Delhi High Court
Iffco Tokio General Insurance Co. ... vs Sant Ram & Ors. on 19 April, 2012
Author: G.P. Mittal
$~14
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Date of decision:19th April, 2012
+ MAC. APP. No.429/2011
IFFCO TOKIO GENERAL INSURANCE CO. LTD.
..... Appellant
Through: Ms. Suman Bagga, Advocate
Versus
SANT RAM & ORS. ..... Respondents
Through: Mr. Anshuman Bal, Advocate
for the Respondents No.1 and 2.
CORAM:
HON'BLE MR. JUSTICE G.P.MITTAL
JUDGMENT
G. P. MITTAL, J. (ORAL)
1. The Appellant seeks reduction of compensation of `5,08,750/-
awarded for the death of Vikas, (a bachelor) who lost his life in
a motor accident which occurred on 23.06.2009.
2. A Claim Petition under Section 163-A of the Motor Vehicles
Act was filed by the Respondents No.1 and 2 i.e. the
deceased's parents. The Claims Tribunal accepted the
deceased's income to be `39,000/- per annum, added 50%
towards inflation, deducted 50% towards personal and living
expenses, applied the multiplier of 15 suitable to the age of the
deceased's mother to compute the loss of dependency as
`4,38,750/-. The Claims Tribunal further awarded a sum of
`50,000/- towards loss of love and affection and `10,000/- each
towards funeral expenses and loss to estate.
3. It is agreed by the learned counsels for the parties that in a
Claim Petition under Section 163-A, the compensation has to
be awarded on the basis of the structured formula.
4. In MAC APP. No.472/2010 titled Bajaj Allianz General
Insurance Co. Ltd. v. Lilawati & Ors., decided on 14th February,
2012, this Court while dealing with Section 163-A of the Motor
Vehicles Act has held as under:
"3. The question whether the compensation in a Petition
under Section 163-A of the Motor Vehicles Act (the Act)
can be claimed and awarded strictly in accordance with
the structured formula given in the Second Schedule has
vexed the Courts in the country. The High Courts and the
Supreme Court have been requesting the legislature to
come out with an amendment to the Second Schedule
which was incorporated way back in the year 1994 so that
adequate and „just compensation‟ may be awarded to the
persons in the lower income bracket.
4. In Oriental Insurance Company Limited v. Smt.
Pataso & Ors., MAC APP.962/2005 decided on
01.09.2008, it was held that considering the inflation and
depreciation in the value of the rupee, there was no
justification to restrict the award of general damages to
the Second Schedule under Section 163-A of the Act.
5. In Oriental Insurance Company Limited v. Om
Prakash & Ors., 1 (2009) ACC 148, ` 50,000/- was
awarded as compensation on account of loss of child and
pain and suffering, which was beyond the limits
prescribed under Section 163-A of the Act.
6. There are later judgments of this Court in Jagdish &
Anr. v. Madhav Raj Mishra and Anr. MAC APP.190/2011
decided on 19.04.2011; and Oriental Insurance Company
Limited v. Anita Devi & Ors., 2011 (5) AD (Delhi) 138,
decided on 10.05.2011 which have adopted the line that
when the Claimants approach the Court under Section
163-A of the Act, the compensation is to be restricted as
per the structured formula.
7. The Supreme Court in some of its reports lamented
the inaction on the part of the Central Govt. in not
carrying out amendment in the Second Schedule to the
Act, but have held that under Section 163-A of the Act, the
compensation can be granted only as per the structured
formula. The first such judgment is Oriental Insurance
Company v. Hansrajbhai v. Kodala, (2001) 5 SCC 175,
where it was held that the benefit of filing a petition on
no-fault liability can be claimed on the basis of income
with a cap of `40,000/-. It was the highest slab in the
Second Schedule. It was observed that others have to
approach the Court under Section 166 of the Act. Para
15 of the report is extracted hereunder:-
"15. In this context if we refer to the Review
Committee's Report, the reason for enacting Section
163-A is to give earliest relief to the victims of the
motor vehicle accidents. The Committee observed
that determination of cases takes a long time and,
therefore, under a system of structural
compensation, the compensation that is payable for
different classes of cases depending upon the age of
the deceased, the monthly income at the time of
death, the earning potential in the case of a minor,
loss of income on account of loss of limb etc. can be
notified and the affected party can then have option
of their accepting „lump sum‟ compensation under
the Scheme of structural compensation or of
pursuing his claim through the normal channels.
The Report of the Review Committee was considered
by the State Governments and comments were
notified. Thereafter, the Transport Development
Council made suggestions for providing adequate
compensation to victims of road accidents without
going into long drawn procedure. As per the objects
and reasons, it is a new pre-determined formula for
payment of compensation to road accidents victims
on the basis of age/income, which is more liberal
and rational. On the basis of the said
recommendation after considering the Report of the
Transport Development Council, the Bill was
introduced with „a new pre-determined formula for
payment of compensation to road accident victims
on the basis of age/income, which is more liberal
and rational‟, i.e. Section 163-A. It is also apparent
that compensation payable under Section 163-A is
almost based on relevant criteria for determining
the compensation such as annual income, age of the
victim and multiplier to be applied. In addition to
the figure which is arrived at on the basis of said
criteria, the Schedule also provides that amount of
compensation shall not be less than Rs.50,000/-. It
provides for fixed amount of general damage in case
of death such as (1) Rs.2000/- for funeral expenses
(2) Rs.5000/- for loss of consortium, if beneficiary is
the spouse (3) Rs.2400/- for loss of estate (4) for
medical expenses supported by the bills, voucher not
exceeding Rs.15000/-. Similarly, for disability in a
non-fatal accident Para 5 of the Schedule provides
for determination of compensation on the basis of
permanent disability. Para 6 provides for notional
income for those who had no income prior to an
accident at Rs.15000/- per annum. There is also
provision for reduction of 1/3rd amount of
compensation on the assumption that the victim
would have incurred the said amount towards
maintaining himself had he been alive. The purpose
of this Section and the Second Schedule is to avoid
long drawn litigation and delay in payment of
compensation to the victims or his heirs who are in
dire need of relief. If such affected claimant opts for
accepting the lump-sum compensation based on
structured formula, he would get relief at the
earliest. It also gives vital advantage of not pleading
or establishing any wrongful act or neglect or
default of the owner of the offending vehicle or
vehicles. This no-fault liability appears to have been
introduced on the basis of the suggestion of the Law
Commission to the effect that 'the expanding notions
of social security and social justice envisage that
liability to pay compensation must be "no-fault
liability" and as observed by this Court in
Ramanbhai's case (Supra), "in order to meet to
some extent the responsibility of the society to the
deaths and injuries caused in road accidents."
However, this benefit can be availed of by the
claimant only by restricting his claim on the basis of
income at a slab of Rs.40,000/- which is the highest
slab in the Second Schedule which indicates that the
legislature wanted to give benefit of no-fault liability
to a certain limit. This would clearly indicate that
the Scheme is in alternative to the determination of
compensation on fault basis under the Act. The
object underlining the said amendment is to pay
compensation without there being any long drawn
litigation on an predetermined formula, which is
known as „structured formula‟ basis which itself is
based on relevant criteria for determining
compensation and the procedure of paying
compensation after determining the fault is done
away. Compensation amount is paid without
pleading or proof of fault, on the principle of social
justice as a social security measure because of ever
increasing motor vehicles accidents in a „fast
moving‟ society. Further, the law before insertion of
Section 163-A was giving limited benefit to the
extent provided under Section 140 for no-fault
liability and determination of compensation amount
on fault liability was taking a long time. That
mischief is sought to be remedied by introducing
Section 163-A and the disease of delay is sought to
be cured to a large extent by affording benefit to the
victims on „structured formula‟ basis. Further, if the
question of determining compensation on fault
liability is kept alive it would result in additional
litigation and complications in case claimants fail to
establish liability of the owner of the defaulting
vehicles."
8. In Deepal Girishbhai Soni v. United India Insurance
Company Limited, (2004) 5 SCC 385; the observations of
the Supreme Court in Para 67 it was stated that "we do
not agree with the findings in Kodala (supra) that if a
person invokes provisions of Section 163-A of the Act, the
annual income of ` 40,000/- per annum shall be treated as
a cap". The Hon‟ble Supreme Court hastened to add that
the proceedings under Section 163-A being a social
security provision, providing for a distinct scheme, only
those whose annual income is upto ` 40,000/- can take the
benefits thereof. All other claims have to be determined
under Chapter XII of the Act.
9. Para 67 in Deepal Girishbhai Soni (supra) is
extracted hereunder:-
"67. We, therefore, are of the opinion that Kodala
(supra) has correctly been decided. However, we do
not agree with the findings in Kodala (supra) that if
a person invokes provisions of Section 163-A, the
annual income of Rs.40,000/- per annual shall be
treated as a cap. In our opinion, the proceeding
under Section 163-A being a social security
provision, providing for a distinct scheme, only
those whose annual income is upto Rs. 40,000/- can
take the benefit thereof. All other claims are
required to be determined in terms of Chapter XII of
the Act."
10. The observations of the Supreme Court in Para
72 of the report in Deepal Girishbahi Soni (supra) further
clarifies the position that the Supreme Court expected the
Central Govt. to bestow serious consideration to carry out
an amendment in the Second Schedule from time to time
to obviate the difficulty faced by the victims belonging to
the lower income group.
11. Deepal Girishbahi Soni (supra) was relied in
two decisions of this Court in (i) Oriental Insurance
Company Limited v. Anita Devi & Ors. (supra) and (ii)
Jagdish & Anr. v. Madhav Raj Mishra and Anr. where it
was held that:-
"...the Claimants approaching the Court under
Section 163-A of the Act can be awarded
compensation only on the basis of the structured
formula given in the Second Schedule."
12. In Anita Devi & Ors. (supra)¸ a compensation of
`10,000/- towards loss of estate, `10,000/- towards
funeral expenses, `10,000/- towards loss of consortium
and `1,00,000/- towards the loss of love and affection
awarded by the Claims Tribunal was reduced to `2,000/-
for funeral expenses, `5,000/- towards loss of consortium
(where the beneficiary is the spouse) and `2,500/- towards
the loss of estate (as per the structured formula). The
overall compensation of `8,13,639/- was reduced to
`4,39,940/- which was in accordance with the Second
Schedule.
13. In the later judgment of the Supreme Court in
Oriental Insurance Company Limited v. Meena Variyal
(2007) 5 SCC 428 while referring to Minu B. Mehta v.
Balkrishna Ramchandra Nayan & Anr., (1977) 2 SCC
441, it was held that a person can apply to the Tribunal to
claim compensation in terms of the Schedule without
proving the negligence or default on the part of the
driver/owner of the offending vehicle and in other cases,
the Claimants had to approach the Court under Section
166 of the Act and was necessarily under an obligation to
prove the negligence. Para 27 of the report is extracted
hereunder:-
"27. We think that the law laid down in Minu B.
Mehta and Anr. v. Balkrishna Ramchandra Nayan
and Anr. (supra) was accepted by the legislature
while enacting the Motor Vehicles Act, 1988 by
introducing Section 163-A of the Act providing for
payment of compensation notwithstanding anything
contained in the Act or in any other law for the time
being in force that the owner of a motor vehicle or
the authorized insurer shall be liable to pay in the
case of death or permanent disablement due to
accident arising out of the use of the motor vehicle,
compensation, as indicated in the Second Schedule,
to the legal heirs or the victim, as the case may be,
and in a claim made under Sub-section (1) of
Section 163-A of the Act, the claimant shall not be
required to plead or establish that the death or
permanent disablement in respect of which the claim
has been made was due to any wrongful act or
neglect or default of the owner of the vehicle
concerned. Therefore, the victim of an accident or
his dependants have an option either to proceed
under Section 166 of the Act or under Section 163-A
of the Act. Once they approach the Tribunal under
Section 166 of the Act, they have necessarily to take
upon themselves the burden of establishing the
negligence of the driver or owner of the vehicle
concerned. But if they proceed under Section 163-A
of the Act, the compensation will be awarded in
terms of the Schedule without calling upon the
victim or his dependants to establish any negligence
or default on the part of the owner of the vehicle or
the driver of the vehicle."
14. In view of the judgments of the Supreme Court
in Kodala (supra), Deepal Girishbhai Soni and Meena
Variyal (supra), the judgments of this Court in Smt.
Pataso & Ors. (supra) and Om Prakash & Ors. (supra)
cannot be taken as precedent.
15. The judgment of this Court in Anita Devi &
Ors.(supra) which is in consonance with the law laid
down in Kodala (supra), Deepal Girishbhai Soni (supra)
and Meena Variyal (supra) shall be taken as a binding
precedent."
5. Accordingly, the compensation in a petition under Section 163-
A of the Act has to be strictly in accordance with the structured
formula. Thus, the loss of dependency comes to `4,68,000/-
(Rs.39,000 X 2/3 X 18). The compensation of `4,500/- is
awarded towards loss to estate and funeral expenses as
provided in II Schedule.
6. The overall compensation is reduced from `5,08,750/- to
`4,72,500/- which shall carry interest @ 7.5% per annum from
the date of filing of the Claim Petition till the date of deposit as
awarded by the Claims Tribunal.
7. The excess amount of `36,250/- along with proportionate
interest and the interest accrued during the pendency of the
Appeal shall be refunded to the Appellant Insurance Company.
8. The balance amount shall be released to the Respondents No.1
and 2 in terms of the order passed by the Claims Tribunal.
9. The Appeal is allowed in above terms.
10. The statutory amount shall be refunded to the Appellant
Insurance Company.
(G.P. MITTAL)
JUDGE
APRIL 19, 2012
pst
