[2008] 6 S.C.R. 812

MG. DIR., BANGALORE METROPOLITAN TPT. CORP. ;..,

SAROJAMMA & ANR. (Civil Appeal No. 2897 of 2008)

APRIL 22, 2008

(S.B.SINHA AND V.S. SIRPURKAR, JJ.) -r- 'I

Motor Vehicles Act, 1988; Ss. 163-A & 166 and Schedule-II.· c Death in accident - Compensation - Determination of - Held: Quantum of compensation to be determined in terms of s. 163-A and as per structured formula in Schedule-If of the Act - Ordinarily, one-third of income of the deceased is deducted from his total income for calculating compensation D to claimant - In the instant case, allegedly, deceased was serving as tutor and also admitted in the Army Teachers Training Institute, thus, having potential of becoming a teacher

- Hence, his income as estimated at Rs.3,0001p.m. cannot be said to be on higher side - No reason found to interfere E with findings of the High Court in applying multiplier of 15 for calculating compensation - But, the High Court had considered irrelevant factors in increasing the rate of interest from 7% to 10% - Hence, rate of interest altered to 7% - Directions issued.

F Principle of just compensation - Applicability of.

A bus, belonging to the appellant, met with an accident. Son of respondent No.1, the claimant, was traveling in the bus sustained injuries and later

G succumbed to the injuries. Respondent No.1 filed a claim petition. The Tribunal calculated the compensation for loss by applying the multiplier of 16. On appeal, the High Court allowed the multiplier of 15 instead of 16 for

... A calculating the compensation but increased the rate of

H 812

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MG. DIR., BANGALORE METROPOLITAN TPT. CORP. 813

v. SAROJAMMA & ANR.

interest from 7% to 10% on the amount of compensation. A Hence the present appeal.

Appellant contended that there was no evidence to show that the income of the deceased was Rs. 3,000/- p.m.; that the age of the claimant being 45 as on the date of accident, the High Court committed a serious error in 8

applying the multiplier of 15 as the deceased was a bachelor; that the claimant being his mother, the Tribunal as also the High Court should have deducted 50% of the amount from his income while determining compensation; and that the High Court committed a C serious error in enhancing the rate of interest from 7% to 10% wherefor no justification has been shown.

Respondent submitted that keeping in view the fact that the mother of the deceased has lost her only son, the D Tribunal should have awarded compensation towards loss of estate and loss of love and affection; that deduction of one-third towards personal expenses is applied in all cases; and that keeping in view the fact that the accident had taken place in the year 1998, grant of 10% interest on amount of compensation was wholly E justified.

Partly allowing the appeal, the Court

HELD: 1.1 For invoking the provision u/s.163-A of the Motor Vehicles Act, it is not necessary for a claimant to F establish any act of negligence on the part of the driver. It is not necessary even to plead that the death had occurred owing to any wrongful act or neglect or default of owner of the vehicle. Quantum of compensation is to be determined in terms of the Schedule II appended thereto: G (Paras - 5 & 6) (817-B, C, DJ

1.2 The structured formula as provided in the Schedule itself stipulates reduction of income of the deceased by one-third in consideration of the expenses H

A which he would have incurred towards maintaining >- <

himself, had he been alive. Ordinarily one-third should be deducted from the income of th' deceased and not half thereof. (Para - 7, 8) [817-E, F, G]

B 1.3 For determining the amount of compensation, the most relevant factor is the income of the deceased. The +- -<. deceased was a tutor, who was admitted in the Army Teachers Training institute. He had te requisite potential of becoming a teacher. His income, thus, having been estimated at Rs. 3,000/- p.m. cannot be said to be on a c very high side. (Para - 8) [817-G; 818-A]

2.1 What should be the legal principle on which the principle of just compensation should be worked out had been the subject matter of various decisions of this Court.

D This court in cases after cases noticed that the principles

on which the multiplier method was developed has been given a go-by. In many cases, a hybrid method based on the subjectivity of the Tribunal has been noticed.

Guidelines provided for by the statutes as also the

E Superior Court have not been applied. The courts have

also noticed several defects in the Schedule -II of the Act.

It was opined that ordinarily the multiplier should not exceed 16. (Para - 11) [819-E, F, G)

General Manager, Kera/a State Road Transport

F Corporation, Trivandrum vs. Susamma Thomas (Mrs.) and

Others (1994) 2 SCC 176 and U. P State Road Transport Corporation and Others vs. Trilok Chandra and Others [(1996) 4 sec 362 - referred to.

2.2 In the instant case, no finding has been arrived at G by the Tribunal that the age of the claimant was 45 or

below. Why the multiplier of 16 had been applied by the Tribunal was not stated. The High Court has also not laid down the legal premise upon which it had applied the

~.A

multiplier of 15. It, however, appears that the counsel for

H the appellant himself stated that the correct multiplier

would be 15 and not 16 which has been accepted by the A High Court. This Court, therefore, does not intend to interfere with the finding of the High Court. (Para - 13)

[820-F, G]

Fakeerappa and Another vs. Karnataka Cement Pipe B ->-+ Factory and Others (2004) 2 SCC 473 - referred to.

2.3 The High Court, however, took into consideration an irrelevant factor, viz., that the claimant must have been suffering from a mental agony in determining the rate of interest as also the age of the deceased. There exists no c justification for increase in the rate of interest. The interest of justice would be subserved if the rate of interest payable on the awarded amount is brought down to 7%, as was directed by the Tribunal. (Para -14) [820-H, 821-A, B]

CIVILAPPELLATE JURISDICTION: Civil Appeal No. 2897 D of 2008.

From the final Judgment and Order dated 28.03.2006 of the High Court of Karnataka at Bangalore in MFA No. 5584/03

(MV) C/W.CR.OB 236/2004(MV)

E R.S. Hegde, Chandra Prakash, J.K. Nayyar and P.P. Singh for the Appellant.

Kiran Suri for the Respondents.

The Judgment of the Court was delivered by F S.B. SINHA, J. 1. Leave granted.

2. One Ravi Kumar (deceased) son of Respondent no. 1 was travelling in a bus belonging to the appellant on 25.11.1998.

It met with an accident. The deceased sustained injuries. He G subsequently succumbed thereto. He was unmarried. He was aged about 18 years. He left behind the respondent No. 1 as

.A .., his only heir and legal representative .

A claim petition was filed in terms of Section 163-A of the Motor Vehicles Act. 1988 (for short "the Act") The H

A Tribunal calculated the loss of dependency at Rs.3,84,000/-

wherefor the multiplier of 16 was applied. The Tribunal estimated the income of the deceased at Rs.3,000/- p.m. One-third was deducted from the said amount towards his personal expenses.

B An appeal was preferred thereagainst by the appellant.

By reason of the impugned judgment, the High Court while + ~: allowing the multiplier of 15 instead of 16 increased the rate of interest from 7% to 10%. Respondent No. 1 was held to be entitled to a total sum of Rs. 3,64,500/- (Rs. 3,60,000 + 2,000 + 2,500). c

3. Mr. R.S. Hegde, learned counsel appearing on behalf of the appellant would submit:

(i) There was no evidence to show that the deceased was earning a sum of Rs. 3,000/- p.m.

D (ii) The age of the respondent No. 1 being 45 as on the date of accident, the High Court committed a serious error in applying the multiplier of 15; as the deceased was a bachelor

(iii) The claimant being his mother, the Tribunal as also

the High Court should have deducted 50% of the amount from his income.

(iv) The High Court committed a serious error in

F enhancing the rate of interest from 7% to 10% wherefor no justification has been shown.

4. Ms. Kiran Suri, learned counsel appearing on behalf of the respondents, on the other hand, would urge:

(i) It is not a fit case where this Court should exercise G its discretionary jurisdiction under Article 136 of the Constitution of India.

(ii) Keeping in view the fact that the mother has lost her rA only son, the Tribunal should have awarded

H compensation towards loss of estate and loss of

love and affection.

(iii) As deduction of one-third towards personal

expenses is applied in all cases, the impugned judgment should not be intrfered with.

+ (iv) Keeping in view the fact that the accident had taken B / place in the year 1998, grant of 10% interest was wholly justified.

5. Section 163-A of the Act was inserted by Act No. 54 of 1994 with effect from 14.11.1994. For invoking the said provision, it is not necessary for a claimant to establish any act c of negligence on the part of the driver. It is not necessary even to plead that the d_eath had occurred owing to any wrongful act or neglect or default of owner of the vehicle.

6. Quantum of compensation is to be determined in terms D of the Schedule II appended thereto. In terms thereof, apart from .... the amount of compensation as provided for therein only funeral expenses, loss of consortium (if beneficiary is the spouse), loss of estate, medical expenses, would be payable.

7. As the Schedule II provides for a structured formula, E ordinarily, the same has to be adhered to. The structured formula itself stipulates reduction of income of the deceased by onethird in consideration of the expenses which he would have incurred towards maintaining himself, had he been alive.

8. Whereas in determining an application for grant of F

~ compensation under Section 166 of the Act, the Tribunal may be entitled to find out actual loss of damages suffered by the claimants, the formula having not envisaged such a contingency, we are of the opinion that ordinarily one-third should be deducted from the income of the deceased and not the half G thereof.

). --; For determining the amount of compensation, the most relevant factor, therefore, is the income of the deceased. He was a tutor. He was admitted in the Army Teachers Training H

)< A institute. He had the requisite potential of becoming a teacher.

His income, thus, having been estimated at Rs. 3,000/- p.m. cannot be said to be on a very high side.

9. This Court in General Manager, Kera/a State Road

B Transport Corporation, Trivandrum v. Susamma Thomas (Mrs.) and Others [(1994) 2 SCC 176] held as under: ~

"9. The assessment of damages to compensate the dependants is beset with difficulties because from the nature of things, it has to take into account many c imponderables, e.g., the life expectancy of the deceased and the dependants, the amount that the deceased would

have earned during the remainder of his life, the amount that he would have contributed to the dependants during that period, the chances that the deceased may not have

D lived or the dependants may not live up to the estimated remaining period of their life expectancy, the chances that the deceased might have got better employment or income

-).-

or might have lost his employment or income altogether."

10. This aspect of the matter has also been considered in E U. P State Road Transport Corporation and Others v. Trilok Chandra and Others [(1996) 4 SCC 362] by a Three-Judge Bench of this Court in the following terms:

"9. The compensation to be awarded has two elements.

One is the pecuniary loss to the estate of the deceased resulting from the accident, the other is the pecuniary loss sustained by the members of his family for his death. The , l

Court referred to these two elements in the Gobald Motor Seivice's case. These two elements were to be awarded under Section 1 and Section 2 of the Fatal Accidents Act, G 1855 under which the claim in that case arose. The Court in that case cautioned that while making the calculations no part of the claim under the first or the second element / should be included twice. The Court gave a very lucid """" ,

illustration, which can be quoted with profit: H

MG. DIR., BANGALORE METROPOLITAN TPT CORP. 819

v. SAROJAMMA & ANR [S.B. SINHA, J.]

An illustration may clarify the position.Xis the income of A the estate of the deceased, Y is the yearly expenditure incurred by him on his dependents (we will ignore the other expenditure incurred by him). X-Y i.e. Z, is the amount he saves every year. The capitalised value of the income

/ + spent on the dependents, subject to relevant deductions, B is the pecuniary loss sustained by the members of his family through his death. The capitalised value of his income, subject to relevant deductions, would be the loss caused to the estate by his death. If the claimants under both the heads are the same, and if they get compensation c for the entire loss caused to the estate, they cannot claim

again under the head of personal loss the capitalised income that might have been spent on them if the deceased were alive. Conversely, if they got compensation under Section 1, representing the amount that the D deceased would have spent on them, if alive, to that extent there should be deduction in their claim under Section 2 of the Act in respect of compensation for the loss caused to the estate. To put it differently if under Section 1 they got capitalised value of Y, under Section 2 E they could get only the capitalised value of Z, for the capitalised value Y + Z = X would be the capitalised value of his entire income."

11. What should be the legal principle on which the principle of just compensation should be worked out had been the subject F matter of various decisions of this Court. This court in cases after cases noticed that the principles on which the multiplier method was developed has been given a go-by. In many cases, a hybrid method based on the subjectivity of the Tribunal has been noticed. Guidelines provided for by the statutes as also G the Superior Court have not been applied. The courts have also noticed several defects in the schedule. It was opined that

A..~ ordinarily the multiplier should not exceed 16.

12. Our attention has also been drawn to a decision of this Court in Fakeerappa and Another v Karnataka Cement Pipe H

A Factory and Others [(2004) 2 SCC 473] wherein it was held:

'7. What would be the percentage of deduction for personal expenditure cannot be governed by any rigid rule or formula of universal application. It would depend upon

B circumstances of each case. The deceased undisputedly was a bachelor. Stand of the insurer is that after marriage, -i ' the contribution to the parents would have been lesser and, therefore, taking an overall view the Tribunal and the High Court were justified in fixing the deduction. c

8. It has to be noted that the ages of the parents as disclosed in the Claim Petition were totally unbelievable.

If the deceased was aged about 27 years as found at the time of post mortem and about which there is no dispute, the father and mother could not have been aged 38 years

D and 35 years respectively as claimed by them in the Claim Petition. Be that as it may, taking into account special features of the case of feel it would be appropriate to restrict the deduction for personal expenses to one-third of the monthly income. Though the multiplier adopted

E appears to be slightly on the higher side, the plea taken by the insurer cannot be accepted as there was no challenge by the insurer to the fixation of the multiplier before the High Court and even in the appeal filed by the appellants before the High Court the plea was not taken." F

13. No finding has been arrived at by the Tribunal that the age of the claimant was 45 or below. Why the multiplier of 16 had been applied by the Tribunal was not stated. The High Court has also not laid down the legal premise upon which it had

G applied the multiplier of 15. It, however, appears that the learned counsel for the appellant himself stated that the correct multiplier would be 15 and not 16 which has been accepted by the High Court. We do not, therefore, intend to interfere with the said ....

finding in the instant case.

14. The High Court, however, took into consideration an

irrelevant factor, viz., that the claimant must have been suffering A from a mental agony in determining the rate of interest as also the age of the deceased. We do not see any justification for increase in the rate of interest. We, therefore, are of the opinion that the interest of justice would be subserved if the rate of interest payable on the awarded amount is brought down to 7%, B as was directed by the Tribunal.

15. The appeal is allowed only to the aforementioned extent. No costs.

S.K.S.

Appeal partly allowed c