NEW INDIA ASSURANCE CO LTD Vs. P KOTHAINAYAGI

JUDGEMENT

(1.) THE Civil Miscellaneous Appeal is preferred by the appellant-Insurance company against the award dated 11.09.2007 made in M.A.C.T.O.P.No.2151 of 2006 on the file of the Motor Accidents Claims Tribunal, Learned Chief Judge, Small Causes Court. 2. THE Cross Objection filed by the first and second respondents herein/claimants, against the judgment and decree dated 11.09.2007 made in M.A.C.T.O.P.No.2151 of 2006 on the file of the Motor Accidents Claims Tribunal, Learned Chief Judge, Small Causes Court. 3. Since the Civil Miscellaneous Appeal and Cross Objection are filed against the same award, they are taken up together and disposed of by a common Judgment. 4. Background facts in a nutshell are as follows: One Arun Kumar met with motor vehicle accident that took place on 06.03.2006 at about 4.30 pm. THE said Arun was proceeding in his Bicycle on the left of the mud portion on Poonamallee High Road, from East to West while he was nearing Nerkundram, opposite to Manju Rodways, a lorry bearing Registration No.TN 45 5700 came from behind in a rash and negligent manner and at high speed and hit the cyclist. Due to the said impact, the deceased sustained fatal injuries and died on the spot. THE claimants are parents of the deceased. THEy claimed a sum of Rs.6,00,000/- as compensation. THE appellant-Insurance Company resisted the claim. On pleadings, the Tribunal framed the following issues:- "1. Whether the driver of the lorry bearing Regn.No.TN- 45-5700 acted in a rash and negligent manner and caused the accident" 2. Whether the petitioners are entitled to claim compensation from the respondents" If so what is the reasonable amount that can be awarded as compensation"" After considering the oral and documentary evidence, the Tribunal held that the accident had occurred only due to rash and negligent driving of the driver of the Lorry and awarded a compensation of Rs.4,82,000/- with interest at 7.5% per annum from the date of the claim petition and the details of the same are as under:- Loss of income to the family.. Rs.4,32,000.00 Loss of love and affection.. Rs. 20,000.00 Loss of estate.. Rs. 25,000.00 Funeral expenses.. Rs. 5,000.00 ------------------- Total.. Rs.4,82,000.00 ------------------- Aggrieved by that award, the appellant-Insurance Company as well as the first and second respondents/claimants have filed Appeal and Cross Objection respectively. 5. THE learned counsel appearing for the appellant-Insurance Company has questioned quantum of compensation awarded by the Tribunal and vehemently contended that the Tribunal ought not to have fixed the monthly income of the deceased at Rs.3,000/- when there is no materials available on record to say that the deceased was earning. THErefore, award passed by the Tribunal is excessive, exorbitant, without basis and justification. Further, the award passed by the Tribunal is not in accordance with law and the same has to be set aside. 6. Learned counsel appearing for the respondents-1 and 2/claimants submitted that the Tribunal has considered all the relevant materials and evidence on record and come to the right conclusion that the appellant-Insurance Company is liable to pay compensation. He further submitted that the parents lost their only son and hence, the compensation amount awarded by the Tribunal has to be enhanced. 7. Heard the counsel and perused the materials on record. On the side of the claimants, Pws' 1 and 2 were examined documents Exs.P1 to P7 were marked. PW-1 -Kothai Nayagi, mother of the deceased. PW-2-Vadivel, is an eye witness to the accident. Ex.P1 is the First Information Report. Ex.P2 is the rough sketch. Ex.P3 is the charge sheet. Ex.P4 is the copy of the post mortem certificate. Ex.P5 is the death certificate. Ex.P6 is the legal heir certificate. Ex.P7 is the xerox coy of driving license of lorry driver. On the side of the appellant-Insurance Company, no one was examined and no document was marked. After considering the oral and documentary evidence, the Tribunal had given a categorical finding that the accident had occurred only due to the rash and negligent driving of the driver of the lorry and the finding is based on the valid materials and evidence and the same is confirmed. 8. In the case of SARLA VERMA AND OTHERS VS. DELHI TRANSPORT CORPORATION AND ANOTHER 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: "7. 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 Vs. Susamma Thomas AIR 1994 SC 1631: (1994) 2 SCC 176. 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 UP State Road Transport Corporation V. Trilok Chandra (1996) 4 SCC 362, 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) 9. In the case of SYED BASHEER AHAMED AND OTHERS VS. MOHAMMED JAMEEL AND ANOTHER reported in (2009) 2 Supreme Court Cases 225, the Apex Court has held as follows: "13. 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. 14. 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. 15. In Kerala SRTC v. Susamma Thomas2, M.N. Venkatachaliah, J. (as His Lordship then was) had observed that: (SCC p.181, para 5) "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. 18. 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. Veluswami4, 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." 19. 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) "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." 20. 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. 10. At the time of accident, the deceased Arun Kumar was aged about 18 years. In Ex.P4, post mortem certificate, the age of the deceased was shown as 18. THErefore, the Tribunal had fixed the age of the deceased as 18 years at the time of accident. In the evidence of PW-1, it is stated that the deceased was a Computer Operator in J.J.Infra Structures, Aminjikarai, Chennai and was earning a sum of Rs.6,000/- per month. However, there is no material available on record to show that the deceased was earning a sum of Rs.6,000/- per month, except the oral evidence of PW-1. THErefore Rs.3,000/-was taken as the monthly contribution to the family of the deceased and has fixed the annual income at Rs.36,000/- (Rs.3000x 12). After taking into consideration, the age of the mother of the deceased, the Tribunal has adopted the multiplier of "12" and awarded a sum of Rs4,32,000/- (Rs.36,000x12) towards loss of income. When the finding was given by the Tribunal that there was no material available on record to show that the deceased was earning a sum of Rs.6,000/- per month, the Tribunal ought not to have fixed the monthly contribution at Rs.3,000/- per month without deducting personal expenses and no details was shown as to how the amount was fixed by the Tribunal. THErefore, after considering the facts and circumstances of the case, this Court is of the view that it is reasonable to fix the monthly income of the deceased at Rs.4,000/-. Out of Rs.6,000/- since the deceased is a bachelor, if 50% towards personal expenses is deducted, the balance a sum of Rs.2,000/- is taken as monthly contribution and the annual income works out to Rs.24,000/-. In the present case, the age of the mother of the deceased should be taken for the purpose of adopting the multiplier. Here the age of the mother was 42. THErefore, I feel that the correct multiplier that should be adopted is '15'. If multiplier '15' is adopted, the loss of income to the family would be Rs.3,60,000 (24,000x15) as against Rs.4,32,000 awarded by the Tribunal. THE Tribunal has awarded a sum of Rs.20,000/- towards loss of love and affection. THE claimants are father and mother. THEy lost their only son. Hence, the amount awarded under this head is very reasonable and the same is confirmed. THE Tribunal has awarded a sum of Rs.5,000/- towards funeral expenses, which I feel is very reasonable and the same is confirmed. THE Tribunal has awarded a sum of Rs.25,000/- towards loss of estate. THE learned counsel for the appellant-Insurance Company contended that the amount awarded by the Tribunal under the head of loss of estate is very excessive. After considering the facts and circumstances of the case, it is reasonable to award a sum of Rs.20,000/- under this head as against Rs.25,000/- awarded by the Tribunal. THE Tribunal has not awarded any amount towards transport charges. Hence, I feel that it would be reasonable to award Rs.5,000/- under this head. THE Tribunal has awarded interest at the rate of 7.5% p.a from the date of petition. THE accident was occurred on 06.03.2006. Keeping in view the prevailing rate of interest at the time of the accident, I feel that the rate of interest awarded by the Tribunal is very reasonable and the same is confirmed. THE details of the modified compensation as per the above discussion are as under:- Loss of income to the family.. Rs.3,60,000.00 Loss of love and affection.. Rs. 20,000.00 Loss of estate.. Rs. 20,000.00 Funeral expenses.. Rs. 5,000.00 Transport expenses.. Rs. 5,000.00 ------------------- Total.. Rs.4,10,000.00 ------------------- THErefore, the claimants are entitled to the modified compensation of Rs.4,10,000/- with interest at the rate of 7.5% per annum as against the compensation of Rs.4,82,000/- awarded by the Tribunal. 11. It is represented by the learned counsel appearing for the appellant-Insurance Company that the appellant-Insurance Company has already been deposited a sum of Rs.3,50,000/- with interest at the rate of 7.5% and the respondents 1 and 2 / claimants were permitted to withdraw 50% of their respective share as per order dated 01.07.2009 . THE appellant-Insurance Company is directed to deposit the modified compensation of Rs.4,10,000/- with interest at the rate of 7.5% per annum, less the amount already deposited, within a period of six weeks from the date of receipt of a copy of this order. Respondents 1 and 2 / the claimants are permitted to withdraw the modified award amount of Rs.4,10,000/- with interest at 7.5% per annum from the date of petition as apportioned by the Tribunal, after adjusting the amount already withdrawn on making proper application. 12. With the above modification, the Civil Miscellaneous Appeal is disposed of. THE Cross Objection is disposed of. No costs. Consequently, connected M.P.No.1 of 2009 is closed.