The New India Assurance Co. Ltd. vs Smt. Nirmala Devi And Ors.
2007 Latest Caselaw 1001 Del

JUDGMENT

Pradeep Nandrajog, J.

1. The 2 captioned appeals arise out of the same accident which took place on 3.3.1979. The insurance company prays that its liability should be held to be limited to the extent of Rs. 50,000/-. Claimants pray that compensation be enhanced.

2. As a result of the accident, Prakaram Chand aged 34 years received fatal injuries. He died. He left behind a wife, 4 minor children and mother. His mother died during the pendency of the claim petition.

3. After discussing the evidence on record pertaining to the accident and holding the driver of the offending vehicle guilty of rash and negligent driving, Tribunal awarded a compensation of Rs. 1,72,800/- to the claimants. The owner, driver and the insurance company have been held liable to pay under the award.

4. Vide FAO No. 209/1994, insurance company has challenged the award in so far it determines that insurance company is liable to satisfy the award.

5. A defense was raised by the insurance company that policy in question was an 'Act Only Policy' and in view of the statutory provision contained in Clause 'b' of Sub-section 2 of Section 95 of M.V.Act, 1939, it's liability is limited to the extent of Rs. 50,000/- only.

6. Learned Tribunal has not discussed the issue of limited liability of insurance company in the award. However, considering that insurance company admitted that offending vehicle was insured with it, learned Tribunal has directed the insurance company to satisfy the award.

7. To establish that policy in question was an 'Act Only Policy', an insurance policy purported to be the true copy of the original policy was filed on record. The same is at Page No. 209 of the record of the Tribunal.

8. No official from the insurance company was summoned to prove that said policy was a true copy of the original policy. The alleged true copy does not bear the signature of the person under whose authority same has been issued.

9. The alleged true copy of the original policy has thus remained an unproved document.

10. There is no presumption in law that policy of insurance issued by an insurance company is 'act only policy'. For if, insurance company takes additional premium, it can cover additional risk. A contract of insurance is between insurance company and assured. Where policy covers a third party risk, third party is beneficiary of the risk. Thus, obligation is that of insurance company to prove terms of its liability. Where insurance company alleges that its liability is limited, onus is on the insurance company to prove it.

11. To the similar effect are the observations of the Kerala High Court in the decision reported as Ouseph v. Antony . In the said case, it was observed as follows:

The insurance company has not chosen to produce the policy or to adduce any evidence to show that their liability is limited to the statutory liability. As insurance company has not discharged the burden by either producing the policy or adducing any other evidence to that effect, the insurance company is liable to pay the entire amount due under the award.

12. Since the insurance company has failed to prove that its liability was limited to the extent of statutory liability, I direct insurance company to satisfy the award. FAO No. 209/1994 is accordingly dismissed.

13. In FAO No. 232/1994, appellants who were the claimants before the Tribunal seek enhancement of the compensation awarded to them due to the death of the deceased in the said road accident.

14. Vide award dated 14.7.1994, total compensation granted to the appellants is Rs. 1,72,800/-.

15. Since the only issue involved in this appeal relates to quantum of compensation, I shall only note such facts as are relevant for adjudication of said issue.

16. Deceased was aged 34 years as on the date of the accident.

17. He left behind his wife, 4 minor children aged 13 years, 11 years, 10 years, and 4 1/2 years respectively and his mother.

18. Deceased was employed as a tailor and was earning Rs. 1200/- per month at the time of the accident.

19. Noting the testimony of the wife of the deceased and other surrounding evidence, learned Tribunal has determined the earnings of the deceased at the time of the accident as Rs. 1200/- per month.

20. Relying upon the decision reported as Radha Kishan Sachdeva and Ors. v. L.D.Sharma and Anr. , learned Tribunal has taken last income of the deceased, i.e. Rs. 1200/- per month as the loss of dependence. Noting that deceased was aged 34 years at the time of the accident, multiplier of 12 has been applied by the Tribunal. Thus, total compensation has been determined by the Tribunal at Rs. 1200 x 12 x 12 = Rs. 1,72,800/-.

21. After perusing the award, I find that the compensation assessed to the appellants is faulty on 1 count.

22. In my view, Tribunal erred in ignoring the prospects of future increase in the income of the deceased. Tribunal failed to take note of the fact that wages increase from time to time to equalize fall in purchasing power of the rupee. Considering that the deceased was aged 34 years at the time of the accident, it could be expected that he would have worked for another 26 years.

23. A perusal of the minimum wages notified under the Minimum Wages Act show that minimum wages increase by nearly 150% in 10 years. Take for instance, minimum wages for skilled workman as on 1.1.1980 were Rs. 320/- per month. Same rose to Rs. 1,043/- in the year 1990 and further rose to Rs. 2,843/- in the year 2000. Meaning thereby that there has been an increase of 225% from the year 1980-1990 and an increase of 172% from the year 1990-2000.

24. Noting that minimum wages virtually double after every 10 years to neutralise increase in inflation, cost of living, purchasing power of rupee and the fact that deceased would have worked for another 26 years, it could reasonably be assumed that his earnings would have at least tripled by the time he would have left gainful employment. Thus, mean average income of the deceased comes to Rs. 2400/- per month. (Rs.1200 + Rs. 3600 ( 3 times increase in income)÷ by 2 = Rs. 2400/-.

25. I note that the deceased was maintaining besides himself, a wife, 4 minor children, aged between 4 1/2 years and 13 years and his mother. Noting the principle that lesser is the income, lesser is the presumed expenses on self and the second principle larger is the family, lesser is the presumed expenses on self, I consider deduction of 1/5th for the personal spending of the deceased as appropriate. Thus, loss of dependence comes to Rs. 1920/- per month.

26. Tribunal has rightly applied multiplier of 12. In so holding, I note the undermentioned judgments:

(i) U.P.State Road Transport Corporation v. Krishna Bala and Ors.

(ii) Managing Director, TNSTC Ltd. v. K.I.Bindu, .

(iii) T.N.State Transport Corporation Ltd. v. S.Rajapriya, .

(iv) New India Assurance Company Ltd. v. Smt.Kalpana and Ors.

27. Applying multiplier of 12, total loss of dependence comes to Rs. 1920 x 12 x 12 = Rs. 2,76,480/-.

28. Tribunal has awarded no compensation under the head 'non-pecuniary damages'. Considering that accident in question relates to the year 1979, I award compensation in sum of Rs. 10,000/- under the said head. Thus, total compensation comes to Rs. 2,86,480/-.

29. Tribunal has awarded compensation in sum of Rs. 1,72,800/-. Therefore, compensation is enhanced by a further sum of Rs. 1,13,680/-.

30. Noting that the interest rates fluctuated between 13% p.a. to 5.5% p.a. between the years 1979 and 2007, I direct that enhanced compensation shall be together with interest @ 8% p.a. from date of claim petition till date of realisation.

31. Enhanced compensation shall be disbursed as follows:

(a) Appellant No. 1 (widow) Rs. 93,680/-

(b) Appellant No. 2,3, 4 and 5 Rs. 5000/- (each)

(children)

32. FAO No. 232/1994 is allowed in terms of para 29, 30 and 31 above.

33. FAO No. 209/1994 is dismissed.

34. No costs.