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Supe Dei (Smt) And Others v. National Insurance Company Limited And Another
Factual and Procedural Background
Dhanurjaya Suna, aged 32, employed as a gas-cutter with M/s Jindal Vijayanagar Steel, died in a motor vehicle accident on 11-8-1997. His monthly income, inclusive of overtime, was treated as Rs 4,000 by the Motor Accidents Claims Tribunal, which applied a multiplier of 15 and awarded Rs 5,42,000 with 6% interest per annum.
On appeal filed by the owner and insurer, the High Court of Karnataka excluded overtime earnings, fixed the income at Rs 1,515 per month, retained the multiplier of 15, and reduced compensation to Rs 3,15,000 with the same 6% interest.
The claimants appealed to the Supreme Court. Leave was granted, and notice was confined to two points: the correct multiplier and the appropriate rate of interest.
Legal Issues Presented
- Whether the appropriate multiplier for assessing compensation, given the deceased’s age of 32, should be 17 as per the Second Schedule to the Motor Vehicles Act, 1988, instead of 15 applied by the lower courts.
- Whether the rate of interest on the compensation should be 9% per annum, rather than the 6% awarded by the Tribunal and the High Court.
Arguments of the Parties
Appellants (Claimants)
- Contended that the multiplier of 17 prescribed in the Second Schedule ought to be applied, and no reason was provided by the lower courts for selecting 15.
- Argued that 9% per annum is the standard rate of interest in motor accident cases, and the reduction to 6% was unjustified.
Respondent Insurance Company
- Fairly conceded that, considering the deceased’s age, a multiplier of 17 would be appropriate as indicated in the Second Schedule, even though Section 163-A does not directly govern the claim.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Kaushnuma Begum v. New India Assurance Co. Ltd. (2001) 2 SCC 9 | Established that 9% per annum is an appropriate rate of interest in motor accident compensation cases. | The Supreme Court relied on this decision to enhance the interest rate from 6% to 9% per annum. |
Court's Reasoning and Analysis
The Court observed that neither the Tribunal nor the High Court furnished reasons for deviating from the Second Schedule’s multiplier of 17. Noting that the Schedule, while directly applicable to Section 163-A claims, serves as a guiding framework under Section 166 as well, the Court saw no justification for using a lower multiplier.
Regarding interest, the Court referred to its earlier ruling in Kaushnuma Begum, reaffirming that 9% per annum is the norm in motor accident cases. Finding no special circumstances warranting a departure, it corrected the rate accordingly.
Holding and Implications
The appeal is allowed in part; compensation shall be recalculated using a multiplier of 17, and interest shall be payable at 9% per annum from the date of filing of the claim petition until realisation.
Direct implication: the claimants receive increased compensation and a higher interest rate. The decision reiterates that courts should ordinarily follow the Second Schedule’s multipliers as a guideline under Section 166 and maintain 9% interest unless specific reasons dictate otherwise. No broader precedent beyond reaffirming these principles was set.
Order
1. Leave granted.
2. The claimants in this case have filed this appeal for compensation under the Motor Vehicles Act, 1988 (hereinafter referred to as “the Act”) assailing the judgment of the High Court of Karnataka in MFA No. 4537 of 1999 (MVC) along with Cross-Appeal No. 26 of 2000 (MVC) in which the compensation awarded by the Motor Accidents Claims Tribunal has been reduced from Rs 5,42,000 to Rs 3,15,000.
3. Dhanurjaya Suna, the victim of the accident was aged about 32 years on the date of the accident i.e 11-8-1997. He was a gas-cutter in M/s Jindal Vijayanagar Steel at Sandur Taluka in Bellary District of the State of Karnataka. He was drawing a salary of Rs 2015 per month and including the overtime allowance his monthly income was about Rs 4000. The Tribunal, for the purpose of determination of compensation had taken the monthly income of the deceased as Rs 4000; had applied the multiplier 15 and awarded a sum of Rs 5,42,000 as compensation.
4. The High Court on appeal by the owner and insurer of the vehicle, excluded the overtime allowance from the monthly income and determined the net income of the deceased at Rs 1515 per month and maintained the multiplier 15 as fixed by the Tribunal. The total compensation amount payable to the claimants was determined as Rs 3,15,000. Both the Tribunal and the High Court awarded 6% interest per annum on the compensation from the date of making the claim till the date of realisation.
5. By the order passed on 3-9-2001 this Court issued notice to the respondents limited to the question of appropriate multiplier to be applied in the case. Therefore, learned counsel for the parties confined their submissions to the questions of appropriate multiplier and the rate of interest on the compensation awarded.
6. Ms Kiran Suri, learned counsel for the appellant contended that 17 should have been taken as the appropriate multiplier in the case as that is the multiplier prescribed under the Second Schedule to the Act. Her further contention is that neither the Tribunal nor the High Court has given any reason why the multiplier of 17 could not be accepted as the appropriate multiplier, and instead 15 should be taken as the multiplier applicable in the case.
7. The further contention of Ms Suri is that the rate of interest awarded in all such cases under the Motor Vehicles Act is 9% per annum and here also no reason has been stated in the award and the judgment as to why it should be reduced to 6% per annum in this case.
8. Learned counsel appearing for the respondent Insurance Company fairly stated that according to the age of the deceased as found by the Tribunal, the multiplier of 17 is to be applied as provided in the Second Schedule to the Act. It is not disputed that though the Second Schedule to the Act in terms does not apply in the case since the claim is not made under Section 163-A of the Act, it serves as a guideline for the purpose of determination of compensation under Section 166 of the Act.
9. On consideration of the submissions made by the learned counsel for the parties and on perusal of the judgments of the Tribunal and the High Court, we find ample substance in the contention raised by Ms Suri that no reason has been stated by the Tribunal or the High Court for fixing 15 as the multiplier. While considering the question of just compensation payable in a case all relevant factors including the appropriate multiplier are to be kept in mind.
10. The position is well settled that the Second Schedule under Section 163-A to the Act which gives the amount of compensation to be determined for the purpose of claim under the section can be taken as a guideline while determining the compensation under Section 166 of the Act. In that view of the matter, there is no reason why the multiplier of 17 should not be taken as the appropriate multiplier in the case.
11. Coming to the question of interest this Court in Kaushnuma Begum v. New India Assurance Co. Ltd. (2001) 2 SCC 9 observed that 9% is the appropriate rate of interest to be awarded and that rate is being applied in motor accident compensation cases.
12. Therefore, the claimants will be entitled to the compensation applying 17 as the multiplier and interest at the rate of 9% per annum will be paid on the sum so calculated from the date of filing of the claim petition till realisation. The order of the Tribunal and the judgment of the High Court are modified to the extent as above.
13. The appeal is disposed of accordingly. There shall be no order as to costs.
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