Oriental Insurance Co. Ltd Vs Smt. Sita Devi & Ors.

Allahabad High Court (Division Bench (DB)- Two Judge)

AMALGAMATION ORDER, 820 of 2015, Judgment Date: Apr 01, 2015

F.A.F.O. No. 820 of 2015
Oriental Insurance Co. Ltd. ------- Appellant
Versus
Smt. Sita Devi & Ors. ------- Respondents
Hon'ble Krishna Murari, J.
Hon'ble Pratyush Kumar, J.
(Delivered by Hon'ble Krishna Murari, J.)
This FAFO filed by the appellant Insurance company is directed against the
judgment and award dated 15.01.2015 passed by Motor Vehicles Accident Claims
Tribunal/ Additional District & Sessions Judge, Court no. 19, Allahabad, in M.A.C.
No. 770 of 2006 awarding a sum of Rs.9,23,140/- along with simple interest at the
rate of 7% per annum from the date of filing of the claim petition till the date of
actual payment.
The application claiming compensation to the tune of Rs.12,50,000/- was
made by the claimant-respondents on the allegations that on 19.06.1997, Shri
Jagnnath Yadav, predecessor-in-interest of the claimant-respondents was travelling
from Phulpur to Allahabad by Commandar Jeep No. UP70 G 1039, and at about 9.30
p.m., when it reached near P.S. Tharwai, a Tata 407 Bus bearing no. UP70 B 9441,
which was being driven rashly and negligently, hit the Commandar Jeep, in which
Jagannath Yadav and other occupants received serious injuries and Jagnnath Yadav
expired during his treatment at the Gandhi Memorial Associate Hospital, Lucknow. A
First Information Report of the accident was also lodged with P.S. Tharwai, which
was registered as Case Crime No. 191/97 under Sections 279, 337 and 338 I.P.C.
and later on after death of Jagannath Yadav, Section 304A I.P.C. was also added. It
was further pleaded that deceased Jagannath Yadav was employed as Constable in
the U.P. police and was aged about 38 years and his monthly salary was Rs.4104/-.
Both the vehicles involved in the accident were insured by the appellant-Oriental
Insurance Company Ltd.
After considering the evidence adduced by the parties, oral as well as
documentary, Tribunal returned a finding that the deceased Jagannath Yadav was in
a permanent job as a police constable in U.P. Police and his age was less than 40
years and at the time of death, his monthly income was Rs.4509/-. The Tribunal also
added 50% of the income towards future prospects for determining the
compensation as the deceased was aged less than 40 years and applying a multiplier
of 15, determined a sum of Rs.9,13,140/-. A sum of Rs.5000/- was awarded towards
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material loss and Rs.5000/- towards funeral etc. In this manner, a total
compensation of Rs.9,23,140/- was awarded along with 7% per annum from the
date of filing the claim petition till the date of actual payment.
Learned counsel for the appellant contends that 50% of the salary has
wrongly been added for future prospects in determining the compensation. It has
also been submitted that Tribunal has erred in allowing the future prospect,
inasmuch as Rule 220A of Motor Vehicles Rules came into force on 26.09.2011 while
the accident took place in 1996. It is further contended that the Rule is prospective
and shall apply only in cases, where the accident took place on or after 26.09.2011
and not where the accident took place before the said date. It is next submitted that
since the insurance company was subsequently impleaded in the proceedings, as
such, the Tribunal is not justified in awarding interest to the claimants with effect
from the date of filing of the claim petition.
We have considered the arguments advanced by the learned counsel for the
appellant and perused the record.
In the case of Smt. Sarla Varma & Ors. Vs. Delhi Transport
Corporation & Anr., 2009 (2) TAC 677, the Hon'ble Apex Court has held as
under.
“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.”
The ratio of the decision in the case of Smt. Sarla Varma (supra) was
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further analysed by the Hon'ble Apex Court in the subsequent decisions rendered in
the cases of K.R. Madhusudhan & Ors. Vs. Administrative Officer & Anr.,
(2011) 4 SCC 689, Santosh Devi Vs. National Insurance Company
Limited & Ors., (2012) 6 SCC 421 and Rajesh & Ors. Vs. Rajbir Singh &
Ors., (2013) 9 SCC 54 and the principles regarding addition to be made to the
actual income of the deceased at the time of his death towards future prospect was
even made applicable to the persons, who are self employed or engaged on fixed
wages. It has been held that, in case of self employed persons or persons with fixed
wages, the actual income of the deceased must be analysed for the purpose of
computation of compensation by 50%, where his age was below 40, by 30% where
he belonged to age of 40-50 and 15% where he was between the age of 50-60. No
such addition/enhancement was permissible where the deceased, in such cases,
beyond the age of 60 years.
In the present case, the deceased was aged 38 years and was in a permanent
job working as a Constable in Police force. There can be no manner of doubt that by
the passage of time, till he attained the age of superannuation, his salary would
have increased. In view of the law laid down by the Hon'ble Apex Court in the case
of Sarla Varma (supra), the Tribunal cannot be said to be unjustified by adding
50% of his wages towards future prospects and, thus, the first argument advanced
by the learned counsel for the appellant has no force and is liable to be rejected.
Now coming to the question of grant of interest by the Tribunal, it may be
pointed out that the insurer indemnifies the insured towards third party claim. The
liability is that of the owner of the offending vehicle, who has been indemnified by
the insurer, and since the claimant is entitled to grant of interest from the date of
making of the claim, which is to be paid by the owner of the offending vehicle, who
has to be indemnified by the insurance company vide Section 149 of the Motor
Vehicles Act, 1988, the mere fact that the insurance company was impleaded in the
proceedings at a subsequent stage, will have no effect whatsoever on the right of
the claimant for being awarded interest from the date of making of the claim.
Under Section 171 of the Motor Vehicles Act, the Tribunal is empowered to
award, in addition to the amount of compensation, simple interest at such rate and
from such date, not earlier than the date of making the claim, as it satisfies.
In the case in hand, the Tribunal has awarded simple interest at the rate of
7% per annum from the date of making of the application and in view of the
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discussions made hereinabove, the mere fact that insurance company was
impleaded in the proceedings at a later stage, will have no effect whatsoever and,
thus, the second argument advanced on behalf of the appellant also devoid of merit
and is liable to be rejected. No other ground was pressed or argued before us.
As a result of the aforesaid discussions, the appeal is devoid of any merit and,
accordingly, stands dismissed summarily.
The Registry is directed to return the statutory deposit made before this Court
to the Tribunal, which shall be liable to be adjusted towards the payment to be made
by the appellant.
01.04.2015
VKS