Case: Lilaben Udesing Gohel Vs. The Oriental Insurance Company Ltd

become liable to pay the amount of compensation is required to retain the amount with it. It is obliged to pay the same to the claimants periodically with interest at the rate of 15%. This is not the case in the guidelines laid down by the Honble Supreme Court. The guidelines laid down by the Honble Supreme Court requires that the amount of compensation should be deposited in the Tribunal. Thereafter, it is for the Tribunal to regulate disbursement and investment of the amount. Moreover, the guidelines laid down by the Honble Supreme Court take care of all types of cases, wherein even the insurance company may not have been held liable to make payment of the compensation; while, in the case of the guidelines laid down by Full Bench of this Court, the guidelines are silent in cases where the Insurance Company is not made liable to make payment of the amount of compensation and only the owner of the vehicle or the driver is made liable to pay the compensation.22. The guidelines issued by the Honble Supreme Court take care of the provisions of Section 168 (3) of the Motor Vehicles Act, 1988, while, as indicated hereinabove, attention of the Full Bench has not been drawn to the provisions of Section 168 (3) of the Act, which requires a person liable to make payment of the amount of compensation to deposit the amount of compensation with the Tribunal within thirty days from the date of announcement of the award.23. In the guidelines laid down by the Honble Supreme Court emphasis is to protect the interests of minor claimants and the interest of illiterate and semi-literate, as well as poor claimants. The guidelines laid down by the Honble Supreme Court also apply to literate and other claimants. But in such cases discretion is left with the Tribunal, indicating the circumstances and the manner in which the discretion may be exercised. While in the guidelines laid down by the Full Bench, it is difficult to read that any such discretion is left with the Tribunal. For the aforesaid reasons there is conflict between the guidelines laid down by the Honble Supreme Court in the case of Union Carbide Corporation (supra) and again in the case of General Manager, Kerala State Road transport Corporation (supra). Moreover, this conflict is irreconcilable inasmuch as it would be impossible to implement both the guidelines simultaneously." (See Jayantilal Ambalal Parma v. Gujarat State Road Transport Corporation and another, 1994 35(2) Gujarat Law Reporter 1308). 15. The five-Judge Bench concluded saying that the guidelines laid down by the Supreme Court as indicated above have to be followed by all the Motor Accident Claims Tribunals. Thus, the position in law as it stood before the decision rendered by the three-Judge Bench of the High Court stands restored.16. It may also be mentioned that before us both the General Insurance Corporation and the Life Insurance Corporation expressed their inability to work out and operate the annuity scheme proposed by the three-Judge Bench of the High Court and further expressed their inability to grant the proposed interest rate as it may conflict with Reserve Bank of India directives that may ensue from time to time. They too, therefore, expressed their inability to operate the scheme. Counsel for the Life Insurance Corporation clarified that when its counsel gave the consent before the three-Judge Bench, it did not visualise the various operational difficulties likely to arise in the implementation of the scheme proposed by the three-Judge Bench of the High Court. Thus, both the General Insurance Corporation and the Life Insurance Corporation feel that the said scheme is unworkable and fraught with several insurmountable difficulties. We too are of the view that the scheme may throw up many operational difficulties. However, now that the larger bench of the High Court has restored the original position, nothing more is required to be done. If any loopholes appear in the implementation of the guidelines laid down in Muljibhais case (1982 (23) 1 Guj LR 756), they can always be plugged consistently with the guidelines.17. Before we pare we must observe that even though the guidelines laid down in Muljibhais case (1982 (23) 1 Guj LR 756) have been approved and applied by this Court in the aforementioned two cases, many Motor Accidents Claims tribunals and even some of the High Courts in other parts of the country do not follow them. We are also told that in claims that are settled in or outside the Court or Tribunal, including Lok-Adalats or Lok Nyayalayas, these guidelines are overlooked. We would like to make it absolutely clear that in all cases in which compensation is awarded for injury caused in a motor accident, whether by way of adjudication or agreement between the parties, the Court/Tribunal must apply these guidelines. We must add one further guideline to the effect that when the amount is invested in a fixed deposit, the bank should invariably be directed to affix a note on the Fixed Deposit Receipt that no loan or advance should be granted on the strength of the said FDR without the express permission of the Court/Tribunal which ordered the deposit. This will eliminate the practise of taking loans which may be upto 80% of the amount invested and thereby defeating the very purpose of the order. We do hope that the Courts/Tribunals in the country will not succumb to the temptation of permitting huge withdrawals in the hope of disposing of the claims. We are sure that the Courts/Tribunals will realise their duty towards the victims of the accident so that a large part of the compensation amount is not lost to them. The very purpose of laying down the guidelines was to ensure the safety of the amount so that the claimants do not become victims of unscrupulous persons and unethical agreements or arrangements. We do hope our anxiety to protect the claimants from exploitation by such elements will be equally shared by the Courts/Tribunals.

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]9. One can easily notice the major shift in ideas in the impugned judgment. The thrust in the impugned judgment is on the concept of annuity so as to ensure periodic payment of a fixed amount and to prevent the awarded sum in lump sum falling into the hands of the claimant as long as possible. In order to ensure the periodic payment, which according to the judgment should be quarterly interest calculated at the rate of 15% on the total compensation amount, the insurance company itself has been made liable to make the necessary investment either in its own business or in the business of the General Insurance Corporation or that of the Life Insurance Corporation. The impugned judgment has shown further caution for minors who should wait till they are at least 21 and in any case for 10 years from the date of the award. It can be seen that the periodic payment is insisted upon for all claimants irrespective of their capacity to take care of large sums of money. Further, the arrangement described above was insisted upon also for payment of the small amount that is generally available on no-fault liability primarily to meet the immediate needs of the victims/heirs.10. The minimum waiting period for 10 years before the claimant could be entitled to receive the compensation money awarded has been challenged as having the effect of depriving the claimant of his right to compensation. Such a procedure is said to be arbitrary and unreasonable and hence violative of fundamental rights under Article 14 and right to property under Article 300 A of the Constitution. Entrusting the capital amount to the insurance company had also been opposed. In the first place insurance companies having already contested the claim petition tooth and nail are likely to have lost the confidence of the claimants. In the second place, the nationalised status of the insurance company may or may not continue in future when it may become difficult to assume that the corpus can be safely left with them. The inflexibility of the rule, it is said, is likely to cause hardships in individual cases particularly when the claimant would be needing the amount for reimbursement of the medical expenses as well as other expenses incidental thereto. It is further said that those who are literate and wise should be given the charge of the compensation amount at the very outset because they may invest the amount in a more profitable way than what is suggested by the Court. The payment of lump sum is also favoured by the appellants as the amount may help the victim/injured or the heir of the deceased in making arrangement for a self-employing establishment which may be a better arrangement than receiving a fixed annuity periodically. So far as the minors are concerned detaining the payment till the claimant reaches the age of 21 years or at least for a minimum period of 10 years would amount, in particular cases, to detain the money till the claimant reaches the age of nearly 30 years. This again is challenged as unreasonable. Further they say that compensation amount is calculated on the basis of the multiplier method in which one-third of the expected loss of estate is deducted and therefore unless the compensation so awarded is paid in lump sum the interest alone will be illusory. Further according to them the amount of time lost in litigation will never be compensated if the victims are to receive only the interest amount.The five-Judge Bench concluded saying that the guidelines laid down by the Supreme Court as indicated above have to be followed by all the Motor Accident Claims Tribunals. Thus, the position in law as it stood before the decision rendered by the three-Judge Bench of the High Court stands restored.16. It may also be mentioned that before us both the General Insurance Corporation and the Life Insurance Corporation expressed their inability to work out and operate the annuity scheme proposed by the three-Judge Bench of the High Court and further expressed their inability to grant the proposed interest rate as it may conflict with Reserve Bank of India directives that may ensue from time to time. They too, therefore, expressed their inability to operate the scheme. Counsel for the Life Insurance Corporation clarified that when its counsel gave the consent before the three-Judge Bench, it did not visualise the various operational difficulties likely to arise in the implementation of the scheme proposed by the three-Judge Bench of the High Court. Thus, both the General Insurance Corporation and the Life Insurance Corporation feel that the said scheme is unworkable and fraught with several insurmountable difficulties. We too are of the view that the scheme may throw up many operational difficulties. However, now that the larger bench of the High Court has restored the original position, nothing more is required to be done. If any loopholes appear in the implementation of the guidelines laid down in Muljibhais case (1982 (23) 1 Guj LR 756), they can always be plugged consistently with the guidelines.17. Before we pare we must observe that even though the guidelines laid down in Muljibhais case (1982 (23) 1 Guj LR 756) have been approved and applied by this Court in the aforementioned two cases, many Motor Accidents Claims tribunals and even some of the High Courts in other parts of the country do not follow them. We are also told that in claims that are settled in or outside the Court or Tribunal, including Lok-Adalats or Lok Nyayalayas, these guidelines are overlooked. We would like to make it absolutely clear that in all cases in which compensation is awarded for injury caused in a motor accident, whether by way of adjudication or agreement between the parties, the Court/Tribunal must apply these guidelines. We must add one further guideline to the effect that when the amount is invested in a fixed deposit, the bank should invariably be directed to affix a note on the Fixed Deposit Receipt that no loan or advance should be granted on the strength of the said FDR without the express permission of the Court/Tribunal which ordered the deposit. This will eliminate the practise of taking loans which may be upto 80% of the amount invested and thereby defeating the very purpose of the order. We do hope that the Courts/Tribunals in the country will not succumb to the temptation of permitting huge withdrawals in the hope of disposing of the claims. We are sure that the Courts/Tribunals will realise their duty towards the victims of the accident so that a large part of the compensation amount is not lost to them. The very purpose of laying down the guidelines was to ensure the safety of the amount so that the claimants do not become victims of unscrupulous persons and unethical agreements or arrangements. We do hope our anxiety to protect the claimants from exploitation by such elements will be equally shared by the Courts/Tribunals.