Madras High Court
New India Assurance Company Limited vs Vairakannu on 12 December, 2007
Author: G.Rajasuria
Bench: G.Rajasuria
BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT DATED : 12/12/2007 CORAM: THE HONOURABLE MR.JUSTICE G.RAJASURIA C.M.A.(MD)No.1290 of 2007 and M.P.(MD)No.1 of 2007 New India Assurance Company Limited represented by its Branch Manager, 43-A/2, Zuman Centre, Promenade Road, Cantonment, Tiruchy. ... Appellant Vs 1.Vairakannu 2.Soundarrajan 3.Muruganandham 4.Saravanan 5.Ramachandran 6.S.Kalieswari 7.C.Kumar ... Respondents Prayer Appeal filed under Section 173 of Motor Vehicles Act, 1988, against the Judgement and Decree dated 19.07.2007 passed in M.C.O.P.No.146 of 2004 by the learned Motor Accidents Claims Tribunal-cum-the Subordinate Judge, Pudukkottai. !For Appellant ... Mr.R.Srinivasan ^For RR1 to R5 ... Mr.K.P.Narayanakumar For RR6 and R7 ... No appearance :JUDGMENT
This appeal is focussed as against the Judgement and Decree dated 19.07.2007 passed in M.C.O.P.No.146 of 2004 by the learned Motor Accidents Claims Tribunal-cum-the Subordinate Judge, Pudukkottai.
2. Heard the learned counsel appearing for the appellant as well as the learned counsel appearing for the respondent Nos.1 to 5 and there is no representation on behalf of the respondent Nos.6 and 7, despite service of notice.
3. The Tribunal vide Judgement dated 19.07.2007 awarded compensation to a tune of Rs.4,62,000/- (Rupees four lakhs and sixty two thousand only) on the following sub-heads:
For loss of income -Rs.4,00,000/-
For loss of consortium -Rs. 10,000/-
For loss of love and affection -Rs. 50,000/-
For funeral expenses -Rs. 2,000/-
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Total -Rs.4,62,000/-
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4. The gist and kernel of the grievance of the appellant/Insurance Company as stood exposited from the memorandum of appeal would run thus:
The Tribunal fell into error in taking the monthly dependency at the sum of Rs.8000/- (Rupees eight thousand only) and calculating the compensation without even deducting one third (1/3) out of it towards the expenditure which the deceased would have incurred for maintaining himself.
5. The point for consideration is as to whether the Tribunal awarded 'just compensation'?
6. On point:
The learned counsel for the appellant/Insurance Company would submit that the Tribunal should have deducted one third (1/3) out of Rs.8000/- (Rupees eight thousand only) towards the expenditure which the deceased would have incurred for maintaining himself had he been alive; since the deceased, a Revenue Inspector by avocation died at the age of 54 years, he had only 4 years of service and accordingly multiplier 4 should have been taken for assessment. According to him, the annual dependency should have been multiplied by 4 and along with that non-pecuniary damages could be added and that after retirement there is nothing to show that he might have worked and earned significantly.
7. In support of his proposition, he cited the decision of the Hon'ble Apex Court in Rajendra Kumar and others v. Rambhai and others reported in AIR 2003 Supreme Court 2095. An excerpt from the said decision would run thus:
"The accident occurred due to a collision between the bus owned by the Andhra Pradesh State Road Transport Corporation, respondent No.3 herein, and the lorry owned by respondent No.1 and insured with respondent No.2. In the said accident, Smt. Susheela Bai, who was a passenger in the bus, sustained multiple injuries and expired on the same day. Her children, who are the appellants herein, filed an application claiming Rs.3,50,000/- as compensation for death of their mother. The Tribunal on appreciation of the materials on record awarded a sum of Rs.65,300/- in favour of the appellants. Feeling aggrieved by the award of the Tribunal, the appellants herein filed an appeal in the High Court. The learned single Judge who decided the appeal enhanced the compensation and determined the compensation at Rs.96,000/- with 12% interest from the date of filing of the claim petition. Still not satisfied with the amount awarded the appellants preferred Letters Patent Appeal No.176 of 1999, which was decided by the Division Bench vide the judgment dated 9-8-1999. The Division Bench further enhanced the compensation amount to Rs.2,55,000/- with 12% interest. Thereafter the Oriental Insurance Company Limited respondent No.2, herein, sought review of the judgment on the ground that it was not granted proper opportunity of hearing in the LPA. The Division bench by the order dated 3-4-2001 allowed the review petition and reduced the compensation amount from Rs.2,55,000/- to Rs.1,83,000/- . The said order is under challenge in the present appeal. Coming to the merits of the case, suffice it to say that on perusal of the order, which has been reviewed by the order under challenge did not suffer from any serious illegality, which called for correction by exercise of review jurisdiction. it is relevant to note here that the deceased was holding the post of Supervisor in Women and Child Welfare Department, Government of Karnataka at the time of her death and she was aged about 48 years at that time. The salary drawn by the deceased, as evident from the salary certificate produced as additional evidence, was Rs.2,570/- p.m. The multiplier, which had been accepted by the Division Bench in the previous order, was 10. In the circumstances of the case, multiplier of 10 was rightly taken. Thus on merit also no interference with the order was called for".
8. Perused the aforesaid decision of the Hon'ble Apex Court. In the said decision, the Hon'ble Apex Court applied the multiplier 10 relating to the death of a Government servant at the age of 48 and in this case, the deceased was 54 years at the relevant time of the accident and applying the multiplier 4, by any standard would very less. I would like to recollect and quote here the recent decisions of the Hon'ble Apex Court in U.P. State Road Transport Corporation and Others v. Trilok Chandra and others reported in (1996)4 Supreme Court Cases 362, the Managing Director, TNSTC Ltd., v. K.I.Bindu & Others reported in 2005(2) TN MAC(SC) 350 and in Hafizun Begum v. Md.Ikram Heque and others reported in 2007(4)CTC 335. An excerpt from the decision in U.P. State Road Transport Corporation and Others v. Trilok Chandra and others reported in (1996)4 Supreme Court Cases 362 would run thus:
"For concluding the analysis it is necessary now to refer to the judgment of this Court in the case of G.M., Kerala SRTC v. Susamma Thomas. In that case this Court culled out the basic principles governing the assessment of compensation emerging from the legal authorities cited above and reiterated that the multiplier method is the sound method of assessing compensation. The Court observed:(SCC p.183, para 13) "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".
The principle was explained and illustrated by a mathematical example:
(SCC pp.185-86, para 17) "The multiplier represents the number of years' purchase on which the loss of dependency is capitalised. Take for instance a case where annual loss of dependency is Rs.10,000. If a sum of Rs.1,00,000 is invested at 10% annual interest, the interest will take care of the dependency, perpetually. The multiplier in this case works out to 10. If the rate of interest is 5% per annum and not 10% then the multiplier needed to capitalise the loss of the annual dependency at Rs.10,000 would be 20. Then the multiplier, i.e., the number of years' purchase of 20 will yield the annual dependency perpetually. Then allowance to scale down the multiplier would have to be made taking into account the uncertainties of the future, the allowances for immediate lump sum payment, the period over which the dependency is to last being shorter and the capital feed also to be spend away over the period of dependency is to last etc. Usually in English Courts the operative multiplier rarely exceeds 16 as maximum. This will come down accordingly as the age of the deceased person (or that of the dependants, whichever is higher) goes up".
It was rightly clarified that there should be no departure from the multiplier method on the ground that Section 110-B, Motor Vehicles Act, 1939 (corresponding to the present provision of Section 168, Motor Vehicles Act, 1988) envisaged payment of 'just' compensation since the multiplier method is the accepted method for determining and ensuring payment of just compensation and is expected to bring uniformity and certainty of the awards made all over the country".
9. An excerpt from the decision in the Managing Director, TNSTC Ltd., v. K.I.Bindu & Others reported in 2005(2) TN MAC(SC) 350 would run thus:
"There were two methods adopted to determine and for calculation of compensation in fatal accident actions, the first the multiplier mentioned in Davies case (supra) and the second in Nance v. British Columbia Electric Railway Co. Ltd., 1951(2)All ER 448.
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. The considerations generally relevant in the selection of multiplicand and multiplier were adverted to by Lord Diplock in his speech in Mallett v. Mc Mongle, 1969 (2) All ER 178, where the deceased was aged 25 and left behind his widow of about the same age and three minor children. On the question of selection of multiplicand Lord Diplock observed:
"The starting point in any estimate of the amount of the 'dependency' is the annual value of the material benefits provided for the dependents out of the earnings of the deceased at the date of his death. But ... there are many factors which might have led to variations up or down in the future. His earnings might have increased and with them the amount provided by him for his dependents. They might have diminished with a recession in trade or he might have had spells of unemployment. As his children grew up and became independent that proportion of his earnings spend on his dependants would have been likely to fall. But in considering the effect to be given in the award of damages to possible variations in the dependency there are two factors to be borne in mind. The first is that the more remote in the future is the anticipated change the less confidence there can be in the chances of its occurring and the smaller the allowance to be made for it in the assessment. The second is that as a matter of the arithmetic of the calculation of present value, the later the change takes place the less will be its effect upon the total award of damages. Thus at interest rates of 4-1/2% the present value of an annuity for 20 years of which the first ten years are at $100 per annum and the second ten years at $200 per annum, is about 12 years' purchase of the arithmetical average annuity of $150 per annum, whereas if the first ten years are at $200 per annum and the second ten years at $100 per annum the present value is about 14 years' purchase of the arithmetical mean of $150 per annum. If therefore the chances of variations in the 'dependency' are to be reflected in the multiplicand of which the years' purchase is the multiplier, variations in the dependency which are not expected to take place until after ten years should have only a relatively small effect in increasing or diminishing the 'dependency' used for the purpose of assessing the damages".
In regard to the choice of the multiplicand the Halsbury's Law of England in Vol.34, Para 98 states the principle thus:
"98. Assessment of damages under the Fatal Accident Act, 1976 - The Courts have evolved a method for calculating the amount of pecuniary benefit that dependants could reasonably expect to have received from the deceased in the future. First the annual value to the dependants of those benefits (the multiplicand) is assessed. In the ordinary case of the death of a wage-earner that figure is arrived at by deducting from the wages the estimated amount of his own personal and living expenses.
The assessment is split into two parts. The first part comprises damages for the period between death and trial. The multiplicand is multiplied by the number of years which have elapsed between those two dates. Interest at one- half the short-term investment rate is also awarded on that multiplicand. The second part is damages for the period from the trial onwards. For that period, the number of years which have based on the number of years that the expectancy would probably have lasted; central to that calculation is the probable length of the deceased's working life at the date of death".
As to the multiplier, Halsbury states:
"However, the multiplier is a figure considerably less than the number of years taken as the duration of the expectancy. Since the dependants can invest their damages, the lump sum award in respect of future loss must be discounted to reflect their receipt of interest on invested funds, the intention being that the dependants will each year draw interest and sum capital (the interest element decreasing and the capital drawings increasing with the passage of years), so that they are compensated each year for their annual loss, and the fund will be exhausted at the age which the Court assesses to be the correct age, having regard to all the contingencies. The contingencies of life such as illness, disability and unemployment have to be taken into account. Actuarial evidence is admissible, but the Courts do not encourage such evidence. The calculation depends on selecting an assumed rate of interest. In practice about 4 or 5 per cent is selected, and inflation is disregarded. It is assumed that the return on fixed interest bearing securities is so much higher than 4 to 5 per cent that rough and ready allowance for inflation is thereby made. The multiplier may be increased where the plaintiff is a high tax payer. The multiplicand is based on the rate of wages at the date of trial. No interest is allowed on the total figure".
In both General Manager, Kerala State Road Transport Corporation, Trivandrum v. Susamma Thomas (Mrs.) and others, 1994(2)SCC 176, and U.P. State Road Transport Corporation And others v. Trilok Chandra and others, 1996(4)SCC 362, the multiplier appears to have been adopted by this Court taking note of the prevalent banking rate of interest.
In fact in Trilok Chandra's case (supra), after reference to Second Schedule to the Act, it was noticed that the same suffers from many defects. It was pointed out that the same is to serve as a guide, but cannot be said to be invariable ready reckoner. However, the appropriate highest multiplier was held to be 18. The highest multiplier has to be for the age group of 21 years to 25 years when an ordinary Indian Citizen starts independently earning and the lowest would be in respect of a person in the age group of 60 to 70, which is the normal retirement age.
Taking into account the relevant factors and the age of the deceased it would be appropriate to apply the multiplier of 13".
10. An excerpt from the decision in Hafizun Begum v. Md.Ikram Heque and others reported in 2007(4)CTC 335 would run thus:
"There are several factors which have to be noted. The liability under Section 140 of the Act does not cease because there is absence of dependency. The right to file a Claim Application has to be considered in the background of right to entitlement. While assessing the quantum, the multiplier system is applied because of deprivation of dependency. In other words, multiplier is a measure. There are three stages while assessing the question of entitlement. Firstly, the liability of the person who is liable and the person who is to indemnify the liability, if any. Next is the quantification and Section 166 is primarily in the nature of recovery proceedings. As noted above, liability in terms of Section 140 of the Act does not cease because of absence of dependency".
(emphasis supplied) Accordingly if viewed, it is clear that the multiplier system is the proper system to assess the compensation in motor accidents claims cases.
11. Ex.P7 is the Salary Certificate of the deceased which would reveal the following:
e.f.1076/2006/m6. tl;lhl;rpah; mYtyfk;, ehs;: 07.02.2006. Fsj;Jhh;
Cjpar; rhd;W Fsj;Jhh; jhYfh fps;Sf;Bfhl;il ruf tUtha; Ma;tuhfg; gzpg[hpe;J 17.08.2004 md;W fhykhd jpU.v!;. buA;fd; vd;gth; khjhe;jpu Cjpak; gpd;tUkhW:
mog;gil Cjpak; : 4,600-
jdp Cjpak; : 190- mftpiyg;go : 2,826- tPl;L thlifg; go : 220- kUj;Jtg; go : 50- epiyahd gazg; go : 200- _------- bkhj;jk; : 8,086 ------- (Ugha; vl;lhapuj;J vz;gj;jp MW kl;Lk;) jiyg;g[ 2053 A District Administration 094 Other establishment - I - Non Plan - AB Taluk establishment Pay of establishment/TA. tl;lhl;rpah;, Fsj;Jhh;.
12. I am of the considered opinion that from the gross salary, certain items namely a sum of Rs.190/- towards special pay, a sum of Rs.220/- towards House Rent Allowance, a sum of Rs.50/- towards Medical Allowance and a sum of Rs.200/- towards Travelling Allowance should be deducted and accordingly the remaining should be taken as the notional income of the deceased and it comes to Rs.7426/- (Rupees seven thousand four hundred and twenty six only). Out of that one third (1/3) of the amount has to be deducted towards the expenditure which the deceased would have incurred for maintaining himself had he been alive irrespective of the fact whether he lead the life of a Bohemian or that of a Spartan. As such, the monthly dependency comes to Rs.4951/- (Rupees four thousand nine hundred and fifty one only). It should be rounded to Rs.5000/-
(Rupees five thousand only). Then the annual dependency comes to Rs.60,000/- (Rupees sixty thousand only) (5000 X 12 = 60,000).
13. Taking a cue from the Second Schedule appended to the Motor Vehicle Act if the matter is viewed, it may appear as though the appropriate multiplier would be 11. It is a trite proposition of law that the multiplier as contemplated under the second schedule need not be taken as a final one in all cases and it could also be varied. Here the wife and his four children are the claimants and that should not be lost sight of. Even if we take the multiplier 8, the compensation under the head 'loss of income' comes to Rs.4,80,000/- (Rupees four lakhs and eighty thousand only) (60,000 X 8 = 4,80,000/-) . The fact also remains that in this part of the country, a Government servant after retirement is not becoming inactive or totally refraining from doing any work and earning. Even after retirement normally retired servants are working and earning significantly. Over and above that non-pecuniary damages if added it will be exceeded Rs.5,00,000/- (Rupees five lakhs) but the Tribunal awarded only Rs.4,62,000/- (Rupees four lakhs and sixty two thousand only). Here, there is no cross objection and only the appellant/Insurance Company filed this appeal. Hence, I am of the opinion that no interference is required even though the methodology adopted by the Tribunal is not correct and the ultimate compensation awarded by the Tribunal need not be interfered with.
14. I, therefore do not find any merit in this Appeal and accordingly it is dismissed. The award of the Tribunal is confirmed. No costs. Consequently, the connected M.P. is also dismissed.
smn To The Motor Accidents Claims Tribunal cum the Subordinate Judge, Pudukkottai.