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Friday, April 6, 2018

Motor Accident Case- corporate laws- insurance laws- Not considered future prospects - reduce the award of interest from 9% p.a. to 6% p.a.=In view of the decision of the Constitution Bench in Pranay Sethi (supra), an addition of 25% is warranted, on account of future prospects having regard to the age of the deceased. The total income, after accounting for future prospects at 25% would work out to Rs 1,14,000 per annum. An amount of one fourth would have to be reduced on account of personal expenses. The net income would work out to Rs 85,500. Applying a multiplier of 14 the total compensation would work out to Rs 11,97,000. Adding a further amount of Rs 70,000 under conventional heads as stipulated in the judgment 1 (2017) 13 SCALE 12 4 in Pranay Sethi (supra), the total compensation payable would work out to Rs 12,67,000. We find no reason or justification for the High Court to reduce the award of interest to 6% p.a.. The rate of interest of 9% p.a. fixed by the Tribunal is restored.

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IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO 2697 OF 2018
(Arising out of SLP(C)No 2927 of 2017)
BHARTIBEN NAYABHA KER AND ORS ..Appellants
VERSUS
SIDABHA PETHABHA MANKE AND ORS ..Respondents
J U D G M E N T
Dr D Y CHANDRACHUD, J
1 The present appeal arises from a judgment of a learned Single Judge
dated 15 March 2016, in a first appeal from the decision of the Motor Accident
Claims Tribunal (MACT), Jamnagar.
2 The appellants are heirs and legal representatives of Nayabha Mapbha
Ker who died as a result of a motor accident on 18 July 1993. He was travelling
in a jeep bearing Registration No GBI-7896 which was being driven by the
fourth respondent towards Mithapur. At about 3.00 am the first respondent who
REPORTABLE
2
was driving a truck bearing Registration No.GJ-10-T-747, came from the
opposite direction and dashed against the jeep. Nayabha was seriously injured
and died during the course of the accident. His heirs filed a claim petition under
Section 166 of the Motor Vehicles Act, 1988 before the MACT, Jamnagar
seeking compensation in the amount of Rs 13 lakhs. By its award dated 19
July 1999 the Tribunal allowed the claim in the amount of Rs 7,78,000 together
with interest at the rate of 12 % per annum. The appellants filed a first appeal
before the High Court of Gujarat. The High Court, by its impugned judgment,
allowed an additional amount of Rs 33,000 under the head of loss of life,
expenses and consortium but reduced the rate of interest from 12 % p.a. to 9%
p.a. Aggrieved by the judgment of the High Court, the claimants are in appeal.
3 The deceased was 41 years old at the time of the accident. He had
acquired a B.A. and B.Ed. qualification. For seven years, he had served as
President of the Taluka Panchayat. The deceased owned agricultural land. The
Tribunal assessed the annual income of the deceased at Rs.81,000 comprised
of his agricultural income and income from other sources. Applying a multiplier
of 12, the Tribunal computed an amount of Rs. 7.56 lakhs towards the loss of
dependency. A total amount of Rs 7.78 lakhs was awarded inclusive of
conventional heads. In appeal, the High Court came to the conclusion that the
total income would work out to Rs 92,000 out of which one fourth would be
deducted for personal expenses. Applying a multiplier of 14, the High Court
3
awarded an additional amount of Rs 33,000. However, the rate of interest has
been reduced to 9% per annum.
4 Basically two submissions have been urged on behalf of the appellants.
First, it has been urged that the High Court did not allow for future prospects for
which provision has to be made in view of the law settled by a Constitution
Bench of this Court in National Insurance Company Limited v Pranay Sethi1
.
Second, it has been urged that there was no justification for the High Court to
reduce the award of interest from 9% p.a. to 6% p.a.
5 The High Court has computed the total income of the deceased at Rs
91,800 (Rs 55,000 being the income from agriculture and Rs 36,800 being the
income from salary). In view of the decision of the Constitution Bench in Pranay
Sethi (supra), an addition of 25% is warranted, on account of future prospects
having regard to the age of the deceased. The total income, after accounting
for future prospects at 25% would work out to Rs 1,14,000 per annum. An
amount of one fourth would have to be reduced on account of personal
expenses. The net income would work out to Rs 85,500. Applying a multiplier
of 14 the total compensation would work out to Rs 11,97,000. Adding a further
amount of Rs 70,000 under conventional heads as stipulated in the judgment

1
(2017) 13 SCALE 12
4
in Pranay Sethi (supra), the total compensation payable would work out to Rs
12,67,000.
6 We find no reason or justification for the High Court to reduce the award
of interest to 6% p.a.. The rate of interest of 9% p.a. fixed by the Tribunal is
restored.
7 The appeal is accordingly allowed by directing that the quantum of
compensation shall stand enhanced to Rs 12,67,000 on which interest shall be
payable at 9% p.a. from the date of the claim petition. There shall be no order
as to costs.
...........................................CJI
 [DIPAK MISRA]
 ...........................................J
 [A M KHANWILKAR]
 ...........................................J
 [Dr D Y CHANDRACHUD]
New Delhi;
April 05, 2018

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