Delhi High Court
Rakhi vs Satish Kumar & Ors on 16 July, 2012
Author: G.P. Mittal
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Reserved on: 15th May , 2012
Pronounced on: 16th July, 2012
+ MAC APP. 390/2011
RAKHI ..... Appellant
Through: Mr. S. N. Parashar, Advocate
Versus
SATISH KUMAR & ORS ..... Respondents
Through: Ms. Rameeza Hakeem,
Advocate for the Respondent
No.3 Insurance Company.
Mr. Atul Nanda, Sr. Advocate,
Amicus Curiae.
WITH
+ MAC.APP. 539/2012
ICICI LOMBARD GENERAL INSURANCE CO.LTD.
..... Appellant
Through Ms. Rameeza Hakeem,
Advocate
versus
RAKHI & ORS ..... Respondents
Through Mr. S.N. Parashar, Advocate
CORAM:
HON'BLE MR. JUSTICE G.P.MITTAL
JUDGMENT
G. P. MITTAL, J.
1. These two Appeals (MAC. APP. No.390/2011 and MAC. APP.
No.539/2012) arise out of a judgment dated 04.01.2011
whereby a compensation of `7,04,393/- was awarded in favour
of Ms. Rakhi and other Claimants ( in MAC. APP. 390/2011)
for the death of Gajender Pal Singh who died in an accident
which occurred on 08.07.2008.
2. By impugned judgment, the Motor Accident Claims
Tribunal(the Claims Tribunal) found that the accident was
caused on account of rash and negligent driving of bus No. DL-
1PB-9008 by the First Respondent. During inquiry before the
Claims Tribunal, a salary certificate Ex.PW1/3 was produced to
show that the deceased was working as a Security Supervisor
and was getting a salary of `4,000/- per month. The Claims
Tribunal found that the deceased was a matriculate. The
minimum wages of a matriculate on the date of the accident
were `4,081/- per month. Thus, the Claims Tribunal took the
deceased's income to be `4,081/- per month, deducted 1/4th
towards personal and living expenses (as the number of
dependents were four) and adopted a multiplier of 17 (as the
deceased was aged 27 years) to compute the loss of dependency
as `6,24,393/-. In addition, the Claims Tribunal awarded a sum
of `10,000/- towards medical expenses as the deceased
remained under treatment in Fortis Hospital before he
succumbed to the injuries; `40,000/- towards loss of love and
affection, `10,000/- each towards loss of consortium, funeral
expenses and loss to estate. The Claims Tribunal opined that
the Claimants were not entitled to any addition on account of
future prospects as the deceased was in private employment.
3. For the sake of convenience, the Appellants in MAC. APP.
No.390/2011(for enhancement of compensation) shall be
referred to as the Claimants and the Cross-Objectionist (ICICI
Lombard General Insurance Co. Ltd.) shall be referred to as the
Insurance Company.
4. The finding on negligence has not been challenged in the Cross-
Objections. The same, therefore, becomes final between the
parties.
5. The following contentions are raised on behalf of the Claimants:
(i) The Claims Tribunal should have considered the
vocation of the deceased while assessing the damages
to the Claimants.
(ii) The Claims Tribunal ought not to have granted the
compensation on the basis of minimum wages; future
prospects of the deceased and increase in salary on
account of inflation should also have been
considered.
6. On the other hand, on behalf of the Insurance Company it is
urged that the salary certificate Ex.PW1/3 proved the
deceased's income to be `4,000/- per month. The Claims
Tribunal fell into error in awarding compensation on the basis
of minimum wages which were `4,081/- per month.
7. It is urged by the learned counsel for the Claimants that the
salary of a person in private employment is also bound to
increase with the passage of time as was observed by the
Supreme Court in Santosh Devi v. National Insurance Company
Ltd. & Ors, MANU/SC/0322/2012. It is contended that the
judgment of this Court in Smt. Dhaneshwari Devi & Anr. v.
Tejeshwar Singh & Ors., Manu/DE/1050/2012 MAC APP.
No.997/2011 decided on 07.03.2012 and Rattan Lal Mehta v.
Rajinder Kapoor & Anr. II (1996) ACC 1 (DB) were impliedly
overruled by the Supreme Court in Santosh Devi (Supra) where
it was held that although the increase in the salaries in private
sector did not keep pace with the increase in the salary of the
Government employees, but with the passage of time there is
increase in the salary of the persons employed in organized and
unorganized sectors on account of inflation and in the income of
the self-employed persons.
8. Per contra, it is contended by the learned counsel for the
Respondent Insurance Company that Santosh Devi(supra) did
not deal with the case of minimum wages. The observations of
the Supreme Court in the said case must be treated as being
confined to the facts of that case instead of laying down the law
that benefit of inflation is to be given to the persons getting
fixed salary or who are self-employed(i.e. skilled and unskilled
worker, barber, blacksmith, cobbler, mason, carpenter, etc. etc.).
9. Mr. Atul Nanda, the learned Amicus points out that in General
Manager, Kerala State Road Transport Corporation,
Trivandrum v. Susamma Thomas (Mrs.) and Ors. (1994) 2 SCC
176, Sarla Dixit v. Balwant Yadav, (1996) 3 SCC 179 down to
Bijoy Kumar Dugar v. Bidya Dhar Dutta & Ors, (2006) 3 SCC
242 it was held that increase on account of future prospects is to
be given only when there is evidence with regard to bright
future prospects. It is urged that the Supreme Court in Sarla
Verma & Ors. v. Delhi Transport Corporation & Anr, (2009) 6
SCC 121 referred to Susamma Thomas (supra), Sarla Dixit
(supra) and various other judgments and tried to bring about
uniformity in grant of compensation to the victims of road
accidents while holding that increase on account future
prospects can be granted only on the basis of evidence in this
regard.
10. It is contended that the judgments in Susamma Thomas(supra),
Sarla Dixit(supra) Bijoy Kumar Dugar(supra), Sarla
Verma(supra) and Santosh Devi(supra) were rendered by a two
Judge Bench of the Supreme Court. The earlier decision in
Susamma Thomas(supra), Sarla Dixit(supra) and Bijoy Kumar
Dugar must be taken as binding precedent as they were not
referred in Santosh Devi(supra). If the two Judge Bench in
Santosh Devi(supra) did not agree with Sarla Verma(supra), a
reference should have been made to a larger Bench. It is stated
that the judgment in Santosh Devi(supra) must be taken per
incuram. Reliance is placed on Safiya Bee v. Mohd. Vajahath
Hussain Alias Fasi, 2011(2) SCC 94 and Union of India & Ors.
v. S.K. Kapoor, (2011) 4 SCC 589 where it was held that if a
Bench of equal strength did not agree with the view taken by a
coordinate Bench of equal strength (in an earlier decision),
judicial discipline and practice required them to refer the issue
to a larger Bench. It was held that the learned Judges were not
right in overruling the judgment by a coordinate Bench of equal
strength.
11. In Dhaneshwari (supra) this Court considered various Single
Bench decisions of this Court including Smt. Anari Devi v. Shri
Tilak Raj & Anr., II (2004) ACC 739; (2005 ACJ 1397),
National Insurance Co. Ltd. v. Pooja & Ors., II (2006) ACC
382 (2007 ACJ 1051), Om Kumari & Ors. v. Shish Pal & Ors,
140 (2007) DLT 62, Narinder Bishal & Anr. v. Rambir Singh &
Ors., MAC APP. 1007-08/2006, decided on 20.02.2008, New
India Assurance Co. Ld. v. Vijay Singh MAC APP. 280/2008
decided on 09.05.2008; Oriental Insurance Company Limited v.
Smt. Rajni Devi & Ors. MAC APP.286/2011 decided on
06.01.2012; Smt. Gulabeeya Devi v. Mehboob Ali & Ors. MAC
APP.463/2011 decided on 10.01.2012 and IFFCO TOKIO Gen.
Ins. Co. Ltd. v. Rooniya Devi & Ors. MAC APP.189/2011
decided on 30.01.2012 and a Division Bench decisions of this
Court in Delhi Transport Corporation and Anr. v. Kumari
Lalita 22 (1982) DLT 170 (DB) and Rattan Lal Mehta v.
Rajinder Kapoor & Anr. II (1996) ACC 1 (DB). This Court
held that Rattan Lal Mehta (supra) being a Division Bench
decision of this Court which laid down that future inflation was
built-in 'in the multiplier method' was a binding precedent as
there was no contrary judgment of the Supreme Court on this
point. Para 38 of the report in Dhaneshwari(supra) is extracted
hereunder:
"38. The Division Bench went on to add that multiplier
takes care of inflation. In fact, when the rates of interest
are high as in the Indian context, any multiplier above
15 would definitely take care of some inflation. Before
demonstrating the same in a tabulated form, I would
refer to the relevant portion of the report in Rattan Lal
Mehta (supra) hereunder:-
"Multiplier takes care of inflation
The mathematical formula which is used in the law of
Economics (See Prof. A Samuelson of the Massechusetts
Institute of Technology in his Textbook on Economics
(10th Ed. 1980 at p. 609) shows that the discount rate for
discounting future payments to present value occurs in
the dominator and that is why a lower interest rate would
result in a higher multiplier and that is why the 'real rate'
of interest enunciated by Fisher was applied by Lord
Diplock in Mallet v. Mc Monagle, 1970 AC 166. That
case has been followed by our Supreme Court in
M.P.S.R.T.C. v. Sudhakar, AIR 1977 SC 1189 and in
KSRTC v. Susamma Thomas (supra). The rate adopted is
of a 'stable period of currency' say 4% or 5% so that
multipliers will be larger and help full compensation. It
must be noted here that if we adopt a higher rate of
interest for reducing future payments to present values
the multiplier will be very small, as the rate of interest
occurs, in the formula, in the denominator. That is why a
smaller rate of interest applicable to stable periods is
prescribed by Economists of the highest repute like
Fisher or Prof. Samuelson and in all books dealing with
Economics and Insurance. This is also the principle in
pension commutations. Government of India has applied
a rate of 3.5% or 4.5% only. Otherwise if higher rates of
interest are applied pension commutations will get
reduced to smaller figures. Superior Courts in England,
Australia, Canada and USA have accepted this principle
of Economics and held that rate of discount for
converting future payments to present value must relate
to stable periods of currency.
29. In a celebrated passage Lord Diplock said "In
estimating the loss, money should be treated as retaining
its value at the date of the Judgment and in calculating
the present value of annual payments which would have
been received in future years, interest rates appropriate
to time of stable currency such as 4 per cent to 5 per cent
should be adopted". That was to be the discount rate for
reducing future earnings/losses to present value. In
England it was to be 4% or 5%. In Australia, in
Todorovic vs. Waller, (1981) 150 C.L.R. 402, the High
Court followed Lord Diplock's judgment and advocated a
discount rate of 3% for converting future payments to
present value. In the Canadian trilogy of cases, referred
to earlier, the Diplock theory was accepted and a rate of
7% was applied. In U.S.A. the same principles were set
out in Chesapeake & Ohio Rly vs. Kelly (1916) 241 U.S.
485 and recently in Jones and Laughlin vs. Pfeifer, 462
U.S. 523 (1983), proposing 3%.
30. In Bhagwandas case, AIR 1988 99 after referring to
the rate applied by Government of India in regard to
pension commutations and the other data relating to
inflation, a 'real rate' of 4% was applied in our country
and a multiplier Table was worked out on that basis. The
above judgment was affirmed by a Division Bench in
Naravva' vs. V.R. Shangde, 1989 ACJ 715 by Jeevan
Reddy, J. (as he then was) and V.N. Rao, J. The
multipliers evolved in Bhagwanda's case compare very
favourably with the statutory multiplier Table published
in the amendment to the Motor Vehicles Act in 1994. A
smaller discount rate relatable to a stable period of
currency reduces future payments (say) of 1997,1998 and
so on, by giving a higher multiplier in present and leaves
it to the recipient of the money to make a proper
investment today of the said monies. There is voluminous
literature on this subject (See: Inflation, Taxation &
Damage Assessment (1980) Can B. Rev. 280; 1974
Economic Journal p. 130 by R. Kidner & K. Richards;
Damages for Personal Injury & the Effect of Future
Inflation (1982) 56 Aust L.J. 168; Economic Analysis vs.
Court room Controversy, The Present Value of Future
Earnings : John A. Carlson Vol. 62 ABAJ 628; Tort
Damages for Loss of Future Earnings (1986) 34 Amer J.
Comp. L (Supp) 141; Economic Theory & Present Value
of Future Lost Earnings : Anderson & Roberts (1985) U.
Miami L.R. 725); A plain English approach to loss of
Future Earning Capacity (1985) 24 Washburn LJ. 253;)
See also leading books, Munkman; Kemp P. Keap; MC
Grregor; Warfield; John A Fleming etc.
31. After the pecuniary damages are arrived at, Courts
are also awarding 12% interest generally on the sum
arrived at. Together with that interest, the amount comes
into the plaintiffs' hands.
No deduction is to be made from the sum arrived at by
using multiplier:
32. As the statutory multiplier reduces, by means of a
mathematical formula (see the formula explained in
Bhagwandas' case AIR 1988 AP 99 ), the future amounts
to present value, there is no need to further deduct 1/3 or
1/4. The multiplier takes in not only mortality and future
inflation but also the fact that the claimants are receiving
an accelerated payment once and for all". (emphasis
supplied)
12. This Court tried to demonstrate that although the inflation was
built-in 'in the multiplier method' but in the Indian context
where the inflation was very high, the multiplier method did not
take care of the inflation completely. This Court made certain
tables i.e. one to assume the real value of money at 4%, i.e.
inflation @ 4% per annum and rate of interest @ 8% per annum
where the compensation awarded lasted for over 30 years which
will happen when a person dies young; and the second table
where the actual rate of interest and actual rate of inflation was
taken where the compensation awarded lasted for 22 years
which showed that the multiplier method on account of inflation
(in this country) did not take care of the loss of dependency
fully. Para 41 of the report in Dhaneshwari (supra) is extracted
hereunder:
"41. I have obtained the Bank rates of interest (of
Nationalized Banks) and compared it with the inflation
prevailing in the country. I have attempted three tables to
demonstrate whether the rate of interest in the Indian
context takes care of the inflation or not.
TABLE - I
It is assumed that the deceased who is aged 26 years dies
leaving behind a widow, a mother and two minor
children.
In this Table a notional amount of Rs.800/- is taken to be
the income of the deceased and therefore the capital
amount is arrived at Rs.1,22,400/- (Rs. 800 - 1/4th x 12 x
17).
The dependency is taken to be Rs. 800 p.m - 1/4th
(Rs.600) x 12 = 7200 p.a. in 1990.
Further, a notional interest and inflation rate of 8% and
4% respectively, is taken into consideration which is an
assumption of 'real rate of interest' (actual inflation rate -
actual interest rate) in stable economy.
The dependency is increased according to the inflation i.e.
4% and the interest on the Capital amount is taken @ of
8%.
The compensation lasts for over 30 years.
S.No Year Capital Interest Dependency Rate of Inflation Excess
Interest Amount
Amount Received
1. 1990 1,22,400 9,792 =600x12 8% 4% 2,592
=7,200
2. 1991 1,24,992 9,999 =7,200+288 8% 4% 2,511
=7,488
3. 1992 1,27,503 10,200 =7,488+299 8% 4% 2,413
=7,787
4. 1993 1,29,916 10,393 =7,787+311 8% 4% 2,295
=8,098
5. 1994 1,32,211 10,576 =8,098+324 8% 4% 2,155
=8,421
6. 1995 1,34,366 10,749 =8,421+336 8% 4% 1,992
=8,757
7. 1996 1,36,358 10,908 =8,757+350 8% 4% 1,801
=9,107
8. 1997 1,38,159 11,052 =9,107+364 8% 4% 1,581
=9,471
9. 1998 1,39,740 11,179 =9,471+378 8% 4% 1,330
=9,849
10 1999 1,41,070 11,285 =9,849+393 8% 4% 1,043
=10,242
=10,651
=11,077
13. 2002 1,43,180 11,454 =11,077+443 8% 4% -65
=11,520
14. 2003 1,43,114 11,449 =11,520+460 8% 4% -530
=11,980
15. 2004 1,42,583 11,406 =11,980+479 8% 4% -1,053
=12,459
16. 2005 1,41,530 11,322 =12,459+498 8% 4% -1,634
=12,957
17. 2006 1,39,895 11,191 =12,957+518 8% 4% -2,283
=13,475
18. 2007 1,37,611 11,008 =13,475+539 8% 4% -3,005
=14,014
19. 2008 134605 10,768 =14,014+560 8% 4% -3,805
=14,574
20. 2009 1,30,799 10,463 =14,574+582 8% 4% -4,692
=15,156
21. 2010 126106 10,088 =15,156+606 8% 4% -5,673
=15762
22. 2011 1,20,432 9,634 =15,762+630 8% 4% -6,757
=16,392
23. 2012 1,13,674 9,093 =16,392+656 8%
4% -7,954
=17,048
24. 2013 1,05,719 8,457 =17048+681 8%
4% -9,272
=17,729
25. 2014 96,447 7,715 =17,729+710 8%
4% -10,723
=18,439
26. 2015 85,723 6,857 =18,439+737 8%
4% -12,318
=19,176
27. 2016 73,404 5,872 =19,176+767 8%
4% -14,070
=19,943
28. 2017 59,333 4,746 =19,943+798 8%
4% -15,994
=20,741
29. 2018 43,338 3,467 20,741+829 8%
4% -18,102
=21,570
30. 2019 25,235 2,018 21,570+863 8%
4% -20,414
=22,433
31. 2020 4,820 22,433+897 8%
4%
=23,330
TABLE - II
In this Table a notional amount of Rs.800/- is taken to be the
income of the deceased and therefore the capital amount is
arrived at Rs.1,22,400/- (Rs. 800 - 1/4th x 12 x 17).
The dependency is taken to be Rs.800/- p.m - 1/4th (Rs.600) x
12 = 7200 in 1990. For the subsequent years the actual inflation
rate is applied to increase the dependency accordingly.
The capital amount is being increased as per the actual Bank
interest rate on long term fixed deposit.
The compensation lasts for about 21 years.
S.No Year Capital Interest Dependency Rate Of Inflation Excess
Amount Received Interest Amount
1. 1990 1,22,400 12,240 =600x12 =7,200 10% 8.9% 5,040
2. 1991 1,27,440 14,018 =7,200+993 11% 13.8% 5,825
=8,193
3. 1992 1,33,265 16,658 =8,193+958 12.5% 11.7% 7,507
=9,151
4. 1993 1,40,772 14,781 =9,151+576 10.5% 6.3% 5,054
=9,727
5. 1994 1,45,826 14,582 =9,727+992 10% 10.2% 3,863
=10,719
6. 1995 1,49,689 17,363 =10,719+1,093 11.6% 10.2% 5,551
=11,812
7. 1996 1,55,240 19,560 =11,812+1,051 12.6% 8.9% 6,697
=12,863
8. 1997 1,61,937 18,298 =12,863+939 11.3% 7.3% 4,496
=13,802
9. 1998 1,66,433 18,307 =13,802+1821 11% 13.2% 2,684
=15,623
10 1999 1,69,117 17,757 =15,623+718 10.5% 4.6% 1,416
=16,341
11. 2000 1,70,533 15,689 =16,341+637 9.2% 3.9% -1,288
=16,978
12. 2001 1,69,244 14,047 =16,978+747 8.3% 4.4% -3,677
=17,725
13. 2002 1,65,566 11,424 =17,725+655 6.9% 3.7% -6,955
=18,380
14. 2003 1,58,610 9,199 =18,380+698 5.8% 3.8% -9,878
=19,078
15. 2004 1,48,731 8,180 =19,078+744 5.5% 3.9% -11,641
=19,822
16. 2005 1,37,089 8,225 =19,822+1,228 % 6.2% -12,824
=21,050
17. 2006 1,24,264 8,449 =21,050+1,326 6.8% 6.3% -13,926
=22,376
18. 2007 1,10,337 9,930 =22,376+1,409 9% 6.3% -13,855
=23,785
19. 2008 96,482 8,876 =23,785+1,974 9.2% 8.3% -16,882
=25,759
20. 2009 79,599 6,367 =25,759+2,781 8% 10.8% -22,172
=28,540
21. 2010 57,426 4,307 =28,540+3,396 7.5% 11.9% -27,628
=31,936
22. 2011 29,797 2,681 =31,936+3,864 9% 12.1% -33,118
=35,800
23. 2012 -3,321 9% 9.2%
13. The learned Single Judges of this Court while granting increase
in the income on account of inflation distinguished between
future prospects and increase on account of inflation. The
observations of the learned Single Judges in National Insurance
Co. Ltd. v. Pooja & Ors., II, (2007 ACJ 1051), Om Kumari &
Ors. v. Shish Pal & Ors, 140 (2007) DLT 62, Narinder Bishal &
Anr. v. Rambir Singh & Ors., MAC APP. 1007-08/2006,
decided on 20.02.2008 and New India Assurance Co. Ld. v.
Vijay Singh MAC APP. 280/2008 decided on 09.05.2008 as
taken in Dhaneshwari(supra) are extracted hereunder:
"6. Then, there is a report of National Insurance
Co. Ltd. v. Pooja & Ors., II (2006) ACC 382 (2007 ACJ
1051) decided by the Learned Single Judge on
19.04.2006. Here again, increase in the minimum wages
was given holding as under:-
"15. The deceased expired in 1999. At that time he was
30 years old. Due to inflation and rapid economic
progress, minimum wages have been going up. The
deceased had long working life ahead of him. It was
natural that his earnings in normal course would have
gone up in the next about 30 years. Loss of dependency
is calculated keeping in view the monetary loss suffered
by the dependants in future. Therefore, ld. Tribunal was
justified in not ignoring the possibility of increase in
earnings/income due to inflation, price rise, etc. of the
deceased and taking this factor into consideration."
7. In Om Kumari & Ors. v. Shish Pal & Ors, 140 (2007)
DLT 62, while giving the increase on account of
minimum wages, another Learned Single Judge held as
under:-
"16. The future prospects may not be linked to
promotional avenues but certainly would be linked to the
inflation and increased wages over the years.
17. I have before me the minimum wages notified under
the Minimum Wages Act, 1948, which show that
pertaining to matriculates, minimum wages have risen
from ` 325/- per month as on 1.1.1980 to ` 1,014 per
month as on 1.5.1989. The same have risen to ` 2,796 per
month as on 1.2.1999. Between 1.1.80 and 1.5.1989, the
percentage increase is slightly over 200. Over the next
10 years, percentage increase is approximately 180.
18. Minimum wages are notified keeping into account the
inflationary trends and cost indices. These are the
minimum wages which law presumes would be required
for a person to sustain himself at the minimum level of
subsistence."
8. In Narinder Bishal & Anr. v. Rambir Singh & Ors.,
MAC APP. 1007-08/2006, decided on 20.02.2008, a
distinction was drawn between future prospects and
increase granted on account of inflation by the learned
Single Judge of this Court. It was held that minimum
wages has co-relation with the growth and development
of the nation's economy, postulating increase in the price
index, reduction of purchasing power and depreciation in
the value of currency. This Court granted 50% increase
in the minimum wages holding as under:-
"16. 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.
17. 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.
18.For instance, minimum wages of unskilled workman
in the year 2000 were ` 2524/- under the Minimum
Wages Act. The said minimum wages in the year 2007 for
the same class of unskilled workman came to be ` 3470/-
under the Act. This increase is not due to any promotion
of unskilled workman or any kind of advancement in his
career but the same are due to increase in the price index
and cost of living which are the determining factors taken
into consideration for increasing the wages under the
Minimum Wages Act. The nature of job of unskilled
workman will not change as the same shall remain
unchanged. The same principle may be true even in the
case of business or trade or other such allied activities
where the future prospects of the deceased can be
considered on the basis of his assets, income tax return,
wealth tax return, balance sheet etc. But as far as the
increase in the minimum wages is concerned the same
takes into consideration the price indeed and the
inflationary trends and the same have no correlation with
the future prospects of a skilled, semi-skilled or an
unskilled workman.
19. In the light of the above discussion, I find myself in
agreement with the argument of counsel for the
appellants that in the given facts and circumstances of
the case, the Tribunal ought to have taken into
consideration the revision in the minimum wages so as to
determine just and fair compensation. In all cases where
the claimants are able to sufficiently establish the income
of the deceased, the benefit of granting any compensation
for future prospects can be taken into consideration only
when sufficient and reliable evidence is placed and
proved by the claimants as per the dictum laid down in
Bijov Kumar Dugar v. Bidva Dhar Dutta and Others,
(2006) 3 SCC 242. While in other cases where in the
absence of sufficient evidence, the Tribunal applied the
yardstick of minimum wages, in all such cases, the
Tribunals can take judicial notice of the revision of
minimum wages, as laid down under the Minimum Wages
Act."
9. In New India Assurance Co. Ld. v. Vijay Singh MAC
APP. 280/2008 decided by this Court on 09.05.2008, yet
another Learned Single Judge relying on Narinder Bishal
(supra) also drew a distinction between the grant of
future prospects which is given on account of
advancement in career and progression in employment,
on the one hand and increase in the minimum wages
which is granted on account of inflation on the other
hand. The learned Single Judge held as under:-
".. 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.
10. In all cases where the claimants are able to
sufficiently establish the income of the deceased, the
benefit of granting any compensation for future prospects
can be taken into consideration only when sufficient and
reliable evidence is placed and proved by the claimants
as per the dictum laid down in Bijov Kumar Dugar v.
Bidya Dhar Dutta and Others, (2006) 3 SCC 242. While
in other cases, where in the absence of sufficient
evidence, the Tribunal applies the yardstick of minimum
wages, in all such cases, the Tribunals can take judicial
notice of the revision of minimum wages, as laid down
under the Minimum Wages Act."
14. In Reshma Kumari v. Madan Mohan (2009) 13 SCC 422, the
Supreme Court observed that unlike other developed countries,
the interest rates in India do not rise with the rise in inflation
and posed a question whether the practice of taking inflation
into consideration was wholly incorrect? Paras 47, 48 and 49 of
the report are extracted hereunder:
"47. One of the incidental issues which has also to be
taken into consideration is inflation. Is the practice of
taking inflation into consideration wholly incorrect?
Unfortunately, unlike other developed countries in India
there has been no scientific study. It is expected that with
the rising inflation the rate of interest would go up. In
India it does not happen. It, therefore, may be a relevant
factor which may be taken into consideration for
determining the actual ground reality. No hard-and-fast
rule, however, can be laid down therefor.
48. A large number of English decisions have been
placed before us by Mr. Nanda to contend that inflation
may not be taken into consideration at all. While the
reasonings adopted by the English courts and its
decisions may not be of much dispute, we cannot blindly
follow the same ignoring ground realities.
49. We have noticed the precedents operating in the
field as also the rival contentions raised before us by the
learned counsel for the parties with a view to show that
law is required to be laid down in clearer terms."
15. In its subsequent reports in Laxman v. Oriental Insurance Co.
Ltd., (2011) 10 SCC 756, Sanjay Batham v. Munnalal Parihar,
(2011) 10 SCC 665, Govind Yadav v. New India Insurance Co.
Ltd. (2011) 10 SCC 683, and Ibrahim v. Raju, (2011) 10 SCC
634 also the Supreme Court referred to para 47 of the report in
Reshma Kumari (supra) but did not lay down any guidelines as
to how and upto what extent the inflation is to be taken into
consideration in awarding a just compensation.
16. Thus, in the absence of any judgment by the Supreme Court
whether inflation was to be considered or not for grant of
compensation to the victims of the accidents, this Court held
that the Division Bench Judgment of this Court in Rattan Lal
Mehta(supra) was a binding precedent.
17. It is true that a coordinate Bench of equal strength cannot
overrule an earlier judgment. The question is whether the
judgment in Santosh Devi(supra) is contrary to the judgments in
Susamma Thomas(supra), Sarla Dixit(supra) Bijoy Kumar
Dugar(supra), Sarla Verma(supra). In Susamma Thomas
(supra), evidence was produced to show that with the passage
of time, the monthly salary of deceased would have risen from
`103/- per month to 2,000/- per month. In Sarla Dixit(supra),
the deceased was employed as a Captain in the Indian Army.
His salary was `1543/- per month. Evidence was led to prove
that he had meritorious record. The compensation was awarded
assuming his salary to be `2200/- per month. In Bijoy Kumar
Dugar(supra), the Supreme Court held increase in
compensation for the future prospects can be granted when
there is evidence with regard to the same. Paras 9 and 11 of the
report are extracted hereunder:
"9. We have gone through the ratio of the above
decisions relied upon by the claimants in support of
the submission for the enhancement of the amount of
compensation. In G.M., Kerala SRTC case the
claimants had satisfactorily proved on record that
the deceased person in that case had a more or less
stable job in the newspaper establishment of
Malayala Manorama on a monthly salary of `1032/-
. On the basis of the evidence found on record in
regard to the prospects of the advancement in the
future career of the deceased, this Court has made
higher estimate of monthly income at `2000/- per
month as the gross income and granted relief to the
claimants.
x x x x x x x x
11. In the present case, as noticed, there is no
evidence brought on record by the claimants to
show the future prospects of the deceased. This
contention, in our view, is not tenable to sustain it."
18. In Sarla Verma(supra), the case related to the death of a
Scientist who was in Government Service. 50% increase was
granted in the deceased's salary while awarding loss of
dependency. In para 24 of the report, it was observed that
where the deceased was self-employed or a person getting fixed
salary the Courts would usually consider the actual income at
the time of his death for the purpose of computing the loss of
dependency. The question of granting increase on account of
inflation to the income of a person getting a fixed salary or a
self employed, i.e. skilled and unskilled worker, like barber,
blacksmith, cobbler, mason, carpenter, etc. etc. at the time of his
death was not before the Supreme Court. The Supreme Court in
Santosh Devi(supra) referred to an earlier decision in R.K.
Malik v. Kiran Pal (2009) 14 SCC 1 and observed that damages
awarded should be an adequate sum of money that would place
the party in the same position as if he had not suffered on
account of the wrong. Para 12 of the report is extracted
hereunder:
"12. In R.K. Malik v. Kiran Pal (2009) 14 SCC 1, the
two Judge Bench while dealing with the case
involving claim of compensation under Section 163-A
of the Act, noticed the judgments in M.S. Grewal v.
Deep Chand Sood (2001) 8 SCC 151, Lata Wadhwa v.
State of Bihar (2001) 8 SCC 197, Kerala SRTC v.
Susamma Thomas (1994) 2 SCC 176, Sarla Dixit v.
Balwant Yadav (1996) 3 SCC 179 and made some of
the following observations, which are largely
reflective of the philosophy that victims of the road
accidents and/or their family members should be
awarded just compensation:
"In cases of motor accidents the endeavour is to put
the dependants/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. However,
no amount of compensation can restore the lost limb
or the experience of pain and suffering due to loss of
life. Loss of a child, life or a limb can never be
eliminated or ameliorated completely.
To put it simply--pecuniary damages cannot replace
a human life or limb lost. Therefore, in addition to
the pecuniary losses, the law recognises that
payment should also be made for non-pecuniary
losses on account of, loss of happiness, pain,
suffering and expectancy of life, etc. The Act
provides for payment of "just compensation" vide
Sections 166 and 168. It is left to the courts to
decide what would be "just compensation" in the
facts of a case."
19. With regard to inflation, the Supreme Court observed that
because of the inflation, the salaries of Government and public
sector employees have increased manifold and also for those
working in the private sector there has been an increase to some
extent though not keeping pace with the increase in the
Government sector. It was observed that the persons on a fixed
salary or self-employed, would also increase the cost of their
labour and they would get an increase of 30% while computing
the loss of dependency. Para 14 of the report is extracted
hereunder:
"14........In our view, it will be naive to say that the
wages or total emoluments/income of a person who is
self-employed or who is employed on a fixed salary
without provision for annual increment, etc., would
remain the same throughout his life. The rise in the
cost of living affects everyone across the board. It
does not make any distinction between rich and poor.
As a matter of fact, the effect of rise in prices which
directly impacts the cost of living is minimal on the
rich and maximum on those who are self- employed or
who get fixed income/emoluments. They are the worst
affected people. Therefore, they put extra efforts to
generate additional income necessary for sustaining
their families. The salaries of those employed under
the Central and State Governments and their
agencies/instrumentalities have been revised from
time to time to provide a cushion against the rising
prices and provisions have been made for providing
security to the families of the deceased employees.
The salaries of those employed in private sectors have
also increased manifold. Till about two decades ago,
nobody could have imagined that salary of Class IV
employee of the Government would be in five figures
and total emoluments of those in higher echelons of
service will cross the figure of rupees one lac.
Although, the wages/income of those employed in
unorganized sectors has not registered a
corresponding increase and has not kept pace with
the increase in the salaries of the Government
employees and those employed in private sectors but
it cannot be denied that there has been incremental
enhancement in the income of those who are self-
employed and even those engaged on daily basis,
monthly basis or even seasonal basis. We can take
judicial notice of the fact that with a view to meet the
challenges posed by high cost of living, the persons
falling in the latter category periodically increase the
cost of their labour. In this context, it may be useful to
give an example of a tailor who earns his livelihood
by stitching cloths. If the cost of living increases and
the prices of essentials go up, it is but natural for him
to increase the cost of his labour. So will be the cases
of ordinary skilled and unskilled labour, like, barber,
blacksmith, cobbler, mason etc. Therefore, we do not
think that while making the observations in the last
three lines of paragraph 24 of Sarla Verma's
judgment, the Court had intended to lay down an
absolute rule that there will be no addition in the
income of a person who is self-employed or who is
paid fixed wages. Rather, it would be reasonable to
say that a person who is self-employed or is engaged
on fixed wages will also get 30 per cent increase in
his total income over a period of time and if he / she
becomes victim of accident then the same formula
deserves to be applied for calculating the amount of
compensation."
20. Thus, the observations made by the Supreme Court in para 24
of the report in Sarla Verma were explained and distinguished
and it was said the persons getting fixed salary and self-
employed persons would also increase their wages with the
passage of time on account of inflation. The question of
increase on account of inflation was not considered by the
Supreme Court in Susamma Thomas(supra), Sarla Dixit(supra)
Bijoy Kumar Dugar(supra) and Sarla Verma(supra). It may be
noticed that minimum wages of an unskilled worker on
01.01.1980 were `240/- which rose to `6,656/- on 01.10.2011.
Thus, the increase in income on account of inflation in our
country is very fast. In para 47 to 51 of Dhaneshwari(supra),
this Court observed as under:
"47. I have obtained data which shows that during the last
26 years the income of the same category of employees has
grown up by about 15 times on account of inflation and
growth in the economy.
Sl. Group of Employees Initial salary Initial salary
No. (including (including
allowances) allowances)
as on Ist as on Ist
January, 1986 January, 2012
1. Group D 930/- 14,108/-
2. LDC 1245/- 15,480/-
3. Section Officer 2550/- 36,650/-
4. Under Secretary to 3700/- 52,714/-
Govt. of India
48. Apart from this almost everybody working in the govt.
department gets at least 4 to 5 promotions during their
tenure. A Clerk at least becomes a Section Officer, an
Assistant becomes a Director in the Govt. of India if not a
Joint Secretary, a Civil Servant (IAS) becomes an
Additional Secretary, if not a Secretary. In private sectors
pastures are much greener for some and not so rosy for the
others.
49. The question is whether in all cases, the Courts are
providing compensation which can be said to be just and
fair.
50. It will be seen that the compensation is far less than the
just compensation as envisaged under the Act mainly on
account of inflationary trend in this country. Though the
multiplier method does take care of future inflation as held
by the Division Bench of this Court in Rattan Lal Mehta
(supra) yet, on account of inflation which remains in
double digits in our country most of the times, even after
the increase granted on account of future prospects the
compensation awarded is not able to take care of the
actual loss of dependency.
51. It is respectfully submitted that I am bound by the
Division Bench judgment of this Court in Rattan Lal Mehta
(supra) which on the aspect of the multiplier taking care of
future inflation was not brought to the notice of this Court
earlier and more importantly escaped my attention. Thus,
increase in minimum wages on account of inflation given
by the learned Single Judges of this Court in various cases
including the one which have been extracted hereinabove,
was not permissible."
21. In my view, there is no conflict between the earlier judgments
of the Supreme Court in Susamma Thomas(supra), Sarla
Dixit(supra) Bijoy Kumar Dugar(supra) and Sarla
Verma(supra) which dealt with the increase in the income on
account of future prospects and Santosh Devi(supra) which
dealt with the increase in income due to inflation. Thus, on the
basis of the judgment in Santosh Devi(supra) it can very well be
said that the persons who are getting fixed salary or who are self
employed as menial, skilled and unskilled workers, like barber,
blacksmith, cobbler, mason, carpenter, etc. etc. would be
entitled to an increase in the income to the extent of 30% on
account of inflation when the deceased or the victim is aged
upto 50 years.
22. Turning to the facts of the instant case. The deceased's income
was proved to be `4,000/- per month by virtue of the salary
certificate Ex.PW1/3. There was no evidence of his bright
future prospects. The Claimants are entitled to an increase of
30% in the salary on account of inflation. The loss of
dependency works out to be `7,95,600/-(`4000 + 30% x 3 ÷ 4 x
12 x 17.
23. A compensation of `40,000/- was awarded towards loss of love
and affection. Generally, a sum of `25,000/- is awarded under
this head. In the absence of any challenge to this finding, I
would not like to interfere with the same. The Claims Tribunal
awarded a sum of `10,000/- towards the expenditure for the
deceased's treatment, till he succumbed to the injuries, and a
sum of `10,000/- each was awarded towards loss to estate, loss
to consortium and funeral expenses. The overall compensation
thus comes to `8,75,600/-.
24. The enhanced compensation of `1,71,207/- shall carry interest
@ 7.5% per annum as awarded by the Claims Tribunal. The
enhanced compensation shall enure for the benefit of the
deceased's widow i.e. Claimant Rakhi. 75% of the enhanced
compensation shall be held in Fixed Deposit for a period of
three years, six years and nine years in equal proportion. The
Claimants shall be entitled to quarterly interest which shall be
utilized by her for her own and for the benefit of the three minor
children.
25. The ICICI Lombard General Insurance Co. Ltd. is directed to
deposit the enhanced amount along with interest in the name of
Claimant with UCO Bank, Delhi High Court Branch within six
weeks.
26. The Appeals are disposed of in above terms.
27. The statutory amount of `25,000/- shall be refunded to the
Appellant ICICI Lombard General Insurance Co. Ltd.
28. The pending Applications stand disposed of.
(G.P. MITTAL)
JUDGE
JULY 16, 2012
pst
