National Insurance Co. Ltd. vs Pooja And Ors.
2006 Latest Caselaw 676 Del

JUDGMENT

Sanjiv Khanna, J.

Page 1646

1. The present appeal under Section 173 of the Motor Vehicles Act, 1988 (hereinafter referred to as the Act, for short) has been filed by the National Insurance Company Limited, the appellant, against the award dated 16th April, 2004 passed by the learned Motor Accidents Claim Tribunal in Claim Petition/Suit No. 117/2003 titled Smt. Pooja and Ors. v. Gulfam and Ors..

2. By the impugned award the learned Motor Accidents Claim Tribunal had decided some other claim petitions also, however, I am not concerned with them. It may also be relevant to state here that the Oriental Insurance Company Limited-the respondent No. 9 in the present appeal has also filed cross- objections. This order will dispose of the appeal and the cross-objections of the respondent No. 9.

3. It is admitted case of the parties that on 24th October, 1999 at about 2.30 a.m. Page 1647the deceased-Mr. Sarvesh Kumar along with others was traveling in a Tata Sumo bearing Registration No. DL 4CJ-0261 and was coming to Delhi from Gopalganj in Bihar. The said Tata Sumo met with an accident with a truck bearing Registration No. UP 15 A-2741. The respondent Nos. 1-6 in the present appeal are the dependants of the deceased-Mr. Sarvesh Kumar. The respondent Nos. 7,8,10 and 11 are the driver and the owner of the TATA Sumo and the driver and the owner of the truck, respectively.

4. The learned Motor Accidents Claim Court after examining the evidence and the material on record came to the conclusion that the said accident was caused due to negligence of the drivers of the two vehicles and accordingly the said two drivers, the owners of the two vehicles and the insurance companies, namely, the appellant and the respondent No. 9, were jointly and severally made liable to pay compensation.

5. On the question of compensation, learned Motor Accidents Claim Tribunal came to the conclusion that no evidence or material was produced by the respondent Nos. 1-6 to show and prove the monthly income of the deceased, though it was stated that he was running an electronic goods shop and it was claimed that he used to earn Rs. 5000/- to 6000/- per month. In that view of the matter, the minimum wages payable in Delhi to an unskilled worker in the year 1999 of Rs. 2348/- per month was taken as the basis for computing the loss of dependency. Ld. Tribunal further held that future increase in earnings should also be taken into consideration and no deduction should be made towards personal expenditure and expenses. Multiplier of 18 was applied and Rs. 7,60,752/- was awarded on account of loss of dependency and in addition Rs. 40,000/- was awarded towards non pecuniary damages. In all compensation of Rs. 8,00,752/- was awarded.

6. Learned counsel for the appellant and the respondent No. 9 submitted that learned Tribunal had erred in holding that no deduction should be made towards personal expenses, while calculating loss of dependency. It was submitted that at least 1/3rd of the total amount should have be deducted towards personal expenses of the deceased. It was also submitted that the learned Motor Accidents Claim Tribunal had erred in doubling the minimum wages and then taking the average of the two, for computing the loss of dependency as there was no evidence or material about the bright future prospects or possibility of increase in the income of the deceased. It was submitted that the deceased did not have a stable job. Objection was also raised to the multiplier of 18 applied by the learned Tribunal. Learned counsel for the appellant and the respondent No. 9 relied upon judgment of the Supreme Court in the case of Sarla Dixit and Anr. v. Balwant Yadav and Ors. and General Manager Kerala State Road Transport Corporation v. Susamma Thomas and Ors. .

7. Learned counsel appearing for the respondent Nos. 1-6, however, submitted Page 1648that the compensation granted was justified and as minimum wages was taken as a basis, no deduction on account of personal expenses of the deceased was rightly made. He relied upon judgment of this Court in the case of Ved Prakash and Ors. v. Gurmeet and the judgment of Rajasthan High Court in the case of Harbai and Ors. v. Laxmi Narayan and Ors. reported in (2005)II ACC 657. Reliance was also placed on the judgment of the Supreme Court in the case of United India Insurance Company Limited v. Patricia Jean Mahajan and Ors. and Abati Bezbaruah v. Deputy Director General Zoological Survey of India reported in I (2003) ACC 352. It was submitted that multiplier of 18 was rightly applied in the present case as the age of the deceased was 30 years at the time of death.

8. The question of quantum of compensation payable under Section 166 of the Act, has been considered and examined by the Supreme Court in several cases. It is now well-settled that for ascertaining compensation to be paid towards pecuniary loss, we should find out the annual loss of dependency and then apply an appropriate multiplier. The object is to ensure that the dependants are paid a capital amount that would in normal course yield interest equal to the annual dependency for the period dependency is expected to last. The capital sum should be scaled down to ensure that the principal capital amount itself should get depleted on the expiry of the period for which the dependency is to last and allowance should also be made by scaling down the multiplier because of uncertainties of future. [See in this regard the judgment of the Supreme Court in the case of Sarla Dixit (Supra) and General Manager Kerala State Road Transport Corporation (Supra)].

9. In T.N. State Transport Corporation Ltd. v. S. Rajapriya , it has been held as under:-

5. Certain principles were highlighted by this Court in the case of Municipal Corporation of Delhi v. Subhagwanti in the matter of fixing the appropriate multiplier and computation of compensation. In a fatal accident action, the accepted measure of damages awarded to the dependants is the pecuniary loss suffered by them as a result of the death. "How much has the widow and family lost by the father's death?" The answer to this lies in the oft-quoted passage from the opinion of Lord Wright in Davies v. Powell Duffryn Associated Collieries Ltd. which Page 1649says: All ER p. 665 A-B The starting point is the amount of wages which the deceased was earning, the ascertainment of which to some extent may depend on the regularity of his employment. Then there is an estimate of how much was required or expended for his own personal and living expenses. The balance will give a datum or basic figure which will generally be turned into a lump sum by taking a certain number of years' purchase. That sum, however, has to be taxed down by having due regard to uncertainties, for instance, that the widow might have again married and thus ceased to be dependent, and other like matters of speculation and doubt.

9. 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 there from 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 years' purchase.

10. x x x

11. x x x

12. The multiplier method involves the ascertainment of the loss of dependency or the multiplicand having regard to the circumstances of the case and capitalising 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.

10. Thus, the object and purpose of awarding pecuniary compensation is to determine the pecuniary loss suffered by the dependant/claimants as a result of the death of the deceased. Compensation is determined by balancing the loss suffered by the dependents of the future pecuniary benefit because of the death of the deceased and any other pecuniary advantage gained by the dependents by the death. The compensation under this head should neither be exorbitant nor disproportionately high. It should not be abnormally low. What is payable is the actual pecuniary loss suffered by the dependants due to the death. Courts to ensure uniformity, consistency and certainty have laid down guidelines but the underling object and purpose is to award compensation that is just, fair and reasonable.

11. In the case of General Manager, Kerala State Road Transport Corporation Page 1650(supra), the Supreme Court held that 1/3rd of the total amount should be deducted towards personal living expenses in absence of any evidence and it was, inter alia, observed as under:-

From this has to be deducted his personal living expenses, the quantum of which again depends on various factors such as whether the style of living was spartan or bohemian. In the absence of evidence it is not unusual to deduct one-third of the gross income towards the personal living expenses and treat the balance as the amount likely to have been spent on the members of the family and the dependants.

12. In the case of Sarla Dixit (Supra) also the Supreme Court deducted 1/3rd from the gross monthly income towards personal expenses and other liabilities. The IInd Schedule of the Act again provides that 1/3rd of the total amount should be deducted towards personal expenses. In New India Assurance Company Ltd. v. Charlie (2005) 10 SCC 720 it has been held :

6. What would be the percentage of deduction for personal expenditure cannot be governed by any rigid rule or formula by universal application. It would depend upon the circumstances of each case. In the instant case the claimant was nearly 37 years of age and was married. Therefore, as rightly contended by learned Counsel for the appellant, 1/3rd deduction has to be made for personal expenditure.

7. Certain principles were highlighted by this Court in the case of Municipal Corporation of Delhi v. Subhagwanti in the matter of fixing the appropriate multiplier and computation of compensation. In a fatal accident action, the accepted measure of damages awarded to the dependants is the pecuniary loss suffered by them as a result of the death. "How much has the widow and the family lost by the father's death?" The answer to this lies in the oft-quoted passage from the opinion of Lord Wright in Davies v. Powell Duffryn Associated Collieries Ltd. which says: All ER p. 665 A-B The starting point is the amount of wages which the deceased was earning, the ascertainment of which to some extent may depend on the regularity of his employment. Then there is an estimate of how much was required or expended for his own personal and living expenses. The balance will give a datum or basic figure which will generally be turned into a lump sum by taking a certain number of years' purchase. That sum, however, has to be taxed down by having due regard to uncertainties, for instance, that the widow might have again married and thus ceased to be dependant, and other like matters of speculation and doubt.

8. x x x

9. x x x

10. x x x

11. 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 there from such part of his income as the deceased was Page 1651accustomed 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 a year's purchase.

13. Keeping in view the judgments mentioned above, it is not possible to accept the submission of the learned Counsel for the respondent Nos. 1-6 that no deduction whatsoever should be made towards personal expenses from the annual income of the deceased to determined the annual loss of dependency. It cannot be said that the deceased was not spending anything on himself or was not incurring any expenditure on his basic requirements, comforts, entertainment etc. and the entire income earned by him was for the benefit and advantage of the claimants. The loss of dependency cannot be calculated without reducing from the income, the personal expenses that the deceased was incurring on himself. Only the amount available after meeting the personal expenditure of the deceased should be taken into consideration for calculating the loss of dependency. The entire income of the deceased cannot be treated as dependency. Failure to deduct a reasonable amount towards personal expenses would result in an abnormal situation and would be contrary to the entire concept and the principles for calculating loss of dependency as enunciated by the Supreme Court.

14. In the judgment of the Delhi High Court in the case of Ved Prakash and Ors. (Supra), it was held that the rule of deduction of 1/3rd from the income towards personal expenses should not be applied in some cases. The said judgment pertains to an accident caused on 31st March, 1978. The present case is under the Motor Vehicles Act, 1988 and in view of the authoritative pronouncements of the Supreme Court mentioned above, I find merit in the argument of the appellant and the contention of respondent No. 9 that the learned Motor Accidents Claim Tribunal was wrong in not deducting any amount whatsoever towards personal expenses of the deceased. The counsel for respondent Nos. 1-6 had not pointed out and shown me any evidence on the basis of which it can be held that the principle of 1/3rd deduction towards personal expenses should not be applied in the present case. In the absence of any evidence or material to the contrary, I feel 1/3rd should be deducted from the total annual income of the deceased towards personal expenditure of the deceased. The annual income of the deceased was determined at Rs. 44,264/-. The total annual loss of dependency after 1/3rd deduction, therefore, would be Rs. 29,510/-.

15. The deceased expired in 1999. At that time he was 30 years old. Due to inflation and rapid economic progress, minimum wages have been going up. The deceased had long working life ahead of him. It was natural that his earnings in normal course would have gone up in the next about 30 years. Loss of dependency is calculated keeping in view the monetary loss suffered by the dependants in future. Therefore, ld. Tribunal was justified in not ignoring the possibility of increase in earnings/income due to inflation, price rise, etc. of the deceased and taking this factor into consideration.

16. Regarding multiplier of 18 applied by the Tribunal, the same though in Page 1652consonance with the IInd Schedule of the Act, in on the higher side. As stated above, the claim petition was filed under Section 166 and not under Section 163A of the said Act. In the case of Sarla Dixit (supra) and General Manager, Kerala State Road Transport Corporation(supra) it has been held by the Supreme Court that normally maximum multiplier of 16 should be applied unless special circumstances require that a higher multiplier should be applied. Reference in this regard may also be made to T.N. State Transport Corporation Ltd. (supra) wherein it has been held as under:

16. In Susamma Thomas case it was noted that the normal rate of interest was about 10% and accordingly the multiplier was worked out. As the interest rate is on the decline, the multiplier has to consequentially be raised. Therefore, instead of 16 the multiplier of 18 as was adopted in Trilok Chandra case appears to be appropriate. In fact in Trilok Chandra case, after reference to Second Schedule to the Act, it was noticed that the same suffers from many defects. It was pointed out that the same is to serve as a guide, but cannot be said to be invariable ready reckoner. However, the appropriate highest multiplier was held to be 18. The highest multiplier has to be for the age group of 21 years to 25 years when an ordinary Indian citizen starts independently earning and the lowest would be in respect of a person in the age group of 60 to 70, which is the normal retirement age.

17. Keeping in view the above facts and the age of the deceased, I feel that multiplier of 16 should be applied in the present case to calculate the loss of dependency.

18. The compensation payable to the respondent Nos. 1-6 for loss of dependency on account of death of Mr. Sarvesh Kumar therefore works out to Rs. 4,72,160/-. With regard to non pecuniary compensation payable to the respondent Nos. 1-6 no arguments were addressed by the counsel appearing for the appellant and the respondent No. 9. Hence I do not examine this aspect and leave it un touched at Rs. 40,000/- . Thus the total amount payable to the respondent Nos. 1 to 6 is Rs. 5,12,160/-.

19. In view of the findings given above, the present appeal is partly allowed and the amount awarded by the learned Motor Accidents Claim Tribunal to respondent Nos. 1-6 in claim petition/Suit No. 117/2003 titled Smt. Pooja and Ors. v. Gulfam decided on 16th April, 2004 is scaled down from Rs. 8,00,752/- to Rs. 5,12,160/-.

20. The respondent Nos. 1-6 will also be entitled to interest @ 7.5% per annum from the date of filing of the petition till payment. The payment will be released to the said respondents in the ratio and as per the conditions stipulated in the Order passed by the learned Tribunal.

21. In the facts and circumstances of the present case, there will be no order as to cost.