FA/732/2008 1/5 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD FIRST APPEAL No. 732 of 2008 With CIVIL APPLICATION No. 2221 of 2008 For Approval and Signature: HONOURABLE MR.JUSTICE D.H.WAGHELA Sd/- ========================================================= 1 Whether Reporters of Local Papers may be allowed to see the judgment ? 2 To be referred to the Reporter or not ? 3 Whether their Lordships wish to see the fair copy of the judgment ? 4 Whether this case involves a substantial question of law as to the interpretation of the constitution of India, 1950 or any order made thereunder ? 5 Whether it is to be circulated to the civil judge ? 1 to 5 NO ========================================================= NEW INDIA ASSURANCE COMPANY LIMITED - Appellant(s) Versus HANSABA DILIPSINH BARAD & 2 - Defendant(s) ========================================================= Appearance : MR PV NANAVATI for Appellant(s) : 1,MR VIBHUTI NANAVATI for Appellant(s) : 1, MR TUSHAR L SHETH for Respondent(s) : 1, 1.2.1, 1.2.2, 1.2.3,1.2.5 None for Respondent(s) : 1.2.4 - 3. ========================================================= CORAM : HONOURABLE MR.JUSTICE D.H.WAGHELA Date : 14/03/2008 ORAL JUDGMENT 1. Learned counsel for respondents No.1 to 3 and 5 having appeared, the appeal having been confined to challenging the quantum of compensation and learned counsel having agreed FA/732/2008 2/5 JUDGMENT and requested to hear and finally dispose the appeal, it was heard in extenso at the admission stage. 2. In the present appeal under section 173 of the Motor Vehicles Act, 1988 ("the Act", for short), the appellant insurance company has called into question total award of Rs.9,22,500/- by way of compensation by the impugned award dated 14.9.2007 of Motor Accident Claims Tribunal (Aux.), Gondal in Motor Accident Claim Petition No.225 of 1995. 2. There was no dispute about the basic facts of the accident having taken place on 03.01.1995 between the tempo and the motorcycle driven by the deceased. The claim petition was filed in the name of the widow, two minor children and parents of the deceased claiming compensation of Rs.10 lakh. The driver of the opposite vehicle was found to be negligent and the amount of compensation was calculated on the basis of the yearly income in the three years preceding the accidental death. Considering his average annual income to be around Rs.72,000/-, the Tribunal accepted Rs.5,000/- as monthly income of the deceased in absence of proper accounts and income tax assessment. After considering the prospective rise in income and FA/732/2008 3/5 JUDGMENT deducting one-third of such amount as expenditure towards himself, the Tribunal had arrived at the figure of annual loss of dependency benefit of Rs.60,000/-. In view of the age of the deceased of 43 years, multiplier of 15 was applied to arrive at the figure of Rs.9 lakh and, adding thereto Rs.20,000/- towards conventional amount and Rs.2,500/- towards funeral expenses, total sum of Rs.9,22,500/- with 9% interest and cost is awarded by the impugned award. 3. Learned counsel Mr.Nanavati, appearing for the appellant, submitted that, in view of the age and income of the deceased, multiplier of 15 ought not to have been applied, since the sum of Rs.9 lakh, if invested in fixed deposit, would fetch more amount by way of interest than the dependency benefit claimed by the claimants. He submitted that the proper multiplier would have been 12 or 13 at the highest and the amount of compensation was required to be reduced accordingly. Learned counsel Mr.Tushar Sheth vehemently argued that the deceased was in the business of executing contracts and was consistently earning high amounts and hence prospective income would have been much higher. He also submitted that the annual income of above Rs.70,000/- could not have been substantiated by income tax returns because of tax planning which FA/732/2008 4/5 JUDGMENT the deceased could have legitimately adopted to save tax. He also submitted that application of multiplier of 15 was in consonance with the Second Schedule to the Act. 4. It was, however, seen that even the total amount of Rs.7 lakh, if properly invested in long term fixed deposit, could have earned for the claimant more interest than the annual amount of dependency benefit, with the principal amount remaining with the claimants for encashment as and when they choose. The amount of dependency benefit was calculated on the basis of the future prospect of income of the deceased which could always be uncertain in case of a private businessman. Therefore, having regard to the overall facts and circumstances, the multiplier is required to be reduced to 13 and, calculating the compensation on that basis, total amount of dependency benefit comes to Rs.7,80,000/-. Adding thereto the undisputed amount of Rs.22,500/-, total sum of Rs.8,02,500/- is required to be awarded to the claimants and the award is required to be modified accordingly. 5. Therefore, the appeal is admitted and partly allowed to the extent that total sum of Rs.8,02,500/- towards compensation with 9% interest per annum from the date of institution FA/732/2008 5/5 JUDGMENT of the claim till the amounts were realized, along with cost, shall be jointly and severally payable by the original respondents. The impugned award shall stand modified to the aforesaid extent with the remaining part of the award remaining intact. Thus, the appeal stands partly allowed with no order as to costs. Rs.25,000/- deposited with this Court shall be transmitted to the Tribunal concerned as payment towards the liability of the appellant. Learned counsel Mr.Nanavati stated that, since the appeal was now finally disposed, the remaining amount shall be deposited with the Tribunal within a period of six weeks from now. Civil Application No.2221 of 2008 does not survive and stands disposed as rejected. Sd/- ( D.H.Waghela, J.) (KMG Thilake)