Delhi High Court

Royal Sundaram Alliance ... vs Pinki Devi & Ors. on 10 September, 2008

Author: V.B.Gupta

*       HIGH COURT OF DELHI : NEW DELHI

     MAC App. No.404/2008 & CM No.10272/2008

%            Judgment reserved on: 29th August, 2008

             Judgment delivered on:10th September, 2008


Royal Sundaram Alliance Insurance Co. Ltd.
Through
"Sorrento Building" No.6, 1st Floor
Lattice Bridge Road, Adyar
Chennai-600 020                       ....Appellant

                         Through: Ms. Sakshi Mittal, Adv.

                             Versus
1. Pinki Devi,
   W/o. Lt. Sh. Mahesh Kumar Sharma

2. Ms. Anshu,
   D/o. Lt. Sh. Mahesh Kumar Sharma

3. Master Ajit,
   S/o. Lt. Sh. Mahesh Kumar Sharma

4. Master Krish,
   S/o. Lt. Sh. Mahesh Kumar Sharma

     (Respondents No.2, 3 & 4 through their
      Mother & natural guardian Smt. Pinki Devi
      Being minor)

     All R/o. Village Adalpur, P.O. Adalpur,
     Police Station-Jandha, District Vaishali,
     Bihar, Presently at D-116, Mahavir Enclave,
     Part-3, Gali No.50, Palam, New Delhi.

5.    Sh. Jitender Narayan Pandey

MAC App.No.404 of 2008                           Page 1 of 17
      S/o. Lt. Sh. Triveni Pandey
     R/o. E-802, Satisar Apartments,
     Plot No.6, Sector-7,
     Dwarka, New Delhi.              ....Respondents.

                         Through:

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.

CM No.10275/2008

Allowed subject to all just exceptions.

Application stands disposed of.

MAC App. No.404/2008 & CM No.10272/2008

1. The present appeal has been filed by the

Insurance Company under Section 173 of the Motor

Vehicles Act, 1988 (for short as „Act‟) against the order

dated 19th February, 2008 passed by Ms. Deepa

Sharma, Judge, MACT, Delhi.

2. The brief facts of this case are that on 19th

December, 2005, at about 9.30 a.m., deceased Mahesh

Sharma was going on his motorcycle No.DL-9SL-0160

along with his friend Surender Sharma. When they

reached near Pushpanjali Farm House, New Dwarka

Road, Mahipalpur, New Delhi, one Maruti Zen No.DL-

9CF-9311, driven by respondent No.5/Jitender Narayan

Pandey, in a rash and negligent manner hit the

motorcycle of the deceased from the side. Deceased

and his friend fell down and received injuries.

Deceased was removed to Safdarjung hospital where

he remained admitted from 19th December, 2005 to

23rd December, 2005. On 23rd December, 2005, he

succumbed to his injuries.

3. It is stated that deceased was working as a

Carpenter with Bhayana Builders Pvt. Ltd. and was

earning Rs.8,000/- p.m. Compensation to the tune of

Rs.20 lacs has been claimed by the legal heirs of the

deceased.

4. Vide the impugned judgment, the Tribunal

awarded a compensation of Rs.7,60,000/- along with

interest @ 7% p.a. from the date of petition till

realization.

5. Aggrieved against the judgment of the Tribunal,

the Insurance Company has filed the present appeal.

6. It is contended by learned counsel for the

appellant that Tribunal wrongly came to the conclusion

that deceased was a skilled worker by relying upon

their identity card alleged to have been issued by

Bhayana Builders Pvt. Ltd. The identity card has not

been proved as the same was not exhibited in

accordance with law. The Tribunal thus, erred in

applying minimum wages applicable to skilled worker

while calculating compensation payable in this case

when there was no proof of the alleged

employment/vocation.

7. The other contention raised by learned counsel

for the appellant is that Tribunal has adopted a

multiplier of 17, which is on a higher side.

8. Claimants case is that deceased was working as a

carpenter with reputed firm and earning Rs.8,000/- per

month. In order to prove the income of the deceased,

respondents 1 to 4 have examined PW2, Ram Nath

Sharma.

9. PW2 has proved on record document Ex.PW2/A,

wherein it is stated that the deceased was earning

Rs.8,000/- per month and was a good carpenter and

could have become a Contractor, if not died.

10. In his cross-examination, PW2 has stated that he

had issued this certificate on compassionate ground,

but he cannot produce any books of account to show

that he was paying Rs.8,000/- p.m. to the deceased.

11. Thus, the claimants have not been able to prove

the income of the deceased, as no documentary

evidence had been placed on record.

12. However, the claimants have proved on record

identity card Ex.PW1/5A issued in the name of the

deceased by Bhayana Builders Pvt. Ltd., wherein he

has been shown as Carpenter.

13. The Tribunal has determined the income of the

deceased after applying Smt. Sarla Dixit & Anr. v.

Balwant Yadav & Ors., AIR 1996 SC 1274 as

Rs.5,370/- per month (Rs.3,580 + Rs.7,160/- = Rs.

10,740/- divided by 2) and after deducting 1/3rd on

account of personal expenses, the income of the

deceased was assessed as Rs.3,580/- per month.

14. The Apex Court in plethora of cases has held that

while assessing the income of the deceased in motor

accident cases, the tribunals should bear in mind that

the same should be assessed on the basis of the cogent

and the reliable evidence produced and duly proved on

record.

15. In this regard the thumb rule is that where there

is no cogent evidence on record to prove the monthly

income at the time of accident, then the minimum

wages notified under the Minimum Wages Act

prevalent at the time of accident can be taken into

consideration.

16. In a recent decision of this Court Sh. Narinder

Bishal and Anr. v. Sh. Rambir Singh and Ors.,

MAC App. 1007-08/2006, decided on 20.02.08 by

Kailash Gambhir, J., it has been observed as under;

"For determining the earning of the deceased or victim of the accident, the claimants are supposed to prove the exact income of the deceased by leading some cogent and reliable documentary evidence as to the nature of his employment or trade or business or in any other activity he was involved in and then the said income can be taken into consideration for determining the quantum of compensation and if in such a case, the claimants are further able to establish the future prospects as well, then the criteria laid down in Sarla Dixit's case would get attracted. There can be another category of cases where the claimants are able to establish the future prospects of the deceased by quantifying the amount to be earned

by the deceased in future with the help of cogent, reliable and convincing evidence and in all such cases the tribunal can take into consideration such future increase as has been established by the claimants on record. The difficulty however, would arise in all those cases where although the claimants are able to sufficiently establish on record the educational qualification of the deceased or the nature of his employment whether skilled, semi-skilled or unskilled but fail to establish by any reliable evidence to prove the exact income of the deceased. In such cases, question arises whether the Tribunal can take into consideration the minimum wages and the periodical revision of minimum wages as are fixed by the Government under the Minimum Wages Act. To examine this question, it will have to be considered whether the revision which takes place under the Minimum Wages Act can be equated with the future prospects of a deceased. As would be evident from catena of judgments of the Supreme Court, the future prospects have no correlation with the price index, inflation or denunciation of currency value.

The future prospects would necessarily mean advancement in future career, earnings and progression in one's life. It could be considered by seeing, from which

post a person began his career, what avenues or prospects he has while being in a particular avocation and what targets he/she would finally achieve at the end of his career. The promotional avenues, career progression, grant of selection grades etc. are some of the broad features for considering one's future prospects in one's career.

The minimum wage, in the very context of economy has a correlation with the growth and development of the nation's economy, postulating increase in the price index, reduction of purchasing power with the denunciation of currency value and consequent fixation of minimum wages giving some periodical increase so as to ensure sustenance and survival of the workman class. Keeping this in view, under no circumstance the revision of minimum wages can be treated on the same footing with the factor of future prospects."

17. In the present case, the deceased was admittedly

working as a carpenter, as established by identity card

Ex PW1/5A issued in the name of the deceased, by

Bhayana Builders Pvt. Ltd.

18. Carpenter comes under the category of skilled

worker. As per the Minimum Wages Act, the minimum

wages payable to a skilled worker in the year 2005

were Rs.3,589/- p.m. which is rounded off to Rs.3,580/-

per month.

19. Thus, the Tribunal has rightly taken the income of

the deceased with the help of minimum wages in the

absence of any other evidence.

20. Assuming for the arguments sake that the

Tribunal should have taken the income of the unskilled

worker instead of skilled worker, even then it would

not make any big difference in the awarded

compensation, as there is not much difference between

both, since the income of the unskilled worker was

Rs.3,165.90 p.m., while that of the skilled worker was

Rs.3,589.90 p.m., on the date of accident.

21. As regards the contention that higher multiplier

has been applied by the Tribunal, 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."

22. The Apex Court in Tamil Nadu State Transport

Corporation Ltd. v. S. Rajapriya & Ors., III (2005)

ACJ 1441 (SC), has observed as under;

"8. The assessment of damages to compensate the dependants is beset with difficulties because from the nature of things, it has to take into account many imponderables, e.g., the life expectancy of the deceased and the dependants, the amount that the deceased would have earned during the remainder of his life, the amount that he would have contributed to the dependants during that period, the chances that the deceased may not have lived or the dependants may not live up to the estimated remaining period of their life expectancy, the chances that the deceased might have got better employment or income or might have lost his employment or income altogether.

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 capitalized by multiplying it by a figure representing the proper number of years‟ purchase.

10. Much of the calculation necessarily remains in the realm of hypothesis "and in that region arithmetic is a good servant but a bad master" since there are so often many imponderables. In every case "it is the over-all picture that matters" and the court must try to assess as best as it can the loss suffered."

23. The sum and substances of the various decisions

of the Apex Court and this Court is that the

compensation paid to the dependent family members

of the road victim should be just and reasonable and in

every case it is the overall picture that matters and the

Court must try to assess as best as it can for the loss

suffered.

24. The age of the deceased at the relevant time was

30 years and as per the structured formula of the

Second Schedule of the Act, the appropriate multiplier

is 17. Thus, the multiplier of 17 adopted by the

Tribunal is as per the Schedule and is fully justified.