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New India Assurance Co. Ltd. v. Surjyamoni Padhi And Others

Orissa High Court
Oct 11, 1979
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Case summary — P.K. Mohanti, J.

Factual and Procedural Background

This appeal, heard by P.K. Mohanti, J., is filed by the insurer under section 110-D of the Motor Vehicles Act against the District Judge-cum Motor Accidents Claims Tribunal, Bolangir. The Tribunal had awarded Rs. 23,460 as compensation in favour of respondents 1 and 2.

On 24-9-1973 at about 8 a.m. Bishnu Prasad Padhi (aged about 52), a licensed stamp vendor at Titilagarh, was riding a cycle in front of the Munsif's Court at Titilagarh when a truck belonging to respondent No. 7 (Dewan Chand Jain) struck and ran him over, resulting in instantaneous death. Respondents 1 and 2 are the son and widow of the deceased; respondent 3 is the daughter-in-law; respondents 4–6 are grandchildren. They claimed total compensation of Rs. 50,000, alleging rash and negligent driving.

The owner entered appearance but filed no counter and did not appear at trial. The insurer (appellant) filed a counter denying the allegations and remained ex parte before the Tribunal. The Tribunal accepted the eyewitness evidence and found the driver guilty of rash and negligent driving, awarded Rs. 23,460 with interest at 6% per annum from the date of the accident until payment, and costs of Rs. 400 in favour of respondents 1 and 2 only (holding respondents 3–6 not entitled). The insurer appealed. Respondents 1–6 filed a cross-objection under Order 41, Rule 22, Civil Procedure Code claiming higher compensation; however counsel for the respondents conceded respondents 3–6 were not entitled to compensation.

Legal Issues Presented

  1. Whether the insurer's appeal is competent or barred under section 96(2) of the Motor Vehicles Act (i.e., whether the insurer could challenge Tribunal findings without prior permission when it had remained ex parte).
  2. Whether the truck was driven rashly and negligently such that the owner and insurer are vicariously liable for the death of the deceased.
  3. What is the correct quantum of compensation, taking into account the deceased's age, life expectancy, proven income, and deductions for personal expenditure and contingencies.
  4. Whether interest should be awarded from the date of the accident or from the date of the application under section 110-A/110-CC of the Motor Vehicles Act.

Arguments of the Parties

Appellant (Insurer)

  • Challenged the Tribunal's finding of rashness and negligence and disputed the quantum of compensation awarded by the Tribunal.
  • Contended (through Mr. P. Roy) that life expectancy of an average Indian should be taken as 65 years (relying on reported cases).
  • Contended that the insurer had not contested at the Tribunal and remained ex parte, and (according to respondents) should have obtained permission of the Tribunal to contest the claim.

Respondents (Claimants)

  • Asserted that the accident was caused by the truck's rash and negligent driving and sought higher compensation (cross-objection under Order 41, Rule 22).
  • Raised a preliminary objection (advanced by Mr. Swain for the respondents) that the insurer's appeal was incompetent because the grounds were barred under section 96(2) of the Motor Vehicles Act.
  • Counsel conceded that respondents 3–6 were not entitled to compensation.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
Chairman, Board of Directors, Orissa Mining Corporation Limited v. Koppula Kamala Dora, I.L.R. 1975 Cutt. 1072 That in such cases granting of interest should ordinarily be from the date of the application (and not from the date of the accident). The Court followed this principle and directed that interest on the compensation should run from the date of the application under section 110-A (23-11-1973) and not from the date of the accident.

Court's Reasoning and Analysis

The Court's reasoning follows several discrete strands addressed in sequence:

  1. Competence of the insurer's appeal:

    The Court construed section 96(2) together with section 110-C(2-A) of the Motor Vehicles Act. Section 110-C(2-A) allows the Claims Tribunal, where it finds collusion or failure to contest by the person against whom a claim is made, to implead the insurer and to permit the insurer to contest the claim on any grounds available to that person. From a conjoint reading the Court concluded that where an insurer has been impleaded and served with notice as contemplated by section 96(2), the insurer is entitled to defend the suit on the grounds available to the insured. In the present case the insurer had been served and was impleaded, was permitted to cross-examine witnesses and no objection was taken by respondents before the Tribunal. The preliminary objection that the appeal was incompetent under section 96(2) was therefore held to be without merit.

  2. Liability for rash and negligent driving:

    The Court accepted the eyewitness evidence of P.W.1, who described: the truck approaching from behind, knocking down and running over the deceased; a skid mark of about 30 feet; and the truck stopping 70–80 feet from the accident site. The Court reasoned that the driver's inability to control the vehicle within a reasonable distance showed high speed and rashness/negligence. Consequently, vicarious liability attached to the owner, and the insurer (which had insured the vehicle against third-party risk) could not avoid liability.

  3. Assessment of quantum of damages:

    The Court examined evidence on life expectancy and income.

    • Life expectancy: The Tribunal had held the average life at 70 years; the appellant urged 65 years relying on reported cases. The Court rejected the view that life expectancy must be fixed by precedent and observed that life expectancy must be assessed on the facts of each case. P.W.2's evidence that family members were generally long-lived supported an expectation that the deceased would have lived to 70 years.
    • Income: The claimants produced a Treasury Officer certificate indicating approximately Rs. 500 per month from stamp sales. The Tribunal, however, mistakenly recorded monthly income at Rs. 160, allegedly based on an incorrect reading of P.W.2's evidence. On scrutiny, P.W.2 had said his father purchased stamps worth Rs. 2,000 weekly and that monthly income was about Rs. 250 from sale of stamps. The Court corrected the record and fixed monthly income at Rs. 250 (in the absence of contrary evidence).
    • Other heads: P.W.2's statements about earnings as a temple priest (Rs. 100 per month) were discredited because he admitted the deceased received no pay and that the son had succeeded to priesthood and temple lands; thus, no pecuniary loss was found on that head. Similarly, income from cultivation was found not to have resulted in pecuniary loss because field servants were engaged both before and after the death.
    • Computation: Having fixed monthly income at Rs. 250, the Court allowed Rs. 100 as the deceased's personal expenditure and Rs. 150 as monthly contribution to the family's support (i.e., pecuniary loss Rs. 150 per month = Rs. 1,800 per year). With remaining life span of 18 years (70 − 52), the gross loss is Rs. 32,400. Taking account of contingencies and lump-sum payment, the Court reduced the amount by one-sixth to arrive at Rs. 27,000 as fair compensation.
  4. Interest and costs:

    The Tribunal had awarded interest from the date of the accident. The Court held this to be an illegality in view of section 110-CC (which permits interest but not earlier than the date of making the claim) and the cited precedent. Applying the precedent, the Court directed interest at 6% per annum from the date of application under section 110-A (23-11-1973) until payment. The Court further directed that respondents be entitled to costs of the claim proceeding proportionate to their success, while parties should bear their own costs in the appellate Court.

Holding and Implications

Final Disposition: The appeal is dismissed; the cross-objection is allowed in part.

Core Ruling: The Tribunal's award is modified. The Court directed that a sum of Rs. 27,000 (in place of Rs. 23,460) be paid as compensation to respondents 1 and 2. This amount shall carry interest at 6% per annum from 23-11-1973 (the date of application under section 110-A) until the date of payment. Respondents 3–6 were held not entitled to compensation.

Direct Consequences for the Parties:

  • Respondents 1 and 2 receive an increased award (Rs. 27,000) with interest from 23-11-1973 at 6% per annum.
  • Respondents 3–6 remain without compensation (as conceded and held by the Tribunal and Court).
  • The insurer's appeal was held competent and dismissed on the merits as to liability; insurer remains liable to meet the award subject to the modification in quantum.
  • Respondents are entitled to costs of the claim proceeding proportionate to their success; parties bear their own costs in this Court.

Broader implications: The opinion confirms that whether an insurer may contest depends on impleading and notice under sections 96(2) and 110-C(2-A) and that life expectancy must be assessed on the facts of each case. The Court applied existing precedent on the appropriate date from which interest should run but did not purport to set a new legal precedent.

Order: Appeal dismissed.

Show all summary ...

P.K Mohanti, J.:— This appeal is under section 110-D of the Motor Vehicles Act by the insurer and is directed against the decision of the District Judge-cum Motor Accidents Claims Tribunal, Bolangir awarding a sum of Rs. 23,460/- as compensation in favour of respondents 1 and 2.

2. One Bishnu Prasad Padhi, aged about 52 years, was a licensed stamp vendor at Titilagarh. On 24-9-1973 at about 8 a.m while he was going on a cycle in front of the Munsif's Court at Titilagarh, a truck belonging to respondent No. 7 Dewan Chand Jain knocked down and ran him over, causing his instantaneous death at the spot. Respondent Nos. 1 and 2 are the son and widow respectively, respondent No. 3 is the daughter-in-law and respondents 4 to 6 are the grandchildren of the deceased. They claimed a total compensation of Rs. 50,000/-. According to them, the accident which resulted in the death of the deceased was due to rash and negligent driving of the truck. The owner of the vehicle entered appearance through a lawyer but filed no counter. The lawyer did not also appear at the trial stage. The insurance company, the appellant herein, filed a counter denying the above allegations.

3. Before the Tribunal two witnesses were examined by the claimants. P.W 1 Ram Swarup Agarwalla is the sole eyewitness to the occurrence. P.W 2 is the son of the deceased who gave evidence about the income of the deceased. No witness was examined by the insurance company. On the evidence of P.W 1, the Tribunal came to the conclusion that the driver was rash and negligent in driving the truck which resulted in the death of the deceased. It determined the compensation at Rs. 23,460/- with interest at 6 per cent per annum from the date of accident till the date of payment and awarded costs of Rs. 400/- in favour of respondents 1 and 2 only, holding that respondents 3 to 6 were not entitled to any compensation. Aggrieved by this decision, the insurance company has come up in appeal. Respondents 1 to 6 have preferred a cross-objection under Order 41, Rule 22, Civil Procedure Code claiming higher compensation. It was, however, conceded by the learned counsel for the respondents that respondent Nos. 3 to 6 are not entitled to any compensation.

4. As already stated, the appeal is by the insurer of the vehicle which caused the death of the deceased. In the memorandum of appeal the appellant has challenged the finding of the Tribunal on the question of rashness and negligence in driving the vehicle and the quantum of compensation awarded by the Tribunal. Mr. Swain for the respondents took a preliminary objection that the appeal by the insurer is incompetent inasmuch as the grounds of the appeal are barred under section 96(2) of the Motor Vehicles Act.

5. Sub-section (2-A) of section 110-C of the Act provides as follows:—

“Where in the course of any inquiry, the Claims Tribunal is satisfied that—

(i) there is collusion between the person making the claim and the person against whom the claim is made, or

(ii) the person against whom the claim is made has failed to contest the claim, it may, for reasons to be recorded by it in writing, direct that the insurer who may be liable in respect of such claim, shall be impleaded as a party to the proceeding and the insurer so impleaded shall thereupon have the right to contest the claim on all or any of the grounds that are available to the person against whom the claim has been made.”

6. A conjoint reading of both the sections 96(2) and 110-C(2-A) indicates that when there is collusion between the person making the claim and the person against whom the claim is made or the person against whom the claim is made has failed to contest the claim, the insurance company is entitled to defend the suit on all or any of the grounds that are available to the person against whom the claim has been made. In the present case, the insurer did not enter contest and remained ex parte before the Tribunal. He has also not preferred any appeal. It was contended on behalf of the respondents that the appellant should have obtained permission of the Tribunal to contest the claim. I am unable to accede to this contention. The appellant was served with a notice as contemplated under section 96(2) of the Act and was impleaded as a party to the claim proceeding. Before the Tribunal the respondents did not take the stand that the appellant was not entitled to defend the suit without obtaining permission. The appellant was allowed to contest the claim and cross-examine the witnesses without any objection by the respondents. The appellant has been saddled with the entire liability for payment of compensation. The appellant is, therefore, entitled to challenge the quantum of compensation as also its basis in this appeal. The preliminary objection raised on behalf of the respondents is without any merit.

7. The evidence of P.W 1 leaves no room for doubt that it was on account of the rash and negligent driving of the truck that the accident had taken place. He stated that while the deceased was going on a cycle on the left side of the road, the truck in which he was sitting went from behind and knocked down the deceased and ran him over and it stopped at a distance of 70 to 80 feet from the place of accident leaving a skid mark of about 30 feet long. The fact that the driver was not able to control the truck within a reasonable distance shows that it was being driven at a high speed and there was rashness and negligence on the part of the driver. There can, therefore, be no escape from the vicarious liability of the owner for the act of the driver nor can the appellant-company with which the vehicle was admittedly insured against third party risk at the time of the accident avoid such liability.

8. This brings us to the question of quantum of damages to which the respondents 1 and 2 are entitled. It is not disputed that the deceased was aged about 52 years at the time of his death. The Tribunal held that the life of an average Indian is 70 years. Mr. P. Roy for the appellant relied on some reported cases in support of his contention that the life of an average Indian is 65 years. In my opinion, life expectation cannot be determined by precedents. Each case has to be decided on its own facts. It is in the evidence of P.W 2 that the members of the deceased's family were generally long-lived. In view of the family history, the deceased can be normally expected to have lived up to 70 years if his life had not been cut short by the accident. The claimants produced a certificate from the Treasury Officer (Extension 6) to show that the monthly income of the deceased from his business as a stamp vendor was Rs. 500/- approximately. The Tribunal determined the monthly income at Rs. 160/- observing that P.W 2 had admitted in his evidence that the monthly income of the deceased was Rs. 160/-. This is clearly an error of record. On a careful scrutiny of the evidence of P.W 2, it appears that he simply stated:—

“Every week my father was purchasing stamp worth Rs. 2,000/- from the treasury and his monthly income was Rs. 250/- on an average from sale of stamps.”

9. In the absence of any evidence to the contrary, the monthly income of the deceased as a stamp vendor can be determined at Rs. 250/- if not more.

10. P.W 2 also stated that the deceased was earning Rs. 100/- per month as the priest of two temples. He, however, admitted that his father was not getting any pay for acting as priest of the temples. He also admitted that he has succeeded to the priesthood of his father in the two temples and has been enjoying the lands of the temples attached to the priesthood. It cannot, therefore, be said that the claimants have sustained any pecuniary loss on this head.

11. P.W 2 further stated that the deceased was earning Rs. 300/- per month from cultivation of his lands. But in cross-examination he stated that the deceased was cultivating his lands by engaging field servants and after his death, the claimants have engaged field servants for cultivation of lands. There is, no pecuniary loss on this head.

12. The monthly income of the deceased is determined at Rs. 250/-. Having regard to the status of the deceased and his ordinary living requirements, it is reasonable to hold that he must have been spending Rs. 100/- on himself and contributing the remaining Rs. 150/- for support of the family. So the pecuniary loss caused to the family by the death of the deceased is Rs. 150/- per month or Rs. 1,800/- per year. For 18 years, i.e, the remaining span of life of the deceased it would come to Rs. 32,400/-. Having regard to the normal hazards of life and the fact that the amount is to be paid in lump sum instead of being spread over in instalments for over 18 years, it is reduced by one-sixth. The compensation would thus work out at Rs. 27,000/-.

13. The Tribunal committed an illegality in awarding interest on the amount of compensation from the date of accident. Section 110-CC of the Motor Vehicles Act makes a provision for the Court to allow interest at such rate and from such date not earlier than the date of making the claim as it may specify in this behalf. In view of this provision, the Tribunal should not have granted interest from the date of accident. In a decision of this Court in Chairman, Board of Directors, Orissa Mining Corporation Limited v. Koppula Kamala Dora . I.L.R 1975 Cutt. 1072., it was held that in such cases granting of interest should ordinarily be from the date of application. I would, therefore, in disagreement with the Tribunal, direct that compensation payable to respondents 1 and 2 shall carry interest at the rate of 6 per cent per annum from the date of application under section 110-A, i.e, 23-11-1973 till the date of payment. In the result, the appeal be dismissed and the cross-objection be allowed in part. I direct that a sum of Rs. 27,000/- (in place of Rs. 23,460/- awarded by the Tribunal) be paid as compensation to respondents 1 and 2. This amount shall carry interest at the rate of 6 per cent per annum from 23-11-1973 up to the date of payment. The respondents shall be entitled to the costs of the claim proceeding proportionate to their success. Parties to bear their own costs incurred in this Court.

14. Appeal dismissed.