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Judgment
P.P.S. Janarthana Raja, J.—The appeal is preferred by the appellant-Insurance Company against the award 27.01.2006 made in MCOP
No. 898 of 2004 by the Motor Accident Claims Tribunal (District Judge), Thiruvannamalai.
Background facts in a nutshell are as follows:
The deceased Kumar met with motor traffic accident that took place on 11.08.2004 at about 7.00 p.m. It is a fatal accident. The deceased was
traveling as a pillion rider in a TVS-50 motor cycle bearing Registration in No. TN-32-A-6622, which was driven by his friend Shanmugam
proceeding on Thirukoilur - Kattucellur Road, At that time, a TVS-Suzuki, motor cycle belonging to the 6th respondent and insured with the
appellant-Insurance Company bearing registration No. TN-32/A-7810 driven by its driver in a rash and negligent manner and dashed against the
deceased, due to which, he had sustained severe head injuries. Immediately he was admitted in Government Hospital, Thirukovilur and later at
Government General Hospital, Chennai, where he died after four days. The claimants are father, mother and brothers of the deceased. The
claimants claimed a sum of Rs. 10,00,000/- as compensation. The appellant-Insurance Company resisted the claim. On pleadings the Tribunal
framed the following issues:
1.Whether the accident had occurred due to the rash and negligent driving of the driver of the TVS-Suzuki.?
2.Whether the claimants are entitled to the compensation? If so, how much?
Any other relief?
After considering the oral and documentary evidence, the Tribunal held that the accident had occurred only in a rash and negligent driving of driver
of TVS-Suzuki belonging to the 6th respondent herein, and also held that the respondents 3 to 5 are not dependents of the deceased and
dismissed the petition as against them. Further Tribunal held that the respondents 1 and 2, who are mother and father of the deceased alone
entitled to get compensation and awarded a compensation of Rs. 3,47,000/- with interest at 7.5% per annum from the date of petition and the
details of the same are as under:
Loss of income Rs. 3,40,000/-
Funeral expenses Rs. 2,000/-
Loss of love and affection
(each Rs.1,000) Rs. 5,000/-
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Total Rs. 3,47,000/-
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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 compensation awarded by the Tribunal
and contended that the amount awarded by the Tribunal is excessive, exorbitant, without basis and justification. He further submitted that the
Tribunal has wrongly adopted the multiplier of 17 instead of adopting the multiplier of 13 as per the decision of the Apex Court in the case of New
India Assurance Company Ltd. Vs. Smt. Shanti Pathak and Others, and that therefore, the award passed by the Tribunal is not in accordance with
law and the same has to be set aside.
4.Learned Counsel appearing for the respondents/claimants submitted that the Tribunal had considered all the relevant materials and evidence on
record and came to the right conclusion and awarded a just, fair and reasonable compensation. Hence the order of the Tribunal is in accordance
with law and the same has to be confirmed.
Heard the counsel. On the side of the claimants, P.Ws.1 and 2 were examined and documents Exs.P1 to P3 were marked. PW1 is the mother
of the deceased. PW2 is Katturaja, who is an eye witness to the accident. Ex.P1 is the copy of the First Information Report. Ex.P2 is the copy of
the postmortem certificate. Ex.P3 is the copy of the Insurance policy. On behalf of the Insurance company no one was examined and no document
was marked to substantiate their claim. After considering the above oral and documentary evidence, the Tribunal had given a categorical finding
that the accident had occurred only due to rash and negligent driving of the driver of the TVS-Suzuki belonging to sixth respondent herein and the
finding is based on valid materials and evidence.
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 dependents 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 dependents, the amount that the deceased would have earned during the
remainder of his life, the amount that he would have contributed to the dependents during that period, the chances that the deceased may not have
live or the dependents 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 dependents, 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 dependents. 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
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 dependents many imponderables enter into the calculation. Therefore, the actual extent of the pecuniary loss
to the dependents 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 dependent 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 dependents 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 dependents, the amount that the deceased would have earned during the
remainder of his life, the amount that he would have contributed to the dependents during that period, the chances that the deceased may not have
lived or the dependents 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
dependents 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 26 years. PW1, the mother, in her evidence stated that the age of the deceased was
26 years. In Ex.P2 Postmortem report, the age of the deceased was mentioned as 25 years at the time of accident. On that basis, the Tribunal has
fixed the age of the deceased as 25 years. PW.1 deposed in her evidence that the deceased was a Mason and he was earning not less than Rs.
200/- per day. Considering the oral and documentary evidence, the Tribunal was of the view that the deceased would have earned not less than
Rs. 100/- per day and the deceased would not be working all the day in a month and taken 25 days as workings days in a month. So, the Tribunal
determined monthly income is Rs. 2500/- (Rs. 100 x 25) and arrived at the annual Income at Rs. 30,000/- (Rs. 2,500 x 12) 2,500/-. Out of the
said sum, the Tribunal has deducted 1/3rd i.e. Rs. 10,000/- towards personal expenses of the deceased and balance sum of Rs. 20,000/- has
been taken as the contribution of the deceased to his family. Considering the age of the deceased at 25 years at the time of the accident, the
Tribunal has adopted the multiplier of 17 and awarded a sum of 3,40,000/- (20,000 x 17) towards loss of dependency. The learned Counsel
appearing for the Insurance company vehemently contended that the Tribunal wrongly adopted the multiplier of 17. The Apex Court, in the case of
New India Assurance Company Ltd. Vs. Smt. Shanti Pathak and Others, , has held that where the claimants are parents of the deceased, the
choice of multiplier would depend upon the age of the claimants and not that of the deceased and in paragraph 6 it has been held as follows:
Considering the income that was taken, the foundation for working out the compensation cannot be faulted with. The monthly contribution was
fixed at Rs. 3500. In the normal course we would have remitted the matter to the High Court for consideration on the materials placed before it.
But considering the fact that the matter is pending since long, it would be appropriate to take the multiplier of 5 considering the fact that the mother
of the deceased was about 65 years at the time of the accident and age of the father was more than 65 years. Taking into account the monthly
contribution at Rs. 3500 as held by the Tribunal and the High Court, the entitlement of the claim would be Rs. 2,10,000. The same shall bear
interest @ 7.5% p.a. from the date of the application for compensation. Payment already made shall be adjusted from the amount due.
In the present case, the claimants 1 and 2 are mother and father . The age of the father is 55 years. The age of the mother is 50 years at the time of
the accident. If the age of the mother is taken into consideration, the correct multiplier that should be adopted is 13. The Tribunal has fixed the
salary of the deceased at Rs. 2,500/- p.m. Considering the evidence of PW.1, that the deceased was working as Mason at the time of the accident
, I feel that it would be appropriate to fix the salary of the deceased at Rs. 3000/- per month and out of the said sum, if 1/3 rd is deducted i.e., Rs.
1000/- towards personal expenses of the deceased, the balance sum of Rs. 2,000/- (Rs. 3,000-1,000/-) would be taken as the monthly
contribution to the family of the deceased and the annual income works out to Rs. 24,000/- (Rs. 2,000 x 12). As stated above, if multiplier 13 is
adopted, the loss of income works out to Rs. 3,12,000/- (Rs. 24,000 x 13) as against Rs. 3,40,000/- awarded by the Tribunal. The Tribunal has
also awarded a sum of Rs. 2,000/- towards funeral expenses, which I feel is very low and the same is modified to Rs. 5,000/- under this head as
against Rs. 2,000/-. The Tribunal has also awarded a sum of Rs. 5000/- towards loss of love and affection, which I feel is very low and meagre
and the same is modified to Rs. 10,000/- under this head as against 5,000/-. The Tribunal has not awarded any amount towards transport and
hence, it would be reasonable to award a sum of Rs. 3,000/- towards transport charges. The Tribunal has awarded interest at the rate of 7.5% per
annum, which I feel is very reasonable and the same is confirmed. The modified amount of compensation is as follows:
Loss of income Rs. 3,12,000/-
Funeral expenses Rs. 5,000/-
Loss of love and affection
(each Rs.5,000) Rs. 10,000/-
Transport Rs. 3,000/-
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Total... Rs. 3,30,000/-
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Therefore, the claimants are entitled to the modified compensation of Rs. 3,30,000/- as against Rs. 3,47,000/- awarded by the Tribunal with
interest at 7.5% p.a. from the date of petition.
The learned Counsel appearing for the appellant-Insurance company submitted that already entire award amount has been deposited as per
order of this Court dated 11.07.2007. The respondents 1 and 2 herein, who are mother and father of the deceased are permitted to withdraw their
respective shares as apportioned by the Tribunal from the modified award amount of Rs. 3,30,000/- with interest at 7.5% p.a. from the date of
petition, after adjusting the amount, if any, already withdrawn. The appellant-Insurance company is also permitted to withdraw the balance amount
on making proper application.
With the above modification, the Civil Miscellaneous Appeal is disposed of. No costs. Consequently, M.P. No. 1 of 2007 is closed.