Delhi High Court
Icici Lombard General Insurance ... vs Lal Babu Jha & Ors. on 23 February, 2015
Author: G.P. Mittal
$-13
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Decided on: 23rd February, 2015
+ MAC.APP.222/2013
ICICI LOMBARD GENERAL INSURANCE COMPANY
LTD. ..... Appellant
Through: Ms. Neerja Sachdeva, Advocate
versus
LAL BABU JHA & ORS. ..... Respondents
Through: Dr. Pratyusit Nandan, Adv.
CORAM:
HON'BLE MR. JUSTICE G.P.MITTAL
JUDGMENT
G. P. MITTAL, J. (ORAL)
1. There is twin challenge to the judgment dated 22.11.2012
passed by the Motor Accident Claims Tribunal (the Claims
Tribunal) whereby compensation of `5,98,176/- was awarded in
favour of Respondents no.1 and 2 for the death of their son Ajit
Kumar Jha, a bachelor who suffered fatal injuries in a motor
vehicular accident which occurred on 17.12.2007.
2. It is urged that the compensation awarded is exorbitant and
excessive in as much as in case of a bachelor, the multiplier
ought to have been taken as per the age of the Claimants rather
than of the deceased. Reliance is placed on U.P. SRTC v.
Trilok Chandara, (1996) 4 SCC 362, 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 and a judgment of this Court in Vijay Laxmi &
Ors. v. Binod Kumar Yadav & Ors., MAC APP.1148/2011
decided on 03.01.2012.
3. It is also averred that the Claims Tribunal made addition of 30%
towards future prospects/inflation, which in the absence of any
evidence towards good future prospects was not permissible.
Reliance is placed on Reshma Kumari & Ors. v. Madan Mohan
& Anr., (2013) 9 SCC 65 and a judgment of this Court in HDFC
Ergo General Insurance Co. Ltd. v. Smt. Lalta Devi and Ors.,
MAC APP No. 189/ 2014 decided on 12.01.2015.
4. It is further contended that since conscious and willful breach of
the terms and conditions of the insurance policy was proved, the
Appellant ought to have been completely exonerated of its
liability to pay the compensation.
5. On the other hand, the learned counsel for Respondents no.1
and 2 supported the impugned judgment saying that the
compensation awarded is just and reasonable. It is argued that
in the case of breach of the terms and conditions of the
insurance policy, the insurer is under obligation to satisfy the
third party liability first and then later recover the compensation
paid from the insured.
MULTIPLIER
6. The question of selection of multiplier was gone into by me in
great detail in Vijay Laxmi & Ors. v. Binod Kumar Yadav &
Ors., MAC APP.1148/2011 decided on 03.01.2012 and it was
held that the multiplier has to be as per the age of the deceased
or age of the Claimant, whichever is higher. Paras 4 to 15 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."
6. Learned counsel for the Appellant referred
to Sarla Verma (supra 1) in support of the
proposition that age of the deceased is to be taken
into consideration for selection of the multiplier.
As an example the multiplier taken in various
cases such as in Susamma Thomas (supra), U.P.
SRTC v. Trilok Chandara, (1996) 4 SCC 362 as
clarified in New India Assurance Co. Ltd. v.
Charlie, (2005) 10 SCC 720 and the multiplier as
mentioned in Second Schedule to the Motor
Vehicles Act were compared and it was held that
the multiplier as per Column No.4 in the said
table was appropriate for application. Sarla
Verma (supra) related to the death of one
Rajinder Prakash who had left behind his widow,
three minor children apart from his parents and
the grandfather. Obviously, the age of the
deceased was taken into consideration for the
purpose of selection of the multiplier as the
deceased left behind a widow younger to him,
apart from three minor children. It was not laid
down as a proposition of law that irrespective of
the age of the claimants, the age of the deceased
is to be taken into consideration for selection of
the multiplier for calculation of the loss of
dependency. It is true that in Mohd. Ameeruddin
(supra 2) and P.S. Somanathan (supra 3) and
National Insurance Company Ltd. v. Azad Singh
(supra 5), the Hon‟ble Supreme Court applied the
multiplier according to the age of the deceased,
yet in view of Trilok Chandra (supra) and Shanti
Pathak (supra) decided by the three Judges of the
Supreme Court, the judgment in Mohd.
Ameeruddin (supra 2), P.S. Somanathan (supra 3)
and Azad Singh (supra 5) cannot be taken as a
precedent for selection of the multiplier.
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.
9. Thus, there is no escape from the conclusion
that the multiplier has to be selected as per the age
of the deceased or that of the claimants whichever
is higher.
10. Turning to the facts of the case, the
multiplier of 11 was applied according to the age
of the deceased‟s mother who was 52 years. The
Tribunal‟s finding in this regard cannot be faulted.
11. Turning to the contention that one-third of
the deceased‟s income ought to have been
deducted towards his personal and living
expenses, the Supreme Court in Mohd.
Ameeruddin (supra 2) held that the deduction of
one-third should have been made towards the
personal living expenses as the deceased was
bachelor.
12. In Sarla Verma (supra 1), relied upon by the
learned counsel for the Appellant, the Hon‟ble
Supreme Court considered Susamma Thomas
(supra), Trilok Chandra (supra), Fakeerappa v.
Karanataka Cement Pipe Factory, (2004) 2 SCC
473 and examined the questions of deduction of the
personal living expenses of the deceased in detail
in various circumstances. Para 27 to 32 of the
report are extracted hereunder:-
"27. In Susamma Thomas, it was observed that in
the absence of evidence, it is not unusual to deduct
one-third of the gross income towards the personal
living expenses of the deceased and treat the
balance as the amount likely to have been spent on
the members of the family/dependants.
28. In UPSRTC v. Trilok Chandra (1996) 4 SCC
362, this Court held that if the number of
dependents in the family of the deceased was
large, in the absence of specific evidence in regard
to contribution to the family, the Court may adopt
the unit method for arriving at the contribution of
the deceased to his family. By this method, two
units is allotted to each adult and one unit is
allotted to each minor, and total number of units
are determined. Then the income is divided by the
total number of units. The quotient is multiplied by
two to arrive at the personal living expenses of the
deceased. This Court gave the following
illustration:-
"15....X, male, aged about 35 years,
dies in an accident. He leaves behind
his widow and 3 minor children. His
monthly income was Rs. 3500. First,
deduct the amount spent on X every
month. The rough and ready method
hitherto adopted where no definite
evidence was forthcoming, was to
break up the family into units, taking
two units for and adult and one unit
for a minor. Thus X and his wire make
2+2=4 units and each minor one unit
i.e. 3 units in all, totaling 7 units.
Thus the share per unit works out to
Rs. 3500/7=Rs. 500 per month. It can
thus be assumed that ` 1000 was spent
on X. Since he was a working member
some provision for his transport and
out-of-pocket expenses has to be
estimated. In the present case we
estimate the out-of-pocket expense at
Rs. 250. Thus the amount spent on the
deceased X works out to Rs.1250 per
month per month leaving a balance of
Rs.3500-1250=Rs.2250 per month.
This amount can be taken as the
monthly loss of X's dependents."
29. In Fakeerappa v. Karnataka Cement Pipe
Factory (2004) 2 SCC473, while considering the
appropriateness of 50% deduction towards
personal and living expenses of the deceased made
by the High Court, this Court observed:-
"7. What would be the percentage
of deduction for personal expenditure
cannot be governed by any rigid rule
or formula of universal application. It
would depend upon circumstances of
each case. The deceased undisputedly
was a bachelor. Stand of the insurer
is that after marriage, the
contribution to the parents would
have been lesser and, therefore,
taking an overall view the Tribunal
and the High Court were justified in
fixing the deduction."
In view of the special features of the case, this
Court however restricted the deduction towards
personal and living expenses to one-third of the
income.
30. Though in some cases the deduction to be
made towards personal and living expenses is
calculated on the basis of units indicated in Trilok
Chandra, the general practice is to apply
standardized deductions. Having considered
several subsequent decisions of this Court, we are
of the view that where the deceased was married,
the deduction towards personal and living
expenses of the deceased, should be one-third
(1/3rd) where the number of dependent family
members is 2 to 3, one-fourth (1/4th) where the
number of dependant family members is 4 to 6, and
one-fifth (1/5th) where the number of dependant
family members exceed six.
31. Where the deceased was a bachelor and the
claimants are the parents, the deduction follows a
different principle. In regard to bachelors,
normally, 50% is deducted as personal and living
expenses, because it is assumed that a bachelor
would tend to spend more on himself. Even
otherwise, there is also the possibility of his
getting married in a short time, in which event the
contribution to the parent/s and siblings is likely to
be cut drastically. Further, subject to evidence to
the contrary, the father is likely to have his own
income and will not be considered as a dependant
and the mother alone will be considered as a
dependent. In the absence of evidence to the
contrary, brothers and sisters will not be
considered as dependents, because they will either
be independent and earning, or married, or be
dependant on the father.
32. Thus even if the deceased is survived by
parents and siblings, only the mother would be
considered to be a dependant, and 50% would be
treated as the personal and living expenses of the
bachelor and 50% as the contribution to the
family. However, where family of the bachelor is
large and dependant on the income of the
deceased, as in a case where he has a widowed
mother and large number of younger non-earning
sisters or brothers, his personal and living
expenses may be restricted to one-third and
contribution to the family will be taken as two-
third."
13. It may be seen that though it was laid down
as a general principle that normally in the case of
death of a bachelor 50% would be treated as his
personal and living expenses, however, where the
family of the bachelor is large and dependant on
the income of the deceased as in a case where he
has a widowed mother and a large number of
younger non-earning brothers and sisters, his
personal living expenses should be restricted to
one-third. Thus, as per Sarla Verma (supra 1) the
deduction of personal living expenses in case of
death of a bachelor dying in an accident would
vary from case to case.
14. The line of approach in Sarla Verma (supra
1) was followed in Arun Kumar Agrawal & Anr. v.
National Insurance Company Ltd. & Ors., (2010)
9 SCC 218 and Shakti Devi v. New India Insurance
Company Ltd. & Anr., (2010) 11 SCALE 571.
15. In Shakti Devi (supra), the Supreme Court
referred to Sarla Verma (supra 1), Susamma
Thomas (supra), Trilok Chandra (supra) and
Fakeerappa (supra) and it was held that "if the
deceased was survived by parents and siblings,
only the mother would be considered to be a
dependant, and 50% would be treated as the
personal and living expenses of the bachelor and
50% as the contribution to the family. However,
where the family of the bachelor is large and
dependent on the income of the deceased, as in a
case where he had a widowed mother and large
number of younger non-earning sisters or brother,
his personal and living expenses may be restricted
to one-third and contribution to the family will be
taken as two-third."
7. Thus, it is a settled law that the multiplier has to be adopted as
per the age of the deceased or of the Claimant, whichever is
higher.
8. In the instant case, the age of the mother of the deceased on the
date of the accident was 42 years and hence, the appropriate
multiplier will be 14 as against 18 as taken by the Claims
Tribunal.
FUTURE PROSPECTS
9. As far as addition of future prospects is concerned, the question
of grant of future prospects was dealt with by this Court at great
length in HDFC Ergo General Insurance Co. Ltd. v. Smt. Lalta
Devi and Ors., MAC APP No. 189/ 2014 decided on
12.01.2015. Paras 8 to 21 of the report in Lalta Devi (supra) are
extracted hereunder:
"8. It is no gainsaying that in appropriate cases
some addition towards future prospects must be
made in case of death or injury of a person
pursuing a professional course. At the same time, it
cannot be laid down as a uniform principle that
every person pursuing professional course will have
a bright future. There may be a student pursuing
engineering from the reputed engineering colleges
like Indian Institute of Technology (IIT), Regional
Engineering College or any other reputed college.
At the same time, a number of engineering Colleges
have mushroomed where an engineering graduate
may find it difficult to secure a job of an engineer.
In the instant case, deceased Aditya, as stated
earlier was a student of an unknown engineering
college, i.e. Echelon Institute of Technology,
Faridabad which is claimed to be affiliated to
Maharshi Dayanand University, Rohtak. The
Claimants have placed on record result-cum-
detailed marks card of First and Second Semester.
It may be noted that the deceased had secured just
ordinary marks in seven subjects and he had to re-
appear in papers 1002 (Mathematical-I), 1006
(Foundation of Computer & Programming) and
1008 (Basics of Mechanical Engineering).
Similarly, in the Second Semester the deceased was
absent in one of the 12 papers and out of 11
subjects for which he had taken examination, he
was to re-appear in four subjects. Thus, it will be
difficult to say that the deceased was a brilliant
student or that he was pursuing engineering from a
well known or even mediocre college.
9. The learned counsel for the Claimants has
referred to a three Judge Bench decision of the
Supreme Court in Rajesh & Ors. v. Rajbir Singh &
Ors., (2013) 9 SCC 54 to contend that the future
prospects have to be added in all cases where a
person is getting fixed wages or is a seasonal
employee or is a student.
10. It is urged by the learned counsel for the
Claimants that the law laid down in Sarla Verma
(Smt.) & Ors. v. Delhi Transport Corporation &
Anr., (2009) 6 SCC 121 was extended in Rajesh &
Ors. v. Rajbir Singh & Ors., (2013) 9 SCC 54 to
hold that future prospects ought to be extended in
all cases.
11. On the other hand, the learned counsel for
the Insurance Company refers to a three Judge
Bench decision of the Supreme Court in Reshma
Kumari & Ors. v. Madan Mohan & Anr., (2013) 9
SCC 65 wherein while approving the ratio with
regard to future prospects in Sarla Verma (Smt.) &
Ors. (supra) and relying on 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 and Abati Bezbaruah v. Dy.
Director General, Geological Survey of India &
Anr., 2003 (3) SCC 148, the Supreme Court held
as under:-
"38. With regard to the addition to income
for future prospects, in Sarla Verma [Sarla
Verma v. DTC, (2009) 6 SCC 121 : (2009) 2
SCC (Civ) 770 : (2009) 2 SCC (Cri) 1002],
this Court has noted the earlier decisions
in Susamma Thomas [Kerala
SRTC v. Susamma Thomas, (1994) 2 SCC
176 : 1994 SCC (Cri) 335], Sarla Dixit
[(1996) 3 SCC 179] and Abati
Bezbaruah [Abati Bezbaruah v. Geological
Survey of India, (2003) 3 SCC 148 : 2003
SCC (Cri) 746] and in para 24 of the Report
held as under: (Sarla Verma case [Sarla
Verma v. DTC, (2009) 6 SCC 121 : (2009) 2
SCC (Civ) 770 : (2009) 2 SCC (Cri) 1002] ,
SCC p. 134):
"24. ... In view of the imponderables
and uncertainties, we are in favour of
adopting as a rule of thumb, an
addition of 50% of actual salary to
the actual salary income of the
deceased towards future prospects,
where the deceased had a permanent
job and was below 40 years. (Where
the annual income is in the taxable
range, the words „actual salary‟
should be read as „actual salary less
tax‟). The addition should be only
30% if the age of the deceased was 40
to 50 years. There should be no
addition, where the age of the
deceased is more than 50 years.
Though the evidence may indicate a
different percentage of increase, it is
necessary to standardise the addition
to avoid different yardsticks being
applied or different methods of
calculation being adopted. Where the
deceased was self-employed or was
on a fixed salary (without provision
for annual increments, etc.), the
courts will usually take only the
actual income at the time of death. A
departure therefrom should be made
only in rare and exceptional cases
involving special circumstances."
39. The standardization of addition to
income for future prospects shall help in
achieving certainty in arriving at
appropriate compensation. We approve the
method that an addition of 50% of actual
salary be made to the actual salary income
of the deceased towards future prospects
where the deceased had a permanent job
and was below 40 years and the addition
should be only 30% if the age of the
deceased was 40 to 50 years and no addition
should be made where the age of the
deceased is more than 50 years. Where the
annual income is in the taxable range, the
actual salary shall mean actual salary less
tax. In the cases where the deceased was
self-employed or was on a fixed salary
without provision for annual increments, the
actual income at the time of death without
any addition to income for future prospects
will be appropriate. A departure from the
above principle can only be justified in
extraordinary circumstances and very
exceptional cases."
12. The learned counsel for the Insurance
Company relies upon a Constitutional Bench
judgment of the Supreme Court in Central Board
of Dawoodi Bohra Community & Anr. v. State of
Maharashtra & Anr., (2005) 2 SCC 673; Safiya
Bee v. Mohd. Vajahath Hussain @ Fasi, (2011) 2
SCC 94; and Union of India & Ors. v. S.K.
Kapoor, (2011) 4 SCC 589 to contend that in case
of divergence of opinion in judgments of benches
of co-equal strength, earlier judgment will be
taken as a binding precedent.
13. It may be noted that in Reshma Kumari &
Ors. v. Madan Mohan & Anr., (2013) 9 SCC 65;
the three Judge Bench was dealing with a
reference made by a two Judge Bench (S.B. Sinha
and Cyriac Joseph, J.J.). The two Hon‟ble Judges
wanted an authoritative pronouncement from a
Larger Bench on the question of applicability of
the multiplier and whether the inflation was built
in the multiplier. The three Judge Bench approved
the two Judge Bench decision of the Supreme
Court in Sarla Verma (Smt.) & Ors. v. Delhi
Transport Corporation & Anr., (2009) 6 SCC 121
with regard to the selection of multiplier. It
further laid down that addition towards future
prospects to the extent of 50% of the actual salary
shall be made towards future prospects when the
deceased had a permanent job and was below 40
years and addition of 30% should be made if the
age of the deceased was between 40-50 years. No
addition towards future prospects shall be made
where the deceased was self-employed or was
getting a fixed salary without any provision of
annual increment.
14. Of course, three Judge Bench of the
Supreme Court in its later judgment in Rajesh
relying on Santosh Devi v. National Insurance
Company Ltd. & Ors., 2012 (6) SCC 421 observed
that there would be addition of 30% and 50%,
depending upon the age of the deceased, towards
future prospects even in the case of self-employed
persons. It may, however, be noted that in Rajesh,
the three Judge Bench decision in Reshma Kumari
(supra) was not brought to the notice of their
Lordships.
15. The divergence of opinion was noted by
another three Judge Bench of the Supreme Court
in Sanjay Verma v. Haryana Roadways, (2014) 3
SCC 210. In paras 14 and 15, the Supreme Court
observed as under:-
"14. Certain parallel developments will now
have to be taken note of. In Reshma
Kumari v. Madan Mohan [(2009) 13 SCC
422 : (2009) 5 SCC (Civ) 143 : (2010) 1
SCC (Cri) 1044], a two-Judge Bench of this
Court while considering the following
questions took the view that the issue(s)
needed resolution by a larger Bench: (SCC
p. 425, para 10)
"(1) Whether the multiplier specified
in the Second Schedule appended to
the Act should be scrupulously applied
in all the cases?
(2) Whether for determination of the
multiplicand, the Act provides for any
criterion, particularly as regards
determination of future prospects?"
15. Answering the above reference a three-
Judge Bench of this Court in Reshma
Kumari v. Madan Mohan [(2013) 9 SCC 65
: (2013) 4 SCC (Civ) 191 : (2013) 3 SCC
(Cri) 826] (SCC p. 88, para 36) reiterated
the view taken in Sarla Verma [Sarla
Verma v. DTC, (2009) 6 SCC 121 : (2009) 2
SCC (Civ) 770 : (2009) 2 SCC (Cri) 1002]
to the effect that in respect of a person who
was on a fixed salary without provision for
annual increments or who was self-employed
the actual income at the time of death should
be taken into account for determining the
loss of income unless there are
extraordinary and exceptional
circumstances. Though the expression
"exceptional and extraordinary
circumstances" is not capable of any precise
definition, in Shakti Devi v. New India
Insurance Co. Ltd. [(2010) 14 SCC 575 :
(2012) 1 SCC (Civ) 766 : (2011) 3 SCC
(Cri) 848] there is a practical application of
the aforesaid principle. The near certainty of
the regular employment of the deceased in a
government department following the
retirement of his father was held to be a
valid ground to compute the loss of income
by taking into account the possible future
earnings. The said loss of income,
accordingly, was quantified at double the
amount that the deceased was earning at the
time of his death."
16. Further, the divergence of opinion in Reshma
Kumari & Ors. v. Madan Mohan & Anr., (2013) 9 SCC
65 and Rajesh & Ors. v. Rajbir Singh & Ors., (2013) 9
SCC 54 was noticed by the Supreme Court in another
latest judgment in National Insurance Company Ltd. v.
Pushpa & Ors., CC No.8058/2014, decided on
02.07.2014 and in concluding paragraph while making
reference to the Larger Bench, the Supreme Court held
as under:-
"Be it noted, though the decision in Reshma
(supra) was rendered at earlier point of time, as is
clear, the same has not been noticed in Rajesh
(supra) and that is why divergent opinions have
been expressed. We are of the considered opinion
that as regards the manner of addition of income of
future prospects there should be an authoritative
pronouncement. Therefore, we think it appropriate
to refer the matter to a larger Bench."
17. Now, the question is which of the judgments ought
to be followed awaiting answer to the reference made by
the Supreme Court in Pushpa & Ors. (supra).
18. In Central Board of Dawoodi Bohra Community &
Anr. v. State of Maharashtra & Anr., (2005) 2 SCC 673
in para 12, the Supreme Court observed as under:-
"12. Having carefully considered the submissions
made by the learned Senior Counsel for the parties
and having examined the law laid down by the
Constitution Benches in the abovesaid decisions,
we would like to sum up the legal position in the
following terms:
(1) The law laid down by this Court in a
decision delivered by a Bench of larger strength
is binding on any subsequent Bench of lesser or
coequal strength.
(2) [Ed.: Para 12(2) corrected vide Official
Corrigendum No. F.3/Ed.B.J./21/2005 dated 3-
3-2005.] A Bench of lesser quorum cannot
disagree or dissent from the view of the law
taken by a Bench of larger quorum. In case of
doubt all that the Bench of lesser quorum can
do is to invite the attention of the Chief Justice
and request for the matter being placed for
hearing before a Bench of larger quorum than
the Bench whose decision has come up for
consideration. It will be open only for a Bench
of coequal strength to express an opinion
doubting the correctness of the view taken by
the earlier Bench of coequal strength,
whereupon the matter may be placed for
hearing before a Bench consisting of a quorum
larger than the one which pronounced the
decision laying down the law the correctness of
which is doubted.
(3) [Ed.: Para 12(3) corrected vide Official
Corrigendum No. F.3/Ed.B.J./7/2005 dated 17-
1-2005.] The above rules are subject to two
exceptions: (i) the abovesaid rules do not bind
the discretion of the Chief Justice in whom vests
the power of framing the roster and who can
direct any particular matter to be placed for
hearing before any particular Bench of any
strength; and (ii) in spite of the rules laid down
hereinabove, if the matter has already come up
for hearing before a Bench of larger quorum
and that Bench itself feels that the view of the
law taken by a Bench of lesser quorum, which
view is in doubt, needs correction or
reconsideration then by way of exception (and
not as a rule) and for reasons given by it, it may
proceed to hear the case and examine the
correctness of the previous decision in question
dispensing with the need of a specific reference
or the order of the Chief Justice constituting the
Bench and such listing. Such was the situation
in Raghubir Singh [(1989) 2 SCC 754] and
Hansoli Devi [(2002) 7 SCC 273]."
19. Similarly, in Safiya Bee v. Mohd. Vajahath
Hussain @ Fasi, (2011) 2 SCC 94 in para 27, the
Supreme Court observed as under:-
"27. However, even assuming that the decision in
WP No. 35561 of 1998 did not operate as res
judicata, we are constrained to observe that even if
the learned Judges who decided WP No. 304 of
2001 did not agree with the view taken by a
coordinate Bench of equal strength in the earlier
WP No. 35561 of 1998 regarding the interpretation
of Section 2(c) of the Act and its application to the
petition schedule property, judicial discipline and
practice required them to refer the issue to a larger
Bench. The learned Judges were not right in
overruling the statement of the law by a coordinate
Bench of equal strength. It is an accepted rule or
principle that the statement of the law by a Bench
is considered binding on a Bench of the same or
lesser number of Judges. In case of doubt or
disagreement about the decision of the earlier
Bench, the well-accepted and desirable practice is
that the later Bench would refer the case to a
larger Bench."
20. In Union of India & Ors. v. S.K. Kapoor, (2011) 4
SCC 589 while holding that the decision of the Co-
ordinate Bench is binding on the subsequent Bench of
equal strength, held that the Bench of Co-ordinate
strength can only make a reference to a larger Bench. In
para 9 of the report, the Supreme Court held as under:-
"9. It may be noted that the decision in S.N. Narula
case [(2011) 4 SCC 591] was prior to the decision
in T.V. Patel case [(2007) 4 SCC 785 : (2007) 2
SCC (L&S) 98] . It is well settled that if a
subsequent coordinate Bench of equal strength
wants to take a different view, it can only refer the
matter to a larger Bench, otherwise the prior
decision of a coordinate Bench is binding on the
subsequent Bench of equal strength. Since, the
decision in S.N. Narula case [(2011) 4 SCC 591]
was not noticed in T.V. Patel case [(2007) 4 SCC
785 : (2007) 2 SCC (L&S) 98] , the latter decision
is a judgment per incuriam. The decision in S.N.
Narula case [(2011) 4 SCC 591] was binding on
the subsequent Bench of equal strength and hence,
it could not take a contrary view, as is settled by a
series of judgments of this Court."
21. This Court in New India Assurance Co. Ltd. v.
Harpal Singh & Ors., MAC APP.138/2011, decided on
06.09.2013, went into this question and held that in view
of the report in S.K. Kapoor (supra), the three Judge
Bench decision in Reshma Kumari & Ors. (supra) shall
be taken as a binding precedent."
10. In the instant case, there was no evidence with regard to good
future prospects, addition of 30% made by the Claims Tribunal
was not permissible.
CALCULATION OF COMPENSATION
11. During inquiry before the Claims Tribunal, it was claimed that
deceased Ajit Kumar Jha was working as a driver. His licence
to drive LMV was also proved. The Claims Tribunal held that
PW-2's testimony that the deceased was working as a driver
remained unchallenged. At the same time, in the absence of any
documentary evidence with regard to the deceased's income,
the Claims Tribunal proceeded to hold the income of the
deceased to be `3940/- per month on the basis of minimum
wages of a skilled worker. In my view, since it was established
that the deceased was working as a driver, the Claims Tribunal
ought to have made assessment of income of a driver. In my
opinion, on the date of the accident i.e. 17.12.2007 on 25
workings days, the income of a driver can be assessed to be
`5,000/- per month.
12. The loss of dependency, in view of the observation made above,
will come to `4,20,000/- (5,000/- x 12 x 1/2 x 14).
13. In addition, the Respondents are entitled to a sum of `1,00,000/-
towards loss of love and affection, `25,000/- towards funeral
expenses and `10,000/- towards loss to estate.
14. The overall compensation therefore, comes to `5,55,000/- as
against the award of `5,98,176/- as made by the Claims
Tribunal. The compensation awarded therefore, cannot be said
to be exorbitant or excessive so as to calling any interference
therein.
LIABILITY
15. As far as liability of the Insurance Company is concerned, the
issue of satisfying third party liability even in case of breach of
the terms of insurance policy is well settled by a three Judge
Bench report of the Apex Court in Sohan Lal Passi v. P. Sesh
Reddy, (1996) 5 SCC 21. As per Section 149(2) of the Motor
Vehicles Act, 1988, (the Act), an insurer is entitled to defend
an action on the grounds as mentioned under Section
149(2)(a)(i) and (ii) of the Act. Thus, the onus is on the insurer
to prove that there is breach of the terms and conditions of the
insurance policy. It is well settled that the breach must be
conscious and willful. Even if a conscious breach on the part of
the insured is established, still the insurer has a statutory
liability to pay the compensation to the third party and it will
simply have the right to recover the same from the
insured/tortfeasor either in the same proceedings or by
independent proceedings, as the case may be, as ordered by the
Claims Tribunal or the Court. The question of statutory liability
to pay the compensation was also discussed in detail by a two
Judge Bench of the Supreme Court in Skandia Insurance
Company Limited v. Kokilaben Chandravadan, (1987) 2 SCC
654, wherein it was held that the exclusion clause in the
contract of Insurance must be read down being in conflict with
the main statutory provision enacted for protection of the
victims of motor accidents. It was laid down that the victim
would be entitled to recover the compensation from the insurer,
irrespective of the breach of any condition of the insurance
policy. The three Judge Bench of the Supreme Court in Sohan
Lal Passi (supra) analysed the corresponding provisions under
the Motor Vehicles Act, 1939 and the Motor Vehicles Act, 1988
and approved the decision in Skandia. Again in New India
Assurance Co., Shimla v. Kamla and Ors., (2001) 4 SCC 342,
the Supreme Court referred to the decision of the two Judge
Bench in Skandia and the three Judge Bench decision in Sohan
Lal Passi and held that the insurer, who has been made liable to
pay the compensation to third parties on account of issuance of
certificate of insurance shall be entitled to recover the same
from the insured if there was any breach of the policy condition
on account of the vehicle being driven without a valid driving
licence. The relevant portion of the report is extracted
hereunder:
"21. A reading of the proviso to sub-section (4) as
well as the language employed in sub-section (5) would
indicate that they are intended to safeguard the interest
of an insurer who otherwise has no liability to pay any
amount to the insured but for the provisions contained in
Chapter XI of the Act. This means, the insurer has to pay
to the third parties only on account of the fact that a
policy of insurance has been issued in respect of the
vehicle, but the insurer is entitled to recover any such
sum from the insured if the insurer were not otherwise
liable to pay such sum to the insured by virtue of the
conditions of the contract of insurance indicated by the
policy.
22.To repeat, the effect of the above provisions is this:
when a valid insurance policy has been issued in respect
of a vehicle as evidenced by a certificate of insurance the
burden is on the insurer to pay to the third parties,
whether or not there has been any breach or violation of
the policy conditions. But the amount so paid by the
insurer to third parties can be allowed to be recovered
from the insured if as per the policy conditions the
insurer had no liability to pay such sum to the insured.
23.It is advantageous to refer to a two-Judge Bench of
this Court in Skandia Insurance Company Limited v.
Kokilaben Chandravadan, (1987) 2 SCC 654. Though
the said decision related to the corresponding provisions
of the predecessor Act (Motor Vehicles Act, 1939) the
observations made in the judgment are quite germane
now as the corresponding provisions are materially the
same as in the Act. Learned Judge pointed out that the
insistence of the legislature that a motor vehicle can be
used in a public place only if that vehicle is covered by a
policy of insurance is not for the purpose of promoting
the business of the insurance company but to protect the
members of the community who become suffers on
account of accidents arising from the use of motor
vehicles. It is pointed out in the decision that such
protection would have remained only a paper protection
if the compensation awarded by the courts were not
recoverable by the victims (or dependants of the victims)
of the accident. This is the raison d‟etre for the
legislature making it prohibitory for motor vehicles being
used in public places without covering third-party risks
by a policy of insurance.
24.The principle laid down in the said decision has been
followed by a three-Judge Bench of this Court with
approval in Sohan Lal Passi v. P. Sesh Reddy, (1996) 5
SCC 21.
25.The position can be summed up thus:
The insurer and the insured are bound by the
conditions enumerated in the policy and the insurer is not
liable to the insured if there is violation of any policy
condition. But the insurer who is made statutorily liable
to pay compensation to third parties on account of the
certificate of insurance issued shall be entitled to recover
from the insured the amount paid to the third parties, if
there was any breach of policy conditions on account of
the vehicle being driven without a valid driving
licence........."
16. Again in United India Insurance Company Ltd. v. Lehru &
Ors., (2003) 3 SCC 338, in para 18 of the report, the Supreme
Court referred to the decisions in Skandia, Sohan Lal Passi and
Kamla and held that even where it is proved that there was a
conscious or willful breach as provided under Section 149(2)(a)
(ii) of the Motor Vehicles Act 1988, the Insurance Company
would still remain liable to the innocent third party but it may
recover the compensation paid from the insured. The relevant
portion of the report is extracted hereunder:
"18. Now let us consider Section 149(2). Reliance
has been placed on Section 149(2)(a)(ii). As seen, in
order to avoid liability under this provision it must be
shown that there is a "breach". As held in Skandia and
Sohan Lal Passi cases the breach must be on the part of
the insured. We are in full agreement with that. To hold
otherwise would lead to absurd results. Just to take an
example, suppose a vehicle is stolen. Whilst it is being
driven by the thief there is an accident. The thief is
caught and it is ascertained that he had no licence. Can
the insurance company disown liability? The answer has
to be an emphatic "No". To hold otherwise would be to
negate the very purpose of compulsory
insurance.........."
xxxx xxxx xxxx xxxx xxxx
xxxx xxxx xxxx xxxx xxxx
20...........If it ultimately turns out that the licence was
fake, the insurance company would continue to remain
liable unless they prove that the owner/insured was
aware or had noticed that the licence was fake and still
permitted that person to drive. More importantly, even in
such a case the insurance company would remain liable
to the innocent third party, but it may be able to recover
from the insured. This is the law which has been laid
down in Skandia, Sohan Lal Passi and Kamla cases. We
are in full agreement with the views expressed therein
and see no reason to take a different view."
17. Thereafter, the three Judge Bench of the Supreme Court in
National Insurance Company Limited v. Swaran Singh & Ors.,
(2004) 3 SCC 297 again emphasised that the liability of the
insurer to satisfy the decree passed in favour of the third party
was statutory. It approved the decisions in Sohan Lal Passi,
Kamla and Lehru. Paras 73 and 105 of the report are extracted
hereunder:
"73. The liability of the insurer is a statutory one. The
liability of the insurer to satisfy the decree passed in
favour of a third party is also statutory.
xxxx xxxx xxxx xxxx xxxx
xxxx xxxx xxxx xxxx xxxx
105. Apart from the reasons stated hereinbefore, the
doctrine of stare decisis persuades us not to deviate from
the said principle."
18. This Court also in Oriental Insurance Company Limited v.
Rakesh Kumar and Others, 2012 ACJ 1268 and other appeals
decided by a common judgment dated 29.02.2012 noticed some
divergence of opinion in National Insurance Company Limited
v. Kusum Rai & Ors., (2006) 4 SCC 250; National Insurance
Company Limited v. Vidhyadhar Mahariwala & Ors., (2008) 12
SCC 701; Ishwar Chandra & Ors. v. The Oriental Insurance
Company Limited & Ors., (2007) 10 SCC 650 and Premkumari
& Ors. v. Prahalad Dev & Ors., (2008) 3 SCC 193 and held that
in view of the three Judge Bench decisions of the Apex Court in
Sohan Lal Passi (supra) and Swaran Singh, the liability of the
Insurance Company vis-à-vis the third party is statutory. If the
Insurance Company successfully proves conscious breach of the
terms of the insurance policy, then it would be entitled only to
recovery rights against the owner or the driver, as the case may
be.
19. Hence, even if the Insurance Company proved that there was
willful and conscious breach of the terms and conditions of the
insurance policy, it was only entitled to recovery rights which
have been granted in the present case.
20. The appeal therefore, has to fail; the same is accordingly
dismissed with cost.
21. Statutory amount, if any, shall be refunded to the Appellant
Insurance Company on deposit of costs, which shall be paid to
Respondents no.1 and 2.
22. The compensation granted shall be released/held in fixed
deposit in terms of the orders passed by the Claims Tribunal.
(G.P. MITTAL)
JUDGE
FEBRUARY 23, 2015
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