier)
Having regard to the age of the deceased and period of active career,
the appropriate multiplier should be selected. This does not mean
ascertaining the number of years he would have lived or worked but
for the accident. Having regard to several imponderables in life and
economic factors, a table of multipliers with reference to the age has
SQ Pathan 31/44
fa.91.15.doc
been identified by this Court. The multiplier should be chosen from
the said table with reference to the age of the deceased.
Step 3 (Actual calculation)
The annual contribution to the family (multiplicand) when multiplied
by such multiplier gives the 'loss of dependency' to the family.
Thereafter, a conventional amount in the range of Rs. 5,000/- to Rs.
10,000/- may be added as loss of estate. Where the deceased is
survived by his widow, another conventional amount in the range of
5,000/- to 10,000/- should be added under the head of loss of
consortium. But no amount is to be awarded under the head of pain,
suffering or hardship caused to the legal heirs of the deceased.
The funeral expenses, cost of transportation of the body (if incurred)
and cost of any medical treatment of the deceased before death (if
incurred) should also added.
25. After following the aforesaid steps, the only income of the
deceased less income-tax should be the starting point for calculating the
compensation. As far as addition to income for future prospects is
concerned, the Apex Court observed that in view of the imponderables and
uncertainties, it had found favour in adopting as a rule of thumb, an
addition of 50% of actual salary to the actual salary income of the deceased
towards future prospects, where the deceased had a permanent job and was
below 40 years (where the annual income is in the taxable range, the
words :actual salary" should be read as "actual salary less tax"). It was
SQ Pathan 32/44
fa.91.15.doc
further observed that there should be an addition of only 30% if the age of
the deceased was 40 to 50 years and that there should be no addition if the
age of the deceased is more than 50 years. The Apex Court observed that
though the evidence may indicate a different percentage of increase, it was
necessary to standardize the addition to avoid different yardsticks being
applied or different methods of calculation being adopted. It further
observed that where the deceased was self-employed or was on a fixed
salary (without provision for annual increments, etc.), the Courts will
usually take only the actual income at the time of death. A departure
there from should be made only in rare and exceptional cases involving
special circumstances.
26. As far as deduction for personal and living expenses is
concerned, the Apex Court observed that where the deceased was married,
the deduction towards personal and living expenses of the deceased should
be one-third where the number of dependent family members is 2 to 3,
one-fourth, where the number of dependent family members is 4 to 6, and
one-fifth, where the number of dependent family members exceeds six.
SQ Pathan 33/44
fa.91.15.doc
27. As far as multiplier is concerned, the Apex Court in Sarla
Verma's case (supra) held that the multiplier to be used should be as
mentioned in column 4 of the following table:
28. The Apex Court observed that about 50% can be added to the
actual salary, by taking note of the future prospects. In addition to the
aforesaid, the claimants would also be entitled to compensation under the
SQ Pathan 34/44
fa.91.15.doc
head of "loss of estate" and some amount towards funeral expenses and for
loss of consortium, while awarding compensation.
29. Sarla Verma's case (supra) dealt with a case of a salaried
person. The Apex Court held that in case of salaried person, additions have
to be made depending upon the age of the deceased to the actual income of
the deceased while computing future prospects. In Santoshi Devi's case
(supra), Sarla Verma was explained and it was held that it was permissible
to extend the benefit of making additions to the total income of the
persons, who were self employed or on fixed wages. Infact, the principles
laid down in Santoshi Devi's case (supra) were reiterated in Rajesh &
Ors. vs. Rajbir Singh & Ors.4, wherein, the Apex Court held that in cases
of self employed persons or persons with fixed wages, the actual income
of the deceased must be enhanced for the purpose of computation i.e. by
50% where the deceased was below 40 years; by 30% where he belonged
to the age group 40-50 years and by 15% where the deceased was between
the age group of 50 to 60 years. It was, however, observed that no such
addition was permissible where deceased was over 60 years of age. Infact,
in Rajesh & Ors. (supra), the Apex Court reiterated the meaning of `just
4 (2013) 9 SCC 54
SQ Pathan 35/44
fa.91.15.doc
compensation' and observed that, at the time of fixing such compensation,
the courts should not succumb to the niceties or technicalities to grant just
compensation in favour of the claimants. It further observed that it is the
duty of the Court to equate, as far as possible, the misery on account of the
accident with the compensation so that the dependents should not face the
vagaries of life on account of discontinuance of the income earned by the
deceased and it is the Courts duty to award just, equitable, fair and
reasonable compensation, irrespective of the claim made.
30. Keeping in mind the aforesaid principles, we now proceed to
determine what is the `just compensation' that the respondent-claimants
would be entitled to. As is evident from the evidence adduced on behalf of
the first respondent-claimant, the last gross income of the deceased was Rs.
4,22,503/-; which was rounded off and shown as Rs. 4,19,690/-; the
income from salary being Rs. 45,000/- and income from business profit
being Rs. 3,75,686/-. Thus, the last income of the deceased as is reflected
from Exhibit 45 shows the nature of income receivable from both, salary as
well as from business. The said gross income arrived at was after
deducting the income-tax payable thereon.
SQ Pathan 36/44
fa.91.15.doc
31. The age of the deceased was 44 years. From a perusal of the
income-tax returns, it is evident that the deceased had income from two
sources; one from `Micro-Med (India) Ltd.', a partnership firm and another
from `M/s. Don Whitely Scientific Equipments Pvt. Ltd.' , a Private
Limited Company. The gross annual income rounded off, for the year
1996-97 was Rs. 4,19,690; wherein, salary income was Rs. 45,000/- p.a.
and income from business was Rs. 3,74,686/-. As far as the income from
salary is concerned, i.e. Rs. 45,000/- p.a., 30% would have to be added
towards future prospects as is permissible, i.e. Rs. 45,000/- + 30% = Rs.
58,500/-. After considering the fact, that there were three dependents and
applying the 1/3rd dependency formula, the amount arrived at is Rs.
39,000/-. Considering that the age of the deceased was 44 years,
Multiplier of 14 would be applicable in the present case, and hence, the
total amount would be Rs. 5,46,000/-. As far as the business income of the
deceased is concerned, as is reflected from the income-tax returns for the
year 1996-97, it is evident that the deceased's income from his business
after deducting tax was Rs. 3,74,686/-. A perusal of all the three income-
tax returns filed by the respondent-claimants i.e. for the year 1994-95,
1995-96 and 1996-97 would reveal that the business income of the
SQ Pathan 37/44
fa.91.15.doc
deceased had risen by more than 100%. In 1994-95, the business income
was Rs. 65,789/-, in 1995-96, it was Rs.1,75,562/- and in the year 1996-97,
the business income was Rs. 3,74,686/-. The said income was after paying
income-tax thereon. As is evident from the evidence on record, the
deceased was an Entrepreneur, who had renovated a number of equipments
for Micro Biology and Bio-technology, and as such, was well respected for
his work by the heads of Industries in the said field. It is also reflected
from the evidence on record that the deceased was a qualified person
having done his B. Sc. in Zoology and was an MBA. It is also evident that
he was trained in U.K by the British Company, which was working in
collaboration with Don Whitely Scientific Equipments Pvt. Ltd. The first
respondent, in her evidence, has also stated that due to the business skills
and acumen of her husband Dilip, the business would have attained
international reputation and that the income would have multiplied by
number of years. The income-tax returns clearly show a rise in the
business income of the company by more than 100% p.a. As is evident
from the evidence of the first respondent, the company was doing
extremely well till the untimely death of the deceased and after his death,
the business had been affected considerably. It has also come in her
SQ Pathan 38/44
fa.91.15.doc
evidence that she had to mortgage her jewellery to raise funds; had to send
persons appointed by the Company to U.K for training; that the workers
had filed cases against her in the Labour Court, and that, she has suffered
losses in the business, resulting in her selling two residential flats. The
said evidence that has come on record has virtually gone unchallenged.
Considering the income-tax returns of all the three years, it appears that
there was a rise of more than 100% in the business income of the deceased
and hence, the respondent-claimants would be entitled to an addition of
50% towards future prospects. The last drawn income from business as is
reflected in the income-tax returns is Rs. 3,74,686/-, after deducting tax on
the same. Considering the aforesaid facts, we are of the opinion, that to the
said business income, an addition of 50% would have to be made. The
amount therefore, would come to Rs. 5,62,029/-. After deducting 1/3 rd
towards personal expenses, the amount would be Rs. 3,74,686/-. Applying
the Multiplier of 14, the amount comes to Rs. 52,45,604/-. Thus, after
considering both, income from salary as well as business income, the total
amount of compensation that the respondent-claimants would be entitled
to, would be Rs. 57,91,604/-. As far as amounts awarded under the
conventional heads are concerned, the Tribunal has awarded Rs. 50,000/-
SQ Pathan 39/44
fa.91.15.doc
towards loss of consortium to the first respondent-claimant; Rs. 25,000/-
towards loss of love and affection to each of the respondent-claimant; Rs.
25,000/- towards loss of estate to each of the respondent-claimants and Rs.
10,000/- towards funeral expenses. As far as the amounts awarded under
the conventional heads are concerned, keeping in mind the judicial
pronouncements in this regard, we are of the opinion that the first
respondent-claimant would be entitled to an amount of Rs. 1,00,000/-
towards loss of consortium; the second and third respondents would be
entitled to a sum of Rs. 50,000/- each towards loss of love and affection;
Rs. 25,000/- towards loss of estate and Rs. 25,000/- towards funeral
expenses. Thus, the total compensation that would be payable to the
respondent-claimants would be Rs. 60,41,604/-.
32. The last issue raised by the learned Counsel for the appellant is
that the interest rate of 12% p.a. granted by the Tribunal is exorbitant and
on the higher side.
33. We have perused the judgments of the Apex Court in this
regard. The Apex Court in the case of Kaushnuma Begum (Smt) & Ors.
SQ Pathan 40/44
fa.91.15.doc
vs. New India Assurance Company Limited & Ors.5, noticed that the
nationalised banks are granting interest @9% on fixed deposits for one year
and held as follows :-
"24. Now, we have to fix up the rate of interest. Section 171 of
the MV Act empowers the Tribunal to direct that "in addition
to the amount of compensation simple interest shall also be
paid at such rate and from such date not earlier than the date
of making the claim as may be specified in this behalf".
Earlier, 12% was found to be the reasonable rate of simple
interest. With a change in economy and the policy of Reserve
Bank of India the interest rate has been lowered. The
nationalised banks are now granting interest at the rate of 9%
on fixed deposits for one year. We, therefore, direct that the
compensation amount fixed hereinbefore shall bear interest at
the rate of 9% per annum from the date of the claim made by
the appellants. The amount of Rs 50,000 paid by the
Insurance Company under Section 140 shall be deducted from
the principal amount as on the date of its payment, and
interest would be recalculated on the balance amount of the
principal sum from such date."
34. The Apex Court in Abati Bezbaruah v. Deputy Director
General, Geological Survey of India & Anr. 6 noticed the varying rate of
interest being awarded by the Tribunals, High Courts and Apex Court
itself. In the said case, the Apex Court held that the rate of interest must be
just and reasonable depending on the facts and circumstances of the case
and should be decided after taking into consideration the relevant factors
5 (2001) 2 SCC 9
6 (2003) 3 SCC 148
SQ Pathan 41/44
fa.91.15.doc
like inflation, change in economy, policy being adopted by the Reserve
Bank of India from time to time, how long the case is pending, loss of
enjoyment of life etc.
35. Infact, the Apex Court in Puttamma & Ors. vs. K. L.
Narayana Reddy & Anr.7, kept the question open for Tribunals and
Courts to decide the rate of interest, keeping in mind the rate of interest
allowed by the Apex Court in similar cases and other factors such as
inflation, change in economic policy adopted by the Reserve Bank of India
from time to time, the period from which the case is pending, etc. Infact in
Puttamma's case (supra), the Apex Court enhanced the compensation @
12% p.a. from the date of filing of the claim petition.
36. Keeping in mind all the aforesaid Judgments, and after
considering the peculiar facts of this case, we are of the opinion that the
interest granted on the compensation amount by the Tribunal to the
respondent-claimants is on the higher side. Although, the claim petition is
of 1996, the delay that has occurred in the said case is not attributable to
7 (2013) 15 SCC 45
SQ Pathan 42/44
fa.91.15.doc
the appellant alone. Both the parties are responsible for the delay, resulting
in the claim petition of 1996 being decided in 2013. As is evident from the
record, the respondent-claimants sought amendment of their claim petition
in 2011, which was allowed in 2012. Having regard to the same, we are of
the opinion that the interest of justice would be met, if the interest granted
on the aforesaid amount is reduced from 12% to 9% p.a. in the facts of the
case.
37. Accordingly, we dispose of the appeal by passing the following
order :
ORDER
(i) The appeal is partly allowed with no order as to costs;
(ii) The impugned award is modified to the extent that the
respondent-claimants will now be entitled to compensation of Rs.
60,41,604/- with interest @ 9% p.a. from the date of filing of the
application till the date of realization. The claimants will be entitled to
proportionate costs of claim application.
SQ Pathan 43/44
fa.91.15.doc
(iii) The apportionment of the claim will be done as follows : 60%
of the aforesaid amount will be awarded to the first respondent; 25% to the
second respondent and 15% to the third respondent. The Tribunal shall pass
appropriate directions for investment of the amount of compensation or
part thereof after hearing the claimants;
(iv) The Tribunal shall compute the amounts payable as per the
modified Award, as expeditiously as possible and in any event, within six
weeks from the date of receipt of writ of this Judgment;
(v) Writ of this Judgment along with R & P shall be forwarded to
the Tribunal within four weeks;
(vi) All concerned to act on the authenticated copy of this order.
(REVATI MOHITE DERE, J.) (A. S. OKA, J.)
SQ Pathan 44/44
