Jharkhand High Court
Divisional Manager vs Ashok Kumar Choudhary on 9 December, 2021
IN THE HIGH COURT OF JHARKHAND AT RANCHI
Misc. Appeal No. 101 of 2009
Divisional Manager, National Insurance Co. Ltd. .... .... Appellant
Versus
1. Ashok Kumar Choudhary
2. Manoj Kumar
3. Bhushan Kumar Sharma
........ Respondents
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CORAM: HON'BLE MR. JUSTICE GAUTAM KUMAR CHOUDHARY
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For the Appellant : Mr. Alok Lal, Advocate
For the Respondents : M/s Tripurari Prasad, Prabir Chatterjee
& S.N. Das, Advocates
C.A.V. ON 30.11.2021 PRONOUNCED ON 09 / 12 / 2021
1. The Insurance Company has preferred the appeal against the
award of compensation under section 166 of the Motor Vehicle Act, 1988
(hereinafter called the M.V. Act) in Title (MV) Suit No. 48 of 2006.
2. The case of the claimant is that he suffered permanent disable-
ment by amputation of his right leg in a motor vehicle accident involving
one tempo bearing Registration No. JH-11B-3366 caused by the rash and
negligent driving of its driver. He was aged 30 years and was a private
tutor and accountant earning Rs.5000/- per month at the time of accident.
The offending vehicle was under the insurance cover of O.P. No.3 the Na-
tional Insurance Co. Ltd.
3. The learned Tribunal held that the claimant suffered permanent
disability due to the rash and negligent driving of the offending vehicle by
its driver. The driving license was valid from 04.06.2001 to 23.06.2004
but at the relevant time of accident he was not holding a valid driving li-
cense. Income of Rs.3000 per month has been accepted by the learned
Tribunal and multiplier of 18 applicable to the age of 30 years of the
injured, the claim amount has been computed. The Tribunal accepted the
permanent disablement of the claimant on the basis of Exhibit 3 which is
the disability certificate issued by medical board and countersigned by the
Chief medical Officer, Bokaro.
4. The impugned judgment has been assailed mainly on the
ground that while deciding Issue No. IV learned Tribunal held that the
driver of tempo was not holding valid and effective driving license to
drive the vehicle in question on the date of accident, but despite this find-
ing the liability has been fastened upon the insurer of the vehicle. It was
the specific case of the insurer that driving license of the driver was valid
for the period 04.06.2001 to 03.06.2004 whereas the accident took place
on 06.09.2004 and had not been renewed after its expiry. Therefore, the
non-renewal of the driving license in term of Section 15(1) of the M.V.
Act within 30 days from its expiry was a violation of the terms of the in-
surance policy under section 149 (4). In view of the breach of policy the
award of compensation to be paid by the Insurance Company was not sus-
tainable in the eye of law. The amount of compensation under convention-
al head has also been assailed and argued that the same could not have
been allowed since the compensation had been awarded on multiplier ba-
sis. Question has also been raised on the manner of proof of the injury re-
port. It is argued that the Tribunal has accepted functional disability to the
extent of hundred percent but considering the nature of occupation of the
claimant it should not have been calculated to that extent.
5. It is not in dispute that the claimant suffered amputation of his
Right leg as a result of injury sustained in the motor vehicle accident by
the offending vehicle which was under the insurance coverage cover of
the appellant company at the relevant time of accident. The question that
falls for consideration is whether accepting 100% functional disability for
computing the compensation was just and fair in the instant case? Further,
when the driving license had expired about three months prior to the acci-
dent the order to pay and recover was sustainable?
6. It is a settled principle of law that amount of compensation is to
be just and fair in terms of Section 168 of the M.V. Act. In case of disa-
bility what will be the compensation shall depend on the occupation of the
victim. It has been held in Anthony v. KARNATAKA SRTC, (2020) 7
SCC 161 Hon'ble the Apex Court while following ratio of Raj Kumar
case summarized the law for assessing functional disability in the follow-
ing words:
9.Raj Kumar v. Ajay Kumar [Raj Kumar v. Ajay Kumar, (2011) 1 SCC
343 : lucidly sets out the principles for grant of compensation in cases
of permanent physical functional disability as follows : (SCC pp. 349-
51, paras 10-11 & 13-14)
"10. Where the claimant suffers a permanent disability as a result of
injuries, the assessment of compensation under the head of loss of
future earnings would depend upon the effect and impact of such
permanent disability on his earning capacity. The Tribunal should not
mechanically apply the percentage of permanent disability as the
percentage of economic loss or loss of earning capacity. In most of the
cases, the percentage of economic loss, that is, the percentage of loss of
earning capacity, arising from a permanent disability will be different
from the percentage of permanent disability. Some Tribunals wrongly
assume that in all cases, a particular extent (percentage) of permanent
disability would result in a corresponding loss of earning capacity, and
consequently, if the evidence produced shows 45% as the permanent
disability, will hold that there is 45% loss of future earning capacity. In
most of the cases, equating the extent (percentage) of loss of earning
capacity to the extent (percentage) of permanent disability will result in
award of either too low or too high a compensation.
11. What requires to be assessed by the Tribunal is the effect of the
permanent disability on the earning capacity of the injured; and after
assessing the loss of earning capacity in terms of a percentage of the
income, it has to be quantified in terms of money, to arrive at the future
loss of earnings (by applying the standard multiplier method used to
determine loss of dependency). We may however note that in some
cases, on appreciation of evidence and assessment, the Tribunal may
find that the percentage of loss of earning capacity as a result of the
permanent disability, is approximately the same as the percentage of
permanent disability in which case, of course, the Tribunal will adopt
the said percentage for determination of compensation.
13. Ascertainment of the effect of the permanent disability on the actual
earning capacity involves three steps. The Tribunal has to first
ascertain what activities the claimant could carry on in spite of the
permanent disability and what he could not do as a result of the
permanent disability (this is also relevant for awarding compensation
under the head of loss of amenities of life). The second step is to
ascertain his avocation, profession and nature of work before the
accident, as also his age. The third step is to find out whether (i) the
claimant is totally disabled from earning any kind of livelihood, or (ii)
whether in spite of the permanent disability, the claimant could still
effectively carry on the activities and functions, which he was earlier
carrying on, or (iii) whether he was prevented or restricted from
discharging his previous activities and functions, but could carry on
some other or lesser scale of activities and functions so that he
continues to earn or can continue to earn his livelihood.
Dinesh Singh v. Bajaj Allianz General Insurance Co. Ltd., (2014) 9
SCC 241 is a case which sheds light on how functional disability is to
be calculated where the victim suffers amputation of limb, but is
involved in an occupation or profession requiring mental work which
does not require any movement. In this case the victim suffered 60%
disability of the total body. The fact that the appellant had resigned as
Quality Engineer from Hospet Steels Ltd. and took up desk job in
Industrial Development Bank of India because of his permanent
disability, suffered by him in the accident was not in dispute. Obviously,
because of the permanent disability suffered by the appellant, who was
an Engineer by profession, he could not take up such profession, which
requires moving from one place to other place. Therefore, the reasoning
of the High Court that the appellant has not suffered any financial loss
because of permanent disability having regard to the fact that
subsequently he took up employment in Industrial Development Bank of
India as Grade B officer, cannot be sustained. Once the permanent
disability is fixed, taking into consideration, its impact on the
employment/profession of the claimant, the compensation has to be
awarded. Since the disability suffered by the appellant, which is fixed at
60% and which is permanent in nature, impacted his employment and
future prospects, it was held that 60% disability was rightly taken as the
percentage of functional disability.
7. Here in the instant case the learned Tribunal has accepted his
earning by tuition at Rs.3000/- per month. Taking into account the fact
that private tuition by its very nature requires movement from one place to
another and amputation of leg would certainly be regarded to seriously
and adversely affect the mobility of the claimant victim. Therefore, the
contention of the Insurance Company that since the claimant was engaged
in mental work so the amputation of limbs will not result in reducing the
earning capacity of the claimant cannot be accepted. However, it will not
be just and fair to regard the amputation to result in hundred percent func-
tional disability. Taking into account the nature of occupation of the clai-
mant, 70% functional disability leading to loss in earning capacity can be
reasonably inferred in the present case. It has also come in evidence that
the claimant had been hospitalized for seven months and therefore an
award under the head of pain and agony will need to be allowed.
Taking Rs.3000 as the monthly income the annual income will
work out to Rs.36,000 and taking 70% functional disability into account
the loss of annual and earning capacity will be Rs.36,000x70%=
Rs.25,200. Since the age of the claimant was 30 years at the time of
accident multiplier of 18 shall be applicable leading to loss of future
earning capacity of Rs.25,200 x 18= Rs.453,600.
It has been held in Pappu Deo Yadav Vs Naresh Kumar 2020
SCC Online SC 752 that the principles of calculating future prospect
shall apply in cases of permanent disability and as well. The age of the
victim was 30 years at the time of accident therefore as per the ratio
decided in Pranay Sethi case a loss of 40% earning under the head of
future prospect can be considered for determining the final compensation
amount.
The claimant shall therefore be entitled to Rs.453,000 x
40%=Rs.1,81,440 under this head.
The final compensation will work out to Rs.453,000+
Rs.181,440 = Rs.6,34,440/-.
Thus, in all, it is held that the appellant is entitled to
compensation of Rs. 7,54,440/-as under:
1. Pain and agony Rs.1,20,000
4. Loss of future income Rs.453,600
7. Loss of earning under future Rs.1,81,440
prospect
In total Rs. 7,54,440
Apart from this the claimant will also be entitled to interest at
the rate of 7.5% per annum from the date of application.
8. Another point that has been strongly raised in this appeal is that
on account of expiry of the driving license the Insurance Company was
not liable to pay the compensation amount to the claimant.
Before considering this plea it will be relevant to consider the
law on this point. In National Insurance Co. Ltd. v. Swaran Singh,
(2004) 3 SCC 297it was laid down the law in the following words:
65. Skandia [(1987) 2 SCC 654 : AIR 1987 SC 1184] , on the other
hand, has been approved by a three-Judge Bench, when the correctness
thereof was referred to a larger Bench in Sohan Lal Passi case [(1996) 5
SCC 21 : 1996 SCC (Cri) 871] wherein a three-Judge Bench of this
Court noticed the ratio propounded in Skandia case [(1987) 2 SCC 654 :
AIR 1987 SC 1184] and observed: (SCC p. 32, para 12)
"In other words, once there has been a contravention of the condition
prescribed in sub-section (2)(b)(ii) of Section 96, the person insured
shall not be entitled to the benefit of sub-section (1) of Section 96. Ac-
cording to us, Section 96(2)(b)(ii) should not be interpreted in a techni-
cal manner. Sub-section (2) of Section 96 only enables the insurance
company to defend itself in respect of the liability to pay compensation
on any of the grounds mentioned in sub-section (2) including that there
has been a contravention of the condition excluding the vehicle being
driven by any person who is not duly licensed. This bar on the face of it
operates on the person insured. If the person who has got the vehicle in-
sured has allowed the vehicle to be driven by a person who is not duly li-
censed then only that clause shall be attracted. In a case where the per-
son who has got insured the vehicle with the insurance company, has
appointed a duly licensed driver and if the accident takes place when the
vehicle is being driven by a person not duly licensed on the basis of the
authority of the driver duly authorised to drive the vehicle whether the
insurance company in that event shall be absolved from its liability? The
expression 'breach' occurring in Section 96(2)(b) means infringement or
violation of a promise or obligation. As such the insurance company will
have to establish that the insured was guilty of an infringement or viola-
tion of a promise. The insurer has also to satisfy the Tribunal or the
court that such violation or infringement on the part of the insured was
wilful. If the insured has taken all precautions by appointing a duly li-
censed driver to drive the vehicle in question and it has not been estab-
lished that it was the insured who allowed the vehicle to be driven by a
person not duly licensed, then the insurance company cannot repudiate
its statutory liability under sub-section (1) of Section 96."
In Nirmala Kothari v. United India Insurance Co. Ltd., (2020) 4
SCC 49 : it has been held
Having set forth the facts of the present case, the question of
law that arises for consideration is what is the extent of care/diligence
expected of the employer/insured while employing a driver? To answer
this question, we shall advert to the legal position regarding the liability
of the insurance company when the driver of the offending vehicle
possessed an invalid/fake driving licence. In United India Insurance Co.
Ltd. v. Lehru [United India Insurance Co. Ltd. v. Lehru, (2003) 3 SCC
338] a two-Judge Bench of this Court has taken the view that the
insurance company cannot be permitted to avoid its liability on the
ground that the person driving the vehicle at the time of the accident was
not duly licenced. It was further held that the willful breach of the
conditions of the policy should be established. PEPSU RTC v. National
Insurance Co., (2013) 10 SCC 217
"10. In a claim for compensation, it is certainly open to the insurer
under Section 149(2)(a)(ii) to take a defence that the driver of the
vehicle involved in the accident was not duly licensed. Once such a
defence is taken, the onus is on the insurer. But even after it is proved
that the licence possessed by the driver was a fake one, whether there
is liability on the insurer is the moot question. As far as the owner of
the vehicle is concerned, when he hires a driver, he has to check
whether the driver has a valid driving licence. Thereafter he has to
satisfy himself as to the competence of the driver. If satisfied in that
regard also, it can be said that the owner had taken reasonable care in
employing a person who is qualified and competent to drive the
vehicle. The owner cannot be expected to go beyond that, to the extent
of verifying the genuineness of the driving licence with the licensing
authority before hiring the services of the driver. However, the
situation would be different if at the time of insurance of the vehicle or
thereafter the insurance company requires the owner of the vehicle to
have the licence duly verified from the licensing authority or if the
attention of the owner of the vehicle is otherwise invited to the
allegation that the licence issued to the driver employed by him is a
fake one and yet the owner does not take appropriate action for
verification of the matter regarding the genuineness of the licence
from the licensing authority. "
While the insurer can certainly take the defence that the licence
of the driver of the car at the time of accident was invalid/fake, however,
the onus of proving that the insured did not take adequate care and caution
to verify the genuineness of the licence or was guilty of willful breach of
the conditions of the insurance policy or the contract of insurance lies on
the insurer. This is not a case where the offending vehicle was plying
without a driving license or that the driving license of the driver was fake.
It is a case where the driving license had lapsed and was not renewed
within three months before the accident. The matter for consideration is
whether the owner of the vehicle had taken reasonable care in employing
a person who was qualified and competent to drive the vehicle in ques-
tion. The owner of the vehicle cannot be faulted on this count for non-
renewal as the person employed had a valid driving license at the time of
being engaged. Renewal of the license was the responsibility of the driver
and by driving a vehicle without it, he can be held liable under the rele-
vant provision of Motor Vehicle Act. The onus was on the Insurance
Company to show that it was the insured who had failed to exercise rea-
sonable care leading to the vehicle being driven by the driver even after
the license had expired. No evidence in this regard has been led on behalf
of the Insurance Company. In my view the owner cannot be held respon-
sible for non-renewal of the driving license and cannot be saddled with
liability to pay the compensation amount for it. Under the circumstance
the order of the Tribunal to that extent is set aside.
In this case it is not the claimants who have preferred appeal,
therefore the question naturally arises whether in appeal the compensation
amount can be enhanced in their favour and against the appellant Insur-
ance Company. This question has been answered by the Apex Court
wherein it has been held that it is permissible.
In Ranjana Prakash v. Divl. Manager, (2011) 14 SCC 639 it has
been held that
7. This principle also flows from Order 41 Rule 33 of the Code of Civil
Procedure which enables an appellate court to pass any order which
ought to have been passed by the trial court and to make such further
or other order as the case may require, even if the respondent had not
filed any appeal or cross-objections. This power is entrusted to the ap-
pellate court to enable it to do complete justice between the parties.
Order 41 Rule 33 of the Code can however be pressed into service to
make the award more effective or maintain the award on other grounds
or to make the other parties to litigation to share the benefits or the li-
ability, but cannot be invoked to get a larger or higher relief. For ex-
ample, where the claimants seek compensation against the owner and
the insurer of the vehicle and the Tribunal makes the award only
against the owner, on an appeal by the owner challenging the quantum,
the appellate court can make the insurer jointly and severally liable to
pay the compensation, along with the owner, even though the claimants
had not challenged the non-grant of relief against the insurer. Be that
as it may.
The Insurance Company is accordingly directed to make full
and final payment of the compensation amount within a month of this or-
der. The statutory amount deposited by the Appellant/Insurance Company
to be remitted by the registry of the Court to the Tribunal within a month
of this order for disbursal to the claimant.
In the result with the above modification in award the appeal is
dismissed.
(Gautam Kumar Choudhary, J.)
Jharkhand High Court, Ranchi
Dated the 9th December, 2021
NAFR / AKT
