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Smart Summary

Factual and Procedural Background

On 24.10.1996, Rajinder Prasad, aged 28 years, died in a road accident involving the TSR vehicle bearing registration No. DL-IL-8661, which he was driving. He was survived by his wife, two children, and mother. The dependents of the deceased filed a claim petition under Section 140 read with Section 166 of the Motor Vehicles Act, 1988, seeking compensation from the vehicle owner and insurer, asserting the death occurred during the course of employment as the deceased was employed as a driver by respondent No. 5, Ashok Kumar Dureja. The Tribunal treated the claim as one under Section 163A of the Motor Vehicles Act, 1988, since the accident involved only the vehicle driven by the deceased. The Tribunal assessed compensation based on the deceased’s income as Rs. 3,000 per month, increased to Rs. 4,500 to account for future income growth, and applied a multiplier of 18, awarding a total compensation of Rs. 6,63,000 including non-pecuniary damages. The insurance company challenged the award on grounds relating to the determination of income and application of benefits for future income increase.

Legal Issues Presented

  1. Whether the Tribunal erred in relying solely on the testimony of the deceased’s wife to determine the monthly income of the deceased without other evidence.
  2. Whether the Tribunal was correct in granting benefits of future increase in income while computing compensation under Section 163A of the Motor Vehicles Act, 1988.
  3. Whether the compensation calculation should strictly adhere to the Second Schedule of the Motor Vehicles Act, 1988, without applying additional benefits not incorporated in the Schedule.
  4. Whether the rate of interest awarded pendente lite and for the future should be modified from 9% to 6% per annum.

Arguments of the Parties

Insurance Company's Arguments

  • The Tribunal erred in relying on the wife’s testimony regarding the deceased’s income, as there was no clear and cogent evidence to establish the income.
  • The Tribunal incorrectly allowed benefits of future increase in income, which should not be granted under Section 163A claims governed strictly by the Second Schedule.

Tribunal's Position (as identified by the Court)

  • The Tribunal accepted the deceased’s income at Rs. 3,000 per month based on the wife’s testimony.
  • The Tribunal granted a 50% increase to Rs. 4,500 per month to account for future income growth.
  • The Tribunal applied a multiplier of 18 and awarded Rs. 15,000 under non-pecuniary damages, totaling Rs. 6,63,000.
  • Interest was awarded at 9% per annum pendente lite and in future.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
Naggappa v. Guru Dayal Singh, 2003 ACJ 12 Establishes that compensation awarded under the Motor Vehicles Act is not restricted to the amount claimed; the Tribunal may award just compensation based on evidence. The Court referred to this precedent to clarify that compensation can exceed the claimed amount if justified, provided it is just and supported by evidence.

Court's Reasoning and Analysis

The Court analyzed the evidentiary basis for determining the deceased’s income and found the Tribunal’s reliance on the wife’s testimony insufficient due to lack of clear and cogent evidence. Instead, the Court adopted the minimum wages for skilled labourers under the Minimum Wages Act as the deceased was a driver, fixing income at Rs. 2,100 per month as of 1.2.1996. Regarding the future increase in income, the Court acknowledged that the claim was treated under Section 163A of the Motor Vehicles Act, which requires strict adherence to the Second Schedule. However, noting that the Government had not amended the Second Schedule since its inception in 1994 despite inflation, the Court deemed it appropriate to allow a 25% increase in income to reflect changes in cost of living. The Court calculated the mean monthly income as Rs. 2,363 after averaging the minimum wages and the increased figure. Deducting one-third for personal expenses, the loss of dependency was assessed at Rs. 1,575 per month. Applying the multiplier of 18 for the deceased’s age (28 years), the Court computed total dependency loss at Rs. 3,40,200. Adding Rs. 15,000 for non-pecuniary damages resulted in Rs. 3,55,200. The Court also modified the interest rate on the award from 9% to 6% per annum, reflecting prevailing bank rates at the time of the award.

Holding and Implications

The appeal filed by the insurance company is allowed in part, and the compensation awarded by the Tribunal is modified.

The Court held that the monthly income of the deceased should be taken as Rs. 2,100 based on minimum wages for skilled labourers, adjusted by 25% for inflation, resulting in a monthly dependency loss of Rs. 1,575. Applying the multiplier and adding non-pecuniary damages, total compensation is fixed at Rs. 3,55,200. Interest on the compensation is awarded at 6% per annum from the date of the claim petition until realization. The insurance company is liable to pay this amount. No costs were awarded. This decision modifies the compensation amount but does not establish a new precedent beyond clarifying the application of minimum wages and inflation adjustment under Section 163A claims.

    Oriental Insurance Co. Ltd. v. Rajwati Devi & Ors.

    Pradeep Nandrajog, J.— On 24.10.1996, deceased Rajinder Prasad, aged 28 years died when the TSR bearing registration No. DL-IL-8661 which was being driven by him met with an accident. He was survived by wife, 2 children and mother.

    2. It was pleaded by the dependents of the deceased that deceased was employed as a driver with respondent No. 5, Ashok Kumar Dureja (owner of the vehicle) and that he died during the course of his employment. Thus, they filed a claim petition under Section 140 read with Section 166 of the M.V Act, 1988 claiming a compensation from the owner and insurer of the vehicle.

    3. As it was proved that accident in question was caused due to the overturning of the vehicle driven by the deceased and no other vehicle was involved in the accident, learned Tribunal treated claim petition filed by the dependents as one filed under Section 163 A of the Motor Vehicles Act, 1988.

    4. Wife of the deceased, Rajwati Devi stepped into the witness box as PW-3 and deposed that deceased was employed as a driver earning Rs. 3000/- per month at the time of the accident.

    5. Relying upon the testimony of the wife of the deceased, learned Tribunal has taken income of the deceased at the time of the accident as Rs. 3000/- per month.

    6. Giving benefit of future increase in the income of the deceased, mean monthly income of the deceased has been taken by the Tribunal as Rs. 4500/- per month. Deducting 1/3rd towards personal spending of the deceased, average monthly dependency has been assessed by the Tribunal at Rs. 3000/- per month. Deceased was aged 28 years at the time of the accident. Thus, as per second Schedule, multiplier of 18 has been adopted by the Tribunal. Thus, total loss of dependency has been assessed at Rs. 6,48,000/-.

    7. Under the head ‘non-pecuniary damages’, Tribunal has awarded a sum of Rs. 15,000/-. Thus, total compensation awarded by the Tribunal is Rs. 6,63,000/-.

    8. Aggrieved by the amount of compensation awarded by the Tribunal to dependents/respondents 1 to 4, insurance company has filed the present appeal.

    9. Learned Counsel for the insurance company had raised 2 contentions in support of his appeal.

    10. The first ground urged by the insurance company is that while determining monthly income of the deceased at the time of the accident, learned Tribunal erred in relying upon the testimony of the wife of the deceased when there was no evidence on record to prove the income of the deceased.

    11. I agree with the contention advanced by the learned Counsel for the insurance company. In absence of clear and cogent evidence pertaining to income of the deceased, learned Tribunal should have determined income of the deceased on the basis of minimum wages notified under the Minimum Wages Act. As the deceased was employed as a driver, I place him in the category of skilled labourers. Minimum wages for skilled labourers as on 1.2.1996 was Rs. 2,101/- per month, (rounded off to Rs. 2100/- per month). I adopt this figure as the monthly income of the deceased at the time of the accident.

    12. Learned Counsel for the insurance company next submits that while determining loss of dependence, Tribunal erred in giving benefits of future increase in the income of the deceased. Counsel further contends that as the Tribunal has treated claim petition as one filed under Section 163A, compensation had to be computed strictly in accordance with Second Schedule appended to the Motor Vehicles Act, 1988.

    13. I agree with the learned Counsel for the appellant inasmuch as the Tribunal ought to have determined compensation strictly in accordance with Second Schedule as it has treated the petition as one filed under Section 163A of the Motor Vehicles Act, 1988.

    14. However, it is pertinent to note Clause 3 of Section 163A. Clause 3 of Section 163A reads as under:

    “(3) The Central Government may, keeping in view the cost of living by notification in the Official Gazette, from time-to-time amend the Second Schedule.”

    15. Second Schedule was appended to the Motor Vehicles Act in the year 1994. Unfortunately, Government has not exercised its power provided under Clause (3). Thus, Second Schedule remains unamended since the date of its inception till today.

    16. I note that from year 1994 to today, inflation has gone up by 4% to 6% each year. Keeping in view the rise in inflation and cost of living and the fact that the Government has not amended Second Schedule, I think it appropriate to give benefit of 25% increase in the income even as per the Second Schedule. Thus, I take mean monthly income of the deceased as Rs. 2,363/-. (Rs. 3000 + Rs. 2,625/- (25% increase in income) / 2=Rs. 2,363/-.

    17. Deducting 1/3rd towards personal spending of the deceased, loss of dependence works out to Rs. 1,575/- per month.

    18. Second Schedule provides for a multiplier of 18 in the case of deceased aged between 25 and 30 years. As the deceased was aged 28 years at the time of the accident, I apply multiplier of 18. Thus, total compensation works out to Rs. 3,40,200/-. Adding Rs. 15,000/- as awarded by the Tribunal under the head ‘non-pecuniary damages’ total compensation is assessed at Rs. 3,55,200/-.

    19. I note that dependents had claimed a compensation of Rs. 3,00,000/- on account of death of deceased in the said road accident. In this regard, suffice would it be to note the judgment of the Supreme Court Naggappa v. Guru Dayal Singh, 2003 ACJ 12. In the para 7 of the report Supreme Court has observed as under:

    “Firstly, under the provisions of M.V Act, there is no restriction that compensation could be awarded only upto the amount claimed by the claimants. In an appropriate case where from the evidence brought on record if Tribunal Court considers that claimant is entitled to get more compensation than claimed, the Tribunal may pass such award. Only embargo is——————It should be ‘just’ compensation, that is to say, it should be neither arbitrary, fanciful or unjusticiable from the evidence.”

    20. Tribunal has awarded pendente lite and future interest @ 9% per annum. The award is dated 18.8.2005 At that time, nationalized banks were offering interest @ 6% per annum. Therefore, I modify the award to the extent that pendente lite and future interest shall carry an interest @ 6% per annum.

    21. Accordingly, appellant insurance company is liable to pay a compensation of Rs. 3,55,200/- together with interest @ 6% p.a from date of claim petition till date of realisation. Award is modified to that extent.

    22. Appeal is accordingly disposed of.

    23. No costs.

    Appeal disposed of.
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    Comments

    Oriental Insurance Co. Ltd. v. Rajwati Devi & Ors.
    (Apr 18, 2007)