Rajasthan High Court - Jaipur
United India Insurance Co. Ltd. vs Sodari Devi And Ors. on 12 November, 2002
Equivalent citations: 2004ACJ1799, 2003(1)WLC727, 2003(2)WLN467
JUDGMENT S.K. Garg, J.
1. This misc. appeal has been filed by the appellant United India Insurance Co. Ltd. (for short 'insurance company') against the judgment and award dated 27.8.1996 passed by the learned Judge, Motor Accidents Claims Tribunal, Bhilwara, by which he passed an award of Rs. 1,73,200 in favour of the claimanrespondent Nos. 1 and 2, who are LRs. of deceased Kela Ram, along with interest at the rate of 12 per cent per annum.
In this appeal, the claimant-respondent Nos. 1 and 2 have also filed the cross-objections on 2.4.1997 and the same would be considered at appropriate place.
2. It arises in the following circumstances:
On 27.7.1993 at about 6 p.m., Kela Ram (hereinafter referred to as 'the deceased') aged about 43 years sat along with his goods in mini truck No. RJ 06-G 459 and was going towards village, Ghati-Ka-Bada and that truck was being driven by one Heera Lal (respondent No. 3 in this appeal) and the owner of that truck was Vijay Kumar (respondent No. 4 in this appeal) and when the truck in question reached near the village Amarwasi, it capsized, as a result of which, the deceased Kela Ram received grievous as well as simple injuries and he succumbed to his injuries on 28.7.1993 in Mahatma Gandhi Hospital, Bhilwara.
Thereafter, claimant-respondent Nos. 1 and 2, who are legal representatives of deceased Kela Ram, filed a claim petition before Motor Accidents Claims Tribunal, Bhilwara (hereinafter referred to as 'the Claims Tribunal') on 18.9.1993 and claimed a sum of Rs. 25,77,000 as compensation on account of death of deceased.
A reply to the claim petition was filed by the appellant insurance company as well as the respondent No. 4 Vijay Kumar, owner of the truck in question and it was pleaded by them that since the deceased was gratuitous passenger, therefore, appellant insurance company as well as owner were not liable to pay compensation to the claimant-respondent Nos. 1 and 2. Hence, the claim petition filed by the claimant-respondent Nos. 1 and 2 be dismissed.
Thereafter, the Claims Tribunal framed the following five issues on 6.12.1994:
(Omitted as in vernacular) Thereafter, both parties led evidence in support of their respective cases.
After hearing both the parties and after considering the entire evidence and material available on record, the learned Claims Tribunal through the judgment and award dated 27.8.1996 decided the issue Nos. 1 and 3 in favour of the claimant-respondent Nos. 1 and 2 holding inter alia:
(i) That at the time of alleged accident, the truck in question was being driven by the driver Heera Lal (respondent No. 3) rashly and negligently.
(ii) That deceased was sitting in the truck in question along with his goods.
(iii) That deceased paid Rs. 10 to the driver of the truck in question (Heera Lal, respondent No. 3) as a rent for table and chair and fare for himself.
(iv) That deceased was not travelling in the truck in question as gratuitous passenger and, therefore, the appellant insurance company as well as the owner of truck in question (Vijay Kumar, respondent No. 4) were responsible to pay compensation to claimant-respondent Nos. 1 and 2.
The issue No. 4 was decided by learned Claims Tribunal in the following manner:
(i) That at the time of the alleged accident, age of the deceased was about 43 years.
(ii) That at the time of the accident, the deceased was in the employment of military services and he was getting Rs. 3,546 per month as salary and out of that amount, he was spending Rs. 1,746 on himself and Rs. 1,800 were being spent on his family members and after multiplying the amount of Rs. 1,800 by 12 months, the annual dependency was assessed at Rs. 21,600 and a multiplier of 7 years was applied by the learned Claims Tribunal and thus, after applying multiplier of 7 years, the learned Claims Tribunal came to the conclusion that the claimant-respondent Nos. 1 and 2 were entitled to Rs. 1,51,200 as compensation.
Apart from that amount, learned Claims Tribunal has further awarded Rs. 2,000 as medical expenses, Rs. 5,000 on account of mental agony, Rs. 5,000 as cremation expenses and Rs. 10,000 to the wife of the deceased on account of loss of consortium and loss to estate. Thus, Rs. 1,73,200 in all were awarded as compensation to the claimant-respondent Nos. 1 and 2.
Aggrieved from the said judgment and award dated 27.8.1996 passed by learned Claims Tribunal, this appeal has been filed by the appellant insurance company.
3. In this appeal, the following submissions have been made by the learned counsel appearing for the appellant insurance company:
(i) That since the deceased was gratuitous passenger, therefore, the appellant insurance company was not liable to make payment of compensation to the LRs. of deceased.
(ii) That since the contract of insurance between the appellant insurance company and the insured, (Vijay Kumar, respondent No. 4 owner of the vehicle in question) was for the purpose of goods being taken in a goods vehicle and, therefore, by carrying passenger in a goods vehicle, breach of the terms of the policy was made by the owner of the vehicle in question and, therefore, in these circumstances the appellant insurance company cannot be held liable.
(iii) That since the Hon'ble Supreme Court in New India Assurance Co. Ltd, v. Shanta Devi [Sic. Asha Rani, 2001 ACJ 1847 (SC)], felt that the law laid down in earlier judgment in New India Assurance Co. Ltd. v. Satpal Singh, 2000 ACJ 1 (SC), requires re-consideration by a larger Bench of the Hon'ble Apex Court and that matter has been now placed before the larger Bench of the Hon'ble Apex Court, therefore, the law laid down in the case of Satpal (supra), cannot be said to be a settled law and in such circumstances, appellant insurance company cannot be held liable or this appeal be kept pending till the decision by the larger Bench of Hon'ble Supreme Court.
4. I have heard learned counsel appearing for the appellant insurance company and the learned counsel appearing for the respondents and gone through the material available on record.
5. The present controversy has been very well answered by the Division Bench of this court in New India Assurance Co. Ltd. v. Bhanwari Devi, 2001 DNJ (Raj) 209 and in that case, the Division Bench of this court, after taking into consideration what the words 'third party' mean and what the expression 'any person' in Section 147(1)(b)(i) of Motor Vehicles Act, 1988 (hereinafter referred to as 'the Act of 1988') means, laid down the law in the following manner:
(i) That the third party is altogether different from the policyholder and the insurance company and its rights are not dependent on the terms and conditions which have taken place between insurer and insured.
(ii) That the expression 'any person' in Section 147(1)(b)(i) of the Act of 1988 is wide enough to include, in our humble opinion, a gratuitous passenger as well as the person, who sits in a goods vehicle after paying some money.
(iii) That it is abundantly clear that a gratuitous passenger travelling in motor vehicle can be regarded as third party within the meaning of insurance policy covering third party risk.
(iv) That as far as the third party risk is concerned, the liability being statutory, it cannot be overridden by the terms of the contract of insurance between the parties.
(v) That a person sitting in a goods vehicle whether he is a gratuitous passenger or a paid passenger would be covered by the expression 'any person' as defined in Section 147(1)(b)(i) of the Act of 1988 and would be termed as 'third party' and if such type of person suffers any injuries, the insurance company would be liable to pay compensation and it cannot escape from its liability by pleading that breach of the terms of the policy has taken place.
(vi) That if there is breach of the terms of the policy on the part of the insured, the insurer (insurance company) can proceed against the insured (owner of the vehicle) and not against the 'third party'.
6. Thus, the Division- Bench of this court has clearly held that a person sitting in a goods vehicle whether he is a gratuitous passenger or a paid passenger would be covered by the expression 'any person' as defined in Section 147(1)(b)(i) of the Act of 1988 and would be termed as 'third party' and if such type of person suffers any injuries, the insurance company would be liable to make compensation and it cannot escape from its liability by pleading that breach of the terms of the policy has taken place.
7. From this point of view, the findings of the learned Claims Tribunal that the appellant insurance company was liable to make payment of compensation to the claimant-respondent Nos. 1 and 2, who are LRs. of deceased Kela Ram, are liable to be confirmed.
8. Hence, both the points raised by the learned counsel appearing for appellant insurance company are decided against the appellant, in view of the Division Bench judgment of this court in case of Bhanwari Devi, 2001 DNJ (Raj) 209.
9. So far as the third submission raised by learned counsel for the appellant insurance company, that since Satpal Singh's case, 2000 ACJ 1 (SC), has been referred to the larger Bench of the Hon'ble Apex Court, therefore, till the decision of the larger Bench of the Hon'ble Apex Court is out, this appeal should not be decided and be kept pending, is concerned, the same does not appear to be proper one as till the law laid down in the case of Satpal Singh (supra), is reversed by the larger Bench of the Hon'ble Supreme Court, the law laid down in that case would be the law of the land.
10. Apart from this, the law laid down in case of Satpal Singh, 2000 ACJ 1 (SC), was in respect of gratuitous passenger, but in the present case the deceased was not a gratuitous passenger as he sat in the truck in question after paying the fare, as held by learned Claims Tribunal and that aspect, as already stated above, has been very well considered by the Division Bench of this court in the case of Bhanwari Devi, 2001 DNJ (Raj) 209, where it was held that in such a situation the insurance company cannot escape its liability. Thus, if the law laid down in case of Satpal Singh (supra), has been referred to the larger Bench of the Hon'ble Apex Court for reconsideration, it would not affect the present case.
11. For the reasons stated above, the appeal filed by the appellant insurance company is liable to be dismissed.
Cross-objections filed by the claimant-respondent Nos. 1 and 2:
12. Learned counsel appearing for the claimant-respondent Nos. 1 and 2 has filed cross-objections in this court on 2.4.1997, inter alia, challenging the findings of the learned Claims Tribunal in respect of issue No. 4 by which a sum of Rs. 1,73,200 as compensation was awarded to them on account of the death of the deceased. The findings on issue No. 4 have been challenged in the following manner:
(i) That the findings of learned Claims Tribunal that the monthly income of the deceased was only Rs. 3,546 and from there too, deducting Rs. 1,746 considering the same to be spent on himself, are absolutely improper and unjustified, as it cannot be presumed that the deceased would have spent half of his salary on himself and this proposition of law as held by the learned Claims Tribunal in the impugned judgment and award is against the law laid down by the Hon'ble Supreme Court in General Manager, Kerala State, Road Trans. Corpn, v. Susamma Thomas, 1994 ACJ 1 (SC).
(ii) That the learned Claims Tribunal has gravely erred in not considering the future prospects of the deceased, as the same should have been considered by the learned Claims Tribunal while making the final loss of dependency and on this point too, the impugned judgment and award passed by the learned Claims Tribunal are against the well established principles of law laid down in the case of Susamma Thomas (supra).
(iii) That the learned Claims Tribunal has further gravely erred in applying the multiplier of 7 years and looking to the age of the deceased, which was about 43 years on the date of accident, multiplier of 7 years was low multiplier and at least multiplier of 10 years should have been applied by the learned Claims Tribunal.
Hence, it was prayed by learned counsel for the claimant-respondent Nos. 1 and 2 that the cross-objections be allowed and the amount of compensation awarded by the learned Claims Tribunal be enhanced appropriately.
13. From perusing the file of this appeal, it appears that no reply to the cross-objections has been filed by the appellant insurance company.
14. Before coming to the conclusion whether the amount of compensation of Rs. 1,73,200 was rightly awarded by the learned Claims Tribunal to the claimant-respondent Nos. 1 and 2 or not, the following admitted facts have to be kept in mind:
(i) That at the time of alleged accident, the age of the deceased was about 43 years.
(ii) That as per Exh. 1, salary certificate, the monthly salary of the deceased was Rs. 3,546 and he was in the employment of the military services.
15. Before proceeding further, law on application of multiplier may be seen.
Law on multiplier:
16. Lord Wright, who is said to be the propounder of the multiplier method, laid down the mode of calculation in Davies v. Powell Duffryn Associated Collieries Ltd., (1942) AC 601, as under:
"There is no question here to what may be called sentimental damage, bereavement or pain and suffering. It is a hard matter of pounds, shillings and pence, subject to the element of reasonable future probabilities. The starting point is the amount of wages which the deceased was earning, the ascertainment of which to some extent may depend on the regularity of his employment. Then, there is an estimate of how much was required or expended for his own personal and living expenses. The balance will give a datum or basic figure which will generally be turned into a lump sum by taking a certain number of years' purchase. That sum, however, has to be taxed down by having due regard to uncertainties, for instance, that the widow might have again married and thereby ceased to be dependent, and other like matters of speculation and doubt."
In elaborating his theme, Lord Wright further said:
"The damages are to be based on the reasonable expectation of pecuniary benefit or benefit reducible to money value. In assessing the circumstances which may be legitimately pleaded in the diminution of the damages must be considered...The actual pecuniary loss of each individual entitled to sue can only be ascertained by balancing, on the one hand, the loss to him of the future pecuniary benefit and, on the other, any pecuniary advantage which from whatever source comes to him by reason of the death."
17. Subsequent decisions of the English courts as well as the Indian courts show that Lord Wright's method is quite efficient and dependable in calculations. The Hon'ble Apex Court of India recognized this method in various decisions, including Municipal Corporation of Delhi v. Subhagwanti, 1966 ACJ 57 (SC); C.K. Subramonia Iyer v. T. Kunhi Kuttan Nair, 1970 ACJ 110 (SC); Madhya Pradesh State Road Trans. Corpn. v. Sudhakar, 1977 ACJ 290 (SC) and Sheikhupura Transport Co, Ltd. v. Northern India Transporters' Insurance Co. Ltd., 1971 ACJ 206 (SC).
18. The above method has been further approved by the Hon'ble Supreme Court in the case of Susamma Thomas, 1994 ACJ 1 (SC) and in that case, the method has been well described in the following manner:
"(i) 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.
(ii) It is necessary to reiterate that the multiplier method is logically sound and legally well established.
(iii) That the multiplier method is the appropriate method, a departure from which can only be justified in rare and extraordinary circumstances and very exceptional cases.
(iv) Usually in English courts the operative multiplier rarely exceeds 16 as maximum.
(v) Of course, the future prospects of advancement in life and career should also be sounded in terms of money to augment the multiplicand. While the choice of the multiplier is determined by two factors, namely, the rate of interest appropriate to a stable economy and the age of the deceased or of the claimant whichever is higher, the ascertainment of the multiplicand is a more difficult exercise.
(vi) In the absence of any evidence, it is not unusual to deduct one-third of the gross income towards the personal living expenses and treat the balance as the amount likely to have been spent on the members of the family and the dependants.
(vii) Apart from compensation awarded on the basis of multiplier method, the usual award for loss of consortium and loss to estate each in the conventional sum of Rs. 15,000 should be awarded.
(viii) The Tribunal will take all this into account and invest as much of the amount as it thinks reasonable in several deposits yielding adequate returns permitting the claimants to withdraw the interest periodically to be used for their maintenance and upkeep. The Tribunal will make appropriate orders within two months from the date of the deposit of the balance to be made by the appellant with interest at the rate of 12 per cent per annum."
19. The law laid down in the case of Susamma Thomas, 1994 ACJ 1 (SC), has been further approved by Hon'ble Supreme Court in the latest decision in Kaushnuma Begum v. New India Assurance Co. Ltd., 2001 ACJ 428 (SC).
20. Keeping in mind the above legal position, it is to be seen whether the findings recorded by learned Claims Tribunal in the impugned judgment and award on issue No. 4 are correct or not.
21. In the case of Susamma Thomas, 1994 ACJ 1 (SC), while deciding the loss of dependency, the future prospects were also taken into consideration and in that case, the monthly income of the deceased was Rs. 1,032 and applying the future prospects, the Hon'ble Supreme Court assessed monthly income of deceased at Rs. 2,000 as the gross income.
22. In the present case, the deceased was in the employment of military services and his monthly income was Rs. 3,546 and, therefore, some amount should have been added to it as the amount for future prospects. Thus, the monthly income of the deceased should have been assessed at least at Rs. 4,000 as the gross income.
23. Thus, the monthly income of the deceased is now assessed at Rs. 4,000 as the gross income and the findings of the learned Claims Tribunal assessing the monthly income of deceased at Rs. 3,546 as the gross income without taking into consideration the future prospects, cannot be sustained and stand modified accordingly.
24. The other aspect of the case is that learned Claims Tribunal came to the conclusion that out of the Rs. 3,546, Rs. 1,746 were being spent by the deceased on himself and Rs. 1,800 were being spent on members of his family meaning thereby, the learned Claims Tribunal divided the monthly income of the deceased into two parts; one part was being spent by deceased on himself and the second part was being spent by him on his family members.
25. In my considered opinion, the above approach of the learned Claims Tribunal for calculating the amount of loss of dependency was not correct one. Out of the gross income of the deceased, his personal living expenses has to be deducted and it is not unusual to deduct one-third of the gross income towards the personal living expenses and treat the balance as the amount likely to have been spent on the members of the family and dependants.
26. Therefore, the findings of the learned Claims Tribunal that the deceased was spending Rs. 1,746 (about half of his salary) on himself are erroneous one as they are against the law, laid down by Hon'ble Supreme Court in the case of Susamma Thomas, 1994 ACJ 1 (SC) and the learned Claims Tribunal should have deducted one-third of the gross income towards the personal living expenses.
27. Thus, out of the gross income of the deceased, i.e., Rs. 4,000, one-third of that amount is to be deducted towards his personal living expenses, which comes to about Rs. 1,333 (Rs. 1,300) and thereafter deducting Rs. 1,300 from Rs. 4,000, the monthly loss of dependency will come to Rs. 2,700 and if Rs. 2,700 is multiplied by 12, the annual loss of dependency comes to Rs. 32,400.
28. Hence, the annual loss of dependency is assessed at Rs. 32,400 and the findings of the learned Claims Tribunal assessing the annual loss of dependency at Rs. 21,600 cannot be sustained and stand modified accordingly.
29. The next question for consideration is whether looking to the age of deceased which was about 43 years at the time of alleged accident, the multiplier of 7 years was rightly applied by the learned Claims Tribunal or not.
30. In Susamma Thomas' case, 1994 ACJ 1 (SC), the age of the deceased was 39 years and in that case multiplier of 12 years was applied.
31. In the present case, looking to the age of the deceased, which was about 43 years at the time of alleged accident, in my considered opinion, application of multiplier of 10 years would be appropriate and applying of multiplier of 7 years by the learned Claims Tribunal cannot be said to be just and proper and, therefore, the learned Claims Tribunal erred in applying the multiplier of 7 years.
32. Thus, in this case, the multiplier of 10 years is applied and after application of multiplier of 10 years, the amount of compensation comes to Rs. 32,400 x 10 = Rs. 3,24,000. Therefore, the claimant-respondent Nos. 1 and 2 are entitled to the compensation of Rs. 3,24,000 instead of Rs. 1,51,200 as assessed by the learned Claims Tribunal and the findings of the learned Claims Tribunal in this respect stand modified accordingly,
33. So far as the amount awarded by the learned Claims Tribunal towards loss of consortium and loss to the estate, i.e., Rs. 10,000 is concerned, the said amount appears to be low and looking to the entire facts and circumstances of the case, award of Rs. 15,000 towards loss of consortium and loss to estate, appears to be just and proper.
34. Thus, Rs. 15,000 is awarded towards loss of consortium and loss to estate instead of Rs. 10,000 and the findings of the learned Claims Tribunal in this respect stand modified accordingly.
35. So far as the awarding of amount of Rs. 5,000 on account of mental agony, Rs. 2,000 towards medical expenses and Rs. 5,000 towards cremation expenses to the claimant-respondent Nos. 1 and 2 is concerned, the same cannot be justified because of the simple reason that when the multiplier method has been adopted in conventional form, the amount on other heads should not be allowed otherwise it would overlap with each other. It is made clear that in case where the multiplier method is applied, other heads except of loss of consortium and loss to estate should not be taken into consideration, while calculating the amount of compensation in case of death.
36. Therefore, awarding of Rs. 5,000 on account of mental agony, Rs. 2,000 as medical expenses and Rs. 5,000 as cremation charges by the learned Claims Tribunal cannot be justified and sustained.
37. For the reasons stated above, the amount of compensation assessed by the learned Claims Tribunal cannot be sustained and thus, it is re-determined in the following manner:
Monthly income of the deceased was Rs. 3,546 and after adding some amount on account of future prospects to it, the gross monthly income of the deceased is assessed at Rs. 4,000 and from this amount for his personal living expenses to the extent of one-third, i.e., about Rs. 1,333 (say Rs. 1,300) has to be deducted and after deducting Rs. 1,300 from Rs. 4,000, the loss of dependency comes to Rs. 2,700 per month and after multiplying Rs. 2,700 by 12, the annual dependency comes to Rs. 32,400. After applying multiplier of 10, the amount of compensation comes to Rs. 32,400 x 10 = Rs. 3,24,000. Thus, the claimant-respondent Nos. 1 and 2 are entitled to compensation of Rs. 3,24,000.
Apart from the above amount, the wife of the deceased is entitled to a sum of Rs. 15,000 towards loss of consortium and loss to estate.
Thus, the claimant-respondent Nos. 1 and 2 are entitled to the compensation of Rs. 3,24,000 + Rs. 15,000 = Rs. 3,39,000.
As the multiplier method has been adopted in conventional form, claimant-respondent Nos. 1 and 2 are not entitled to amount on other heads except loss of consortium and loss to estate.
Accordingly, the award of Rs. 3,39,000 is passed in favour of claimant-respondent Nos. 1 and 2 and against the appellant insurance company and respondent Nos. 3 and 4 jointly and severally.
In the result, the appeal filed by the appellant insurance company is dismissed.
The cross-objections filed by claimant-respondent Nos. 1 and 2 are partly allowed in the manner that award of Rs. 3,39,000, as stated above, is passed in favour of the claimant-respondent Nos. 1 and 2 and against the appellant insurance company and the respondent Nos. 3 and 4 jointly and severally. The claimant-respondent Nos. 1 and 2 shall get interest at the rate of 9 per cent per annum from today on the enhanced amount awarded by this court in this appeal only if the same is not paid to them within two months from today by the appellant insurance company or respondent Nos. 3 and 4. The judgment and award dated 27.8.1996 passed by learned Claims Tribunal stand modified accordingly to the above extent.
No order as to costs.