Delhi High Court

National Insurance Co. vs Meena & Ors. on 7 November, 2008

Author: V.B.Gupta

*      HIGH COURT OF DELHI : NEW DELHI

    MAC App. No.192/2007 & CM No.4517/2007

%            Judgment reserved on: 17th October, 2008

             Judgment delivered on:7th November, 2008

National Insurance Co.
R.O. II, 2E/9, Jahandwalan Extn.,
New Delhi-55.                             ....Appellant

                       Through: Mr. S.L. Gupta, Adv.

                                Versus

1. Meena Widow of Sh. Madan Lal

2. Ms. Neha D/o. Sh. Madan Lal

3. Hira Lal father of Madan Lal.

4. Bimla Devi mother of Madan Lal
   All respondent Nos.1 to 4 are R/o. House No.
   C-31/7, Arjun Mohalla Block B, Abhimanyu
   Gali, Mauj Pur- Delhi-1100053.
                               Contesting Respondents

5. Krishan Kumar s/o. Sh. Bale Ram
   R/o. C-3292, Rani Bagh Park, Rani Bagh,
   Delhi-34.

6. Rajesh Kumar Chopra S/o. B.L. Chopra R/o.
   2119, Rani Bagh, Delhi-34.

                           5 and 6 are Performa Respondents.

                           Through: None.




MAC App. No.192/2007                          Page 1 of 18
 Coram:
HON'BLE MR. JUSTICE V.B. GUPTA

1. Whether the Reporters of local papers may
   be allowed to see the judgment?                      Yes

2. To be referred to Reporter or not?                   Yes

3. Whether the judgment should be reported
   in the Digest?                                       Yes

V.B.Gupta, J.

National Insurance Company has filed the present

appeal under Section 173 of the Motor Vehicles Act,

1988 against the award dated 2nd January, 2007 passed

by Sh. Pradeep Chaddah, Judge, MACT (for short as

„Tribunal‟).

2. Brief facts of this case are that on 12th November,

2005, at about 10.30 p.m., Sh. Madan Lal was driving

his car No.DL-7C-B-3278. In the car apart from Sh.

Madan Lal, one another passenger was also travelling.

The car was standing stationary on the road. In the

meanwhile, a bus bearing No.DL-1PB-1208, which was

driving by its driver in a rash and negligent manner,

hit the car from behind and the car got sandwiched

between the offending bus and the vehicle in front. All

the occupants of the car were removed to the Hospital,

where Madan Lal and his son were declared brought

dead.

3. The offending bus was being driven by

respondent No.5, owned by respondent No.6 and was

insured with the appellant.

4. The driver as well as owner of the offending bus

did not put in appearance before the trial court despite

service and they were proceeded ex-parte.

5. Appellant in its written statement has admitted

that the offending bus was insured with it. However, it

took preliminary objection in the written statement

stating that the insured had not complied with the

provisions of the Section 158(6) of the Act and the

offending vehicle was being driven by the person

without the permission and authority of the insured

and the driver of the offending bus was not holding

valid and proper driving licence and there was no

effective and valid permit in existence.

6. Vide impugned judgment, the Tribunal awarded a

compensation of Rs.10,10,000/- to the claimants along

with 9% interest from the date of institution of the

petition till the date of actual deposit.

7. Notice of appeal was issued to respondents no.1

to 4 and they were duly served, but they did not appear

on 17th July, 2007.

8. Later on, one advocate Sh. A.K. Mishra, appeared

on behalf of respondents No.1 to 4.

9. On 23rd August, 2007, when the matter was listed,

none appeared on behalf of respondent nos. 1 to 4.

The appeal was admitted for hearing.

10. On 17th October 2008, when the matter was listed

for hearing, again none appeared on behalf of

respondent nos.1 to 4 and thus, the arguments

advanced by learned counsel for appellant were heard.

11. It has been contended by the learned counsel for

appellant that the deceased was 41 years of age and

thus, the multiplier of 15 applied by the Tribunal is on

higher side and against the decisions of the Apex

Court.

12. Other contention is that compensation of

Rs.1,00,000/- on account of love and affection is

excessive.

13. Thus, compensation awarded by the Tribunal is on

higher side and without any basis and the award

passed by the Tribunal is liable to be set aside.

14. In the present case, there is no dispute about the

age and income of the deceased.

15. Regarding age of the deceased, the claimants

have proved the certificate ExPW1/1 issued by the

Central Board of Secondary Education, according to

which, date of birth of the deceased was 13th April,

1965. The accident took place on 12th November,

2005. Thus, the deceased was aged about 40 years

and 7 months at the time of accident, and the Tribunal

has rightly taken his age as 41 years.

16. As regards to the income of the deceased, the

Tribunal held as under;

"Copy of Income Tax Return filed by the deceased has been placed on record which indicate his total gross income as Rs.1,00,860/-. From the said amount we can deduct sum of Rs.9,014/- which the deceased had earned as income from National Saving Certificate. So we can safely take his earnings as net income of Rs.90,000/- after tax."

17. Thus, the Tribunal has taken the income of the

deceased as per record, and no infirmity can be found

on this count.

18. Now, the question to be seen is as what multiplier

should be adopted in this case, since the age of the

deceased at the relevant time was about 41 years.

19. Regarding multiplier, the Apex Court in the case

of U.P. State Road Transport Corpn. v. Krishna

Bala & Ors., III (2006) ACC 361 (SC), has

highlighted the manner of fixing the appropriate

multiplier and computation of compensation and has

observed as under:

"6. Certain principles were highlighted by this Court in the case of Municipal Corporation of Delhi v. Subhagwanti, 1966 (3) SCR 649 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 dependents 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., All ER p.665 A-B, which says:-

"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."

7. There were two methods adopted to determine and for calculation of compensation in fatal accident actions, the first the multiplier mentioned in Davies case (supra) and the second in Nance v. British Columbia Electric Railway Co. Ltd., 1951 (2) All ER 448.

8. 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."

Further Court held that;

"10. In regard to the choice of the multiplicand the Halsbury's Laws of England in Vol. 34, Para 98 states the principle thus:

"98. Assessment of damages under the Fatal Accidents Act 1976- The courts

have evolved a method for calculating the amount of pecuniary benefit that dependants could reasonably expect to have received from the deceased in the future. First the annual value to the dependants of those benefits (the multiplicand) is assessed. In the ordinary case of the death of a wage- earner that figure is arrived at by deducting from the wages the estimated amount of his own personal and living expenses.

The assessment is split into two parts. The first part comprises damages for the period between death and trial. The multiplicand is multiplied by the number of years which have elapsed between those two dates. Interest at one-half the short-term investment rate is also awarded on that multiplicand. The second part is damages for the period from the trial onwards. For that period, the number of years which have elapsed between the death and the trial is deducted from a multiplier based on the number of years that the expectancy would probably have lasted; central to that calculation is the probable length of the deceased's working life at the date of death."

11. As to the multiplier, Halsbury states:

"However, the multiplier is a figure considerably less than the number of years taken as the duration of the expectancy. Since the dependants can invest their damages, the lump sum

award in respect of future loss must be discounted to reflect their receipt of interest on invested funds, the intention being that the dependants will each year draw interest and some capital (the interest element decreasing and the capital drawings increasing with the passage of years), so that they are compensated each year for their annual loss, and the fund will be exhausted at the age which the court assesses to be the correct age, having regard to all contingencies. The contingencies of life such as illness, disability and unemployment have to be taken into account. Actuarial evidence is admissible, but the courts do not encourage such evidence. The calculation depends on selecting an assumed rate of interest. In practice about 4 or 5 per cent is selected, and inflation is disregarded. It is assumed that the return on fixed interest bearing securities is so much higher than 4 to 5 per cent that rough and ready allowance for inflation is thereby made. The multiplier may be increased where the plaintiff is a high tax payer. The multiplicand is based on the rate of wages at the date of trial. No interest is allowed on the total figure."

20. In Smt. Sarla Dixit and Anr. v. Balwant Yadav

& Ors., AIR 1996 SC 1272, cited by learned counsel

for appellant, the Apex Court has observed;

"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 awarded 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 34. This is wholly impermissible. We are, aware that some decisions of the High Courts and of this Court as well have arrived at compensation on some such basis. These decisions cannot be said to have laid down a settled principle. They are merely instances of particular awards in individual cases. The proper method of computation is the multiplier-method. A departure, except in exceptional and extraordinary cases, would introduce inconsistency of principle, lack of uniformity and an element of unpredictability for the assessment of compensation. Some judgments of the High Courts have justified a departure

from the multiplier method on the ground that Section 110-B of the Motor Vehicles Act, 1939 insofar as it envisages the compensation to be 'just', the statutory determination of a 'just' compensation would unshackle the exercise from any rigid formula. It must be borne in mind that the multiplier method is the accepted method of ensuring a 'just' compensation which will make for uniformity and certainty of the awards. We disapprove these decisions of the High Courts which have taken a contrary view. We indicate that the multiplier method is the appropriate method, a departure from which can only be justified in rare and extraordinary circumstances and very exceptional cases."

Further, the Court has observed;

"So far as the adoption of the proper multiplier is concerned, it was observed that the future prospects of advancement in life and career should also be sounded in terms of money to augment the multiplicand. While the chance of the multiplier is determined by two factors, namely, the rate of interest appropriate to a stable economy and the age of the deceased or of the claimant whichever is higher, the ascertainment of the multiplicand is a more difficult exercise. Indeed, many factors have to be put into the scales to evaluate the contingencies of the future. All contingencies of the future need not necessarily be baneful."

Further the Court held that;

"Deceased in the present case, as seen above, was earning gross salary of Rs.1543 per month. Rounding it up to figure of Rs.1500 and keeping in view all the future prospects which the deceased had in stable military service in the light of his brilliant academic record and performance in the military service spread over 7 years, and also keeping in view the other imponderables like accidental death while discharging military duties and the hazards of military service, it will not be unreasonable to predicate that his gross monthly income would have shot up to at least double than what he was earning at the time of his death, i.e., up to Rs.3000/- per month had he survived in life and had successfully completed his future military career till the time of superannuation. The average gross future monthly income could be arrived at by adding the actual gross income at the time of death, namely Rs.1500/- per month to the maximum which he would have otherwise got had he not died a premature death, i.e., Rs.3000/- per month and diving that figure by two. Thus, the average gross monthly income spread over his entire future career had it been available, would work out to Rs.4500 divided by 2, i.e., Rs.2200. Rs.2200 per month would have been the gross monthly average

income available to the family of the deceased had he survived as a breadwinner. From that gross monthly income at least 1/3rd will have to be deducted by way of his personal expenses and other liabilities like payment of income tax etc."

21. In the present case, admittedly, the Tribunal has

taken the actual income of the deceased. It did not

double the monthly income of the deceased nor

considered the future prospects.

22. As per structured formula of the Second Schedule

of the Act, the appropriate multiplier for the age of

above 40 years but not exceeding 45 years is 15.

23. The Apex Court has taken a view in catena of

judgments that the multiplier as laid down in the

Second Schedule of the Act can be deviated only under

exceptional circumstances otherwise normally the

same acts as a safeguard. Therefore, I do not find any

infirmity in the impugned award so far as the said

multiplier of 15 is concerned.

24. It is also one of the contention that the

compensation of Rs.1,00,000/- on account of loss of

love and affection is on higher side but the appellant

has not given any justification for reducing the same.

25. Under the provisions of the Act, no upper limit for

providing compensation for loss of love and affection

has been prescribed. The only embargo is that it

should be „just‟ compensation, that is to say, it should

be neither arbitrary, fanciful nor unjustifiable from the

evidence.

26. In this regard, the Apex Court also observed in

The Divisional Controller, KSRTC v. Mahadeva

Shetty & Anr., JT 2003 (6) SC 519, as under;

"It has to be kept in view that the Tribunal constituted under the Act as provided in Section 168 is required to make an award determining the amount of compensation which to it appears to be "just". It has to be borne in mind that compensation for loss of limbs or life can hardly be weighed in golden scales. Bodily injury is nothing but a deprivation which entitles the claimant to

damages. The quantum of damages fixed should be in accordance with the injury. An injury may bring about many consequences like loss of earning capacity, loss of mental pleasure and many such consequential losses. A person becomes entitled to damages for mental and physical loss, his or her life may have been shortened or that he or she cannot enjoy life, which has been curtailed because of physical handicap. The normal expectation of life is impaired. But at the same time it has to be borne in mind that the compensation is not expected to be a windfall for the victim. Statutory provisions clearly indicate that the compensation must be "just" and it cannot be a bonanza; not a source of profit but the same should not be a pittance. The courts and tribunals have a duty to weigh the various factors and quantify the amount of compensation, which should be just. What would be "just" compensation is a vexed question. There can be no golden rule applicable to all cases for measuring the value of human life or a limb. Measure of damages cannot be arrived at by precise mathematical calculations. It would depend upon the particular facts and circumstances, and attending peculiar or special features, if any. Every method or mode adopted for assessing compensation has to be considered in the background of "just" compensation which is the pivotal

consideration. Though by use of the expression "which appears to it to be just", a wide discretion is vested in the Tribunal, the determination has to be rational, to be done by a judicious approach and not the outcome of whims, wild guesses and arbitrariness. The expression "just" denotes equitability, fairness and reasonableness, and non-arbitrary. If it is not so, it cannot be just. (See Helen C. Rebello v. Maharashtra State Road Transport Corporation & another, II (1998) ACC 512.)"

27. In cases of motor accidents, the endeavour is to

put the dependents/claimants in the pre-accidental

position. Compensation in cases of motor accidents, as

in other matters, is paid for reparation of damages.

The damages so awarded should be adequate sum of

money that would put the party, who has suffered, in

the same position if he had not suffered on account of

the wrong. Compensation is, therefore, required to be

paid for prospective pecuniary loss, i.e. future loss of

income/dependency suffered on account of the

wrongful act.

28. Keeping in view all the facts and circumstances