2009 (5) TMI 1006 - SC - Indian Laws

Quantum of compensation in Motor Accident Claims - Payment of just compensation - Multiplier Method for calculating pecuniary loss or loss of dependency - Quantify Non-pecuniary compensation - Conventional compensation - Rash and Negligent driving - School bus after overrunning the road and breaking the railing, drowned in Yamuna river - 29 children died - claim for fault liability and sought for payment of compensation u/s 163A r/w Second Schedule of the Motor Vehicle Act, 1988 ( the Act') - Tribunal not awarded interest from the date of petition till realization - HC by its common order held that the appellants are entitled to enhancement of compensation in all the cases and also directed that the dependents would be entitled to interest but would not withdraw the principal amount during the lock-in period of six years without the permission of the Tribunal. HELD THAT - No amount of compensation can restore the lost limb or the experience of pain and suffering due to loss of life. Loss of a child, life or a limb can never be eliminated or ameliorated completely. To put it simply-pecuniary damages cannot replace a human life or limb lost. Therefore, in addition to the pecuniary losses, the law recognises that payment should also be made for non pecuniary losses on account of, loss of happiness, pain, suffering and expectancy of life etc. The Act provides for payment of just compensation vide Section 166 and 168 . It is left to the courts to decide what would be just compensation in facts of a case. Under the Second Schedule of the Act in case of a non earning person, his income is notionally estimated at ₹ 15,000/- per annum. The Second Schedule is applicable to claim petitions filed u/s 163A. The Second Schedule provides for the multiplier to be applied in cases where the age of the victim was less than 15 years and between 15 years but not exceeding 20 years. Even when compensation is payable u/s 166 r/w 168A, deviation from the structured formula as provided in the Second Schedule is not ordinarily permissible, except in exceptional case Abati Bezbaruah v. Dy. Director General, Geological Survey of India 2003 (2) TMI 505 - SUPREME COURT . The date of accident is 18.11.1997. Prior to this, the Second Schedule of the Act was already introduced w. e. f. 14.11.1994. Thus, the notional income mentioned in the Second Schedule and the multiplier specified therein can form the basis for the pecuniary compensation for the loss of dependency in the present cases. No fact and reason was highlighted during the arguments why the Second Schedule should not apply in the present cases. The Second Schedule also provides for deduction of 1/3rd consideration towards expenses; which the victim would have incurred on himself if he had lived. As compensation for loss of dependency is to be calculated on the basis of notional income because the deceased was a child. It by necessary implication takes into account future prospects, inflation, price rise etc. Therefore keeping in view of Second Schedule of the Act, this Court do not see any reason to differ with the view taken by the Tribunal as well as the HC in so far as award of pecuniary compensation to the dependents/claimants is concerned. We must point out here that the learned Counsel for the appellants had argued that the notional sum of ₹ 15,000/- should be enhanced and increased as the legislature has not amended the Second Schedule and the same continues to be in existence since it was enacted on 14.11.1994. We are not examining and going into this aspect as the accident had taken place in the present case nearly three years after the enactment of the Second Schedule. The time difference between the date of the enactment and the date of accident is not substantial. While quantifying and arriving at a figure for loss of expectation of life , the Court have to keep in mind that this figure is not to be calculated for the prospective loss or further pecuniary benefits that has been awarded under another head i.e. pecuniary loss. The compensation payable under this head is for loss of life and not loss of future pecuniary prospects. Under this head, compensation is paid for termination of life, which results in constant pain and suffering. Conventional compensation - The term conventional compensation used in the said case has been used for non pecuniary compensation payable on account of pain and suffering as a result of death. The Court in the said case referred to ₹ 50, 000/- as conventional figure. The reason was loss of expectancy of life and pain and suffering on that account which was common and uniform to all regardless of the status. Unless there is a specific case departing from the conventional formula, non- pecuniary compensation should not be fixed on basis of economic wealth and background. In M.S. Grewal anr. v/s Deep Chand Sood ors. 2001 (8) TMI 1450 - SUPREME COURT , compensation of ₹ 5 lakhs was awarded to the claimants and the same was held to be justified. Learned Counsel for the respondent No. 3, however, pointed out that in the said case the Supreme Court had noticed that the students belonged to an affluent school as was apparent from the fee structure and therefore the compensation of ₹ 5 lakhs as awarded by the HC was not found to be excessive. It is no doubt true that the Supreme Court in the said case noticed that the students belonged to an upper middle class background but the basis and the principle on which the compensation was awarded in that case would equally apply to the present case. A forceful submission has been made by the learned Counsels appearing for the claimants-appellants that both the Tribunal as well as the High Court failed to consider the claims of the appellants with regard to the future prospects of the children. It has been submitted that the evidence with regard to the same has been ignored by the Courts below. On perusal of the evidence on record, we find merit in such submission that the Courts below have overlooked that aspect of the matter while granting compensation. It is well settled legal principle that in addition to awarding compensation for pecuniary losses, compensation must also be granted with regard to the future prospects of the children. It is incumbent upon the Courts to consider the said aspect while awarding compensation. We deem it appropriate to grant compensation of ₹ 75,000/- (which is roughly half of the amount given on account of pecuniary damages) as compensation for the future prospects of the children, to be paid to each claimant within one month of the date of this decision. We would like to clarify that this amount i.e. ₹ 75,000/- is over and above what has been awarded by the HC. Pecuniary and Non-pecuniary damages - We are of the considered view both the Tribunal as well as HC has awarded the compensation on the basis of Second Schedule and relevant multiplier under the Act. However, we may notice here that as far as non-pecuniary damages are concerned, the Tribunal does not award any compensation under the head of non-pecuniary damages. However, in appeal the HC has elaborately discussed this aspect of the matter and has awarded non-pecuniary damages of ₹ 75,000. Needless to say, pecuniary damages seeks to compensate those losses which can be translated into money terms like loss of earnings, actual and prospective earning and other out of pocket expenses. Non-pecuniary damages include such immeasurable elements as pain and suffering and loss of amenity and enjoyment of life. In this context, it becomes duty of the court to award just compensation for non-pecuniary loss. It is difficult to quantify the non-pecuniary compensation, nevertheless, the endeavour of the Court must be to provide a just, fair and reasonable amount as compensation keeping in view all relevant facts and circumstances into consideration. We have noticed that the HC in present case has enhanced the compensation in this category by ₹ 75, 000/- in all connected appeals. We do not find any infirmity in that regard. Interest - Tribunal had directed for payment of interest for only four years at the rate of 6% per annum from the date of filing of the claim petition till the award and in case of payment was not made within 30 days then further interest at the rate of 6% from the date of award till payment. In appeal, HC awarded 7% per annum from the date of filing of the petition till payment. We find the interest awarded by the HC as just and proper, so the same need not be disturbed.

Summary

Issues Involved:
1. Legality and validity of the High Court judgment.
2. Determination of compensation under the Motor Vehicle Act, 1988.
3. Application of the Second Schedule for calculating compensation.
4. Consideration of non-pecuniary damages.
5. Award of interest on compensation.

Issue-wise Detailed Analysis:

Legality and Validity of the High Court Judgment
The appeals challenge the judgment and order dated 17.05.2006 by a Single Judge of the Delhi High Court, which disposed of multiple motor accident claims petitions. The appellants sought enhanced compensation for the death of their children in a bus accident.

Determination of Compensation under the Motor Vehicle Act, 1988
The appellants filed claim petitions under Section 163A read with the Second Schedule of the Motor Vehicle Act, 1988. The Tribunal awarded compensation based on the age of the children and a notional income of Rs. 15,000 per annum, applying multipliers of 15 and 16 for different age groups. The High Court enhanced the compensation by Rs. 75,000 and awarded interest at 7.5% per annum from the date of filing the claim petition until payment.

Application of the Second Schedule for Calculating Compensation
The Second Schedule of the Act, effective from 14.11.1994, was applied for calculating pecuniary compensation. The notional income of Rs. 15,000 per annum was used, and 1/3rd was deducted for personal expenses. The Court found no reason to deviate from the Second Schedule, despite arguments for enhancing the notional income due to inflation and cost of living.

Consideration of Non-Pecuniary Damages
Non-pecuniary damages were also considered, including loss of happiness, pain, suffering, and loss of expectation of life. The Court referred to established principles and previous judgments, such as R.D. Hattangadi v. Pest Control (India) (P) Ltd., which categorized damages into pecuniary and non-pecuniary. The High Court awarded Rs. 75,000 for non-pecuniary damages, which the Supreme Court found just and reasonable.

Award of Interest on Compensation
The Tribunal awarded interest at 6% per annum for four years from the date of filing the claim petition until the award, with further interest if payment was delayed. The High Court increased the interest rate to 7.5% per annum from the date of filing the petition until payment. The Supreme Court upheld this interest rate as just and proper.

Conclusion
The Supreme Court upheld the High Court's judgment, including the enhanced compensation and interest rate. Additionally, the Court awarded Rs. 75,000 for future prospects of the children, recognizing the importance of considering future prospects in compensation claims. The appeals were disposed of accordingly.