FA/2140/2006 1 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD FIRST APPEAL No. 2140 of 2006 For Approval and Signature: HONOURABLE MR.JUSTICE M.S.SHAH and HONOURABLE MR.JUSTICE AKIL KURESHI ========================================================= 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 ? ========================================================= THE NEW INDIA ASSURANCE CO. LTD. - Appellant(s) Versus MEENABEN PANKAJKUMAR JOSHI & 5 - Defendant(s) ========================================================= Appearance : MS LILU K BHAYA for Appellant(s) : 1, MR SANDEEP N BHATT for Defendant(s) : 1 - 4. None for Defendant(s) : 5, RULE SERVED for Defendant(s) : 6, ========================================================= CORAM : HONOURABLE MR.JUSTICE M.S.SHAH and HONOURABLE MR.JUSTICE AKIL KURESHI Date : 27/02/2007 ORAL JUDGMENT (Per : HONOURABLE MR.JUSTICE M.S.SHAH) FA/2140/2006 2 JUDGMENT This appeal at the instance of the Insurance Company is directed against the judgment and award dated 13.12.2005 passed by Mr CH Koshti, Motor Accident Claims Tribunal, Fast Track Court-4, Gandhidham- Kutch in MAC Petition No.297 of 2005 (original No.2 of 1998) awarding compensation of Rs.49,25,000/- with proportionate costs and with interest at the rate of 12% per annum from the date of the claim petition till December 2000 and thereafter at the rate of 9% per annum. 2. By the same award, the Tribunal also provided for disbursement of 40% of the amount to the claimants (widow, two minor children and widowed mother of the deceased) and investment of 60% of the amount in fixed deposits for a period of five years with permission to the claimants to withdraw periodical interest. There is no dispute about the fact that if the Insurance Company had to deposit the entire amount with proportionate costs and interest, the total amount to be deposited would have been in the region of about Rs.90 lakhs and odd amount and, therefore, Rs.36 lakhs and odd amount (40% of the total amount) would have been disbursed, if the Insurance Company had not filed the present appeal and this Court had not granted any stay. FA/2140/2006 3 JUDGMENT 3. When the appeal was admitted on 11.7.2006, this Court also granted ad-interim stay of execution of the award under challenge on condition that the applicant-Insurance Company shall deposit a sum of RS.25 lakhs with the Tribunal. The Insurance Company accordingly deposited Rs.25 lakhs in all, and total sum of Rs.22.50 lakhs has been invested in fixed deposits and disbursement is made of the balance Rs.2.50 lakhs. 4. On 26.10.1997, deceased Pankajkumar Joshi, (husband of claimant No.1, father of minor claimant Nos.2 and 3 and son of claimant No.4) was driving Opel Astra car on the Morbi-Rajkot highway. At about 1.30 in the wee hours, when the deceased reached village Kagdadi, the truck insured by the appellant- Insurance Company was parked on the road without any signal, reflector or tail lamp. The Opel Astra car being driven by the deceased hit the rear portion of the truck resulting into serious injuries. The deceased was shifted to the Tankara Government Hospital for treatment where he succumbed to the injuries. The widow, two minor children and widowed mother of the deceased filed the claim petition for compensation of Rs.1 crore on the ground that the accident was caused by the negligent parking of the truck on the middle of the road without any reflector, side signal or tail lamp. The claimants' case was that the deceased was Director of Kandla FA/2140/2006 4 JUDGMENT Clearing Agency Pvt. Ltd. receiving a monthly salary of Rs.7500/- per month and was also doing proprietary business in the name of Ultra Clearing and Forwarding Company. 5.1 The Tribunal held that the accident was caused mainly by the negligent parking of the truck on the middle of the road and that the truck driver was negligent to the extent of 85%. The Tribunal also held that the deceased was guilty of contributory negligence to the extent of 15%. 5.2 On the question of quantum of compensation, the claimants had produced income-tax returns for the Assessment Years 1996-97 and 1997-98 at Exhs.36 and 37 respectively disclosing salary income for Directorship in Kandla Clearing Agency Pvt. Ltd. at Rs.66,000/- and Rs.90,000/- respectively. Both the returns were filed after the accident with the following notes :- “1. The assessee has not filed the return of income upto 1995-96 as his income was below the exempt limit. 2. The assessee has expired on 26.10.1997 as such the return has been filed by his legal heir Smt. Meena Pankaj Joshi (claimant No.1 in the claim petition and respondent No.1 herein).” Both the returns were accompanied by the certificate issued by Manager/Accountant of Kandla Clearing Agency Pvt. Ltd.. It was also the case of FA/2140/2006 5 JUDGMENT the claimants that the deceased had set-up another business of his own in May 1997 in the name of Utra Clearing and Forwarding Company and to show that the deceased was earning substantial income from the said business, the claimants produced certified photocopy of the ledger account entries issued by the State Bank of Bikaner and Jaipur at Gandhidham. On the basis of the said entries, the Tribunal gave a finding that the turnover of the said business for eight months was Rs.12.73 lakhs and the Tribunal further accepted the claimants' case that profit margin on such turnover would be 20%. Impressed by the entries in the said ledger account issued by the State Bank of Bikaner and Jaipur, the Tribunal made the following observations:- “Moreover Bank statement produced at Ex.39 shows the name of Utra clearing and forwarding company and the name of deceased. It shows that the company of deceased, in a very short span, had secured good business. Looking to the statement of the bank transaction. It shows the turnover of Rs.12.73 lacs. As per petitioner, looking to the turnover, marginal commission can be calculated at 20%, so income from the business is arrived at Rs.2.40 lacs approximate in 8 months and Rs.25,000/- should be assessed per month, so by this way deceased was earning more than 30,000/- per month at the time of accident.” Thereafter the Tribunal further held that since the deceased was aged about 32 years on the date of the accident, his future prospective income be considered at Rs.42,000/- per month. FA/2140/2006 6 JUDGMENT 5.3 Deducting one-third therefrom as the personal expenses which the deceased would have incurred on himself, the Tribunal assessed the net monthly dependency benefit at Rs.28,000/- i.e. Rs.3,36,000/- per annum. Adopting the multiplier of 17, the Tribunal worked out the compensation for loss of dependency benefit at Rs.3,36,000 X 17 = Rs.57,12,000/-. In view of the finding that the deceased was negligent to the extent of 15%, the Tribunal reduced the amount of compensation for loss of dependency benefit to Rs.48,55,200/- and made the final award for compensation under the following heads :- Rs.48,55,200/- For loss of dependency benefit Rs. 50,000/- For loss to the estate Rs. 10,000/- For loss of consortium Rs. 10,000/- -------------- For obsequial ceremonies Rs.49,25,000/- -------------- Total The Tribunal further awarded interest at the rate of 12% per annum from the date of the claim petition till December 2000 and thereafter at the rate of 9% per annum. 6. The Insurance Company for the truck is in appeal before us and Ms Lilu Bhaya, learned counsel FA/2140/2006 7 JUDGMENT for the appellant has challenged the judgment and award on the following grounds :- (i) The Tribunal erred in attributing 85% negligence to the truck driver, even though the truck was lying in a stationary condition and the deceased driving the Opel Astra car could have easily avoided the accident. It was on account of excessive speed at which the deceased was driving Opel Astra that the accident took place causing fatal injuries to the deceased who was driving the car. It is submitted that if at all any negligence could be attributed to the truck driver, it could not have been more than 50% and that the deceased car driver ought to have been held responsible for the accident to the extent of at least 50%. (ii) The Tribunal erred in relying upon the income-tax returns filed by widow of the deceased for the salary income allegedly earned by the deceased as Director of the Company for two years prior to the date of the accident. It is submitted that the claimants had failed to produce any authentic satisfactory documentary evidence of any date prior to the date of the accident for showing that the deceased was a Director in Kandla Clearing Agency Pvt. Ltd. FA/2140/2006 8 JUDGMENT with a monthly salary of Rs.7500/- per month. (iii)It is also vehemently submitted that the Tribunal erred in taking into consideration the alleged income from Ultra Clearing and Forwarding Company when neither the claimants had filed any income-tax return for the said income even after the accident nor had the deceased paid any advance tax on such alleged income prior to his death; (iv) The Tribunal erred in holding that the actual monthly income of the deceased at the time of the accident was Rs.30,000/- and that his prospective future income would have been Rs.42,000/- per month. (v) Lastly it is contended that the Tribunal also erred in awarding interest at the rate of 12% per annum and that interest ought not to have been awarded at a rate higher than 7.5% per annum. 7. On the other hand, Mr Sandeep N Bhatt, learned counsel for respondent Nos.1 to 4 (original claimants) has not only supported the findings given by the Tribunal regarding computation of compensation under various heads, but has further submitted as under : - FA/2140/2006 9 JUDGMENT (i) The Tribunal erred in holding that the deceased was guilty of contributory negligence. Since the truck was parked in the middle of the road in the dead of night without any tail lamp, reflector or any other signal, the entire responsibility for the accident was that of the negligent truck driver who parked the truck in that condition. The deceased could never be treated as having contributed to the accident in any manner whatsoever ; (ii) As regards the salary income of the deceased, it is submitted that apart from the certificate issued by the Manager of Kandla Clearing Agency Pvt. Ltd. certifying that the deceased was a Director of the Company since 1990 and was drawing remuneration of Rs.7500/- per month, the certificate of Rajiv Gandhi Memorial Shipping Performance Award – 1995 issued on 21.5.1996 by the Award Selection Committee comprising of no less a person than the Commissioner of Customs, Kandla was clinching enough to sustain the finding of the Tribunal of the fact that the deceased was a Director of Kandla Clearing Agency Pvt. Ltd.; FA/2140/2006 10 JUDGMENT (iii)As regards income from Ultra Clearing and Forwarding Company, there was no dispute about the authenticity of the ledger entries issued by the State Bank of Bikaner and Jaipur and, therefore, the Tribunal was justified in assessing the income on the basis of the entries in the ledger account. (iv) The rate of interest to be paid on the compensation amount as awarded by the Tribunal is proper. 8. We first take up the issue of negligence. The evidence produced by the claimants on this issue was the First Information Report lodged by the truck driver at Exh.32, the panchnama at Exh.33, the post- mortem report at Exh.34 and the deposition of Anil J Gadhavi at Exh.43 who claimed that his car was following the car being driven by the deceased at a distance of 15 to 20 feet and that he had taken the deceased to the Tankara hospital. The said witness also stated that the truck was parked near Kagdadi village on the Morbi-Rajkot highway without any signals and without any barricade behind the truck. 9. Before referring to the contents of the First Information Report which was lodged by the truck driver at 17.25 hours on 26.10.1997 (Exh.32), we would prefer to refer to the contents of the panchnama (Exh.33) which was drawn by the concerned Police Sub Inspector between 9-00 and 10-00 AM on the FA/2140/2006 11 JUDGMENT same day. From the said panchanama, the following facts emerge :- (i) The accident took place on the Rajkot Morbi State highway; (ii) The truck in question was parked on the asphalt road. All the wheels of the truck were on the asphalt road; (iii)A substantial part of the Opel Astra car (inadvertently described as Maruti Opel Astra 16) was lying under the truck; (iv) Both the front doors of the car had bent and the top hood of the car was crushed till the rear seat of the car. In view of the above contents of the panchnama, we find considerable force in the submission of Mr Bhatt for the original claimants that for whatever reason the truck was required to be parked, the truck ought to have been parked on the kachchha shoulder of the road and not on the asphalt road. The argument of the learned counsel for the appellant-Insurance Company that the panchnama does not indicate that there was any kachchha shoulder on either side of the asphalt road, has to be stated to be rejected because the Court would like to take FA/2140/2006 12 JUDGMENT judicial notice of the fact that the State highways are two lane roads with kachchha shoulders on either side. Though the panchnama does not indicate the exact width of the road, it is well known that the asphalt road on a State Highway is wide enough for passage of two vehicles. In this situation, parking of the truck on the asphalt road was itself an act of gross negligence compounded by the absence of any reflector or tail light on the rear side of the truck. During night hours, even a person driving his car at reasonable and moderate speed would not be in a position to notice such truck parked on a Highway from a distance long enough to stop the car so as to avoid any accident. We, therefore, fail to see any justification for attributing any negligence to the deceased who was driving the car. 10. The view being taken by us also finds support from the decision of another Division Bench of this Court in a similar case in Premlata Nilamchand Sharma vs. Hirabhai Ranchhodbhai Patel, 1983 ACJ 290. In that case the deceased was driving a scooter on a foggy December evening. The scooter collided with a trailer attached to the tractor which was stationed on the left side of the road. It was so stationed without taking the requisite and statutory precautions, such as reflector and the red tail light at the rear with the result that the deceased could not notice the tractor. This Court held that the first act of negligence on the part of the tractor driver consisted of the manner in which he had parked FA/2140/2006 13 JUDGMENT the tractor and the trailer, because the left hand rear wheel of the tractor and the trailer were on the edge of the asphalt road, but there was no reason why the driver did not park the tractor and the trailer entirely off the asphalt road so as to avoid all possibility of an accident. That was all the more so as the tractor lay on the road in the darkness of the night and there were no reflectors or working rear lights. This Court held in terms that it was the duty of the truck driver to park his truck and trailer absolutely off the asphalt road and on the kachchha strip so that the entire asphalt road would be left open and unobstructed for the other users of the highway. 11. In the facts of the present case also, the truck was parked on the asphalt road without any reflectors or working tail lights. Any person driving a car on the State highway in the early morning hours would never expect any vehicle like a truck parked on the highway and that too without any reflector or any other signal. We are, therefore, of the view that the accident was caused entirely on account of the negligence of the car driver and that no negligence could have been attributed to the deceased who was driving the Opel Astra car. 12. Coming to the question of quantum of compensation, the learned counsel for the Insurance Company even went to the extent of challenging the finding of the Tribunal that the deceased was a FA/2140/2006 14 JUDGMENT Director of Kandla Clearing Agency Pvt. Ltd.. It is submitted that the deceased had not filed any income- tax returns prior to the date of the accident and that even the certificate produced by the claimants was issued by a person purporting to be Manager/Acountant of the Kandla Clearing Agency Pvt. Ltd., but the certificate (Exh.38/C) did not bear any date. It is submitted that no appointment order was produced nor was any extract from the Registrar of Companies produced. 13. In view of these objections, we have made closer scrutiny of the evidence, and we find that the claimants had also produced on record an Award Certificate dated 21.5.1996 issued by the Rajiv Gandhi Memorial Shipping Performance Award Selection Committee at Exh.40/C. The award was given to “Shri Pankaj Joshi (deceased), Director of Kandla Clearing Agency Pvt. Ltd. in recognition of the outstanding contribution in the promotion of shipping trade at Kandla major port as Best Executive in private sector.” One of the members of the Selection Committee was Mr R Mukhopadhyay, Commissioner of Customs, Kandla and another member was Mr SK Somiyajulu, Ex. Chairman, Kandla Port. The authenticity of this certificate has not been doubted and we see no reason to doubt the claimants' case that the deceased was a Director of Kandla Clearing Agency Pvt. Ltd.. FA/2140/2006 15 JUDGMENT 14. In that view of the matter, it would also not be unreasonable to accept the claimants' case that the deceased was drawing salary of Rs.7500/- per month as a Director of Kandla Clearing Agency Pvt. Ltd. as certified in the certificate at Exh.38/C. It is true that the income-tax returns were filed by the widow of the deceased after the accident and that no returns were filed by the deceased prior to the date of the accident, but once the fact that the deceased was a Director in Kandla Clearing Agency Pvt. Ltd. is accepted, the monthly salary of Rs.7500/- being paid to the Director of a Clearing Agency at a major port like Kandla port cannot be stated to be unreasonable or excessive. We are, therefore, of the view that the salary income of the deceased as a Director of Kandla Clearing Agency Pvt. Ltd. at Rs.90,000/- per annum is required to be accepted. Of course, the income-tax of Rs.7500/- was required to be paid thereon, and was paid with the return filed after the accident. 15. The next question is whether the deceased had any other source of income and if yes, what was the actual income which the deceased was getting from such source prior to the accident. 16. Mr Sandeep Bhatt for the original claimants has vehemently submitted that State Bank of Bikaner and Jaipur is a subsidiary of State Bank of India and that ledger account entries issued by the said Bank spanning over a period from 16.5.1997 to 28.10.1997 FA/2140/2006 16 JUDGMENT reflect the extensive scale and volume of the business which was being carried on by the deceased in the name of Ultra Clearing and Forwarding Company. The gross receipts for the period of six months were to the tune of Rs.12,73,693/- plus the subsequent entries made in the month of October which would take the total deposits to almost Rs.14 lakhs plus and the deceased had a net credit balance of Rs.99,896/- in the said account. It is, therefore, submitted that for such lucrative business of clearing and forwarding, the assessment of actual monthly income of the deceased at Rs.30,000/- per month inclusive of the salary income of Rs.7500/- per month and the assessment of prospective future income at Rs.42,000/- per month is very much within the brackets and that the Tribunal committed no error in assessment and computation of compensation for loss of dependency benefit. 17. Even proceeding on the basis that the deceased had set-up another business in the name of Ultra Clearing and Forwarding Company in May 1997 and even proceeding on the basis that there were deposits in the bank accounts of the deceased with State Bank of Bikaner and Jaipur, we cannot at all approve of the approach of the Tribunal in proceeding on the basis that the margin of profit or margin of commission of the deceased in the said business was to the extent of 20%. The very nature of the business of the deceased being that of clearing and forwarding agent would mean that the deceased would be acting as FA/2140/2006 17 JUDGMENT an agent of the consignors or consignees and, therefore, such receipts would to a substantial extent be the price of the goods being consigned. The very fact that after the accident the widow of the deceased filed income-tax returns for the salary income of the deceased for the previous years 1995-96 and 1996-97 but did not file any income-tax return for the subsequent year i.e. 1997-98 for the alleged business income allegedly earned between May and October 1997 belies the claimants' case that the deceased was getting substantial income from the business being carried on by him in the name of Ultra Clearing and Forwarding Company. We are, therefore, shocked to find that the Claims Tribunal accepted the claimants' case about the alleged income of the deceased from the business in the name of Ultra Clearing and Forwarding Company without making any probe into such tall claim and without testing the claimants' case even on the touchstone of plain commonsense. 18. Even so, while interfering with the finding of the Tribunal assessing actual income of the deceased at Rs.30,000/- per month and prospective future income at Rs.42,000/- per month, having regard to the fact that the deceased was a Director with Kandla Clearing Agency Pvt. Ltd. and was drawing monthly salary of Rs.7500/- per month i.e. Rs.90,000/- per annum (net income Rs.82,500/-) and also having regard to the certificate issued in recognition of the outstanding contribution of the FA/2140/2006 18 JUDGMENT deceased in the promotion of shipping trade at the Kanda port as Best Executive in private sector, we are of the view that there is enough material on the record to come to the conclusion that with passage of time, the deceased would have earned higher income and as per the conventional formula (doubling the actual income, adding the actual income thereto and the aggregate of the two to be halved), such higher income would be required to be assessed at an amount 50% higher than the actual income of the deceased on the date of the accident, which would mean prospective future income of Rs.1,35,000/- per annum. Deducting one-third therefrom as the personal expenses of the deceased, the net dependency benefit to the claimants would be Rs.90,000/- per annum. Since the deceased was aged 32 years on the date of the accident and also considering the entrepreneurship of the deceased, the multiplier of 17 adopted by the Tribunal does not call for any interference. Hence the compensation for loss of dependency benefit would work out to Rs.90,000 X 17 = Rs.15,30,000/-. Adding thereto, the conventional amount of Rs.25,000/- for loss to the estate, Rs.15,000/- to the widow for loss of consortium and Rs.5,000/- for funeral expenses, the total amount of compensation