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Judgment
M. Jagannadha Rao, J.—These cases raise an important question relating to the power of the Motor Accidents Claims Tribunal after judgment, to withhold and invest moneys payable to adult claimants for a specified period or periods. In some of the cases under appeal before us, the Tribunal has, following the decision of K. Ramaswamy, J. (as he then was) in New India Assurance Co. Ltd. Vs. Madapati Naramma and others, , directed deposit of the amounts payable to adults, in nationalised banks. When the insurance company or the owners of the motor vehicles had preferred appeals in this court and prayed for stay, counsel for the respondents-claimants have pleaded for release of the whole or part of the award amount. In the view that if such a request is accepted, it will run counter to the judgment of Ramaswamy, J. (as he then was) the learned single Judges (Eswara Prasad, J. in some cases) and one of us (P.L.N. Sarma, J. in some other cases) have referred the miscellaneous petitions for decision to a Division Bench. In some cases, having regard to the higher pecuniary value, the interlocutory applications themselves are before us in the Division Bench.
We have heard almost all the standing counsel for the insurance companies and counsel for the owners of the vehicles as also counsel for claimants in general and are disposing some of the cases by this judgment. We shall pass orders separately in other cases. Generally, the counsel on both sides did not, before us, seriously object to the retention of moneys but requested us to reduce the rigour and hardship that sometimes the judgment in New India Assurance Co. Ltd. Vs. Madapati Naramma and others, , is likely to produce and requested that the guidelines may be modified. The counsel for the insurance companies contended that there is ample power in the court to retain custody of the moneys for some time so that the socio-economic purpose of the law could be achieved.
It will be appropriate to first deal with the statutory provisions of the new Motor Vehicles Act, 1988 and examine whether the language employed by the Parliament, in any way, restricts the power of the Tribunal in controlling and regulating the user of the compensation.
The Motor Vehicles Act, 1988 states in Section 168 that the Tribunal shall determine the amount of compensation "which appears to it to be just". Section 169 permits the Tribunal to follow such summary procedure as it thinks fit, subject to any rules that are made in this behalf. Rule 530, as applicable in Andhra Pradesh, permits the making of an award, "specifying the amount of compensation to be paid" by the insurer and also the person or persons to whom the compensation shall be paid. The Tribunal is not vested with all the powers of the court but with some specified powers. Section 175 bars the jurisdiction of the civil court. u/s 168(3), it is stated that when an award is made under the section, the person required to pay any amount in terms of such award shall, within thirty days of the date of announcing the award by the Claims Tribunal, deposit the entire amount awarded "in such manner as the Claims Tribunal may direct". Thus while deposit of the entire amount is necessary, the manner of deposit is to be in such manner as may be directed by the Tribunal. If we look at the corresponding section under the Old Act, namely, Section 110-B, we do not find any provision corresponding to Section 168(3). It cannot be said that Parliament had no special purpose in adding the special provisions contained in Section 168(3). It is well settled that whenever an Act is replaced by another Act and there is a change in the language of a provision as compared with the corresponding provision of the Old Act, the courts must inquire into the legislative intention behind the change in the language. It must also be noted that the legislature must have borne in mind the relevant case-law laid down by the courts under the old statute. Even under the Old Act, the Supreme Court took judicial notice of the fact that the recipients of the compensation are either frittering away the compensation contrary to the purpose for which it is paid or are becoming victims of fraud, misrepresentation or cheating by friends, relations or middlemen. Kailasam, J. considered these aspects in detail in Bishan Devi v. Sirbaksh Singh 1979 ACJ 496 (SC), under the Old Act and observed:
In most cases, it is seen that a lump sum payment is not to the advantage of the dependants as large part of it is frittered away during litigation and by payment to persons assisting in the litigation.
(Emphasis added)
The same view was expressed under the Old Act by Ahmadi, J. (as he then was) in Muljibhai Ajarambhai Harijan v. United India Insurance Co. Ltd. 1983 ACJ 57 Guj, as follows:
... it is not sufficient to award compensation to the victim of the accident or his legal representatives, as the case may be, but it is also its duty to ensure that the amount is not frittered away. If the amount is squandered away, the socio-economic objective intended to be achieved by the award will be defeated.
(Emphasis added)
Thus, it has been made clear, even when Section 110-B was in force, that the socio-economic objective of the legislative intention in creating a special Tribunal was to see that the compensation was speedily ascertained and once it was so ascertained, was not allowed to be frittered away. The insurance companies are all nationalised and are paying the compensation amount out of the premia collected from the general body of policy holders and therefore the State has a stake in seeing that the amounts are not dissipated but are properly invested so as to secure a regular monthly stream of support to the claimants. Prof. Luntz inAssessment of Damages in Personal Injury & Death (1983) 2nd Edn., p. 22, says the same thing as follows:
However, it is arguable that since the funds for the payment of damages are mostly made available through compulsory insurance, the State has an obligation to see that the funds are used to meet the needs for which they are created.
(Emphasis added)
It is therefore clear that there is a sound basis for the legislative intent and purpose in enacting a special provision in Section 168(3). Even when Section 110-B of the Old Act was in force, the Supreme Court, Gujarat, Bombay and Andhra Pradesh High Courts have adopted a procedure of periodical payments. In our view, the language of the New Act can even be said to clarify the existing legal position. In fact, in Bishan Devi''s case 1979 ACJ 496 (SC), Kailasam, J. observed as follows:
The insurance companies are now nationalised and the necessity for awarding lump sum payment to secure the interests of the dependants is no longer there.
(Emphasis added)
It was further observed:
Regular monthly payments could be made through one of the nationalised banks nearest to the place of residence of the dependants. Payment of monthly instalments and avoidance of lump sum payment would reduce substantially the burden on the insurer and consequently of the insured.
(Emphasis added)
So far as releasing the compensation by way of instalments to adults, the Supreme Court did not make any exception. On the other hand, the Gujarat High Court, followed by Bombay and Andhra Pradesh High Courts, made the position explicit. Ahmadi, J. (as he then was) clearly stated in Muljibhai Ajarambhai Harijan''s case 1983 ACJ 57 (Gujarat), as follows:
We are, therefore, of opinion that in such cases, it is imperative on the Claims Tribunal to protect the claimants, no matter they are adults, by directing investment of lump sum compensation awarded to them.
(Emphasis added)
There are also certain other possible objections and we shall presently refer to them.
At the outset, it must be realised that the right of the claimants is only to be compensated, month after month, for the losses in income. The courts have been, as a matter of convenience, trying to arrive at a lump sum figure. It is, therefore, up to the courts to decide how these amounts are to be released. It is a mistake in law to think that there is a legal right to receive one lump sum amount in lieu of all future income or contributions.
It can be argued for the claimants that the Tribunal is estimating the value of a loss of earning capacity by treating it as an ''asset'' and like the loss of any other assets, the Tribunal is bound to pay compensation in a lump sum. The point then is whether the Tribunal is undertaking to estimate the value of loss of ''earning capacity'' or ''loss of earnings''. There has been, no doubt, considerable controversy in this behalf but, in our view, the court is only estimating the value of loss of a stream of monthly earnings or contributions and not the value of loss of earning capacity. The courts are to estimate what the injured or the deceased ''would'' have, as a fact, received rather than what they ''could'' have received. A leading writer Prof. PC. Atiyah in ''Loss of Earnings or Earning Capacity'' (1971) 45 Aus LJ 228, has stated as follows:
Although pronouncements... appear from one point of view, to take ''lost capacity'' as the correct concept, this appearance is defective. If the value of the lost capacity is to be measured by the earnings which that capacity probably would have produced, then in truth the plaintiff is being compensated for the loss of income which he would probably have earned.
In several instances it happens that the judges use the word ''earning capacity'' while, in fact, what they are ultimately computing is the loss of earnings over a period. That is why the Pearson Commission [see para 338] has stated that, in a way, there is no real distinction between ''damages for loss of earning capacity'' and ''damages for loss of earnings'' and English courts have treated past loss as well as future loss as loss of earnings and not as loss of earning capacity. [Luntz (1983) op. cit. p. 227; Street: Law of Damages, 1961, pp. 45-46]. The cases of housewives and children no doubt require an inquiry into what they could earn or could have earned but that is because they have either voluntarily decided not to get employed or have not yet become ready for employment. Australian courts, no doubt, have laid more stress theoretically on ''earning capacity'' as stated by Prof. Ross Parsons: ''Excursus'' (1955) 28 Aus LJ 563 at 571-72. See also Paff v. Speed (1961) 105 CLR 549 at 566 and Todorovic v. Waller (1981) 150 CLR 402. But Prof Luntz (op. cit. p. 228) points out that: "Nevertheless, despite their verbal adherence to the conceptual approach, Australian courts have on the whole avoided reaching unacceptable conclusions" for in practice, actual computation is done by the same courts on the basis of what the person would, as a fact, have earned rather than what he ''could'' have earned. In Canada, in spite of frequent use of the words ''loss of earning capacity'' as in R v. Jennings 1966 SCR 532 and in Andrews v. Toy Alberta Ltd. 1978 (2) SCR 229, in practice the courts do estimate the damages on the basis of loss of earnings. Despite frequent judicial use of the term ''loss of earning capacity'', says Cooper-Stephenson & Sounders in Personal Injury Damages in Canada 1983 at p. 198, "the overwhelming weight of authority supports the view that the primary basis for assessment under this head is an estimation of loss of earnings, in the sense that the plaintiff''s damages reflect what he would have earned but for the accident, rather than what he had the capacity or ability to earn" and they say that in Canada, "the arithmetical method of calculation in (these) decisions proceeds on the premise that the court is attempting to determine the actual financial loss, rather than diminution of a theoretical capacity". It is said that in U.S.A there is a strict adherence to the conceptual theory of earning capacity. Street (op. cit. p. 45) says with regard to U.S.A., "The basis of the award there is loss of earning capacity, yet commentators accept that in the alternative, the plaintiff may recover his actual loss, that that figure is not merely relevant as evidence of his earning capacity [Harper & James, Law of Torts, 1317, McCormick, 313]". However, in the statement of lawin American Jurisprudence, Vol. 22 (2d) (1988) Rev., para 157, it is stated that as a matter of practice "there is no fixed rule for estimating the amount of damage to be recovered for loss or diminution of ''earning capacity''. The jury should award a fair and reasonable compensation, taking into consideration what the plaintiff''s income ''would'' probably have been, how long it ''would'' have lasted and all the contingencies to which it was liable". [Vicksbury & M.R. Co. v. Putnam 118 US 545]. See also ''Economics and impaired earning capacity in personal injury cases'' (1969) 44 Wash L Rev. 351.
In the light of the above discussion, it is clear that the proper approach to the problem is to inquire into the ''loss of earnings'' and not the ''earning capacity'' treated as an asset by itself. There is therefore no legal right in law to claim a lump sum amount to be paid straightaway on the analogy of valuation of loss of an asset. For the aforesaid reasons, we dissent from certain observations made by the Gujarat High Court in Ashish Jivrajbhai v. Ashwinbhai Himatlal 1982 ACJ (Supp) 195 (Gujarat), wherein it was stated that the court awards compensation for diminution of a ''capital asset'', albeit for a limited duration. In our view, treating the loss as a loss of periodic earnings, there is no objection if the Tribunal comes into the picture and seeks to release the compensation periodically in instalments.
There can, in our view, also be no objection on the score that the award amount is normally meant to exhaust itself at the end of the period for which the damages are estimated. It is true that the ''interest theory'' which arrives at a lump sum which earns interest equivalent to the monthly or annual loss has been held not to be a proper method of computation. But that is on the ground that there will be overpayment inasmuch as the principal amount remains intact even after the monthly or annual payments are made. In our view, that is a matter concerning the method of capitalising the future payments and is a different concept. Once the sum is a capitalised sum of future income intended to exhaust itself at the expiry of the period for which the dependency is to last or the period of expectancy of the injured, the method of periodical payment does not, in our view, conflict with the principle upon which the interest theory of computation has been rejected by courts. One is a method of computation of the gross sum symbolising the lost future earnings while the other is merely a mode of payment out of the gross sum.
Another objection that can be raised is that the gross sum representing future earnings is arrived at by imposing a deduction for immediate payment and for future mortality and that if the resulting amount is not immediately paid after the award, the claimants must be assumed to be necessarily undercompensated. It can be argued that they cannot suffer losing the advantage of immediate payment and again suffer a postponement in payment. We may state that so far as our High Court is concerned, we are now following the ''actuarial multiplier'' method and it is true that the figure arrived at by this method involves the reduction of the future payment to present value-as on date of award. We shall here have to explain a basic principle. The reduction of the gross sum is based not merely on the advantage accruing due to accelerated payment but also due to the need to take into account the chances of future mortality. Therefore, the reduction is not exclusively due to accelerated payment. In our view, if the retention of the moneys by the court is restricted to a small period-as we propose to do-there can be no objection on this score particularly when the investments by the court are good investments. Such detention for a small period will, while meeting the above objection in a substantial measure, also contribute in preserving the award amount for the claimants'' benefit and sufficiently delink the other influences to which they might fall victim soon after the award. In fact, if the entire amount released is frittered away immediately in speculative investments in the hope of getting larger returns or is knocked away by middlemen, friends or relations, in a short period, the position would be worse and the very purpose of the award will be defeated.
The Supreme Court has clearly taken judicial notice of the fact that in several cases, the award amount is frittered away for purposes other than for which it is intended and a large chunk of the money is taken away by those assisting in the litigation. In fact that is what Ahmadi, J. (as he then was) stated in Muljibhai Ajarambhai Harijan''s case 1983 ACJ 57 (Gujarat). The Bombay High Court in Nav Bharat Builders v. Pyarabai 1985 ACJ 79 (Bombay) and K. Ramaswamy, J. (as he then was) in New India Assurance Co. Ltd. Vs. Madapati Naramma and others, , have said the same thing.
Experience in other countries too is also the same, human nature being what it is. In fact, several sociological studies have revealed startling facts. One of the reasons for the theory upon which periodic payments and structured payments have been awarded is the one relating to avoidance of dissipation of the moneys. Lord Parker, CJ in 1965 (18) Current Legal Problems 1 at p. 5, has stated that a follow-up of the cases in north of England has revealed that all those who have recovered five figures damages-very substantial in those days-lost the money and were drawing under the national insurance in a matter of a few years. Most of the recipients of tort compensation in the survey conducted by the Pearson Commission who received small amounts had spent away the money on current living expenses or on a holiday or other luxuries. Only 5 per cent invested out of the money [Pearson Report, para 562; Vol. 2, para 404 and Table 89]. A survey by the Centre for Socio-legal Studies, Oxford [see Luntz, op. cit. p. 22 fn. 28] revealed the same situation in respect of claimants receiving more than � 400 while other surveys, relating to recipients of lump sums under other types of compensation, bear out the view that the money is seldom used to make adequate provisions for the future. [SeeA Wilson & H. Levy : Workmen''s Compensation, Vol. 11 1941, pp. 135-37, 162-63; Harper & James: Law of Torts 1956, pp. 1130-33-34, quoting a study of the U.S. Railroad Retirement Board; Kolbach 1978, 64 Iowa L Rev. 138 at 144; Atiyah: Accidents, Compensation and the Law, 187-88; S. Encel & C.E. Johnston: Compensation & Rehabilitation, 1978, Table 9.2 (all quoted by Luntz, op. cit. p. 22 fn. 28)]. Another survey conducted by the Department of Social Security, Sydney (1977, Research Series, No. 2, Table 6.9) showed that out of 35 quadriplegies who received lump sum, 19 used some of the money to purchase homes, 18 bought cars and 28 invested some of the money (less than $ 61,000 each) (Luntz, op. cit. para 1.2.16, p. 22). A review by the Canadian insurance industry revealed that after one year, 50 per cent of recipients had nothing left and after five years, 90 per cent of recipients had nothing left. [See paper on Compensation & Damages by Sir Derek Bradbeer, pp. 990-91, Vol. II, p. 27 at 41, Indo-British Legal Forum, New Delhi].
Several leading writers have also referred to the sorry situation of dissipation of lump sum amounts. Prof. John G. Fleming [(1986) 34 Am J Camp L (Supp) 141 at 143] states that the system of lump sum payments "has many undesirable features, both social and administrative. Particularly smaller awards are quickly dissipated, remitting the disabled to public welfare". Henderson [(1981) 67 ABAJ 301 at 302] states that with lump sum, there is the possibility that a plaintiff will squander an award or lose it with mismanagement. Luntz (1983, op. cit. para 1.2.16, p. 21) says: "Thus an amount intended to be sufficient to support an unemployable plaintiff and his dependants for many years and to provide for medical and hospital needs as they arise, might be rapidly dissipated... Such studies, as these have been, reveal that lump sums are usually quickly spent in discharging debts that have accumulated between the accident and payment, in buying furniture, household appliances or motor vehicles and occasionally in paying off the mortgage of a house". Cooper-Stephenson & Saunders (1983) (op cit. p. 10) also agree that "there is always the fear in serious cases that the plaintiff will squander a large award, thereby throwing himself on public funds". Mrs. Lalitha, Reader, Law Faculty, Anantapur, observes: "Mismanagement, squandering and dissipation in death cases leave the children uneducated and at a disadvantage and the surviving widow virtually destitute". [Lex et Juris, 16th October, 1990].
A few individual cases have also been specifically noted by Luntz (op. cit. para 1.2.16 fn. 27):
A 21 years old woman in Australia who was awarded $ 29,000 was preyed on by a number of youngmen and five months later, the money was all gone. Another Australian case in Varker v. C.B.C. of Sydney Ltd. (1972)2 NSWLR 967, affords a rare insight into the manner in which a quadriplegic fell victim to fraud. An English example is of a brother and sister-in-law spending �80,000 awarded to a cripple''.
One of the most pathetic cases in India is the one decided by the Madhya Pradesh High Court in Umraji v. R.C. Bajpai 1986 ACJ 399 (MP), which has also been noticed by K. Ramaswamy, J. (as he then was) in New India Assurance Co. Ltd. Vs. Madapati Naramma and others, . In that case the counsel for the claimant took away 2/3rds of the total compensation amount which amounted to Rs. 29,700/- (out of Rs. 44,700/-) payable to the widow. A complaint of professional misconduct yielded no fruit. The widow addressed a letter to the Chief Justice which was registered as a revision u/s 115, Civil Procedure Code. An inquiry was conducted and despite several adjournments and recording of evidence, the full amount was not paid by the advocate and a false receipt was relied upon. The court finally directed the advocate to pay the amount to the widow. After referring to this and other cases, K. Ramaswamy, J. (as he then was) observed in the above-mentioned case:
The illiterate, poor or victims of accidents have become mere pawns in the hands of unscrupulous persons to have unjust enrichment at the former''s expense.
Thus, the group-surveys, views of writers and the individual cases referred to above, in our opinion, certainly demonstrate that there is need for withholding the award amount and paying the same in instalments so that it can be used for the benefit of the claimants. Of course, the award is always to contain a residuary clause stating that it would be open to the claimants to apply for release of the balance if there is exceptional or grave need. Kailasam, J. in Bishan Devi''s case 1979 ACJ 496 (SC), had this in mind when he observed that, "it may also be provided that if the dependants are not satisfied with the minimum compensation payable, they will be at liberty to pursue their remedies before the Motor Accidents Claims Tribunal
(Emphasis added)
Two proposals generally discussed abroad therefore relate to ''structured settlements'' or ''periodic payment judgments''. The phrase ''structured settlement'' is an all-compassing term used to describe any ''settlement'' that includes a periodic payment plan to provide for future expenses of an injured party. They typically feature an annuity to compensate for future damages and lump sum payment for accrued expenses. But because they generally involve ''locked in'' periodic payments, the structured settlements have been criticised on the ground that they allow defendants to minimise costs while failing to take into account the decreasing purchase power of payments which results from rising inflation. Since these arrangements are based on consent, careful planning on the part of the counsel for both sides can ensure a settlement that is acceptable and beneficial to all. A more innovative approach replaces the traditional lump sum judgment with a ''periodic payment of judgment plan'' (as in the American Model Payment of Judgments Act). Many States in U.S. have adopted legislation requiring periodic payments in specific types of actions, such as those under workers'' compensation or no-fault insurance plans. Calculating the present value and future inflation is unnecessary under such a plan since the payments are adjusted as they accrue. Periodic payments are advantageous because they eliminate the possibility that the plaintiff will squander a large lump sum-recovery intended to provide him with lifetime income. [See (1983) St. John''s Law Review, p. 316, at 339-340 quoting: Krause, Structured settlement for tort victims (1980) 66 ABAJ 1527; Henderson, Restoring the tort victim to pre-injury position (1981) 67 ABAJ 301; Corboy, Structured injustice compulsory payment of judgments (1980) 60 ABAJ 1524; Periodic payments of bodily injury award (1980) 66 ABAJ 734].
The ''periodic payment'' procedure, in our view, cannot also be said to conflict with the ''once-for-all (common law) rule, laid down by Holt, CJ, in Filter v. Veal, 91 ER 1122, followed by Lord Halsbury in Dalley Main Colliery Co. v. Mitchell (1886) 11 AC 127 (HL). That principle was based on not permitting a claimant who has once made a claim and received an amount to resort to a fresh claim based on subsequent events concerning deterioration in health or further medical expenses. No doubt, the Privy Council went a step further in Fournier v. Canadian National Rly. 1927 AC 167 (PC), in a case arising from Quebec. There a jury had awarded an annuity of $ 300 to each of six children until they reached the age of 18, but the Privy Council held that the award of a capitalised value of such annuities was bad and that the jury should have directed a lump sum. The House of Lords held in Lim Poh Choo v. Camden and Islington Area Health Authority 1980 ACJ 486 HL, England), overruling Lord Denning that it was a matter for the legislature to permit a payment which would be renewed or monitored periodically on the basis of future events. The Australian court in Pamment v. Pawelski (1949) 79 CLR 406 and Paff v. Speed (1961) 105 CLR 549 and the Canadian Supreme Court in Andrews v. Toy Alberta Ltd. 1978 (2) SCR 229, adhered to the ''once-for-all'' rule of the common law. In the U.S.A., the plaintiff could, at common law, sue only once [See James & Hazard: Civil Procedure, S 11.11). Common law restrictions have, to some extent, been modified by amendments engrafted into the procedure codes. So far as the ordinary civil courts are concerned there have been, no doubt, legislative measures taken, such as by Section 6 of the Administration of Justice Act, 1982 incorporating Section 32-A in the Supreme Court Act, 1981, permitting claimants to move fresh actions on basis of aggravation of losses arising out of the previous cause of action etc. Provisional damages and interim payment can also be awarded. In Australia, New South-Wales adopted a scheme of periodic payments in 1987 and so did South Australia; [See Prof. J.G. Fleming: Law of Torts, 1988, p. 205]. In the U.S.A. the Uniform Law Commissioners promulgated the Model Periodic Payments Judgment Act which is yet to be adopted by more States.
But the point to be noted is that the common rule is relevant only in the context of the law enforced by our ordinary civil courts. Assuming that the civil courts in India cannot pass a judgment liable to be reviewed periodically either for increases at the instance of the plaintiff or for decreases at the instance of the defendants-on the basis of post-judgment events such as deterioration in health, further surgery or death of victim, etc.-there is, in our view, no justification in applying the ''once-for-all'' rule to Tribunals specially constituted for awarding compensation in motor claims. Further, the basis of the common law rule is to prevent separate actions on the same cause of action and is wholly irrelevant to the question as to whether the amount finally and ''once-for-all'' ascertained could be detained and released periodically.
Congestion in courts, it is lastly argued, will be the result if claimants are compelled to approach the Tribunal again and again, for release of amounts after the award; (See Luntz, op. cit., para 1.2.20, p. 23). Apparently this may be so, but in reality suitable directions given in the award can eliminate such congestion. The guidelines must include a direction to the Tribunal to state in the award that the concerned bank will credit into the account of the claimant the amounts covered by the instalments or the interest amounts without the need for the claimants to approach the Tribunal for release of the amounts every time. Further, if the period of retention is short and if the releases are fairly substantial, the approaches to the court by the claimants will be minimum.
Finally, the question is whether the instalments are to be confined to the past and future ''pecuniary losses'' or should cover the ''non-pecuniary damages'' awarded for pain, suffering or loss of amenities. The question also is whether the medical and travel expenses and the amounts allocated for purchase of artificial limbs should also be withheld.
In our view, so far as the frittering away of the amounts is concerned, whatever criticism is advanced in regard to pecuniary losses equally applies to non-pecuniary losses as well. Large chunks of amounts paid as damages for pain and suffering or loss of amenities are also dissipated or taken away by others by way of fraud or misrepresentation or cheating. In fact, the Gujarat and Bombay judgments to which we have referred earlier have been in force for the last seven years and it has not been suggested in later judgments of those courts that the deferment of payment procedure is not to apply to non-pecuniary losses. Therefore, the guidelines which we propose to give for retention of moneys shall apply to the non-pecuniary losses as well.
Two exceptions to the general guidelines may be indicated at this stage itself. The first relates to the amount determined as payable towards the past medical, hospital, travel expenses or expenses for artificial limbs, etc., already incurred by the date of the award. These expenses are to be paid straightaway and not to be postponed, though this will not apply to future expenses belonging to these categories. The second exception is with regard to amounts awarded to old parents. The amounts are generally not very high and there is no need to retain them. We are of the view that in all cases where the parents are above 45 years, the award amount can be straightaway released in their favour.
Coming finally to the guidelines, we note counsel''s submissions that division of cases as relatable to illiterate, semi-literate and literate, as made in the Gujarat, Bombay and earlier Andhra Pradesh judgments has created considerable difficulty in application. Further, it appears to us that in a large number of cases, the withholding of the entire amount has created serious hardship. Further, a time which is fairly reasonable has to be incorporated to avoid the criticism that the deduction, if any, made for accelerated payment or the multiplier arrived at is not unfavourable to the claimants. Therefore, we intend to release decent amounts and fix reasonable time limitations. In this context, we keep in mind that u/s 173 the Parliament now requires Rs. 25,000/- or 50 per cent of the amount awarded, whichever is less, to be deposited as a pre-condition for any appeal to be maintained. It is also necessary to note that u/s 140, in case of ''no fault'' liability, the amount fixed is Rs. 25,000/- in case of death and Rs. 12,500/- (Sic. Rs. 12,000/-) in case of injury. The above amounts fixed by Parliament, in our view, indicate that each claimant could be paid up to an amount of Rs. 25,000/- in a lump sum without postponing the payment.
Bearing the above aspects in mind, subject to the two exceptions referred to above, we are of the view that the undermentioned guidelines are to be followed in passing an award. These guidelines are applicable to the amounts awarded as pecuniary as well as non-pecuniary damages. They do not obviously apply to costs or the periodical payment of interest. The Tribunal will, however, include a residuary clause which would permit the claimants to apply to the Tribunal for release of any additional amounts and this is subject to the Tribunal being satisfied about the extraordinary need and the urgency 1/ exigencies. Such special release of amounts will be exceptional and have to be kept at the minimum. At the same time, the Tribunal should not refuse to exercise powers under the residuary clause as a matter of course. The discretion must be exercised judicially consistent with the facts then placed before the Tribunal and orders could be passed after issuing notice to the opposite party.
The following guidelines, in our view, should govern the award to be passed by the Motor Accidents Claims Tribunal. These guidelines are applicable for each adult and each minor claimant, whether in case of death or injury and shall govern both pecuniary and non-pecuniary compensation. (These guidelines shall be subject to the two exceptions mentioned above):
(1) The amount of the award including interest and costs, as apportioned, shall be directed to be deposited, within 30 days of the award, as stated in Section 168(3) in a nationalised bank nearest to the place of residence of the claimant/s or, if there is no such nationalised bank at that place, in any scheduled bank and the deposit shall be subject to the following further obligations.
(2) So far as the amount of costs is concerned, it shall be directed to be credited to the account/s of the claimant/s in the bank, within 30 days of the award.
(3) So far as the entire award amount (past and future) and the interest accrued (up to the date of the award) is concerned (hereinafter called ''the gross amount''), in case the same is Rs. 25,000/- or less, it shall be directed to be credited to the account/s of the claimant/s in the bank straightaway.
(4) If the gross amount is Rs. 50,000/- or less (but more than Rs. 25,000/-), the bank shall be directed to credit Rs. 25,000/- to the claimant''s account straightaway and the balance shall be directed to be invested in a fixed deposit for a period of 30 months and credited, at the expiry of 30 months, to the account/s of the claimant/s.
(5) If the gross amount is Rs. 1,00,000/- or less (but more than Rs. 50,000/-), the bank shall be directed to credit Rs. 25,000/- to the claimant''s account straightaway and Rs. 25,000/- of the balance shall be directed to be invested in a fixed deposit for 30 months and the entire further balance shall be directed to be invested in a fixed deposit for 60 months. The fixed deposit amounts shall be directed to be credited to the account/s of the claimant/s at the expiry of the respective periods.
(6) If the gross amount is more than Rs. 1,00,000/-, the bank shall be directed to credit Rs. 25,000/- to the claimant''s account straightaway and invest Rs. 25,000/- for 30 months and the entire balance for 60 months. The fixed deposit amount shall be directed to be credited to the claimant''s account at the expiry of the respective periods.
(7) So far as the interest amounts accruing on the fixed deposits are concerned, they shall be directed to be credited to the claimant''s account every quarter or half year, as permissible and as and when they accrue.
(8) So far as minors are concerned, the entire gross amount shall be invested up to date of their attaining majority and during that period, the interest amounts shall be credited to their accounts, permitting the guardian to operate the interest accounts.
(9) After the minors attain majority, the guidelines (3) to (7) shall be applied to the gross amount that becomes available at that time, the period of 30 months and 60 months being reckoned from the date of the minors attaining majority.
(10) In every award, there shall be a reservation permitting the claimants or their guardians to file any applications even before the expiry of the periods for which the amounts are invested in fixed deposit, for release of part or whole of the amount, to the satisfaction of the Tribunal-such as medical expenses, marriage expenses etc. For the limited purpose of clearing such applications, the main O.P. shall be deemed to be pending.
(11) In case the appeals filed against the award are disposed of within 5 years from the date of award, the above guidelines shall be subject to such further directions as the appellate court might impose.
(12) Only the amounts credited to the claimants'' accounts shall be allowed to be withdrawn and the fixed deposits shall not be allowed to be pledged, or loans taken against them.
(12-A) The guidelines abovementioned shall be applicable for deposit and release of award amounts, whether the award is passed in respect of O.Ps. filed prior to the commencement of the new Motor Vehicles Act, or earlier (Sic. after).
One other aspect concerning interlocutory orders in this court in appeals against awards may also have to be mentioned. In fact, we are now having before us a large number of interlocutory applications or appeals against interlocutory orders. Once we have given the above guidelines, counsel for claimants-respondents, if they want us not to follow them, would, in our opinion, not be justified in so urging unless they satisfy us that one or other of these guidelines is bad. As long as these guidelines themselves are not altered, it would not, in our opinion, be proper for us to deviate from them as a matter of course. May be, here and there, a case needing some relaxation may occur but that we would consider, could be an exception. In fact, having regard to the fairly large principal amount and interest released and the short period fixed by us for detention of moneys- more or less on a consensus of a large number of counsel for claimants, insurance companies, motor transport corporations and counsel for other tortfeasors-we are confident that deviation from the guidelines, even in this court, is likely to be a rare exception.
Question, however, arises what should happen if only a part of the award amount (with interest) is directed to be deposited by this court and not the whole. The answer is simple. The guidelines referred to above would apply mutatis mutandis to the gross sum directed by this court as if it is the gross sum directed by the Tribunal. The result would be that it is only the amounts lying in fixed deposits which would vary but not the amount of periodic releases. For example, if this court directs deposit of Rs. 1,00,000/-rather than Rs. 2,00,000/-, as the gross sum, (i.e., entire principal plus interest up to date of award), the guidelines shall have to be applied to Rs. 1,00,000/- treating it as the gross sum. This necessarily follows from the main principle that the amount is not dissipated or frittered away and subserves the purpose for which it is awarded.
We are sure that what we have said above so far as the discretionary orders to be passed by this court at the interlocutory stage (as in cases just now before us) will be appreciated in the proper perspective and not as a blanket check on the normal exercise of discretion. If we have done something, it is, in fact, to relax the previous hardship complained against and at the same time to achieve the broad purpose envisaged in the judgments of the Supreme Court, Gujarat, Bombay and Andhra Pradesh High Courts.
Thus while we have no quarrel with the reasoning of Ramaswamy, J. in New India Assurance Co. Ltd. Vs. Madapati Naramma and others, , we modify the said judgment and direct that the guidelines which we have evolved above will stand substituted for the guidelines mentioned in that case.
C.M.P. No. 8677 of 1990 in CM.A. No. 906 of 1990:
In this C.M.P. the petitioner, who is the wife of the deceased, is questioning the direction made in the award on the basis of the judgment of K. Ramaswamy, J. that the entire amount of Rs. 30,000/- awarded in her favour is to the kept in deposit. The facts are that the husband of the petitioner died on 15.7.1987 and the award was passed by the Tribunal on 20.2.1990 in a sum of Rs. 68,200/-with interest at the rate of 12 per cent. Under the award Rs. 30,000/- was awarded in favour of the wife (petitioner); Rs. 5,000/- in favour of the son who was a major at the time of the award; Rs. 15,000/- each in favour of two minor daughters; and Rs. 3,200/- in favour of the mother of the deceased. The Tribunal directed investment of the moneys payable to the two minor daughters and also directed immediate release of Rs. 5,000/- awarded to the major son and Rs. 3,200/- awarded to the mother of the deceased. It further directed that the entire amount of Rs. 30,000/- awarded to the wife (petitioner) should be invested as per the guidelines given by K. Ramaswamy, J.
In view of the guidelines mentioned above, a sum of Rs. 25,000/- will be released in favour of the petitioner straightaway and the Tribunal will issue appropriate directions to the bank in the light of the guidelines mentioned above. So far as the remaining amount awarded to the petitioner is concerned, the same shall be invested in any nationalized bank as stated in the guidelines and shall be released at the expiry of 30 months from the date of the award. So far as the amounts invested in the names of the minor daughters are concerned, the same shall continue to be invested in fixed deposit till the minors attain majority. In the meantime, the petitioner, who is their guardian, will be permitted to receive interest accruing on the amounts belonging to the minors. After the minors attain majority, the respective sums of Rs. 15,000/- each, with such interest as might have accrued, will be permitted to be released in their favour, in view of the fact that the amounts that are being invested, are each less than Rs. 25,000/-.
So far as the amount of costs is concerned, the same shall be paid, as per the award, straightaway.
C.M.P. No. 8685 of 1990 in C.M.A No. 908 of 1990:
In this matter the petitioner is the widow of the deceased, who died on 28.1.1987. The Tribunal passed an award on 1.3.1990 in a sum of Rs: 75,000/- with interest at the rate of 12 per cent. The Tribunal, however, directed investment of the entire amount as per the directions given by K. Ramaswamy, J. In view of the guidelines mentioned above, a sum of Rs. 25,000/- will be released in favour of the petitioner immediately by the lower court, following the procedure mentioned earlier. So far as the balance of Rs. 50,000/- plus interest is concerned, a sum of Rs. 25,000/-out of that will be invested for a period of 30 months and the entire further balance shall be invested for a period of 60 months. During the currency of the said deposits the petitioner shall be permitted to withdraw the interest periodically, accruing thereon, every quarter as stated in the guidelines. At the expiry of the respective periods mentioned above, the sums covered by the fixed deposits shall be released in favour of the petitioner. If the amounts have already been invested for five years as directed by the Tribunal, the court below will take appropriate steps to have the necessary modifications made in the investment.
So far as the amount of costs is concerned, the same shall be paid, as per the award, straightaway.
C.M.P. No. 8366 of 1990 and C.M.P. No. 5582 of 1990 in C.M.A. No. 526 of 1990:
In this matter the date of accident is 9.6.1987 and the date of the award is 23.1.1990. The claimants are the two widows and two children of the deceased. There is no dispute as between the widows in regard to the amount awarded. The Tribunal awarded Rs. 1,15,200/- to be shared equally by the two widows, one minor son and one minor daughter. So far as the abovesaid amount of Rs. 1,15,200/- is concerned, there is already an interim order passed by the learned single Judge, in the stay application filed by the insurance company, i.e., C.M.P. No. 5582 of 1990, dated 19.4.1990, that one-half of the award amount alone need be deposited and the balance need not be deposited. It appears that pursuant to the said direction, the insurance company has already deposited a sum of Rs. 80,082/- in the Tribunal. Out of the said sum, the amount of costs of Rs. 4,757/-shall be straightaway paid out as directed in the award. The rest of the amount, i.e., Rs. 75,325/-, will now have to be treated as the gross amount for purposes of the application of the guidelines, referred to earlier. This amount will have to be divided into four parts; each share will come to Rs. 18,831.25. So far as the two widows are concerned, inasmuch as the amount payable to each of them is less than Rs. 25,000/-, the same shall be directed to be released in their favour immediately. So far as the amount payable to the two minors is concerned, the same shall initially be invested, if not already invested, in any nationalized bank till such time as the minors attain majority. Inasmuch as the amount payable to each of the minors is also less than Rs. 25,000/-, the same shall be released in favour of the minors as soon as they attain majority. During their minority, however, the interest accruing on the fixed deposits shall be permitted to be released in favour of their respective guardians.
C.M.P. No. 10326 of 1990 and C.M.P. No. 7603 of 1990 in C.M.A. No. 759 of 1990:
In this case the appeal is preferred by the insurance company and it has sought stay of the award. The claimant, who is the injured person, has filed an application for vacating the stay. The accident took place on 4.9.1988 and the award was passed on 31.3.1990 in a sum of Rs. 2,27,500/- [after deducting the sum of Rs. 12,500/- (Sic. Rs. 12,000/-) earlier paid towards no fault claim]. The said sum carries interest at the rate of 12 per cent. In addition, a sum of Rs. 2,173/- is awarded as costs. The costs amount will be paid, as per the award, straightaway. The gross amount for the purpose of applying the guidelines will be Rs. 2,27,500/- with interest thereon up to the date of the award. Out of the said amount, a sum of Rs. 1,22,000/- represents the medical, travel 1/ expenses incurred by the claimant up to the date of the award, in respect of which voluminous evidence was produced before the Tribunal. Therefore, the claimant is entitled for the immediate release of Rs. 1,22,000/- with interest at the rate of 12 per cent up to the date of the award. The balance amount will now have to be treated as the gross amount for purposes of application of the abovementioned guidelines. This sum will be Rs. 1,05,500/- with interest up to the date of the award. This amount is entirely payable to the claimant in accordance with the guidelines earlier referred to. Out of the said amount, a sum of Rs. 25,000/- will be released in favour of the claimant immediately. Out of the balance, another sum of Rs. 25,000/-will be invested for a period of 30 months and the entire further balance for a period of 60 months. During the currency of the fixed deposits the claimant will be permitted to receive the interest amounts every quarter. At the expiry of 30 months, the sum of Rs. 25,000/- will be permitted to be withdrawn by the claimant and at the expiry of 60 months, the entire balance shall be permitted to be withdrawn. For fulfilling the above conditions, the insurance company will deposit Rs. 1,50,000/- with interest at the rate of 12 per cent and costs-deducting the sum, if any, already deposited-within eight weeks from today. The balance of the award amount shall be deposited by the owner of the vehicle.
We may note that the owner of the vehicle in this C.M.P. has not yet preferred any appeal before us and is yet to be served in the appeal filed by the insurance company.