FA/1069/2006 1 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD FIRST APPEAL No. 1069 of 2006 For Approval and Signature: HONOURABLE MR.JUSTICE MOHIT S. SHAH AND HONOURABLE MR.JUSTICE AKIL KURESHI ================================================= 1 Whether Reporters of Local Papers may be allowed to see the judgment ? Yes 2 To be referred to the Reporter or not ? Yes 3 Whether their Lordships wish to see the fair copy of the judgment ? No 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 ? No 5 Whether it is to be circulated to the civil judge ? To all Motor Accident Claims Tribunals Yes ================================================= NEW INDIA ASSURANCE CO. LTD - Appellant(s) Versus TAKHUBEN RAGHABHAI (HEIR OF DECD. RAGHABHAI RAJABHAI) & 9 - Defendant(s) ================================================= Appearance : MR SHALIN N MEHTA with Ms Viraj Faujdar for Appellant-Insurance Co., Respondent Nos.1 to 9 served. MR MRUGEN PUROHIT and MS AMRITA AJMERA for Intervener- Claimants ================================================= CORAM : HONOURABLE MR.JUSTICE MOHIT .S. SHAH and HONOURABLE MR.JUSTICE AKIL KURESHI Date : 30/11/2006 ORAL JUDGMENT (Per : HONOURABLE MR.JUSTICE MOHIT .S. SHAH) FA/1069/2006 2 JUDGMENT This appeal under Section 173 of the Motor Vehicles Act, 1988 (for brevity, the Act) is filed by the Insurance Company against the judgment and award dated 1.10.2005 of Motor Accident Claims Tribunal (Aux.), Rajkot in MAC Petition No. 446 of 2000 awarding compensation of Rs.6,28,400/- with proportionate costs and with interest at the rate of 9% per annum from the date of the claim petition till realization. 2. Though served, none appears for the respondents. Respondent Nos. 1 to 8 are the original claimants. Respondent No.9 was the driver of the vehicle involved in the accident. Respondent No.10 Company was the owner of the vehicle and when notice for final disposal of the appeal was sought to be served, the Company had already closed down. In view of the importance of the issues raised in the appeal, particularly the issues affecting claimants in the motor accident claim petitions, we permitted Mr Mrugen Purohit and Ms Amrita Ajmera to intervene and make submissions on behalf of the claimants in some other appeals filed by Insurance Companies against the awards made by the Claims Tribunals presided over by the same judicial officer – (Mr MS Shaikh) at Surendranagar, Rajkot or Junagadh. FA/1069/2006 3 JUDGMENT 2A. Although not very conventional, we would like to give an index to this judgment, since it runs into 80 pages with almost equal number of paragraphs : INDEX TO JUDGMENT Sr. No. Particulars Para Nos. 1. Facts 3 2. Findings given by Tribunal 4 & 5 3. Submissions 8, 19, 20 4. Statutory Provisions 9 to 13 5. Case Law cited on Nature of Liability: Issue of Negligence 14 to 18 6. Discussion on Nature of Liability: Issue of Negligence Conclusion on this issue 21 to 40 41 7. Conventional amount for Loss of Expectation of Life & Loss of Consortium Submissions Discussion 42 to 44 45 to 60 8. Deduction of Share of Expenses of Deceased 61 to 63 9. Multiplier 64 to 68 10. Insurer's Liability 69, 70 11. Directions for Investment/Disbursement 71, 72 12. Intemperate Language used by Tribunal 73 13. Conclusions 74 14. Operative Order 75, 76 FA/1069/2006 4 JUDGMENT 3. The above numbered claim petition was filed with the case that on 1.7.1999, Raghabhai Rajabhai was travelling in the matador (No.GJ-1X-7405) insured by the Insurance Company. The deceased had purchased grass and was travelling in the matador alongwith the grass. When the matador reached the place of occurrence at about 7.00 a.m., the driver was driving the matador at an excessive speed and steered the vehicle to save a cow on the road resulting into the matador going over the road. It turned turtle and ran into the pit nearby. The impact of the accident was so severe that the deceased died on the spot. The widow, minor children and the mother of the deceased filed the claim petition for compensation of Rs.4 lakhs. 4. On the question of negligence, the Tribunal relied on the decision of the Apex Court in Kaushnuma Begum vs. New India Assurance Co. Ltd., (2001) 2 SCC 9 and held as under :- “So far as the point of negligence is concerned, it is now well settled that it does not require to be established by the claimants; what is required to be established is that the accident occurred due to use of the vehicle because issue of negligence is not at all necessary for adjudication of the matter of compensation under the M.V. Act. It is to be noted that even in the M.V. Act itself under Sec.147 it is provided that insurer can be made liable in respect of the death or bodily injury “caused by or arising out of use of vehicle”. Thus, the Legislature has intentionally not used the words “caused by wrongful act, neglect or default” and these words pertaining to negligence have been omitted from the Act itself. Hence, now “negligence” is not an essential requirement for obtaining just compensation for the accident arising out of use of a motor vehicle. Therefore, now-a-days, it is not necessary to establish the point of negligence and Tribunal is required only to find out whether injuries sustained by the claimant or death caused to the victim is the result of use of motor vehicles or not.” FA/1069/2006 5 JUDGMENT However, after making the above observations, the Tribunal examined the documentary and oral evidence on record on the issue of negligence and came to the independent conclusion that the accident was caused by the sole negligence of the matador driver. 5. On the question of quantum of compensation - 5.1 For the purpose of computing compensation for loss of dependency benefit, the Tribunal assessed the monthly income of the deceased at Rs.3000/-. Considering that the deceased had nine family members including himself, the Tribunal deducted one-fifth share towards personal expenses of the deceased and assessed the dependency benefit at Rs.2400/- per month. Considering that the deceased was aged 28 years (falling in the age group of 25 – 30 years), the Tribunal adopted the multiplier of 18 years on the basis of the Second Schedule to the Act. The compensation for dependency benefit was accordingly worked out at Rs.2400 x 12 = 28,800 x 18 years = Rs.5,18,400/-. 5.2 Thereafter the Tribunal awarded Rs.1,00,000/- as conventional amount for loss to estate and Rs.10,000/- for the funeral expenses; in all awarding total compensation of Rs.6,28,400/-. 5.3 Relying on the decision of the Kaushnuma Begam's case, the Tribunal also awarded interest at the rate of 9% per annum from the date of claim petition till realization. FA/1069/2006 6 JUDGMENT 5.4 Lastly, the Tribunal referred to the decision of this Court in Bai Damayanti Sharma, 1996 (2) GLR 418 for the purpose of giving directions regarding investment/disbursement of the award amount and provided for disbursement of Rs.1,00,000/- to the mother of the deceased to perform religious pilgrimage. The rest of the amount was ordered to be apportioned equally amongst the other claimants i.e. the widow and six children of the deceased, In case of widow, the Tribunal provided for disbursement of 50% of the amount payable to her and in case of minor children the Tribunal provided for disbursement of 20% of the amount and the remaining amounts were ordered to be invested in fixed deposits with permission to withdraw periodical interest accruing on the fixed deposits. 6. It is against the aforesaid judgment and award that the Insurance Company of the vehicle involved in the accident has moved this Court in appeal. 7. When such appeals by the Insurance Companies against the awards of the Motor Accident Claims Tribunal come up for admission hearing, ordinarily while admitting the appeal, we grant interim stay in favour of the Insurance Company conditional upon deposit of the entire amount of compensation awarded by the Tribunal together with proportionate costs and interest. However, the learned counsel for the appellant – Insurance Company and several other Insurance Companies made a grievance that the concerned judicial officer presiding over the Motor Accident Claims Tribunal at Surendranagar and thereafter upon his transfer to Rajkot and to Junagadh, has been making excessive awards purporting to base such awards on the decisions of the Apex Court and this Court but such judgments of the said Tribunal lay down FA/1069/2006 7 JUDGMENT new principles in motor accident claims jurisprudence. The learned advocates for the Insurance Companies also submitted that the Tribunal has not only been making excessive awards, but has also been providing for disbursement of large amounts to widows and minor children of the deceased. Looking to the grievances made on behalf of a large number of Insurance Companies, we notified the First Appeals against the awards made by the same judicial officer and have heard a number of learned advocates appearing for the Insurance Companies as well as two learned advocates appearing as interveners on behalf of the claimants. In this judgment, therefore, we propose to deal with the questions of law raised by the learned advocates for the Insurance Companies which have been raised in several other appeals, but as far as the facts are concerned, we have confined our attention only to the facts of the present appeal. The factual contentions regarding the quantum of compensation raised in the other appeals will be dealt with in those individual appeals. SUBMISSIONS ON BEHALF OF INSURANCE COMPANIES 8. Mr Shalin N Mehta, learned advocate for New India Assurance Co. Ltd. - appellant in this appeal has raised the following contentions and the learned Advocates for the other Insurance Companies have also made submissions on the same lines:- 8.1 The legal principle laid down by the Tribunal dispensing with the question of negligence is contrary to several decisions of the Apex Court including the decision of the three Judge Bench in Minu B Mehta vs. Balkrishan Ramchandra Nayan, AIR 1977 SC 1248, National Insurance Co. Ltd. vs. Prembhai Patel, (2005) 6 SCC 172, Oriental Insurance Co. Ltd. vs. Hansrajbhai V. Kodala, (2001) 5 SCC 175 and Deepal Girishbhai Soni vs. United India FA/1069/2006 8 JUDGMENT Insurance Co. Ltd., (2004) 5 SCC 385. It is laid down in the aforesaid decisions that in claim petitions filed under Section 110A of the Motor Vehicles Act, 1939 and under the corresponding provisions of Section 166 of the Motor Vehicles Act, 1988, the claimants have to prove negligence of the driver or the owner of the offending vehicle involved in the accident and that the liability of the driver/owner of the vehicle to pay compensation in such cases and the consequential liability of the Insurance Company to satisfy the award of the Tribunal is based on “fault liability” in contrast to “no fault liability” under Sections 140 and 163A of the 1988 Act. The two Judge Bench in Kaushnuma Begum's case (2001) cannot be treated as having overruled the principle laid down by the three Judge Bench in Minu Mehta's case (1977) in emphatic terms that proof of negligence is necessary before the owner or the Insurance Company could be held to be liable for the payment of compensation in a motor accident claim case. This principle has also been reiterated in the other decisions of the Apex Court. 8.2 The award of Rs.1,00,000/- under the head of conventional amount for the loss of expectation of life is not only excessive, but also arbitrary and perverse and contrary to several decisions of the Apex Court. In some claim petitions, the same Claims Tribunal has even awarded Rs.1,50,000/- under the head of conventional amount for loss of expectation of life or for loss to the estate. In several past cases, the Apex Court has awarded a sum between Rs.15,000 to Rs.20,000 to the claimants under the head of conventional amount of compensation for loss to the estate or for loss of expectation of life. The Tribunal has erred in relying upon the decision in Lata Wadhwa vs. State of Bihar, (2001) 8 SCC 1997 which was rendered in the peculiar facts of that case. In any case, the revision of the conventional amounts cannot be permitted to be done by the Claims Tribunal and that it is only the Hon'ble Supreme Court or the High Courts which can undertake such exercise. FA/1069/2006 9 JUDGMENT 8.3 The general disposition of the Tribunal on assessment of income, deduction of the amount which the deceased would have spent on himself had he not died in the accident and adoption of multiplier are not borne out from the decisions relied upon by the Tribunal, and are also contrary to the well settled legal principles enunciated by the Apex Court and this Court. 8.4 The Tribunal has also erred in disbursing large amounts to the widow and minor children of the deceased whose interests are required to be protected as laid down in several decisions of the Apex Court and of this Court. 8.5 The Tribunal has been using intemperate language in its judgments. STATUTORY PROVISIONS 9. Before dealing with the rival contentions on this issue, it would be profitable to refer to the relevant statutory provisions of the Indian Fatal Accidents Act, 1855 as well as the Motor Vehicles Act, 1939 and the Motor Vehicles Act, 1988 (hereinafter referred to “the 1939 Act” and “the 1988 Act”). 10. While under the common law a person injured in an accident caused by a negligent act of the defendant had the right to sue the defendant for damages, upon the death of such injured person the doctrine of actio personalis moritur cum persona (personal cause of action dies with the death of the person) was an impediment to the legal heirs of the deceased getting FA/1069/2006 10 JUDGMENT compensation. The Indian Fatal Accidents Act, 1855 was an Act to provide compensation to families for loss occasioned by the death of a person caused by an actionable wrong. The preamble to the Act provided that “whereas no action or suit is now maintainable in any Court against a person who, by his wrongful act, neglect or default, may have caused the death of another person, and it is often-times right and expedient that the wrong- doer in such case should be answerable in damages for the injury so caused by him; it is enacted as follows -” Sections 1A and 2 are the only relevant Sections for the purposes of the present controversy and they read as under :- “1A. Suit for compensation to the family of a person for loss occasioned to it by his death by actionable wrong .- Whenever the death of a person shall be caused by wrongful act, neglect or default, and the act, neglect or default is such as would (if death had not ensued) have entitled the party injured to maintain an action and recover damages in respect thereof, the party who would have been liable if death had not ensued shall be liable to an action or suit for damages, notwithstanding the death of the person injured, and although the death shall have been caused under such circumstances as amount in law to felony or other crime. Every such action or suit shall be for the benefit of the wife, husband, parent and child, if any, of the person whose death shall have been so caused, and shall be brought by and in the name of the executor, administrator or representative of the person deceased; and in every such action the Court may give such damages as it may think proportioned to the loss resulting from such death to the parties respectively, for whom and for whose benefit such action shall be brought; and the amount so recovered, after deducting all costs and expenses, including the costs not recovered from the defendant, shall be divided amongst the beforementioned parties, or any of them, in such shares as the Court by its judgment or decree shall direct. FA/1069/2006 11 JUDGMENT 2. Not more than one suit to be brought.- Provided always that not more than one action or suit shall be brought for, and in respect of the same subject- matter of complaint; Claim for loss to estate may be added,- Provided that, in any such action or suit, the executor, administrator or representative of the deceased may insert a claim for and recover any pecuniary loss to the estate of the deceased occasioned by such wrongful act, neglect or default, which sum, when recovered, shall be deemed part of the assets of the estate of the deceased.” (emphasis supplied) 11. The relevant provisions for constituting Motor Accident Claims Tribunals for adjudication of compensation claims and their powers and procedures are similar in Chapter VIII of Motor Vehicles Act, 1939 and Chapter XII of the Motor Vehicles Act, 1988. Since the decision in Minu B Mehta (AIR 1977 SC 1248) heavily relied upon by the Insurance Company was concerned with the 1939 Act, we quote the provisions from the said Act. Sections 110A to 110F were inserted in the 1939 Act by Act 100 of 1956. Sub- section (1) of Section 110 read as under :- “110.Claims Tribunals – (1) A State Government may, by notification in the Official Gazette, constitute one or more Motor Accidents Claims Tribunals (hereinafter referred to as Claims Tribunals) for such area as may be specified in the notification for the purpose of adjudicating upon claims for compensation in respect of accidents involving the death of, or bodily injury to, persons arising out of the use of motor vehicles, or damages to any property of a third party so arising, or both: Provided that ... ... ... ... .. ... (emphasis supplied) Section 110A provided as to who can make an application for compensation, the territorial jurisdiction of the FA/1069/2006 12 JUDGMENT Tribunal and the period of limitation. Section 110B provided that on receipt of the application for compensation under Section 110A, the Claims Tribunal shall, after giving the parties an opportunity of being heard, hold an inquiry into the claim and may make an award determining the amount of compensation which appears to it to be just and specifying the person or persons to whom compensation shall be paid and also specifying the amount which shall be paid by the insurer or owner or driver of the vehicle involved in the accident or by all or any of them, as the case may be. Section 110C prescribed the procedure and powers of Claims Tribunals. Section 110CC conferred discretion on the Tribunal to award simple interest on the amount of compensation at such rate and from such date not earlier than the date of making the claim as it may specify in this behalf. Section 110F provided for Bar of jurisdiction of Civil Courts in the following terms:- “110-F. Bar of jurisdiction of Civil Courts. - Where any Claims Tribunal has been constituted for any area, no Civil Court shall have jurisdiction to entertain any question relating to any claim for compensation which may be adjudicated upon by the Claims Tribunal for that area, and no injunction in respect of any action taken or to be taken by or before the Claims Tribunal in respect of the claim for compensation shall be granted by the Civil Court.” 12. Section 92A inserted by Act 47 of 1982 w.e.f. 1.10.1982 provided for liability to pay compensation in certain cases on the principle of “no fault”. Sub-section (1) thereof read as under :- “(1) Where the death or permanent disablement of any person has resulted from an accident arising out of the use of a motor vehicle or motor vehicles, the owner of the vehicle shall, or, as the case may be, the owners of the vehicles shall, jointly and severally, be liable to pay compensation in respect of such death or disablement in accordance with the provisions of this section.” FA/1069/2006 13 JUDGMENT Sub-section (2) thereof provided for fixed amounts of compensation in fatal cases and in cases of permanent disablement. Sub-sections (3) and (4) thereof read as under :- “(3) In any claim for compensation under sub- section (1), the claimant shall not be required to plead and establish that the death or permanent disablement in respect of which the claim has been made was due to any wrongful act, neglect or default of the owner or owners of the vehicle or vehicles concerned or of any other person. (4) A claim for compensation under sub-section (1) shall not be defeated by reason of any wrongful act, neglect or default of the person in respect of whose death or permanent disablement the claim has been made nor shall be quantum of compensation recovered in respect of such death or permanent disablement be reduced on the basis of the share of such person in the responsibility for such death or permanent disablement.” (emphasis supplied) While inserting Section 92A, the Amendment Act also added the following explanation to Section 110. Explanation – For the removal of doubts, it is hereby declared that the expression 'claims for compensation in respect of accidents involving the death of, or bodily injury to, persons arising out of the use of motor vehicles' includes claims for compensation under Section 92-A.” 13. The 1939 Act was thereafter repealed and substituted by the 1988 Act with effect from 1.7.1989 and the corresponding provisions regarding jurisdiction of the Tribunal to make award are in similar terms and are to be found in Sections 165 to 175 (corresponding to Sections 110 and 110F of the 1939 Act). Section 140 corresponds to Section 92A of the 1939 Act. Section 161 provides for compensation to be paid by General Insurance Corporation of India (Government of India undertaking) token amounts of compensation in a fatal case (Rs.25,000/-) as well as a FA/1069/2006 14 JUDGMENT permanent disablement case (Rs.12,500/-) arising from any “hit and run” case, where the identity of the vehicle is unknown. Chapter XII in MV Act, 1988 relating to Claims Tribunals also includes the provision excluding jurisdiction of the Civil Courts by providing Section 175 which is in pari materia with Section 110F of the 1939 Act. “175. Bar on jurisdiction of Civil Courts. - Where any Claims Tribunal has been constituted for any area, no Civil Court shall have jurisdiction to entertain any question relating to any claim for compensation which may be adjudicated upon by the Claims Tribunal for that area, and no injunction in respect of any action taken or to be taken by or before the Claims Tribunal in respect of the claim for compensation shall be granted by the Civil Court.” With effect from 14.11.1994 the Parliament inserted Section 163A, which reads as under :- “163A. Special provisions as to payment of compensation on structured formula basis.- (1) Notwithstanding anything contained in this Act or in any other law for the time being in force or instrument having the force of law, the owner of the motor vehicle or the authorized insurer shall be liable to pay in the case of death or permanent disablement due to accident arising out of the use of motor vehicle, compensation, as indicated in the Second Schedule, to the legal heirs or the victim, as the case may be. Explanation.- For the purposes of this sub-section, “permanent disability” shall have the same meaning and extent as in the Workmen's Compensation Act, 1923 (8 of 1923). (2) In any claim for compensation under sub-section (1), the claimant shall not be required to plead or establish that the death or permanent disablement in respect of which the claim has been made was due to any wrongful act or neglect or default of the owner of the vehicle or vehicles concerned or of any other persons. FA/1069/2006 15 JUDGMENT (3) The Central Government may, keeping in view the cost of living by notification in the Official Gazette, from time to time amend the Second