FAO Nos.589 to 591 of 2010 (O&M) 1 FAO Nos.4710 of 2010 & 2304 of 2011 & 1490 of 2010 IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH 1. FAO No.589 of 2010 (O&M) (in MACT case No.115 of 2007) Date of decision: 21.12.2011 Oriental Insurance Company Ltd. ....Appellant Versus Saroj Devi and others ...Respondents 2. FAO No.590 of 2010 (O&M) (in MACT case No.85 of 2007) Oriental Insurance Company Ltd. ....Appellant Versus Lajwanti and others ...Respondents 3. FAO No.591 of 2010 (O&M) (in MACT case No.87 of 2007) Oriental Insurance Company Ltd. ....Appellant Versus Prema Devi and others ...Respondents FAO Nos.589 to 591 of 2010 (O&M) 2 FAO Nos.4710 of 2010 & 2304 of 2011 & 1490 of 2010 4. FAO No.4710 of 2010 (O&M) (in MACT case No.202 of 2009) ICICI Lombard ....Appellant Versus Smt.Shabo Devi and others ...Respondents 5. FAO No.2304 of 2011 (O&M) (in MACT case No.69 of 2009) Bajaj Allianz General Insurance Company Ltd. ....Appellant Versus Sunita and others ...Respondents 6. FAO No.1490 of 2010 (O&M) (in MACT case No.114 of 2007) Bajaj Allianz General Insurance Company Ltd. ....Appellant Versus Surta Ram and others ...Respondents CORAM: HON'BLE MR.JUSTICE JITENDRA CHAUHAN FAO Nos.589 to 591 of 2010 (O&M) 3 FAO Nos.4710 of 2010 & 2304 of 2011 & 1490 of 2010 Present: Mr.Ashwani Talwar, Advocate for the appellant in FAO Nos. 589 to 591 of 2010 Mr.Subhash Goyal, Advocate for the appellant in FAO Nos. 1490 of 2010 & 2304 of 2011 Mr.Suman Jain, Advocate for the appellant in FAO No.4710 of 2010 Mr.Ajay Gulati, Deputy Advocate General, Haryana with Mr.Kunal Garg, Assistant Advocate General, Haryana (for the State In all appeals) Mr.Ramender Chauhan, Advocate for respondent Nos. 1, 2, and 5 in FAO Nos. 589 of 2010 Mr.RS Sangwan, Advocate for respondent Nos. 1,3 and 4 in FAO No.591 of 2010 Mr.DK Singal, Advocate for respondent No.4 in FAO No.589 of 2010 respondent No.6 in FAO Nos.590 &591 of 2010 Mr.Ravinder Arora, Advocate for respondent No.7 in FAO NO 591 OF 2010 None for respondent Nos. 1 to 4 in FAO No.4710 of 2010 Mr.Sandeep Goyal, Advocate for respondent No.5 In Fao No. 4710 of 2010 Mr.Ashish Gupta, Advocate for respondent Nos. 1 to 4 in FAO No.1490 of 2010 Mr.VK Kajla, Advocate for respondent Nos. 1 to 5 in FAO No.2304 of 2011 ***** Jitendra Chauhan, J. CM No. 7950 CII of 2011 in FAO No. 2304 of 2011 For the reasons mentioned in the application, delay of 82 days FAO Nos.589 to 591 of 2010 (O&M) 4 FAO Nos.4710 of 2010 & 2304 of 2011 & 1490 of 2010 in filing the appeal is hereby condoned. Application stands disposed of. Main appeals The present bunch of Appeals has thrown up an interesting but complex proposition of law. This judgment shall dispose of the present bunch of First Appeals (FAO’s) preferred by the Insurance Companies against the awards passed by the Ld. MACT’s in different claim petitions arising out of respective motor vehicular accidents. It needs to be highlighted that though the awards are separate, having been passed by various MACT’s, a common question of law was raised before this Court. Accordingly, the Court deemed it appropriate to dispose off all the FAO’s raising a similar question of law, through a common judgment. However, the judgment is being delivered in FAO No. 589 of 2010 (Oriental Insurance Company Limited vs. Saroj Devi and others). Before proceeding with the discussion, a brief resume of the FAO’s being disposed off by this common judgment would be relevant. FAO No.589 of 2010 The Insurance Company has preferred the present appeal against the impugned Award dated 30.10.2009, passed in MACT case No.115 of 2007, by the learned Motor Accident Claims Tribunal, Bhiwani. In this case, death of ASI Rajender Singh occurred in a motor accident on 21.6.2007. Rajender Singh was Assistant Sub Inspector in Haryana Police and his gross salary was Rs.14,740/- per month as per Ex.P14, at the time FAO Nos.589 to 591 of 2010 (O&M) 5 FAO Nos.4710 of 2010 & 2304 of 2011 & 1490 of 2010 of death. At the time of his death, he was about 43 years of age as per Ex.P15. The claimants i.e. wife, daughter and father filed a claim petition, which was allowed by the learned Tribunal vide impugned Award dated 30.10.2009 and awarded the following amounts: 1. Compensation on account of loss of dependency @ Rs.60,000/- per annum (dependency taken as Rs.5000/- per month) with multiplier of 14 Rs.8,40,000/- 2. Compensation on account of transportation of dead body and last rites Rs.5,000/- --------------------------- Total Rs.8,45,000/- ---------------------------- FAO No.590 of 2010 The Insurance Company has preferred the present appeal against the impugned Award dated 30.10.2009, passed in MACT case No.85 of 2007, by the learned Motor Accident Claims Tribunal, Bhiwani. In this case, death of HC Satbir Singh Singh occurred in a motor accident on 21.6.2007. Rajender Singh was Head Constable in Haryana Police and his gross salary was Rs.10,563/- per month, as per Ex.P2, at the time of death. At the time of his death, his age was about 42 years. The claimants i.e. wife, daughter, son and father filed a claim petition, which was allowed by the learned Tribunal vide impugned Award dated 30.10.2009 and awarded the following amounts: 1. Compensation on account of loss of dependency @ Rs.60,000/- per annum (dependency taken as Rs.5000/- per month) FAO Nos.589 to 591 of 2010 (O&M) 6 FAO Nos.4710 of 2010 & 2304 of 2011 & 1490 of 2010 with multiplier of 14 Rs.8,40,000/- 2. Compensation on account of transportation of dead body, last rites and consortium etc. Rs. 5,000/- --------------------------- Total Rs.8,45,000/- ---------------------------- FAO No.591 of 2010 The Insurance Company has preferred the present appeal against the impugned Award dated 30.10.2009, passed in MACT case No.87 of 2007, by the learned Motor Accident Claims Tribunal, Bhiwani. In this case, death of Raje Ram occurred in a motor accident on 21.6.2007. Raje Ram was a Sanskrit Teacher in Govt. Girls High School, Duloth Ahir and his gross salary was Rs.23,405/- per month, as per Ex.P23, at the time of death. His age was about 55 years. The claimants i.e. wife, son, daughter and father filed a claim petition, which was allowed by the learned Tribunal vide impugned Award dated 30.10.2009 and awarded the following amounts: 1. Compensation on account of loss of dependency @ Rs.96,000/- per annum (dependency taken as Rs.8000/- per month) with multiplier of 9 Rs.8,64,000/- 2. Compensation on account of transportation of dead body, last rites and consortium etc. Rs. 5,000/- --------------------------- Total Rs.8,69,000/- ---------------------------- Rounded off Rs.8,70,000/- FAO No.4710 of 2010 FAO Nos.589 to 591 of 2010 (O&M) 7 FAO Nos.4710 of 2010 & 2304 of 2011 & 1490 of 2010 The Insurance Company has preferred the present appeal against the impugned Award dated 7.1.2010, passed in MACT case No.202 of 2009, by the learned Motor Accident Claims Tribunal, (FTC), Karnal. In this case, death of HC Satbir Singh occurred in a motor accident on 16.7.2007. Satbir Singh was a Conductor in Haryana Roadways and his carry home was Rs.10226/- per month, as per Ex.P3, at the time of death. His age was about 50 years. The claimants i.e. wife, two sons and one daughter filed a claim petition, which was allowed by the learned Tribunal vide impugned Award dated 7.1.2010, and awarded a sum of Rs.11,14,926/-. FAO No.2304 of 2011 The Insurance Company has preferred the present appeal against the impugned Award dated 21.8.2010, passed in MACT case No.69 of 2009, by the learned Motor Accident Claims Tribunal, Hisar. In this case, death of Narender Pal occurred in a motor accident on 14.10.2008. Narender Pal was a Government JBT Teacher in Haryana Education Department and his carry home salary after deduction was Rs.9760/- per month, as per Ex.P2, at the time of death. His age was about 36 years. The claimants i.e. wife, daughter, son and parents filed a claim petition, which was allowed by the learned Tribunal vide impugned Award dated 30.10.2009 and awarded a sum of Rs.20,76,400/- (14640 (average salary) x 3/4th (dependency) x 12 x 15 (multiplier) + 10000( conventional heads). FAO Nos.589 to 591 of 2010 (O&M) 8 FAO Nos.4710 of 2010 & 2304 of 2011 & 1490 of 2010 FAO No.1490 of 2010 The Insurance Company has preferred the present appeal against the impugned Award dated 22.12.2009, passed in MACT case No.114 of 2007, by the learned Motor Accident Claims Tribunal, Karnal. In this case, death of Constable Sanjeev Kumar occurred in a motor accident on 9.5.2007. Sanjeev Kumar was Constable in Haryana Police and his gross salary was Rs.8472/- per month and carry home salary was Rs.7862/- per month, as per Ex.P1, at the time of death. His age was about 28 years. The claimants i.e. parents and two minor sons filed a claim petition, which was allowed by the learned Tribunal vide impugned Award dated 22.12.2009 and awarded a sum of Rs.17,33,000/- . MAIN ISSUE The legal issue before the Court is regarding the measure of compensation that an insurance company or an owner is required to pay, in case of a death having been caused by the use of a motor vehicle in a public place, in the face of a compassionate assistance policy formulated by the State (State of Haryana) which enables the claimants i.e. deceased’s family, to tide over the financial crisis, resulting from the death of the earning member, by providing full salary for a certain number of years (which is determined by the age of the deceased government employee) followed by family pension for the remainder term. As per the Compassionate Assistance Policy i.e. Haryana Compassionate Assistance To the Dependants of Deceased Government FAO Nos.589 to 591 of 2010 (O&M) 9 FAO Nos.4710 of 2010 & 2304 of 2011 & 1490 of 2010 Employees Rules, 2006, the maximum number of years, for which full last drawn salary is payable to the dependants of the deceased employee, is 15 i.e. in those case where the deceased was under the age of 35 years. In case the deceased was in the age group of 35 to 48 years, the period of full salary gets reduced to 12 years or the age of superannuation, whichever is less, had the deceased continued in service and the said period gets further reduced to 7 years or the age of superannuation, whichever is less, in case the deceased had attained the age of 45 years. However, in all scenarios, the period of full last drawn salary is followed by grant of family pension. It would be appropriate to reproduce the text of said Compassionate Assistance Policy/ notification in order to appreciate its complete import. “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 FAO Nos.589 to 591 of 2010 (O&M) 10 FAO Nos.4710 of 2010 & 2304 of 2011 & 1490 of 2010 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;- (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 FAO Nos.589 to 591 of 2010 (O&M) 11 FAO Nos.4710 of 2010 & 2304 of 2011 & 1490 of 2010 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. (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.” The argument raised on behalf of the Insurance Companies is that once the family of the deceased is provided financial assistance in the FAO Nos.589 to 591 of 2010 (O&M) 12 FAO Nos.4710 of 2010 & 2304 of 2011 & 1490 of 2010 form of full salary of the deceased, in practical terms, there is no monetary loss to the dependents and hence, the Insurance Companies cannot be made liable to pay compensation by assessing the salary (annual dependency) and then multiplying it with an appropriate multiplier, as laid down in the schedule of the Act or as per the law down by the Hon’ble Supreme Court in the case of Sarla Verma and Others Vs. DTC and Others 2009 (6) SCC 121. This course of action i.e. payment of compassionate assistance as well as compensation assessed by applying the principles as laid down in the case of Sarla Verma (supra), in the submission of the ld. Counsel’s appearing for the Insurance Companies, would result in twice over benefit to the claimants and the same is not permissible, as has been repeatedly held by the Hon’ble Supreme Court by observing that the death of a person should not result in a bonanza for the dependents. It is further argued that the salary of the deceased employee is to be made the basis only once for rendering financial assistance and using it twice to compute financial assistance would result in undue enrichment, especially keeping in mind that the annual dependency is a pure fiction of law which has been worked out as a welfare measure but not for giving undue benefit. It is further submitted that calculation is to be made, firstly of the financial assistance accruing to the claimants as a result of the compassionate assistance policy and secondly, as per the law laid down in Sarla Verma and Others Vs. DTC and Others (in case of a claim under section 166 Motor Vehicles Act) or as under section 163 A Motor Vehicles Act (for short 'the FAO Nos.589 to 591 of 2010 (O&M) 13 FAO Nos.4710 of 2010 & 2304 of 2011 & 1490 of 2010 Act) read with 2nd Schedule, as the case may be. After making the said calculations, if the financial assistance (as per the compassionate assistance policy) to be received by the dependents is less than what they are entitled to in view of the law laid down in Sarla Verma and Others Vs. DTC and Other, in that scenario the Insurance Company or the owner/drivers should be made liable to pay up the short fall. The learned counsels appearing for the Insurance Companies have made a strong pitch for the aforementioned submission stating it to be logical and one which ensures that the claimants don’t end up with a monetary bonanza/ double benefit. It is also submitted that this matter has already been considered by a Single bench of this Court i.e. FAO No. 3432 of 2009 (along with a bunch of 9 FAO’s) decided on 29.9.2010. In the said judgment, it has been laid down that the compassionate assistance being received by the dependents must necessarily be deducted from the compensation as assessed by applying the principles of Sarla Verma (supra). Additionally, the Ld. Counsels have also submitted that as per the view taken by the Hon’ble Supreme Court, compassionate assistance or financial assistance accruing to the dependents as a result of the death of the employee in an accident has to be taken into consideration for computing the final compensation under the Motor Vehicles Act proceedings. In support of their submissions, learned Counsel’s appearing for the Appellant Insurance Companies have placed reliance on the judgment of the Hon’ble Apex Court namely, BBMB vs. Kanta Aggarwal 2008 (11) SCC 366. FAO Nos.589 to 591 of 2010 (O&M) 14 FAO Nos.4710 of 2010 & 2304 of 2011 & 1490 of 2010 On behalf of the claimants, it has been strenuously argued that liability of the Insurance Company to pay assessed compensation is distinct, separate and unconnected with any other form of financial assistance which might be available to the dependents of the deceased. The Compassionate Assistance Policy formulated by the State of Haryana is a service benefit accruing to the dependants of the deceased by virtue of the deceased having put in his labour and hard work in the service of the state affairs. Compassionate assistance is in no manner connected with tiding over of the financial crises resulting to the deceased’s family due to an accident only but is a general welfare measure which is available across the board to the family of all deceased employees who die in harness, irrespective of the cause of death. It is further submitted that the Insurance Companies cannot, by any stretch of logic, be permitted to get their liability excused because the deceased’s family is also entitled to financial assistance from an alternative source. The liability of the Insurance Company is statutory and contractual whereas compassionate assistance results from employer- employee relationship. The two can not be reconciled and hence have to charter their own course. Learned Counsels appearing for the State Of Haryana have also argued that the Insurance Companies cannot derive any advantage from the compassionate assistance policy in as much as compassionate assistance coming from the State is by virtue of employer-employee relationship manifested in the form of Compassionate Assistance Rules 2006 whereas FAO Nos.589 to 591 of 2010 (O&M) 15 FAO Nos.4710 of 2010 & 2304 of 2011 & 1490 of 2010 the liability of the insurance company is arising in a totally different context i.e. by virtue of a contract, under the law of indemnity. It is further contended that compensation payable under the Motor Vehicles Act is statutory and has no correlation with the amount received as a part of compassionate assistance. It is submitted that in case of a life insurance policy, the sum assured would payable to the LR’s of the insured, in the event of his death (whether accidental or natural death) and even where the death does not occur, to the insured himself at the time of maturity of the policy. This advantage, the insured derives from the fact that he pays premium for the stipulated period. Drawing an analogy from this, it is contended that pecuniary benefit by way of compassionate assistance is a result of the labour already put in by the employee and which he would have earned, had he not died. In other words, compassionate assistance works quite much like a life insurance policy and hence cannot be taken into consideration for the purposes of deduction from the compensation as assessed under Motor Vehicles Act. In support of their submissions, the learned State counsel’s rely on Helen C. Rebello vs. M.S.R.T.C.{1998(4) RCR (Civil) 177} and UIIC vs. Patricia Jean Mahajan {2002 (3) RCR (CIVIL) 534}. It is still further contended that there is no clause in the insurance policy that in case the claimant is to get any benefit under the social security scheme, the said amount is to be deducted while awarding compensation to the LRs’ of the deceased. I have given my thoughtful consideration to the arguments FAO Nos.589 to 591 of 2010 (O&M) 16 FAO Nos.4710 of 2010 & 2304 of 2011 & 1490 of 2010 addressed on behalf of the parties. The liability of the Insurance Company arises from a contract in which it promises to indemnify the insured in case of a damage arising to a third party due to his act. Such a liability can either be waived off by the insured himself or can be excused, in case there is a violation of the terms/ conditions of the contract by virtue of which the insurer promises to indemnify. Law does not recognize a third situation where the insurer can get away with his responsibility to pay the damages on behalf of the insured. The issue that arises in the present Appeals is whether the insurance companies and the owners/drivers of the offending vehicles, which includes drivers with invalid or fake driving license, can be allowed to get their liability reduced or excused in certain exceptional cases because of a benevolent act of an unconnected third party, which in these Appeals happens to be the State of Haryana. If the argument advanced on behalf of the Insurance Companies is to be accepted in totality, it would negate the purpose of section 163-A or section 166 of the Act. This fact can be established by hypothesizing two different situations. In the first hypothesis, we presume that the deceased was a new entrant in the service of the Government and was unmarried, say in the age group of 26 – 30 years, which is the usual age of entry to a government job. It has been repeatedly held by the Hon’ble Apex Court that in case of an unmarried deceased, it is the age of the claimants which is to be considered for the purpose of applying the appropriate multiplier. In all probability, the FAO Nos.589 to 591 of 2010 (O&M) 17 FAO Nos.4710 of 2010 & 2304 of 2011 & 1490 of 2010 claimants would be the parents who would be in the age group of 55 – 65 years, for which the multiplier would range from 11 – 9, as per Sarla Verma and Others Vs. DTC and Another (supra). However, as per the compassionate policy assistance, the family of such a deceased employee would get his full last drawn salary for 15 years and they would also be entitled to family pension for the period thereafter. If the contention of the learned Counsels appearing for the insurance companies (which has been reproduced above) is applied in such a fact situation, there would not be any shortfall between the compassionate assistance and compensation as worked out under the guidelines of Sarla Verma’s case. The real effect would be that insurance companies or the owner and/or driver of the vehicle will not be required to pay anything and their liability will get excused. Example: As per Compassionate Assistance Policy: If salary is Rs. 25,000/-, deceased is unmarried and below 35 years of age, full last drawn salary will be given for 15 years to the dependents. Compassionate assistance works out to – 25000 x 12 x 15 = Rs. 45,00,000/- (forty five lakhs). In addition, family pension will also be granted. As per Sarla Verma: 50% increase in salary since age less than 40 years – Rs. 37,500/- (Rs.25,000/- plus 50%) Dependency