Gujarat High Court
Vinaykrao S Desai vs S K Construction Thro' A M Patel & 2 on 9 December, 2016
Author: S.G.Shah
Bench: S.G.Shah
C/FA/2631/2004 CAV JUDGMENT
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
FIRST APPEAL NO. 2631 of 2004
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR.JUSTICE S.G.SHAH
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1 Whether Reporters of Local Papers may be allowed
to see the judgment ?
2 To be referred to the Reporter or not ?
3 Whether their Lordships wish to see the fair copy of
the judgment ?
4 Whether this case involves a substantial question of
law as to the interpretation of the Constitution of
India or any order made thereunder ?
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VINAYKRAO S DESAI....Appellant(s)
Versus
S K CONSTRUCTION THRO' A M PATEL & 2....Defendant(s)
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Appearance:
MR VS DESAI, ADVOCATE for the Appellant(s) No. 1
MR JANAK RAVAL, AGP for the Defendant(s) No. 3
MR PALAK H THAKKAR, ADVOCATE for the Defendant(s) No. 2
SERVED BY GOVERNMENT GAZETTE for the Defendant(s) No. 1
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CORAM: HONOURABLE MR.JUSTICE S.G.SHAH
Date : 09/12/2016
CAV JUDGMENT
1. The appellant is claimant, whereas respondents are Insurance Company before the Motor Accident Claim Tribunal of Kheda at Nadiad. The appeal is arising out Page 1 of 40 HC-NIC Page 1 of 40 Created On Sat Dec 10 00:37:29 IST 2016 C/FA/2631/2004 CAV JUDGMENT of award of compensation and damages under the Motor Vehicles Act, 1988.
2. The appellant has preferred one Motor Accident Claim Petition No. 1476 of 1990 claiming damages and compensation for the vehicular accident, wherein his Fiat Car was extensively damaged and it could not be used for long time. The appellant has claimed Rs. 16,000/- as compensation. Such claim petition was partly allowed by the judgment and order dated 29.07.2002, whereby the Motor Accident Claim Tribunal has awarded Rs. 10,000/- to the appellant which is to be recovered from the owner of offending vehicle and its Insurance Company.
3. Though the appeal is mainly on the issue of quantum of compensation and thereby though factual details of accident and liability is not much material, it would be appropriate to recollect that the claim of the appellant is based upon an incident of 23.07.1990. On such day, at about 10:00 a.m. when the appellant was traveling from Ahmedabad to Vadodara via National Highway in his car No. GBQ 1809, a heavy goods vehicle bearing No. GQG 7654 was driven rashly and negligently and in a careless manner by its driver and thereby he dashed the vehicle with the appellant's car, which resulted into damage to the Car. Due to such accident, the appellant incurred expenses for repair of the Car including traveling, conveyance and other expenditure. Therefore, the appellant has claimed compensation from the owner and insurer of the offending vehicle No. GQG 7654. The appellant has also Page 2 of 40 HC-NIC Page 2 of 40 Created On Sat Dec 10 00:37:29 IST 2016 C/FA/2631/2004 CAV JUDGMENT joined the Insurance Company of his car as one of the opponent.
4. The Insurance Company of offending vehicle though appeared, did not file reply before the Tribunal, whereas Insurance Company of appellant's vehicle has filed a reply and confirmed that they have paid amount of Rs. 5,460/- towards own damaged claim for the car as per terms and conditions of the policy.
5. After appreciating the evidence of both the sides, the Tribunal has recorded that the appellant has produced documentary evidence regarding repair charges, labour charges and invoices for expenses incurred by him for repair of his car damaged in the accident to the extent of Rs. 9,890/- Therefore, the Tribunal has awarded Rs. 10,000/- as lump-sum amount of compensation considering it just, proper and reasonable because the appellant has already received own damaged claim from his own Insurance Company.
6. The Tribunal has also awarded interest @ 9% on such compensation relying upon the case of Kaushnuma Begum Vs. New India Assurance Company Ltd. reported in AIR 2001 SCW 85.
7. Thereupon, the appellant has filed a review petition being MACP (CA) No. 162 of 2002 on 26.08.2002 before the Tribunal contending that since the proceedings before the Motor Accident Claim Tribunal were taken up summarily, he was not given fair chance to represent his case and more particularly when his advocate was not available to argue his case, there is Page 3 of 40 HC-NIC Page 3 of 40 Created On Sat Dec 10 00:37:29 IST 2016 C/FA/2631/2004 CAV JUDGMENT bona fide procedural error in the award by the Tribunal and therefore, he is claiming the amount of Rs. 6,000/- which was omitted from the award by the Tribunal. He has submitted relevant material for considering computation of quantum based upon all such aspects and claimed total Rs. 7100/- with 15% interest . Alternatively, he prayed for restoration of Motor Accident Claim Petition No. 1476 of 1990 to the stage of evidence and to grant him an opportunity to submit his case and oral argument before pronouncement of the judgment. He also prayed for other costs and circumstantial relief in such review petition.
8. The concerned Tribunal after hearing both the parties and after perusing the record came to the conclusion that there is scope of granting review application, because the award was passed without affording an opportunity of hearing to the parties and thereby practically it was considered that the appellant may be heard because the order of the Tribunal was treated as ex-parte order. Thereafter, considering the rival submissions, the Tribunal has allowed the application and awarded the amount of Rs. 17,500/- as lump-sum compensation with 9% interest considering the submissions by the appellant regarding higher rate of interest and considering the consumer price index at the relevant time, whereby it has been confirmed and believed on 30.06.2004 that the appellant is entitled to Rs. 17,500/-.
9. Now the appellant has challenged such order dated 30.06.2004 contending that since he has suffered loss Page 4 of 40 HC-NIC Page 4 of 40 Created On Sat Dec 10 00:37:29 IST 2016 C/FA/2631/2004 CAV JUDGMENT in the year 1990 to the tune of Rs. 16,000/- and the award is Rs. 17,500/- only in the year 2004 i.e. after 14 years, it cannot considered as "just compensation"
taking into account the economical variables.
10. In support of his submissions, he has also filed before this Court certain summary of statistical data of economical variables and thereby he claimed an additional amount of Rs. 42,350/- or atleast Rs. 39,720/- as corresponding real value of his claim as on 30.06.2004. It is also submitted that the statistical data during the intervening period of economical variable namely consumer price index, purchasing power of rupee and cost of inflation index needs to be considered to enhance the compensation. It is also submitted that as provided under the Motor Vehicles Act, compensation should be "just compensation". He has also prayed for interest at the rate of 15% instead of interest awarded at the rate of 9%, contending that the statutory bank rate published under Section 14 of the RBI Act cannot be applicable in such cases but it should be maximum rate of interest payable on different classes on deposit of Banking Company as provided under Section 2 (b) of the Companies Act, thereby it is contended that in fact, if the amount of compensation and damages was paid immediately or at the earliest point of time after the accident i.e. at least after filing of the claim petition, then either one could have utilized that amount to come to the same position as before the occurrence of accident, or one may invest such amount in a manner from where he can get maximum interest. It Page 5 of 40 HC-NIC Page 5 of 40 Created On Sat Dec 10 00:37:29 IST 2016 C/FA/2631/2004 CAV JUDGMENT is also contended that practically on day of awarding Rs. 17,500/- in the year 2004, the real value of the claim by the appellant was Rs. 42,350/- and therefore, amount in dispute i.e. Rs. 42,350/- and interest at the rate of 15% on awarded amount Rs. 17,500/- i.e. Rs. 14,700/- thereby in appeal, the total claim is for Rs. 57,050/- or such further or other real value sum thereof as at and by the appellate decreetal date.
11. Therefore, the basic issue in this appeal is regarding award of compensation and damages in terms of its real value. Thereby when original claim is for damages with financial loss because of damages caused to the vehicle etc., it is clear that to consider just and reasonable compensation on such rate, practically, the consumer price index, inflation of prices of commodities and every chargeable services, valuation of money and devaluation of purchase power of rupee needs to be taken into consideration. It also needs to be considered that while reviewing the order, the Tribunal had also considered some such aspect at the time of awarding the amount, but there is no reasons/justification for awarding only Rs. 17,500/-, more particularly, when the appellant has produced information regarding consumer price index and other relevant statistical data.
12. After hearing both the sides, I am also of the opinion that in case of damages and even in the case for compensation in non pecuniary loss, one must take into consideration the devaluation of money, higher cost of living and inflation in proper perspective and Page 6 of 40 HC-NIC Page 6 of 40 Created On Sat Dec 10 00:37:29 IST 2016 C/FA/2631/2004 CAV JUDGMENT manner. Such issue is otherwise dealt with by several Courts in different decisions, few of them are taken into consideration and relevant information is recorded in this judgment hereinafter.
13. Whereas the appellant is relying upon the consumer price index and fall in value of rupee, the appellant has also submitted the following points :
(1). To award "Just" amount of compensation under Section 168(1) of the Motor Vehicle Act, 1988 r.w.
Articles 14, 300-A of the Constitution is to ensure; without any disparity, between what is estimated in the Claim in its Nominal Value (NV) and is appealed to be awarded in the award in its real value (RV).
(2). This appeal is against a principal award of Nominal Value and Interest @ 9% p.a. for its enhancement by a supplementary award of Real Value & Interest @ 15% p.a..
(3). A contest to the claim by the insurer sets in the adjudication wherein it defers, retains and uses whereas the applicant waits to recover, receive and use the amount of compensation for the long period at large, consequentially resulting in the inflation causing the fall in a rupee's power & requiring its restoration-ante-in-real-value under a rule of Restitutio-in-Integrum.
(4). Consumer price index is juxtaposed for this Computation upto 20015 on Derivative CPI variation in percentage at the web "inflation-eu-india" & Original Page 7 of 40 HC-NIC Page 7 of 40 Created On Sat Dec 10 00:37:29 IST 2016 C/FA/2631/2004 CAV JUDGMENT CPI source-able at Labour Bureau, Labour Ministry, Simala.
(5). Simple interest on the amount of compensation at the real value under Sections 2(b), 4(1) of the Interest Act; Sections 171, 173 of the Motor Vehicles Act; Section 34 (1), proviso, Explanation II of the Code at the SBI's Highest Maximum Prime Lending Rate is sourced at the web "sbi.con.in" & computed @ 15% p.a. (6). Under the Hon'ble Court's order in CA No. 8995 of 2004 on 04.11.2004 for a withdrawal- without- prejudice of the insurer's deposited Rs. 39,550 is fairly computed & set-off as at Rs. 96,343 for 2004- 2005.
14. With such submissions, the appellant has produced one calculation sheet as schedule-A for computation of real value, whereby, now he has claimed Rs. 1,75,759/- and after giving a credit of amount already paid. He has submitted that he is entitled to additional amount of Rs. 83,942/-.
15. The chart of variance and CPI is annexed with this judgment and thereby, it is made as a part of this judgment, which reads as under :
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15. The appellant has also placed reliance upon the provision of the Interest Act so as to claim 15% interest, more particularly definition clause as provided under Section 2(b) of the Interest Act which defines "current rate of interest", as the highest maximum rate at which interest may be paid on different classes of deposits. Section 4 of such Act is relied upon, wherein, it is provided that notwithstanding anything contained in Section 3, interest shall be payable in all cases in which it is payable by virtue of any enactment or other rule of law or having the force of law. He also relied upon Section 171 of the Motor Vehicles Act, 1988. The appellant has also placed reliance upon the following decisions :-Page 11 of 40
HC-NIC Page 11 of 40 Created On Sat Dec 10 00:37:29 IST 2016 C/FA/2631/2004 CAV JUDGMENT
(i) Prataprai Arjandas Dhameja and another Vs. Jivkuvarba Bhupatsingh and others reported in 1982 (1) GLR 437, wherein while interpreting "just compensation". The Division Bench of this Court has observed as under.
"32. What then does the expression 'just compensation' connote? The term 'just' is derived from the Latin word 'justus'. It is used in a variety of shades and contexts. According to Shorter Oxford Dictionary, it inter alia means what is morally rights, righteous, equitable; consonant with the principles of moral right; equitable; fair. According to Mukherjee's Law Lexicon the term 'just' has various meanings and its meaning is often governed by the context. 'Just' may apply in nearly all of its senses, either to ethics or law, denoting something which morally right and fair and sometimes that which is right and fair according to positive law. It connotes reasonableness and something conforming to rectitude and justice, something equitable, fair. (Vide page 1100 of Volume 50, Corpus Juris Secundum). Therefore, when one talks of 'just compensation' he talks of compensation which is equitable, fair and reasonable."
(ii) Forasol Vs. Oil and Natural Gas Commission reported in AIR 1984 SC 241, though the decision is regarding consideration of date of award for the purpose of awarding interest, the appellant is relying upon the following observation of the Court.
43. ....... A decree crystallizes the amount payable by the defendant to the plaintiff and it is the decree which entitles the judgment creditor to recover the judgment debtor through the processes of law. An objection which can, however, be taken to selecting this date is that the decree of the trial court is not the final decree for there may be appeals or other proceedings against it in superior courts and by the time the matter is finally determined, the rate of exchange prevailing on that date may be nowhere near that which prevailed at the date of the decree of the trial court. To select the date Page 12 of 40 HC-NIC Page 12 of 40 Created On Sat Dec 10 00:37:29 IST 2016 C/FA/2631/2004 CAV JUDGMENT of the decree of the trial court as the conversion date would, therefore, be to adopt as unrealistic a standard as the "breach date". This difficulty is, however, easily overcome by selecting the date when the action is finally disposed of in the sense that the decree becomes final and binding between the parties after all remedies against it are exhausted."
(iii) Mohanbhai Gemabhai Vs. Balubhai Savjibhai and others reported in 1993 (1) GLR 249, wherein the Division Bench of this Court has again while dealing with the issue of "just compensation and interest"
observed as under.
"29. There is no dispute about the fact that the run-away inflation and the sky- rocketing prices are the unpleasant phenomena prevalent in our present economy, and this Court, while determining the amount of compensation, cannot be oblivious to this aspect, as the law mandates to grant compensation which is just and reasonable, in the facts and circumstances of the case."
(iv) Tukaram Kana Joshi and others through Power of Attorney Holder Vs. M.I.D.C. and others reported in AIR 2013 SC 565, wherein while considering the holding of property as a constitutional human rights, the Supreme Court has observed as under.
"6.......... It is pertinent to note that even after the Right to Property seized to be a Fundamental Right, taking possession of or acquiring the property of a citizen most certainly tantamounts to deprivation and such deprivation can take place only in accordance with the "law", as the said word has specifically been used in Article 300-A of the Constitution. Such deprivation can be only by resorting to a procedure prescribed by a statute. The same cannot be done by way of executive fiat or order or administration caprice.
7. The right to property is now considered to be, not only a constitutional or a statutory right, but also a human right. Though, it is not a basic feature of the Constitution or a Page 13 of 40 HC-NIC Page 13 of 40 Created On Sat Dec 10 00:37:29 IST 2016 C/FA/2631/2004 CAV JUDGMENT fundamental right, human rights are considered to be in realm of individual rights, such as the right to health, the right to livelihood, the right to shelter and employment etc. Now however, human rights are gaining an even greater multi faceted dimension. The right to property is considered, very much to be a part of such new dimension.
8. In the case at hand, there has been no acquisition. The question that emerges for consideration is whether, in a democratic body polity, which is supposedly governed by the Rule of Law, the State should be allowed to deprive a citizen of his property, without adhering to the law. The matter would have been different had the State pleaded that it has right, title and interest over the said land. It however, concedes to the right, title and interest of the appellants over such land and pleads the doctrine of delay and laches as grounds for the dismissal of the petition/appeal.
12. ..... When substantial justice and technical considerations are pitted against each other, the cause of substantial justice deserves to be preferred, for the other side cannot claim to have a vested right in the injustice being done, because of a non-deliberate delay. The court should not harm innocent parties if their rights have infact emerged, by delay on the part of the petitioners"
16. It would be appropriate to refer the following decision also, wherein Hon'ble the Supreme Court of India has repeatedly considered all such issues and in principles, it is held that while awarding compensation, the Court can consider the aspect of inflation, consumer price index so also devaluation of money.
(i) In R.K. Malik Vs. Kiranpal reported in AIR 2009 SCC 2506, which is again relied in the case of Santosh Devi v. National Insurance Company Ltd. and Ors. reported in 2012 SC 2185 and many other cases, the Page 14 of 40 HC-NIC Page 14 of 40 Created On Sat Dec 10 00:37:29 IST 2016 C/FA/2631/2004 CAV JUDGMENT Hon'ble Supreme Court of India observed as follows :
"10. Undoubtedly, the compensation in law is paid to restore the person, who has suffered damage or loss in the same position, as if the tortious act or the breach of contract had not been committed. The law requires that the party suffering should be put in the same position, if the contract had been performed or the wrong had not been committed. The law in all such matters requires payment of adequate, reasonable and just monetary compensation.
11. In cases of motor accidents the endeavour is to put the dependants/ claimants in the pre- accidental position. Compensation in cases of motor accidents, as in other matters, is paid for reparation of damages. The damages so awarded should be adequate sum of money that would put the party, who has suffered, in the same position if he had not suffered on account of the wrong."
(ii) In the case of Puttamma v. K. L. Narayana Reddy reported in AIR 2014 SUPREME COURT 706, Hon'ble the Supreme Court has observed as under:
47. The appellants have produced the copy of the report of the 6th Pay Commission to consider the trends in prices including natural inflation.
The same is quoted below:
| |"1.3.6 The General Wholesale price index (WPI) (52 weeks| | |average) increased 1.6 times between 1995-96 to 2005-06 | | |while the price index for manufactures increased by 1.4 | |Trends in|times and that of agriculture 1.6 times. Between 1996-97| |Prices |and 2000-01, the general inflation averaged 5.1 percent.| | |Acceleration in inflation post 2006 was caused by | | |acceleration in inflation in primary commodities and | | |continued high escalation in price of the commodities in| | |fuel group due to hardening of global prices. | | |1.3.7 The Consumer Price Index (CPI) with Base 1982, | | |increased from a level of 342 in 1996-97 to 579 in | | |2006-07. | Page 15 of 40 HC-NIC Page 15 of 40 Created On Sat Dec 10 00:37:29 IST 2016 C/FA/2631/2004 CAV JUDGMENT
48. Mr. P.P. Malhotra, learned Amicus Curiae produced a table relating to "Minimum Support Price for food grains according to crop year (Fair Average Quality)". Second Schedule of Act, 1988 came into effect from 14th November, 1994. If the Minimum Support Price for food grains of the year 1994-1995 is compared with the Minimum Support Price for the year 2011-2012 the resulting figures come as follows:-
|Table 25:Minimum Support Price for Foodgrains According to Crop Year ||(Fair Average Quality) | | | | | | |(Rs. per quintal)| | |Year |Paddy |Coarse |Wheat |Gram |Arhar(Tu|Moong |Urad| | |common |cereals | | |r) | | | |1 |2 |3 |4 |5 |6 |7 |8 | |1994-95 |340 |280 |360 |670 |760 |760 |760 | |1995-96 |360 |300 |380 |700 |800 |800 |800 | |2010-11 |1000 |880 |1120 |2100 |3000 |3170 |2900| |2011-12 |1080 |980 |- |- |3200 |3500 |3300| Percentage increase in price of food grains since 1991-92 has been shown as under:-
|PERCENTAGE INCREASE IN PRICE OF FOODGRAINS SINCE 1991-92 | |Year |Padd|Perc|Coar|Perce|Whea|Perce|Gra|Perc|Arh|Perc|Moon|Perc|Ura|Perc| | |y |enta|se |ntage|t |ntage|m |enta|ar |enta|g |enta|d |enta| | |Comm|ge |cere| | | | |ge |(Tu|ge | |ge | |ge | | |on |Incr|als |Incre| |Incre| |Incr|r) |Incr| |Incr| |Incr| | | |ease| |ase | |ase | |ease| |ease| |ease| |ease| | | |sinc| |since| |since| |sinc| |sinc| |sinc| |sinc| | | |e | |1991-| |1991-| |e | |e | |e | |e | | | |1991| |92 | |92 | |1991| |1991| |1991| |1991| | | |-92 | | | | | |-92 | |-92 | |-92 | |-92 | | | | | | | | | | | | | | | | | |1991-9|230 |- |205 |- |280 |- |500|- |545|- |545 |0 |545|0 | |2 | | | | | | | | | | | | | | | |1992-9|270 |17 |240 |17 |330 |18 |600|20 |640|17 |640 |17 |640|17 | |3 | | | | | | | | | | | | | | | |1993-9|310 |35 |260 |27 |350 |25 |640|28 |700|28 |700 |28 |700|28 | |4 | | | | | | | | | | | | | | | |1994-9|340 |48 |280 |37 |360 |29 |670|34 |760|39 |760 |39 |760|39 | |5 | | | | | | | | | | | | | | | |2010-1|1000|335 |880 |329 |1120|300 |210|320 |300|450 |3170|482 |290|432 | Page 16 of 40 HC-NIC Page 16 of 40 Created On Sat Dec 10 00:37:29 IST 2016 C/FA/2631/2004 CAV JUDGMENT |1 | | | | | | |0 | |0 | | | |0 | | |2011-1|1080|370 |980 |378 |- |- |- |- |320|487 |3500|542 |330|506 | |2 | | | | | | | | |0 | | | |0 | | (Figures in Rupees per quintal) Minimum Support Price for non-foodgrains according to crop year (FairAverage Quality) has been brought to our notice which is as follows:
Table 26 : Minimum Support Price for Non-Foodgrains According to Crop Year (Fair Average Quality) | | | | | | | | | |(per | | | | | | | | | | |quinta| | | | | | | | | | |l) | |Year |Sugarca|Cotto|Jute |Groundn|Soyabe|Soyabea|Sunflow|Rapesee|Safflo| | |ne |n | |ut |en |n |er |d |wer | | | | | |(in |black |yellow |seed |Mustard| | | | | | |shell) | | | | | | |1 |2 |3 |4 |5 |6 |7 |8 |9 |10 | |1991-|26.00 |840.0|375.0|645.00 |395.00|445.00 |670.00 |670.00 |640.00| |92 | |0 |0 | | | | | | | |1992-|31.00 |950.0|400.0|750.00 |475.00|525.00 |800.00 |760.00 |720.00| |93 | |0 |0 | | | | | | | |1993-|34.50 |1050.|450.0|800.00 |525.00|580.00 |850.00 |810.00 |760.00| |94 | |00 |0 | | | | | | | |1994-|39.10 |1200.|470.0|860.00 |570.00|650.00 |900.00 |830.00 |780.00| |95 | |00 |0 | | | | | | | |1995-|42.50 |1350.|490.0|900.00 |600.00|680.00 |950.00 |860.00 |800.00| |96 | |00 |0 | | | | | | | |2010-|139.12 |3000.|1575.|2300.00|1400.0|1440.00|2350.00|1850.00|1800.0| |11 | |00 |00 | |0 | | | |0 | |2011-|139.12 |3300.|1600.|2700.00|1650.0|1690.00|2800.00|- |- | |12 | |00 |00 | |0 | | | | | Percentage increase in price of non-foodgrains in the year 1991-92, 1992-93, 1994-95 and 2011-12 has been shown as under:- |PERCENTAGE INCREASE IN PRICE OF NON-FOODGRAINS SINCE 1991-92 | | | |Year |Suga|Perc|Cot|Perc|Jut|Perc|Gro|Perce|Soya|Perce|Soy|Perc|Sun|Perc| | |rcan|enta|ton|enta|e |enta|und|ntage|bean|ntage|a-b|enta|-fl|enta| | |e |ge | |ge | |ge |- | | | |ean|ge |owe|ge | | | |Incr| |Incr| |Incr|nut|Incre|Blac|Incre|Yel|Incr|r |Incr| | | |ease| |ease| |ease|(in|ase |k |ase |low|ease|See|ease| | | |sinc| |sinc| |sinc|she|since| |since| |sinc|d |sinc| | | |e | |e | |e |ll)|1991-| |1991-| |e | |e | | | |1991| |1991| |1991| |92 | |92 | |1991| |1991| | | |-92 | |-92 | |-92 | | | | | |-92 | |-92 | | | | | | | | | | | | | | | | | |1991 |26 |0 |840|0 |375|0 |645|0 |395 |0 |445|0 |670|0 | |-92 | | | | | | | | | | | | | | | |1992-|31 |19 |950|13 |400|7 |750|16 |475 |20 |525|18 |800|19.4| |93 | | | | | | | | | | | | | |0 | |1993-|34.5|33 |105|25 |450|20 |800|24 |525 |33 |580|30 |850|26.8| |94 |0 | |0 | | | | | | | | | | |7 | |1994-|39.1|50 |120|43 |470|25 |860|33 |570 |44 |650|46 |900|34.3| |95 |0 | |0 | | | | | | | | | | |3 | |2011-|139.|435 |330|293 |160|327 |270|319 |1650|318 |169|280 |280|317.| |12 |12 | |0 | |0 | |0 | | | |0 | |0 |91 | We are not comparing the average price of gold and silver in domestic and foreign markets as increased since 1994-95 till 2011-12.Page 17 of 40
HC-NIC Page 17 of 40 Created On Sat Dec 10 00:37:29 IST 2016 C/FA/2631/2004 CAV JUDGMENT Grant of Interest
57. Section 171 of the Act, 1988 deals with the award of interest where any claim is allowed, it reads as follows:
"171. Award of interest where any claim is allowed.-here any Claims Tribunal allows a claim for compensation made under this Act, such Tribunal may direct that in addition to the amount of compensation simple interest shall also be paid at such rate and from such date not earlier than the date of making the claim as it may specify in this behalf."
Under the said provision no rate of interest has been fixed and its duty is bestowed upon the Tribunal to fix the rate of interest.
62. In view of the aforesaid provisions of the Act, 1988 (Section 171)and the observation of this Court, as noticed above, we keep this question open for Tribunals and Courts to decide the rate of interest after taking into consideration the rate of interest allowed by this Court in similar case and other factors such as inflation, change in economy, policy adopted by the Reserve Bank of India from time to time and the period since when the case is pending.
(iii) Hon'ble the Supreme Court of India has, in CIVIL APPEAL No. 8065 OF 2009 between V. Krishnakumar vs. State Of Tamil Nadu &Ors; decided on 1 July, 2015 and reported in AIR 2015 SC 2856 as under:
"The impact of inflation affects us all. The value of today's rupee should be determined in the future. For instance, a sum of Rs. 100 today, in fifteen years, given a modest 3% inflation rate, would be worth only Rs.64.13. In Wells v. Wells [1999] 1 A.C. 345 the House of Lords observed that the purpose of awarding a lump sum for damages for the costs of future care and loss of future earnings was to put the plaintiff in the same financial position as if the injury had not occurred, and consequently the courts had the difficult task of ensuring that the award maintained its value in real terms, despite the effect of inflation.
Apportioning For Inflation
23. Inflation over time certainly erodes the value of money. The rate of inflation (Wholesale Price Index-Annual Variation) in Page 18 of 40 HC-NIC Page 18 of 40 Created On Sat Dec 10 00:37:29 IST 2016 C/FA/2631/2004 CAV JUDGMENT India presently is 2 percent [Handbook of Statistics, Reserve Bank of India] as per the Reserve Bank of India. The average inflationary rate between 1990-91 and 2014-15 is 6.76 percent as per data from the RBI. In the present case we are of the view that this inflationary principle must be adopted at a conservative rate of 1 percent per annum to keep in mind fluctuations over the next 51 years.
The formula to compute the required future amount is calculated using the standard future value formula:-
FV = PV x (1+r)n PV = Present Value r = rate of return n = time period Accordingly, the amount arrived at with an annual inflation rate of 1 percent over 51 years is Rs.1,37,78,722.90 rounded to Rs.1,38,00,000/-.
Comparative law.
24. This Court has referred to case law from a number of other major common law jurisdictions on the question of accounting for inflation in the computation of awards in medical negligence cases. It is unnecessary to discuss it in detail. It is sufficient to note that the principle of apportioning for inflationary fluctuations in the final lump sum award for damages has been upheld and applied in numerous cases pertaining to medical negligence. x x x x x x x x x x x x The leading case in the United States, which acknowledges the impact of inflation while calculating damages for medical negligence was Jones & Laughlin Steel Corporation v. Pfeifer [(1983) 462 US 523], wherein that court recognized the propriety of taking into account the factors of present value and inflation in damage awards.Page 19 of 40
HC-NIC Page 19 of 40 Created On Sat Dec 10 00:37:29 IST 2016 C/FA/2631/2004 CAV JUDGMENT Similarly, in O'Shea v Riverway Towing Co. [(1982) 677 F.2d 1194, at 1199 (7th Cir)], Posner J., acknowledged the problem of personal injury victims being severely undercompensated as a result of persistently high inflation.
In Taylor v. O' Connor[(1971) A.C. 115], Lord Reid also accepted the importance of apportioning for inflation. In the same case Lord Morris of Borth-y-Gest also upheld the principle of taking into account future uncertainties. He observed:
" x x x x x x x x x x x x A
learned judge cannot be expected to
prophesy as to future monetary trends or rates of interest but he need not be unmindful of matters which are common knowledge, such as the uncertainties as to future rates of interest and future levels of taxation. Taking a reasonable and realistic and common- sense view of all aspects of the matter he must try to fix a figure which is neither unfair to the recipient nor to the one who has to pay. x x x x x x x x x x x x More recently the Judicial Committee of the UK Privy Council in Simon v. Helmot [[2012] UKPC 5] has unequivocally acknowledged the principle, that the lump sum awarded in medical negligence cases should be adjusted so as to reflect the predicted rate of inflation.
(iv) Following observations of Hon'ble the Supreme Court in the case of Central Bank of India vs. Ravindra & Ors. [2002 (1) SCC 367] are with reference to the issue on late or delayed payment, which is recorded in the case of T.N. Generation & Distbn. Corpn. Ltd. VS.PPN power Gen. Co. Pvt. Ltd. Reported in (2014) 11 SCC 53 as under:
"In this judgment [2002 (1) SCC 367] it has been held as follows:Page 20 of 40
HC-NIC Page 20 of 40 Created On Sat Dec 10 00:37:29 IST 2016 C/FA/2631/2004 CAV JUDGMENT ".........The essence of interest in the opinion of Lord Wright, in Riches v. Westminster Bank Ltd. All ER at p. 472 is that it is a payment which becomes due because the creditor has not had his money at the due date. It may be regarded either as representing the profit he might have made if he had had the use of the money, or, conversely, the loss he suffered because he had not that use. The general idea is that he is entitled to compensation for the deprivation; the money due to the creditor was not paid, or, in other words, was withheld from him by the debtor after the time when payment should have been made, in breach of his legal rights, and interest was a compensation whether the compensation was liquidated under an agreement or statute. A Division Bench of the High Court of Punjab speaking through Tek Chand, J. in CIT v. Dr Sham Lal Narula [AIR 1963 P H 411] thus articulated the concept of interest the words 'interest' and 'compensation' are sometimes used interchangeably and on other occasions they have distinct connotation. 'Interest' in general terms is the return or compensation for the use or retention by one person of a sum of money belonging to or owed to another. In its narrow sense, 'interest' is understood to mean the amount, which one has contracted to pay for use of borrowed money. ... In whatever category 'interest' in a particular case may be put, it is a consideration paid either for the use of money or for forbearance in demanding it, after it has fallen due, and thus, it is a charge for the use or forbearance of money. In this sense, it is a compensation allowed by law or fixed by parties, or permitted by custom or usage, for use of money, belonging to another, or for the delay in paying money after it has become payable."
56. Similar observations have been made by this Court in Indian Council of Enviro-Legal Page 21 of 40 HC-NIC Page 21 of 40 Created On Sat Dec 10 00:37:29 IST 2016 C/FA/2631/2004 CAV JUDGMENT Action vs. Union of India & Ors. [2011 (8) SCC 161] wherein it has been held as follows:
"178. To do complete justice, prevent wrongs, remove incentive for wrongdoing or delay, and to implement in practical terms the concepts of time value of money, restitution and unjust enrichment noted above--or to simply levelise--a convenient approach is calculating interest. But here interest has to be calculated on compound basis--and not simple--for the latter leaves much uncalled for benefits in the hands of the wrongdoer.
179. Further, a related concept of inflation is also to be kept in mind and the concept of compound interest takes into account, by reason of prevailing rates, both these factors i.e. use of the money and the inflationary trends, as the market forces and predictions work out.
180. Some of our statute law provide only for simple interest and not compound interest. In those situations, the courts are helpless and it is a matter of law reform, which the Law Commission must take note and more so, because the serious affect it has on the administration of justice. However, [pic] the power of the Court to order compound interest by way of restitution is not fettered in any way. We request the Law Commission to consider and recommend necessary amendments in relevant laws."
57. The late payment clause only captures the Page 22 of 40 HC-NIC Page 22 of 40 Created On Sat Dec 10 00:37:29 IST 2016 C/FA/2631/2004 CAV JUDGMENT principle that a person denied the benefit of money, that ought to have been paid on due dates should get compensated on the same basis as his bank would charge him for funds lent together with a deterrent of 0.5% in order to prevent delays."
(v) Hon'ble the Supreme Court has; in K. Krishna Reddy and Ors. v. The Special Dy. Collector, Land Acquisition Unit II, LMD Karimnagar, Andhra Pradesh, AIR 1988 SC 2123; held as under:
"?.After all money is what money buys. What the claimants could have bought with the compensation in 1977 cannot do in 1988. Perhaps, not even one half of it. It is a common experience that the purchasing power of rupee is dwindling. With rising inflation, the delayed payment may lose all charm and utility of the compensation. In some cases, the delay may be detrimental to the interests of claimants. The Indian agriculturists generally have no avocation. They totally depend upon land. If uprooted, they will find themselves nowhere. They are left high and dry. They have no savings to draw. They have nothing to fall back upon. They know no other work. They may even face starvation unless rehabilitated. In all such cases, it is of utmost importance that the award should be made without delay. The enhanced compensation must be determined without loss of time?."
(vi) In Reshma Kumari v. Madan Mohan (2009) 13 SCC 422: (2009 AIR SCW 6999), this Court reiterated that the compensation awarded under the Act should be just and also identified the factors, which should be kept in mind while determining the amount of compensation. The relevant portions of the judgment is extracted below:
"One of the incidental issues which has also to be taken into consideration is inflation. Is the practice of taking inflation into consideration wholly incorrect? Unfortunately, unlike other developed countries in India there has been no Page 23 of 40 HC-NIC Page 23 of 40 Created On Sat Dec 10 00:37:29 IST 2016 C/FA/2631/2004 CAV JUDGMENT scientific study. It is expected that with the rising inflation the rate of interest would go up. In India it does not happen. It, therefore, may be a relevant factor, which may be taken into consideration for determining the actual ground reality. No hard-and- fast rule, however, can be laid down therefor."
11. In Arvind Kumar Mishra v. New India Assurance Company Limited (2010) 10 SCC 254 : (2010 AIR SCW 6085), the Court considered the plea for enhancement of compensation made by the appellant. After noticing factual matrix of the case, the Court observed:
" xxx xxx The whole idea is to put the claimant in the same position as he was insofar as money can. Perfect compensation is hardly possible but one has to keep in mind that the victim has done no wrong; he has suffered at the hands of the wrongdoer and the court must take care to give him full and fair compensation for that he had suffered."
(vii) In the case of Rajesh v. Rajbir Singh, reported (2013) 9 SCC 54, Hon'ble the Supreme Court of India has observed as under:
5. The expression "just compensation" has been explained in Sarla Verma v. DTC, (2009) 6 SCC 121, holding that the compensation awarded by a Tribunal does not become just compensation merely because the Tribunal considered it to be just. ìJust compensationî is adequate compensation which is fair and equitable, on the facts and circumstances of the case, to make good the loss suffered as a result of the wrong, as far as money can do so, by applying the well-settled principles relating to award of compensation. After surveying almost all the previous decisions, the Court almost standardised the norms for the assessment of damages in motor accident claims.
6. At para 24, it has been held as follows: (Sarla Verma case, SCC p. 134) "In Kerala SRTC v. Susamma Thomas, (1994) 2 SCC 176 :
this Court increased the income by nearly 100%, in Sarla Dixit v. Balwant Yadav, (1996) 3 SCC 179 the income was increased only by 50% and in Abati Page 24 of 40 HC-NIC Page 24 of 40 Created On Sat Dec 10 00:37:29 IST 2016 C/FA/2631/2004 CAV JUDGMENT Bezbaruah v. Geological Survey of India, (2003) 3 SCC 148 the income was increased by a mere 7%. In view of the imponderables and uncertainties, we are in favour of adopting as a rule of thumb, an addition of 50% of actual salary to the actual salary income of the deceased towards future prospects, where the deceased had a permanent job and was below 40 years. (Where the annual income is in the taxable range, the words ëactual salaryí should be read as ëactual salary less taxí.) The addition should be only 30% if the age of the deceased was 40 to 50 years. There should be no addition, where the age of deceased is more than 50 years. Though the evidence may indicate a different percentage of increase, it is necessary to standardise the addition to avoid different yardsticks being applied or different methods of calculation being adopted. Where the deceased was self-employed or was on a fixed salary (without provision for annual increments, etc.), the courts will usually take only the actual income at the time of death. A departure therefrom should be made only in rare and exceptional cases involving special circumstances."
(viii) In a recent decision, in Santosh Devi v. National Insurance Co. Ltd. (2012) 6 SCC 421 it has been observed in para 11 as follows "11. We have considered the respective arguments. Although the legal jurisprudence developed in the country in last five decades is somewhat precedent-centric, the judgments which have bearing on socio-economic conditions of citizens and issues relating to compensation payable to the victims of motor accidents, those who are deprived of their land and similar matters needs to be frequently revisited keeping in view the fast- changing societal values, the effect of globalisation on the economy of the nation and their impact on the life of the people."
Subsequently, it has been held at paras 14 to 18, as follows: (Santosh Devi case7, SCC pp. 428-29) Page 25 of 40 HC-NIC Page 25 of 40 Created On Sat Dec 10 00:37:29 IST 2016 C/FA/2631/2004 CAV JUDGMENT
15. The rise in the cost of living affects everyone across the board. It does not make any distinction between rich and poor. As a matter of fact, the effect of rise in prices which directly impacts the cost of living is minimal on the rich and maximum on those who are self-employed or who get fixed income/emoluments. They are the worst affected people. Therefore, they put in extra efforts to generate additional income necessary for sustaining their families.
17. There are three fundamental principles to major damages.
(i) Restitutio in integrum.
(ii) Remoteness of damage.
(iii) Mitigation of damage.
(i) Restitutio in integrum.-
...............Therefore where an injury is to be
compensated by damages, in settling the sum of money to be given in reparation of the damage, you should as nearly as possible get at the sum of money which will put the party who has been injured or who has suffered, in the same position as he would have been any, if he had not sustained the wrong for which he is now getting his compensation or reparation.
18. Consumer Price Index (CPI) - measures changes in the price level of a market basket of consumer goods and services purchased by households. The CPI is a statistical estimate constructed using the prices of a sample of representative items whose Page 26 of 40 HC-NIC Page 26 of 40 Created On Sat Dec 10 00:37:29 IST 2016 C/FA/2631/2004 CAV JUDGMENT prices are collected periodically. Sub-indexes and sub-sub-indexes are computed for different categories and sub-categories of goods and services, being combined to produce the overall index with weights reflecting their shares in the total of the consumer expenditures covered by the index. The annual percentage change in a CPI is used as a measure of inflation. A CPI can be used to index (i.e., adjust for the effect of inflation) the real value of wages, salaries, pensions, for regulating prices and for deflating monetary magnitudes to show changes in real values.
19. The index is usually computed monthly, or quarterly in some countries, as a weighted average of sub-indices for different components of consumer expenditure, such as food, housing, shoes, clothing, each of which is in turn a weighted average of sub- sub-indices. It takes time to assemble and process the information used for weighting which, in addition to household expenditure surveys, may include trade and tax data.
Ideally, the weights would relate to the composition of expenditure during the time between the price-reference month and the current month. There is a large technical economics literature on index formulae which would approximate this and which can be shown to approximate what economic theorists call a true cost of living index. Such an index would show how consumer expenditure would have to move to compensate for price changes so as to allow consumers Page 27 of 40 HC-NIC Page 27 of 40 Created On Sat Dec 10 00:37:29 IST 2016 C/FA/2631/2004 CAV JUDGMENT to maintain a constant standard of living. Approximations can only be computed retrospectively, whereas the index has to appear monthly and, preferably, quite soon.
20. The index reference period, usually called the base year, often differs both from the weight- reference period and the price reference period. This is just a matter of rescaling the whole time-series to make the value for the index reference-period equal to 100. Annually revised weights are a desirable but expensive feature of an index, for the older the weights the greater is the divergence between the current expenditure pattern and that of the weight reference-period.
Calculating the CPI for a single item Current item price ($) = (base year price) * [(Current CPI) / (Base year CPI)] or Where 1 is usually the comparison year and CPI1 is usually an index of 100.
Alternatively, the CPI can be performed as . The "updated cost" (i.e. the price of an item at a given year, e.g.: the price of bread in 2010) is divided by that of the initial year (the price of bread in 1970), then multiplied by one hundred.[1] Calculating the CPI for multiple items Many but not all price indices are weighted averages using weights that sum to 1 or 100.
Example: The prices of 85,000 items from 22,000 stores, and 35,000 rental units are added together and averaged. They are weighted this way: Housing:
Page 28 of 40HC-NIC Page 28 of 40 Created On Sat Dec 10 00:37:29 IST 2016 C/FA/2631/2004 CAV JUDGMENT 41.4%, Food and Beverage: 17.4%, Transport: 17.0%, Medical Care: 6.9%, Other: 6.9%, Apparel: 6.0%, Entertainment: 4.4%. Taxes (43%) are not included in CPI computation.[2] where the s do not necessarily sum to 1 or 100.
21. Definition of 'Consumer Price Index' Definition: A comprehensive measure used for estimation of price changes in a basket of goods and services representative of consumption expenditure in an economy is called consumer price index.
Description: The calculation involved in the estimation of CPI is quite rigorous. Various categories and sub-categories have been made for classifying consumption items and on the basis of consumer categories like urban or rural. Based on these indices and sub indices obtained, the final overall index of price is calculated mostly by national statistical agencies. It is one of the most important statistics for an economy and is generally based on the weighted average of the prices of commodities. It gives an idea of the cost of living.
22. Inflation is measured using CPI. The percentage change in this index over a period of time gives the amount of inflation over that specific period, i.e. the increase in prices of a representative basket of goods consumed.
23. In India, the Consumer Price Index or CPI measures changes in the prices paid by consumers for Page 29 of 40 HC-NIC Page 29 of 40 Created On Sat Dec 10 00:37:29 IST 2016 C/FA/2631/2004 CAV JUDGMENT a basket of goods and services.
24. CPI numbers are widely used as a macroeconomic indicator of inflation, as a tool by governments and central banks for inflation targeting and for monitoring price stability, and as deflators in the national accounts. CPI is also used for indexing dearness allowance to employees for increase in prices. CPI is therefore considered as one of the most important economic indicators. For construction of CPI numbers, two requisite components are weighting diagrams (consumption patterns) and price data collected at regular intervals. The data refers to group wise all India Consumer Price Index for Rural & Urban with base year 2010. The dataset is published by Central Statistical Office and released on the 12th of every month. One can refer such data/information from https://data.gov.in/catalog/all- india-consumer-price-index-ruralurban Whereas All India General Index declared as under by Labour Buraeau, Government of India can be referred from http://labourbureau.nic.in/indexes.htm All India General Index Index Number Base Year March February 2016 2016 Consumer Price Index Numbers for 2001=100 267 268 Industrial Workers - CPI(IW) February 2016 March 2016 Consumer Price Index Numbers 1986-87= 843 843 forAgricultural 100 Labourers Consumer Price 1986-87= 849 848 Index Numbers for 100 Rural Labourers Page 30 of 40 HC-NIC Page 30 of 40 Created On Sat Dec 10 00:37:29 IST 2016 C/FA/2631/2004 CAV JUDGMENT Consumer Price Index CPI in India increased to 127.20 Index Points in April from 126 Index Points in March of 2016. Consumer Price Index CPI in India averaged 109.15 Index Points from 2011 until 2016, reaching an all time high of 127.20 Index Points in April of 2016 and a record low of 86.81 Index Points in February of 2011. Consumer Price Index CPI in India is reported by the Ministry of Statistics and Programme Implementation (MOSPI), India.
All such date/information can be referred from http://www.tradingeconomics.com/india/consumer
-price-index-cpi http://164.100.34.62:8080/AllIndia_Item_Combin edInflation_2012.aspx Page 31 of 40 HC-NIC Page 31 of 40 Created On Sat Dec 10 00:37:29 IST 2016 Following tables of All India Consumer Price Index (General Workers (Base 1982=100) is available on http://cyberjournalist.org.in/manisana/aicpinew.html Year Jan. Feb. March April May June July Aug. Sept. O 1997 350 350 351 354 352 355 358 359 361 3 1998 384 382 380 383 389 399 411 413 420 4 1999 420 415 414 415 419 420 424 426 429 4 2000 431 430 434 438 440 442 445 443 444 4 2001 445 443 445 448 451 457 463 466 465 4 2002 467 466 468 469 472 476 481 484 485 4 2003 483 484 487 493 494 497 501 499 499 5 2004 504 504 504 504 508 512 517 522 523 5 2005 526 525 525 529 527 529 538 540 542 5 2006 551 551 551 557 560 570 574 574 579 5 2007 588 593 588 593 597 602 611 616 616 6 2008 620 625 634 639 644 648 662 671 676 6 2009 685 685 685 695 699 708 741 750 755 7 2010 796 787 787 787 796 806 824 824 829 8 2011 870 857 857 861 866 875 894 898 912 9 2012 917 921 931 949 954 963 982 991 995 1 2013 1023 1033 1037 1046 1056 1070 1088 1097 1102 1 2014 1097 1102 1107 1120 1130 1139 1167 1171 1171 1 2015 1176 1171 1176 1185 1195 1208 1218 1222 1232 1 HC-NIC Page 32 of 40 Created On Sat Dec 10 00:37:29 IST 2016 Wheras ALL INDIA CONSUMER PRICE INDEX (Base 1960) (Quarte under is available on http://cyberjournalist.org.in/manisana/a Oct. - Dec. Jan. - April 1813 2191 1997 March. 2001 June 200 July Jan. - March April -
1883 2228 Sept.
1998 June 2001
2004
April-June July - Oct.
1924 2291
1998 Sept. 2001 Dec.20
Jan
July - Sept. Oct. - Dec.
2044 2316 March
1998 2001
2005
April
Oct. - Dec. Jan. -
2136 2302 June
1998 March 2002
2005
July
Jan.- March April -
2053 2329 Sept.
1999 June 2002
2005
Apr. - June July - Oct.
2061 2383
1999 Sept. 2002 Dec.20
July - Sept. Oct. - Dec.
2102 2399
1999 2002
HC-NIC Page 33 of 40 Created On Sat Dec 10 00:37:29 IST 2016
Oct.. - Dec. Jan. -
2146 2389
1999 March 2003
Jan.- March April -
2128 2439
2000 June 2003
April - June July -
2169 2463
2000 Sept. 2003
July - Sept. Oct. - Dec.
2189 2480
2000 2003
Oct. - Dec. Jan - March
2210 2485
2000 2004
Jan. - April - July -
Year
March June Sept.
2006 2716 2770 2838
2007 2907 2945 3028
2008 3089 3173 3302
2009 3378 3454 3690
2010 3896 3926 4071
2011 4246 4276 4443
2012 4550 4710 4877
2013 5083 5212 5402
2014 5433 5570 5767
2015 5790 5897 6034
2016 6117
HC-NIC Page 34 of 40 Created On Sat Dec 10 00:37:29 IST 2016
Chart showing progressive fall in value of Rupee by the appellant r HC-NIC Page 35 of 40 Created On Sat Dec 10 00:37:29 IST 2016 C/FA/2631/2004 CAV JUDGMENT Inflation Calculator India Calculate India's inflation between any two years from 1971 to 2016 Worth of Rs.16,000 in 1990 Is same as Rs.43,329.20 in 2004 Result: Rs.47,391.32 Number of Years: 14 Average Yearly Inflation Rate : 7.42 % Culmulative rate of inflation : 170.81 % Year Amount Inflation Rate 1990 Rs.17,500.00 N.A. 1991 Rs.19,891.28 13.66 % 1992 Rs.21,956.53 10.38 % 1993 Rs.23,478.25 6.93 % 1994 Rs.25,760.90 9.72 % 1995 Rs.28,152.19 9.28 % 1996 Rs.30,760.88 9.27 % 1997 Rs.32,826.13 6.71 % 1998 Rs.36,630.50 11.59 % 1999 Rs.38,260.92 4.45 % 2000 Rs.40,326.09 5.40 % 2001 Rs.42,391.34 5.12 % 2002 Rs.44,021.76 3.85 % 2003 Rs.45,652.19 3.70 % 2004 Rs.47,391.32 3.81 % Worth of Rs.25,500 in 2004 Is same as Rs.61,003.67 in 2016 Close Result: Rs. 61,003.07 Number of Years: 12 Average Yearly Inflation Rate : 7.57 % Culmulative rate of inflation : 139.23 % Year Amount Inflation Rate 2004 Rs. 25,500.00 N.A. 2005 Rs. 26,669.74 4.59 % 2006 Rs. 28,424.32 6.58 % 2007 Rs. 30,120.44 5.97 % 2008 Rs. 32,810.80 8.93 % 2009 Rs. 37,080.30 13.01 % 2010 Rs. 39,871.29 7.53 % 2011 Rs. 43,648.69 9.47 % 2012 Rs. 47,904.15 9.75 % 2013 Rs. 52,721.40 10.06 % 2014 Rs. 55,214.16 4.73 % 2015 Rs. 58,212.08 5.43 % 2016 Rs. 61,003.07 4.79 % Page 36 of 40 HC-NIC Page 36 of 40 Created On Sat Dec 10 00:37:29 IST 2016 C/FA/2631/2004 CAV JUDGMENT
25. Therefore, now, it is quite clear that while considering the quantum of compensation and damages to be awarded to the victims, Courts can certainly consider different aspect viz.consumer price index, inflation, devaluation of purchase price of rupees and based upon that if we consider the real value of the money, it would be always lesser than the nominal value of the money and therefore, practically, because of inordinate delay in awarding compensation when we are calculating the compensation that may be payable to the victim, practically, we consider only nominal value instead of real value of money. Therefore, the award should be equal to real value of money on the date of award as if the nominal value is paid atleast on the date of claim petition.
26. The only negative argument may be to the effect that interest is awarded in such cases for delayed payment and therefore, there is no need to consider all such economical issues and difference between nominal value as well as real value.
27. However, the fact remains that payment of interest is altogether a different issue, which is regulated even by statute and it is mainly for the reason, the amount which is otherwise payable to the claimant is being utilised by the tort feasors for all these period. At the most, there may not be a double rise in the quantum of compensation both on economic issues,so also on rate of interest as pleaded by the petitioner. It cannot be ignored that if we scrutinize Page 37 of 40 HC-NIC Page 37 of 40 Created On Sat Dec 10 00:37:29 IST 2016 C/FA/2631/2004 CAV JUDGMENT the yearly accounts of insurance companies, then, it would reveal that insurance companies are investing huge amount for short term deposit at the interest rate of 24% or so and therefore, they cannot say that they are not supposed to pay interest. However, so far as rate of interest is concerned, at this stage, I do not wish to modify the rate of interest from 9% as selected by the Tribunal when amount of compensation is being enhanced as discussed herein above.
28. Therefore, petitioner is certainly entitled to some more amount of compensation than as awarded by the Tribunal because the Tribunal has awarded compensation in the year 2004 for the damage suffered in the year 1990 i.e. after fifteen years. Therefore, though petitioner has submitted computation of real value (RV) and it is reproduced herein above, I am of the view to simply apply inflation calculator for India provided online on website -
http://calculatorstack.com/inflation-calculator-a.php which interactively calculates the India's inflation between any two years from 1971 to 2016 and explain the method of calculation which is reproduced herein above.
29. Therefore, relying upon such calculation so also calculation submitted by the appellant wherein though he has claimed Rs.83,942/-, the overall consideration makes it clear that as per the inflation calculator readily available on-line, if an amount of Rs.16,000/- is payable in the year 1990, then, in the year 2004 one should be paid Rs. 43,329.29 ps. i.e. rounded off Page 38 of 40 HC-NIC Page 38 of 40 Created On Sat Dec 10 00:37:29 IST 2016 C/FA/2631/2004 CAV JUDGMENT to Rs. 43,000/-. Therefore, when Rs.17,500/- is awarded in the year 2004, there is difference of Rs.25,500/-; whereas if Rs.25,500/- is to paid in the year 2004, then, in the year 2016, it would amount to Rs. 61003.07 i.e. rounded off to Rs.61,000/-.
30. So far interest on such awarded amount is concerned, now, it becomes clear that when we are awarding compensation considering the inflation for the total period of 12 years, the interest cannot be awarded on such inflated value of the rupee since the interest is otherwise available only for the delayed payment from the date of actual entitlement of particular amount till the date of actual payment. In the present case, as aforesaid, appellant was entitled to Rs.43,000/- in the year 2004, but he was paid only Rs.17,500/- with interest and thereby, total Rs.39,550/- at the relevant time. Thereby, if appellant has not been paid total Rs.43,000/- towards compensation in the year 2004, out of that only principal amount of compensation i.e. Rs.17,500/- is deducted whereby, appellant was entitled to additional amount of Rs.25,500/- in the year 2004, but since it was not paid in the year 2004, though against such principal amount, its inflated value being Rs.61,000/- is paid as discussed herein above, appellant is not entitled to interest on such inflated value, but he is entitled to interest only on the basic compensation, which has remained unpaid in the year 2004 i.e. Rs.25,500/-. Therefore, appellant is entitled to 9% interest only on Rs.25,500/- and not on Rs.61,000/-.
Page 39 of 40HC-NIC Page 39 of 40 Created On Sat Dec 10 00:37:29 IST 2016 C/FA/2631/2004 CAV JUDGMENT
31. In view of above facts and circumstances, the First Appeal is partly allowed. Thereby, the insurance company shall pay additional amount of Rs.61,000/- with 9% interest from 30.6.2004 only on Rs.25,500/- till its realisation.
(S.G.SHAH, J.) binoy Page 40 of 40 HC-NIC Page 40 of 40 Created On Sat Dec 10 00:37:29 IST 2016