New India Assurance Co. Ltd. vs Anita Suri & Ors.
2010 Latest Caselaw 2955 Del

           * IN THE HIGH COURT OF DELHI AT NEW DELHI

                                                    Date of Reserve: May 25, 2010
                                                     Date of Order: June 04, 2010

+FAO No. 359/1997 & CM Appl. Nos 45/2002, 431, 609/2003,
 16113/2004, 11265/2005
%
                                                                       04.06.2010

NEW INDIA ASSURANCE CO. LTD.                     ... Appellant
                 Through: Mr. L.K. Tyagi, Advocate

                  Versus

ANITA SURI & ORS.                                               ... Respondents
                                   Through: Mr. Navneet Goyal, Advocate

                                           AND

+FAO No. 26/1998 & CM Appl. Nos 1210/2000, 503/2003
%
                                                                       04.06.2010

ANITA SURI & ORS.                                              ... Appellant
                                   Through: Mr. Navneet Goyal, Advocate

                  Versus

MANGAL & ORS                                                     ... Respondents
                                   Through: Mr. L.K. Tyagi, Advocate for R-3


JUSTICE SHIV NARAYAN DHINGRA


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

2. To be referred to the reporter or not?

3. Whether judgment should be reported in Digest?




FAO No. 359 of 1997 & 26 of 1998                                     Page 1 of 7
 JUDGMENT

1. The above two appeals arise out of the award dated 24th September,

1997 whereby the claimants were awarded a compensation of Rs. 4,42,000/-

and the liability of the insurance company was held to be unlimited and the

insurance company was directed to pay the entire compensation. The

insurance company has preferred the appeal assailing the award on the

ground that its liability has wrongly been held to be unlimited whereas the

claimants have assailed the award on the ground that compensation awarded

was inadequate.

2. The accident in this case had taken place on 23rd December, 1980

resulting into death of Vinay Kumar Suri, who was going in his car No.

DHD 7466 and was hit from behind at red light by truck No. DLL 7494.

3. The deceased was a businessman and to prove his income not only

oral testimony was adduced but Income Tax Returns for Assessment Years

1978-79, 1979-80, 1980-81 and 1981-82 were produced. The total annual

income (pre-tax) for Assessment Years 1978-79 was Rs. 28,335/- and for

the years 1981-82 it was Rs. 38,980/-. The learned Tribunal considered the

monthly income of the deceased at Rs. 2,800/- on the basis of average of the

different assessment years and calculated the compensation on the basis of

this income. The Tribunal applied a multiplier of 18 and deducted Rs. 560/-

as the amount towards own expenses of the deceased. The deceased has left

behind widow, two minor daughters and parents. The learned Tribunal

relied upon the ratio of UP State Road Transport Corporation & Ors.

reported in I (1996) ACC 592 SC for calculating just and fair compensation

in this case. The Tribunal also awarded Rs. 10,000/- towards loss of

expectations of life and thus granted total compensation of Rs. 4,42,000/-.

4. It is submitted by the counsel for the appellant (claimants) that the

Tribunal has not taken into consideration future prospects and the Tribunal

wrongly took into consideration average income of the deceased of all

previous years as the income tax returns shows that income of the deceased

was progressively increasing. He submitted that income of last financial

year only should have been taken and he submitted that income of deceased

was not properly assessed by the Tribunal.

5. The deceased was a partner in a partnership firm namely M/s. Aryan

Industries and his income was from this partnership business. Income Tax

Returns placed on record are of this partnership firm wherein income of the

deceased from the firm has been shown. I consider that the Tribunal should

have considered the income of the deceased only of last financial year

instead of taking average of all financial years. When we take the income of

last financial years, the monthly income of the deceased would come around

Rs. 3,250/-, while the average income taken by the Tribunal is Rs. 2800/-.

However, the Tribunal committed an error apparent by not deducting

income tax from this average income. The tax liability in the year 1981-82

was very heavy. Only first Rs. 15000/- were exempted from tax and for

income exceeding Rs. 15,000/-, the tax liability was 30 per cent up to Rs.

25,000/-, 34% up to Rs. 30,000/- and 40% if the income was beyond Rs.

30,000/-. As per the Income Tax prevalent in the year 1981-82, where the

income exceeded Rs. 30,000/-,the tax liability was Rs. 4700 + 40% of the

amount in excess of Rs. 30,000/-. Thus, the deceased was liable to pay a tax

of around Rs. 600/- per month. If we reduce the gross monthly income of

deceased i.e. Rs. 3250/-, by the tax liability of Rs. 600/- per month, the real

monthly income of the deceased would come around Rs. 2650/- per month.

However, the Tribunal has calculated compensation on the basis of Rs.

2800/- per month and therefore I consider that it cannot be said to be unfair.

6. Multiplier of 18 applied by the Tribunal is the maximum multiplier as

per II Schedule of M.V. Act. The deduction of Rs. 560/- per month towards

personal expenses was also the most appropriate deduction. As per Sarla

Varma & Ors. vs. Delhi Transport Corporation & Anr.; (2009) 6 SCC 121

case, the deduction should have been 1/4th. However, in this case

approximately 1/5th has been deducted and I therefore consider that award

cannot be assailed on this ground.

7. Future prospects in business are not taken into account due to

possible upheavals, ups and downs in the business. I therefore consider that

compensation awarded by the Tribunal was just and fair.

8. The issue of limited liability raised by the insurance company was

dealt by this Court in F.A.O. No.257 of 1991 titled Neeta Trehan & Ors. Vs.

Gopal Krishan & Ors., decided on 17th May, 2010, observing as under :-

"14. The issue arises whether this insurance cover obtained by the insured was limited to a liability of Rs.1,50,000/- being the minimum liability for which a vehicle was required to be insured by the owner or this premium covered wider liability. Counsel for the appellants has drawn my attention to the judgment in Veena Pruthi's case (supra) given by the Division Bench of this court where the Division Bench of this court held that if the premium was Rs.125/-, the liability would be limited to Rs.1,50,000/- and not unlimited. On the same logic it is stated that if the premium was Rs.240/- for class A(2) vehicle, the liability of insurance company would be limited to Rs.1,50,000/-.

15. Where obtaining of an insurance cover is made mandatory by statute, the contract is to be interpreted in the light of statutory provisions. In case of motor vehicles, obtaining of an insurance cover by the owners of vehicles is a statutory requirement. Thus, an insurance policy has to be interpreted keeping in view the statutory provisions and the rules of tariff as framed by the Advisory Board. Under the tariff rules, two separate tariffs are provided for 'Act Only Liability' and for 'Public Risk'. It cannot be said that the Advisory Board provided tariff for 'Act Only Liability'

as a superfluous phenomenon. The Advisory Board was having in mind that where the owner wants to take an insurance policy covering the minimum liability under Section 95 of the Act, then the premium should be different. If the owner wants wider liability then the premium should be different and that is the reason that for 'Act Only Liability', a premium of Rs.200/- was provided and for 'Public Risk', a premium of Rs.240/- was provided. Public risk is a wider term and takes into account the entire risk faced by the owner for bringing vehicle on road. If there had been no compulsion under the Act to obtain an insurance policy, the only insurance cover which owner could have obtained from an insurance company for covering public risk would have been this that he would pay Rs.240/- and get the public risk covered. If the Act would have not prescribed any limit, the public risk would naturally have been unlimited. The Act prescribed that every owner of vehicle should get insurance cover covering a minimum amount. Beyond that, the Act did not provide anything. It is under these circumstances that the Tariff Advisory Committee prescribed separate premium for 'Act Only Policy' and separate premium for a 'Public Risk Policy'. I, therefore, consider that the 'Public Risk' premium would cover unlimited amount of risk and would not cover a limited amount of risk.

x x x x x

18. There is another aspect to be kept in mind. When an owner approaches insurance agent for insurance, he is told what would be the tariff payable by him and on payment of tariff, an insurance certificate or cover note is issued. The contract of insurance, thus, stands concluded on receipt of tariff/premium in terms of the tariff schedule as laid down by Advisory Board. Insurance policy is subsequently mailed to owner by insurance company. If insurance company unilaterally inserts a clause in the policy which is contrary to tariff

regulations, such a clause is not binding. All insurance policies are in the shape of one standard performa used for different kinds of coverage. If while sending insurance policy to owner the company official does not score off non-applicable clauses or inserts a limited liability clause which is contrary to the tariff charged from owner, such a clause is not binding."

9. In the present case, the premium charged by the insurance company

was Rs. 125/-, which was the premium for "Public Risk Liability", whereas

the premium for "Act Only Liability" was Rs. 100/-. The tariff table

available on Trial Court Record and the policy cover note confirm that the

premium was not charged for "Act Only Liability" but it was charged for

"Public Risk Liability". I, therefore, consider that the liability of the

insurance company was not limited to Rs. 50,000/- as claimed, but it was

unlimited.

10. Both the appeals fail and are hereby dismissed.

June 04, 2010                                 SHIV NARAYAN DHINGRA, J.
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