Allahabad High Court
Tata A.I.G. General Insurance Co. Ltd. vs Amar Kaur And 3 Others on 4 November, 2022
Author: Ajay Bhanot
Bench: Ajay Bhanot
HIGH COURT OF JUDICATURE AT ALLAHABAD Court No. - 7 Case :- FIRST APPEAL FROM ORDER No. - 2385 of 2017 Appellant :- Tata A.I.G. General Insurance Co. Ltd. Respondent :- Amar Kaur And 3 Others Counsel for Appellant :- Sushil Kumar Mehrotra Counsel for Respondent :- Ram Singh,Sudhir Dixit With Case :- FIRST APPEAL FROM ORDER No. - 3211 of 2017 Appellant :- Smt. Amar Kaur And Another Respondent :- Tata A.I.G. Gen. Ins. Company Ltd. And 2 Others Counsel for Appellant :- Amit Kumar Singh,Ram Singh Counsel for Respondent :- Sushil Kumar Mehrotra Hon'ble Ajay Bhanot,J.
1. Heard Shri Ram Singh, learned counsel for the appellant-claimants and Shri Sushil Kumar Mehrotra, learned counsel for the appellant-Insurance Company. I. INTRODUCTION
2. These two appeals arise out of an award made by the learned Motor Accident Claims Tribunal/Additional District Judge, Aligarh1 in Motor Accident Claim Petition No. 709 of 2014 (Amar Kaur and another Vs. Tata A.I.G. General Insurance Co. Ltd. and others) dated 11.04.2017 by partly allowing the claim of the claimants. 2.1. The appeals have been filed by the Insurance Company and the claimants respectively and are being decided by a common judgement. II. Case of the claimants and respondents before the learned tribunal:
3. Briefly the case of the claimants before the learned tribunal was that the deceased died of injuries sustained in an accident which occurred on 26.08.2014, and was caused by the rash and negligent driving of the driver of Bolero Jeep bearing Registration No. UP 81 X 0168. The offending vehicle was insured by TATA AIG General Insurance Company Ltd. The deceased was pillion rider on a motorcycle bearing Registration No. DL75BK-4482 driven by his son Pawan Kumar when the accident occurred. The claimants are the dependants of the deceased Kalicharan. The deceased was 58 years of age at the time of his death. III. Compensation awarded by the learned tribunal
4. The learned tribunal in the impugned judgement dated 11.04.2017 awarded compensation which is depicted in the tabulated form hereunder:
Sr.No. Heads Amount Awarded by the tribunal
1.
Monthly Income (A) 40,000/-
2. Annual Income (B) (Ax12=B) 4,80,000/-
3. Future Prospects (C) 20% of 4,80,000= 96,000/-
4. Annual Income + Future Prospects (B+C=D) 4,80,000+96,000/-
=5,76,000/-
5. Deduction towards personal expenses (E) (1/3 of D) 1/3 of 5,76,000/- =1,92,000/-
6. Annual Loss of dependancy (F) (D-E =F) 5,76,000-1,92,000/-
= 3,84,000/-
7. Multiplier (G) 9
8. Total loss of dependancy (F x G) 3,84,000 x 9 = 3,456,000/-
9. Conventional Heads
(a) Loss of consortium
(b) loss of Estate
(c) Funeral Expenses 40,000/-
10. Total compensation 3,456,000 + 40,000/-
= 3,496,000/-
11. Interest 7% 4.1. The appeal filed by the claimants seeks enhancement of compensation, and the Insurance Company in appeal has assailed the quantum of compensation as being excessive. IV. Submissions of learned counsels for the parties:
5. Shri Sushil Kumar Mehrotra, learned counsel for the appellant-Insurance Company submits that the income of the deceased was incorrectly calculated. Secondly the future prospects of 20% were not liable to be calculated in view of the judgement of National Insurance Company Ltd. vs. Pranay Sethi and others2. Thirdly adoption of split multiplier was advocated on behalf of the Insurance Company.
6. Sri Ram Singh, learned counsel for the claimants-respondents submits that the compensation was not rightly calculated. The claimants were entitled to a higher amount. V. Issues for Consideration:
7. After advancing their arguments, learned counsels for the respective parties agree that only the following question falls for consideration in these appeals:
Whether the learned tribunal while determining the compensation lawfully computed the amounts under these heads: salary, future prospects, application of multiplier, conventional heads and interest?
VI a. Issue of Salary of the deceased:
8. The deceased was working as a supervisor in the Agriculture Department in Rajasthan. The salary fixation certificate issued by the employer of the deceased records that the monthly salary of the deceased was 49,480/- and duly proved by the claimants.
9. Learned tribunal arbitrarily deducted an amount of Rs. 10,000/- per month. I am afraid that the aforesaid deduction is perverse and has no justification. Income tax @ 10% is liable to be deducted from the salary of the deceased. Deducting the income tax at the rate of 10%, the annual income of the deceased comes to Rs. 5,93,760/-. This amount is fixed under the head of salary and shall be the basis for computing the compensation. VI b. Future prospects:
10. The future prospects are liable to be calculated in accordance with the Uttar Pradesh Motor Vehicles Rules, 19983. Rule 220A-3(iii) of the Rules is relevant and is reproduced hereunder:
"(3) The future prospects of a deceased, shall be added in the actual salary or minimum wages of the deceased as under:
"(iii) More than 50 years of age 20% of the salary"
11. The UP Rules, 1998 came up for consideration before the Supreme Court in New India Assurance Co. Ltd. vs. Urmila Shukla and others4. In Urmila Shukla (supra) upon consideration of various judgements including National Insurance Company Ltd. Vs. Pranay Sethi and others5 held:
"10. The discussion on the point in Pranay Sethi was from the standpoint of arriving at "just compensation" in terms of Section 168 of the Motor Vehicles Act, 1988.
11. If an indicia is made available in the form of a statutory instrument which affords a favourable treatment, the decision in Pranay Sethi cannot be taken to have limited the operation of such statutory provision specially when the validity of the Rules was not put under any challenge. The prescription of 15% in cases where the deceased was in the age bracket of 50-60 years as stated in Pranay Sethi cannot be taken as maxima. In the absence of any governing principle available in the statutory regime, it was only in the form of an indication. If a statutory instrument has devised a formula which affords better or greater benefit, such statutory instrument must be allowed to operate unless the statutory instrument is otherwise found to be invalid." (emphasis supplied)
12. The Rules of the Uttar Pradesh Motor Vehicles Rules, 1998 were not under consideration before the Supreme Court in Pranay Sethi (supra) or Sarla Verma (Smt) and others Vs. Delhi Transport Company and another6. Future prospects in Pranay Sethi (supra) were determined without noticing the U.P. Rules,1998. This fact was adverted to in Urmila Shukla (supra):
"8. It is submitted by Mr. Rao that the judgment in Pranay Sethi does not show that the attention of the Court was invited to the specific rules such as Rule 3(iii) which contemplates addition of 20% of the salary as against 15% which was stated as a measure in Pranay Sethi. In his submission, since the statutory instrument has been put in place which affords more advantageous treatment, the decision in Pranay Sethi ought not to be considered to limit the application of such statutory Rule."
13. The U.P. Rules,1998 are statutory in nature and their operation is not stymied by Pranay Sethi (supra). The U. P. Rules, 1998 have the force of law and shall apply with full force in appropriate cases. The U.P. Rules, 1998 are more beneficial for the claimants than the provisions made in Pranay Sethi (supra) for them. The holdings in Pranay Sethi (supra) can not dilute the advantages conferred by U.P. Rules, 1998 upon the eligible beneficiaries.
14. In this wake, this Court finds that the claimants/respondents are entitled to 20% enhancement in wages under the head of future prospects as contemplated in the UP Rules, 1998. The necessary changes in the award shall be accordingly made. VI c. Application of Split Multiplier:
15. The second issue raised by Shri Sushil Kumar Mehrotra, learned counsel for the appellant is that since the deceased was on the verge of retirement, the multiplier of 9 was wrongly applied. He advocated use of a split multiplier by placing reliance on the judgement rendered by the Madras High Court in Divisional Manager, Royal Sundaram Alliance Insurance Co. Ltd. Chennai Vs. Sarladevi and Others7. The Madras High Court evolving the concept of split multipliers held as under:
"10. On a perusal of records, we find that deceased was 58 years old at the time of his death and he was left with only two years of service. When that being so, the Tribunal, while calculating the amount under the head 'loss of income', ought to have split up the multiplier into two parts and ought to have made the calculation i.e from the date of accident till the date of retirement based on the actual salary and for the remaining years, by fixing 50% of the salary as notional loss of income. Instead of doing so, the Tribunal adopted the multiplier of 8 and made the calculation based on the actual salary, which had resulted in awarding an exorbitant sum of Rs.36,58,248/- as total loss of dependancy. Further we find that Tribunal while making calculation under the head of loss of dependancy, has deducted 1/4th amount towards personal expenses of the deceased. Hence, we hold that the method of multiplier adopted by the Tribunal for arriving at the compensation under 'loss of dependancy' is not correct and the same has to be modified by way of reassessment.
11. As per the judgment of Hon'ble Apex Court reported in Sarla Verma and others vs. Delhi Transport Corporation and another (2009 (2) TN MAC 1), the correct multiplier between the age of 56 to 60 is 9. Therefore, multiplier of 9 could be taken into consideration for arriving at compensation to the case on hand since the deceased was 58 years at the time of his death. If the actual salary of Rs.50,809/- is taken into consideration, the annual loss of income works out to Rs.6,09,708/-. 10% of the amount is liable to be deducted towards income tax deduction. 10% in the sum of Rs.6,09,708/- comes to Rs.60,970.80 and the same can be rounded off to Rs.61,000/-. If so, the balance amount works out to Rs.5,48,708- (Rs.6,09,708/- minus Rs.61,000/-), rounded off to Rs.5,49,000/-. Hence, annual loss of income could be fixed at Rs.5,49,000/-. For the first two years, the loss of income would be Rs.10,98,000/- (Rs.5,49,000/- x 2 years). For the balance seven years, only 50% annual income has to be taken into consideration as notional income, which comes to Rs.19,21,500/- (Rs.2,74,500/- x 7 years). Therefore, the total loss of income works out to Rs.30,19,500/- (Rs.10,98,000/- + Rs19,21,500/-)."
16. However, application of split multiplier method was discarded in no certain terms in K.R. Madhusudhan v. Administrative Officer8, by holding thus:
"14. In the appeal which was filed by the appellants before the High Court, the High Court instead of maintaining the amount of compensation granted by the Tribunal, reduced the same. In doing so, the High Court had not given any reason. The High Court introduced the concept of split multiplier and departed from the multiplier used by the Tribunal without disclosing any reason therefor. The High Court has also not considered the clear and corroborative evidence about the prospect of future increment of the deceased. When the age of the deceased is between 51 and 55 years the multiplier is 11, which is specified in the 2nd column in the Second Schedule to the Motor Vehicles Act, and the Tribunal has not committed any error by accepting the said multiplier. This Court also fails to appreciate why the High Court chose to apply the multiplier of 6.
15. We are, thus, of the opinion that the judgment of the High Court deserves to be set aside for it is perverse and clearly contrary to the evidence on record, for having not considered the future prospects of the deceased and also for adopting a split multiplier method." (emphasis supplied)
17. A similar view was taken by the Supreme Court in Puttamma v. K.L. Narayana Reddy9, by following K. R. Madhusudhan (supra), referencing provisions of the Motor Vehicles Act and the judgement rendered by Supreme Court in Sarla Verma (supra). In K. L. Narayana Reddy (supra) it was noticed that the Motor Vehicles Act, 1988 does not envisage application of the a split multiplier and held thus:
"32. For determination of compensation in motor accident claims under Section 166 this Court always followed multiplier method. As there were inconsistencies in the selection of a multiplier, this Court in Sarla Verma [Sarla Verma v. DTC, (2009) 6 SCC 121 : (2009) 2 SCC (Civ) 770 : (2009) 2 SCC (Cri) 1002] prepared a table for the selection of a multiplier based on the age group of the deceased/victim. The 1988 Act, does not envisage application of a split multiplier.
34. We, therefore, hold that in absence of any specific reason and evidence on record the tribunal or the court should not apply split multiplier in routine course and should apply multiplier as per decision of this Court in Sarla Verma [Sarla Verma v. DTC, (2009) 6 SCC 121 : (2009) 2 SCC (Civ) 770 : (2009) 2 SCC (Cri) 1002] as affirmed in Reshma Kumari [Reshma Kumari v. Madan Mohan, (2013) 9 SCC 65 : (2013) 4 SCC (Civ) 191 : (2013) 3 SCC (Cri) 826] ."
18. The argument for applying a split multiplier is misconceived and is accordingly rejected. There was no error in the application of a multiplier of 9 by the learned tribunal in the facts of this case, as the deceased was 58 years of age. VI d. Calculation of Conventional Heads:
19. The amount determined under conventional heads in the impugned award is at variance with Pranay Sethi (supra). The conventional heads were fixed in Pranay Sethi (supra) by holding as under:
"54. ......The conventional and traditional heads, needless to say, cannot be determined on percentage basis because that would not be an acceptable criterion. Unlike determination of income, the said heads have to be quantified. Any quantification must have a reasonable foundation. There can be no dispute over the fact that price index, fall in bank interest, escalation of rates in many a field have to be noticed. The court cannot remain oblivious to the same. There has been a thumb rule in this aspect. Otherwise, there will be extreme difficulty in determination of the same and unless the thumb rule is applied, there will be immense variation lacking any kind of consistency as a consequence of which, the orders passed by the tribunals and courts are likely to be unguided. Therefore, we think it seemly to fix reasonable sums. It seems to us that reasonable figures on conventional heads, namely, loss of estate, loss of consortium and funeral expenses should be Rs. 15,000/-, Rs. 40,000/- funeral expenses should be Rs. 15,000/-, Rs. 40,000/- And Rs. 15,000/- respectively."
20. The figure under conventional heads determined in Pranay Sethi (supra) shall be applicable to the facts of this case. The award is modified accordingly. VI e. Interest
21. Interest of 7% and the manner of payment decided by the learned tribunal is just and lawful and does not call for interference. VII. Determination of Compensation to which claimants are entitled:
22. In wake of the preceding discussion, the amount of compensation to which the claimants are entitled and are hereby awarded, is tabulated hereunder:
i. Date of Accident - 26.08.2014
ii. Name of Deceased - Shri Kalicharan
iii. Age of the deceased - 58 years
iv. Occupation of the Deceased - Supervisor in Agriculture Department in Rajasthan
v. Income of the deceased - 49,480/- per month
vi. Name, Age and Relationship of Claimants with the deceased:
Sr. No.
Name
Age
Relation
1.
Amar Kaur
56
Wife
2.
Lokesh Kumar
25
Son
vii. Computation of Compensation
Sr. No.
Heads
Amount (in Rupees)
1.
Monthly Income (A)
Rs. 49,480/-
2.
Annual Income (B)
(A x 12 = B)
Rs. 5,93,760/-
3.
Income Tax @ 10%
59,376/-
Yearly Income of Deceased less tax
5,93,760-59,376
= 5,34,384/-
3.
Future Prospects (C)
20% of 5,34,384/-
= 1,06,876.80
4.
Annual Income + Future Prospects
(B+C=D)
5,34,384 + 1,06,876.80
= 641,260.80
5.
Deduction towards personal expenses (E) (1/3 of D)
1/3 of 641,260.80
= 213753.60-
6.
Annual Loss of dependancy (F)
(D-E = F)
641,260.80-213753.60
= 4,27,507.20/-
7.
Multiplier (G)
9
8.
Total loss of dependancy
(F x G)
4,27,507.20/- x 9
= 38,47,563/-
9.
Conventional Heads:
(a) Loss of consortium
(b) Loss of Estate
(c) Funeral Expenses
70,000/-
10.
Total compensation
39,17,563/-
11.
Interest
7%
VIII. Conclusion & Directions:
23. In view of the above, the appeal filed by the Insurance Company viz. First Appeal From Order No. - 2385 of 2017 is dismissed.
24. The appeal filed by the claimant viz. First Appeal From Order No.- 3211 of 2017 is partly allowed.
25. The amount of compensation to which the claimants have been awarded shall be deposited by the Insurance Company within a period of three months before the learned tribunal. Thereafter the learned tribunal shall release the amount to the claimants without delay. The amount already disbursed to the claimants (if any) shall be adjusted.
26. The amount deposited by the Insurance Company before this Court shall be transmitted to the learned trial court which shall release the same in favour of the claimants as part of the compensation determined in this appeal. Order Date :- 04.11.2022 Dhananjai Sharma