United India Assurance Company ... vs Mota Ram & Ors.
2012 Latest Caselaw 6651 Del

*        IN THE HIGH COURT OF DELHI AT NEW DELHI

                                           Date of decision: 21st November, 2012
+        MAC.APP. 256/2009

         UNITED INDIA ASSURANCE COMPANY LTD.           ...... Appellant
                       Through: Mr. K.L. Nandwani, Adv.

                       versus


         MOTA RAM & ORS.                                  ..... Respondents
                     Through:          Mr. Raj Kumar, Adv with
                                       Ms. Jatinder Kaur, Adv. for R-1 & R-2.

         CORAM:
         HON'BLE MR. JUSTICE G.P.MITTAL

                                JUDGMENT

G. P. MITTAL, J. (ORAL)

1. The Appeal is for reduction of compensation of `24,50,000/- awarded by the Motor Accident Claims Tribunal (the Claims Tribunal) in favour of Respondents No.1 and 2 (the deceased's parents) for the death of their son Surender Pal, who died in a motor vehicle accident which occurred on 5.12.2001.

2. The finding on negligence reached by the Claims Tribunal is not challenged by the Appellant Insurance Company. Thus, the same has attained finality.

3. There is twin challenge to the impugned judgment. First, the deceased Surender Pal was a bachelor. Thus, the multiplier should have been applied as per the age of the deceased's mother which was a little less

than 45 years. Second, the rate of interest @ 9% per annum was on the higher side, particularly, when this accident took place in the year 2001 and the Claim Petition was decided in the year 2009.

4. On the other hand, learned counsel for the Claimants supports the judgment urging that the compensation awarded is just and reasonable.

MULTIPLIER

5. In Vijay Laxmi & Ors. v. Binod Kumar Yadav & Ors., MAC APP.1148/2011 decided on 03.01.2012 this Court noticed the Supreme Court judgments in U.P. State Road Transport Corporation & Ors. v. Trilok Chandra & Ors., (1996) 4 SCC 362; G.M., Kerala SRTC v. Susamma Thomas, (1994) 2 SCC 176; New India Assurance Company Ltd. v. Shanti Pathak (Smt.) & Ors., (2007) 10 SCC 1; National Insurance Company Ltd. v. Shyam Singh & Ors., (2011) 7 SCC 65, decided on 04.07.2011 and Manam Saraswathi Sampoorna Kalavathi & Ors., v. The Manager, APSRTC, Tadepalligudem A.P. & Anr., (2010) 5 SCC 785, and held that the multiplier has to be as per the age of the deceased or that of the Claimant/Claimants whichever is higher. Paras 4,5,7 and 8 of the report are extracted hereunder:-

"4. As far as the selection of multiplier is concerned, the law is settled that the choice of multiplier is determined by the age of the deceased or that of the claimants whichever is higher. There is a three Judges Bench judgment of the Supreme Court in U.P. State Road Transport Corporation & Ors. v. Trilok Chandra & Ors., (1996) 4 SCC 362, where the Supreme Court relied on G.M., Kerala SRTC v. Susamma Thomas, (1994) 2 SCC 176 and reiterated that the choice of the multiplier is determined by the age of the deceased or that of the claimants whichever is more. Para 12 of the report is extracted hereunder:-

"12. For concluding the analysis it is necessary now to refer to the judgment of this Court in the case of General Manager, Kerala State Road Transport, v. Susamma Thomas: (1994) 2 SCC 176. In that case this Court culled out the basic principles governing the assessment of compensation emerging from the legal authorities cited above and reiterated that the multiplier method is the sound method of assessing compensation. The Court observed:

"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.

The principle was explained and illustrated by a mathematical example:

"The multiplier represents the number of Years' purchase on which the loss of dependency is capitalised. Take for instance a case where annual loss of dependency is Rs. 10,000. If a sum of Rs.1,00,000 is invested at 10% annual interest, the interest will take care of the dependency, perpetually. The multiplier in this case works out to 10. If the rate of interest is 5% per annum and not 10% then the multiplier needed to capitalise the loss of the annual dependency at Rs.10,000 would be 20. Then the multiplier i.e., the number of Years' purchase of 20 will yield the annual dependency

perpetually. Then allowance to scale down the multiplier would have to be made taking into account the uncertainties of the future, the allowances for immediate lump sum payment, the period over which the dependency is to last being shorter and the capital feed also to be spent away over the period of dependency is to last etc. Usually in English Courts the operative multiplier rarely exceeds 16 as maximum. This will come down accordingly as the age of the deceased person (or that of the dependents, whichever is higher) goes up."

5. There is another three Judges' decision of the Supreme Court in New India Assurance Company Ltd. v. Shanti Pathak (Smt.) & Ors., (2007) 10 SCC 1, where in the case of the death of a bachelor, who was aged only 25 years, the multiplier of 5 was applied according to the age of the mother of the deceased, who was about 65 years at the time of the accident. Para 6 of the report is extracted hereunder:-

"6. Considering the income that was taken, the foundation for working out the compensation cannot be faulted. The monthly contribution was fixed at Rs.3,500/-. In the normal course we would have remitted the matter to the High Court for consideration on the materials placed before it. But considering the fact that the matter is pending since long, it would be appropriate to take the multiplier of 5 considering the fact that the mother of the deceased is about 65 years at the time of the accident and age of the father is more than 65 years. Taking into account the monthly contribution at Rs.3,500/- as held by the Tribunal and the High Court, the entitlement of the claim would be Rs.2,10,000/-. The same shall bear interest @ 7.5% p.a. from the date of the application for compensation. Payment already made shall be adjusted from the amount due."

x x x x x x x x x

7. In the latest judgment of the Supreme Court in National Insurance Company Ltd. v. Shyam Singh & Ors., (2011) 7 SCC 65,

decided on 04.07.2011, the Supreme Court referred to Ramesh Singh & Anr. v. Satbir Singh & Anr., (2008) 2 SCC 667 and held that the multiplier as per the age of the deceased or the claimant whichever is higher would be applicable. Para 9 and 10 of the report are apposite:-

"9. This Court in the case of Ramesh Singh & Anr. v. Satbir Singh & Anr., (2008) 2 SCC 667, after referring to the earlier judgments of this Court, in detail, dealt with the law with regard to determination of the multiplier in a similar situation as in the present case. The said findings of this Court are as under:-

"6. We have given anxious consideration to these contentions and are of the opinion that the same are devoid of any merits. Considering the law laid down in New India Assurance Co. Ltd. v. Charlie, AIR 2005 SC 2157, it is clear that the choice of multiplier is determined by the age of the deceased or claimants whichever is higher. Admittedly, the age of the father was 55 years. The question of mother's age never cropped up because that was not the contention raised even before the Trial Court or before us. Taking the age to be 55 years, in our opinion, the courts below have not committed any illegality in applying the multiplier of 8 since the father was running 56th year of his life."

10. In our view, the dictum laid down in Ramesh Singh (supra) is applicable to the present case on all fours. Accordingly, we hold that the Tribunal had rightfully applied the multiplier of 8 by taking the average of the parents of the deceased who were 55 and 56 years."

8. Similarly in Manam Saraswathi Sampoorna Kalavathi & Ors., v. The Manager, APSRTC, Tadepalligudem A.P. & Anr., (2010) 5 SCC 785, decided on 26.03.2010, the multiplier of 13 was applied in case of death of a young bachelor where the mother was 47 years of age."

6. Thus, the appropriate multiplier in the instant case as per the age of deceased's mother should have been 14 instead of 18 as adopted by the Claims Tribunal, as per the age of the deceased.

7. I have before me the Trial Court record. The deceased's salary was taken to be `15,000/- per month. The Salary Certificate Ex.PW-2/2, however, reveals that after deducting a sum of `100/- towards uniform maintenance reimbursement and `1389/- towards conveyance reimbursement, the deceased's salary was `15,674/- per month. The deceased was in a settled employment in a reputed company, that is, Maruti Udyog Limited and was rightly given an addition of 50% towards future prospects.

8. There was liability of income tax of about `20,000/- on an annual income of `1,88,080/- in the relevant year.

9. The loss of dependency thus comes to `17,64,924/- (15,674/- x 12 - ` 20,000/- (income tax) + 50% x 1/2 x 14).

10. The Claimants are further entitled to a sum of `25,000/- towards loss of love and affection and `10,000/- each towards loss to estate and funeral expenses.

11. Thus, the overall compensation comes to `18,09,924/-.

RATE OF INTEREST

12. The Claims Tribunal awarded interest @ 9% per annum. This accident took place on 05.12.2001 when the rate of interest on long term deposits were between 5-6%. The rate of interest started firming up in the year 2007. The same were in the vicinity of 8-9% in the year 2010. On

averaging out the rates of interest, it was unreasonable to award interest @ 9% per annum. The same is therefore, reduced to 7.5% per annum.

13. In view of the above discussion, the compensation of `18,09,924/- is awarded along with interest @ 7.5% per annum.

14. By an order dated 21.05.2009, the execution of the impugned judgment was stayed, subject to deposit of `15 lacs along with interest @ 7.5% per annum. The balance compensation of `3,09,924/- along with interest @ 7.5% per annum on the entire award amount from the date of filing of the Petition till the date of payment shall be deposited with the Claims Tribunal within six weeks.

15. The amount already deposited and the balance amount which is to be deposited in terms of this order shall be disbursed/held in deposit in favour of the Claimants in terms of the order passed by the Claims Tribunal.

16. The statutory deposit of `25,000/- be refunded to the Appellant Insurance Company.

17. The Appeal is allowed in above terms.

18. Pending Applications also stand disposed of.

(G.P. MITTAL) JUDGE NOVEMBER 21, 2012 vk