Motor accident claim, High Court order of reducing insurance compensation modified and amount enhanced by Supreme Court

January 20, 2018

The Supreme Court while disposing of the appeal filed by the victim family of a motor accident enhanced the compensation amount to Rs. 61,90,000/- in place of Rs. 26,45,000/- allowed by the High Court after reducing the original compensation of Rs. 61,55,000/- awarded by motor accident claims tribunal.

A Bench of Judges, Chief Justice Dipak Misra, Justice A. M. Khanwilkar and Justice Dr. D.Y. Chandrachud have disposed of the appeal filed against the Judgment passed by High Court of Bombay in Ramrao Lala Borse and Anr v. New India Assurance Company Ltd and Anr, Civil Appeal No. 418 of 2018. The High Court has partly allowed the appeal of the insurer and reduced the award of compensation by the Motor Accident Claims Tribunal from Rs 61,55,000/- to Rs 26,45,000/-.

On 19 February 2006, Deepak was travelling as a passenger in a luxury bus on Mumbai-Agra road and was occupying a seat on the driver's side. When the bus was at Atgaon in Nashik district, a truck came from the opposite direction and collided with the bus resulting in grievous injuries to the passengers including Deepak. Deepak was shifted to the Government hospital at Nashik where he succumbed to his injuries.

At the time of the accident, the deceased was serving as an Assistant Teacher in Dadasaheb Dandekar Vidyalaya, a school run by Shishu Vihar Education Society. The claimants, who were his parents, filed a claim under Section 166 of the Motor Vehicles Act 1988 seeking compensation against the owner of the offending truck and the insurer. The Tribunal held that the accident was caused due to the rash and negligent act of the driver of the offending truck. The Tribunal accepted the evidence adduced by the Claimants that had the deceased survived, he would have been made permanent and would have been entitled to the benefit of 6th Pay Commission wages of at least Rs 40,000 per month. Adopting a multiplier of 17, the Tribunal awarded compensation of Rs 61,20,000/- to which it added a further sum of Rs 35,000/- under conventional heads. Interest was awarded @9% p.a.

The High Court, on an analysis of the evidence, confirmed the finding of negligence arrived at by the Tribunal. On compensation, the High Court noted that the salary certificate dated 18 March 2013 indicated that the deceased was working as an Assistant Teacher on a temporary basis in the secondary section of Shishu Vihar Education Society between June 2001 and February 2006. The Income certificate indicated that in February 2006 the deceased was in receipt of a salary of Rs 2,800 per month. Another certificate issued by the Headmaster on 20 March 2006 indicated the same position.

The case of the claimants rested on the premise that the deceased was likely to be made permanent in which event, he would be entitled to a higher salary. The Secretary of the Trust where the diseased worked, deposed that though the strength of the students had increased, and the workload had increased, persons such as the deceased continued in service on a contract basis for want of sanction from the government for the post. The High Court observed that the evidence of secretary of trust was that if the government were to sanction the post, considering the seniority and experience of the deceased, the Trust would have appointed him as a permanent teacher in which event his salary, according to the scales of the 6th Pay Commission, would have been Rs 40,000 per month. The finding was that the deceased at the relevant time was 29 years of age; that he had completed his B.Ed. from the University of Mumbai and was an Assistant Teacher employed on a temporary/contract basis for teaching English from 2001 to 2006.

The High Court adverted to the provisions contained in the Maharashtra Employees of Private Schools (Conditions of Service) Regulation Act, 1977. In this background, the High Court arrived at the finding that if the deceased were to be alive, he would have been regularized and would have drawn a salary of Rs 40,000/- per month. The High Court held that an addition of 50 per cent on account of future prospects ought to have been made. However, the High Court held that the Tribunal erred in applying a multiplier of 17. Having regard to the fact that the father of the deceased was 65 years old in 2006 and his mother was 50 years old, the High Court came to the conclusion that a multiplier of 7 should be adopted, taking the average age of the parents as 61 years. The High Court held that since the deceased was a bachelor, a deduction of 50 per cent should be made on account of personal expenses. On the above basis, the High Court computed the yearly income of the deceased at Rs 4,80,000; enhanced the income by 50% on the ground of future prospects to Rs 7,20,000, deducted a sum of Rs 3,60,000 towards personal expenses and on the basis of a multiplier of 7 arrived at a total compensation of Rs 25,20,000. The amount payable to each of the two claimants for loss of love and affection was enhanced to Rs 50,000 and funeral expenses of Rs 25,000 were allowed. The High Court has, accordingly, awarded a total compensation of Rs 26,45,000 together with interest @ 9% p.a.

The Supreme Court said that in terms of the judgment of the Constitution Bench of this Court in National Insurance Company Limited v Pranay Sethi and the judgment in Sarla Verma v Delhi Transport Corporation, the correct multiplier to be applied in the present case would be 17 having regard to the age of the deceased. As regards future prospects, an addition of 50 per cent would be warranted. On the above basis and making a deduction of 50 per cent towards personal expenses (the deceased being a bachelor), the total compensation would stand quantified at Rs 61,20,000/-. After making an addition on account of conventional heads, the total compensation would stand computed at Rs 61,90,000/-. The aforesaid amount shall carry interest @ 9% p.a. from the date of the filing of the claim petition. Apportionment shall be carried out in terms of the award of the Tribunal.

Accordingly the court allowed the appeal.

Read the Judgment of Supreme Court of India in Ramrao Lala Borse and Anr v. New India Assurance Company Ltd and An dated 19.1.2018