United India Insurance Co. Ltd vs Dilshada Begum And Others
2023 Latest Caselaw 346 j&K

      HIGH COURT OF JAMMU & KASHMIR AND LADAKH
                      AT JAMMU

                                             Reserved on: 09.02.2023
                                             Pronounced on: 23.02.2023

                                                 MA No. 365/2013



United India Insurance Co. Ltd.                         ...Appellant(s)

                            Through:- Mr. Vishnu Gupta Advocate
                      v/s

Dilshada Begum and others                             ...Respondent(s)


                            Through:- Mr. Bari Abdullah, Advocate

Coram: HON'BLE MR. JUSTICE SANJAY DHAR, JUDGE

                            JUDGMENT

1 The appellant-Insurance company has challenged award dated

31.05.2013 passed by the Motor Accidents Claims Tribunal, Ramban

(hereinafter referred to as the „Tribunal‟) whereby the respondents-claimants

have been held entitled to an amount of Rs. 5,00,000/- as compensation on

account of death of one Mohd Rafiq Malik who is stated to have died on

01.02.2011 as a result of motor vehicular accident involving vehicle bearing

No. JK03/4413.

2. It has been contended by the appellant-Insurance Company that

the income of the deceased was pleaded and proved to be more than Rs.

40,000/- per annum, therefore, it was not open to the Tribunal to scale it

down to Rs. 40,000/- per annum so as to bring the claim petition within the

parameters of Section 163-A of Motor Vehicles Act, 1988 (hereinafter

referred to as the „Act of 1988‟). It has also been contended that, while

calculating the compensation, the Tribunal has made deduction and applied

multiplier as per the ratio laid down by the Supreme Court in the case of

Sarla Verma and others vs. Delhi Transport Corporation and another,

(2009) 6 SCC 121, whereas, in the case of a claim petition under Section

163-A of the Act of 1988, the compensation has to be assessed strictly in

accordance with the Second Schedule to the said Act. It has further been

contended that a cheque relating to the premium of policy of insurance was

dishonored and, as such, the policy of insurance issued by the appellant-

Insurance Company in favour of the insured in respect of the vehicle in

question stood automatically cancelled. Accordingly, the vehicle in question

was not covered under any policy of insurance at the time of the accident.

Thus, according to the appellant-Insurance Company, it could not have been

saddled with liability to satisfy the award.

3 I have heard learned counsel appearing for the appellant-

Insurance Company and learned counsel appearing for the respondents-

claimants and perused the record of the case.

4 It appears that on 01.02.2011, a vehicle bearing

No. JK03/4413, that was being driven by deceased Mohd Rafiq Malik,

suffered an accident which resulted in serious injuries to the deceased driver

leading to his death. The respondents-claimants, who happen to be the wife,

sons and daughter of the deceased, filed a claim petition under Section

163-A of the Act of 1988 before the Tribunal. In the claim petition, it was

claimed that the age of the deceased at the time of his death was 35 years, he

was driver by profession and that his monthly income was Rs. 20,000/- per

month. The compensation was claimed by the respondents-claimants in

terms of the Second Schedule to the Act of 1988.

5 The appellants-Insurance Company filed its objections to the

claim petition in which it was contended that the vehicle in question was

being driven in violation of the terms and conditions of the policy of

insurance at the time of the accident, inasmuch as, its driver was not holding

a valid driving licence. It was also contended that the vehicle in question

was being driven without a valid and effective route permit and fitness

certificate and that the driver of the vehicle in question was driving the same

in a rash and negligent manner. It was further contended that five gratuitous

passengers were also travelling in the vehicle in question at the relevant

time. The appellant-Insurance, however, admitted that the vehicle in

question was covered by a policy of insurance having its validity from

20.05.2010 to 19.05.2011. The reply filed by the appellant-insurance

company has been signed by its authorized officer as well as by its counsel

before the Tribunal.

6 The Tribunal, on the basis of pleadings of the parties, framed

the following issues:

(i) Whether the deceased Mohd Rafiq Malik died as a result of injuries received in a vehicular accident on 01.02.2011 at Zanchoos on Banihal Neel Road involving vehicle No. JK03/4413 driven by the deceased himself under the jurisdiction of Police Station Banihal ? OPP

(ii) Whether the petitioners are entitled to receive any compensation under Motor Vehicle Act from the respondents, if so, to what extent and from whom ? OPP;

(iii) Whether the offending vehicle was being driven at the time of accident in contravention of terms and conditions of Insurance Policy and respondent insurance company is not liable to pay any compensation to the petitioners ? OPP

(iv) Relief.

7 The respondents-claimants examined three witnesses, namely

the claimant Dishada Begum, PW Abdul Rashid and PW Mohd Rafiq,

whereas no evidence was led by the appellant-Insurance Company. The

learned Tribunal, after appreciation of evidence on record, came to the

conclusion that the deceased has died as a result of the accident involving

vehicle bearing No. JK03/4413 which he was driving at the relevant time.

The Tribunal further observed that, though the income of the deceased has

been shown to be Rs. 20,000/-, however, because the claim petition has been

filed under Section163-A of the Act of 1988, therefore, the annual income

of the deceased is to be restricted to Rs.40,000/- per annum. Accordingly,

the compensation was assessed at Rs.5.00 lac along with interest at the rate

of 7.5% per annum.

8 The first contention that has been raised by the appellant-

Insurance Company is that the vehicle in question was not covered under the

policy of insurance at the relevant time because the cheque relating to

premium had been dishonored and consequently, the policy of insurance

was automatically cancelled. In this regard, the appellant-Insurance

Company has placed on record the original cheque, original dishonor memo

and a copy of the notice stated to have been sent to the insured.

9 Learned counsel for the appellant-Insurance Company has

submitted that the reply to the claim petition was filed by the counsel for the

insurance company without instructions from the company and the same

was signed by any authorized officer of the company, therefore, the

aforesaid plea could not be raised before the Tribunal.

10. The stand taken by the learned counsel for the appellant is

factually incorrect for the reason that the record of the Tribunal clearly

shows that the reply filed by the appellant-Insurance Company has been

signed not only by the counsel for the insurance company, but also by the

authorized officer of the company and it bears seal and signatures of the said

officer. In para (4) of the reply, the appellant- insurance company has

admitted that the vehicle in question was insured under a policy of insurance

with its validity from 20.05.2010 to 19.05.2011. Obviously, no issue as

regards the question, whether or not, the vehicle in question was covered

under the policy of insurance has been framed by the Tribunal.

11. The plea that the vehicle in question was not insured at the

relevant time has been raised by the appellant-insurance company for the

first time in the appeal and at the same time the insurance company has

categorically admitted in its reply before the Tribunal that the vehicle in

question was insured at the relevant time. The appellant-insurance company

cannot take inconsistent pleas and deny the insurance policy for the first

time in the appeal. Allowing such plea to be raised in appeal would cause

grave prejudice to the claimant and the owner as they have no chance to

meet this new plea at the appellate stage.

12. The claim petition remained pending before the Tribunal for

more than one year, but it never occurred to the appellant-insurance

company to bring to the notice of the Tribunal that the policy of insurance

had been cancelled. This plea cannot be allowed to be raised for the first

time at the appellate stage, particularly when the appellant-insurance

company has specifically admitted before the Tribunal that the vehicle in

question was insured at the relevant time. The argument of learned counsel

for the appellant-insurance company is, therefore, without any merit.

13. It has been next contended that, once it was shown that the

annual income of the deceased was more than Rs. 40,000/- per annum, it

was not open to the Tribunal to restrict the income of the deceased to Rs.

40,000/- per annum and award compensation in terms of the provisions

contained in Section 163-A of Act of 1988. In this regard, learned counsel

for the appellant-insurance company has relied upon a judgment of the

Supreme Court in the case of Deepal Girishbhai Soni and others vs

United India Insurance Co. Ltd.,, 2004 ACJ 934. Reliance has also been

placed upon judgment of Punjab and Haryana High Court in the case of

National Insurance Co. Ltd vs. Nagina Devi and others, 2016 ACJ 176,

a judgment of Gauhati High Court in the case of New India Assurance Co.

Ltd. vs Lalthangveli and others, 2009 ACJ 299, judgment of Kerala High

Court in the case of United India Insurance Co. Ltd., vs. Akbar Shihab,

2013 ACJ 121, judgment of Kerala High Court in the case of National

Insurance Co. Ltd., vs. Jabbar and another, 2007 ACJ 1371, judgment

of High Court of Himachal Pradesh in the case of Satya Devi vs. Bakshi

Ram and others, 2011 ACJ 760 and judgment of Punjab and Haryana

High Court in the case of Gurmeet Singh vs. Chandigarh Transport

Undertaking and others, 2008 ACJ 2303.

14 In Deepal Girishbhai Soni's case (supra), the Supreme Court,

after discussing the scope of provisions contained in Section 163-A and

Section 166 of the Act of 1988, came to the conclusion that the proceedings

under Section 163-A being a social security provision, providing for a

distinct scheme, only those whose, annual income is up to Rs. 40,000/- per

annum can take the benefit thereof. All other claims are required to be

determined in terms of Chapter XII of the Act. It was further held that, in

Section 163-A, the expression "notwithstanding anything contained in the

Act or, in any other law for the time being in force" has been used, which

goes to show that the Parliament intended to insert a non-obstante clause of

wide nature which would mean that the provisions of Section 163-A of the

Act of 1988 would apply despite the contrary provisions existing in the said

Act, or any other law for the time being in force. The Court went on to

observe that Section 163-A of the Act covers cases where negligence is on

the part of the victim and it is by way of an exception to Section 166 and the

concept of social justice has been duly taken care of.

15 Again in the case of United India Insurance Company Ltd.

vs. Sunil Kumar and another, 2013 ACJ 2856, it has been held that

liability to award compensation under Section163-A of the Act of 1988 is on

the principle of "no fault", therefore, the question as to who is at fault is

immaterial and foreign to an enquiry under section 163-A of the Act. It was

further observed that the Legislature never wanted the claimant to plead or

establish negligence on the part of the owner or the driver. The Court went

on to observe that, once it is established that the death or permanent

disablement has occurred during the course of use of the vehicle and the

vehicle is insured, the insurance company or the owner, as the case may be,

shall be liable to pay the compensation, which is a statutory obligation.

16. Expounding the law regarding intention behind incorporation

of Section 163A of the Act, the Supreme Court in the case of Sarla Verma

(supra), in para (34) of the judgment observed as under:

"34. The Motor Vehicle Act, 1988 was amended by Act 54 of 1994, inter alia inserting Section 163-A and the Second Schedule with effect from 14.11.1994. Section 163-A of the MV Act contains a special provision as to payment of compensation on structured formula basis, as indicated in the Second Schedule to the Act. The Second Schedule contains a Table prescribing the compensation to be awarded with reference to the age and income of the deceased. It specifies the amount of compensation to be awarded with reference to the annual income range of Rs.3,000/- to Rs.40,000/-. It does not specify the quantum of compensation in case the annual income of the deceased is more than Rs.40,000/-.

But it provides the multiplier to be applied with reference to the age of the deceased. The table starts with a multiplier of 15, goes upto 18, and then steadily comes down to 5. It also provides the standard deduction as one-third on account of personal living expenses of the deceased. Therefore, where the application is under section 163A of the Act, it is possible to calculate the compensation on the structured formula basis, even where compensation is not specified with reference to the annual income of the deceased, or is more than Rs.40,000/-, by applying the formula : (2/3 x AI x M), that is two-thirds of the annual income multiplied by the multiplier applicable to the age of the deceased would be the compensation. Several principles of tortious liability are excluded when the claim is under section 163A of MV Act".

17 The question whether the Tribunal can restrict the income of

the deceased/injured to Rs.40,000/- per annum in spite of the claimant

having pleaded that the income of the deceased/injured is more than Rs.

40,000/- per annum, came up for consideration before this Court in the case

of Bajaj Allianz General Ins. Co. Ltd vs. Mohd Sharief and others, 2017

(5) JKJ (HC) 110.This Court, after discussing the afore-noted judgment of

the Supreme Court, has observed as under:

"The possibility of exercising the option of filing a claim application under Section 166 of the Act or under Section 163-A, however, is not available in a case where admittedly the accident had occurred due to the wrongful act, neglect or default on the part of the victim of the accident himself for the reason that in such a case a claim under Section 166 of the Act would not lie. In such a case, the claimants cannot be debarred from filing a claim under Section 163-A of the Act, which covers cases where even negligence is on the part of victim, only for the reason that the annual income of the victim was more than Rs.40,000/-.

18 In the aforesaid case, in the claim application, the income of the

deceased was pleaded as Rs.7000/- per month, but the Tribunal, after

holding an enquiry, restricted the income of the deceased to Rs.36000/- per

annum. The award was challenged by the insurer on two grounds including

the ground that the claim petition under Section 163 A of the Act of 1988 is

not maintainable when annual income of its deceased is more than

Rs.40,000/- per annum.This Court in view of its foregoing observations

rejected the argument of the insured.

19 Again in the case of National Insurance Company Ltd. vs

Rukhsana Begum and others, Manu/JK/0479/2019, this Court in a case

where the claimant had shown the income of the deceased as Rs.7000/- per

month, but the Tribunal did not accept this assertion and held that income of

the deceased cannot be taken as more than Rs.40000/-. This Court, placing

reliance upon the ratio laid down in Mohd Sharief's case (supra) held the

claim petition as maintainable.

20. Again in Neema v. Sohan Singh, 2019 SCC Online HP 1805,

challenge was laid to the order of the Tribunal dismissing the claim petition

on the ground that the same was not maintainable as the claimants had failed

to demonstrate that the income of the deceased was not less than the

maximum limit of Rs.40,000/- per annum. The appellant in the aforesaid

case relied upon the Division Bench Judgment of High Court of Himachal

Pradesh in the case of Oriental Insurance Company Ltd vs. Sihnu Ram

and others (FAO No. 474/2010, decided on 28.09.2016) in which it was

held that de hors the fact as to whether the income of the deceased is

Rs.40,000/- or more per annum, once the claim petition has been filed by

the claimant, may be under Section 163 A of the Act of 1988, the same has

to be decided by the Tribunal on merit and the claim petition cannot be

thrown out on flimsy grounds that the income of the deceased was Rs.

40,000/- or more.. The Court agreed with the view taken in Sihnu Ram's

case (supra) and set aside the award passed by the Tribunal holding the

award to be bad in law as the Tribunal could not have dismissed the claim

petition filed under Section 163 A of the Act simply on the ground that the

income of the deceased was more than Rs. 40,000/- per annum. The matter

was remanded back to the Tribunal for fresh consideration.

21. Again in the case of Narayan Rama Chougale vs. Shekhar

Shankereppa Kulgod and ors, MANU/KA/4954/2022, Karnataka High

Court, in an appeal filed against the award of the Tribunal rejecting the

claim petition under Section 163 A of the Act of 1988, observed as under:

"5. The contention of the learned counsel for the appellant is that annual income of Rs. 40,000/-fixed as per Section 163A of the Act is an enabling provision and therefore, the claimant who has an annual income in excess of Rs. 40,000/-can always restrict it to Rs. 40,000/-and maintain a claim petition under Section 163A of the Act and thereby he can claim compensation without proving negligence on the part of the driver of the offending vehicle. It is his further contention that this is an enabling provision provided for the benefit of the claimants, who are willing to forego a higher income for the purpose of claiming compensation without proving the negligence on the part of the driver of the offending vehicle and thereby giving up his right to claim higher compensation. This aspect of the law is no longer res integra. As a matter of fact, learned Tribunal has referred to the relevant case laws and rejected the said contention after elaborate discussion and I have no reason to disagree with the same. I may immediately refer to the decision of the Honble Supreme Court in the case of Deepal Girishbhai Soni and others v. United India Insurance Co. Ltd., Baroda MANU/SC/0246/2004.

6. Following the said decision, a Division Bench of this Court in United India Insurance Co. Ltd., Bangalore v. Anita and others, MANU/KA/8206/2006: 2007 (1) T.A.C. 48 (Kant.) has rejected the same contentions. Therefore, there is no merit in this appeal and accordingly, it is liable to be dismissed."

22 From the foregoing analysis of law on the subject, it is clear

that even in a case where the claimant pleads that the income of the

deceased or injured is more than Rs.40,000/- per annum, he can opt to file a

claim petition under section 163 A of the Act and if he opts to do so, his

income has to be taken not more than Rs.40,000/- per annum and in such a

case, the compensation has to be calculated on the structured formula basis

even though his actual income may be more than Rs.40000/- per month.

23. A claimant, who opts to file a claim petition under Section

163A of the Act, is saved from the requirement of proving that the accident

had occurred due to neglect or default on the part of the owner of the

offending vehicle. But, in such a case, a claimant would only get the limited

compensation in accordance with the structured formula provided under the

Second Schedule of the Act of 1988, whereas, if a clamant opts to file his

claim petition under Section 166 of the Act, he has to prove neglect or

default on the part of the owner or driver of the offending vehicle, only then

he would be entitled to compensation and the liability of the driver, owner

and insurer, in such cases, would be unlimited. Thus, a person having

income more than Rs.40000/- per annum is not debarred from filing a

petition under Section 163 A of the Act of 1988, provided his income is

taken within the aforesaid limit and the compensation is calculated as per

the structured formula under the Act. The argument of the learned counsel

for the appellant-insurance company, that the claim petition is not

maintainable because the income of the deceased is shown to be Rs.20,000/-

per month is, therefore, without any merit.

24 As already noted, once a claim petition is filed by the claimants

in terms of Section 163A of the Act, the claimants are only entitled to

compensation in terms of the structured formula given in the Second

Schedule of the Act. In the instant case, the learned Tribunal has calculated

the compensation on the basis of the ratio laid down by the Supreme Court

in Sarla Verma's case (supra). The same is not in accordance with law.

Once, the Tribunal proceeds to restrict the income of the deceased to

Rs.40,000- per annum and claim petition was filed under Section 163-A of

the Act, the only option available with the Tribunal is to calculate the

compensation on the basis of the structured formula. Therefore, the

applicable multiplier has to be in accordance with the Second Schedule of

the Act and the deduction of personal expenses of the deceased towards

maintaining himself has to be 1/3rd of the income. However, in the instant

case, neither the applicable multiplier, nor the deduction has been made by

the Tribunal in accordance with the structured formula. The award is,

therefore, required to be modified to this extent.

25 Another aspect of the matter relates to the age of the deceased.

It appears that the Tribunal has fallen in error while determining age of the

deceased. The Tribunal has taken the age of the deceased as 35 years but a

perusal of the documents on record shows that the date of birth of the

deceased, as per his driving licence, is 21.07.1974, meaning thereby that, at

the time of his death, he was more than 36 years old.

26 In view of what has been discussed above, the award of the

Tribunal is modified in the following manner:

(i) Annual loss of dependency: Annual income less by 1/3rd deduction on account of personal expenses multiplied by applicable multiplier as per Second Schedule i.e. Rs.40,000-Rs.13333=Rs. 26,667x16 = Rs. 4,26,672/-

      (ii) Funeral expenses:          = Rs. 2000/-
      (iii) Loss of Estate:           = Rs. 2500
      (iv) Loss of consortium         = Rs. 5000/-
                      Total          = Rs. 4,36,172/-

27. Thus, the claimants are entitled to compensation of

Rs. 4,36,172/-. The appeal is, therefore, partly allowed and an award in the

amount of Rs.4,36,172/-along with interest at the rate of 7.5% per annum

from the date of filing of the claim petition till realization of the awarded

amount is passed in favour of the claimants and against the appellant,

Insurance Company. Other terms and conditions of the impugned award

shall remain unchanged.

28 The Registrar Judicial shall release the amount deposited by the

appellant-Insurance Company in favour of the claimants in terms of this

judgment, if not already released, on their proper identification. The excess

amount, if any, shall be released in favour of the appellant-company along

with interest accrued thereon.

29. Appeal stands disposed of accordingly.

(Sanjay Dhar) Judge

Jammu 23.02.2023 Karam Chand Whether the order is speaking : Yes Whether the order is reportable: Yes