Case: NATIONAL INSURANCE COMPANY LTD Vs. MANNAT JOHAL

2. These cross-appeals relating to the vehicular accident compensation claims, respectively by the insurer of the offending vehicle and by the claimants, are directed against the common judgment and order dated 06.07.2018, as passed in FAO No. 1136 of 2000 (O & M) and connected matters, whereby the High Court of Punjab and Haryana has allowed the appeal for enhancement of compensation filed by the claimants and has modified the common award dated 27.01.2000 as made by the Motor Accident Claims Tribunal, Chandigarh in MACT Case Nos. 80 of 1996 and 84 of 1996 that were filed respectively by the parents and by the wife and children of the deceased Shri Rajpal Singh Johal3. In the impugned judgment and order dated 06.07.2018, the High Court has made upward revision of the amount of compensation awarded by the Tribunal and, in place of the amount of Rs. 37,71,000/- together with interest @ 12% p.a. as awarded by the Tribunal, the High Court has awarded a sum of Rs. 48,00,000/- together with interest @ 7.5% p.a. from the date of filing of the claim petition till the date of realisation. The High Court has allowed this enhancement essentially with reference to the principles enunciated by this Court in National Insurance Company Ltd. v. Pranay Sethi & Ors.: 2017 ACJ 2700 (SC) and in Sarla Verma and Ors. v. Delhi Transport Corporation and Anr.: 2009 ACJ 1298 (SC)4. In these appeals, on one hand, the insurer of the offending vehicle has questioned the quantum of compensation so awarded, basically on the ground that while making assessment of pecuniary loss, the ex gratia amount received by the claimants from the employer of the deceased deserves to be deducted while, on the other hand, the claimants have questioned the reduction of the rate of interest by the High Court4.1. Therefore, the basic question for consideration in these appeals is as to whether the amount of compensation as awarded by the High Court is that of just compensation or the same calls for any modification?5. The background aspects of the matter, so far relevant for the question at hand, may be noticed, in brief, as follows:5.1. The vehicular accident in question occurred on 30.12.1995, at about 1 p.m., near the police out post Bagari (Assam), when the deceased Shri Rajpal Singh Johal was driving a car, taking his wife and children along, from Kaziranga to Guwahati. The offending vehicle, being an oil tanker bearing registration No. AS-01-9526, rammed into the car driven by the deceased while coming from the opposite direction. The deceased succumbed to the injuries sustained in this accident while his wife was also injured and their two children suffered severe shock5.2. On account of demise of the victim Shri Rajpal Singh Johal due to the injuries sustained in the accident aforesaid, two claim applications came to be made before the Motor Accident Claims Tribunal, Chandigarh: one on 14.05.1996 by the parents of deceased, being MACT Case No. 80 of 1996; and another on 22.05.1996 by the wife and minor children of the deceased, being MACT Case No. 84 of 1996. The sum and substance of the allegations in claim applications had been that the deceased met with his untimely end for the accident in question that occurred due to rash and negligent driving of the oil tanker in question. It was asserted that the deceased was 38 years of age; was working as General Manager (Marketing) with Punjab Wireless System Limited, Mohali; was drawing gross annual salary of Rs. 3,21,801.60 with perks just prior to the accident; and he was due to be promoted as the Associate Vice President in January 1996 whereby, his annual salary would have been enhanced to Rs. 3,50,000/-. While asserting their dependency on the deceased, the claimants i.e., the parents, wife and children of the deceased claimed compensation against the driver, owner and insurer of the offending vehicle. The cause of action being the same, these two claim petitions were consolidated, and were tried and decided together by way of the common award dated 27.01.20005.3. Before the Tribunal, driver of the offending vehicle remained ex parte while its owner denied any negligence on part of the driver and rather alleged that the accident occured due to rash and negligent driving by the deceased. On the other hand, insurer of the offending vehicle denied the factum of the accident and also alleged that the driver of the offending vehicle did not possess a valid driving license5.4. On the pleadings, the Tribunal framed as many as 9 issues. After taking evidence, the Tribunal proceeded to determine the relevant issues in its impugned award dated 27.01.2000. The Tribunal decided the basic issues relating to the factum of accident and the responsibility for the same against the non-applicants while holding that the accident in question occurred due to rash and negligent driving of the offending oil tanker. The Tribunal also held that the wife and children of the deceased were dependent on him and further that the parents were marginally dependent on him5.5. On the question of quantification of compensation, the Tribunal took note of the evidence led by the claimants as regards emoluments of the deceased as on 01.12.1995; the fact that his colleagues were promoted as Associate Vice President in the year 1995; that he too had the prospects of such promotion; and that emoluments of the Associate Vice President were revised with effect from the month of December 1996. Therefore, the Tribunal considered it just and reasonable to assess the income of the deceased at Rs. 3,51,000/- p.a., as per the revised emoluments for the post of Associate Vice President in the employer company. Then, the Tribunal proceeded to deduct one-third towards personal expenses of the deceased and in this manner, took the annual loss of dependency at Rs. 2,34,000/- and, after applying the multiplier of 16, assessed the pecuniary loss of the claimants at Rs. 37,44,000/-. The Tribunal further awarded Rs. 25,000/- towards transportation of dead-body and Rs. 2,000/- towards other expenses and thus, finally awarded a sum of Rs. 37,71,000/- to the claimants. The Tribunal also allowed interest at the rate of 12% p.a. from the date of filing of claim application No. 80 of 1996. The Tribunal allowed a sum of Rs. 1,00,000/- each to the mother and father of the deceased while observing that they were in the age group of 78 years and were only marginally dependent on the deceased; and apportioned the remaining amount amongst the wife and children of the deceased5.6. Against the award so made by the Tribunal, the claimants in MACT Case No. 84 of 1996 preferred an appeal before the High Court of Punjab and Haryana, seeking enhancement of the amount of compensation, while the insurance company preferred two separate appeals questioning the findings in the award and seeking reduction of the amount of compensation5.7. The High Court, in its impugned judgment dated 06.07.2018, in the first place rejected the contentions urged on behalf of the insurer as regards the factum and cause of accident and affirmed the findings of the Tribunal. As regards quantum of compensation, the High Court proceeded to make enhancement over the amount awarded by the Tribunal with reference to the decisions in Pranay Sethi and Sarla Verma (supra). The High Court did not accept the basis of assessment of loss of income with reference to the likely enhanced emoluments of deceased on his expected promotion and subsequent revision of pay-scale in the year 1996. The High Court, therefore, took the base annual emoluments at Rs. 3,21,801.60 and, while deducting Rs. 20,000/- towards income-tax, rounded off the figure to Rs. 3,00,000/-. The High Court, thereafter, provided for enhancement of 40% towards future prospects and then, looking to five number of dependents, deducted one-fourth towards personal expenses of the deceased. In this manner, the High Court arrived at the multiplicand of Rs. 3,15,000/- and, while applying the multiplier of 15 in view of the age of the deceased at 38 years, worked out the pecuniary loss at Rs. 47,25,000/-. The High Court further awarded Rs. 40,000/- towards loss of consortium, Rs. 15,000/- towards funeral expenses and Rs. 15,000/- towards loss to estate. Accordingly, the High Court assessed the total compensation at Rs, 47,95,000/- and rounded it up to Rs. 48,00,000/-. The High Court, however, allowed interest at the rate of 7.5% p.a., while holding that the respondents related with the offending vehicle were liable to make payment of compensation. As regards apportionment, the High Court allowed a sum of Rs. 26,00,000/- to the wife of the deceased; Rs. 8,00,000/- to the son of the deceased; Rs. 10,00,000/- to the daughter of the deceased; and Rs. 2,00,000/- each to the mother and father of the deceased.

Court's reasoning:
7. Having given anxious consideration to the rival submissions and having examined the record, we are clearly of the view that the modified award made by the High Court in this case remains that of just compensation and no case for interference is made out in either of these appeals8. It remains trite, and need not be over-emphasised, that while dealing with the question of quantification in a claim for compensation under the Motor Vehicles Act, 1988 (the Act of 1988), the endeavor has to be to ensure awarding of just compensation to the claimant/s9. In a case like the present one, relating to the death of the vehicular accident victim, any process of awarding just compensation involves assessment of such amount of pecuniary loss which could be reasonably taken as the loss of dependency suffered by the claimants due to the demise of the victim. In other words, such a process, by its very nature, involves the assessment of monetary contribution that the claimants were likely to receive from the deceased had he not met with the untimely end due to the accident. For the purpose of such an assessment, while some of the basic facts, like the age, job and income of the deceased and the number of dependents with extent of their dependency, could be reasonably ascertained from the evidence on record, yet, several uncertain factors also, per force, come into play, like the future prospects of the deceased coupled with various imponderables related with a human life. As the process, by its very nature, involves a substantial deal of guess-work, this Court, over the years, has evolved and applied several principles so as to ensure that as far as possible, the methods for assessment remain uniform, curbing against disparity in the amount of compensation to be awarded in similarly circumstanced cases. It is not necessary for the present purpose to traverse through the large number of past decisions, particularly for the reason that the basic parameters stand explained and standardised with the larger Bench decision in Pranay Sethi (supra), wherein this Court has partly modulated the parameters enunciated in the two-Judge Bench decision in Sarla Verma (supra), and has laid down the principles as follows:-3. While determining the income, an addition of 50% of actual salary to the income of the deceased towards future prospects, where the deceased had a permanent job and was below the age of 40 years, should be made. The addition should be 30%, if the age of the deceased was between 40 to 50 years. In case the deceased was between the age of 50 to 60 years, the addition should be 15%. Actual salary should be read as actual salary less tax59.4. In case the deceased was self-employed or on a fixed salary, an addition of 40% of the established income should be the warrant where the deceased was below the age of 40 years. An addition of 25% where the deceased was between the age of 40 to 50 years and 10% where the deceased was between the age of 50 to 60 years should be regarded as the necessary method of computation. The established income means the income minus the tax component59.5. For determination of the multiplicand, the deduction for personal and living expenses, the tribunals and the courts shall be guided by paras 30 to 32 of Sarla Verma which we have reproduced hereinbefore59.6. The selection of multiplier shall be as indicated in the Table in Sarla Verma read with para 42 of that judgment59.7. The age of the deceased should be the basis for applying the multiplier59.8. Reasonable figures on conventional heads, namely, loss of estate, loss of consortium and funeral expenses should be Rs 15,000, Rs 40,000 and Rs 15,000 respectively. The aforesaid amounts should be enhanced at the rate of 10% in every three years10. Applying the principles aforesaid to the present case, we find that the award made by the Tribunal suffered from a few fundamental errors and shortcomings as regards the assessment of multiplicand. The Tribunal, instead of taking the last drawn emoluments of the deceased, chose to proceed on his enhanced projected emoluments after the expected promotion and pay revision. However, thereafter, the Tribunal did not provide for any further future prospects. The Tribunal also did not make any deduction towards the tax component. Moreover, the Tribunal deducted one-third towards personal expenses of the deceased though he had had five dependents. Then, the Tribunal applied the multiplier of 16. Apparently, the assessment made by the Tribunal could not have been countenanced, for being not in conformity with the principles in Pranay Sethi (supra)11.1. The assessment so made by the High Court stands more or less in conformity with the principles enunciated in Pranay Sethi (supra). The only doubtful area is that the High Court provided for enhancement towards future prospects only at 40% on the last drawn emoluments of the deceased and not at 50% though he was shown to be in a settled employment with future chances of promotion as also pay revision. However, on the facts and in the circumstances of the present case, we are not considering any modification in the amount awarded by the High Court for a variety of factors, as indicated infra12. Taking up the question of ex gratia payment received by the claimants from the employer of the deceased, it is noticed that an amount of Rs. 3,21,801/- was paid by the employer to the claimants, being one years gross salary of the deceased. While relying on the decision in Shashi Sharma, it is contended on behalf of the insurer that the ex gratia amount so received by the claimants is required to be deducted. Noticeable it is that in Shashi Sharmas case, a three-Judge Bench of this Court was dealing with the payment received by the legal heirs of the deceased in terms of Rule 5 of the Haryana Compassionate Assistance to the Dependents of Deceased Government Employees Rules, 2006 (Rules of 2006) whereunder, on the death of a government employee, the family would continue to receive as financial assistance a sum equal to the pay and other allowances that was last drawn by the deceased employee for periods specified in the Rules and after the said period, the family would be entitled to receive family pension. The family would also be entitled to retain the government accommodation for a period of one year in addition to payment of Rs. 25,000/- as ex gratia12.2. In the present case too, it has not been shown if the ex gratia amount received by the claimants had been under any Rules of service and would be of continuous assistance, as had been the case in Shashi Sharma (supra) as per the Rules of 2006 considered therein. In an overall analysis and with reference to the decision in Sebastiani Lakra (supra), we are clearly of the view that the decision in Shashi Sharma would not apply to the facts of the present case and no deduction in the amount awarded by the High Court appears necessary12.3 Apart from the above, as noticed, the High Court has even otherwise provided for enhancement towards future prospects only at 40% though the deceased was in a settled job and was not self-employed or on fixed salary. If at all an assertion is made that the assistance received by the claimants or a part of allowances received by the deceased need to be taken into consideration for making certain deductions, the enhancement by way of future prospects at 50% would be effectively setting off any such proposed deduction. In other words, in the ultimate analysis, the amount of pecuniary loss as assessed by the High Court remains reasonable and cannot be said to be either exorbitant or too low so as to call for any interference13. The aforesaid features equally apply to the contentions urged on behalf of the claimants as regards the rate of interest. The Tribunal had awarded interest at the rate of 12% p.a. but the same had been too high a rate in comparison to what is ordinarily envisaged in these matters. The High Court, after making a substantial enhancement in the award amount, modified the interest component at a reasonable rate of 7.5% p.a. and we find no reason to allow the interest in this matter at any rate higher than that allowed by High Court.