REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO.3723 OF 2012
(arising out of SLP (C) No. 24489 of 2010)
Santosh Devi … Appellant
Versus
National Insurance Company Ltd. and others … Respondents
J U D G M E N T
G.S. SINGHVI, J.
1. Leave granted.
2. Feeling dissatisfied with the enhancement granted by the Punjab and
Haryana High Court in the amount of compensation determined by Motor
Accident Claims Tribunal, Gurdaspur (for short, ‘the Tribunal’) in MACT
Case No. 97 of 1995, the appellant has filed this appeal.
3. Shri Swaran Singh (the appellant’s husband) died in a road accident
when the Maruti car in which he was travelling with Varinder Singh (husband
of respondent No. 2 and the father of respondent Nos. 3 and 4) went out of
control. Varinder Singh, who was driving the vehicle also suffered multiple
injuries and died on the spot.
4. The appellant and other legal representatives of Swaran Singh filed a
petition under Section 166 of the Motor Vehicles Act, 1988 (for short, ‘the
Act’) for award of compensation to the tune of Rs. 4 lacs. They pleaded
that the accident was caused due to rash and negligent driving of the
Maruti car by Varinder Singh; that at the time of his death, the age of the
deceased was about 45 years and that he was earning Rs. 5,000/- per month
by running a milk dairy and doing agriculture. The legal representatives
of Varinder Singh denied that the accident had occurred due to rash and
negligent driving of the Maruti car. In the written statement filed on
behalf of respondent No. 1, it was pleaded that the claim petition was not
maintainable because the deceased, who was travelling in the car cannot be
treated as a third party and that the person driving the vehicle did not
have valid driving licence. Respondent No.1 also controverted the
claimant’s assertion about the income of Swaran Singh.
5. On the pleadings of the parties the Tribunal framed the following
issues:
“1) Whether the death of Swaran Singh not amounting to culpable
homicide took place on account of the rash and negligent driving of
Maruti Car No. PB-035A-0090 driven by Varinder Singh?
2) To what amount of compensation the applicants are entitled? If
so, from whom?
3) Relief.”
6. In support of the claim petition, the appellant examined herself and
two other witnesses, namely, Bakhshish Singh and Surain Singh. Respondent
No.1 examined Milap Chand, Clerk, in the office of the District Transport
Officer, Gurdaspur. On behalf of the legal representatives of Varinder
Singh copies of driving licence, insurance policy and registration
certificate were produced and marked as Exhibits R1 to R3.
7. After analysing the evidence produced by the parties, the Tribunal
decided issue No.1 in the affirmative and held that the accident was caused
due to rash and negligent driving of Maruti car by Varinder Singh. While
dealing with issue No.2, the Tribunal adverted to the statement made by the
appellant in her cross-examination that the deceased did not own any
agricultural land and that he was cultivating land on lease basis and
proceeded to determine the amount of compensation by assuming his income as
Rs. 1,500/- per month. The Tribunal was also of the view that two sons of
the appellant, namely, Sulakhan Singh and Surjit Singh cannot be treated as
dependants of the deceased because their age was 26 years and 23 years
respectively. The Tribunal deducted Rs. 500/- towards personal expenses of
the deceased and held that dependency of the appellant and other family
members would Rs.1,000/- per month. The Tribunal then applied the
multiplier of 11 and declared that the claimants are entitled to
compensation of Rs. 1,32,000/- with interest at the rate of 12 per cent per
annum from the date of application.
8. The High Court relied upon the judgment of this Court in Sarla Verma
v. Delhi Transport Corporation (2009) 6 SCC 121, applied the multiplier of
14 and held that the claimants are entitled to total compensation of
Rs.1,77,500/- with interest at the rate of 7 per cent per annum on the
enhanced amount from the date of appeal till realisation.
9. Learned counsel for the appellant relied upon the judgment in Sarla
Verma’s case and argued that the Tribunal and the High Court committed
serious error by not giving the benefit of 30 per cent increase in the
income of the deceased which he would have earned for the next 25 years.
Learned counsel further argued that the deduction of Rs.500/- towards
personal expenses of the deceased was totally disproportionate to size of
his family and the Tribunal and the High Court overlooked stark reality
that it is impossible for a person having meagre earning of Rs. 1,500/- per
month to spend 1/3rd on himself and leave 2/3rd of his income for five
dependants including three children. He criticised the observations made
by the Tribunal that Sulakhan Singh and Surjit Singh could not be treated
as dependant of the deceased because they were major and argued that in the
absence of any evidence to the contrary, there was no reason to discard the
testimony of the appellant that in all five family members were dependant
on the deceased.
10. Learned counsel for respondent No.1 submitted that the rule of 30 per
cent addition in the income of the deceased as laid down in Sarla Verma’s
case cannot be applied to a case like the present one because the deceased
was neither in Government service nor he was a permanent employee of a
corporation or company which may have ensured increase in his income from
time to time. He argued that those employed in unorganized sectors cannot
be placed at par with Government employees and those employed in
agencies/instrumentalities of the State or private corporations/companies.
11. We have considered the respective arguments. Although, the legal
jurisprudence developed in the country in last five decades is somewhat
precedent-centric, the judgments which have bearing on socio-economic
conditions of the citizens and issues relating to compensation payable to
the victims of motor accidents, those who are deprived of their land and
similar matters needs to be frequently revisited keeping in view the fast
changing societal values, the effect of globalisation on the economy of the
nation and their impact on the life of the people.
12. In R.K. Malik v. Kiran Pal (2009) 14 SCC 1, the two Judge Bench while
dealing with the case involving claim of compensation under Section 163-A
of the Act, noticed the judgments in M.S. Grewal v. Deep Chand Sood (2001)
8 SCC 151, Lata Wadhwa v. State of Bihar (2001) 8 SCC 197, Kerala SRTC v.
Susamma Thomas (1994) 2 SCC 176, Sarla Dixit v. Balwant Yadav (1996) 3 SCC
179 and made some of the following observations, which are largely
reflective of the philosophy that victims of the road accidents and/or
their family members should be awarded just compensation:
“In cases of motor accidents the endeavour is to put the
dependants/claimants in the pre-accidental position. Compensation in
cases of motor accidents, as in other matters, is paid for reparation
of damages. The damages so awarded should be adequate sum of money
that would put the party, who has suffered, in the same position if he
had not suffered on account of the wrong. Compensation is therefore
required to be paid for prospective pecuniary loss i.e. future loss of
income/dependency suffered on account of the wrongful act. However, 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
Sections 166 and 168. It is left to the courts to decide what would be
“just compensation” in the facts of a case.”
13. In Sarla Verma’s case (supra), another two Judge Bench considered
various factors relevant for determining the compensation payable in cases
involving motor accidents, noticed apparent divergence in the views
expressed by this Court in different cases, referred to large number of
precedents including the judgments in U.P. SRTC v. Trilok Chandra (1996) 4
SCC 362, Nance v. British Columbia Electric Railway Co. Ltd. 1951 AC 601,
Davies v. Powell Duffryn Associated Collieries Ltd. 1942 AC 601 and made an
attempt to limit the exercise of discretion by the Tribunals and the High
Courts in the matter of award of compensation by laying down straightjacket
formula under different headings, some of which are enumerated below:
“(i) Addition to income for future prospects
In Susamma Thomas this Court increased the income by nearly 100%, in
Sarla Dixit the income was increased only by 50% and in Abati
Bezbaruah the income was increased by a mere 7%. In view of the
imponderables and uncertainties, we are in favour of adopting as a
rule of thumb, an addition of 50% of actual salary to the actual
salary income of the deceased towards future prospects, where the
deceased had a permanent job and was below 40 years. (Where the annual
income is in the taxable range, the words “actual salary” should be
read as “actual salary less tax”). The addition should be only 30% if
the age of the deceased was 40 to 50 years. There should be no
addition, where the age of the deceased is more than 50 years. Though
the evidence may indicate a different percentage of increase, it is
necessary to standardise the addition to avoid different yardsticks
being applied or different methods of calculation being adopted. Where
the deceased was self-employed or was on a fixed salary (without
provision for annual increments, etc.), the courts will usually take
only the actual income at the time of death. A departure therefrom
should be made only in rare and exceptional cases involving special
circumstances.
(ii) Deduction for personal and living expenses
Though in some cases the deduction to be made towards personal and
living expenses is calculated on the basis of units indicated in
Trilok Chandra, the general practice is to apply standardised
deductions. 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 family members is 2
to 3, one-fourth (1/4th) where the number of dependent family members
is 4 to 6, and one-fifth (1/5th) where the number of dependent family
members exceeds six.
(iii) Selection of multiplier
We therefore hold that the multiplier to be used should be as
mentioned in Column (4) of the table above (prepared by applying
Susamma Thomas, Trilok Chandra and Charlie), which starts with an
operative multiplier of 18 (for the age groups of 15 to 20 and 21 to
25 years), reduced by one unit for every five years, that is M-17 for
26 to 30 years, M-16 for 31 to 35 years, M-15 for 36 to 40 years, M-14
for 41 to 45 years, and M-13 for 46 to 50 years, then reduced by two
units for every five years, that is, M-11 for 51 to 55 years, M-9 for
56 to 60 years, M-7 for 61 to 65 years and M-5 for 66 to 70 years.”
14. We find it extremely difficult to fathom any rationale for the
observation made in paragraph 24 of the judgment in Sarla Verma’s case that
where the deceased was self-employed or was on a fixed salary without
provision for annual increment, etc., the Courts will usually take only the
actual income at the time of death and a departure from this rule should be
made only in rare and exceptional cases involving special circumstances. In
our view, it will be naïve to say that the wages or total emoluments/income
of a person who is self-employed or who is employed on a fixed salary
without provision for annual increment, etc., would remain the same
throughout his life. The rise in the cost of living affects everyone
across the board. It does not make any distinction between rich and poor.
As a matter of fact, the effect of rise in prices which directly impacts
the cost of living is minimal on the rich and maximum on those who are self-
employed or who get fixed income/emoluments. They are the worst affected
people. Therefore, they put extra efforts to generate additional income
necessary for sustaining their families. The salaries of those employed
under the Central and State Governments and their
agencies/instrumentalities have been revised from time to time to provide a
cushion against the rising prices and provisions have been made for
providing security to the families of the deceased employees. The salaries
of those employed in private sectors have also increased manifold. Till
about two decades ago, nobody could have imagined that salary of Class IV
employee of the Government would be in five figures and total emoluments of
those in higher echelons of service will cross the figure of rupees one
lac. Although, the wages/income of those employed in unorganized sectors
has not registered a corresponding increase and has not kept pace with the
increase in the salaries of the Government employees and those employed in
private sectors but it cannot be denied that there has been incremental
enhancement in the income of those who are self-employed and even those
engaged on daily basis, monthly basis or even seasonal basis. We can take
judicial notice of the fact that with a view to meet the challenges posed
by high cost of living, the persons falling in the latter category
periodically increase the cost of their labour. In this context, it may be
useful to give an example of a tailor who earns his livelihood by stitching
cloths. If the cost of living increases and the prices of essentials go up,
it is but natural for him to increase the cost of his labour. So will be
the cases of ordinary skilled and unskilled labour, like, barber,
blacksmith, cobbler, mason etc. Therefore, we do not think that while
making the observations in the last three lines of paragraph 24 of Sarla
Verma’s judgment, the Court had intended to lay down an absolute rule that
there will be no addition in the income of a person who is self-employed or
who is paid fixed wages. Rather, it would be reasonable to say that a
person who is self-employed or is engaged on fixed wages will also get 30
per cent increase in his total income over a period of time and if he / she
becomes victim of accident then the same formula deserves to be applied for
calculating the amount of compensation.
15. It is also not possible to approve the view taken by the Tribunal
which has been reiterated by the High Court albeit without assigning
reasons that the deceased would have spent 1/3rd of his total earning,
i.e., Rs. 500/-, towards personal expenses. It seems that the Presiding
Officer of the Tribunal and the learned Single Judge of the High Court were
totally oblivious of the hard realities of the life. It will be impossible
for a person whose monthly income is Rs.1,500/- to spend 1/3rd on himself
leaving 2/3rd for the family consisting of five persons. Ordinarily, such a
person would, at best, spend 1/10th of his income on himself or use that
amount as personal expenses and leave the rest for his family.
16. The Tribunal’s observation that the two sons of the appellant cannot
be treated dependant on their father because they were not minor is neither
here nor there. In the cross-examination of the appellant, no question was
put to her about the source of sustenance of her two sons. Therefore, there
was no reason for the Tribunal to assume that the sons who had become major
can no longer be regarded dependant on the deceased.
17. In the result, the appeal is allowed, the impugned judgment as also
the award of the Tribunal are set aside and it is declared that the
claimants shall be entitled to compensation of Rs.2,94,840 [Rs.1,500 + 30%
of Rs.1,500 = Rs.1,950 less 1/10th towards personal expenses = Rs.1,755 x
12 x 14 =Rs.2,94,840]. The claimants shall also be entitled to Rs.5,000/-
for transportation of the body, Rs.10,000/- as funeral expenses and
Rs.10,000/- in lieu of loss of consortium. Thus, the total amount payable
to the claimants will be Rs.3,19,840/-. The enhanced amount of
compensation i.e. Rs.1,42,340/- (Rs.3,19,840 - Rs.1,77,500) shall carry
interest of 7 per cent from the date of application till realisation.
18. Respondent No.1 – Insurance Company is directed to pay to the
appellant the total amount of compensation within a period of three months
by getting prepared a demand draft in her name which shall be delivered to
her at the address given in the claim petition filed before the Tribunal.
While doing so, respondent No.1 shall be free to deduct the amount already
paid to the appellant.
…..……….....……..….………………….…J.
[G.S. SINGHVI]
…………..………..….………………….…J.
[SUDHANSU JYOTI MUKHOPADHAYA]
New Delhi,
April 23, 2012.
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