Bombay High Court
United India Insurance Company Limited vs Sugra Riyaz Varawalla & Ors on 26 April, 2012
Bench: A.M. Khanwilkar, S. S. Shinde
1 30212
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
vgm
CIVIL APPELLATE JURISDICTION
FIRST APPEAL NO. 302 OF 2012
WITH
CIVIL APPLICATION NO. 669 OF 2012
United India Insurance Company Limited ...Appellant
V/s.
Sugra Riyaz Varawalla & Ors. ...Respondents
Mr. Rahul Mehta i/by M/s. KMC Legal venture for the Appellant
Mrs. P.R. Gupta i/by Mr. Deshmukh and Mr. Bhalwal for the
Respondents.
CORAM: A.M. KHANWILKAR AND
S.S. SHINDE, JJ.
DATE: APRIL 26, 2012 P.C. (Per A.M. Khanwilkar, J.):-
Heard the counsel for the parties.
2. This appeal takes exception to the judgment of the Motor Accident Claims Tribunal, Mumbai, dated ::: Downloaded on - 09/06/2013 18:27:32 ::: 2 30212 30th September, 2011 in Claim Application No. 2892 of 2004.
The tribunal has passed the following order, which is the subject-
matter of challenge in the present appeal:-
"ORDER"
1. Application is partly allowed with proportionate costs.
2. Opposite party and the insurer shall jointly and severally pay compensation of Rs.69,18,712/- (Rupees Sixty Nine lacs Eighteen Thousand Seven Hundred Twelve only) inclusive of NFL amount along with interest @ 8.5% per annum from the date of this application till realisation of entire award amount to applicant, by issuing A/c. Payee cheque of 50% amount in the name of applicant No. 1 Sugra, by issuing A/c. Payee cheque of 20% amount in the name of applicant No. 2 Asma, by issuing A/c.
Payee cheque of 20% amount in the name of applicant No.3 Fazlerazzak and by issuing A/c. Payee cheque of 5% amount in the name of applicant No. 4 Saify and by issuing A/c. payee cheque of 5% amount in the name of applicant No. 5 Zarina, within four weeks from the date of this order.
3. It is further directed that the cheques shall be deposited in this Tribunal and account officer shall hand over the said cheques to applicants by obtaining receipts thereof, on verification of court fees.
4. Award be drawn accordingly."
3. Only two points have been raised before us. The first point raised is that the Tribunal has reckoned the future loss caused on account of death of respondent No. 1's husband by taking into account the aggregate income of the deceased husband.
Relying on the oral evidence of respondent No.1, which was produced by the counsel for the appellant, it was contended that the ::: Downloaded on - 09/06/2013 18:27:32 ::: 3 30212 Tribunal has completely glossed over the admission given by respondent No. 1 in her evidence recorded before the Tribunal that, after the death of her husband, the settlement amount has been transferred in her name and in the names of her children. She has further stated that she does not remember as to how much amount was received by way of settlement. Reliance is then placed on the statement of respondent No. 1 that she was partner in Sarin Industries, as also on another statement that she received amounts from Credit Card Companies on account of accidental death of her husband.
4. The second point raised is that, admittedly, respondent No. 1 received insurance amount from L.I.C. after the accidental death of her husband. The amounts so received by respondent No. 1 ought to have been deducted while computing the future loss caused on account of accidental death of husband of respondent No. 1. The decision of the Tribunal to direct payment of Rs.69,18,712/-, along with interest, is excessive.
5. Before dealing with both these points, we think it apposite to advert to the finding recorded by the Tribunal. It has ::: Downloaded on - 09/06/2013 18:27:32 ::: 4 30212 found that, in order to substantiate the claim of compensation, the claimant, in her evidence, has placed reliance on the income-tax returns of the deceased in "individual capacity" for the years 2001-02, 2002-03 and 2003-04, which are marked Exhibits 28 to 30. It has also noted that, although income-tax returns of the firms, deeds of partnership, Certificates of Incorporation and other documents indicated that deceased Riyaz was one of the partners of those firms, the claimant did not place reliance on those documents. In other words, the question regarding quantum of compensation has been answered purely relying on the income-tax returns of the deceased submitted for the years 2001-02 till 2003-04 (Exhibits 28 to 30) in his individual capacity alone.
On the basis of those income-tax returns, the Tribunal analysed the matter in paragraphs 26 and 27 of the judgment to conclude that the net average annual income of the deceased would be around Rs. 6,56,545/-. The discussion in this behalf reads thus:-
"26. On the basis of income tax return for the year 2001-02 marked Ex. 28, income tax return for the year 2002-03 marked Ex.29 and income tax return for the year 2003-04 marked Ex.30, and the gross total annual income is shown as Rs.8,53,920/-, Rs.8,95,091/- and Rs.9,72,265/- respectively. Therefore, the average gross annual income comes to Rs.9,07,092/-. Deceased Riyaz has paid income tax of Rs.2,73,002/- for the year 2003-04, Rs.2,29,643/- for the year 2002- 03 and Rs.2,48,997/- for the year 2001-02. Total income tax paid by ::: Downloaded on - 09/06/2013 18:27:32 :::
5 30212 deceased Riyaz for these 3 years was Rs.7,51,642/- and average annual income tax paid by Riyaz was Rs.2,50,547/-
27. As such, net average annual income of deceased Riyaz will be average total annual income less average annual income tax paid and it comes to Rs.6,56,545/-."
6. The Tribunal then deducted one-fourth amount for computing net annual loss of dependency and opined that the annual loss of dependency comes to Rs.4,92,408/-. By applying multiplier '14', the said amount has worked out to Rs.68,93,712/-.
As regards these findings, the same are not assailed in the present appeal.
7. What is contended by the appellant, is that, respondent No. 1, in her evidence, had admitted that she received some settlement amount after the death of her husband. Indeed, the amount is not specified by respondent No. 1.
8. The question is: Whether amount so received by respondent No. 1 ought to be deducted while computing the loss of annual dependency income? We have no hesitation in taking the view that this admission of respondent No. 1 does not take the ::: Downloaded on - 09/06/2013 18:27:32 ::: 6 30212 matter any further. The amount so received by respondent No. 1 towards settlement in respect of shares and debentures of her husband, which are transferred in her name and in the name of her children, cannot be reckoned for the purpose of computing the loss of annual dependency income. The said settlement amount was received towards the profit earned or assets held by the deceased husband while he was alive and working as partner in the firms.
A priori, such amount cannot be deducted while computing the loss of annual dependency income. It is well established position that when the principle of loss and gain has to be applied, it has to be on similar and same plain having nexus inter se between them and not to which, there is no semblance of any co-relation.
In paragraph 37 of the decision in Helen C. Rebello & others vs. MSRTC, 1999 ACJ 10, the apex Court has held that any cash, bank balance, shares, fixed deposits, etc. though are of pecuniary advantage, receivable by the heirs on account of one's death but all these have no co-relation with the amount receivable under the statute occasioned only on account of accidental death.
Accordingly, the argument of the appellant under consideration is devoid of merits.
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9. The next admission, on which strong reliance is placed by the appellant, is that, respondent No. 1 stated that she may be partner in Sarin Industries. We fail to understand as to how this admission can be of any avail to the appellant. For considering the claim, the Tribunal was required to assess the loss of annual dependency income, which otherwise would have been earned by the family, if the husband of respondent No. 1 was to be alive.
As has been held hitherto, even the earnings of respondent No. 1, in her own rights, being partner in Sarin Industries, cannot be the basis to reduce the quantum of loss of annual dependency income on account of accidental death of husband of respondent No. 1.
10. That takes us to the argument on the basis of admission of respondent No. 1 that she had received amount from Credit Card Companies on account of accidental death of her husband. Similar grievance is made with regard to the insurance amount received by respondent No. 1, after the accidental death of her husband, from L.I.C. Both these arguments can be answered and will have to be negatived on the basis of the exposition of the Apex court in the case of Helen's case (supra). This decision is complete answer to ::: Downloaded on - 09/06/2013 18:27:32 ::: 8 30212 the contention that the amount received by respondent No.1 from LIC after the accidental death of her husband should be deducted.
The apex Court has held that there can be no co-relation between the insurance amount received from LIC after the demise of the person and died due to motor vehicle accident. It is not even remotely concerned with that event. It held that amount of loss and gain of one contract cannot be made applicable to the loss and gain of another contract and that an amount receivable under a statute has no co-relation with an amount earned by an individual.
No further elaboration on this contention is required.
11. The Counsel for the appellant, however, has produced a copy of an unreported decision of the Apex Court in the case of Bhakra Beas Management Board vs. Kanta Agarwal & Ors., Civil Appeal No.4216 of 2008 decided on 7th July, 2008, to contend that if the claimant has received benefit as a consequence of injuries sustained by the deceased that ought to be reckoned for the purpose of deduction while computing the loss of annual dependency income. In our opinion, reliance placed on this decision to buttress the argument under ::: Downloaded on - 09/06/2013 18:27:32 ::: 9 30212 consideration is inapposite. The observations in the said decision will have to be understood in the context of the question examined by the court. In that case, the Tribunal awarded compensation along with interest. In appeal filed before the High Court, it was pointed out that on the death of the husband of Respondent No.1, she was provided with compassionate appointment and she was getting salary of `4,700/- per month (basic pay of nearly `4,700/-) and a residence was also provided to her. The High Court did not accept that argument. The observations made in this decision will, therefore, have to be understood in the context of the issue considered by the court.
As a matter of fact, even in this decision, reference has been made to paragraphs 32 to 34 of the decision in Helen's case (supra). The principle stated in Helen's case (supra), has not been overruled thus far by a larger bench of the apex Court.
Suffice it to observe that the unreported decision pressed into service by the appellant does not overrule the exposition of the earlier two-Judges bench (co-equal, coordinate bench of the Apex Court) in Helen's case (supra) which specifically dealt with the issue as to whether the insurance amount received by the heirs ::: Downloaded on - 09/06/2013 18:27:32 ::: 10 30212 ought to be deducted while computing the loss of annual dependency income.
12. The decision in Helen's case (supra) has been explained and affirmed in the case of United India Insurance Co. Ltd. & Ors. v. Patricia Jean Mahajan & Ors., (2002) 6 S.C.C. 281 (See paragraphs 35 to 36). The Court held that the amount received by the heirs of deceased under the social security system cannot be deducted for computing the amount of loss and gain. In paragraph 36, the Court observed thus:-
"36. We are in full agreement with the observations made in the case of Helen Rebello that principle of balancing between losses and gains, by reason of death, to arrive at the amount of compensation is a general rule, but what is more important is that such receipts by the claimants must have some correlation with the accidental death by reason of which alone the claimants have received the amounts. We do not think it would be necessary for us to go into the question of distinction made between the provisions of the Fatal Accidents Act and the Motor Vehicles Act. According to the decisions referred to in the earlier part of this judgment, it is clear that the amount on account of social security as may have been received must have a nexus or relation with the accidental injury or death, so far to be deductible from the amount of compensation. There must be some correlation between the amount received and the accidental death or it may be in the same sphere, absence (sic) the amount received shall not be deducted from the amount of compensation. Thus, the amount received on account of insurance policy of the deceased cannot be deducted from the amount of compensation though no doubt the receipt of the insurance amount is accelerated due to premature death of the insured. So far as other items in respect of which learned counsel for the Insurance Company has vehemently urged, for example some allowance paid to the children, and Mrs. Patricia ::: Downloaded on - 09/06/2013 18:27:32 ::: 11 30212 Mahajan under the social security system, no correlation of those receipts with the accidental death has been shown much less established. Apart from the fact that contribution comes from different sources for constituting the fund out of which payment on account of social security system is made, one of the constituents of the fund is tax which is deducted from income for the purpose. We feel that the High Court has rightly disallowed any deduction on account of receipts under the insurance policy and other receipts under the social security system which the claimant would have also otherwise been entitled to receive irrespective of accidental death of Dr. Mahajan. If the proposition 'receipts from whatever source' is interpreted so widely that it may cover all the receipts, which may come into the hands of the claimants, in view of the mere death of the victim, it would only defeat the purpose of the Act providing for just compensation on account of accidental death.
Such gains, maybe on account of savings or other investment etc. made by the deceased, would not go to the benefit of the wrongdoer and the claimant should not be left worse off, if he had never taken an insurance policy or had not made investments for future returns."
13. The next question is whether the amount received by Respondent No.1 from credit card companies on account of accidental death of her husband ought to be deducted while computing loss of annual dependency income due to the death of her husband. While answering this issue, it may be apposite to deduce the legal position stated by the apex court in Helen's case (supra). As noted earlier, the principal question considered in the said decision was whether the life insurance money received by the heirs ought to be deducted while computing the loss and gain.
However, this decision also answers some wider principles.
::: Downloaded on - 09/06/2013 18:27:32 :::12 30212 The first question answered in this decision is whether the language of the provisions under the Fatal Accidents Act, 1855 and English Fatal Accidents Act 1946 is the same and even if same, whether the language of the Motor Vehicles Act, 1939 is similar to Fatal Accidents Act 1855. The Court after referring to the relevant provisions of the concerned Act opined that section 110-B of the 1939 Act clearly enlarges the scope of computing the compensation. The court examined several decisions of both
- English Court and the Indian Courts which had occasion to consider the sweep of restrictive Fatal Accidents Act. Each of those decisions were considered very closely before taking the view that the language of section 110-B of the 1939 enactment is different than what is under section 1A of the Fatal Accidents Act 1855. The Court went on to observe that section 110B of the 1939 Act empowers the Tribunal to determine the compensation "which appears to it to be just". Placing emphasis on this expression, the Court proceeded to note that that has widened the scope of determination of compensation which is neither under the Indian Fatal Accidents Act, 1855 nor under the English Fatal Accidents Act, 1846. The Court also noted that apart from ::: Downloaded on - 09/06/2013 18:27:32 ::: 13 30212 conflicting decisions of Indian High Courts, no decision was placed before it which has determined the principle of deductibility of any amount, life insurance, gratuity, pension, etc. from the amount payable under the Motor Vehicles Act. It thus held that there is deliberate change in the language of the Act of 1939, revealing the intent of Legislature, namely, to confer wider discretion on the Tribunal which is not to be found in the Act of 1855. It went on to emphatically observe that any decision based on the principle applicable to the earlier Act (i.e. Fatal Accidents Act 1855), would not be applicable while adjudicating the compensation payable to the claimant under the Motor Vehicles Act, 1939.
14. In paragraph 30 of the reported decision, the Court went on to consider the purport of word "just". It noted that the introduction of the word "just" was deliberately brought in the language of section 110-B of Act of 1939 to enlarge the consideration in computing compensation which, of course, would include the question of deductibility, if any. On that basis, it proceeded to hold that the irresistible conclusion was that the ::: Downloaded on - 09/06/2013 18:27:32 ::: 14 30212 principle of computation of the compensation both under the English Act of 1846 and under the Indian Act of 1855 by the earlier decisions, were restrictive in nature in the absence of any guiding words therein. Hence, the Courts applied the "general principle" at the common law of loss and gain, but that would not apply to the considerations u/s 110-B of the Act of 1939 (read Section 168 of the Act of 1988) which enlarges the discretion to deliver "better justice" to the claimant. The Court, unambiguously, reiterated its view noted in the earlier part of the same decision that all the decisions of the High Courts, which were based on interpretation of the principles of the English Act of 1846 and Indian Act of 1855 to hold such deductions were valid were not applicable while considering the scope of jurisdiction and authority of the Claims Tribunal under the Act of 1939, as giving restrictive interpretation in computation of compensation under the Act of 1939 was not possible. It is held that the word 'just' - as its nomenclature denotes - equitability, fairness and reasonableness having larger peripheral field. The largeness is, of course, not arbitrary; it is restricted by the conscience which is fair, reasonable and equitable - if it exceeds - it is termed as unfair, unreasonable, ::: Downloaded on - 09/06/2013 18:27:32 ::: 15 30212 inequitable, not just. Relying on the meaning of expression 'just' appearing in the legal dictionaries, the Court noted that the expression 'just' denotes wider discretion in the Tribunal, which, indeed, ought to be within the limitations under the provisions of the Motor Vehicles Act or any other provision having force of law. To buttress the statement of law enunciated in the earlier part of the reported decision, the Court drew support from the provisions of Sections 94, 95, 95-AA, 96 and 99 of the Act of 1939 (corresponding Sections 146, 147, 149 and 152 of the Act of 1988), as can be discerned from paragraph 31 of the reported judgment.
It went on to observe that the legislative scheme clearly indicates that it "is a beneficial legislation". Thus, after perusing the legislative history and the legislative scheme, it has been held that the provisions of the Act of 1939 under consideration should be interpreted which confers benefit and not which usurps its benefit.
15. From paragraph 32 of the reported decision in Helen's case (supra), the Apex Court dealt with the issue as to whether the life insurance amount received by claimants occasioned by the death of the deceased is deductible from the compensation or not.
::: Downloaded on - 09/06/2013 18:27:32 :::16 30212 In paragraph 33, the Court noticed the argument of the parties.
First, it referred to the plea of the claimant. While doing so, the logic that weighed with the Court is, firstly, that the insurance money is by virtue of a "contractual" relationship between the deceased and the insurance company; and is payable to the legal heirs of the deceased in terms of the contract. It noted that such money cannot be said to have been received by the heirs only on account of the death of the deceased, but, truly, it is a "fruit of the premium paid by the deceased during his life time". The amount was receivable by the claimant, irrespective of the accidental death, even if he would have died the natural death. Further, the interpretation should not be such which would benefit the tortfeasor for his negligence and wrong leading to the untimely death without any contribution by him. In short, the amount payable under any contract of social assurance or any insurance ought not to be deducted, as the same is payable to the heirs "because of the contract" and "not on account of the death of the insured person".
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16. The Court considered the said issue in paragraph 34 on the following basis. The Court held that the general principle of estimating damages under the common law was not applicable.
The principle will have to be culled out from the provisions of the Motor Vehicles Act, 1939. Indeed, it went on to observe that, no doubt, the Act delivers compensation to the claimant only on account of accidental injury or death caused due to motor vehicle, but not on account of any other death. The pecuniary advantage occurring under the Act has to be deciphered, correlating with the accidental death. The compensation payable under the Act of 1939 is on account of the pecuniary loss to the claimant by accidental injury or death, and not other forms of death. The death must, necessarily, be by accident involving motor vehicle.
17. It then examined the purport of words "pecuniary advantage". It noted that, if the words "pecuniary advantage" from whatever source are to be interpreted to mean any form of death under this Act, it would dilute all possible benefits conferred on the claimant, and would be contrary to the spirit of the law.
That would obliterate both, all possible conferment of economic ::: Downloaded on - 09/06/2013 18:27:32 ::: 18 30212 security to the claimant by the deceased and the intentions of the legislature. On such interpretation, the tortfeasor, in spite of his wrongful act or negligence, which contributes to the death, would have, in many cases, no liability or meagre liability. It, therefore, concluded that, under the Act of 1939, whatever pecuniary advantage is received by the claimant, from whatever source, would only mean which comes to the claimant on account of the accidental death due to motor vehicle and not other form of death.
18. In paragraph 35, the Court noted that the compensation would not include that which claimant receives on account of other forms of death, which he would have received even apart from accidental death. The amount so received would have no correlation to the accidental death for which compensation is computed.
19. The Court then considered the illustration of employer insuring his employee, as against injury or death arising out of a motor vehicle accident. It held that any amount received on account of such insurance on the happening of incidence may be an ::: Downloaded on - 09/06/2013 18:27:32 ::: 19 30212 amount liable for deduction. The Court noted that the legislature has expressly provided through the proviso to Section 95 of the 1939 Act (similar to Section 147 of the 1988 Act), whereunder the liability of the insurer is excluded in respect of injury or death arising out of the motor vehicle accident in the course of employment of an employee. The Apex Court then noted that the claimant for the happening of the same incidence may not gain twice from two sources or from the same transaction, viz., the same incident. The Court further noted that the compensation receivable by the claimant either under the Motor Vehicle Act or from the employer is either statutory or through the security of the employer securing for his employee, but, in both cases, he receives the amount "without his contribution". Even this observation is significant while considering the argument of the appellant in the present case.
20. Notably, no such express provision is found in respect of amount received by the legal heirs of the deceased (other than as employee) from any other source on account of contractual obligation due to death on account of motor vehicle accident.
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21. The Apex Court then went on to ask question to itself as to how an amount earned out of one's labour or "contribution"
towards one's wealth, savings, etc., either for himself or for his family, which such person knows, under the law, has to go to his heirs after his death either by succession or under a will could be said to be the "pecuniary gain" only on account of one's accidental death. Even though it is a pecuniary gain, it would not be equitable or could be balanced out of the amount to be received as compensation under the Motor Vehicles Act.
22. At the end of paragraph 36, the Court re-stated the legal principle that the principle of loss and gain has to be on the same place within the same sphere, of course, subject to the contract to the contrary or, any provisions of law.
23. The statement of law expounded by the Apex Court in Helen's case (supra) would apply proprio vigore to the provisions of Motor Vehicles Act, 1988 as the scheme of the subsequent enactment is mutatis mutandis Section 110-B of the Act of 1939.
In that, Section 168 of the 1988 Act dealing with award of the ::: Downloaded on - 09/06/2013 18:27:32 ::: 21 30212 claims Tribunal also provides that the compensation to be determined by the Tribunal should be such "which appears to it to be just".
24. We are conscious of the fact that the abovenoted dictum of the Apex Court is in the context of the issue as to whether the amount received from life insurance company can be deducted from the compensation amount. The broad principle underlying, however, will be germane for examining the amount received by the claimant from credit card companies due to the death of the claimant's husband.
25. Reverting to the admission of the claimant that she received amount from credit card companies on account of accidental death of her husband, in the cross-examination, no other question is put to her. It is not even suggested that such receipts by the claimant has had some correlation with the accidental death "by reason of which alone" she has received that amount. Further, no clear suggestion is given to respondent No. 1 that she would not have received that amount from the credit card companies but for ::: Downloaded on - 09/06/2013 18:27:32 ::: 22 30212 the accidental death of her husband due to motor vehicle within the meaning of the Act of 1988. Indisputably, the amount received from credit card companies is the result of contractual obligation, and, more importantly, because of the contribution paid by the deceased therefor during his life time. Significantly, unlike an express provision in Section 147 of the Act of 1988 to exclude the liability of the insurer in respect of injury or death due to motor vehicle accident in the course of employment of an employee, the Act of 1988 does not expressly exclude the amount receivable by the claimant against the contractual obligation of the credit card companies in lieu of the contribution made by the deceased during his life time to the credit card companies therefor. No suggestion has been put to the claimant that the amount received by her from the credit card companies after the death of her husband was without payment of any contribution by the deceased.
Furthermore, no suggestion is given that the amount received by the claimant from the credit card companies was equivalent to the compensation amount to be determined by the Tribunal.
We would assume that implicit suggestion in the question put to the claimant during the cross-examination was that the "accidental ::: Downloaded on - 09/06/2013 18:27:32 ::: 23 30212 death" was the result of motor vehicle accident covered by the Act of 1988. However, in absence of any pleading and proof in respect of the abovenoted matters by the appellant, we fail to understand as to how the appellant would succeed on the simple admission of respondent No. 1 that she had received amount from credit card companies on account of accidental death of her husband.
26. As aforesaid, the Apex Court has expounded that the Act of 1939 (which is para materia to the Act of 1988) is a beneficial legislation, and will have to be interpreted, which confers benefit and not which usurps its benefit. Considering the above, acceding to the argument of the appellant to deduct the amount received by the claimant from the credit card companies while computing the compensation payable under the Act of 1988 would be antithesis to providing "just" compensation to the claimant, as mandated by Section 168 of the Act of 1988.
27. A priori, the argument of the appellant that, in view of the admission of the claimant that she has received amount from credit card companies on account of accidental death of her husband, does not take the matter any further for the appellant.
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28. Accordingly, we have no hesitation in dismissing this appeal, as no other contention has been raised before us. Ordered accordingly.
29. In view of dismissal of appeal, civil application is dismissed.
30. The statutory deposit of Rs. 25,000/- deposited in this Court is permitted to be withdrawn by respondent No. 1-claimant.
S.S. SHINDE, J. A.M. KHANWILKAR, J.
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