Oriental Insurance Company Ltd. vs Jeebach Sharma & Ors.
2016 Latest Caselaw 1677 Del

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*      IN THE HIGH COURT OF DELHI AT NEW DELHI
                       Date of Decision: 01st March, 2016
+                        MAC.APP. 430/2004
       ORIENTAL INSURANCE COMPANY LTD.                  ..... Appellant
                         Through:    Mr. L.K. Tyagi, Adv.
                         versus
       JEEBACH SHARMA & ORS.                            ..... Respondents
                         Through:    Mr. R.P.S. Bhatti, Adv. for R-1 & 4.
CORAM:
HON'BLE MR. JUSTICE R.K.GAUBA
                  JUDGMENT

R.K.GAUBA, J (ORAL):

1. Vijay Kumar Sharma, a bachelor, son of the first respondent herein died in a motor vehicular accident at about 9.30 a.m. on 13.12.2001 when the cycle on which he was riding was hit by a motor vehicle make TATA 407 bearing registration No. UP 14E 1086 concededly insured against third party risk with the appellant insurance company (insurer). The first respondent (claimant) filed a petition under Section 163-A of Motor Vehicles Act, 1988 (MV Act) on 14.3.2002 before the motor accident claims tribunal (the tribunal) where it was registered as suit No. 65/03/02. The tribunal found, on inquiry, that the age of the deceased was 20 years and assessed his income at Rs.40,000/- per annum and on the said basis awarded total compensation at Rs.5,11,167/- which includes loss of dependency worked out at Rs.5,06,667/- which figure was reached after deducting 1/3rd

of the income towards personal and living expenses from a sum of ₹7,60,000/- which has been indicated by the second schedule of the MV Act.

2. The insurance company in appeal points out that the second schedule to the MV Act is erroneous and has been adversely commented upon by the Supreme Court in U.P. State Road Transport Corporation and Ors. vs. Trilok Chandra and Ors., (1996) 4 SCC 362. It is argued that the age of the deceased being 20 years, the multiplier of 16 has been correctly adopted but on the maximum income of Rs. 40,000/- per annum, the compensation should have been calculated at Rs. 6,40,000/- rather than Rs. 7,60,000/- as erroneously shown by the schedule.

3. In Trilok Chandra (supra), the Supreme Court observed as under:-

"18. We must at once point out that the calculation of compensation and the amount worked out in the Schedule suffer from several defects. For example, in Item 1 for a victim aged 15 years, the multiplier is shown to be 15 years and the multiplicand is shown to be Rs 3000. The total should be 3000 × 15=45,000 but the same is worked out at Rs 60,000. Similarly, in the second item the multiplier is 16 and the annual income is Rs 9000; the total should have been Rs 1,44,000 but is shown to be Rs 1,71,000. To put it briefly, the table abounds in such mistakes. Neither the tribunals nor the courts can go by the ready reckoner. It can only be used as a guide. Besides, the selection of multiplier cannot in all cases be solely dependant on the age of the deceased. For example, if the deceased, a bachelor, dies at the age of 45 and his dependants are his parents, age of the parents would also be relevant in the choice of the multiplier. But these mistakes are limited to actual calculations only and not in respect of other items. What we propose to emphasise is that the multiplier cannot exceed 18 years' purchase factor. This is the improvement over the earlier position that ordinarily it should not exceed 16. We thought it

necessary to state the correct legal position as courts and tribunals are using higher multiplier as in the present case where the Tribunal used the multiplier of 24 which the High Court raised to 34, thereby showing lack of awareness of the background of the multiplier system in Davies case[1942 AC 601 : (1942) 1 All ER 657]" .

4. Similar error, as noted in Trilok Chandra (supra ) is noticeable in the last column against the multiplier of 16. The appropriate figure which should have been reflected in the said column would be Rs.6,40,000/- rather than Rs.7,60,000/- and, thus, the compensation payable here would turn out to be Rs.6,40,000. It is adopted accordingly. Since 1/3rd is to be deducted towards personal and living expenses in terms of the first note below the second schedule to the MV Act, the total compensation payable in the case is calculated as (6,40,000 X 2/3) Rs.4,26,666/66 rounded off to Rs. 4,27,000/-. On non-pecuniary damages allowed by the tribunal in terms of second schedule to the MV Act being added, the total compensation payable comes to Rs. 4,31,500/- rounded off to Rs.4,32,000/-.

5. The compensation is, thus, reduced to Rs.4,32,000/-. It shall, however, carry interest at 9 per cent per annum from 10.7.2003 till realization. The enhanced compensation shall stand apportioned in terms of the directions of the tribunal in the impugned judgment between the claimant and fourth respondent before the tribunal.

6. By order dated 8.10.2004, the insurance company had been directed to deposit the awarded amount within the specified period upon which the execution was stayed. By order dated 5.10.2006, the amount of Rs. 1,75,000/- with interest was allowed to be released, the balance directed to

be kept in fixed deposit receipt. This appeal was dismissed by a learned single judge of this court by judgment dated 12.2.2008. However, the said judgment was set aside by the Supreme Court by order dated 03.10.2013 in Civil Appeal No. 8978/2013. It is stated by the counsel for the appellant insurance company that during the pendency of the appeal before the Supreme Court, there was a stay against release of the balance.

7. The Registrar General shall now calculate the amount payable to the claimant and to the fourth respondent in terms of the order now passed modifying the compensation and release the same in accordance with the above said directions, refunding the excess lying in deposit with proportionate interest and statutory deposit, if made, to the insurance company.

8. The appeal is disposed of in above terms.

R.K. GAUBA (JUDGE) MARCH 01, 2016/nk