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Judgment
P.P.S. Janarthana Raja, J.—The appeal is preferred by the insurance company against the award dated 12.10.2004 made in M.C.O.P No.
698 of 2001 by the Motor Accident Claims Tribunal, District Court, Salem.
Background facts in a nutshell are as follows:
One deceased Muhammed Hussain met with motor traffic accident on 09.04.2001 at about 09.00 hours. The deceased was riding his Bajaj
Scooter bearing registration No. TN 27-B-3219 along with his father from his residence to E.B. office at Chathiram in Salem town, to pay the
electricity bill. While the deceased was proceeding opposite to Salem Municipal Corporation Zonal Office near Chathiram on the extreme left side
of the road, a lorry bearing registration No. TN-27-B 6303 came in a rash and negligent manner and hit the Bajaj Scooter from back side. Due to
the impact, the deceased was thrown out of the vehicle and sustained grievous injuries all over the body. Immediately, he was taken to Bharath
Hospital, Salem and he died on 12.04.2001 during treatment. The claimants are wife, three minor children, father and mother of the deceased.
They claimed compensation of Rs. 10,00,000/-. The said lorry was insured with the appellant insurance company who resisted the claim. On
pleadings, the Tribunal framed the following issues:
Whether the driver of the 1st respondent was negligent at the time of accident? Whether the respondents are liable to compensate the
petitioners?
Whether the claimants are entitled to get compensation as prayed for?
After considering the oral and documentary evidence, the Tribunal held that the accident had occurred only due to the rash and negligent driving of
the driver of the lorry and awarded compensation of Rs. 7,75,000/- with interest @ 9% per annum from the date of claim and the details of the
same are as under:
Loss of income : Rs. 6,40,000/-
Medical expenses : Rs. 20,000/-
Transportation : Rs. 1,000/-
Loss of consortium : Rs. 20,000/-
Loss of love and affection : Rs. 30,000/-
Loss of estate : Rs. 60,000/-
Funeral expenses : Rs. 4,000/-
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Total : Rs. 7,75,000/-
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Aggrieved by that award, the appellant insurance company has filed the present appeal.
The learned Counsel appearing for the appellant insurance company questioned only the quantum of the award and vehemently contented that
the award passed by the Tribunal is excessive, exorbitant and also without any basis and justification. Further, the Tribunal is wrong in fixing the
income of the deceased at Rs. 5,000/- without any basis. Therefore, the award passed by the Tribunal is not in accordance with law and the same
should be set aside.
The Learned Counsel appearing for the claimants submitted that the Tribunal has considered all the facts and circumstances of the case and
awarded a just, fair and reasonable compensation is based on valid materials and evidence. It is a question of fact and it is not a perverse order.
Therefore, the award passed by the Tribunal is in accordance with law and the same should be confirmed.
Heard the counsel. On the side of the claimant, P.Ws.1 to 5 were examined and documents Exs.A1 to A17 were marked. On the side of the
appellant insurance company, R.W.1 one Velayutham, who is the Assistant in RTO office was examined and Ex.B1 dated 02.09.2003 driving
licence particulars of the deceased was marked. P.W.1 is the wife of the deceased. P.W.2 is the father of the deceased. P.W.3 is one Shadhar,
who is the co-employee of the deceased. P.W.4 one Loganathan was examined. P.W.5 one Murugesan was also examined. Ex.A1 dated
12.04.2001 is the certified copy of the First Information Report. Ex.A2 dated 13.04.2001 is the certified copy of Postmortem certificate, Ex.A3
dated 14.04.2001 is the certified copy of M.V.I. report (TN 27 B 6303). Ex.A4 dated 16.04.2001 is the certified copy of M.V.I report (TN 27
B 3219), Ex.A5 dated 17.04.2001 is the certified copy of charge sheet, Ex.A6 dated 20.06.2001 is the certified copy of judgement in C.C. No.
304/01, Ex.A7 dated 03.05.2001 is the legal heir ship certificate, Ex.A8 is the medical bills, Ex.A9 dated 15.04.2001 is the Sarathy Travel''s cash
receipt-11, Ex.A10 is the life member card (Salem Gold + Silver Ornamental Workers Association), Ex.A11 dated 16.12.1992 is the registration
as a small scale Industrial Unit permanent certificate, Ex.A12 dated 28.07.2000 is the certificate of registration, Ex.A13 dated 14.03.2001 +
19.06.2002 are the subscription receipt issued to Saratha Jeweller (No. 2), Ex.A14 is the wage bill books (2), Ex.A15 dated 28.03.1991 is the
cash bill for the purchase of machinery issued by P.R. & Sons Industries, Coimbatore, with delivery note-original, Ex.A16 dated 16.03.1990 is the
cash memo issued by batliboi & Co. Ltd., Coimbatore original, Ex.A17 dated 25.01.1990 is the test report given by TNEB were marked. After
considering the above oral and documentary evidence, the Tribunal has given a categorical finding that the accident had occurred only due to the
rash and negligent driving of the lorry and awarded compensation. It is a question of fact. The finding is based on valid materials and evidence and
therefore, the same is confirmed.
In the case of Sarla Verma and Ors. v. Delhi Transport Corporation and Anr. reported in (2009) 4 MLJ 997, the Apex Court has considered
the relevant factors to be taken into consideration before awarding compensation and held as follows:
Before considering the questions arising for decision, it would be appropriate to recall the relevant principles relating to assessment of
compensation in cases of death. Earlier, there used to be considerable variation and inconsistency in the decisions of Courts Tribunals on account
of some adopting the Nance method enunciated in Nance v. British Columbia Electric Rly. Co. Ltd. (1951) AC 601 and some adopting the
Davies method enunciated in Davies V. Powell Duffryn Associated Collieries ltd. (1942) AC 601. The difference between the two methods was
considered and explained by this Court in General Manager, Kerala State Road Transport Corporation, Trivandrum Vs. Mrs. Susamma Thomas
and others, . After exhaustive consideration, this Court preferred the Davies method to Nance method. We extract below the principles laid down
in General Manager, Kerala State Road Transport Corporation v. Susamma Thomas (supra).
In fatal accident action, the measure of damage is the pecuniary loss suffered and is likely to be suffered by each dependent as a result of the death.
The assessment of damages to compensate the dependants is beset with difficulties because from the nature of things, it has to take into account
many imponderables, e.g., the life expectancy of the deceased and the dependants, the amount that the deceased would have earned during the
remainder of his life, the amount that he would have contributed to the dependants during that period, the chances that the deceased may not have
live or the dependants may not live up to the estimated remaining period of their life expectancy, the chances that the deceased might have got
better employment or income or might have lost his employment or income altogether.
The manner of arriving at the damages is to ascertain the net income of the deceased available for the support of himself and his dependants, and to
deduct therefrom such part of his income as the deceased was accustomed to spend upon himself, as regards both self-maintenance and pleasure,
and to ascertain what part of his net income the deceased was accustomed to spend for the benefit of the dependants. Then that should be
capitalised by multiplying it by a figure representing the proper number of year''s purchase.
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.
It is necessary to reiterate that the multiplier method is logically sound and legally well-established. There are some cases which have proceeded to
determine the compensation on the basis of aggregating the entire future earnings for over the period the life expectancy was lost, deducted a
percentage therefrom towards uncertainties of future life and award the resulting sum as compensation. This is clearly unscientific. For instance, if
the deceased was, say 25 years of age at the time of death and the life expectancy is 70 years, this method would multiply the loss of dependency
for 45 years - virtually adopting a multiplier of 45 - and even if one-third or one-fourth is deducted therefrom towards the uncertainties of future life
and for immediate lump sum payment, the effective multiplier would be between 30 and 34. This is wholly impermissible.
In U.P. State Road Transport Corporation and Others Vs. Trilok Chandra and Others, , this Court, while reiterating the preference to Davies
method followed in General Manager, Kerala State Road Transport Corporation v. Susamma Thomas (supra), stated thus:
In the method adopted by Viscount Simon in the case of Nance also, first the annual dependency is worked out and then multiplied by the
estimated useful life of the deceased. This is generally determined on the basis of longevity. But then, proper discounting on various factors having a
bearing on the uncertainties of life, such as, premature death of the deceased or the dependent, remarriage, accelerated payment and increased
earning by wise and prudent investments, etc., would become necessary. It was generally felt that discounting on various imponderables made
assessment of compensation rather complicated and cumbersome and very often as a rough and ready measure, one-third to one-half of the
dependency was reduced, depending on the life span taken. That is the reason why courts in India as well as England preferred the Davies formula
as being simple and more realistic. However, as observed earlier and as pointed out in Susamma Thomas case, usually English courts rarely
exceed 16 as the multiplier. Courts in India too followed the same pattern till recently when tribunals/courts began to use a hybrid method of using
Nance method without making deduction for imponderables.... Under the formula Advocated by Lord Wright in Davies, the loss has to be
ascertained by first determining the monthly income of the deceased, then deducting therefrom the amount spent on the deceased, and thus
assessing the loss to the dependants of the deceased. The annual dependency assessed in this manner is then to be multiplied by the use of an
appropriate multiplier
(emphasis supplied)
In the case of Syed Basheer Ahamed and Others Vs. Mohd. Jameel and Another, , the Apex Court has held as follows:
Section 168 of the Act enjoins the Tribunal to make an award determining ""the amount of compensation which appears to be just"". However,
the objective factors, which may constitute the basis of compensation appearing as just, have not been indicated in the Act. Thus, the expression
which appears to be just"" vests a wide discretion in the Tribunal in the matter of determination of compensation. Nevertheless, the wide amplitude
of such power does not empower the Tribunal to determine the compensation arbitrarily, or to ignore settled principles relating to determination of
compensation.
Similarly, although the Act is a beneficial legislation, it can neither be allowed to be used as a source of profit, nor as a windfall to the persons
affected nor should it be punitive to the person(s) liable to pay compensation. The determination of compensation must be based on certain data,
establishing reasonable nexus between the loss incurred by the dependants of the deceased and the compensation to be awarded to them. In a
nutshell, the amount of compensation determined to be payable to the claimant(s) has to be fair and reasonable by accepted legal standards.
In Kerala SRTC v. Susamma Thomas, M.N. Venkatachaliah, J. (as His Lordship then was) had observed that: (SCC p.181, para 5)
...The determination of the quantum must answer what contemporary society ''would deem to be a fair sum such as would allow the wrongdoer
to hold up his head among his neighbours and say with their approval that he has done the fair thing''. The amount awarded must not be niggardly
since the ''law values life and limb in a free society in generous scales.
At the same time, a misplaced sympathy, generosity and benevolence cannot be the guiding factor for determining the compensation. The object of
providing compensation is to place the claimant(s), to the extent possible, in almost the same financial position, as they were in before the accident
and not to make a fortune out of misfortune that has befallen them.
The question as to what factors should be kept in view for calculating pecuniary loss to a dependant came up for consideration before a three-
Judge Bench of this Court in Gobald Motor Service Ltd. v. R.M.K. Veluswami, with reference to a case under the Fatal Accidents Act, 1855,
wherein, K. Subba Rao, J. (as His Lordship then was) speaking for the Bench observed thus: (AIR p.1)
In calculating the pecuniary loss to the dependants many imponderables enter into the calculation. Therefore, the actual extent of the pecuniary loss
to the dependants may depend upon data which cannot be ascertained accurately, but must necessarily be an estimate, or even partly a conjecture.
Shortly stated, the general principle is that the pecuniary loss can be ascertained only by balancing on the one hand the loss to the claimants of the
future pecuniary benefit and on the other any pecuniary advantage which from whatever source comes to them by reason of the death, that is, the
balance of loss and gain to a dependant by the death must be ascertained.
Taking note of the afore extracted observations in Gobald Motor Service Ltd. in Susamma Thomas it was observed that: (Susamma Thomas
case, SCC p.182, para 9)
The assessment of damages to compensate the dependants is beset with difficulties because from the nature of things, it has to take into account
many imponderables e.g. the life expectancy of the deceased and the dependants, the amount that the deceased would have earned during the
remainder of his life, the amount that he would have contributed to the dependants during that period, the chances that the deceased may not have
lived or the dependants may not live up to the estimated remaining period of their life expectancy, the chances that the deceased might have got
better employment or income or might have lost his employment or income altogether.
Thus, for arriving at a just compensation, it is necessary to ascertain the net income of the deceased available for the support of himself and his
dependants at the time of his death and the amount, which he was accustomed to spend upon himself. This exercise has to be on the basis of the
data, brought on record by the claimant, which again cannot be accurately ascertained and necessarily involves an element of estimate or it may
partly be even a conjecture. The figure arrived at by deducting from the net income of the deceased such part of income as he was spending upon
himself, provides a datum, to convert it into a lump sum, by capitalising it by an appropriate multiplier (when multiplier method is adopted). An
appropriate multiplier is again determined by taking into consideration several imponderable factors. Since in the present case there is no dispute in
regard to the multiplier, we deem it unnecessary to dilate on the issue.
After considering the principles enunciated in the judgments cited supra, let me consider the facts of the present case.
At the time of the accident, the deceased was aged about 37 years. He is a manufacturer and designer of gold and silver ornaments. P.W.1 is
the wife of the deceased. In her evidence, it is stated that the deceased was earning a sum of Rs. 10,000/- per month and she is also stated that the
deceased was running a small scale industrial unit in the name and style of ""Hussain Die Works"" at Shevapet, Salem. P.W.3 to 5 are also
corroborated the same and Ex.A10 to A16 are also corroborated that the deceased was running small scale industrial unit for the purpose of
designing, cutting of gold and silver ornaments. Ex.A2 is the post-mortem certificate, in which, it is stated that the age of the deceased was 37
years. Therefore, the Tribunal fixed the age of the deceased at 37 years. There is no concrete evidence available on record to show that the
deceased was earning a sum of Rs. 10,000/- per month. Therefore, the Tribunal determined the monthly income of the deceased at Rs. 5,000/-
and computed the annual income at Rs. 60,000/-. Out of the said sum 1/3 of Rs. 20,000/- was deducted towards personal expenses and the
balance amount of Rs. 40,000/- taken as the annual contribution of the deceased. After taking into consideration of the age of the deceased, the
Tribunal adopted multiplier ''16'' and arrived at the loss of income at Rs. 6,40,000/-. Here, the Tribunal correctly fixed the age and multiplier.
Therefore, the award passed by the Tribunal towards loss of income is reasonable and the same is confirmed. Further, the Tribunal awarded a sum
of Rs. 20,000/- towards medical expenses. After the accident, the deceased was admitted in Bharath Hospital, Salem. He was in the hospital from
09.4.2001 to 12.04.2001. Ex.A5 is the series of medical bills. It is an actual expenditure. Therefore, the Tribunal correctly awarded a sum of Rs.
20,000/- which is reasonable and the same is confirmed. The Tribunal also awarded a sum of Rs. 20,000/- towards loss of consortium. After
taking into consideration of the age of the widow i.e., 25 years at the time of the accident, the award amount is very reasonable and the same is
confirmed. Further, the Tribunal awarded a sum of Rs. 30,000/- towards loss of love and affection. Three minor children lost and affection of the
father and the parents lost the son. Taking into consideration of the same, the award amount of Rs. 30,000/- towards loss of love and affection is
reasonable and the same is confirmed. The Tribunal also awarded a sum of Rs. 4,000/- towards funeral expenses which is very low and meagre.
Therefore, it is reasonable to award a sum of Rs. 6,000/- under that head as against Rs. 4,000/- awarded by the Tribunal. Further, the Tribunal
awarded a sum of Rs. 1,000/- for transportation which is very low and meagre. He was in the hospital for a period of 4 days and it is reasonable
to award a sum of Rs. 5,000/- as against Rs. 1,000/- awarded by the Tribunal. The Tribunal also awarded a sum of Rs. 60,000/- towards loss of
estate which is excessive and exorbitant. After taking into consideration of the facts and circumstances of the case, it is reasonable to award a sum
of Rs. 40,000/- as against Rs. 60,000/- awarded by the Tribunal. The interest rate awarded by the Tribunal is 9% per annum. After taking into
consideration of the date of accident, date of award and the prevailing rate of interest during that period, the interest rate awarded by the Tribunal
is reasonable and therefore the same is confirmed. The modified amount of the compensation are as under:
Loss of income : Rs. 6,40,000/-
Medical expenses : Rs. 20,000/-
Loss of consortium : Rs. 20,000/-
Loss of love and affection : Rs. 30,000/-
Loss of estate : Rs. 40,000/-
Funeral expenses : Rs. 6,000/-
Transport charges : Rs. 5,000/-
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Total : Rs. 7,61,000/-
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In the result, the claimants are entitled to modified compensation of Rs. 7,61,000/- with interest @ 9% per annum from the date of claim as
against Rs. 7,75,000/- awarded by the Tribunal. It is stated by the learned Counsel for the appellant insurance company that the entire award
amount has already been deposited by the Court order dated 22.07.2005 and the major claimants were permitted to withdraw 50% of the award
amount. Under these circumstances, the claimants are permitted to withdraw the modified compensation of Rs. 7,61,000/- with interest @ 9% per
annum, less the amount already withdrawn, on making proper application. In respect of the minors'' share is concerned, the minors'' share is
directed to be deposited in any one of the nationalised banks till they attain majority. The mother of the minors i.e., the first respondent is permitted
to withdraw the interest on the minors'' share once in three months. The appellant transport corporation is also permitted to withdraw the balance
amount on making proper application.
With the above modifications, the appeal is disposed of. No costs.