COMPENSATION UNDER MOTOR VEHICLES ACT, 1988 – SOME ISSUES

[Mr. M. GOVINDARAJAN]

Introduction

The Motor Vehicles Act, 1988 is an Act of the Parliament of India which regulates all aspects of road transport vehicles. The Act came into force from 1 July 1989. It replaced Motor Vehicles Act, 1939 which earlier replaced the first such enactment Motor Vehicles Act, 1914.   The Act provides in detail the legislative provisions regarding licensing of drivers/conductors, registration of motor vehicles, control of motor vehicles through permits, special provisions relating to state transport undertakings, traffic regulation, insurance, liability, offences and penalties, etc. For exercising the legislative provisions of the Act, the Government of India made the Central Motor Vehicles Rules 1989.

Compensation

In its very nature whenever a tribunal or a court is required to fix the amount of compensation in cases of accidents it involves some guess work, some hypothetical consideration, some amount of sympathy linked with the nature of the disability caused.

The following factors have to be considered by the Tribunal while awarding compensation, in case of the death of the victim-

• The income of the deceased per annum should be ascertained. Out of the said income a deduction is to be made with regard to the amount which the deceased would have spent on him by way of personal and living expenses. The balance which is to be considered to be the contribution to the dependent family constitutes the multiplicant;
• Having regard to the age of deceased and active career, the multiplication method should be selected.

Injuries cause deprivation to the body which results in losses, entitling the claimant to claim damages. The damages may vary according to the gravity and nature of disability or of injuries suffered.  The damages can be pecuniary as well as non pecuniary.   The court has to make a judicious attempt to award the damages, so as to compensate the claimant for the loss suffered by him. The compensation should not be assessed in so liberal fashion as to make it a bounty for the claimant. There must be an endeavor to secure some uniformity and consistency. It is desirable that so far as possible comparable injuries should be compensated by comparable awards.

Damages have to be assessed under two heads, viz; Pecuniary Damages and Special or General Damages.  Pecuniary Damages may include expenses incurred by the claimant on medical treatment, attendance, transportation, special diet etc.,  Non pecuniary damages includes damages for mental and physical shock, pain and suffering already suffered or likely to be suffered  in the future and for the loss of amenities of life  which may include a variety of matters. 

Territorial jurisdiction

Section 166 (2) of the Act provides that every application shall be made at the option of the claimant, either to the claims Tribunal, having jurisdiction over the area in which the accident occurred or the claim Tribunal within the local limits of whose jurisdiction the claimant resides or carries on business or within the local limits of whose jurisdiction the defendant resides, and shall be in such forms and contains such particulars as may be prescribed.

In ‘Malati Sardar V. National Insurance Company Limited and Others’ – 2016 (8) TMI 917 - SUPREME COURT, the deceased Diganta Sardar, aged 26 years, a school teacher, unmarried son of the appellant was hit by bus insured with the respondent company at Hoogly in the State of West Bengal and died.  The appellant filed the claim before the Tribunal at Kolkata.  Rash and negligent driver by the driver of the bus having been established, the Tribunal, applying the multiplier of 13 on account of the appellant being 47 years and taking the income of the deceased and other relevant factors fixed compensation @ ₹ 16,12,200/- with interest@ 6%  per annum from the date of filing of claim petition.  The respondent preferred an appeal before the High Court only on the ground of territorial jurisdiction of the Tribunal.  The objection of the respondent was that the accident took place at Hoogly and the claimant resided at Hoogly.  The office of the respondent being at Kolkata did not attract territorial jurisdiction of Kolkata Tribunal.  The High Court upheld the objections of the respondent and allowed the appeal.

The Supreme Court, in appeal, filed by the appellant, held that the provision of Section 166 is a benevolent provision for the victims of accidents of negligent driving.  The provision of territorial jurisdiction has to be interpreted consistent with the object of facilitating remedies for the victims of the accidents.  Hyper technical approach in such matter can hardly be appreciated.  There is no bar to claim a petition being filed at a place where the insurance company, which is the main contesting party in such cases, has its business.  In such cases, there is no prejudice to any party.  There is no failure of justice.  The Supreme Court set aside the impugned judgment of the High Court and restored the award of the Tribunal.

Breach of the conditions of insurance policy

In ‘United India Insurance Company Limited V. K.M. Poonam and others’ – 2011 (2) TMI 1475 - SUPREME COURT the insurance policy of owner of vehicle covered six occupants of vehicle in question, including the driver.  Therefore the liability of the insurer would be confined to six persons only, notwithstanding larger number of persons carried in vehicle.  Such excess number of persons would have to be treated as third parties, but since no premium had been paid in the policy for them, the insurer would not be liable to make payment of compensation amount as they are concerned.  Since there can be no pick and choose method to identify five passengers, excluding the driver, in respect of whom compensation would be payable by the Insurance company to meet the ends of justice, the Insurance Company should deposit the total amount of compensation awarded to all claimants, with liberty to recover the amount paid by it over and above the compensation is payable in respect of the persons covered by the insurance policy from the owner of the vehicle by putting the decree into execution.                                                                                                                                 

Composite Negligence

In the case of composite negligence, the claimant is entitled to sue both or any of the joint tortfeasors and to recover the entire compensation as liability of tortfeasers is joint and several.

In ‘Kamalesh and others V. Attar Singh and others’ – 2015 (10) TMI 2528 - SUPREME COURT the Supreme Court held that the method and manner in which the accident has taken place leaves no room for doubt that it was a case of composite negligence of drivers of both vehicles that is the driver of Maruti Car and the driver of the tempo.  Though the police have registered a case against the driver of tempo, Attar Singh and the same cannot be said to be conclusive.  It appears both the drivers were equally responsible for the accident.  Thus it was a case of composite negligence.  Both the drivers were joint tortfeasers, thus liable to make payment of compensation.

Fatal accident – computation of compensation

In ‘Pushkar Mehra V. Brij Mohan Kushwaha and others’ – (2016) 1 SCC (Crl) 320 the appellant widow is the wife of the deceased along with the mother and the children of the deceased.  The appellant claimed compensation amounting to ₹ 25 lakhs due to death of her husband in a motor accident when he was crossing the road, dashed by vehicle dumper  loaded with concrete.  The annual income of the deceased was claimed to be ₹ 1.25 lakhs per annum as he was self employed in the business of trading in paints and hardware.  The Tribunal held that there was no documentary evidence produced by the appellant on record in support of the income of the deceased, it has taken his salary to be ₹ 2,895/- per month as per the wages for unskilled labor under the Minimum Wages Act, 1948.  The Tribunal awarded compensation of ₹ 3,84,760/- including loss for consortium, loss of estate, on account of love and affection and funeral expenses.  The Tribunal also directed to pay interest @ 7.5% per annum on the award amount from, the date of filing the petition till the notice of the deposit of the award.

The judgment was challenged by the appellant in the High Court seeking enhancement of compensation granted by the Tribunal questioning the correctness of the compensation awarded.  The High Court held that the compensation awarded by the Tribunal was more than adequate and dismissed the appeal.

Against the judgment of the High Court the appellant filed the present appeal before the Supreme Court.  The Supreme Court held that the lower authorities should have taken the wages of the deceased to be that of skilled worker or clerical and non technical supervisory staff as he was self employed and running his own business.  The Supreme Court further held that the rate applicable is ₹ 7020/- per month as per the order of Government of NCT of Delhi as minimum wages for the skilled worker.   In the case of self employed or on fixed wages, where there is no age of superannuation, the supreme Court was of the view that it would be just and equitable to provide an addition of 15% of the case where the victim is between the age group of 50 to 60 years.  The Supreme Court awarded ₹ 9,60,424/- as arrived at below-

Income fixed for compensation= ₹ 7020

ADD 15% for future prospect = ₹ 1053

Total= ₹ 8073

LESS person expenses of the deceased = ₹ 2691

Net income     = ₹ 5382

Compensation multiplier  = 11

Compensation payable  = 5382 x 12 x 11  = ₹ 7,10,424

Loss of consortium  = ₹ 1,00,000

Loss of love and affection= ₹ 1,00,000

Pain, loss and suffering= Rs.  25,000

Funeral and obsequies expenses  = Rs.  25,000

TOTAL= ₹ 9,60,424

The Supreme Court further directed to pay interest @ 9% from the date of filing the petition till the date of realization of the amount. 

Future prospects of promotion to be considered

In ‘Ramilabnen Chinnubai Parambar and other V. National Insurance Company and others’ – 2014 (4) TMI 1145 - SUPREME COURT the deceased was getting a gross salary of ₹ 14,103.77 per month apart from benefits like GFP, DA etc.,  The deceased was having another 12 years of service and there is a chance of revision of pay scales and getting one more promotion.  Taking into all consideration, the Tribunal arrived at the conclusion that the salary of the deceased would be ₹ 35,000/- per month at the time of his retirement and ₹ 25,000/- per month as his potential earning capacity on the date of his death.  The High Court upheld the same.  In appeal, the Supreme Court held that keeping in view the peculiar facts and circumstances of the case where the deceased died at an early age of 46 years, had 12 more years of service would have got promotion, resulting in his pay and emoluments, the Supreme Court felt that ends of justice would meet if the potential earning capacity of the deceased at ₹ 30,000/- per month instead of ₹ 25,000/- as fixed by the Tribunal.  The Supreme Court allowed the appeal and set aside the orders passed by the lower courts.