New India Assurance Company Ltd. v. Shanti Pathak (Smt) And Others, Supreme Court Of India, Judgment, Law, casemine.com

Factual and Procedural Background

Two sets of civil appeals were decided together:

Civil Appeals Nos. 2926-27 of 2007 arose from an accident dated 11-11-2002 in which a 25-year-old man, Hem Pathak, died when the jeep in which he was travelling collided with an insured truck. His parents filed a claim before the Motor Accidents Claims Tribunal, Nainital, which awarded them Rs 4,10,000 applying a multiplier of 17. The Division Bench of the Uttaranchal High Court dismissed the insurer’s appeal under Section 173 of the Motor Vehicles Act, 1988, and the insurer came before the Supreme Court.

Civil Appeal No. 2928 of 2007 concerned a separate accident in which the deceased was 52 years old. The Tribunal had applied a multiplier of 13, a figure the High Court upheld. The insurer again appealed to the Supreme Court.

Legal Issues Presented

Whether, for determining the appropriate multiplier under the Second Schedule to the Motor Vehicles Act, the relevant age is that of the deceased or that of the dependent claimants.

Whether the compensation awarded by the Tribunal (as affirmed by the High Court) was excessive and required recalculation.

In the first set of appeals, whether contributory negligence and the absence of formal permission to the insurer to contest the claim should affect liability.

Arguments of the Parties

Appellant Insurer’s Arguments

The multiplier must be selected with reference to the ages of the dependent parents (both over 65), not the 25-year-old deceased, which would substantially lower the compensation.

No permission had been granted to the insurer to contest the claim on merits before the Tribunal; hence, liability findings were legally flawed.

The accident was a case of contributory negligence, warranting a reduction in the award.

The opinion does not detail the respondents’ specific counter-arguments.

Court's Reasoning and Analysis

The Supreme Court accepted the basic income figures adopted by the Tribunal in both matters but disagreed with the multipliers applied.

CAs Nos. 2926-27 of 2007: Because both parents were around 65 years old, the Court considered a multiplier of 5 appropriate, rejecting the multiplier of 17 used below. With the monthly contribution fixed at Rs 3,500, the Court calculated total compensation at Rs 2,10,000. It found no basis for the insurer’s pleas on contributory negligence or lack of permission, and affirmed liability.

CA No. 2928 of 2007: Relying on the post-mortem report that placed the deceased’s age at 52 years, the Court ruled that the correct multiplier was 8, not 13. Taking the monthly income at Rs 11,684 and deducting one-third for personal expenses, the annual loss of dependency was fixed at Rs 93,000. Multiplying by 8 yielded Rs 7,44,000; adding Rs 29,500 awarded under other heads produced a total of Rs 7,73,500.

The rate of interest (7.5% p.a. in the first appeals and the Tribunal’s rate in the second) was left untouched. Payments already made were ordered to be adjusted.

Holding and Implications

CAs Nos. 2926-27 of 2007 DISPOSED OF: Compensation reduced to Rs 2,10,000 with 7.5% interest from the date of the application, subject to adjustment of sums already paid.

CA No. 2928 of 2007 ALLOWED IN PART: Compensation recalculated at Rs 7,73,500 with interest as previously ordered; earlier payments to be set off.

The judgments clarify that the age of dependants can be decisive in selecting the multiplier when they are significantly older than the deceased, but the decision is confined to the facts and does not purport to lay down a new precedent.

New India Assurance Company Ltd. v. Shanti Pathak (Smt) And Others

Dr. Arijit Pasayat, J.—

CAs Nos. 2926-27 of 2007 @ SLPs (C) Nos. 20101-02 of 2005

1. Leave granted.

2. Challenge in these appeals is to the legality of the judgment rendered by a Division Bench of the Uttaranchal High Court dismissing the appeal filed before it under Section 173 of the Motor Vehicles Act, 1988 (in short “the Act”). The Motor Accidents Claims Tribunal/Addl. District Judge, Fast Track Court, Nainital (hereinafter referred to as “the Tribunal”) awarded a sum of Rs 4,10,000 in favour of Respondents 1 and 2 (hereinafter referred to as “the claimants”).

3. The background facts which are almost undisputed essentially are as follows:

On 11-11-2002 Hem Pathak (hereinafter referred to as “the deceased”) who was at the relevant point of time 25 years of age lost his life in a vehicular accident. He was travelling in Jeep No. UP 03 0805. The said jeep had a collision with truck bearing No. UP 20 A 8491. Since the truck was the subject-matter of insurance, the parents of the deceased filed a claim petition. The Tribunal as noted above awarded Rs 4,10,000. Since the age of the deceased was 25 years, multiplier of 17 was applied. The Tribunal referred to various decisions of this Court for quantifying the amount as Rs 4,10,000.

4. Before the High Court it was contended by the appellant that the multiplier to be adopted is to be determined on the age of the claimants and not on the age of the deceased, which was to be taken as the basis for working out the compensation. The High Court did not find any substance in this plea. It was held that no permission had been granted to the insurer to contest its claim. It was submitted that it is a clear case of contributory negligence and the quantum of compensation should be suitably divided. The High Court did not find any substance in this plea also.

5. In support of the appeal, learned counsel for the appellant submitted that both the trial court and the High Court failed to notice the age of the claimants which was relevant and not the age of the deceased.

6. Considering the income that was taken, the foundation for working out the compensation cannot be faulted with. The monthly contribution was fixed at Rs 3500. In the normal course we would have remitted the matter to the High Court for consideration on the materials placed before it. But considering the fact that the matter is pending since long, it would be appropriate to take the multiplier of 5 considering the fact that the mother of the deceased was about 65 years at the time of the accident and age of the father was more than 65 years. Taking into account the monthly contribution at Rs 3500 as held by the Tribunal and the High Court, the entitlement of the claim would be Rs 2,10,000. The same shall bear interest @ 7.5% p.a from the date of the application for compensation. Payment already made shall be adjusted from the amount due.

7. The appeal is disposed of accordingly with no order as to costs.

Civil Appeal No. 2928 of 2007 @ SLP (C) No. 3957 of 2006

8. In the instant case the age of the deceased was 52 years as per the post-mortem report, and the multiplier thus has to be 8 instead of 13 as adopted by the Tribunal and upheld by the High Court. The rate of interest awarded does not need any interference. The monthly income has to be taken as Rs 11,684 and one-third has to be deducted therefrom for personal expenses. Thus, the annual loss of income comes to Rs 93,939. The same is rounded to Rs 93,000. The entitlement for loss of income comes to Rs 7,44,000. The other amounts awarded by the Tribunal totalling Rs 29,500 remain unaltered. Thus, the claimant is entitled to Rs 7,73,500 along with interest at the rate fixed by the Tribunal. The payment already made shall be adjusted.

9. The appeals are allowed to the aforesaid extent with no order as to costs.

Civil Appeals Nos. 2926-27 of 2007 with No. 2928 of 2007, decided on July 10, 2007

New India Assurance Company Ltd. v. Shanti Pathak (Smt) And Others

Factual and Procedural Background

Legal Issues Presented

Arguments of the Parties

Appellant Insurer’s Arguments

Table of Precedents Cited

Court's Reasoning and Analysis

Holding and Implications

New India Assurance Company Ltd. v. Shanti Pathak (Smt) And Others

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