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The Fatal Accidents Act, 1855
Kaushalya Devi & Ors vs Shri K.L. Bansal on 3 December, 1968
Smt Sarla Dixit & Anr vs Balwant Yadav & Ors on 29 February, 1996
National Insurance Co. Ltd vs Kaushalaya Devi & Ors on 13 May, 2008
Abati Bezbaruah vs Dy. Director General Geological ... on 14 February, 2003

User Queries
Delhi High Court
Bajaj Allianz Gen Insurance Co Ltd vs Gouri & Ors on 23 March, 2010

* IN THE HIGH COURT OF DELHI AT NEW DELHI

+ MAC.APP. 150/2010

Date of reserve: 23rd March, 2010

% Date of Decision:26th March, 2010

BAJAJ ALLIANZ GEN INSURANCE CO LTD ..... Appellant Through Mr. Atul Nanda, Ms. Rameeza

Hakeem, Mr. Gaurav Gupta, Mr. Sumeer

Sodhi, Ms. Malika Gahlot, Ms. Sugandha and Mr. Sanjay Bhardwaj, Advocates.

versus

GOURI & ORS ..... Respondents Through None.

CORAM :-

THE HON'BLE MR. JUSTICE J.R. MIDHA

1. Whether Reporters of Local papers may YES be allowed to see the Judgment?

2. To be referred to the Reporter or not? YES

3. Whether the judgment should be YES reported in the Digest?

JUDGMENT

CM No.4625/2010

1. Allowed, subject to just exceptions.

2. The application stands disposed of.

CM No.4624/2010

1. Allowed, subject to order under Section 170 of the Motor

Vehicles Act being filed within two weeks.

2. The application stands disposed of.

MAC.APP. No.150/2010 & CM No.4623/2010

1. The appellants have challenged the award of the Claims

Tribunal whereby compensation of Rs.9,22,200/- has been

awarded to the claimants/respondents No.1 to 4.

MAC.APP. 150/2010 Page 1 of 13

2. The accident dated 8th April, 2008 resulted in the death of

Shambhu. The deceased was survived by his widow, one

minor son and parents who filed the claim petition before the

Claims Tribunal.

3. The deceased was working as a driver. His driving

licence was proved as Ex.PW-3/E. According to the

claimants/respondents No.1 to 4, the deceased was earning

Rs.8,400/- per month. In the absence of any documentary

proof of the salary of the deceased, the Claims Tribunal took

minimum wages of Rs.4107/- in respect of a skilled worker.

Following the judgments of this Court in cases of Kanwar Devi

vs. Bansal Roadways, 2008 ACJ 2182, Lekh Raj Vs.

Suram Singh, 2007 ACT 2165, National Insurance

Company Limited vs. Renu Devi, III (2008) ACC 134 and

UPSRTC vs. Munni Devi, MAC.APP.No.310/2007 decided

on 28.7.2008, the Claims Tribunal took the judicial notice of

increase in minimum wages due to inflation and rise in price

index and took the average of minimum wages and its double

as income of the deceased [(Rs.4107 + Rs.8214 / 2 =

Rs.6161/-)].

4. The deceased was aged 31 years at the time of the

accident and was survived by four legal representatives.

Following the judgment of the Hon'ble Supreme Court in the

case of Sarla Verma Vs. DTC, 2009 (6) SCALE 129, the

Claims Tribunal deducted 1/4th towards the personal expenses

of the deceased and applied the multiplier of 16 to compute the

loss of dependency at Rs.8,87,184/- (rounded off to MAC.APP. 150/2010 Page 2 of 13 Rs.8,87,200/-). The Claims Tribunal awarded Rs.10,000/-

towards the loss of love and affection, Rs.10,000/- towards loss

of consortium, Rs.10,000/- towards loss of estate and

Rs.5,000/- towards funeral expenses. Total compensation

awarded is Rs.9,22,200/- along with interest at the rate of 7.5%

per annum.

5. The only ground urged by the learned counsel for the

appellant at the time of the hearing of the appeal is that the

Claims Tribunal erred in taking the judicial notice of increase in

minimum wages due to inflation and rise in price index. The

learned counsel for the appellant referred to and relied upon

the judgment of House of Lords in the case of Mallett Vs.

McMonagle, 1967, 2 W.L.R. 767 in which the House of Lords

held as under at page 772:-

"In my view, the only practical course for courts to adopt in assessing damages awarded under the Fatal Accidents Acts is to leave out of account the risk of further inflation, on the one hand, and the high interest rates which reflect the fear of it and capital appreciation of property and equities which are the

consequence of it, on the other hand. In estimating the amount of the annual

dependency in the future, had the deceased not been killed, money should be treated as retaining its value at the date of the 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 4 per cent to 5 per cent should be adopted."

6. The learned counsel for the appellant also referred to the

judgments of House of Lords in the case of Taylor Vs.

O'Connor, 1971 AC 115 and Lim Poh Choo Vs. Camden

and Islington Area Health Authority, (1980) AC 193. MAC.APP. 150/2010 Page 3 of 13 According to the learned counsel for the appellant, the actual

income of the deceased at the time of the accident should be

taken and no addition should be made for future inflation.

7. After considering the aforesaid judgments referred to and

relied upon by the learned counsel for the appellant, this Court

is of the prima facie view that:-

(i) Where the income of the deceased has been

proved, the future prospects are added to the income of

the deceased in terms of the judgment of the Hon'ble

Supreme Court in the case of Sarla Verma (supra),

where it was held as under:-

"Question (i) - addition to income for future prospects

20. Generally the actual income of the deceased less income tax should be the starting point for calculating the compensation. The question is whether actual income at the time of death should be taken as the income or whether any addition should be made by taking note of future prospects.

21. In Susamma Thomas, this Court held that the future prospects of advancement in life and career should also be sounded in terms of money to augment the multiplicand (annual contribution to the dependants); and that where the deceased had a stable job, the court can take note of the prospects of the future and it will be unreasonable to estimate the loss of dependency on the actual income of the deceased at the time of death. In that case, the salary of the deceased, aged 39 years at the time of death, was Rs. 1032/- per month. Having regard to the evidence in regard to future prospects, this Court was of the view that the higher estimate of monthly income could be made at Rs. 2000/- as gross income before deducting the personal living expenses.

MAC.APP. 150/2010 Page 4 of 13

22. The decision in Susamma Thomas was followed in Sarla Dixit v. Balwant Yadav where the deceased was getting a gross salary of Rs. 1543/- per month. Having regard to the future prospects of promotions and increases, this Court assumed that by the time he retired, his earning would have nearly doubled, say Rs. 3000/-. This Court took the average of the actual income at the time of death and the projected income if he had lived a normal life period, and determined the monthly income as Rs. 2200/- per month.

23. In Abati Bezbaruah v. Dy. Director General, Geological Survey of India, as against the actual salary income of Rs. 42,000/- per annum, (Rs. 3500/- per month) at the time of accident, this Court assumed the income as Rs. 45,000/- per annum, having regard to the future prospects and career advancement of the deceased who was 40 years of age.

24. In Susamma Thomas, this Court increased the income by nearly 100%, in Sarla Dixit, the income was increased only by 50% and in Abati Bezbaruah the income was increased by a mere 7%. In view of imponderables and uncertainties, we are in favour of adopting as a rule of thumb, an addition of 50% of actual salary to the actual salary income of the deceased towards future prospects, where the deceased had a permanent job and was below 40 years. [Where the annual income is in the taxable range, the words `actual salary' should be read as `actual salary less tax']. The addition should be only 30% if the age of the deceased was 40 to 50 years. There should be no addition, where the age of deceased is more than 50 years. Though the evidence may indicate a different percentage of increase, it is necessary to standardize the addition to avoid different yardsticks being applied or different methods of calculations being adopted. Where the deceased was

self-employed or was on a fixed salary (without provision for annual increments etc.), the courts will usually take only the actual income at the time of death. A departure therefrom should be made only in rare and exceptional cases involving special circumstances."

(ii) In the case of R.K. Malik Vs. Kiran Pal, 2009 (8)

Scale 451, the Hon'ble Supreme Court has MAC.APP. 150/2010 Page 5 of 13 awarded future prospects in respect of a minor

child. The findings of the Hon'ble Supreme Court in

paras 14 to 17, 31 and 32 are reproduced

hereunder:-

"14. For calculating the yearly loss of dependency the starting point is the wages being earned by the deceased, less his personal and living expenses. This provides a basic figure. Thereafter, effect is given to the future prospects of the deceased, inflation and general price rise that erodes value and the purchasing power of money. To the multiplicand so calculated, multiplier is to be applied. The multiplier is decided and determined on the basis of length of dependency, which must be estimated. This has to be necessarily

discounted for contingencies and uncertainties. Reference in this regard may be made to the judgments of this Court in the case of Sarla Dixit v. Balwant Yadav; Managing Director TNSTC Ltd. v. K.T. Bindu, AIR 2005 SC

4425; T.N. State Transport Corporation Ltd. v. S. Rajapriya, AIR 2005 SC 2985; New India Assurance Co. Ltd. v. Charlie, AIR 2005 SC 2157 and United India Insurance Co. Ltd. v. Patrica Jean Mahajan, [2002] 3 SCR 1176.

15. The real problem that arises in the cases of death of children is that they are not earning at the time of the accident. In most of the cases they were still studying and not working. However, under no stretch of imagination it can be said that the parents, who are appellants herein, have not suffered any pecuniary loss. In fact, Loss of dependency by its very nature is awarded for prospective or future loss. In this context, Lord Atkinson aptly observed in Taff Vale Rly. Co. v. Jenkins MANU/AG/0452/1912 as follows:

In case of the death of an infant, there may have been no actual pecuniary benefit derived by its parents during the child's lifetime. But this will not necessarily bar the parents' claim and prospective loss will found a valid claim provided that the parents establish that they had a reasonable expectation of pecuniary benefit if the child had lived.

MAC.APP. 150/2010 Page 6 of 13

16. Then, how does one calculate pecuniary compensation for loss of future earnings and loss of dependency of the parents, grandparents etc. in the case of non-working student? Under the Second Schedule of the Act in case of a non earning person, his income is notionally estimated at Rs. 15,000/- per annum. The Second Schedule is applicable to claim petitions filed under Section 163A of the Act. The Second Schedule provides for the multiplier to be applied in cases where the age of the victim was less than 15 years and between 15 years but not exceeding 20 years. Even when compensation is payable under Section 166 read with 168 of the Act, deviation from the structured formula as provided in the Second Schedule is not ordinarily permissible, except in exceptional cases. [see Abati Bezbaruah v. Dy. Director General, Geological Survey of India,

[2003]1SCR1229; United India Insurance Company Ltd. v. Patricia Jean Mahajan, [2002] 3SCR 1176 and UP State Road

Transport Corporation v. Trilok Chandra, (1996) 4SCC 362].

17. Reverting back to the factual position of the present case, the date of accident is

18.11.1997. Prior to this, the Second Schedule of the Act was already introduced w. e. f. 14.11.1994. Thus, the notional income

mentioned in the Second Schedule and the multiplier specified therein can form the basis for the pecuniary compensation for the loss of dependency in the present cases. No fact and reason was highlighted during the arguments why the Second Schedule should not apply in the present cases. The Second Schedule also provides for deduction of 1/3rd consideration towards expenses; which the victim would have incurred on himself if he had lived. As compensation for loss of dependency is to be calculated on the basis of notional income because the deceased was a child. It by necessary implication takes into account future prospects, inflation, price rise etc."

"31. A forceful submission has been made by the learned Counsels appearing for the claimants-appellants that both the Tribunal as well as the High Court failed to consider the claims of the appellants with regard to the future prospects of the children. It has been submitted that the evidence with regard to the same has been ignored by the Courts below. On perusal of the evidence on MAC.APP. 150/2010 Page 7 of 13 record, we find merit in such submission that the Courts below have overlooked that aspect of the matter while granting compensation. It is well settled legal principle that in addition to awarding compensation for pecuniary losses, compensation must also be granted with regard to the future prospects of the children. It is incumbent upon the Courts to consider the said aspect while awarding compensation. Reliance in this regard may be placed on the decisions rendered by this Court in General Manager, Kerala S. R. T. C. v. Susamma Thomas, AIR 1994 SC 1631; Sarla Dixit v. Balwant Yadav (1993) II LLJ 664 SC; and Lata Wadhwa case (supra).

32. In view of discussion made hereinbefore, it is quite clear the claim with regard to future prospect should have been be addressed by the courts below. While considering such claims, child's performance in school, the reputation of the school etc. might be taken into consideration. In the present case, records shows that the children were good in studies and studying in a reasonably good school. Naturally, their future prospect would be presumed to be good and bright. Since they were children, there is no yardstick to measure the loss of future prospects of these children. But as already noted, they were performing well in studies, natural consequence supposed to be a bright future. In the case of Lata Wadhwa (supra) and M. S. Grewal (supra), the Supreme Court recognised such future prospect as basis and factor to be considered. Therefore, denying compensation towards future prospects seems to be unjustified. Keeping this in background, facts and circumstances of the present case, and following the decision in Lata Wadhwa (supra) and M. S. Grewal (supra), we deem it appropriate to grant compensation of Rs. 75,000/- (which is roughly half of the amount given on account of pecuniary damages) as compensation for the future prospects of the children, to be paid to each claimant within one month of the date of this decision. We would like to clarify that this amount i.e. Rs. 75,000/- is over and above what has been awarded by the High Court."

(iii) In the case of Baby Radhika Gupta Vs. Oriental

Insurance Co. Ltd., Civil Appeal No.7736/2009

decided on 24th November, 2009, the Hon'ble

Supreme Court awarded Rs.2 lakh towards future

prospects in respect of death of a self-employed person.

MAC.APP. 150/2010 Page 8 of 13 (iv) Where the deceased was earning but the income of

the deceased is not proved by documentary evidence, the

income of the deceased was taken according to the

minimum wages under the Minimum Wages Act. The

minimum wages get doubled over a period of ten years

and judicial notice is taken of the increase in minimum

wages due to inflation and rise in price index and the

income of the deceased is taken by taking the average of

minimum wages and its double. The law in this regard is

well-settled in the following judgments of this Court:-

(a) Kanwar Devi vs. Bansal Roadways, 2008 ACJ 2182

This Court took judicial notice of the increase of

minimum wages to meet the price index and

inflation rate. The Court has taken the view that

the minimum wages get doubled over the period of

10 years and increase in minimum wages is not akin

to future prospects.

(b) National Insurance Company Limited vs. Renu Devi III (2008) ACC 134

This Court took the judicial notice of the fact that the

minimum wages get almost doubled over the period

of 10 years.

(c) UPSRTC vs. Munni Devi, MAC.APP. No.310/2007 decided on 28.07.2008

This Court followed the aforesaid judgments and

observed that the wages under the Minimum Wages

Act became almost more than double within a span MAC.APP. 150/2010 Page 9 of 13 of 10 years period.

(v). This Court as well as the Claims Tribunals are

consistently following the principles laid down in the

aforesaid judgments during the last more than a year and

the insurance companies have been satisfying the awards

passed on the above basis.

(vi). The three judgments of the House of Lords referred

to and relied upon by the learned counsel for the

appellant do not deal with the minimum wages. In all the

three cases, occupation as well as income of the

deceased was not in dispute. Where the occupation and

income of the deceased have been sufficiently proved,

the future prospects have to be added in terms of the

judgment of the Hon'ble Supreme Court in the case of

Sarla Verma Vs. DTC (supra). Where the income of the

deceased is not proved by sufficient evidence, the cases

would be governed by the judgment of the Hon'ble

Supreme Court in the case of R.K. Malik (supra) and of

this Court in the cases of Kanwar Devi vs. Bansal

Roadways (supra), National Insurance Company

Limited Vs. Renu Devi (supra) and UPSRTC Vs.

Munni Devi (supra). In either case, the judgments

referred to and relied upon by the learned counsel for the

appellant would have no relevance or applicability to the

present case.

MAC.APP. 150/2010 Page 10 of 13

8. The learned counsel for the appellant submits that this

case raises a substantial question of law as to the correctness

of the judgment of the Hon'ble Supreme Court in the case of

R.K. Malik (supra) and of this Court in the cases of Kanwar

Devi vs. Bansal Roadways (supra), Lekh Raj Vs. Suram

Singh (supra), National Insurance Company Limited vs.

Renu Devi (supra) and UPSRTC vs. Munni Devi (supra).

9. This Court is of the prima facie view that in view of the

clear precedents of the Hon'ble Supreme court and of this

Court, the English judgments referred to by the learned counsel

for the appellant have no application. However, notice is

being issued on insistence of the learned counsel for the

appellant that the English judgments are applicable and this

question raised needs examination, but considering that the

claimants would be compelled to contest this case, this Court

feels that the cost of litigation of the claimants should be

secured before issuing notice.

10. This Court is of the view that the appellant should deposit

a sum of Rs.10,000/- as costs with the Registrar General of this

Court. The statutory amount deposited by the appellant along

with this appeal as well as the amount now directed to be

deposited be kept in fixed deposit till disposal of this appeal. If

the appellant ultimately succeeds in this appeal, this amount

would be refunded back to the appellant along with interest

accrued thereon. However, in the event of this appeal being

dismissed, this amount and the statutory amount deposited by MAC.APP. 150/2010 Page 11 of 13 the appellant along with this appeal would be paid to the

claimants as litigation cost.

11. Subject to deposit of Rs.10,000/- by the appellant with the

Registrar General of this Court within two weeks, issue notice to

the claimants/respondents No.1 to 4 by ordinary process,

registered AD as well as Dasti, returnable on 23rd April, 2010.

Notice be also issued to counsel for claimants/respondents

No.1 to 4 who appeared before the Claims Tribunal. The

names and addresses of the counsel for claimants No.1 to 4 be

furnished on the process fee form.

12. In view of the observations made above, no case for grant

of ex-parte stay is made out. It is noted that out of the award

amount of Rs.9,22,200/-, only Rs.2,00,000/- is to be released to

the claimants at this stage and the remaining amount of

Rs.7,22,200/- would remain in fixed deposit (Rs.50,000/- is to

be released to respondent No.1, Rs.50,000/- to respondent

No.2 and Rs.1,00,000/- to respondent No.3 at this stage.

Rs.50,000/- would remain in fixed deposit in the name of

respondent No.1 for a period of three years; Rs.50,000/- in the

name of respondent No.2 for a period of three years;

Rs.4,22,000/- in the name of respondent No.3 for a period of

seven years and Rs.2,00,000/- would remain in the name of

respondent No.4 till he attains majority). The aforesaid fixed

deposits cannot be prematurely discharged and the claimants

cannot avail any loan, advance or withdrawal against the said

fixed deposits. In the event of appellant ultimately

succeeding in this appeal, the amount in dispute is sufficiently MAC.APP. 150/2010 Page 12 of 13 secured and, therefore, the stay of the execution of the

impugned award is not warranted.

13. It is clarified that aforesaid observations are prima facie

and shall not be construed as expression on the merits of the

case.

14. Ms. Manjusha Wadhwa, Advocate is appointed as amicus

curiae to assist this Court in this matter.

15. Lower court record be requisitioned before the next date

of hearing.

16. Copy of the order be given Dasti to learned counsel for

the appellant and the learned amicus curiae under the

signature of the Court Master.

J.R. MIDHA, J

MARCH 26, 2010

s.pal

MAC.APP. 150/2010 Page 13 of 13