Jagannadha Rao, J.:— The following questions arise for consideration in this appeal, as to how compensation under S. 110-B of the Motor Vehicles Act is to be computed, what is meant by loss to the ‘dependency’ and how is the ‘multiplier’ to be chosen, what is meant by the loss to the ‘estate’ and how is it to be computed, can the compensation be shared by the dependents not enumerated under the Fatal Accidents Act, 1855 and final as to how the compensation is to be apportioned?
2. The deceased Mohd. Mahfooz was a carpenter when he died, he was aged 22 years. The accident occured at 9.45 p.m on 14-11-77 at Hanumakonda when a bus belonging to the appellant Corporation bearing the number APZ 8330 knocked down the deceased. The deceased was admitted in the Mahatma Gandhi Hospital Warangal and he expired on 21-11-77 in the hospital at 9.00 The deceased was a carpenter owning a carpentry shop at Hunter Road and was earning Rs. 400/- to Rs. 500/ per month, left behind his mother and four unmarried sisters as his heirs and dependents who filed O.P No. 11/1978 on 5.6.78 claiming Rs. 72,000/- towards the dependency, at the rate of Rs. 1500/- P.A for 48 years and Rs. 500/- towards damages to clothing, articles and cycle. The Corporation was impleaded as the 1st respondent and the driver as the 2nd respondent. The Tribunal held that the accident occured on account of the negligence of the appellant's driver. It accepted that the deceased was aged 22 years at his death, that he was earning Rs. 400/- to Rs. 500/- P.M as a carpenter and would have given for the family atleast Rs. 1500/- per annum for a period of 48 years i.e, Rs. 72,000/- inasmuch as he would have lived upto 70 years. An award was passed for the other damages of Rs. 500/- towards loss of clothing, articles and cycle, in all making up a total of Rs. 72,500/-. Interest was granted at 6% PA from the date of petition i.e, 5.6.1978
3. Against the above award, the Corporation has filed the present appeal.
4. We are not inclined to disturb the finding of the lower Court that the appellant's driver was negligent. The finding in this regard is based on the evidence of P.W 2, another cyclist who was cycling by the side of the deceased, the wound certificate Ex. A-1 and the other circumstances. This finding is therefore confirmed.
5. Sri C. Ananda Rao, the learned counsel for the Corporation contends that the Tribunal erred in taking a multiplier of 48. He also contended that the sisters of the deceased are not among the dependents enumerated in the Fatal Accidents Act that the provisions of Sec. 110-B are merely procedural and they cannot confer any rights on the sisters of the deceased claiming a share in the dependency. He placed reliance on the decision of the Supreme Court in N.I Insurance Company v. Shanti Misra (1) (1975) 2 SCC 840 : A.I.R 1976 S.C 237.
6. On the other hand, it is contended by the learned counsel for the respondents Sri K.F Baba, that the multiplier adopted by the Tribunal is not incorrect, that the multiplicand should under law, be Rs. 2400/- p.a and not Rs. 1500/- p.a He also contended that the sisters of the deceased are entitled to share in the dependency in view of the special provisions of S. 11 of the Motor Vehicles Act which according to him are wider than those under the Fatal Accidents Act, 1855. He contends that the provisions of Sec. 110-B are also substantive in nature. According to him the sisters of the deceased are entitled to a share in the dependency in view of the decision of a Division Bench of this Court in Vanguard Insurance Company v. C. Hanumantha Rao (2) 1975 (1) An. W.R 327 : 1975 A.C.J 344 (A.P)
7. We shall firstly address ourselves to these twin-concept of loss to the dependency and loss to the estate.
8. The loss of the ‘benefit to the dependents’ is a concept derived from the English Fatal Accidents Act, 1846, known as the Lord Campbell's Act. The corresponding law in India is the Fatal Accidents Act (Act 13 of 1855).
9. The loss of ‘benefit to the estate’ of the deceased is the loss arising to the estate under the heads of mental and physical pain, loss of expectation of life and loss of amenities. The compensation payable in this regard is made to survive to his legal representatives under the Legal Representatives Suits' Act, 1855 read with Section 306 of the Indian Succession Act, 1925. The corresponding law in England in this regard is the Law Reform (Miscellaneous Provisions) Act, 1934. The Indian Legislature would seem to have anticipated the English statute of 1934 by several decades.
10. As there is a fatal accident in this case, the provision of the Fatal Accidents Act, 1855 and of the Legal Representative's Suits Act read with Sec. 306 of the Indian Succession Act 1925 apply and allow damages to be claimed after the death of the person killed in the accident. The damages are ascertained and shared and apportioned under S. 110-B of the Motor Vehicle Act.
11. We shall now deal with the various components of the above-said ‘compensation’.
(A) Loss of Benefit to the Dependents and the Multipliers
12. The Fatal Accidents Act, 1855 provides that whenever the death of a person shall be caused by wrongful act, neglect or default, and the act, neglect or default is such as would (if death had not ensued) have entitled the party injured to maintain an action and recover damages in respect there of the party who would have been liable if death had ensued shall be liable to an action or suit for damages, notwithstanding death of the person injured. Every such action or suit shall for the benefit of the wife, husband, parent or child, if any the deceased and the court may ‘apportion’ the damages ‘as it may think fit’.
13. Damages under this heed are restricted to the financial loss. A basic figure regarding the net contribution for the support of the dependents which would have been derived from the future income of the deceased is arrived at. Then an estimate of the probable length of time for which the earnings or contribution would have continued is made, and then a convenient ‘multiple’ is determined a number of year's purchase which will reduce the total loss to its ‘present value’, after taking into account the proved risks of rise or fall in the income. Thereafter all contingencies such as the possibility of the widow remarrying or the dependent dying earlier have to be taken into account. We shall explain this question in detail presently.
14. The mode of estimating the ‘present value’ of the loss of benefit to the dependents by applying the ‘multiplier’ method was first dealt with by Lord Wright in Davis v. Poweli Duffryn Association Collieries Limited (3) 1942 A.C 601 : 1942 (1) All E.R 657 (H.L) and by Lord Simon in Nance v. British Columbia Electric Railway Company Ltd. (4) 1951 A.C 601 : 1951 (2) All E.R 448 (P.C) and has been consistently followed in England, Australia, Newzealand etc. This method was explained in Davis case (3) (page 617) by Lord Wright:
“The starting point is the amount of wages which the deceased was earning, the ascertainment of which to some extent may depend on the regularity of his employment. Then there is an estimate of how much was required or expended for his own personal and living expenses. The balance will give a datum or basic figure which will generally be turned into a lumpsum by taking a certain number of year's purchase. That sum, however, has to be taxed down by having due regard to uncertainties, for instance, that the widow might have again married and thus ceased to be dependent, and other like matters of speculation and doubt.”
15. The multiplier method has been consistently applied by our Supreme Court in various cases. Subba Rao, J. (as he then was) referred to the above rulings in the decision of the Supreme Court in Gobald Motor Service Limited v. R.M.K Veluswami (5) A.I.R 1962 S.C 1. In Municipal Corporation of Delhi v. Subhagwanth (6) AIR 1966 S.C 1750 after referring to the above passage from Lord Wright's judgment, Ramaswami, J. applied a multiplier of 15 in respect of a person who died at the age of 30 years. A few years later, in C.K Subrahmania Iyer v. T. Kunhi Kuttan Nair (7) (1969) 3 SCC 64 : A.I.R 1970 S.C 376. Hegde, J. also referred to the above English cases, and after quoting a passage from Winfield on Torts (7th Edn. at page 135 136) observed:
“As a general rule parents are entitled to recover the present cash value of the prospective service of the deceased minor child. In addition they may receive compensation for loss of pecuniary benefit reasonably to be expected after the child attains majority.”
(emphasis supplied)
16. Coming to Sheikpura Transport Company v. N.I.T Company Limited (8) (1971) 1 SCC 785 : A.I.R 1971 S.C 1624 in respect of a person who died at the age of 42 years, Hegde, J. adopted a multiplier of 15. In Hardeep Kaur v. State of Punjab (9) (1975) 1 SCC 156 : A.I.R 1974 S.C 1995 the deceased was 25 years of age and a multiplier of 20 was adopted by Jaganmohan Reddi, J. Similarly in Madhya Pradesh S.R.T.C v. Sudhakar (10) (1977) 3 SCC 64 : A.I.R 1977 S.C 1189. Krishna Iyer & A.C Gupta, JJ. observed:
“A method of assessing damages, usually followed in England as appears from Mallet v. Mc. Monagle (11) (1970) AC 166 : 1969 (2) All ER 178 is to calculate the net pecuniary loss upon an annual basis and to arrive at the total award by multiplying the figure assessed as the amount of an annual ‘dependency, by a number of ‘year's purchase’ (p 178) that is, the number of years the benefit was expected to last, taking into consideration the imponderable factors in fixing either the multiplier or the multiplicand.”
17. There the deceased died at the age of 23 years and had 35 years of service and a multiplier of 20 was used against the annual sum payable to the dependents and it was observed:
“In a decision of the Kerala High Court relied on by the appellant (P.B Kader v. Thatchamma (12) to which one of us was a party the same method of assessing compensation was adopted.” Krishna Iyer, J. who ‘delivered the judgment in the Kerala case P.B Kader v. Thatchamma (12) A.I.R 1970 Kerala 241 explained that standardised methods have been devised for calculating the value of the dependency or the ‘present value’ of the pecuniary benefit that the deceased would have conferred upon the dependents in the future. In the Kerala case Krishna Iyer, J. finally observed as follows:
“As I mentioned earlier there are two ways of which the present value of the dependents can be worked out: either you fix the multiplier, disregarding the fact of lumpsum payment now, and then, with reference to the relevant annuity tables read down that figure into the present value; or alternatively you reduce the multiplier having in mind the thought that a lumpsum is being paid now in the place of staggered payments over the years. Courts in England have leaned towards the latter method and in arriving at the multipliers mentioned above I have adopted the same course.”
(emphasis supplied).
18. Thus in England as well as in India, the multiplier method is applied to compute the ‘present value’ of the future benefit to the dependents. The British Law Commission has observed:
“the multiplier has been, remains and should continue to remain, the ordinary, the best and only method of assessing the value of a number of future annual sums” (Working paper No. 27-1970)
19. With regard to the choice of the multiplier, Judges select the same from their experience. But there is every possibility of the awards being arbitrary or speculative if it is left to the uncontrolled discretion of the court. Lord Goddard in Heatly v. Steel Company of Wales (12-a) 1953 (1) All E.R 489 pointed out that Judges were likely to act arbitrarily or on speculatively grounds. The present case is an example of the use of a multiplier of 48 for which there is neither precedent nor scientific basis.
20. We are of the view that it is necessary to judicially define the scope of the discretion in the selection of the ‘multiplier’ as well as the ‘multiplicand’ (the annual dependency) so that it may not be exercised arbitrarily.
21. It is in this context that the annuity tables become useful. Their use will help in selecting a multiplier appropriate to the age of the deceased at his death with reference to his working age or the age upto which the deceased would have earned for his dependents.
22. At one time it was thought that these tables do not take into consideration the probabilities but they consider only the chances, that they do not take into account various ‘contingencies,’ or that they give a false appearance of accuracy and precision in a sphere where conjectural estimates have to play a large part. (Per Lord Pearson in Taylor v. O'Connor (13) 1970 (1) All E.R 365.
23. But it has been explained that these misgivings have no true basis. Prof. Street on Law of Damages (1962 Ed. page 111) shows that the House of Lords had earlier allowed the use of the annuity tables in 1880 in order to value reversionary interests in property (M'Donald v. M'Donald (14) (1880) 5 A.C 519. These tables are widely used in computation of death duties or for evaluation of pensionary benefits of a person unlawfully dismissed. In fact, Lord Denning advocated the actuary's assistance in Hodges v. Harland & Wolff Limited (15) 1965 (1) All E.R 1056 as follows:
“The Judges do take actuarial considerations into account. They often take a number of years' purchase if the evidence of an actuary would be helpful in any case, I know of no rule of law which prevents it being entertained.”
24. The British Law Commission has clearly accepted the use and relevancy of the annuity tables prepared by actuaries in its Working Paper No. 27 (1970-1971). It observed:
“The actuarial method of calculation, whether from expert evidence or from tables, continues to be technically relevant and technically admissible but its usefulness is confined, except perhaps in very unusual cases, to an ancillary means of checking a computation already made by the multiplier method”
and also recommended legislative action to re-affirm the efficacy of the actuarial tables or the evidence of acturies (vide Actuarial Assessment of Damages: The Thalidomide case by Mr. J.H Prevett in Vol. 35 Modern Law Review (1972) (p. 140 at p. 146). Kemp & Kemp on ‘Quantum of Damages’ (1967) have compared the multipliers chosen by Judges from experience and found a close proximity between them and those arrived at from the annuity tables.
25. The position in the United States is no different. In the American Restatement of the Law of Torts (Vol. 4) (1939) it is stated at para 924:
“For this purpose, it is permissible to use mortality tables and other evidence as to the average expectation of life.”
26. In fact, some American States such as North Carolina and Wisconsin have laid down statutory tables for use in personal injury actions. Actuarial tables are widely used by Courts in the U.S, Canada, Australia and South Africa (Street, 1962 pp. 114, 137). Using life-expectancy, pension plans computed differently for men and women were held by the American Supreme Court to be discriminatory (City of Los Angles v. Manhart (15-a) (1978) 435 U.S 702.
27. We are adverting in detail to the Tables only for the purpose of enabling a cross-check of the Judge's multiplier chosen from experience.
28. We shall now advert to the scientific basis on which these annuity tables are prepared combining (i) mortality tables and (ii) the formula for reduction of the prospective loss to its ‘present value’. Munkaman's Damages (3rd Ed. p. 54) has set out the actuarial basis of these tables. A detailed analysis is also given in Judicial Attitudes towards actuarial evidence by K. Richards and R. Kidner in vol. 124, New Law Journal (1974) page 105 as set out hereunder.
29. They explain that these tables are prepared after taking into account the chances of premature death of the deceased at any later date and after making suitable reduction for a lumpsum payment. They first direct the estimation of the annual dependency (we shall deal with it in detail later) taking into account the future salary increments and inflation, at 5% compound interest per annum. From the English mortality table No. 12 (1960-62) the probability of a male aged 30 surviving until age 35 can be calculated as O. 989 (i.e, he has got 98.9% chance of reaching that age) until 50 (as O. 95; until age 60 is O. 83 and soon. These figures help in calculating the ‘Expected value’ of the dependency in any year i.e, the estimate of the dependency multiplied by the probability that the man would have remained alive to provide it for his wife and family. If the annual dependency of a lecturer, on date of his death at 30 years is £ 4,500, the probability of his living to provide for his family till 35 years is O. 989 and the expected value of the dependency in the 35th year will be £ 4,451 (O. 989× £ 4,500). For each future year, this expected value is to be calculated till (say) 65 years or for life.
30. But before totalling them, each expected-value for ‘each’ of the future years has to be reduced to its ‘present value’, since a pound received in future is not equivalent to a pound received now. Pounds in the future must be discounted. For example if a £ 100 is invested at 5% p.a for one ‘year, it will be worth £ 105. The discounted’ or present value of £ 105 received in one year's time at a rate of discount of 5% is £ 100. Similarly the present value of £ 100 to be received in the 5th year from now, using a discount rate of 5% will be £ 78.35 (by using the compound interest or equivalent formula).
31. We have seen that if the annual dependency in the 30th year is £ 4500, the estimated value of the dependency in the 35th year is £ 4451. Reducing it to its present value, it will be £ 4451 × O. 7835, giving £ 3487. It is these reduced value that are to be totalled for the 31st, 32nd, 33rd, 34th, 35th and so on till the 65th year, to provide a final present value of damages for all these years.
32. These two processes i.e, probabilities of death and the conversion to present value are combined into a single annuity table providing a multiplier which will, when applied against the annual dependency, give the present value of the total expected values' or prospective loss. Mr. J.H Prevett in his Article already referred to (Vol. 35 Modern Law Review) states that the ‘association of a survival probability and a rate of discount lies at the root of the actuary's technique of arriving at the ‘present value’. The tables (prepared by Mr. J.H Prevett) are set out in Kemp & Kemp ‘Quantum of Damages’ (1967 Ed. pp. 40 to 51) and the authors observe (at page 36):
“It will be apparent that in the preparation of these tables both discount and mortality have been taken into account.”
and that once the multiplier is chosen from the Table, ‘we have only to provide for other’ contingencies, and adjust the multiplier suitably.
33. There are several tables provided in Kemp & Kemp on ‘Quantum of Damages’ (1967 Ed.) as also fresh tables in their 1982 Ed. The multipliers in the latter edition are higher-in view of the improved health conditions in England. Having regard to Indian conditions, we are of the view that the Table No. IV (General Mortality-Males) in the 1967 Ed. and which is prepared by calculating present values at 5 1/2% discount rate are useful for cross-checking the multiplier which the Court might otherwise fix from its experience. Table No. IV gives multipliers for those earning upto the end of their life and also those who earn upto 65 years. We are extracting the table in so far as those earning upto 65 years and the multipliers in cases of those earning for life i.e, beyond 65 years are mentioned in brackets. Conversely, if the earning capacity is to cease at the 55th or 60th year, the multipliers in Table IV have to be slightly reduced. The Table is based on mortality figures for males and in cases where the deceased is a female, the multipliers from the Table are to be slightly reduced.
[Their Lordships discussed the tables and proceeded—Table omitted from printing]
34. The other tables which adopt lesser rates of interest between 3% to 5% for reduction of the annual dependency to ‘present values’ give higher multipliers than those in Table IV. It will be noticed that the higher interest rate adopted, (for reduction to present values), the lower will be the multiplier and vice-versa. We have adopted the table No. IV prepared at 5 1/2% compound interest rate as being applicable to our country inasmuch as this rate can be treated as in vogue during “stable periods” of currency-as pointed out by, Lord Diplock in Mallet v. Mc. Monagle (11) (Supra). We shall revert to this aspect while dealing with the question of ‘inflation’.
35. The assumption of certain critics that the multipliers from the Table are likely to be on the high side because they do not take into consideration (i) the chances of the deceased dying earlier than their normal life-span or (ii) the factum of a lumpsum payment are, from what we have seen to be the basis of the Tables, not correct as explained by several leading writers. (see Street, Law of Damages 1962 Ed. p. 120 and the two articles, one by Mr. J.H Prevett in (1972) 35 Modern Law Review p. 140 at p. 150 and the other by K. Richards & R. Kidner (1974) 124 New Law Journal pages 105 at 106 already referred to).
36. But the critics are justified in stating that the multipliers from the Tables are to be adjusted or reduced for certain other ‘contingencies’ and this is fully accepted by the authors of the tables and also by the actuaries.
37. Contingencies which are ‘negative’ or which necessitate a reduction in the multiplier chosen from the Table are: (i) the chances of premature death of the dependents; (ii) the chances of marriage or remarriage of the female dependents; (iii) the chances of the deceased falling sick or his earning coming down due to holidays, strikes, unemployment, sickness and industrial disablement etc. According to Prof. Street, the items in the last contingency (iii) require a reduction of the multiplier by 2% to 6%.
38. The ‘contingency’ which has a positive content is the one pertaining to ‘inflation’ as stated by this Court in Somarajyam v. A.P.S.R.T.C (16) A.I.R 1983 A.P 407, where this Court referred to the three earlier rulings of the House of Lords in Mallet v. Mc. Monagle (11), (Supra) Taylor v. O'Connor (13) (Supra) and Cookson v. Knowles (17) 1979 A.C 556. In the first of these cases, that is, Mallet's case (11) Lord Diplock stated that in computing damages under the Fatal Accidents Act, 1855, it was more practicable for Courts
“…to leave out of account the risk of further inflation on the one hand and high interest rates…..on the other hand money should be treated as retaining its value at the date of judgment, and in calculating the present value of annual payments which would have been received in future years, interest rates appropriate to times of stable currency such as four per cent to five per cent should be adopted.”
(emphasis supplied).
39. Views to the same effect were expressed in the second case Taylor v. O'Connor (13) by Viscount Dilhorne and Lord Pearson but Lord Reld differed. However on the facts of Taylor's case (13) it was found that the award being sufficiently large, investment thereof by the dependents in interest-earning investments might result in charge to income-tax on the interest and the multiplier was therefore slightly increased to compensate for income tax rather than for inflation. In the third case Cookson v. Knowles (17) (Supra) Lord Diplock reiterated his views in Mallet's case (11) that future inflation is taken care of in a ‘rough and ready way’ because the conventional multipliers applied by Judges “are higher as being the result of applying an interest rate of 4 to 5 percent” whereas, actual rates of interest are much higher and higher interest rates would have otherwise yielded smaller multipliers.
40. We have seen that the ‘conventional’ multipliers used by Judges from experience or those taken from annuity tables are based on an interest rate between 3% to 5 1/2% per annum compound-for reducing prospective earnings to present values. It would be anamalous, as pointed out by Lord Diplock, to take advantage of a higher multiplier obtained by use of lower rates of interest obtaining during stable periods of currency and asking for a further increase of the multiplier for off-sitting inflation as well as higher rates of interest obtaining or obtainable in future. The reason is that the multiplier would have otherwise been smaller if current rates of interest at 8% to 10% granted by Nationalised Banks are used for reducing future earnings to their ‘present value’. However in exceptional cases such as Taylor's case (13) where the award is huge and investment in current deposits would result in liability to income tax, it would be permissible to increase the multiplier slightly to offset the deduction.
41. Recently in Lim Poh Choo v. Camden and Islington Area Health Authority (18) 1980 A.C 174 the House of Lords speaking through Lord Scarman reviewed the above cases and accepted the view of Lord Diplock in Mallet's case (11), that the conventional multiplier takes care of inflation but in exceptional cases such as Taylor's case (13) where there was chance of incidence of income-tax, the multiplier could be increased and to that extent inflation was relevant. The approach of Lord Diplock has been accepted by the British Law Commission in the Report on Personal Injury Litigation—Assessment of Damages (No. 56 para 217, 227 to 230 and working paper 41, para 190) which recommended that the inflation-factor should be included in the actuarial tables. We have already seen that interest rates and multipliers are in inverse proportion.
42. We shall now proceed to deal with the computation of the ‘annual dependency’ which is the multiplicand. Start with the deceased's net income at the date of his death estimate how much of this he spent on himself, and then, if his pattern of life justifies the assumption, take the remainder as his net income and as being spent for the benefit of his dependents (Kemp & Kemp 4th Ed., 1975, Vol. 1, pp. 235-236). In Adsett v. West (19) 1983 3 W.L.R 437. Mc Cullough, J. pointed out that customary calculations and estimates which have been made for many years in cases under the Fatal Accidents Act reveal that the deceased would roughly have spent only about a third or less of his income upon himself. In our view, this even may vary between 35% to 50%. Further is the deceased's income is high enough, his liability to income-tax must be taken into account in arriving at his net “annual income” (British Transport Corporation v. Gourley (20) 1956 A.C 185.
43. The product of the multiplier and the multiplicand gives the compensation payable under the Fatal Accidents Act. The said product need not be reduced by the collateral benefits received by the dependents on the event of the death of the victim-such as insurance, provident fund etc. Parry v. Cleaver (21) 1970 A.C 1. The compensation under the Fatal Accidents Act is not to be distributed equally among the recepients but is to be apportioned (as we shall explain later) according to their needs and expected tenure of life.
44. In case the recipients under the Fatal Accidents Act, 1855 receive any amounts from the estate, the award under the former is to be reduced by the share from the estate.
45. In Graham v. Dodds (21-a) 1983 (2) All E.R 953 the House of Lords held that in fatal accident cases the multiplier and the annual dependency have to be worked out with reference to the date of death of the victim and not the date of trial.
46. We shall work out an illustration. Assume that the age of the deceased at his death was (say) 24 years. Taking the monthly value of the total income at Rs. 800/- P.M and taking into account the usual deductions before receipt of the pay-packet and the absence of income-tax at that level, the amount which the deceased would have spent upon himself may be around Rs. 350/-, leaving Rs. 450/- towards monthly dependency. The annual dependency could be Rs. 5400/-. The multiplier from the table would be 16.04 for a person earning upto 65 years. Assuming that the deceased would have retired from service at 55 years, and that he does not belong to the classes of low or high mortality groups, and taking into consideration the chances of his widow or children dying early, the chances of the deceased falling sick or earning less, etc. a multiplier of 14 would be proper. The award under the Fatal Accidents Act would be Rs. 75,600/- as being the present value of the prospective loss. As we shall point out below this is to be apportioned between the widow and children according to their needs and expected life span and if these persons should get a share from the ‘Moss to the estate’, the same is to be deducted from the amount apportioned under the Fatal Accidents Act.
(B) Loss to the Estate:
47. The ‘loss to the estate’ is to be recovered by those who are entitled to the estate under the law-the heirs on intestacy, or the legatees, administrators or executors in cases of testamentary succession. The right survives the deceased in England under the provisions of the Law Reform (Miscellaneous Provisions) Act 1934 and in India under the Legal Representatives' Suits Act, 1855 read with Section 306 of the Indian Succession Act, 1925. Under Section 2 of the Fatal Accidents Act, 1855 a claim for the estate and a claim for the dependency can be combined in the same action.
48. The loss to the estate comprises of damages that are payable to the deceased towards physical injuries sustained by him as representing pain and suffering (see Compensation for pain & suffering by Arye Miller at p. 554 of International & Comparative Law Quarterly, 1982 p. 554) and for loss of ameneties for the period between the time of accident and the time of death, together with a conventional small sum towards loss of expectation of life. These are all treated as non-pecuniary benefits.
49. But in the decision in Pickett v. British Rai Engineering Ltd. (22) 1980 A.C 136 (HL) : 1979 (1) All E.R 774 the House of Lords added to this head, a separate item called the ‘lost earnings’ for the ‘lost years’. Their Lordships held that a person's interest in his ‘good health’ and ‘sound earning’ is a valuable asset distinct from his ‘expectation of life’ and that he should be duly compensated for the ‘loss of earnings’ for the ‘lost years’. Damages were awarded to the widow under this head not only for the deceased's pain and suffering, loss of expectation of life but also ‘loss of earnings’ for the ‘lost years’. The loss of earnings had to be calculated by arriving at the annual loss of earnings for the future years and applying the multiplier formula and reducing the same to the present values. This principle was applied by the House of Lords in Gammel v. Wilson (23) 1982 A.C 27 : 1981 (1) All E.R 578 to the case of the death of the victims of the accident.
50. In cases where the recipients of the dependency and the recipients of the estate were the same, it was found as a result of these rulings that they would receive more under the claim to the estate in an action under the Law Reform Act, 1934 rather than under the Fatal Accidents Act for the multiplier under the claim to the estate need not be reduced for the contingency of the chances of death or marriage or remarriage of the legal heirs. The adaptation of a liberal method for computation for arriving at the ‘annual loss of earnings’ (multiplicand) as in Harris v. Empress Motors Ltd. (24) 1983 (3) All E.R 561 (CA) also led to higher damages under the Law Reform Act 1934. Further parents were getting higher damages on death of their children-from the “loss to the estate”. The greatest blow however was that if the dependents receiving the compensation under the Fatal Accidents Act were different from those receiving the loss to the estate, the tort-feasor had more or less to pay damages twice over.
51. In such a situation, the Pearson Commission (1978) (Royal Commission on Civil Liability and compensation for death or personal injury, 7054-Vol. 1 paras 433-437) and the British Law Commission (Law Commission No. 56, Draft Bill 1973, Clause 16(3) recommended that the loss of earnings for lost years should not be permitted to survive to the estate (see Article in Vol. 46, Modern Law Review, 1983, p. 478 at 480 by Peter Cane and Donald Harris and at p. 192 of same volume by Andrew Borkowski and Keitt Stanton). Consequently this benefit towards the lost earnings for the lost years was eliminated by the Administration of Justice Act, 1982. (see 1983 New Law Journal pp. 307, 324). Thus the status quo ante before Gammel v. Wilson (Supra) (23) was again restored.
52. We are of the view that it is not necessary or desirable to adopt the English rule in Gammel v. Wilson (23) (Supra) in our law. The results in England were found to be unsatisfactory and had to be eliminated by statute. We therefore hold that the loss to the ‘estate’ cannot be increased by computing the ‘lost earnings’ for the ‘lost years’. We respectfully dissent from the contrary view taken by the Madhya Pradesh High Court in Ramesh Chandra v. M.P.S.R.T.C (25) 1983 A.C.J 221 (M.P). The other items under this head already adverted to however remain.
(C) Deduction for Avoiding Double—Benefit:
53. During the course of our discussion we have pointed out that in cases where the recipients of the dependency under the Fatal Accidents Act and the loss to the estate are the same, the compensation obtained by a person under the Fatal Accidents Act, after apportionment, is to be reduced by the amount he receives as heir to the ‘loss to the estate’. The balance that remains payable under the Fatal Accidents' award has of course to be added to the share obtainable towards ‘loss to the estate’ and the sum total is recoverable from the defendants. In case however the recipients under the Fatal Accidents Act are different from those of ‘the loss to the estate’, there is no question of such a deduction. This is clear from the decisions in Rose v. Ford (26) 1937 A.C 826 at 835 and Davis v. Powell Dufferyn Colleries (3) (Supra). The deduction procedure is accepted by our Supreme Court in Gobald Motor Service Limited v. R.M.K Veluswamy (5) (Supra) where Subba Rao, J. (as he their was) observed.
“If the claimants under both the heads are the same, and if they get compensation for the entire loss caused to the estate, they cannot claim again under the head of personal loss to capitalised income that might have been spent on them if the deceased were alive.”
54. That leads us to the question as to who the recipients under the head of ‘loss to the dependency’ and ‘loss to the estate’ should be.
(D) Who are Persons Entitled under (A) and Under (B):
55. The next question that arises for consideration is: “Whether the apportionment of the dependency under the Fatal Accidents Act, 1855 is to be limited to the enumerated class of persons under Section 1-A of the Fatal Accidents Act, 1855?”
56. Under Section 1-A of the said Act the apportionment of the dependency is to be made between the wife, husband, parent and child, if any, of the deceased. Section 4 of the said Act states the word ‘parent’ shall include the father, mother, grand father and grand mother and that the word ‘child’ shall include the son, daughter, grandson, grand-daughter, step son and step daughter.
57. It is contended by Sri K.F Baba, the learned counsel for the respondents that the provisions of Section 110-B of Motor Vehicles Act are wider in scope than the provisions of Section 1-A of the Fatal Accidents Act, 1855, that the apportionment under the Motor Vehicles Act is at the discretion of the Court and that therefore the brothers and sisters of the deceased, if they are otherwise the legal representatives of the deceased according to their personal law, would also be entitled for an apportionment of the dependency.
58. Section 110-B of the Motor Vehicles Act provides that the Tribunal shall hold an enquiry into the claims of the parties and shall make an ‘award determining the amount of compensation which appears to it to be just and specifying the person or persons to whom compensation shall be paid’.
59. In our view the provisions under Section 110-B of the Motor Vehicles Act, 1939 not only empower the Tribunal to make an award which is ‘just’ but also empower the said Tribunal to specify the person or persons to whom the compensation shall be paid, thereby permitting apportionment of compensation payable under the Fatal Accidents Act to persons other than those enumerated in the Fatal Accidents Act 1855. In our view all the legal representatives of the deceased, according to the personal law applicable to the deceased, will be entitled to apportionment of the dependency as per their needs and according to their age and that apportionment is not limited to the class of persons enumerated under Section 1-A of the Fatal Accidents Act read with Section 4 thereof. The observations of their Lordships of the Supreme Court in relation to the wider scope of Section 110-B of the Motor Vehicles Act 1939 in Shiekpura Transport Company v. N.I.T Insurance Company (8) (Supra) are, in our view, apposite in this context Hegde, J. of the Supreme Court observed:
“Under Section 110-B of the Motor Vehicles Act 1939 the Tribunal is required to fix such compensation which appears to it to be just. The power given to the tribunal in the matter of fixing compensation under that provision is wide. Even if we assume (we do not propose to decide that question in this case) that compensation has to be fixed on the same basis as required to be done under the Fatal Accidents Act 1855 (Act 13 of 1855), the pecuniary loss to the aggrieved party would depend upon data which cannot be ascertained accurately but must necessarily be an estimate or even partly a conjecture.”
(Emphasis ours).
60. The liberal view permitting apportionment of the dependency between all the legal representatives of the deceased-without being restricted to the limited group of persons enumerated under the Fatal Accidents Act-taken by us has also been taken by a Full Bench of the Punjab & Haryana High Court consisting of Chinnappa Reddy, M.R Sharma and Harbanslal, JJ. in Jokhiram v. Naresh Kantha (27) 1978 A.C.J 80 (P & H) Damayanti Devi v. Sita Devi (28) 1972 A.C.J 340 (P & H) and by a Division Bench of the Karnataka High Court in K.S.R.T Corporation v. Peerappa (29) A.I.R 1979 Karnataka 154 by the Madras High Court in Mohammed Habibullah v. K. Seethammal (30) A.I.R 1967 Madras 123 the Himachal Pradesh High Court in State v. Dole Ram (31) A.I.R 1981 Himachal Pradesh 87 and the Gujarat High Court in Megjibhai v. Chaturbhai (32) AIR 1977 Gujarat 195. The liberal view which we have adopted was also taken earlier by a Division Bench of this Court in Vanguard Insurance Company v. C. Hanumantha Rao (2) (Supra)
61. For the reasons given above, we respectfully dissent from the judgments of the following High Courts viz. the Delhi High Court in Dewan Hari Chand v. Delhi Municipality (33) A.I.R 1981 Delhi 71 the Kerala High Court in P.B Kader v. Thatchamma (12), the Madhya Pradesh High Court in Budha v. Union of India (34) A.I.R 1981 Madhya Pradesh 151 and the Madras High Court in Perumal v. Elluswamy Reddiar (35) AIR 1974 (1) MLJ 292 : 1974 A.C.J 102.
62. The learned counsel for the appellant placed reliance upon another judgment of the Supreme Court in N.I Insurance Company v. Shant Misra (1) (Supra). A reading of the judgment would show that their lordships were only concerned with Sections 110-A and 110-F of the Motor Vehicles Act and held that the said two sections only dealt with the procedural law and not with the substantive law relating to compensation. In our view that judgment was concerned with the question as to the forum before which a claim under the Motor Vehicles Act should be adjudicated and was confined to two sections viz., Sections 110-A and 110-F and is therefore clearly distinguishable. In our opinion, the decision of the Supreme Court in Sheikpura Transport Company v. N.I.T Company (8) (Supra), which directly deals with Section 110-B is in point and binding on us.
63. We may point out that in England the list of statutory dependents has been periodically enlarged subsequent to 1846 in several statutes such as the Fatal Accidents Act, 1959, the Fatal Accidents Act, 1976 and the Administrations of Justice Act, 1982. Under the English statutory law the brother, sister, uncle or aunt of the deceased and the persons related by adoption or half blood and the illegitimate off-spring are entitled to the apportionment of the dependency. The recipients are in three classes viz., the dependents, the mourners, and the beneficiaries of the estate (see new law Journal, Vol. 133 pp. 307 and 321 by Mr. Tom Harvey).
64. We have also pointed earlier that under Section 1-A of the Fatal Accidents Act, 1855 the Court may give such.
“damages as it may think, proportioned to the loss resulting from such dealt to the parties respectively for whom and for whose benefit such action shall be brought; and the amount so recovered …… shall be devided amongst the before-mentioned parties or any of them, in such shares as the Court by its judgment or decree shall direct.”
65. The Court therefore has the power to apportion the dependency between the recipients individually. The entitlement of each person is to a separate award and not just to a joint-interest in a global sum.
66. The compensation payable to the dependents of the deceased is determined and apportioned by the Tribunal constituted under the Motor Vehicles Act, 1939 but the survival of the right in respect of the damages to the dependents and to the legal heirs could only be traced to the Fatal Accidents Act, 1855 and the Legal Representatives Suits' Act, 1855 read with Section 306 of the Indian Succession Act, 1925. Once the right survives, the Tribunal exercises various powers under the Motor Vehicles Act, 1939. Under Section 110-B of that Act, it has power to—
“make an award determining the amount of compensation which appears to it to be just and specifying the person or persons to whom compensation shall be paid………”
67. The Tribunal therefore has power to apportion the dependency among the dependents under the Fatal Accidents Act, 1855 in accordance with their needs and life-span.
68. But so far as the ‘loss to the estate’ is concerned, the Tribunal has to divide the same in accordance with the personal law applicable to the deceased in case of intestacy or to the legal representatives, administrators, executors or legatees in accordance with law or any other testamentary direction.
69. We shall now proceed to apply the above principles to the facts of the case.
70. The first step is to determine the annual dependency or the ‘multiplicand’. In our view, the evidence of P.W 1, the mother of the deceased and of P.W 2, the husband of one of the married sisters is to the effect that the deceased was having a carpentry and painting workshop and that he was earning, on an average, about Rs. 400 to Rs. 500/- P.M at the time of his death. We determine the average monthly net earning at Rs. 400/- and consider that the deceased would have given Rs. 200/- P.M to his dependents. The annual dependency thus works out to a sum of Rs. 2,400/-. We are not inclined to go by the rough figure of Rs. 1500/- P.A mentioned by the claimants for that figure is clearly contrary to the conventional figure adopted towards the dependency. Thus the annual dependency will be Rs. 2,400/ and for such an income there is no incidence of income-tax.
71. The next step is to arrive at the appropriate multiplier. The deceased having died at the age of 22 years, we consider that a multiplier of 16 would be reasonable.
72. We now proceed to crosscheck the multiplier with reference to the annuity tables. The deceased not being a salaried employee liable to retirement, it is reasonable to assume that his earning capacity extends beyond 65 years. For a person dying at 22, and earning beyond his 65th year, the multiplier would be 16.85 This multiplier has to be reduced for the contingencies, namely, the chances of the mother dying the sisters marrying soon, the deceased falling sick or his earning capacity getting otherwise diminished. We are of the view that the multiplier of 16.85 from the Table is to be reduced to 16. Thus the multiplier of 16 selected by us compares ??? with the one arrived at by use of the actuarial or annuity tables. Therefore it is clear that the multiplier of 48 adopted by the Tribunal is hopelessly arbitrary.
73. The compensation payable to the dependency under the Fatal Accidents Act, 1855 comes to Rs. 2400 × 16 = Rs. 38,400/-.
74. As the same is not high when apportioned, it is not likely to result in any diminution towards income-tax on the interest payable upon any investments so as to fall within the exception in Lim Poh Choo's (18) case. As the multiplier of 16 is arrived at by reducing the prospective loss to its ‘present value’ by applying a standard rate of 5 1/2% compound for future years, it will not be reasonable to proceed on the basis of treat any investment of the dependency at a rate higher than 5 1/2% so as to provide further for inflation or income-tax.
75. The next question is the loss to the estate. We confirm the loss to the estate at Rs. 500/-.
76. The further question is as to who are entitled to receive these sum. The dependency, according to the liberal view accepted by us, is to go to all the legal heirs of the deceased who died intestate. The heirs are the mother and sisters, married and unmarried. But the married sisters, not being any longer dependent get nothing. The dependency goes to the mother and the unmarried sisters.
77. The dependency of Rs. 38, 400/- has however to be apportioned between the mother and the unmarried sisters according to their needs and span of life. The loss to the estate namely Rs. 500/- has to be divided according to Mahomedan Law between the mother and sisters of the deceased. Thereafter, the amount received by each of the claimants from the estate has to be deducted from the amount each is apportioned from the dependency.
78. On the facts of this case, the claimants having already withdrawn ‘jointly’ one half of the award of Rs. 72,500/- with interest, we do not propose to make the above calculations. Suffice it to say that the amount receivable by the claimants ‘jointly’ would be as follows:
(a) towards depen-Fataldency under Accidents Act, 1855 (Rs. 38,400/- Rs. 500)
..Rs. 37,900-00.
(b) towards the loss to the estate ..
500-00.
Total:
Rs. 38,400-00.
79. In the result, the award made by the Tribunal is set aside and the appeal allowed in part and an award of Rs. 38,400/- with interest at 6% P.A from 5-6-78, the date of the petition, is substituted. There shall be no order as to costs in the C.M.A
80. With regard to the mode of payment of compensation awarded under the Motor Vehicles Act, 1939, it would, in our opinion, be desirable that the Tribunals should issue payments under ‘Account-payee’ cheques or similar orders, directly to the parties or their legal guardians upon verification of their identity.
81. Compensation cases raise issues of social, economic and financial policy not amenable to judicial reform but can be resolved by the legislature only after full consideration of factors which cannot all be brought into clear focus or be weighed and assessed, in the course of the forensic process. The judge — however wise creative, and imaginative he may i.e ‘cabin'd, cribe'd confin'd bound in” not, as was Macbeth to his “saucy doubts and fears” but by the evidence and arguments of litigants. It is this limitation, inherent in the forensic process, which sets bounds to the scope of judicial law reform (per Lord Scarman at p. 183 of Lim Poh Choo's case (18). The reform must therefore come from Parliament. The Fatal Accidents Act, 1855 requires to be made upto date in the light of the experience of the English Fatal Accidents Acts of 1959 and 1976. Similarly the Legal Representatives' Suits Act, 1855 and Section 306 of the Indian Succession Act, 1925 require to be brought in line after examining the amendments to the Law Reform (Miscellaneous Provisions) Act, 1934. The widespread reforms made under the Administration of Justice Act, 1982 have also be taken into account. The law has to be simplified and adjusted to suit Indian conditions.
82. Lord Hailsham, while introducing the Administration of Justice Bill, 1982 spoke of the need for ‘darning’ the statute from time to time, like darning old socks. Perhaps, as pointed out by Andrew Borkowski & K. Stanton (Vol. 46, Modern Law Review, 1983, p. 191), it is necessary to buy ‘new socks’ rather than darn the old ones.