FAO No.3432 of 2009 -1- IN THE HIGH COURT FOR THE STATES OF PUNJAB AND HARYANA AT CHANDIGARH FAO No.3432 of 2009 Date of Decision. 29.09.2010 New India Assurance Company Limited through its Deputy Manager, Sector 17-A, Chandigarh ......Appellant Versus Smt. Santosh wife of Shri Ajay Kumar son of Shri Basti Ram resident of village Dhani Pal, Tehsil Hansi, District Hisar and others ......Respondents 2. FAO No.3433 of 2009 New India Assurance Company Limited through its Deputy Manager, Sector 17-A, Chandigarh ......Appellant Versus Smt. Kamlesh wife of Shri Shishpal Singh Nain son of Shri Hem Chand, resident of House No.16, Chander Lane Colony, Kaimri Road, Hisar and others ......Respondents 3. FAO No.3434 of 2009 New India Assurance Company Limited through its Deputy Manager, Sector 17-A, Chandigarh ......Appellant Versus Smt. Kailash Baswana wife of Shri Amar Singh Baswana, resident of House No.16, Bishnoi colony, Hisar and others ......Respondents 4. FAO No.3435 of 2009 New India Assurance Company Limited through its Deputy Manager, Sector 17-A, Chandigarh ......Appellant Versus Satish Kumar son of Shri Ujagar Singh, resident of village Ratta Khera, PO Dhangar, Tehsil Tohana, District Fatehabad and others ......Respondents FAO No.3432 of 2009 -2- 5. FAO No.3487 of 2009 New India Assurance Company Limited through its Deputy Manager, Sector 17-A, Chandigarh ......Appellant Versus Smt. Raj Kala wife of Sh. Azad Singh son of Shri Bani Singh, resident of House No.119, Sunder Nagar, Hisar and others ......Respondents 6. FAO No.2246 of 2009 Smt. Santosh aged about 34 years wife of Ajay Kumar son of Sh. Basti Ram and others ......Appellants Versus Karam Singh son of Shri Bhikhu Ram and others ......Respondents 7. FAO No.2247 of 2009 Smt. Kamlesh aged 37 years wife of Shishpal Singh Nain son of Sh. Khem Chand and others ......Appellants Versus Karam Singh son of Shri Bhikhu Ram and others ......Respondents 8. FAO No.2248 of 2009 Smt. Kailash Baswana aged about 50 years wife of Amar Singh Baswana son of Sh. Manphul Singh Baswana and others ...... Appellants Versus Karam Singh son of Shri Bhikhu Ram and others ......Respondents 9. FAO No.2249 of 2009 Rajbir Singh aged 53 years son of Chandu Lal, resident of House No.265, Sector 13, Hisar ......Appellant FAO No.3432 of 2009 -3- Versus Karam Singh son of Shri Bhikhu Ram and others ......Respondents 10. FAO No.2250 of 2009 Smt. Raj Kala aged about 34 years wife of Azad Singh son of Shri Bani Singh and others ......Appellants Versus Karam Singh son of Shri Bhikhu Ram and others ......Respondents Present: Mr. Ashwani Talwar, Advocate and Mr. Mrigank Sharma, Advocate for the appellant-insurance company. Mr. Rajesh Sheoran, Advocate for the claimants. Mr. Navin Kapoor, Advocate for the owner of the offending vehicle. Mr. Kunal Garg, AAG, Haryana. CORAM:HON'BLE MR. JUSTICE K. KANNAN 1. Whether Reporters of local papers may be allowed to see the judgment ? Yes 2. To be referred to the Reporters or not ? Yes 3. Whether the judgment should be reported in the Digest? Yes -.- K. KANNAN J. I. The issue for consideration 1. This batch of cases involves the issue of whether the representatives of the deceased, who have come by a financial benefit through ex gratia payments by the Government arising out of the death of the persons in the motor accident would stand to forfeit the benefit of compensation and if not, would that be relevant to slice down the compensation. The contrary position is FAO No.3432 of 2009 -4- what is contended on behalf of the claimants that ex-gratia payments are wholly irrelevant as the Tribunal has found and that they are entitled to a full compensation on the basis of the extent of dependence of the family as though no benefit has accrued and by the application of suitable multiplier commensurate with the age of the respective deceased at the time of the accident. II. Occurence of motor accident leading to deaths and injuries 2. In this batch of cases, FAO Nos.3432, 3433, 3434 and 3487 relate to cases of deaths of persons, all of whom were Government servants in the State of Haryana. The accident is said to have taken place when on 24.07.2005, the Financial Commissioner and Secretary to Government of Haryana, Agriculture Development and Director of Agriculture Department had called a meeting with high- level officials of various government departments at Panchkula. Officials at various levels attended the meeting and while they were returning in a Government vehicle, they was a collision with a truck belonging to private individual and insured with the New India Assurance Company Limited. Some persons died and several were seriously injured. III. Text of Government notification 3. All the representatives have come by benefit of notification issued by the Haryana Government, General Administration Department dated 1.08.2006. The notification publishes the rules called the Haryana Compassionate Assistance to the Dependents of FAO No.3432 of 2009 -5- Deceased Government Employees Rules, 2006. The relevant rules are reproduced in so far as, they have a bearing to this case:- “1. (1) These rules may be called the Haryana Compassionate Assistance to the Dependents of Deceased Government Employees Rules, 2006. (2) They shall come into force at once. 2. The object of the rule is to assist the family of a deceased/missing Government employee of Group C and D category, in tiding over the emergent situation, resulting from the loss of bread-earner while in regular service by giving financial assistance. 3. The eligibility to receive financial assistance under these rules shall be as per the provision in the pension/family pension scheme, 1964. 4. An eligible family member of the deceased/missing Government employee shall make an application i Form A for compassionate financial assistance. 5. (1) On the death of any Government employee, the family of the employee would continue to receive as financial assistance a sum equal to the pay and other allowances that was last drawn by the deceased employee in the normal course without raising a specific claim;- FAO No.3432 of 2009 -6- (a) for a period of fifteen years from the date of death of the employee, if the employee at the time of his death had not attained the age of thirty five years; (b) for a period of twelve years or till the date the employee would have retired from Government service on attaining the age of superannuation, whichever is less, if the employee at the time of his death had attained the age of thirty five years but had not attained the age of forty-eight years; (c) for a period of seven years or till the date the employee would have retired from Government service on attaining the age of superannuation, whichever is less, if the employee had attained the age of forty five years; (2) The family shall be eligible to receive family pension as per the normal rules only after the period during which he receives the financial assistance as above is completed. (3) The family of a deceased Government employee who was in occupation of a Government residence would continue to retain the residence on payment of normal rent/licence fee for a period of one year from the date of death of the employee. FAO No.3432 of 2009 -7- (4) Within fifteen days from the date of a Government employee, an ex-gratia assistance of twenty five thousand rupees shall be provided to the family of the deceased employee to meet the immediate needs on the loss of the bread earner. (5) House Rent Allowance shall not be a part of allowance for the purposes of calculation of assistance.” 4. As per the said notification, the representatives, who filed the cases were admittedly dependents of the respective deceased persons in FAO Nos.3432 to 3434 and 3487 of 2009 and have been found entitled to claim the salary of the respective deceased persons at the rate last drawn and they will continue to secure the benefit till the time when the respective deceased persons would have superannuated or for a period of 15 years from the date of death, if the deceased had not attained the age of 35 years; it shall be for a period of 12 years or till the date when the employee would have retired from Governments service, whichever is less, if at the time of death, the person had completed the age of 35 years but had not attained the age of 48 years. It shall be for a period of 7 years or till the date when the employee would have retired, whichever is less, if the person had attained the age of 48 years. IV. Employment details of deceased persons 5. The relevant details of the age, income last drawn and the terminal benefits obtained are tabulated here below:- FAO No.3432 of 2009 -8- Sr. No . Case No. Name Age Date of retirement Years due for retirement Last drawn salary Terminal benefits (Rs.) 1 3432 & 2246 Ajay Kumar 41 Y 2 M 31.05.2024 17 years Rs.13,764/- 1,27,420/- 2 3433 & 2247 Shishpal Nain 52 Y 3 M 30.04.2013 6 years Rs.15,612/- 7,96,998/- 3 3434 & 2258 Amar Singh 54 Y 5 M 28.02.2011 4 years Rs.25,429/- 15,37,757/- 4 3487 & 2250 Azad Singh 41 Y 3 M 30.04.2024 17 years Rs.18,499/- 6,62,777 It could be noticed that of the above persons, Ajay Kumar and Azad Singh were both above the age of 35 years and had not attained 48 years and had more than 12 years left, which is maximum period for which the benefit would obtain to the family. Amar Singh and Shishpal Nain, however, were both above the age of 50 years and they had lesser number of years left than 7 years, which would be the maximum period for which the representatives would take the benefit. V. The respective contentions 6. While it is contended by the learned counsel appearing for the insurer that while determining the compensation, all these benefits, which the representatives have obtained will have to be taken into account, the contention on behalf of the claimants is that ex gratia payments cannot be deducted. The State Government itself is a party in all the cases and the counsel appearing on behalf of the FAO No.3432 of 2009 -9- State would contend that the insurance company ought not to cast a burden on the state by diluting its own liability and expect the State to provide the benefit. Each has a point of view and supported by decisions of Courts. VI. Contentions examined in the light of court decisions 7. The most significant pronouncement on the relevance of the benefit obtained to the representatives of the deceased has come through the judgment of the Hon'ble Supreme Court in Bhakra Beas Management Board Vs. Kanta Aggarwal 2008(11) SCC 366. In that case the claimant lost her husband in a motor accident. She had been given compassionate appointment through which she received a monthly salary of Rs.4700/- and was also provided accommodation. The Tribunal took this to be totally irrelevant and determined a compensation of Rs.8,48,160/- plus interest @9%. The death had taken place 14 years before the adjudication came to Hon'ble Supreme Court and at the time of admission of the SLP, an amount of Rs.5,00,000/- had been directed to be deposited. The contention on behalf of the Bhakra Beas Management Board, which had been directed to give the compensation was that the compassionate appointment provided to the wife and free accommodation which had been given to her must have been taken due notice of. Reliance was made on the earlier judgment of the Hon'ble Supreme Court in United India Insurance Co. Ltd. Vs. Patricia Jean Mahajan 2002 (6) SCC 281 and still earlier ruling in Gobald Motor Service Ltd. Vs. R.M.K. Veluswami AIR 1962 SC 1. FAO No.3432 of 2009 -10- The judgment traversed the reasoning in Gobald Motor Service Ltd's case (supra), which obtained the benefit of observations of House of Lords in Davies Vs. Powell Duffryn Associated Collieries Ltd. 1942(1) All England Law Reporter 657, which said “ the general rule, which has always prevailed in regard to assessment of damages and a Fatal Accidents Act is well settled, namely, that any benefit accruing to a dependent by reason of the relevant death must be taken into account. Under those Acts, the balance of loss and gain to a dependent by the death must be ascertained, the position of each dependent being considered separately.” The basis was observed by the House of Lords as “The damages are to be based on the reasonable expectation of pecuniary benefit or benefit reducible to money value. In assessing the damages all circumstances which may be legitimately pleaded in diminution of the damages must be considered...... The actual pecuniary loss of each individual entitled to sue can only be ascertained by balancing, on the one hand, the loss to him of the future pecuniary benefit, and, on the other, any pecuniary advantage which from whatever source comes to him by reason of the death.” These observations had been reiterated in subsequent pronouncements of the Hon'ble Supreme Court in Sheikhupura Transport Co. Ltd. Vs. Northerin India Transporters' Ins. Co. Ltd. 1971 (1) SCC 785 and General Manager, Kerala State Road Trans. Corpn. Vs. Susamma Thomas 1994(2) SCC 176. The principle of balance of loss and gain so as to arrive at a just and fair amount of compensation has thus been accepted by the Hon'ble Supreme Corut and expected to be followed FAO No.3432 of 2009 -11- by all Courts as well. A still later decision of the House of Lords in Hodgson Vs. Trapp (1988) 3 All ER 870 gave a fuller expression to the same idea in the following observations:- "...The basic rule is that it is the net consequential loss and expense which the Court must measure, if, in consequence of the injuries sustained, the plaintiff has enjoyed receipts to which he would not otherwise have been entitled, prima facie, those receipts are to be set agaisnt the aggregate of the plaintiff's losses and expenses in arriving at the measure of his damages. All this is elementary and has been said over and over again. To this basic rule there are, of course, certain well established, though not always precisely defined and delineated, exceptions..... It is the rule which is fundamental and axiomatic and exceptions to it which are only to be admitted on grounds which clearly justify their treatment as such." VII. Balancing of loss of benefit that would have accrued with benefit that will accrue to representative by reason of death; with exceptions 8. The general principle of estimating damages shall be by balancing of what is the loss to the claimants of the future pecuniary benefits that would accrue to a person if he had not died, with the pecuniary advantage from whichever source it comes. At common law, the balancing act would always be invoked while determining the compensation payable to victims of motor accident claims. This was set in Helen C. Rebello Vs. Maharashtra State Road Trans. Corpn. 1999 (1) SCC 90 as a guiding principle for determining compensation and still later dealt with in great detail by the Hon'ble Supreme Court in United India Insurance Co. Ltd. Vs. Patricia Jean Mahajan and others 2002(6) SCC 281. Having set down the law, the Hon'ble Supreme Court, in Patricia Jean FAO No.3432 of 2009 -12- Mahajan's case, dealt with the exceptions which we have referred to above. It said only the receipts which have correlation with the accidental death would be deductible and amounts received by the dependents on account of insurance policy of the deceased or amounts received by them under social security system, which would have come to them even without reference to death would have no such correlation with the accidental death and hence would not be deductible. The reasoning is obvious. The amount that a person obtains by way of terminal benefits or pension are all methods of deferred payment of wages. It is a consideration for the service already rendered which stand accrued to the estate of the deceased and therefore, they cannot be permitted to be deducted on the death of the person. In matters of insurance, for instance, it is the payment for the premium periodically, which would make possible a return of lump sum on the happening of the event mentioned in the policy. In the case of payments under the social security system, the Court found in Patricia Jean Mahajan that as a matter of fact, they were again returns secured to the family for periodical contributions made and some deductions made from the salary during the life time. Amounts that come by way of recompense or a consideration for some service were found not to be related to the death and therefore, found not deductible. VIII. Pure gratuitous payments shall not be deducted 9. Courts appear never to have taken into account, in the assessment of damages, moneys gratuitously conferred from private FAO No.3432 of 2009 -13- sources upon the plaintiff as a mark of sympathy and assistance. Pure ex gratia payments that have no statutory basis but coming fortuitously is never deducted (See Harjit Kaur v Tochi Transport Company (1986) 2 ACC 70 (P&H) , where the widow of the deceased has been granted a pension at the rate of Rs. 300/- per month. An ex-gratia grant of Rs. 11,700/- has also been sanctioned by the department in which Ajaib Singh was employed for his widow. About Rs. 3,000/- was lying in the Provident Fund Account of Ajaib Singh. The Court said that these amounts paid to the widow of the deceased could not be taken into account so as to reduce the quantum of compensation payable to the appellants. See also MLJ -Motor Vehicle Laws, LexisNexis, 2008, Vol 2 pp 1517-1518 for decisions of all other High Courts. There are also pronouncements from English Courts and they make good for a complete treatment of the subject. In Parry v Cleaver [1970] A.C.1 the House of Lords speaking through Lord Reid said, “It would be revolting to the ordinary man’s sense of justice, and therefore contrary to public policy, that the sufferer should have his damages reduced so that he would gain nothing from the benevolence of his friends or relations or of the public at large, and that the only gainer would be the wrongdoer”. An amount paid from disaster relief fund to victims of a Railway accident was held in a North Ireland casein Redpath v Belfast & County Down Ry [1947]N.I.167 as not going to reckoned for deduction, while ascertaining the compensation payable by the Railways. In an early English decision in Liffen v Watson [1940] 1 KB 556(CA) gratuitous payments made by the master of a domestic FAO No.3432 of 2009 -14- servant as well as free board and lodging during the period when she was not able to continue in her employment due to injuries were held not deductible from compensation payable by the tort- feasor. A similar treatment was made through another judgment of the Court of appeal for ex gratia payments made by a sympathetic employer in Cunningham v Harrison [1973] QB 942. IX. Returns as deferred wages or for services rendered are instances of Impermissible deductions 10. Apart from gratuitous payments privately conferred, there exists another situation where benefits could have accrued by the services of the deceased and payments made after death that take the shape of deferred wage. They would become payable to the representatives of the deceased in consideration of and by virtue of contribution made by the deceased during his life time. Terminal benefits such as earned leave salary, provident fund accumulations, gratuity, etc are the best instances of such entitlements. Another benefit could be compassionate appointment to one of the members of the family arising out of the death of the person in harness, when he or she still has some more years of service left. Here the benefit obtained by the employee through compassionate appointment would give rise to regular source of employment. It could be noticed that though the raison d’être of employment is the death of the person while still in service, the proximate cause for material benefit by recurrent salaries is only his or her services to the employer and hence the benefit could not be deducted. The receipts of pension (N.Sivammal v MD, Pandiyan Roadwasys FAO No.3432 of 2009 -15- Corpn AIR 1985 SC 106 ) , provident fund (Bahgat Singh v Om Sharma AIR 1983 P&H 94(FB) , gratuity (National Insurance Co Ltd v Indira Srivastava (2008) 2 SCC 763) , compassionate appointment ( Amarjit Kaur v State of Punjab 1999-3 PLR 27, (20000 1 TAC 552) social security benefits ( United India Insurance Ltd v Patricia Jean Mahajan (2002) 6 SCC 281 ) and LIC (Helen C.Rebello v Mharashtra SRTC (1999) 1 SCC 90) have all been held to be irrelevant for computation of compensation for death in motor accident. There is a whole wealth of case law that abounds on this subject and they have been digested fairly extensively in the MLJ - Motor Vehicle Laws, LexisNexis, 2008, Vol 2 pp 1510-1521 and it is too far from doubt that the payments received that have a bearing to the services rendered by the deceased employee cannot be taken into consideration as permissible deductions. X. Gratuitous Payments or benefits, though termed as such, but are specifically enforceable are a different genre and hence ought to obtain different treatment 11. Payments or benefits on a statutory basis or under a scheme which could be legally enforced by the legal representative ought to receive a different treatment for, after all, we are trying to re- create a situation of what the deceased would have done to the family of dependents if he had continued to live. In an injury case in Tamil Nadu State Transport Corporation v Natarajan (2003) 6 SCC 137 , even a compassionate appointment received by a workman was held to be a relevant factor to scale down the claim for compensation against an employer to the extent to which the FAO No.3432 of 2009 -16- liability was apportioned on the latter. In Bhakra-Beas Management Board v Kanta Aggarwal (2008) 11 SCC 366 the fact that the wife was given compassionate appointment and also provided with accommodation was taken into consideration to scale down the extent of entitlement, although not taken as completely wiping out the claim. In UK also, the law favors deductions which have an element of enforceability. As opposed to ‘public benevolence in the shape of various un-covenanted benefits from the Welfare State’, benefits which are earned by the public through their contributions go into reckoning while assessing compensation. Even free medical treatment provided under National Health Service, is taken as relevant to deny medical expenses for injuries which an injured claimant would never have incurred while availing the benefits under NHS (West v Shephard (1964) AC 326; Mitchell v Mulholland (No.2) (1972) 1 QB 65 ). XI. Distinction between returns which are not resultant to death and benefits arising out of and as a consequence of death 12. When we consider whether there could be any deduction made for benefits received by the legal representatives of the deceased, the following questions must be asked: Is the benefit the direct result of death? If yes, is the benefit a mode of deferred wage or a return for present services rendered? If yes again, there shall be no deduction. On the contrary, is it a legally enforceable right of monetary benefit that requires no compulsory service to be rendered by the representative to claim the benefit? If the answer is FAO No.3432 of 2009 -17- yes, appropriate deduction shall have to be made, though it may not result in total effacement of the claim. 13. In this case all the representatives have come by fairly large sums of benefit by an accelerated date of payment of the terminal benefits. The amounts, which could