TaxTMI 
TaxTMI 
2013 (4) TMI 953
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..... and Ors. (2001 (2) SCC 9), United India Insurance Co. Ltd. & Ors. v. Patricia Jean Mahajan & Ors. (2002 (6) SCC 281), Jyoti Kaul & Ors. v. State of M.P. & Anr. (2002 (6) SCC 306), Abati Bezbaruah v. Dy. Director General, Geological Survey of India & Anr. (2003 (3) SCC 148), New India Assurance Co. Ltd. v. Shanti Pathak (Smt.) & Ors. (2007 (10) SCC 1), were cited. The attention of the Bench was also invited to Sections 163A and 166 of the 1988 Act. The Bench was of the opinion that the question, whether the multiplier specified in the Second Schedule should be taken to be guide for calculation of amount of compensation payable in a case falling under Section 166 of the 1988 Act needed to be decided by a larger Bench. The reasons for referring the above issue to the larger Bench indicated in the referral order dated 23.07.2009 read as under: "39. We have noticed hereinbefore that in Patricia Jean Mahajan5 and Abati Bezbaruah and the other cases following them multiplier specified in the Second Schedule has been taken to be guiding factor for calculation of the amount of compensation even in a case under Section 166 of the Act. However, in Shanti Pathak this Court advocated....
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....l representatives is to receive a sum of Rs. 7,60,000/-, however, if an application for grant of compensation is filed in terms of Section 166 of the 1988 Act that much amount may not be paid, although in the former case the amount of compensation is to be determined on the basis of 'no fault liability' and in the later on 'fault liability'. In the aforementioned situation the Courts, we opine, are required to lay down certain principles. 44.We are not unmindful of the Statement of Objects and Reasons to Act 54 of 1994 for introducing Section 163-A so as to provide for a new predetermined formula for payment of compensation to road accident victims on the basis of age/income; which is more liberal and rational. That may be so, but it defies logic as to why in a similar situation, the injured claimant or his heirs/legal representatives, in the case of death, on proof of negligence on the part of the driver of a motor vehicle would get a lesser amount than the one specified in the Second Schedule. The Courts, in our opinion, should also bear that factor in mind. 45. Having regard to divergence of opinion and this aspect of the matter having not been considered in th....
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....commendation of the Law Commission of India, amended the Motor Vehicles Act, 1939 (for short, "1939 Act") and inserted Section 92A therein which provided that in any claim for compensation under sub-section (1) of Section 92-A, the claimant shall not be required to plead and establish that the death or permanent disablement in respect of which the claim has been made was due to any wrongful act, neglect or default of the owner or owners of the vehicles concerned or of any other person. 4. In Gujarat State Road Transport Corporation, Ahmedabad v. Ramanbhai Prabhatbhai and Another10, a two-Judge Bench held that the compensation awardable under Section 92-A was without proof of any negligence on the part of the owner of the vehicle or any other person which was clearly a departure from the usual common law principle that a claimant should establish negligence on the part of the owner or driver of the motor vehicle before claiming any compensation for the death or permanent disablement caused on account of a motor vehicle accident. Certain observations made in Minu B. Mehta9 were held to be obiter in Ramanbhai Prabhatbhai (1987 (3) SCC 234) . 5. The 1988 Act replaced the 1939 Act....
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....sub-section (6) of section 158 as an application for compensation under this Act." 6. By Act 54 of 1994, Section 163A was brought in the 1988 Act w.e.f. 14.11.1994. Section 163A may be reproduced which reads as under:- "163-A. Special provisions as to payment of compensation on structured formula basis.- (1) Notwithstanding anything contained in this Act or in any other law for the time being in force or instrument having the force of law, the owner of the motor vehicle or the authorised insurer shall be liable to pay in the case of death or permanent disablement due to accident arising out of the use of motor vehicle, compensation, as indicated in the Second Schedule, to the legal heirs or the victim, as the case may be. Explanation.-For the purposes of this sub-section, 'permanent disability' shall have the same meaning and extent as in the Workmen's Compensation Act, 1923 (8 of 1923). (2) In any claim for compensation under sub-section (1), the claimant shall not be required to plead or establish that the death or permanent disablement in respect of which the claim has been made was due to any wrongful act or neglect or default of the o....
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....isablement due to accident arising out of the use of motor vehicle. The peculiar feature of Section 163A is that for a claim made thereunder, the claimants are not required to plead or establish that the death or permanent disablement in respect of which the claim has been made was due to any wrongful act or neglect or default of the owner or owners of the vehicle concerned. The scheme of Section 163A is a departure from the general principle of law of tort that the liability of the owner of the vehicle to compensate the victim or his heirs in a motor accident arises only on the proof of negligence on the part of the driver. Section 163A has done away with the requirement of the proof of negligence on the part of the driver of the vehicle where the victim of an accident or his dependants elect to apply for compensation under Section 163A. When an application for compensation is made under Section 163A the compensation is paid as indicated in the Second Schedule. The table in the Second Schedule has been found by this Court to be defective to which we shall refer at a little later stage. 11. On the other hand, by making an application for compensation arising out of an accident u....
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....etermination of compensation in accident cases on the basis of multiplier method. In Trilok Chandra3 , the Court considered Section 163A and the Second Schedule which was not under consideration in Susamma Thomas1 as Section 163A was not on the statute when the judgment in Susamma Thomas1 was delivered. It was observed that by incorporation of Sections 163A and 163B in the 1988 Act the situation had undergone a change. Under the Second Schedule, the maximum multiplier could be upto 18 and not 16 as was held in Susamma Thomas1 . In Trilok Chandra3 , the maximum multiplier was fixed at 18 but the Court did find several defects in the calculation of compensation and the amount worked out in the Second Schedule. Importantly this Court stated in Trilok Chandra3 that Tribunals and the Courts cannot go by the ready reckoner; the Schedule can only be used as a guide. This is what this Court said in paras 17 and 18 of the Report: "17. The situation has now undergone a change with the enactment of the Motor Vehicles Act, 1988, as amended by Amendment Act 54 of 1994. The most important change introduced by the amendment insofar as it relates to determination of compensation is the in....
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.... High Court raised to 34, thereby showing lack of awareness of the background of the multiplier system in Davies case". (Emphasis supplied by us) 14. A three-Judge Bench in Supe Dei (Smt) and others v. National Insurance Company Limited and another (2009) 4 SCC 513) [Civil Appeal No. 2753 of 2002; decided on April 16, 2002] considered the question, whether Second Schedule to the 1988 Act can be made applicable in deciding the application for compensation made under Section 166 or not? This Court held that the Second Schedule under Section 163A of the 1988 Act which gives the amount of compensation to be determined for the purpose of claim under that Section can be taken as a guideline while determining the compensation under Section 166 of the 1988 Act. The Second Schedule in terms does not apply to a claim made under Section 166 of the 1988 Act. 15. In Patricia Jean Mahajan5 , this Court had an occasion to consider Sections 163A and 166 of the 1988 Act. With regard to Section 163A, the Court stated, "the noticeable features of this provision are that it provides for compensation in the case of death or permanent disablement due to accident arising out of use of moto....
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.... years live in India, but four of them are in the United States. Shri Soli J. Sorabjee submitted that the amount of multiplicand shall surely be relevant and in case it is a high amount, a lower multiplier can appropriately be applied. We find force in this submission. Considering all the facts and factors as indicated above, to us it appears that application of multiplier of 7 is definitely on the lower side. Some deviation in the figure of multiplier would not mean that there may be a wide difference between the multiplier applied and the scheduled multiplier which in this case is 13. The difference between 7 and 13 is too wide. As observed earlier, looking to the high amount of multiplicand and the ages of the dependants and the fact that the parents are residing in India, in our view application of multiplier of 10 would be reasonable and would provide a fair compensation i.e. a purchase factor of 10 years. We accordingly hold that multiplier of 10 as applied by the learned Single Judge should be restored instead of multiplier of 13 as applied by the Division Bench. We find no force in the submission made on behalf of the claimants that in no circumstances the amount of multipl....
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.... immediate relief to a section of the people whose annual income is not more than Rs. 40,000 having regard to the fact that in terms of Section 163-A of the Act read with the Second Schedule appended thereto, compensation is to be paid on a structured formula not only having regard to the age of the victim and his income but also the other factors relevant therefor. An award made thereunder, therefore, shall be in full and final settlement of the claim as would appear from the different columns contained in the Second Schedule appended to the Act. The same is not interim in nature. . . . This together with the other heads of compensation as contained in columns 2 to 6 thereof leaves no manner of doubt that Parliament intended to lay a comprehensive scheme for the purpose of grant of adequate compensation to a section of victims who would require the amount of compensation without fighting any protracted litigation for proving that the accident occurred owing to negligence on the part of the driver of the motor vehicle or any other fault arising out of use of a motor vehicle. xxx xxx xxx 46. Section 163-A which has an overriding effect provides for special provisions as ....
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....as has been held by this Court, may be resorted to in exceptional cases. Furthermore, the amount of compensation should be just and fair in the facts and circumstances of each case. 21. In Shanti Pathak8 a three-Judge Bench of this Court in a very brief order applied multiplier of 8 for a claim of compensation in respect of the deceased who was 25 years at the time of his death. 22. In Oriental Insurance Company Ltd. v. Jashuben and Ors. (2008 (4) SCC 162, two-Judge Bench of this Court applied the multiplier of 13 in a case where the age of the deceased was 35 years at the time of accident. 23. In Sarla Verma (Smt.) and Ors. v. Delhi Transport Corporation and Anr. (2009 (6) SCC 121), this Court had an occasion to consider the peculiarities of Section 163A of the 1988 Act vis-à-vis Section 166. The Court reiterated what was stated in earlier decisions that the principles relating to determination of liability and quantum of compensation were different for claims made under Section 163A and claims made under Section 166. It was stated that Section 163A and the Second Schedule in terms did not apply to determination of compensation in applications under Section 166. Wh....
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....onal minimum income of non-earning persons as Rs. 15,000 per annum, the table prescribes the compensation payable even in cases where the annual income ranges between Rs. 3000 and Rs. 12,000. This leads to an anomalous position in regard to applications under Section 163-A of the MV Act, as the compensation will be higher in cases where the deceased was idle and not having any income, than in cases where the deceased was honestly earning an income ranging between Rs. 3000 and Rs. 12,000 per annum. Be that as it may." 25. While referring to the decisions of this Court in New India Assurance Company Ltd. v. Charlie and Anr (2005 (10) SCC 720), T.N. State Road Transport Corporation v. S. Rajapriya and Ors. (2005(6) SCC 236) and U.P. State Road Transport Corporation v. Krishna Bala and Ors. (2006 (6) SCC 249), this Court in Sarla Verma17 in paragraph 39 (pg. 138) of the Report observed as follows: "39. In New India Assurance Co. Ltd. v. Charlie this Court noticed that in respect of claims under Section 166 of the MV Act, the highest multiplier applicable was 18 and that the said multiplier should be applied to the age group of 21 to 25 years (commencement of normal producti....
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....niformity and consistency in the selection of multiplier while awarding compensation in motor accident claims made under Section 166. 29. Section 168 of the 1988 Act provides the guideline that the amount of compensation shall be awarded by the claims tribunal which appears to it to be just. The expression, 'just' means that the amount so determined is fair, reasonable and equitable by accepted legal standards and not a forensic lottery. Obviously 'just compensation' does not mean 'perfect' or 'absolute' compensation. The just compensation principle requires examination of the particular situation obtaining uniquely in an individual case. 30. Almost a century back in Taff Vale Railway Co. v. Jenkins (1913) AC 1) , the House of Lords laid down the test that award of damages in fatal accident action is compensation for the reasonable expectation of pecuniary benefit by the deceased's family. The purpose of award of compensation is to put the dependants of the deceased, who had been bread-winner of the family, in the same position financially as if he had lived his natural span of life; it is not designed to put the claimants in a better financial position in which they would ot....
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....e of the deceased's death. Once the net annual loss (multiplicand) is assessed, taking into account the age of the deceased, such amount is to be multiplied by a 'multiplier' to arrive at the loss of dependency. In Sarla Verma17 , this Court has endeavoured to simplify the otherwise complex exercise of assessment of loss of dependency and determination of compensation in a claim made under Section 166. It has been rightly stated in Sarla Verma17 that claimants in case of death claim for the purposes of compensation must establish (a) age of the deceased; (b) income of the deceased; and (c) the number of dependants. To arrive at the loss of dependency, the Tribunal must consider (i) additions/deductions to be made for arriving at the income; (ii) the deductions to be made towards the personal living expenses of the deceased; and (iii) the multiplier to be applied with reference to the age of the deceased. We do not think it is necessary for us to revisit the law on the point as we are in full agreement with the view in Sarla Verma17 . 34. If the multiplier as indicated in Column (4) of the table read with paragraph 42 of the Report in Sarla Verma17 is followed, the wide variation....
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....ddition, where the age of the deceased is more than 50 years. Though the evidence may indicate a different percentage of increase, it is necessary to standardise the addition to avoid different yardsticks being applied or different methods of calculation 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." 36. The standardization of addition to income for future prospects shall help in achieving certainty in arriving at appropriate compensation. We approve the method that an addition of 50% of actual salary be made to the actual salary income of the deceased towards future prospects where the deceased had a permanent job and was below 40 years and the addition should be only 30% if the age of the deceased was 40 to 50 years and no addition should be made where the age of the deceased is more than 50 years. Where the annual income is in the taxable range, the actual salary shall mean actual salary less tax. In the cases where the d....
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....enses may be restricted to one-third and contribution to the family will be taken as two-third." 38. The above does provide guidance for the appropriate deduction for personal and living expenses. One must bear in mind that the proportion of a man's net earnings that he saves or spends exclusively for the maintenance of others does not form part of his living expenses but what he spends exclusively on himself does. The percentage of deduction on account of personal and living expenses may vary with reference to the number of dependant members in the family and the personal living expenses of the deceased need not exactly correspond to the number of dependants. 39. In our view, the standards fixed by this Court in Sarla Verma17 on the aspect of deduction for personal living expenses in paragraphs 30, 31 and 32 must ordinarily be followed unless a case for departure in the circumstances noted in the preceding para is made out. 40. In what we have discussed above, we sum up our conclusions as follows: (i) In the applications for compensation made under Section 166 of the 1988 Act in death cases where the age of the deceased is 15 years and above, the Claims Tribunals....