R.M.LODHA,J. - (1.) A two-Judge Bench (S.B. Sinha and Cyriac Joseph, JJ.) proceeded to hear these appeals on two common questions, namely, (1) Whether multiplier specified in the Second Schedule appended to the Motor Vehicles Act, 1988 (for short "the 1988 Act") should be scrupulously applied in all cases? and (2) Whether for determination of the multiplicand, the 1988 Act provides for any criterion, particularly as regards determination of future prospect. In the course of hearing few decisions of this Court, General Manager, Kerala State Road Transport Corporation, Trivandrum v. Susamma Thomas (Mrs.) and Ors1., Sarla Dixit (Smt.) and Anr. v. Balwant Yadav and Ors 2., U.P. State Road Transport Corporation and Ors. V. Trilok Chandra and Ors.3, Kaushnuma Begum (Smt.) and Ors. V. New India Assurance Co. Ltd. and Ors.4, United India Insurance Co. Ltd. & Ors. v. Patricia Jean Mahajan & Ors.5, Jyoti Kaul & Ors. v. State of M.P. & Anr. 6, Abati Bezbaruah v. Dy. Director General, Geological Survey of India & Anr.7, New India Assurance Co. Ltd. v. Shanti Pathak (Smt.) & Ors.8, were cited. The attention of the Bench was also invited to Sections 163A and 166 of the 1988 Act. The Bench was of the opinion that the question, whether the multiplier specified in the Second Schedule should be taken to be guide for calculation of amount of compensation payable in a case falling under Section 166 of the 1988 Act needed to be decided by a larger Bench. The reasons for referring the above issue to the larger Bench indicated in the referral order dated 23.07.2009 read as under: "39. We have noticed hereinbefore that in Patricia Jean Mahajan5 and Abati Bezbaruah7and the other cases following them multiplier specified in the Second Schedule has been taken to be guiding factor for calculation of the 1 1994 (2) SCC 176 2 1996 (3) SCC 179 3 1996 (4) SCC 362 4 2001 (2) SCC 9 5 2002 (6) SCC 281 6 2002 (6) SCC 306 7 2003 (3) SCC 148 8 2007 (10) SCC 1 amount of compensation even in a case under Section 166 of the Act. However, in Shanti Pathak8 this Court advocated application of lesser multiplier, although no legal principle has been laid therein. 40. In Trilok Chandra3 this Court has pointed out certain purported calculation mistakes in the Second Schedule. It, however, appears to us that there is no mistake therein. Amount of compensation specified in the Second Schedule only is required to be paid even if a higher or lower amount can be said to be the quantum of compensation upon applying the multiplier system. 41. Section 163-A of the 1988 Act does not speak of application of any multiplier. Even the Second Schedule, so far as the same applies to fatal accident, does not say so. The multiplier, in terms of the Second Schedule, is required to be applied in a case of disability in nonfatal accident. Consideration for payment of compensation in the case of death in a "no fault liability" case vis-a-vis the amount of compensation payable in a case of permanent total disability and permanent partial disability in terms of the Second Schedule is to be applied by different norms. Whereas in the case of fatal accident the amount specified in the Second Schedule depending upon the age and income of the deceased is required to be paid where for the multiplier is not to be applied at all but in a case involving permanent total disability or permanent partial disability the amount of compensation payable is required to be arrived at by multiplying the annual loss of income by the multiplier applicable to the age of the injured as on the date of determining the compensation and in the case of permanent partial disablement such percentage of compensation which would have been payable in the case of permanent total disablement as specified under item (a) of the Second Schedule. 42. The Parliament in its wisdom thought to provide for a higher amount of compensation in case of permanent total disablement and proportionate amount of compensation in case of permanent partial disablement depending upon the percentage of disability. 43. Thus, prima facie, it appears that the multiplier mentioned in the Second Schedule, although in a given case, may be taken to be a guide but the same is not decisive. To our mind, although a probable amount of compensation as specified in the Second Schedule in the event the age of victim is 17 or 20 years and his annual income is Rs. 40,000/-, his heirs/legal representatives is to receive a sum of Rs.7,60,000/-, however, if an application for grant of compensation is filed in terms of Section 166 of the 1988 Act that much amount may not be paid, although in the former case the amount of compensation is to be determined on the basis of 'no fault liability' and in the later on 'fault liability'. In the aforementioned situation the Courts, we opine, are required to lay down certain principles. 44.We are not unmindful of the Statement of Objects and Reasons to Act 54 of 1994 for introducing Section 163-A so as to provide for a new predetermined formula for payment of compensation to road accident victims on the basis of age/income; which is more liberal and rational. That may be so, but it defies logic as to why in a similar situation, the injured claimant or his heirs/legal representatives, in the case of death, on proof of negligence on the part of the driver of a motor vehicle would get a lesser amount than the one specified in the Second Schedule. The Courts, in our opinion, should also bear that factor in mind. 45. Having regard to divergence of opinion and this aspect of the matter having not been considered in the earlier decisions, particularly in the absence of any clarification from the Parliament despite the recommendations made by this Court in Trilok Chandra3, the issue, in our opinion, shall be decided by a Larger Bench. It is directed accordingly."
(2.) WE are concerned with the above reference. Before we refer to the provisions contained in Sections 163A and 166 of the 1988 Act, it is of some relevance to notice the background in which the Parliament considered it necessary to bring in the provisions of no fault liability on the statute. It so happened that in Minu B. Mehta and Anr. v. Balkrishna Ramchandra Nayan and Anr.9 , a three-Judge Bench of this Court while considering the question whether the fact of injury resulting from the accident involving the use of a vehicle on the public road is the basis of a liability and that it is not necessary to prove any9 1977 (2) SCC 441 negligence on the part of the driver, held that the liability of the owner of the car to compensate the victim in a car accident due to the negligent driving of his servant is based on the law of tort and before the master could be made liable it is necessary to prove that the servant was acting during the course of his employment and that he was negligent. This Court held that the concept of owner's liability without any negligence is opposed to the basic principles of law. The mere fact that a person died or a party received an injury arising out of the use of a vehicle in a public place cannot justify fastening liability on the owner. This Court noticed a judgment of Madras High Court in M/s Ruby Insurance Co. v. Govindaraj, (A.A.O. Nos. 607 of 1973 and 296 of 1974) decided on December 13, 1976 wherein the necessity of having social insurance to provide cover for the claimants irrespective of proof of negligence to a limited extent was suggested. This Court said "unless these ideas are accepted by the legislature and embodied in appropriate enactments Courts are bound to administer and give effect to the law as it exists today. We conclude by stating that the view of the learned Judges of the High Court has no support in law and hold that proof of negligence is necessary before the owner or the insurance company could be held to be liable for the payment of compensation in a motor accident claim case". The Parliament having regard to the above view of this Court and the recommendation of the Law Commission of India, amended the Motor Vehicles Act, 1939 (for short, "1939 Act") and inserted Section 92A therein which provided that in any claim for compensation under sub-section (1) of Section 92-A, the claimant shall not be required to plead and establish that the death or permanent disablement in respect of which the claim has been made was due to any wrongful act, neglect or default of the owner or owners of the vehicles concerned or of any other person.
(3.) IN Gujarat State Road Transport Corporation, Ahmedabad v. Ramanbhai Prabhatbhai and Another10, a two-Judge Bench held that the compensation awardable under Section 92-A was without proof of any negligence on the part of the owner of the vehicle or any other person which was clearly a departure from the usual common law principle that a claimant should establish negligence on the part of the owner or driver of the motor vehicle before claiming any compensation for the death or permanent disablement caused on account of a motor vehicle accident. Certain observations made in Minu B. Mehta9 were held to be obiter in Ramanbhai Prabhatbhai10 .;