1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY BENCH AT AURANGABAD FIRST APPEAL NO. 857/2003 Maroti s/o Irappa Jambhale, Age : 30 years, Occu. Nil, R/o Hamalpura, Nanded. ...Appellant. Versus 1. A. Purshottam, Age : Major, Occu. Business, R/o H. No. 3-4-15, Tilak Nagar, Peddapalli (A.P.). 2. United India Insurance Co. ltd., through its Manager, Branch Ramgundam, Divisional Office Medipalli Road, Jyotinagar At : Ramagundam, Dist. Karimnagar (A.P.). 3. Maharashtra State Road Transport Corporation, through its Divisional Controller, Nanded. ...Respondents. Shri A.R. Kale h/f Mr. A.R. Joshi, Advocate for appellant. Shri A.S. Gatne, Advocate for respondent no.2. Mr. M.K. Goyanka, Advocate for respondent No. 3. CORAM : A.V. NIRGUDE, J Date : 4 th August, 2010. 2 ORAL JUDGMENT:- 1 Heard. 2 This appeal is filed against the judgment and award passed by the learned Member of Motor Accident Claims Tribunal, Nanded in M.A.C.P. No. 71/1990. The appellant was the petitioner. 3 The case of the appellant is as under. The appellant was working as mason and as a contractor in R.C.C. work at the relevant time. On 24/03/1990 while he was travelling in a bus belonging to the respondent No.3, it met with an accident with another vehicle owned by respondent No.1 and insured with respondent No.2. There occurred a collision and the appellant suffered injuries to his right leg and right hand. During the medical treatment, both his right leg from knee and his right hand from wrist were amputated. The appellant asserted that his income per month was Rs.1,800/- to 2,000/- per month and he said, he suffered a total loss of earning. He therefore, claimed Rs.5,00,000/- as compensation. 4 The respondents No. 2 and 3 opposed the claim mainly on the ground of quantum. The learned Member of the M.A.C.T. awarded the sum of Rs.1,75,000/- for loss of future income due to disablement and Rs.20,000/- for pain and suffering, and loss of amenities and Rs.5,000/- towards loss of income due to hospitalization. Thus the claim of the appellant was allowed to the extent of Rs.2,00,000/- with interest @ 12% per annum from the date of application till the amount is paid. The 3 learned Member directed both the respondents No.1 and 2 to pay Rs.1,00,000/- with interest and directed respondent No.3 to pay Rs.1,00,000/- with interest. 5 Even today, there is no dispute between the parties that the accident took place due to rash and negligent driving of the two drivers. The only question that arose for my consideration in this appeal is whether the appellant is entitled to enhanced compensation? Firstly, the Court has to decide as to how much was income of the appellant? The appellant in this regard, recorded his deposition and stated that his wages per day as mason were Rs.60/- per day. He added further that he used to take contracts for R.C.C. centering etc. and he said, the total monthly income he earned at the relevant time was approximately Rs.3,000/-. He did not place on record any documentary evidence in support of this assertion. He admitted that he was not paying any income tax on his income. The learned judge having regard to the nature of work, held that the monthly income of the appellant could not be more than Rs.1,000/-. The learned advocate appearing for the appellant assailed this finding. The learned judge indeed made an error when he said that during Monsoon, the appellant would not get work and during such time, he would remain jobless etc.. On the basis of such guess work, the learned judge held that the income of the appellant could not be more than Rs.1,000/- per month. The learned Advocate appearing for the respondents on the other hand suggested that even the claim of the appellant that he was earning Rs.60/- per day as wages as a mason was exaggeration. They tried to suggest that during 1990, the minimum wages payable to a mason in the area where he used to reside could not be more than Rs.27/- per day. In order to support their contention, they placed reliance on the judgment of Division Bench of 4 Himachal Pradesh in the case of Himachal Pradesh Road Transport Corporation through its General Manager Versus Amar Singh reported in 1997(1) T.A.C. 324. In that judgment, the learned judges of the Himachal Pradesh High Court took into account the minimum wages payable as per the provisions The Minimum wages Act, at the relevant time. I am not inclined to follow this line of argument. It is common knowledge that in reality the minimum wages made payable by the Minimum wages Act are not paid to workers in unorganized sector whereas workers in organized sector have better bargaining power. It is also common knowledge that a worker having greater skill gets far more wages than what is prescribed by the law. I am accepting the finding of learned judge of the lower Court that the appellant is unable to prove that he had some more income from his contract work for want of evidence. But I am inclined to accept the word of the appellant when he said that he used to get Rs.60/- per day as mason. In view of this, if the appellant was working six days a week, the yearly income of the appellant would come to Rs.18,720/-. In my view, this amount should be considered the multiplicand. I am not inclined to accept the suggestion of the learned advocate appearing for the respondent that 1/3rd of the amount should be reduced towards personal expenditure of the appellant. Such reduction is generally made in fatal accident cases where the claimants are claiming dependency. Here the appellant is alive and there is no doubt that due to amputation of his two limbs, he suffered 100% loss of earning. So, according to the appellant’s advocate, the pecuniary loss of the appellant comes to Rs.18,720/- per year and according to him, this should be utilized as multiplicand. Opposing this submission, the learned advocate for the respondents asserted that from yearly income of the appellant, an amount equal to at least 1/3rd should be reduced, towards personal 5 expenditure. He placed reliance on the judgment of Supreme Court in the case of New India Assurance Company Ltd. Vs. Charlie and another reported in AIR 2005 Supreme Court 2157. Para 6:- “What would be the percentage of deduction for personal expenditure cannot be governed by any rigid rule or formula by universal application. It would depend upon circumstances of each case. In the instant case the claimant was nearly 37 years of age and was married. Therefore, as rightly contended by learned counsel for the appellant, 1/3 rd deduction has to be made for personal expenditure”. Indeed the judgment in which these observations are made, related to a injury case. It was the case of total disablement and total loss of earning. In the facts and circumstances of this case I am inclined to avoid deductions for personal expenditure and I am accepting the case of the appellant that the loss of earning per year should be utilized as multiplicand. 6 The next question is what should be the multiplier. The learned advocate for the appellant asserted that in chosing the multiplier, the Court should not be guided by the Schedule annexed to Section 163-A of the Motor Vehicles Act. He asserted that this case is not of application under Section 163-A but is a regular application under Section 166 of the Act. He also invited my attention to the provisions of Section 168 of the Act which provides that the Court should award "just compensation". In this regard, observations of the Supreme Court in the above mentioned judgment, would be of help. 6 Para 13:- There were two methods adopted to determine and for calculation of compensation in fatal accident actions, the first the multiplier mentioned in Davies case (supra) and the second in Nance v. British Columbia Electric Railway Co. Ltd., (1951 (2) All ER 448). Para 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 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. Para 15:- The considerations generally relevant in the selection of multiplicand and multiplier were adverted to by Lord Diplock in his speed in Mallett v. Mc Mongle (1969 (2) All ER 178) where the deceased was aged 25 and left behind his widow of about the same age and three minor children. On the question of selection of multiplicand Lord Diplock observed: “The starting point in any estimate of the amount of the ‘dependency’ is the annual value of the material benefits provided for the dependants out of the earnings of the deceased at the date of his death. But... there are many factors which might have led to variations up or down in the future. His earnings might have increased and with them the amount provided by him for his dependants. They might have diminished with a recession in trade or he might have had spells of unemployment. As his children grew up and became independent the proportion of his earnings spent on his dependants would have been likely to fall. But in considering the effect to be given in the award of damages to possible variations in the dependency there are two factors to be borne in mind. The first is that the more remote in the future is the anticipated change the less confidence there can be in the chances of its occurring and the 7 smaller the allowance to be made for it in the assessment. The second is that as a matter of the arithmetic of the calculation of present value, the later the change takes place the less will be its effect upon the total award of damages. Thus at interest rates of 41/2 % the present value of an annuity for 20 years of which the first ten years are at $ 100 per annum and the second ten years at $ 200 per annum, is about 12 years’ purchase of the arithmetical average annuity of $ 150 per annum, whereas if the first ten years are at $ 200 per annum and the second ten years at $ 100 per annum the present value is about 14 yeas’ purchase of the arithmetical mean of $150 per annum,. If therefore the chances of variations in the ‘dependency’ are to be reflected in the multiplicand of which the years’ purchase is the multiplier, variations in the pendency which are not expected to take place until after ten yeas should have only a relatively small effect in increasing or diminishing the ‘dependency’ used for the purpose of assessing the damages.” Para 16:- In regard to the choice of the multiplicand the Halsbury’s Laws of England in Vol. 34, para 98 states the principle thus: “98. Assessment of damages under the Fatal Accidents Act, 1976 – The courts have evolved a method for calculating the amount of pecuniary benefit that dependants could reasonably expect to have received from the deceased in the future. First the annual value to the dependants of those benefits (the multiplicand) is assessed. In the ordinary case of the death of a wage-earner that figure is arrived at by deducting from the wages the estimated amount of his own personal and living expenses. The assessment is split into two parts. The first part comprises is multiplied by the number of years which have elapsed between those two dates. Interest at one-half the short-term investment rate is also awarded on that multiplicand. The second part is damages for the period from the trial onwards. For that period, the number of years which have based on the number of years that the expectancy would probably have lasted; central to that calculation is the probable length of the deceased’s working life at the date of death.” As to the multiplier, Halsbury states: 8 “However, the multiplier is a figure considerably less than the number of years taken as the duration of the expectancy. Since the dependants can invest their damages, the lump sum award in respect of future loss must be discounted to reflect their receipt of interest on invested funds, the intention being that the dependants will each year draw interest and some capital (the interest element decreasing and the capital drawings increasing with the passage of years), so that they are compensated each year for their annual loss, and the fund will be exhausted at the age which the court assesses to be the correct age, having regard to all contingencies. The contingencies of life such as illness, disability and unemployment have to be taken into account. Actuarial evidence is admissible, but the courts do not encourage such evidence. The calculation depends on selecting an assumed rate of interest. In practice about 4 or 5 per cent is selected, and inflation is disregarded. 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. The multiplier may be increased where the plaintiff is a high tax payer. The multiplicand is based on the rate of wages at the date of trial. No interest is allowed on the total figure.” 7 Having regard to these paragraphs, I am convinced that the method of multiplier is required to be utilized in this case for calculating the amount of compensation. Recently in the case of Sarala Varma and others Vs. Delhi Transport Corporation and another reported in (2009) 6 Supreme Court Cases 121, the Supreme Court laid down the rule as to which multiplier should be selected for different age groups. In view of this judgment, multiplier applicable to this case, would be 17. The amount of compensation for loss of earning thus would be Rs. 3,18,240/-. In addition to this, the applicant is entitled to the amounts awarded to him by the Court below namely Rs.5,000/- for loss of income due to hospitalization 9 and Rs.20,000/- for pain and suffering and loss of amenities. The total comes to Rs. 3,43,240/-. On this amount, the appellant would be entitled to 12% per annum interest from the date of application till realization of amount and cost of this appeal. 8 The next question is what should be the rate of interest applicable to the amount so awarded from the date of the application. This appeal was filed after delay of 300 days and therefore, the appellant is not entitled to interest on this amount for the period of delay which he caused for filing this appeal. The learned Advocate appearing for the respondents requested the Court to reduce rate of interest at least from the date of admission of the appeal. Having regard to the pendency of the case for last more than 20 years, I am not inclined to reduce the rate of interest though it looks on higher side for the present times. ORDER The appeal is allowed in above terms. An award be drawn accordingly. [A.V. NIRGUDE, J.] tsk/fa857.03/ok