TMI Blog2013 (4) TMI 953X X X X Extracts X X X X X X X X Extracts X X X X ..... . v. Patricia Jean Mahajan Ors. (2002 (6) SCC 281), Jyoti Kaul Ors. v. State of M.P. Anr. (2002 (6) SCC 306), Abati Bezbaruah v. Dy. Director General, Geological Survey of India Anr. (2003 (3) SCC 148), New India Assurance Co. Ltd. v. Shanti Pathak (Smt.) Ors. (2007 (10) SCC 1), were cited. The attention of the Bench was also invited to Sections 163A and 166 of the 1988 Act. The Bench was of the opinion that the question, whether the multiplier specified in the Second Schedule should be taken to be guide for calculation of amount of compensation payable in a case falling under Section 166 of the 1988 Act needed to be decided by a larger Bench. The reasons for referring the above issue to the larger Bench indicated in the referral order dated 23.07.2009 read as under: 39. We have noticed hereinbefore that in Patricia Jean Mahajan5 and Abati Bezbaruah and the other cases following them multiplier specified in the Second Schedule has been taken to be guiding factor for calculation of the amount of compensation even in a case under Section 166 of the Act. However, in Shanti Pathak this Court advocated application of lesser multiplier, although no legal principle has been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f compensation is filed in terms of Section 166 of the 1988 Act that much amount may not be paid, although in the former case the amount of compensation is to be determined on the basis of no fault liability and in the later on fault liability . In the aforementioned situation the Courts, we opine, are required to lay down certain principles. 44.We are not unmindful of the Statement of Objects and Reasons to Act 54 of 1994 for introducing Section 163-A so as to provide for a new predetermined formula for payment of compensation to road accident victims on the basis of age/income; which is more liberal and rational. That may be so, but it defies logic as to why in a similar situation, the injured claimant or his heirs/legal representatives, in the case of death, on proof of negligence on the part of the driver of a motor vehicle would get a lesser amount than the one specified in the Second Schedule. The Courts, in our opinion, should also bear that factor in mind. 45. Having regard to divergence of opinion and this aspect of the matter having not been considered in the earlier decisions, particularly in the absence of any clarification from the Parliament despite the recom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd inserted Section 92A therein which provided that in any claim for compensation under sub-section (1) of Section 92-A, the claimant shall not be required to plead and establish that the death or permanent disablement in respect of which the claim has been made was due to any wrongful act, neglect or default of the owner or owners of the vehicles concerned or of any other person. 4. In Gujarat State Road Transport Corporation, Ahmedabad v. Ramanbhai Prabhatbhai and Another10, a two-Judge Bench held that the compensation awardable under Section 92-A was without proof of any negligence on the part of the owner of the vehicle or any other person which was clearly a departure from the usual common law principle that a claimant should establish negligence on the part of the owner or driver of the motor vehicle before claiming any compensation for the death or permanent disablement caused on account of a motor vehicle accident. Certain observations made in Minu B. Mehta9 were held to be obiter in Ramanbhai Prabhatbhai (1987 (3) SCC 234) . 5. The 1988 Act replaced the 1939 Act. Chapter X of the 1988 Act deals with liability without fault in certain cases. Sub-section (3) of Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .1994. Section 163A may be reproduced which reads as under:- 163-A. Special provisions as to payment of compensation on structured formula basis.- (1) Notwithstanding anything contained in this Act or in any other law for the time being in force or instrument having the force of law, the owner of the motor vehicle or the authorised insurer shall be liable to pay in the case of death or permanent disablement due to accident arising out of the use of motor vehicle, compensation, as indicated in the Second Schedule, to the legal heirs or the victim, as the case may be. Explanation.-For the purposes of this sub-section, permanent disability shall have the same meaning and extent as in the Workmen's Compensation Act, 1923 (8 of 1923). (2) In any claim for compensation under sub-section (1), the claimant shall not be required to plead or establish that the death or permanent disablement in respect of which the claim has been made was due to any wrongful act or neglect or default of the owner of the vehicle or vehicles concerned or of any other person. (3) The Central Government may, keeping in view the cost of living by notification in the Official Gazette, from tim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or permanent disablement in respect of which the claim has been made was due to any wrongful act or neglect or default of the owner or owners of the vehicle concerned. The scheme of Section 163A is a departure from the general principle of law of tort that the liability of the owner of the vehicle to compensate the victim or his heirs in a motor accident arises only on the proof of negligence on the part of the driver. Section 163A has done away with the requirement of the proof of negligence on the part of the driver of the vehicle where the victim of an accident or his dependants elect to apply for compensation under Section 163A. When an application for compensation is made under Section 163A the compensation is paid as indicated in the Second Schedule. The table in the Second Schedule has been found by this Court to be defective to which we shall refer at a little later stage. 11. On the other hand, by making an application for compensation arising out of an accident under Section 166 it is necessary for a claimant to prove negligence on the part of the driver or owner of the vehicle. The burden is on the claimant to establish the negligence on the part of the driver or own ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mas1 as Section 163A was not on the statute when the judgment in Susamma Thomas1 was delivered. It was observed that by incorporation of Sections 163A and 163B in the 1988 Act the situation had undergone a change. Under the Second Schedule, the maximum multiplier could be upto 18 and not 16 as was held in Susamma Thomas1 . In Trilok Chandra3 , the maximum multiplier was fixed at 18 but the Court did find several defects in the calculation of compensation and the amount worked out in the Second Schedule. Importantly this Court stated in Trilok Chandra3 that Tribunals and the Courts cannot go by the ready reckoner; the Schedule can only be used as a guide. This is what this Court said in paras 17 and 18 of the Report: 17. The situation has now undergone a change with the enactment of the Motor Vehicles Act, 1988, as amended by Amendment Act 54 of 1994. The most important change introduced by the amendment insofar as it relates to determination of compensation is the insertion of Sections 163-A and 163-B in Chapter XI entitled Insurance of Motor Vehicles against Third Party Risks . Section 165-A begins with a non obstante clause and provides for payment of compensation, as indica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ers v. National Insurance Company Limited and another (2009) 4 SCC 513) [Civil Appeal No. 2753 of 2002; decided on April 16, 2002] considered the question, whether Second Schedule to the 1988 Act can be made applicable in deciding the application for compensation made under Section 166 or not? This Court held that the Second Schedule under Section 163A of the 1988 Act which gives the amount of compensation to be determined for the purpose of claim under that Section can be taken as a guideline while determining the compensation under Section 166 of the 1988 Act. The Second Schedule in terms does not apply to a claim made under Section 166 of the 1988 Act. 15. In Patricia Jean Mahajan5 , this Court had an occasion to consider Sections 163A and 166 of the 1988 Act. With regard to Section 163A, the Court stated, the noticeable features of this provision are that it provides for compensation in the case of death or permanent disablement due to accident arising out of use of motor vehicle. The amount of compensation would be as indicated in the Second Schedule. The claimant is not required to plead or establish that the death or permanent disablement was due to any wrongful act or n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ltiplier can appropriately be applied. We find force in this submission. Considering all the facts and factors as indicated above, to us it appears that application of multiplier of 7 is definitely on the lower side. Some deviation in the figure of multiplier would not mean that there may be a wide difference between the multiplier applied and the scheduled multiplier which in this case is 13. The difference between 7 and 13 is too wide. As observed earlier, looking to the high amount of multiplicand and the ages of the dependants and the fact that the parents are residing in India, in our view application of multiplier of 10 would be reasonable and would provide a fair compensation i.e. a purchase factor of 10 years. We accordingly hold that multiplier of 10 as applied by the learned Single Judge should be restored instead of multiplier of 13 as applied by the Division Bench. We find no force in the submission made on behalf of the claimants that in no circumstances the amount of multiplicand would be a relevant consideration for application of appropriate multiplier. We have already given our reasons in the discussion held above. 20. The court cannot be totally oblivious to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pended thereto, compensation is to be paid on a structured formula not only having regard to the age of the victim and his income but also the other factors relevant therefor. An award made thereunder, therefore, shall be in full and final settlement of the claim as would appear from the different columns contained in the Second Schedule appended to the Act. The same is not interim in nature. . . . This together with the other heads of compensation as contained in columns 2 to 6 thereof leaves no manner of doubt that Parliament intended to lay a comprehensive scheme for the purpose of grant of adequate compensation to a section of victims who would require the amount of compensation without fighting any protracted litigation for proving that the accident occurred owing to negligence on the part of the driver of the motor vehicle or any other fault arising out of use of a motor vehicle. xxx xxx xxx 46. Section 163-A which has an overriding effect provides for special provisions as to payment of compensation on structured-formula basis. Sub-section (1) of Section 163-A contains non obstante clause in terms whereof the owner of the motor vehicle or the authorised insurer is liab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this Court in a very brief order applied multiplier of 8 for a claim of compensation in respect of the deceased who was 25 years at the time of his death. 22. In Oriental Insurance Company Ltd. v. Jashuben and Ors. (2008 (4) SCC 162, two-Judge Bench of this Court applied the multiplier of 13 in a case where the age of the deceased was 35 years at the time of accident. 23. In Sarla Verma (Smt.) and Ors. v. Delhi Transport Corporation and Anr. (2009 (6) SCC 121), this Court had an occasion to consider the peculiarities of Section 163A of the 1988 Act vis- -vis Section 166. The Court reiterated what was stated in earlier decisions that the principles relating to determination of liability and quantum of compensation were different for claims made under Section 163A and claims made under Section 166. It was stated that Section 163A and the Second Schedule in terms did not apply to determination of compensation in applications under Section 166. While stating that Section 163A contains a special provision, this Court said: 34. . . . . . . Section 163-A of the MV Act contains a special provision as to payment of compensation on structured formula basis, as indicated in the Sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n in regard to applications under Section 163-A of the MV Act, as the compensation will be higher in cases where the deceased was idle and not having any income, than in cases where the deceased was honestly earning an income ranging between ₹ 3000 and ₹ 12,000 per annum. Be that as it may. 25. While referring to the decisions of this Court in New India Assurance Company Ltd. v. Charlie and Anr (2005 (10) SCC 720), T.N. State Road Transport Corporation v. S. Rajapriya and Ors. (2005(6) SCC 236) and U.P. State Road Transport Corporation v. Krishna Bala and Ors. (2006 (6) SCC 249), this Court in Sarla Verma17 in paragraph 39 (pg. 138) of the Report observed as follows: 39. In New India Assurance Co. Ltd. v. Charlie this Court noticed that in respect of claims under Section 166 of the MV Act, the highest multiplier applicable was 18 and that the said multiplier should be applied to the age group of 21 to 25 years (commencement of normal productive years) and the lowest multiplier would be in respect of persons in the age group of 60 to 70 years (normal retiring age). This was reiterated in T.N. State Transport Corpn. Ltd. v. S. Rajapriya and U.P. SRTC v. Krishna Ba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 05 5 5 27. In paragraph 42 (pg. 140) of the Report, this Court in Sarla Verma17 laid down that the multiplier shall be used in a given case in the following manner: 42. We therefore hold that the multiplier to be used should be as mentioned in Column (4) of the table above (prepared by applying Susamma Thomas, Trilok Chandra and Charlie), which starts with an operative multiplier of 18 (for the age groups of 15 to 20 and 21 to 25 years), reduced by one unit for every five years, that is M-17 for 26 to 30 years, M-16 for 31 to 35 years, M-15 for 36 to 40 years, M-14 for 41 to 45 years, and M-13 for 46 to 50 years, then reduced by two units for every five years, that is, M-11 for 51 to 55 years, M-9 for 56 to 60 years, M-7 for 61 to 65 years and M-5 for 66 to 70 years. 28. The above exercise was undertaken in Sarla Verma17 to ensure uniformity and consistency in the selection of multiplier while awarding compensation in motor accident claims made under Section 166. 29. Section 168 of the 1988 Act provides the guideline that the amount of compensation shall be awarded by the claims tribunal which appears to it to be just. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e tribunals and courts. 33. We have already noticed the table prepared in Sarla Verma17 for the selection of multiplier. The table has been prepared in Sarla Verma17 having regard to the three decisions of this Court, namely, Susamma Thomas1 , Trilok Chandra3 and Charlie18 for the claims made under Section 166 of the 1988 Act. The Court said that multiplier shown in Column (4) of the table must be used having regard to the age of the deceased. Perhaps the biggest advantage by employing the table prepared in Sarla Verma17 is that the uniformity and consistency in selection of the multiplier can be achieved. The assessment of extent of dependency depends on examination of the unique situation of the individual case. Valuing the dependency or the multiplicand is to some extent an arithmetical exercise. The multiplicand is normally based on the net annual value of the dependency on the date of the deceased s death. Once the net annual loss (multiplicand) is assessed, taking into account the age of the deceased, such amount is to be multiplied by a multiplier to arrive at the loss of dependency. In Sarla Verma17 , this Court has endeavoured to simplify the otherwise complex exercis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... other cases of death where the application has been made under Section 166, the multiplier as indicated in Column (4) of the table in Sarla Verma17 should be followed. 35. With regard to the addition to income for future prospects, in Sarla Verma17, this Court has noted earlier decisions in Susamma Thomas1 , Sarla Dixit2 and Abati Bezbaruah7 and in paragraph 24 of the Report held as under: 24. In view of the imponderables and uncertainties, we are in favour of adopting as a rule of thumb, an addition of 50% of actual salary to the actual salary income of the deceased towards future prospects, where the deceased had a permanent job and was below 40 years. (Where the annual income is in the taxable range, the words actual salary should be read as actual salary less tax ). The addition should be only 30% if the age of the deceased was 40 to 50 years. There should be no addition, where the age of the deceased is more than 50 years. Though the evidence may indicate a different percentage of increase, it is necessary to standardise the addition to avoid different yardsticks being applied or different methods of calculation being adopted. Where the deceased was self-employed or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s own income and will not be considered as a dependant and the mother alone will be considered as a dependant. In the absence of evidence to the contrary, brothers and sisters will not be considered as dependants, because they will either be independent and earning, or married, or be dependent on the father. 32. Thus even if the deceased is survived by parents and siblings, only the mother would be considered to be a dependant, and 50% would be treated as the personal and living expenses of the bachelor and 50% as the contribution to the family. However, where the family of the bachelor is large and dependent on the income of the 23 Fakeerappa and Anr. v. Karnataka Cement Pipe Factory and Others; [(2004) 2 SCC 473] deceased, as in a case where he has a widowed mother and large number of younger non-earning sisters or brothers, his personal and living expenses may be restricted to one-third and contribution to the family will be taken as two-third. 38. The above does provide guidance for the appropriate deduction for personal and living expenses. One must bear in mind that the proportion of a man s net earnings that he saves or spends exclusively for the maintenance of others ..... X X X X Extracts X X X X X X X X Extracts X X X X
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