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TMI Blog2013 (4) TMI 953X X X X Extracts X X X X X X X X Extracts X X X X ..... surance Co. Ltd. Ors. v. Patricia Jean Mahajan Ors. (2002 (6) SCC 281), Jyoti Kaul Ors. v. State of M.P. Anr. (2002 (6) SCC 306), Abati Bezbaruah v. Dy. Director General, Geological Survey of India Anr. (2003 (3) SCC 148), New India Assurance Co. Ltd. v. Shanti Pathak (Smt.) Ors. (2007 (10) SCC 1), were cited. The attention of the Bench was also invited to Sections 163A and 166 of the 1988 Act. The Bench was of the opinion that the question, whether the multiplier specified in the Second Schedule should be taken to be guide for calculation of amount of compensation payable in a case falling under Section 166 of the 1988 Act needed to be decided by a larger Bench. The reasons for referring the above issue to the larger Bench indicated in the referral order dated 23.07.2009 read as under: 39. We have noticed hereinbefore that in Patricia Jean Mahajan5 and Abati Bezbaruah and the other cases following them multiplier specified in the Second Schedule has been taken to be guiding factor for calculation of the amount of compensation even in a case under Section 166 of the Act. However, in Shanti Pathak this Court advocated application of lesser multiplier, although no legal principle has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sation is filed in terms of Section 166 of the 1988 Act that much amount may not be paid, although in the former case the amount of compensation is to be determined on the basis of no fault liability and in the later on fault liability . In the aforementioned situation the Courts, we opine, are required to lay down certain principles. 44.We are not unmindful of the Statement of Objects and Reasons to Act 54 of 1994 for introducing Section 163-A so as to provide for a new predetermined formula for payment of compensation to road accident victims on the basis of age/income; which is more liberal and rational. That may be so, but it defies logic as to why in a similar situation, the injured claimant or his heirs/legal representatives, in the case of death, on proof of negligence on the part of the driver of a motor vehicle would get a lesser amount than the one specified in the Second Schedule. The Courts, in our opinion, should also bear that factor in mind. 45. Having regard to divergence of opinion and this aspect of the matter having not been considered in the earlier decisions, particularly in the absence of any clarification from the Parliament despite the recommendations made b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erein which provided that in any claim for compensation under sub-section (1) of Section 92-A, the claimant shall not be required to plead and establish that the death or permanent disablement in respect of which the claim has been made was due to any wrongful act, neglect or default of the owner or owners of the vehicles concerned or of any other person. 4. In Gujarat State Road Transport Corporation, Ahmedabad v. Ramanbhai Prabhatbhai and Another10, a two-Judge Bench held that the compensation awardable under Section 92-A was without proof of any negligence on the part of the owner of the vehicle or any other person which was clearly a departure from the usual common law principle that a claimant should establish negligence on the part of the owner or driver of the motor vehicle before claiming any compensation for the death or permanent disablement caused on account of a motor vehicle accident. Certain observations made in Minu B. Mehta9 were held to be obiter in Ramanbhai Prabhatbhai (1987 (3) SCC 234) . 5. The 1988 Act replaced the 1939 Act. Chapter X of the 1988 Act deals with liability without fault in certain cases. Sub-section (3) of Section 140 provides that in any claim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -A. Special provisions as to payment of compensation on structured formula basis.- (1) Notwithstanding anything contained in this Act or in any other law for the time being in force or instrument having the force of law, the owner of the motor vehicle or the authorised insurer shall be liable to pay in the case of death or permanent disablement due to accident arising out of the use of motor vehicle, compensation, as indicated in the Second Schedule, to the legal heirs or the victim, as the case may be. Explanation.-For the purposes of this sub-section, permanent disability shall have the same meaning and extent as in the Workmen's Compensation Act, 1923 (8 of 1923). (2) In any claim for compensation under sub-section (1), the claimant shall not be required to plead or establish that the death or permanent disablement in respect of which the claim has been made was due to any wrongful act or neglect or default of the owner of the vehicle or vehicles concerned or of any other person. (3) The Central Government may, keeping in view the cost of living by notification in the Official Gazette, from time to time amend the Second Schedule. 7. Along with Section 163A Second Schedule wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r default of the owner or owners of the vehicle concerned. The scheme of Section 163A is a departure from the general principle of law of tort that the liability of the owner of the vehicle to compensate the victim or his heirs in a motor accident arises only on the proof of negligence on the part of the driver. Section 163A has done away with the requirement of the proof of negligence on the part of the driver of the vehicle where the victim of an accident or his dependants elect to apply for compensation under Section 163A. When an application for compensation is made under Section 163A the compensation is paid as indicated in the Second Schedule. The table in the Second Schedule has been found by this Court to be defective to which we shall refer at a little later stage. 11. On the other hand, by making an application for compensation arising out of an accident under Section 166 it is necessary for a claimant to prove negligence on the part of the driver or owner of the vehicle. The burden is on the claimant to establish the negligence on the part of the driver or owner of the vehicle and on proof thereof, the claimant is entitled to compensation. We are confronted with the ques ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orporation of Sections 163A and 163B in the 1988 Act the situation had undergone a change. Under the Second Schedule, the maximum multiplier could be upto 18 and not 16 as was held in Susamma Thomas1 . In Trilok Chandra3 , the maximum multiplier was fixed at 18 but the Court did find several defects in the calculation of compensation and the amount worked out in the Second Schedule. Importantly this Court stated in Trilok Chandra3 that Tribunals and the Courts cannot go by the ready reckoner; the Schedule can only be used as a guide. This is what this Court said in paras 17 and 18 of the Report: 17. The situation has now undergone a change with the enactment of the Motor Vehicles Act, 1988, as amended by Amendment Act 54 of 1994. The most important change introduced by the amendment insofar as it relates to determination of compensation is the insertion of Sections 163-A and 163-B in Chapter XI entitled Insurance of Motor Vehicles against Third Party Risks . Section 165-A begins with a non obstante clause and provides for payment of compensation, as indicated in the Second Schedule, to the legal representatives of the deceased or injured, as the case may be. Now if we turn to the S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red the question, whether Second Schedule to the 1988 Act can be made applicable in deciding the application for compensation made under Section 166 or not? This Court held that the Second Schedule under Section 163A of the 1988 Act which gives the amount of compensation to be determined for the purpose of claim under that Section can be taken as a guideline while determining the compensation under Section 166 of the 1988 Act. The Second Schedule in terms does not apply to a claim made under Section 166 of the 1988 Act. 15. In Patricia Jean Mahajan5 , this Court had an occasion to consider Sections 163A and 166 of the 1988 Act. With regard to Section 163A, the Court stated, the noticeable features of this provision are that it provides for compensation in the case of death or permanent disablement due to accident arising out of use of motor vehicle. The amount of compensation would be as indicated in the Second Schedule. The claimant is not required to plead or establish that the death or permanent disablement was due to any wrongful act or negligence or default of the owner of the vehicle or any other person. 16. Then the Court referred to Sections 165 and 166 of the 1988 Act and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... application of multiplier of 7 is definitely on the lower side. Some deviation in the figure of multiplier would not mean that there may be a wide difference between the multiplier applied and the scheduled multiplier which in this case is 13. The difference between 7 and 13 is too wide. As observed earlier, looking to the high amount of multiplicand and the ages of the dependants and the fact that the parents are residing in India, in our view application of multiplier of 10 would be reasonable and would provide a fair compensation i.e. a purchase factor of 10 years. We accordingly hold that multiplier of 10 as applied by the learned Single Judge should be restored instead of multiplier of 13 as applied by the Division Bench. We find no force in the submission made on behalf of the claimants that in no circumstances the amount of multiplicand would be a relevant consideration for application of appropriate multiplier. We have already given our reasons in the discussion held above. 20. The court cannot be totally oblivious to the realities. The Second Schedule while prescribing the multiplier, had maximum income of ₹ 40,000 p.a. in mind, but it is considered to be a safe guid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... herefor. An award made thereunder, therefore, shall be in full and final settlement of the claim as would appear from the different columns contained in the Second Schedule appended to the Act. The same is not interim in nature. . . . This together with the other heads of compensation as contained in columns 2 to 6 thereof leaves no manner of doubt that Parliament intended to lay a comprehensive scheme for the purpose of grant of adequate compensation to a section of victims who would require the amount of compensation without fighting any protracted litigation for proving that the accident occurred owing to negligence on the part of the driver of the motor vehicle or any other fault arising out of use of a motor vehicle. xxx xxx xxx 46. Section 163-A which has an overriding effect provides for special provisions as to payment of compensation on structured-formula basis. Sub-section (1) of Section 163-A contains non obstante clause in terms whereof the owner of the motor vehicle or the authorised insurer is liable to pay in the case of death or permanent disablement due to accident arising out of the use of motor vehicle, compensation, as indicated in the Second Schedule, to the le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Jashuben and Ors. (2008 (4) SCC 162, two-Judge Bench of this Court applied the multiplier of 13 in a case where the age of the deceased was 35 years at the time of accident. 23. In Sarla Verma (Smt.) and Ors. v. Delhi Transport Corporation and Anr. (2009 (6) SCC 121), this Court had an occasion to consider the peculiarities of Section 163A of the 1988 Act vis- -vis Section 166. The Court reiterated what was stated in earlier decisions that the principles relating to determination of liability and quantum of compensation were different for claims made under Section 163A and claims made under Section 166. It was stated that Section 163A and the Second Schedule in terms did not apply to determination of compensation in applications under Section 166. While stating that Section 163A contains a special provision, this Court said: 34. . . . . . . Section 163-A of the MV Act contains a special provision as to payment of compensation on structured formula basis, as indicated in the Second Schedule to the Act. The Second Schedule contains a table prescribing the compensation to be awarded with reference to the age and income of the deceased. It specifies the amount of compensation to be a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me ranging between ₹ 3000 and ₹ 12,000 per annum. Be that as it may. 25. While referring to the decisions of this Court in New India Assurance Company Ltd. v. Charlie and Anr (2005 (10) SCC 720), T.N. State Road Transport Corporation v. S. Rajapriya and Ors. (2005(6) SCC 236) and U.P. State Road Transport Corporation v. Krishna Bala and Ors. (2006 (6) SCC 249), this Court in Sarla Verma17 in paragraph 39 (pg. 138) of the Report observed as follows: 39. In New India Assurance Co. Ltd. v. Charlie this Court noticed that in respect of claims under Section 166 of the MV Act, the highest multiplier applicable was 18 and that the said multiplier should be applied to the age group of 21 to 25 years (commencement of normal productive years) and the lowest multiplier would be in respect of persons in the age group of 60 to 70 years (normal retiring age). This was reiterated in T.N. State Transport Corpn. Ltd. v. S. Rajapriya and U.P. SRTC v. Krishna Bala. 26. In Sarla Verma17, this Court undertook the exercise of comparing the multiplier indicated in Susamma Thomas1 , Trilok Chandra3 and Charlie18, for claims under Section 166 of the 1988 Act with the multiplier mentioned in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Lords laid down the test that award of damages in fatal accident action is compensation for the reasonable expectation of pecuniary benefit by the deceased s family. The purpose of award of compensation is to put the dependants of the deceased, who had been bread-winner of the family, in the same position financially as if he had lived his natural span of life; it is not designed to put the claimants in a better financial position in which they would otherwise have been if the accident had not occurred. At the same time, the determination of compensation is not an exact science and the exercise involves an assessment based on estimation and conjectures here and there as many imponderable factors and unpredictable contingencies have to be taken into consideration. 31. This Court in C.K. Subramania Iyer and Ors. v. T.Kunhikuttan Nair and Ors. 1970 (2) SCR 688 , reiterated the legal philosophy highlighted in Taff Vale Railway 21 for award of compensation in claim cases and said that there is no exact uniform rule for measuring the value of the human life and the measure of damages cannot be arrived at by precise mathematical calculations. Obviously, award of damages in each case woul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he deductions to be made towards the personal living expenses of the deceased; and (iii) the multiplier to be applied with reference to the age of the deceased. We do not think it is necessary for us to revisit the law on the point as we are in full agreement with the view in Sarla Verma17 . 34. If the multiplier as indicated in Column (4) of the table read with paragraph 42 of the Report in Sarla Verma17 is followed, the wide variations in the selection of multiplier in the claims of compensation in fatal accident cases can be avoided. A standard method for selection of multiplier is surely better than a criss-cross of varying methods. It is high time that we move to a standard method of selection of multiplier, income for future prospects and deduction for personal and living expenses. The courts in some of the overseas jurisdictions have made this advance. It is for these reasons, we think we must approve the table in Sarla Verma17 for the selection of multiplier in claim applications made under Section 166 in the cases of death. We do accordingly. If for the selection of multiplier, Column (4) of the table in Sarla Verma17 is followed, there is no likelihood of the claimants wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctual salary income of the deceased towards future prospects where the deceased had a permanent job and was below 40 years and the addition should be only 30% if the age of the deceased was 40 to 50 years and no addition should be made where the age of the deceased is more than 50 years. Where the annual income is in the taxable range, the actual salary shall mean actual salary less tax. In the cases where the deceased was selfemployed or was on a fixed salary without provision for annual increments, the actual income at the time of death without any addition to income for future prospects will be appropriate. A departure from the above principle can only be justified in extraordinary circumstances and very exceptional cases. 37. As regards deduction for personal and living expenses, in Sarla Verma17, this Court considered Susamma Thomas1 , Trilok Chandra3 and Fakeerappa23 and finally in paras 30, 31 and 32 of the Report held as under: 30 .Having considered several subsequent decisions of this Court, we are of the view that where the deceased was married, the deduction towards personal and living expenses of the deceased, should be one-third (1/3rd) where the number of dependent fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ust ordinarily be followed unless a case for departure in the circumstances noted in the preceding para is made out. 40. In what we have discussed above, we sum up our conclusions as follows: (i) In the applications for compensation made under Section 166 of the 1988 Act in death cases where the age of the deceased is 15 years and above, the Claims Tribunals shall select the multiplier as indicated in Column (4) of the table prepared in Sarla Verma17 read with para 42 of that judgment. (ii) In cases where the age of the deceased is upto 15 years, irrespective of the Section 166 or Section 163A under which the claim for compensation has been made, multiplier of 15 and the assessment as indicated in the Second Schedule subject to correction as pointed out in Column (6) of the table in Sarla Verma17 should be followed. (iii) As a result of the above, while considering the claim applications made under Section 166 in death cases where the age of the deceased is above 15 years, there is no necessity for the Claims Tribunals to seek guidance or for placing reliance on the Second Schedule in the 1988 Act. (iv) The Claims Tribunals shall follow the steps and guidelines stated in para 19 of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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