Govind Yadav vs The New India Insurance Co.Ltd

Govind Yadav .......Appellant

Versus

The New India Insurance Company Limited .......Respondents

J U D G M E N T

G.S. Singhvi, J.

1. Leave granted.

2. The appellant has approached this Court because he is not fully satisfied

with the enhancement granted by the High Court in the amount of

compensation awarded by 9th Additional Motor Accident Claims Tribunal,

Jabalpur (for short, `the Tribunal').

3. In the petition filed by him under Section 166 of the Motor Vehicles Act,

1988 (for short, `the Act'), which came to be registered as MVC No.59 of 2005,

the appellant prayed for award of compensation to the tune of Rs.10,70,000/-

2 with interest @ 18%. The appellant's claim was founded on the following

assertions:

(i) That he had suffered grievous injuries in an accident which

occurred on 14.11.2004 when the mini bus in which he was

working as Helper overturned due to rash and negligent driving by

the driver Shri Abdul Ahmad Musalman.

(ii) That he was initially treated at Government Hospital, Seoni from

where he was shifted to Nagpur Medical College. He remained in

the hospital from 14.11.2004 to 2.1.2005 and 15.2.2005 to

20.3.2005. Due to infection, his left leg was amputated above the

knee. Thereafter, he was treated at National Hospital, Jabalpur.

(iii) That at the time of accident his age was about 24 years and he was

drawing monthly salary of Rs.4,000/-.

(iv) That on account of amputation of leg, he lost the job and his future

was bleak.

4. The owner and the driver of the vehicle did not contest the claim of the

appellant, but the respondent insurance company did so. In the written

statement filed on behalf of the respondent, it was pleaded that the accident was

not caused due to rash and negligent driving of the mini bus and, in any case,

3

the insurer was not liable to pay compensation because the driver of the mini

bus did not have valid driving licence.

5. After considering the pleadings of the parties and evidence produced by

them the Tribunal held that the accident was caused due to rash and negligent

driving of the mini bus by its driver. However, the Tribunal did not accept the

appellant's version that he was working as a Helper and was getting salary of

Rs.4,000/- by observing that he had not produced any evidence to prove the

factum of employment and monthly emoluments. The Tribunal then referred to

the Second Schedule of the Act and determined the amount of compensation by

assuming the appellant's income to be Rs.15,000/- per annum. The Tribunal

was of the view that due to 70% disability, the appellant would suffer loss of

income to the tune of Rs.10,500/- per annum. The Tribunal then applied the

multiplier of 17 and held that the appellant is entitled to Rs.1,78,500/- towards

loss of future income. The compensation awarded by the Tribunal under other

heads was as under:

1) Mental agony and physical pain caused due to

amputation of the leg and other injuries Rs.25000/-

2) Medical expenses Rs. 3300/-

3) Expenditure incurred on nutritious food and

transportation during treatment Rs.10000/-

4) Loss of earning due to accident and entertainment

from normal earning Rs.10000/-

5) Cost of artificial leg Rs.30000/-

4

The Tribunal also awarded interest at the rate of 6% on the total compensation

of Rs.2,56,800/-.

6. The appeal preferred by the appellant against the award of the Tribunal

was disposed of by the learned Single Judge of the High Court by granting an

enhancement of Rs.50,000/-. In the opinion of the learned Single Judge, the

income of the appellant, who was working as Cleaner at the time of accident

could be taken as Rs.2000/- per month i.e. Rs.24,000/- per annum and the loss

of income due to 70% permanent disability would be Rs.16,800/- per annum.

He also applied the multiplier of 17 and held that the appellant is entitled to

compensation of Rs.2,85,600/- towards future loss of income. The learned

Single Judge added Rs.20,400/- towards conveyance charges, special diet and

medical expenses and concluded that the appellant is entitled to total

compensation of Rs.3,06,000/- with interest at the rate of 7% per annum from

the date of application.

7. Shri Rajnish K. Singh, learned counsel for the appellant, argued that the

compensation awarded by the Tribunal was wholly inadequate and the High

Court committed serious error by not granting appropriate enhancement

keeping in view the fact that on account of the permanent disability suffered by

5

him, the appellant will not be able to get suitable employment and lead normal

life. He further argued that the Tribunal and the High Court gravely erred in

not awarding just and reasonable compensation for future treatment including

cost of artificial leg which will require periodical replacement.

8. Shri S.L. Gupta, learned counsel for the respondent, supported the

impugned judgment and argued that the appellant has failed to make out a case

for further enhancement in amount of compensation.

9. We have considered respective submissions. This Court has, from time

to time, expressed concern over the increasing number of motor accidents and

pendency of large number of cases involving adjudication of claims made by

the legal representatives of the deceased and also by those who suffer injuries

and disabilities of various types as a result of accidents. The statistics compiled

by Transport Research Wing of Ministry of Road Transport and Highways,

New Delhi show that between 2004 and 2008, more than 5,00,000 people lost

their lives and about 22,60,000 people were injured. The table containing the

details of road accidents in India (2004-2008) as published in the report titled

"Accidental Deaths and Suicides in India, 2008" by National Crime Records

Bureau, Ministry of Home Affairs is reproduced below:

6 Sl. Year Road % Persons % Persons % No. of % Rate

No Accidents variation injured variation killed (in variation vehicles (in variation of

(in over (in over nos.) over thousands) over Deaths

thousand) previous thousands) previous previous previous Per

year year year year Thousand

Vehicles

(Col.7/

Col.9)

(1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11)

1 2004 361.3 7.4 413.9 8.1 91,376 8.2 66,289* - 1.4

2 2005 390.4 8.0 447.9 8.2 98,254 7.5 66,289* - 1.5

3 2006 394.4 1.0 452.9 1.1 1,05,725 7.6 72,718@ 9.7 1.5

4 2007 418.6 6.1 465.3 2.7 1,14,590 8.4 72,718# - 1.6

5 2008 415.8 -6.7 469.1 0.8 1,18,239 3.2 89,618@ 23.2 1.3

The above noted figures do not include the accidents which are not

reported to the police and other governmental agencies.

10. The personal sufferings of the survivors and disabled persons are

manifold. Some time they can be measured in terms of money but most of the

times it is not possible to do so. If an individual is permanently disabled in an

accident, the cost of his medical treatment and care is likely to be very high. In

cases involving total or partial disablement, the term `compensation' used in

Section 166 of the Motor Vehicles Act, 1988 (for short, `the Act') would

include not only the expenses incurred for immediate treatment, but also the

amount likely to be incurred for future medical treatment/care necessary for a

particular injury or disability caused by an accident. A very large number of

people involved in motor accidents are pedestrians, children, women and

7

illiterate persons. Majority of them cannot, due to sheer ignorance, poverty and

other disabilities, engage competent lawyers for proving negligence of the

wrongdoer in adequate measure. The insurance companies with whom the

vehicles involved in the accident are insured usually have battery of lawyers on

their panel. They contest the claim petitions by raising all possible technical

objections for ensuring that their clients are either completely absolved or their

liabilities minimized. This results in prolonging the proceedings before the

Tribunal. Sometimes the delay and litigation expenses' make the award passed

by the Tribunal and even by the High Court (in appeal) meaningless. It is,

therefore, imperative that the officers, who preside over the Motor Accident

Claims Tribunal adopt a proactive approach and ensure that the claims filed

under Sections 166 of the Act are disposed of with required urgency and

compensation is awarded to the victims of the accident and/or their legal

representatives in adequate measure. The amount of compensation in such

cases should invariably include pecuniary and non-pecuniary damages. In R.D.

Hattangadi v. Pest Control (India) Private Limited (1995) 1 SCC 551, this Court

while dealing with a case involving claim of compensation under the Motor

Vehicles Act, 1939, referred to the judgment of the Court of Appeal in Ward v.

James (1965) 1 All ER 563, Halsbury's Laws of England, 4th Edition, Volume

12 (page 446) and observed:

8 "Broadly speaking while fixing an amount of compensation

payable to a victim of an accident, the damages have to be

assessed separately as pecuniary damages and special damages.

Pecuniary damages are those which the victim has actually

incurred and which are capable of being calculated in terms of

money; whereas non-pecuniary damages are those which are

incapable of being assessed by arithmetical calculations. In

order to appreciate two concepts pecuniary damages may

include expenses incurred by the claimant: (i) medical

attendance; (ii) loss of earning of profit up to the date of trial;

(iii) other material loss. So far non-pecuniary damages are

concerned, they may include (i) damages for mental and

physical shock, pain and suffering, already suffered or likely to

be suffered in future; (ii) damages to compensate for the loss of

amenities of life which may include a variety of matters i.e. on

account of injury the claimant may not be able to walk, run or

sit; (iii) damages for the loss of expectation of life, i.e., on

account of injury the normal longevity of the person concerned

is shortened; (iv) inconvenience, hardship, discomfort,

disappointment, frustration and mental stress in life."

In the same case, the Court further observed:

"In its very nature whenever a tribunal or a court is required to

fix the amount of compensation in cases of accident, it involves

some guesswork, some hypothetical consideration, some

amount of sympathy linked with the nature of the disability

caused. But all the aforesaid elements have to be viewed with

objective standards."

11. In Nizam's Institute of Medical Sciences v. Prasanth S. Dhananka (2009) 6

SCC 1, the three-Judge Bench was dealing with a case arising out of the

complaint filed under the Consumer Protection Act, 1986. While enhancing the

compensation awarded by the National Consumer Disputes Redressal Commission

9

from Rs.15 lakhs to Rs.1 crore, the Bench made the following observations which

can appropriately be applied for deciding the petitions filed under Section 166 of

the Act:

"We must emphasise that the court has to strike a balance between the

inflated and unreasonable demands of a victim and the equally

untenable claim of the opposite party saying that nothing is payable.

Sympathy for the victim does not, and should not, come in the way of

making a correct assessment, but if a case is made out, the court must

not be chary of awarding adequate compensation. The "adequate

compensation" that we speak of, must to some extent, be a rule of

thumb measure, and as a balance has to be struck, it would be difficult

to satisfy all the parties concerned.

At the same time we often find that a person injured in an accident

leaves his family in greater distress vis-`-vis a family in a case of

death. In the latter case, the initial shock gives way to a feeling of

resignation and acceptance, and in time, compels the family to move

on. The case of an injured and disabled person is, however, more

pitiable and the feeling of hurt, helplessness, despair and often

destitution enures every day. The support that is needed by a severely

handicapped person comes at an enormous price, physical, financial

and emotional, not only on the victim but even more so on his family

and attendants and the stress saps their energy and destroys their

equanimity."

(emphasis supplied)

12. In Reshma Kumari v. Madan Mohan (2009) 13 SCC 422, this Court

reiterated that the compensation awarded under the Act should be just and also

identified the factors which should be kept in mind while determining the amount

of compensation. The relevant portions of the judgment are extracted below:

1 "The compensation which is required to be determined must be just.

While the claimants are required to be compensated for the loss of

their dependency, the same should not be considered to be a windfall.

Unjust enrichment should be discouraged. This Court cannot also lose

sight of the fact that in given cases, as for example death of the only

son to a mother, she can never be compensated in monetary terms.

The question as to the methodology required to be applied for

determination of compensation as regards prospective loss of future

earnings, however, as far as possible should be based on certain

principles. A person may have a bright future prospect; he might have

become eligible to promotion immediately; there might have been

chances of an immediate pay revision, whereas in another (sic

situation) the nature of employment was such that he might not have

continued in service; his chance of promotion, having regard to the

nature of employment may be distant or remote. It is, therefore,

difficult for any court to lay down rigid tests which should be applied

in all situations. There are divergent views. In some cases it has been

suggested that some sort of hypotheses or guess work may be

inevitable. That may be so.

In the Indian context several other factors should be taken into

consideration including education of the dependants and the nature of

job. In the wake of changed societal conditions and global scenario,

future prospects may have to be taken into consideration not only

having regard to the status of the employee, his educational

qualification; his past performance but also other relevant factors,

namely, the higher salaries and perks which are being offered by the

private companies these days. In fact while determining the

m ultiplicand this Court in O riental Insurance Co. Ltd. v. Jas huben

held that even dearness allowance and perks with regard thereto from

which the family would have derived monthly benefit, must be taken

into consideration.

One of the incidental issues which has also to be taken into

consideration is inflation. Is the practice of taking inflation into

consideration wholly incorrect? Unfortunately, unlike other

developed countries in India there has been no scientific study. It is

expected that with the rising inflation the rate of interest would go up.

1

In India it does not happen. It, therefore, may be a relevant factor

which may be taken into consideration for determining the actual

ground reality. No hard-and-fast rule, however, can be laid down

therefor."

(emphasis supplied)

13. In Arvind Kumar Mishra v. New India Assurance Company Limited (2010)

10 SCC 254, the Court considered the plea for enhancement of compensation

made by the appellant, who was a student of final year of engineering and had

suffered 70% disablement in a motor accident. After noticing factual matrix of the

case, the Court observed:

"We do not intend to review in detail state of authorities in relation

to assessment of all damages for personal injury. Suffice it to say

that the basis of assessment of all damages for personal injury is

compensation. The whole idea is to put the claimant in the same

position as he was insofar as money can. Perfect compensation is

hardly possible but one has to keep in mind that the victim has done

no wrong; he has suffered at the hands of the wrongdoer and the

court must take care to give him full and fair compensation for that

he had suffered."

(emphasis supplied)

14. In Raj Kumar v. Ajay Kumar (2011) 1 SCC 343, the Court considered some

of the precedents and held:

"The provision of the Motor Vehicles Act, 1988 ("the Act", for short)

makes it clear that the award must be just, which means that

compensation should, to the extent possible, fully and adequately

restore the claimant to the position prior to the accident. The object of

awarding damages is to make good the loss suffered as a result of

1

wrong done as far as money can do so, in a fair, reasonable and

equitable manner. The court or the Tribunal shall have to assess the

damages objectively and exclude from consideration any speculation

or fancy, though some conjecture with reference to the nature of

disability and its consequences, is inevitable. A person is not only to

be compensated for the physical injury, but also for the loss which he

suffered as a result of such injury. This means that he is to be

compensated for his inability to lead a full life, his inability to enjoy

those normal amenities which he would have enjoyed but for the

injuries, and his inability to earn as much as he used to earn or could

have earned.

The heads under which compensation is awarded in personal injury

cases are the following:

Pecuniary damages (Special damages)

(i) Expenses relating to treatment, hospitalisation, medicines,

transportation, nourishing food, and miscellaneous expenditure.

(ii) Loss of earnings (and other gains) which the injured would

have made had he not been injured, comprising:

(a) Loss of earning during the period of treatment;

(b) Loss of future earnings on account of permanent disability.

(iii) Future medical expenses.

Non-pecuniary damages (General damages)

(iv) Damages for pain, suffering and trauma as a consequence of

the injuries.

(v) Loss of amenities (and/or loss of prospects of marriage).

(vi) Loss of expectation of life (shortening of normal longevity).

In routine personal injury cases, compensation will be awarded

only under heads (i), (ii)(a) and (iv). It is only in serious cases of

injury, where there is specific medical evidence corroborating the

evidence of the claimant, that compensation will be granted under

any of the heads (ii)(b), (iii), (v) and (vi) relating to loss of future

earnings on account of permanent disability, future medical

expenses, loss of amenities (and/or loss of prospects of marriage)

and loss of expectation of life."

(emphasis supplied)

1

15. In our view, the principles laid down in Arvind Kumar Mishra v. New

India Assurance Company Ltd. (supra) and Raj Kumar v. Ajay Kumar (supra)

must be followed by all the Tribunals and the High Courts in determining the

quantum of compensation payable to the victims of accident, who are disabled

either permanently or temporarily. If the victim of the accident suffers

permanent disability, then efforts should always be made to award adequate

compensation not only for the physical injury and treatment, but also for the

loss of earning and his inability to lead a normal life and enjoy amenities, which

he would have enjoyed but for the disability caused due to the accident.

16. We shall now consider whether the compensation awarded to the

appellant is just and reasonable or he is entitled to enhanced compensation

under any of the following heads:

(i) Loss of earning and other gains due to the amputation of leg.

(ii) Loss of future earnings on account of permanent disability.

(iii) Future medical expenses.

(iv) Compensation for pain, suffering and trauma caused due to

the amputation of leg.

(v) Loss of amenities including loss of the prospects of marriage.

1

(vi) Loss of expectation of life.

17. A brief recapitulation of the facts shows that in the petition filed by him

for award of compensation, the appellant had pleaded that at the time of

accident he was working as Helper and was getting salary of Rs.4,000/- per

month. The Tribunal discarded his claim on the premise that no evidence was

produced by him to prove the factum of employment and payment of salary by

the employer. The Tribunal then proceeded to determine the amount of

compensation in lieu of loss of earning by assuming the appellant's income to

be Rs.15,000/- per annum. On his part, the learned Single Judge of the High

Court assumed that while working as a Cleaner, the appellant may have been

earning Rs.2,000/- per month and accordingly assessed the compensation under

the first head. Unfortunately, both the Tribunal and the High Court overlooked

that at the relevant time minimum wages payable to a worker were Rs.3,000/-

per month. Therefore, in the absence of other cogent evidence, the Tribunal

and the High Court should have determined the amount of compensation in lieu

of loss of earning by taking the appellant's notional annual income as

Rs.36,000/- and the loss of earning on account of 70% permanent disability as

Rs.25,200/- per annum.

1 The application of multiplier of 17 by the Tribunal, which was approved

by the High Court will have to be treated as erroneous in view of the judgment

in Sarla Verma v. Delhi Transport Corporation (2009) 6 SCC 121. In para 42

of that judgment, the Court has indicated that if the age of the victim of an

accident is 24 years, then the appropriate multiplier would be 18. By applying

that multiplier, we hold that the compensation payable to the appellant in lieu of

the loss of earning would be Rs.4,53,600/-.

18. The award made by the Tribunal for future medical expenses was wholly

inadequate. In Nagappa v. Gurudayal Singh (2003) 2 SCC 274, this Court

considered whether it was permissible to award compensation in installments or

recurring compensation to meet the future medical expenses of the victim. After

noticing the judgment of M. Jagannadha Rao, J. (as he then was) in P.

Satyanarayana v. I. Babu Rajendra Prasad 1988 ACJ 88 (AP), the judgment of the

Division Bench of the Kerala High Court in Valiyakathodi Mohd. Koya v.

Ayyappankadu Ramamoorthi Mohan 1991 ACJ 140 (Kerala), this Court observed:

"In this view of the matter, in our view, it would be difficult to

hold that for future medical expenses which are required to be

incurred by a victim, fresh award could be passed. However, for

such medical treatment, the court has to arrive at a reasonable

estimate on the basis of the evidence brought on record. In the

present case, it has been pointed out that for replacing the

artificial leg every two to three years, the appellant would be

1

required to have some sort of operation and also change the

artificial leg. At that time, the estimated expenses for this were

Rs 18,000 and the High Court has awarded the said amount. For

change of the artificial leg every two or three years no

compensation is awarded. Considering this aspect, if Rs one

lakh is awarded as an additional compensation, the appellant

would be in a position to meet the said expenses from the

interest of the said amount."

After the aforesaid judgment, the cost of living as also the cost of artificial

limbs and expenses likely to be incurred for periodical replacement of such

limb has substantially increased. Therefore, it will be just and proper to award

a sum of Rs.2,00,000/- to the appellant for future treatment. If this amount is

deposited in fixed deposit, the interest accruing on it will take care of the cost of

artificial limb, fees of the doctor and other ancillary expenses.

19. The compensation awarded by the Tribunal for pain, suffering and

trauma caused due to the amputation of leg was meager. It is not in dispute that

the appellant had remained in the hospital for a period of over three months. It

is not possible for the Tribunals and the Courts to make a precise assessment of

the pain and trauma suffered by a person whose limb is amputated as a result of

accident. Even if the victim of accident gets artificial limb, he will suffer from

different kinds of handicaps and social stigma throughout his life. Therefore, in

all such cases, the Tribunals and the Courts should make a broad guess for the

1

purpose of fixing the amount of compensation. Admittedly, at the time of

accident, the appellant was a young man of 24 years. For the remaining life, he

will suffer the trauma of not being able to do his normal work. Therefore, we

feel that ends of justice will be met by awarding him a sum of Rs.1,50,000/- in

lieu of pain, suffering and trauma caused due to the amputation of leg.

20. The compensation awarded by the Tribunal for the loss of amenities was

also meager. It can only be a matter of imagination as to how the appellant will

have to live for the rest of life with one artificial leg. The appellant can be

expected to live for at least 50 years. During this period he will not be able to

live like normal human being and will not be able to enjoy the life. The

prospects of his marriage have considerably reduced. Therefore, it would be

just and reasonable to award him a sum of Rs.1,50,000/- for the loss of

amenities and enjoyment of life.

21. In the result, the appeal is allowed. The impugned judgment and the

award of the Tribunal are set aside. It is declared that the appellant is entitled to

total compensation of Rs.9,53,600/- with interest @ 7% per annum from the

date of filing the claim petition till the date of realization. The respondent is

directed to pay the balance amount of compensation with interest within a

1

period of three months from today in the form of a Bank Draft prepared in the

name of the appellant.

....................................J.

(G.S. Singhvi)

....................................J.

(Surinder Singh Nijjar)

New Delhi,

November 01, 2011.