Oriental Insurance Co. Ltd.

v Ram Prasad Varma and others - Date of Judgment: 13/1/2009

Case No.: Civil Appeal No. 106 Of 2009  -  Bench: S.B. Sinha, Cyriac Joseph

Judgment: [Arising Out Of S.L.P. (Civil) No. 16785 Of 2006]

Arijit Pasayat, J.- Leave granted

2. Ram Prasad Varma, respondent No. 1, an Assistant Executive Engineer, was employed with Oil and Natural Gas
Corporation (ONGC) at Rajahmundry. On or about 9.9.1998, while he was going to the workshop, he was hit by a
lorry bearing registration No. AP-16-W-5839. The lorry ran over his legs. He was admitted in the hospital.
Indisputably, both his legs were amputated. The fact that an accident had taken place owing to rash 2 and negligent
driving on the part of the driver of the said lorry is not in dispute. It is also not in dispute that, at the relevant time,
respondent was aged 55 years and his annual income was Rs.2,27,471.00.

3. Respondent having suffered permanent disability filed a Claim Petition in terms of Section 166 of the Motor
Vehicles Act claiming compensation of a sum of Rs.20 lakhs; Rs.50,000/- towards extra nourishment; Rs. 50,000/-
towards compensation for mental agony, pain and suffering; Rs. 50,000/- for loss of amenities in life and Rs.2 lakhs
for the expenditure of attendant throughout the life and Rs.16.50 lakhs towards loss of future earnings.

4. The Motor Accidents Claims Tribunal awarded a sum of Rs.19,63,000/- with interest at the rate of 12% per
annum from the date of filing of the petition till realization.

5. An appeal preferred thereagainst by the Insurance Company before the High Court in terms of Section 173 of the
Act has been dismissed by reason of the impugned judgment. The High Court, however, considering the prevailing
rate of interest reduced the rate of interest from 12% per annum to 9% per annum. 3 6. Mr. Pankaj Seth, learned
counsel appearing on behalf of appellant would contend:

(i) The learned Tribunal, and consequently the High Court, committed a serious error in applying multiplier of eight
although respondent would have retired from services on attaining the age of sixty.

(ii) The Tribunal in determining the amount of compensation should have deducted the amount of income tax from
his gross salary as compensation has been granted on the basis of the structured formula.

(iii) The Tribunal in determining the said amount of compensation should have deducted one-third from the total
amount of his income by way of miscellaneous expenses.

7. Indisputably, the respondent was an Assistant Executive Engineer. He was an income tax payee. He had
submitted income tax return for the year 1998-99 showing his gross salary at Rs.2,27,471.40 and the amount of
income-tax deducted at source was Rs.30,748.00. 4

8. A claimant who had suffered injuries in a motor vehicle accident resulting in amputation of both legs is entitled to
100% compensation in terms of the First Schedule appended to the Workmen's Compensation Act, 1923. The
amount of compensation which represents the loss of income can be calculated either in terms of the structured
formula as contained in the Second Schedule appended to the Motor Vehicles Act or on the basis of the other
materials brought on record. It is not in dispute that in a case of this nature, the Tribunal cannot be said to have
committed any illegality in applying the structured formula.

9. The Second Schedule as such may not have any application as the maximum annual income of a deceased or an
injured which could be taken into consideration therefor is Rs.40,000/- per annum. However, keeping in view the
peculiar factual circumstances of the case, the proper multiplier which, in our opinion, should be adopted is eight for
the purpose of determining fair compensation.

10. Indisputably, he was to retire within a few years, but in view of the injuries suffered he had to give up his job.
The life expectancy of an Indian citizen is about 62 years. A person on retirement, in the event if pension scheme is
applicable, would be entitled to pensionary benefits. Had the 5 respondent worked for five years more, the amount
of pension calculated on the basis of last pay drawn would have been more than what might have become payable in
the year 1998.

11. One-third amount is deducted from computation of compensation from the total income on the premise that
some expenses were necessary for one's own survival. Incidentally, we may notice that in the note appended to the
Second Schedule, the amount of compensation arrived in the case of fatal accident claims is required to be reduced
by one-third in consideration of the expenses which the victim would have incurred towards maintaining himself
had he been alive. A person, although alive, but when he is not in a position to move and even for every small thing
he has to depend upon the services of another, in our opinion, a direction to deduct 1/3rd of the amount from his
total income need not always be insisted upon. 12. Our attention, however, has been drawn to a decision of this
Court in New India Assurance Co. Ltd. v. Charlie and Anr. [(2005) 10 SCC 720] wherein 1/3rd was directed to
be deducted towards personal expenditure, we do not find that any legal principle was laid down therein. It also does
not appear that the premise on which such deduction is allowed and what would 6 happen in a case, where such a
premise does not exist, did not fall for consideration. In Charlie (supra), this court itself opined that in a case, where
the injured had suffered 100% disability, the legal principle for determination of compensation applicable to a
deceased can, in appropriate cases, taking note of all relevant factors be reasonably applied even in a case of totally
permanent disabled person. This Court referred to Halsbury's Laws of England, Volume 34, para 98 wherein it was
held that the multiplier may be increased where the plaintiff is a high tax payer. That principle is also applicable in
this case. In Halsbury (supra), it was stated that in applying the structured formula it is assumed that the return on
fixed interest bearing securities is so much higher than 4 to 5 per cent that rough and ready allowance for inflation is
thereby made. It was stated: "14. 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 7 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." 13. Our attention has also been drawn to a recent decision of this Court in Sunil Kumar vs. Ram
Singh Gaud & Ors. [2007 (12) SCALE 792] wherein a Division Bench has opined as under:- "9. Taking into
consideration the present income of the appellant as Rs.4,000/- per month; and the permanent disability of 45%
suffered by him, we are of the view that the capacity of the appellant to earn in future would be reduced by
Rs.1,800/- per month approximately. If 1/3rd is deducted towards miscellaneous expenses, the loss of income comes
to Rs.1,200/- per month which, in turn, comes to Rs.14,400/- per annum. Appellant was 29 years of age at the time
of accident. Taking the multiplier to be 18 [as per the Second Schedule to Section 163A of the Act], the total loss of
income comes to Rs.2,59,200/-." 8 In that case, the injured suffered permanent disability of 45%. Even therein the
multiplier of 18 was applied. It was held that by reason of disability suffered by the claimant his earning capacity
would be reduced. In the instant case, respondent has become totally immobile. 14. Our attention has also been
drawn to a decision of this Court in Bijoy Kumar Dugar v. Bidyadhar Dutta and Ors. [(2006) 3 SCC 242]. In that
case, multiplier of 12 was applied. However, some observations were made that in regard to future prospects of
income in the course of employment or business or profession, as the case may be, some cogent and reliable
evidence have to be led.

15. In this case, respondent was a highly placed employee in a prestigious public sector undertaking. By reason of
termination of service, he is not only deprived of his salary but also various other allowances to which he was
otherwise entitled to. His family members could have taken benefit of some of the allowances. 16. We may,
however, notice that in General Manager, Kerala State Road Transport Corporation, Trivandrum vs. Susamma
Thomas (Mrs.) & ors. [(1994) 2 SCC 176], this Court held: 9 "9. The assessment of damages to compensate the
dependants is beset with difficulties because from the nature of things, it has to take into account many
imponderables, e.g., the life expectancy of the deceased and the dependants, the amount that the deceased would
have earned during the remainder of his life, the amount that he would have contributed to the dependants during
that period, the chances that the deceased may not have lived or the dependants may not live up to the estimated
remaining period of their life expectancy, the chances that the deceased might have got better employment or
income or might have lost his employment or income altogether. 10. The manner of arriving at the damages is to
ascertain the net income of the deceased available for the support of himself and his dependants, and to deduct
therefrom such part of his income as the deceased was accustomed to spend upon himself, as regards both self-
maintenance and pleasure, and to ascertain what part of his net income the deceased was accustomed to spend for
the benefit of the dependants. Then that should be capitalised by multiplying it by a figure representing the proper
number of year's purchase.

11. Much of the calculation necessarily remains in the realm of hypothesis "and in that region arithmetic is a good
servant but a bad master" since there are so often many imponderables. In every case "it is the over-all picture that
matters" and the court must try to assess as best as it can the loss suffered." 10 17. This aspect of the matter has also
been considered in U.P. State Road Transport Corporation and Ors. v. Trilok Chandra and Ors. [(1996) 4 SCC 362]
by a Three-Judge Bench of this Court in the following terms: "9. The compensation to be awarded has two elements.
One is the pecuniary loss to the estate of the deceased resulting from the accident, the other is the pecuniary loss
sustained by the members of his family for his death. The Court referred to these two elements in the Gobald Motor
Seivice's [AIR 1962 SC 1] case.

These two elements were to be awarded under Section 1 and Section 2 of the Fatal Accidents Act, 1855 under which
the claim in that case arose. The Court in that case cautioned that while making the calculations no part of the claim
under the first or the second element should be included twice. The Court gave a very lucid illustration, which can
be quoted with profit: `An illustration may clarify the position. X is the income of the estate of the deceased, Y is the
yearly expenditure incurred by him on his dependents (we will ignore the other expenditure incurred by him). X-Y
i.e. Z, is the amount he saves every year. The capitalised value of the income spent on the dependents, subject to
relevant deductions, is the pecuniary loss sustained by the members of his family through his death. The capitalised
value of his income, subject to relevant deductions, would be the loss caused to the estate by his death. If the
claimants under both the heads are the same, and if they get compensation for the entire loss caused to the estate,
they cannot claim again under the head of personal loss the capitalised income that might have been 11 spent on
them if the deceased were alive. Conversely, if they got compensation under Section 1, representing the amount that
the deceased would have spent on them, if alive, to that extent there should be deduction in their claim under Section
2 of the Act in respect of compensation for the loss caused to the estate. To put it differently if under Section 1 they
got capitalised value of Y, under Section 2 they could get only the capitalised value of Z, for the capitalised value Y
+ Z = X would be the capitalised value of his entire income." {See also Bangalore Metropolitan Transport
Corporation. vs. Sarojamma and Anr. [(2008) 5 SCC 142]} 18. Following the aforementioned precedents, we are of
the opinion that in the peculiar facts and circumstances of this case, it is not necessary to interfere either with the
application of multiplier of eight or non-deduction of 1/3rd from his net salary. However, what was the net salary of
the respondent for the said purpose should have been determined. An employee when not in employment is not to
pay his tax. Income tax payable from the salary, therefore, was required to be deducted. It was so held in National
Insurance Company Ltd. v. Indira Srivastava and Ors. [(2008) 2 SCC 763], stating: 12 "17. This Court in Asha
(supra) did not address itself the questions raised before us. It does not appear that any precedent was noticed nor the
term 'just compensation' was considered in the light of the changing societal condition as also the perks which are
paid to the employee which may or may not attract income tax or any other tax. What would be 'just compensation'
must be determined having regard to the facts and circumstances of each case. The basis for considering the entire
pay packet is what the dependents have lost due to death of the deceased. It is in the nature of compensation for
future loss towards the family income. xxx xxx xxx 19. The amounts, therefore, which were required to be paid to
the deceased by his employer by way of perks, should be included for computation of his monthly income as that
would have been added to his monthly income by way of contribution to the family as contradistinguished to the
ones which were for his benefit. We may, however, hasten to add that from the said amount of income, the statutory
amount of tax payable thereupon must be deducted." Incidentally, we may notice that in that case also this Court
held: "21. If the dictionary meaning of the word 'income' is taken to its logical conclusion, it should include those
benefits, either in terms of money or otherwise, which are taken into consideration for 13 the purpose of payment of
income-tax or profession tax although some elements thereof may or may not be taxable or would have been
otherwise taxable but for the exemption conferred thereupon under the statute. xxx xxx xxx 25. The expression 'just'
must also be given its logical meaning. Whereas it cannot be a bonanza or a source of profit but in considering as to
what would be just and equitable, all facts and circumstances must be taken into consideration."

19. The High Court has directed payment of interest at the rate of 9% per annum. We do not think that any case has
been made out for interference with the rate of interest. The appeal is dismissed subject to the modification that from
the gross income of the respondent, the amount of income tax as was applicable at the relevant time should be
deducted. The Tribunal is directed to redetermine the amount of compensation in the light of this judgment.
However, in the facts and circumstances of this case, there shall be no order as to costs.

Usha Rajkhowa and others v M/s. Paramount Industries and others - Date of Judgment: 17/2/2009
Case No.: Civil Appeal No. 1088 of 2009 -  Bench: S.B. Sinha &  V.S. Sirpurkar

Judgment: Arising out of SLP (C) No. 16647 of 2008

V.S. Sirpurkar, J.- Leave granted

The appellants herein challenges the judgment passed by the High Court, confirming the judgment of the Motor
Accidents Claim Tribunal (hereinafter referred to as `the Tribunal' for short), whereby, the Tribunal limited the
appellants' entitlement to 50% of assessed claim amount and granted compensation of Rs.6,56,300/- on the ground
that there was contributory negligence on the part of the driver of the Car, who lost his life in accident. He was the
husband of appellant No. 1 and the father of appellant No. 2. The Car was insured by respondent No. 3 Oriental
Insurance Company Ltd. 2

3. One Jadhav Rajkhowa died in a motor vehicle accident on 5.12.1998 at about 7 pm, when he had gone to Dergaon
market from his house at Dadhara in his Maruti Car bearing Registration No. WB/12/6287. On the way of Dergaon,
one truck bearing Registration No. NLA-241, coming from Jorhat side towards Bokakhat in a rash and negligent
manner, hit the Maruti Car causing the instant death of said Jadhav Rajkhowa. Therefore, the claim petition was
filed by his legal representatives (the appellants herein). The Car was insured with Oriental Insurance Company
Ltd., while the offending truck belonged to M/s. Paramount Industries, Jorhat (respondent No. 1 herein), which was
insured with United India Insurance Company Ltd., Golaghat Branch (respondent No. 2 herein).

4. The Oriental Insurance Company Ltd. in defence, contended that Maruti Car was under the valid insurance
coverage with it and it was an Act Policy and the owner Jadhav Rajkhowa had paid Rs.373/- by way of premium
covering the third party risk and that he had paid no additional premium covering his own life risk, even though
there was provision under separate insurance policy nor had he paid any additional premium for driver and
occupants. It was claimed by the Oriental Insurance Company Ltd. that the owner, driver and occupants were never
treated as third party and since it was an Act Policy, the claimant would not be entitled to claim any compensation
from them. The owner of the truck had submitted that its truck was under the valid insurance policy with United
India Insurance Company Ltd. and, therefore, the owner was not liable to pay any compensation and compensation,
if any, had to be paid by the Insurance 3 Company. The United India Insurance Company Ltd., however, submitted
that the accident had taken place due to rash and negligent driving on the part of the driver of the Maruti Car and the
valid insurance was in favour of the truck, as had been admitted.

5. In support of the claim, appellant/claimant Usha Rajkhowa appeared as PW-1 and stated that her husband was the
driver of the Maruti Car at the time of its accident and he was an employee of Oil India Ltd. She further stated that
her husband was 30 years old at the time of accident and he had two children at that time. She claimed the monthly
pay of her husband to be Rs.10,536/-. PW-2 Sarbeswar Bora was an employee of Oil India Ltd. He stated that
deceased Jadhav Rajkhowa was Safety Inspector at the time of accident. The other witness examined was
Madhuriya Rajkhowa PW-3, who stated that he was travelling along with one Dhiren Hazarika in Maruti Car and
that the offending truck No. NLA-241 was coming from the opposite direction in high speed and hit the car. It was
claimed by the witness that both Dhiren Hazarika, as also Jadhav Rajkhowa had died on the spot, while he escaped
the death with certain grievous injuries. In his Cross Examination, PW-3 stated that:- "As to which vehicle was at
fault I can't say clearly. It is not a fact that accident took place because of fault of Maruti Car." He further stated:-
"Maruti Car was going on its own side. Truck hit the Maruti Car." 4 On the basis of this evidence, the Tribunal,
firstly returned a finding that the Oriental Insurance Company Ltd. was not liable to pay any compensation, since the
policy covering the owner of the Maruti Car, was not a comprehensive policy, but only an Act Policy. Insofar as the
assessment of compensation is concerned on the basis of monthly salary and applying the multiplier formula, the
amount was assessed at Rs.13,05,600/-. Adding the funeral expenditure of Rs.2,000/- and loss of consortium of
Rs.5,000/-, the total amount was arrived at Rs.13,12,600/-. The Tribunal then came to the finding that this amount
was payable by United India Insurance Company Ltd., which was the insurer of the truck No. NLA-241 to the extent
of 50% only, while the balance amount is to be borne by the owner himself. The Tribunal, ultimately held that the
claimant would be entitled to compensation of Rs.6,56,300/- from United India Insurance Company Ltd. with the
accrued interest @ 9% p.a. from the date of filing of the claim petition.

6. This award of the Tribunal was appealed against by the present appellants under Section 173 of the Motor
Vehicles Act, 1988. It was asserted in the appeal that the Tribunal in its award should not have limited the liability to
50% by apportioning between both the involved vehicles, as there were no pleadings or evidence in support of such
apportionment. It was specifically stated in the appeal memo that the Tribunal itself had not held any contributory
negligence on the part of Maruti Car nor had it given any finding and thus, the claim could not have been reduced to
50%, applying the theory of contributory negligence. The High Court firstly 5 endorsed the finding of the Tribunal
that Oriental Insurance Company Ltd. was not liable to pay any compensation, since the policy was an Act Policy.
The High Court then went into the exercise of appreciation of evidence and observed that the Tribunal had held that
the accident took place due to contributory negligence of the drivers of the truck and the Maruti Car. Considering
the evidence of PW-3, it referred to the stray sentence, which we have quoted earlier, to the effect that the witness
was not able to say clearly as to which vehicle was at fault. On this very basis, the High Court endorsed the so-called
finding of the Tribunal that it was an act of contributory negligence. The High Court, therefore, held both the
vehicles equally responsible for the accident and proceeded to dismiss the appeal. It is this judgment, which has
fallen for consideration before us.

7. The Learned Counsel, appearing on behalf of the appellants, firstly invited our attention to the award passed by
the Tribunal, as also to the evidence led on behalf of the appellants and severely criticized the same. The Learned
Counsel also submitted that the approach of the Tribunal and the High Court is erroneous and contrary to the
evidence on record. The Learned Counsel for United Insurance Company Ltd., however, supported the impugned
judgment.

8. In spite of our minute scrutiny of the award, we have not been able to even find a mention of words "contributory
negligence" in the award passed by the Tribunal. There is, in fact, no finding given by the Tribunal as regards the
contributory negligence. The subject is discussed in paragraphs 10 and 11, where we do not find any specific finding
to the 6 effect that Maruti Car was guilty of the contributory negligence. It is only because the amount of
compensation is restricted to the 50% of the assessed amount that we have to infer that the Tribunal had given a
finding of contributory negligence. Even at the cost of repetition, we may say that the words "contributory
negligence" nowhere appear in the award passed by the Tribunal. There is only one stray statement in the award,
concerning the evidence of PW-3 Madhuriya Rajkhowa to the effect that he failed to state which of the vehicles was
actually at fault. On this backdrop, when we see the impugned judgment, very interestingly, the judgment mentions
in paragraph 9:- "In the present case at hand, the learned Tribunal has held that the accident took place due to
contributory negligence of the driver of the truck and the Maruti Car." We are afraid, such sentence is not to be
found in the award of the Tribunal. We do not know, as to where has this finding been found by the High Court in
the award. The High Court then referred to the evidence of PW-3 and referred to the same sentence by PW-3. It is
on the basis of this stray sentence that the High Court chose to confirm the finding of the Tribunal (which is not to
be found) regarding the contributory negligence. Such appreciation is clearly erroneous.

9. We must say that the criticism by the Learned Counsel for the appellants that the High Court, as well as, the
Tribunal have not applied their mind to the matter, is quite justified. We, ourselves, have seen the evidence of PW-3.
In the Examination-in-Chief, the witness very 7 specifically asserted that the truck was coming from the opposite
direction in a high speed from Jorhat side and it hit the Car, as a result of which Shri Jadhav Rajkhowa and Shri
Dhiren Hazarika died, while he had received injuries. He was undoubtedly right in saying that he could not say
clearly as to which vehicle was at fault, however, he was quick to deny the suggestion thrown at him that the
accident took place because of the fault of Maruti Car. He has very specifically denied that suggestion in the
following words:- "It is not a fact that accident took place because of fault of Maruti Car." As if all this was not
sufficient, he then in his Cross-Examination at the instance of Oriental Insurance Company Ltd., asserted that Maruti
Car was going on its own side (when the truck hit the Maruti Car). Now, the following factors are clear from this
evidence:-
1. The truck was coming in high speed.
2. It was the truck, which hit the Car and not vice versa.
3. The Maruti Car was going on its own side. It seems that the Tribunal, as well as, the High Court had chosen to go
by the inference drawn by PW-3 or at any rate, his inability to fix the liability. It is not the judgment of the witness,
which is decisive in the matter. In fact, the Tribunal, as well as, the High Court should have framed their own
opinion, instead of going by the judgment or as the case may be, inference by PW-3. 8 Under such circumstances,
applying the doctrine of res ipsa loquitor, it is clear that it was because of the negligence on the part of the truck that
the accident took place. After all the hit given by the truck was so powerful that two persons in the Car died on the
spot, while the third escaped with serious injuries. When we see the award of the Tribunal, as also the appellate
judgment, they are astonishingly silent on these aspects. We are, therefore, convinced that there was no question of
any contributory negligence on the part of the driver of the Maruti Car and it was solely because of the negligence
on the part of the truck that the accident took place.

10. The question of contributory negligence on the part of the driver in case of collision was considered by this
Court in Pramodkumar Rasikbhai Jhaveri Vs. Karmasey Kunvargi Tak and Ors. reported in 2002 (6) SCC
455. That was also a case of collusion in between a Car and a truck. It was observed in Para 8:- "The question of
contributory negligence arises when there has been some act or omission on the claimant's part, which has materially
contributed to the damage caused, and is of such a nature that it may properly be described as `negligence'.
Negligence ordinarily means breach of a legal duty to care, but when used in the expression "contributory
negligence", it does not mean breach of any duty. It only means the failure by a person to use reasonable care for the
safety of either himself or his property, so that he becomes blameworthy in part as an "author of his own wrong." 9
This Court further relied on an observation of High Court of Australia in Astley Vs. Austrust Ltd. reported in 1999
(73) ALJR 403 to the following effect:- "A finding of contributory negligence turns on a factual investigation
whether the plaintiff contributed to his or her own loss by failing to take reasonable care of his or her person or
property. What is reasonable care depends on the circumstances of the case. In many cases, it may be proper for a
plaintiff to rely on the defendant to perform its duty. But there is no absolute rule. The duties and responsibilities of
the defendant are a variable factor in determining whether contributory negligence exists and, if so, to what degree.
In some cases, the nature of the duty owed may exculpate the plaintiff from a claim of contributory negligence; in
other cases, the nature of the duty may reduce the plaintiff's share of responsibility for the damage suffered; and in
yet other cases, the nature of the duty may not prevent a finding that the plaintiff failed to take reasonable care for
the safety of his or her person or property. Contributory negligence focuses on the conduct of the plaintiff. The duty
owed by the defendant, although relevant, is one only of many factors that must be weighed in determining whether
the plaintiff has so conducted itself that it failed to take reasonable care for the safety of its person or property."
Keeping these principles in mind, we find that there was absolutely no evidence to suggest that there was any failure
on the part of the Car driver to take any particular care or that he had breached his duty in any manner. Such breach
on his part had to be proved by Insurance Company as it was its burden and for that, the Punchanama of the spot,
showing tyre marks caused by brakes, the Panchanama of the damaged car and the truck could have been brought on
record. The Insurance Company has obviously failed to discharge its burden. We, therefore, respectfully follow the
above mentioned judgment.

11. Under the circumstances, there would be no question of restricting the claim to the 50% of the assessed amount
of compensation.

12. The Learned Counsel for the respondents did not address us on the question of quantum. We hold that the
compensation was correctly assessed. We, however, would not confirm the theory that the accident took place
because of the contributory negligence and would choose to award full compensation to the appellants. The appeal is
allowed. The award of the Tribunal and appellate judgment of the High Court are modified to the extent we have
indicated. The appeal stands allowed with costs.