M.R. Krishna Murthi v. the New India Assurance Co. Ltd. & Others
A. K. SIKRI, J. 1. Leave granted.
2. The appellant herein, who is a practicing advocate, had suffered
in nasty accident at the young age of 18 years. He was a student at that
time studying in Modern School, Delhi. It was 26 th May, 1988. He was
travelling along with his mother from Delhi to Mussoorie to celebrate his
18 th birthday falling on 27 th May, 1988. On Delhi-Dehradun highway
the accident took place in which his entire left leg was crushed. He was
rushed to the hospital and his hospitalization continued for over two
months. He had to undergo surgery for which he was operated on 31 st
May, 1988. Though, the appellant was discharged from the hospita l
after two months, his treatment continued for over 6 years, during which
period he had to undergo further operations. In all, three surgeries were
performed. First, for putting plates and screws, another for removal of
plates and screws wherein doctor discovered that he could not remove
the plates and screws of femur bone. The result is that even today the
said screws and plates in the femur bone remain planted. This exposes
him to the risk of another fracture anytime. The third operation was for
removal of a lump in the right leg which had developed after the accident
and had grown over the years.
3. As per the appellant, the net result of the aforesaid accident of
such severity is that he is suffering permanent disability (pain and difficulty
in locomotion) even today. This disability is certified by the District
Government Hospital, Muzaffarnagar at 40%, as per the d isability
certificate dated 10 th December, 2005 (Exh. PW-4/103).
M.R. KRISHNA MURTHI v. THE NEW INDIA ASSURANCE
CO. LTD. & OTHERS
4. The appellant filed an application claiming compensation before
Motor Accidents Claims Tribunal (MACT), Muzaffarnagar, U.P. as the
accident took place in the area within the jurisdiction of the said MACT.
However, on his application for transfer of the said claim petition, this
Court passed orders dated 12 th January, 1998 transferring the case to
MACT, Patiala House, New Delhi. The MACT, after conclusion of the
trial, rendered its award dated 23 rd May, 2007 attributing negligence to
the driver of the ambassador car which had hit the vehicle in which the
appellant was travelling. As the accident occurred due to the negligence
of the said driver (Respondent no. 4 in MACT case), and the offending
vehicle was insured with Respondent no. 1, namely, New India Assurance
Company Limited, the liability was fastened on the Insurance Company,
the driver of the vehicle as well as the owner of the vehi cle who also
arrayed as respondents. The MACT, thereafter, dealt with the issue of
quantum of compensation and awarded a sum of Rs. 8,48,000/-, the
breakup of which is as under:
“Pain and sufferings Rs.50,000/-
Medicines Rs.2,10,000/-
Special Diet Rs.15,000/-
Conveyance Rs.15,000/-
Compensation on account Rs.4,08,000/-
of loss of income adopting
multiplier of 18 permanent Rs.75,000/-
disability attendant Rs.25,000/-
loss of enjoyment Rs.50,000/-
Total Rs.8,48,000/-”
5. The MACT also awarded interest @7% for a period of 10
years, inter alia , taking note of the fact that the claim petition has been
dismissed in default twice.
6. The appellant filed the appeal thereagainst before the Hi gh
Court. However, when it was taken up for hearing, nobody appeared on
behalf of the appellant. Going by the fact that on severa l consecutive
dates the appellant was not represented and remained absent, instead of
dismissing the appeal in default, the High Court decided the matter on
merits after hearing the counsel for the Insurance Company and on
perusing the record.
1095
7. Main contention of the appellant in appeal was that MACT had
failed to take into account the disability certificate which sh owed that
the appellant had suffered permanent disability to the exte nt of 40%.
This submission is rejected by the High Court with the observations that
the MACT had, in fact, calculated the loss of future income on the basis
of inference that the claimant has suffered functional disa bility to the
extent of 40% corresponding to affecting his earning capacity. The
High Court also took note of the income tax returns which were filed by
the appellant for the periods 2003-04, 2004-05, 2005-06. However, as
per the High Court, these income tax returns were irrelevant and could
not be taken into consideration as accident occurred way back i n the
year 1988 and, therefore, compensation had to be fixed with reference
to the date of the accident when the claimant was a boy of 18 years
only. Instead, only addition is made by the High Court, that too on some
other count. It has noted that the appellant would require services of a
driver till he attains age of 70 years, which is a normal expected lifespan.
Though, no evidence was led in support of this claim, the High Court has
awarded an additional lumpsum damages in the sum of Rs. 50,000/- on
this account, given the nature of disability and physical disf igurement
suffered by the appellant.
8. The appellant, thereafter, preferred a review petition under
Order LXVII Rule 1 of the Code of Civil Procedure seeking review of
the judgment dated 17 th May, 2016 rendered by the High Court. It was
pointed out that there was an error committed by the MACT a s it had
applied the multiplier of 17, whereas multiplier of 18 should have been
adopted while calculating the compensation towards loss of income, going
by the fact that the appellant was only 18 years of age when he suffered
the injuries. This plea has been accepted by the High C ourt thereby
applying the multiplier of 18, instead of 17 which has resulted in
enhancement of compensation by Rs.24000/- together with corresponding
interest. Main judgment dated 17 th May, 2016 as well as order dated
19 th May, 2017 passed in review petition are the subject matters of the
present appeals.
9. Mr. Arun Mohan, learned senior counsel appearing for the
appellant has made two-fold submissions which are paraphrased in the
following manner:
(i) In the first instance, it is submitted that the MACT as well as
the High Court have erred in computing the future earning by fixing the
M.R. KRISHNA MURTHI v. THE NEW INDIA ASSURANCE
CO. LTD. & OTHERS [A. K. SIKRI, J.]
income at the rate of Rs.5000/- only while assessing the los s of future
earnings. No doubt, submitted the learned senior counsel, the appellant
was only a student and, therefore, there was no real earning at that
stage. Only future prospects can be taken into consideration, as per the
law laid down by this Court in a series of judgments. However, submission
of learned senior counsel was that while assessing the loss of future
earning, the Court should have regard to the family background of the
victim, the institution in which he is getting education, his potential to
adopt the career he desired to choose, career prospe cts in view of
attendant circumstances etc. In this hue, Mr. Arun Mohan sub mitted
that the appellant belongs to a family of lawyers as bot h his parents
were senior lawyers practicing in Supreme Court. Because of this family
background, the appellant also wanted to join legal profession. Though,
at the time of accident, he was studying in school, after school he intended
to pursue his studies in law. He, in fact, did law and has joined the legal
profession, which fact was placed on record, as by the time the appellant
became a lawyer the case before MACT was still pending. Further,
having regard to affluent family background, the appellant at the time of
accident was studying in prestigious Modern School, Barakhamba Road,
New Delhi. All these circumstances clearly indicated that the appellant
had a bright future and, therefore, his future earnings c ould not be
considered without keeping in view the aforesaid facto rs. In such
circumstances, loss of future earning prospects by treating the future
earnings at the rate of Rs.5000/- only was abysmally low. He also
submitted that though in the review petition filed before the High Court,
specific ground to this effect was taken, it has not even been considered
by the High Court.
(ii) Second submission of Mr. Arun Mohan was a passionate plea
aimed at reforming the system at following levels:
(a) On-road safety and grant of adequate compensation to the
victims without any delay. For ensuring expeditious settlement of
claims, resort to alternate means which may include innov ative
measures.
(b) Taking adequate steps including adopting innovative measures,
to ensure fast track disposal of cases by MACTs.
(c) Ensuring receipt of compensation in the safe hands of victims
and/or kiths and kins of victims, that too over a sustained period.
1097
10. Detailed submissions on these aspects and suggestions of Mr.
Arun Mohan are as under:
“Road Safety and Compensation
IT is perceived that of road accidents (1,40,000 dead per year
and 5,00,000 injured per year), less than 10% reach the MACT
with claims. Almost 90% do not have Access to Justice.
And of the 10% or so who do reach MACT, the questions arise:
1. What is the ‘Cost’ to the State judiciary and insurance se ctor
for adjudication of these claims?
2. What are the time delays?
3. On what income source do the dependents/injured survive during
pendency till the payout?
4. Of the ultimate payout, how much actually reaches the recipients
and how much is lost?
5. After, say, five years of receiving the compensation, w hat
actually remains with the majority of the recipients?
These were some disturbing questions on a ground level survey.
Put differently, firstly, as most are poor, there is hardly any access
to justice; the court resources are wasted; there are delays and
difficulties and slicing away (cut) from the payout; and little safety
for the money that is received.
As a Solution to these problems, there are two proposals:
1. establishing a Motor Accidents Mediation Authority (MAMA)
in every district;
2. making it compulsory for the accident investigator to:
(a) send a copy of his Report to MAMA;
(b) send e-mail to National Road Safety Council’s c e l l
identifying the accident spot and how similar accidents could be
prevented in future.
MAMA will follow the following procedure:
1. MAMA will then issue notices to the claimants and others.
M.R. KRISHNA MURTHI v. THE NEW INDIA ASSURANCE
CO. LTD. & OTHERS [A. K. SIKRI, J.]
2. interim compensation (with recourse) of few thousand rupees
a month pending adjudication as direct credit to Aadhaar linked
bank account;
3. completion of paperwork at MAMA;
4. mediation proceedings at MAMA;
5. complete safety in the hands of the recipient.
The amount settled is not given as rupees (or even FDRs), but as
Annuity Certificates, which have more return for the same value-
meaning lesser payout by the insurance sector with full receipt by
the claimant.”
11. He further submitted that this Court may consider a direction
to the Government to frame these procedures and schemes. LIC /RBI
can provide for availability of Annuity Certificates in consultation with
the Pension Fund Regulatory and Development Authority a nd the
commercial Banks/insurance companies.
12. To facilitate appreciation and implementation, he gave tw o
flowcharts as below:
1099
13. In the Flowchart-1 (under the existing law), a direction from
this Court is sought to all MACTs to compulsorily refer motor accident
cases to the District Mediation Authority which will serve the purpose
till the Government amends the Statute. Flowchart - 2 shows where the
amended statute and the rules can provide for establishin g a Motor
Accident Mediation Authority (MAMA) in every district in the country.
He also suggested that rules can provide for every accident investigator
to send information to : (1) MAMA; and (2) National Road Safet y
Council’s Cell.
14. Speaking with an optimist tone, Mr. Mohan submitted that
there is a hope that with a provision for MAMA:
(1) access to justice will substantially increase;
(2) the court costs will reduce;
(3) insurance sector costs (as payout) will reduce;
(4) Annuity Certificates of the payout will nearly eliminate the
‘slicing away’; and
M.R. KRISHNA MURTHI v. THE NEW INDIA ASSURANCE
CO. LTD. & OTHERS [A. K. SIKRI, J.]
(5) the actual benefit to the recipients will be far mor e (with
Annuity Certificates) than it is at present.
15. Mr. Salil Paul, learned counsel appearing for the Insurance
Company advanced his argument on the quantum of compensation based
on future prospective. His submission was that the yardst ick adopted
by the courts below in fixing the income based on future prospective on
the basis of which compensation is given to the appellant is in tune with
various judgments rendered by this Court as well as the H igh Court.
Therefore, no interference was called for, insofar as grant of
compensation is concerned. He referred to certain judgments in support.
16. With reference to the second submission of Mr. Arun Mohan,
Mr. Salil Paul gave a positive response with the plea that since suggestions
given by Mr. Arun Mohan were in larger public interest for reformation
of the system, he had no objection if the Court issues appropriate
directions in this behalf. At the same time, he also pointed out that
insofar as speedy disposal of cases and payment of compensation to the
victims, particularly, young victims are concerned, the High Court of
Delhi had given directions on the basis of which Claims Tribunal Agreed
Procedure was approved by High Court of Delhi. Modified version
thereof has now been approved as recent as on 7 th December, 2018
which takes care of the speedy disposal as well as periodical payments
to be made to the young victims over a period of time. Mr. Salil Paul
placed on record the relevant judgments as well as Modified Claims
Tribunal Agreed Procedure approved by the Delhi High Court vide orders
dated 7 th December, 2018.
17. We now proceed to discuss the merits of the aforesaid two
proposition advanced before us.
(I) Assessment of Compensation:
Admittedly, the appellant was a student studying in a school.
He was not doing any job or was in any vocation and, thus, was not
earning anything. The loss of future earning is to be as sessed on the
aforesaid basis. Before adverting to the arguments that are raised by
Mr. Arun Mohan and taken note of above, it would be appropriate to
scan through certain judgments cited before us by both the pa rties in
order to decipher the principles for determining loss of future earning in
such circumstances. First case which we would like to re fer is the
1101
judgment in the case of Arvind Kumar Mishra v. New India Assurance
Co. Ltd. , (2010) 10 SCC 254. In that case also, the appellant who was
a victim of accident, was a student. He was in the final year of
engineering which he was doing from a reputed college. He had a
brilliant academic record, having passed all semester examinations with
distinction. In the accident that took place, the appellant suffered multiple
injuries which led to 70% permanent disability. This disability rendered
him incapacitated which had the consequence of dashing forever his
dream of becoming Mechanical Engineer, studies for which c areer he
had undertaken. On the aforesaid facts, his future earning were assessed
at Rs.60,000/- per annum by taking salary and allowances paya ble to
Assistant Engineer in public employment. This future earni ng was
discounted at 30% on the basis of which multiplicand was taken at
Rs.42,000/- per annum. Going by his age which was 25 years at t he
time of accident, multiplier of 18 was applied and on that basis,
compensation towards loss of future earning was ass essed at
Rs.7,56,0000/-.
Second case to which reference is made is Oriental Insurance
Company Limited v. Deo Patodi & Ors. , (2009) 13 SCC 123. Here,
the victim was a brilliant student and while a student, he was also earning
Rs.80,000/- per month in a job on part-time basis in the United Kingdom.
He had not accepted a job offered by a US based company at a salary
of Rs.18 lakhs per annum. However, at the time of accident, he was
not working. Accident took place on June 12, 2003 when he was 22
years of age. He suffered head injuries which proved fatal and he died
within six days i.e. on June 18, 2003. While computing the compensation
under the head ‘loss of dependency’ (he was the only son of the claimant),
the Tribunal as well as the High Court held that the de ceased would
have earned only Rs.18,000/- per month. This Court, in appeal, however,
considered the aforesaid estimation of income to be on lower side and
the Court decided to fix the earning at Rs.25,000/- per month, which
was 1/3rd of the amount that he was receiving in the United Kingdom.
The relevant discussion in this behalf runs as under:
“8. The question in regard to the calculation of loss of dependency,
it is trite, would vary from case to case. The fact that the deceased
was a brilliant student is not in dispute. He had graduated in
Business Administration in the UK. Even as a student, in a job on
M.R. KRISHNA MURTHI v. THE NEW INDIA ASSURANCE
CO. LTD. & OTHERS [A. K. SIKRI, J.]
a part-time basis he was being paid a salary of Rs 80,000 per
month (UK £1008.31). He paid his income tax even in the UK.
After his graduation, he came back to India. He was offered a
job as EU Controller by GOA LLC, a company based in Chicago,
USA at an annual salary of Rs 18 lakhs (i.e. $41,600). However,
when the accident took place he was not working; having not
accepted the said offer. He was still a student. It would have
been hazardous for the Tribunal to calculate the amo unt of
compensation towards the loss of dependency on that basis.
9. The Tribunal and the High Court, however, in our opinion, keeping
in view the aforementioned backdrop might not be correc t in
holding that he would have earned only Rs 18,000 per month. It is
true that the cost of living in the western countries would be higher.
The standard of living in the western countries cannot be followed;
in the absence of any material placed before this Court it should
not be followed in India. Even in a case where the victim of an
accident was earning salary in US dollars, this Court opined that a
lower multiplier should be applied.
10. In United India Insurance Co. Ltd. v. Patricia Jean
Mahajan [(2002) 6 SCC 281] this Court held: (SCC pp. 294-95,
paras 19-20)
“19 . In the present case we find that the parents of the
deceased were 69/73 years. Two daughters were aged 17
and 19 years. The main question, which strikes us in this
case is that in the given circumstances the amount of
multiplicand also assumes relevance. The total amount of
dependency as found by the learned Single Judge and also
rightly upheld by the Division Bench comes to 2,26,297 dollars.
Applying multiplier of 10, the amount with interest and the
conversion rate of Rs 47, comes to Rs 10.38 crores and with
multiplier of 13 at the conversion rate of Rs 30 the amount
comes to Rs 16.12 crores with interest. These amounts are
huge indeed. Looking to the Indian economy, fiscal and
financial situation, the amount is certainly a fabulous amount
though in the background of American conditions it may not
be so. Therefore, where there is so much of disparity in the
1103
economic conditions and affluence of the two places viz. the
place to which the victim belongs and the place where th e
compensation is to be paid, a golden balance must be struck
somewhere, to arrive at a reasonable and fair mesne. Looking
by the Indian standards they may not be much too
overcompensated and similarly not very much under
compensated as well, in the background of the country where
most of the dependent beneficiaries reside. Two of the
dependants, namely, parents aged 69/73 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. …
20 . The court cannot be totally oblivious to the realities. The
Second Schedule while prescribing the multiplier, h ad
maximum income of Rs 40,000 p.a. in mind, but it is
considered to be a safe guide for applying the prescribed
multiplier in cases of higher income also but in cases where
the gap in income is so wide as in the present case income is
2,26,297 dollars, in such a situation, it cannot be said that
some deviation in the multiplier would be impermissible.
Therefore, a deviation from applying the multiplier as provided
in the Second Schedule may have to be made in this case.
Apart from factors indicated earlier the amount of multiplicand
also becomes a factor to be taken into account which in this
case comes to 2,26,297 dollars, that is to say an amount of
around Rs 68 lakhs per annum by converting it at the rate of
Rs 30. By Indian standards it is certainly a high amount.
Therefore, for the purposes of fair compensation, a lesser
multiplier can be applied to a heavy amount of multiplicand.”
The said decision, however, to some extent was clarified by this
Court in Punjab National Bank v. Indian Bank [(2003) 6 SCC
79] .
11.It is in the aforementioned situation, we are of the opinion that
the fair amount of compensation should have been calculated at
Rs 25,000 per month being about one-third of the amount which
he was receiving in the UK.”
M.R. KRISHNA MURTHI v. THE NEW INDIA ASSURANCE
CO. LTD. & OTHERS [A. K. SIKRI, J.]
18. We may also take note of one judgment of High Court of
Delhi in MAC. APP. No. 135 of 2008 titled ‘ New India Assurance Co.
Ltd. v. Ganga Devi & Ors. ’ decided on November 23, 2009. In that
case also, accident resulted in death of the victim, named, Dr. Brij Mohan.
He was 24 years of age at the time of accident and had comple ted his
MBBS. He was doing one year internship and was getting sti pend of
Rs.5,000/- per month. The deceased had cleared the UPSC examination
for the post of Medical Officer and was scheduled to be ap pointed as
Medical Officer after completing the internship. Evidenc e of PW-2,
Senior Assistant of the Hospital, where the deceased was interning, was
produced who deposed that after completing his internship, there was a
possibility of getting absorbed as Junior Resident Doc tor in the same
hospital at salary of Rs.18,000/- to Rs.20,000/- per month.
19. The Tribunal took the view that the aforesaid evidence wa s
insufficient to prove the income. Accordingly, it took the minimum wages
of a graduate worker as Rs.3,543/- per month and added 50% towards
inflation and rise in price index. From this, 1/3rd was deducted towards
personal expenses and multiplier of 11 was applied to compute the loss
of dependency at Rs.9,35,352/-. The High Court set aside the order of
the Tribunal holding that evidence of PW-2 was believable. On that
basis, income was taken at Rs.18,000/- per month to which 50% was
added towards future prospects, following the judgment of this Court in
Sarla Verma v. Delhi Transport Corporation , (2009) 6 SCALE 129.
Deduction towards personal expenses was made on which multiplier of
13 was applied.
20. The aforesaid cases are of all those victims who were students
at the time of accident and were not in actual employment. In addition,
Mr. Arun Mohan had also referred to the judgment in N. Manjegowda
v. Manager, United India Insurance Company Limited, (2014) 3
SCC 584, where victim of an accident was a young advocate aged about
36 years. In the accident, he sustained whole body disability o f 50%.
This judgment is cited for the purpose of showing principle laid down by
the Court in determining the loss of earning capacity of a n advocate
who suffers disability in an accident. The Tribunal had assessed the loss
of future income due to disability at Rs.6,17,500/- per annum. The High
Court reduced the same to Rs.1,50,000/-. This Court noted that due to
the said accident, the appellant had suffered partial sensory loss all over
1105
his limbs and there was lack of proper coordination in all four limbs. He
needed an assistance for daily routine work. This kind of disability, in
the opinion of the Court, hindered his ability to practice as an advocate
and compete with others in the field of legal profession. He was bound
to suffer huge professional loss in the said condition. This Court, in the
aforesaid circumstances, took the view that loss of future income fixed
at Rs.6,17,500/- did not require any deduction. On the contrary, the loss
of earning should be treated as 70% and the appropriate multiplier should
be 16 in place of 13. On that basis, the loss of income due to disability
needed enhancement from Rs.6,17,500/- by at least Rs.4,00,000/- and
the compensation under the head loss of income due to disability was
worked out accordingly.
21. It would be also appropriate to take note of certain judgments
dealing with the assessment of loss of future earnings on acco unt of
disability suffered as a result of accident, even when these cases pertain
to those victims who were having their earnings, as these cases would
throw light on the general principles which were laid down for assessing
such a loss.
22. In the case of Raj Kumar v. Ajay Kumar & Anr. , (2011) 1
SCC 343,where the victim suffered 45% disability to left lower limb and
permanent functional disability of 25%, the Court held that it is a functional
disability which would be the operative criteria for assessing the loss of
future earnings and not physical disability. There is a detailed and lucid
discussion of assessment of future loss of earning due to per manent
disability, covering all possible facets and discussing every nuance of the
subject matter. After explaining the meaning of permanent disability
and contrasting it with temporary disability and also the manner in which
permanent disability of different limbs expressed by Doc tors in the
Disability Certificates is to be interpreted, the Cour t clarified that the
assessment of compensation under the head of loss of future earnings
would depend upon the effect and impact of such permanent disability
on his earning capacity. The manner in which the assessment is to be
carried out is contained in the following passages in the said judgment:
“12. Therefore, the Tribunal has to first decide whether there is
any permanent disability and, if so, the extent of such permanent
disability. This means that the Tribunal should consider and decide
with reference to the evidence:
M.R. KRISHNA MURTHI v. THE NEW INDIA ASSURANCE
CO. LTD. & OTHERS [A. K. SIKRI, J.]
(i) whether the disablement is permanent or temporary;
(ii) if the disablement is permanent, whether it is permanent total
disablement or permanent partial disablement;
(iii) if the disablement percentage is expressed with reference to
any specific limb, then the effect of such disablement of the limb
on the functioning of the entire body, that is, the permanent disability
suffered by the person.
If the Tribunal concludes that there is no permanent disability then
there is no question of proceeding further and determining the
loss of future earning capacity. But if the Tribunal concludes that
there is permanent disability then it will proceed to asce rtain its
extent. After the Tribunal ascertains the actual extent of permanent
disability of the claimant based on the medical evidence, it has to
determine whether such permanent disability has affected or will
affect his earning capacity.
13. Ascertainment of the effect of the permanent disabili ty on
the actual earning capacity involves three steps. The Tribunal has
to first ascertain what activities the claimant could car ry on in
spite of the permanent disability and what he could not do as a
result of the permanent disability (this is also relevant for awarding
compensation under the head of loss of amenities of life). The
second step is to ascertain his avocation, profession and nature of
work before the accident, as also his age. The third step is to find
out whether ( i) the claimant is totally disabled from earning any
kind of livelihood, or ( ii) whether in spite of the permanent disability,
the claimant could still effectively carry on the activ ities and
functions, which he was earlier carrying on, or ( iii) whether he
was prevented or restricted from discharging his previous activities
and functions, but could carry on some other or lesser scale of
activities and functions so that he continues to earn or can continue
to earn his livelihood.
xx xx xx
19. We may now summarise the principles discussed above:
(i) All injuries (or permanent disabilities arising from injuries), do
not result in loss of earning capacity.
1107
(ii) The percentage of permanent disability with reference to the
whole body of a person, cannot be assumed to be the percentage
of loss of earning capacity. To put it differently, the percentage of
loss of earning capacity is not the same as the percentage of
permanent disability (except in a few cases, where the T ribunal
on the basis of evidence, concludes that the percentage of loss of
earning capacity is the same as the percentage of per manent
disability).
(iii) The doctor who treated an injured claimant or who examined
him subsequently to assess the extent of his permanent disability
can give evidence only in regard to the extent of perman ent
disability. The loss of earning capacity is something that will have
to be assessed by the Tribunal with reference to the evide nce in
entirety.
(iv ) The same permanent disability may result in diffe rent
percentages of loss of earning capacity in different persons,
depending upon the nature of profession, occupation or job, age,
education and other factors.”
23. From the conjoint reading of the aforesaid judgments, inter
alia, following principles can be culled out which would be relevant for
deciding the instant appeal:
(i) In those cases where the victim of the accident is not an earning
person but a student, while assessing the compensation for loss of future
earning, the focus of the examination would be the career prospect and
the likely earning of such a person in future. For example , where the
claimant is pursuing a particular professional course, the poseer would
be: what would have been his income had he joined a service
commensurating with the said course. That can be the future earning.
(ii) There may be cases where the victim is not, at that stage,
doing any such course to get a particular job. He or she may be studying
in a school. In such a case, future career would depend upon multiple
factors like the family background, choice/interest of the complainant to
pursue a particular career, facilities available to him /her for adopting
such a career, the favourable surrounding circumstances t o see which
would have enabled the claimant to successfully pick up the said career
etc.
M.R. KRISHNA MURTHI v. THE NEW INDIA ASSURANCE
CO. LTD. & OTHERS [A. K. SIKRI, J.]
If the chosen field is employment, then the future earning can be
taken on the basis of salary and allowances which are payable for such
calling. In case, career is a particular profession, t he future earning
would depend on host of other factors on the basis of which chances to
achieve success in such a profession can be ascertained.
(iii) There may be cases like Deo Patodi where even a student,
the claimant would have made earnings on part-time basis or w ould
have received offer for a particular job. In such cases, the se factors
would also assume relevance.
(iv) After ascertaining the likely earning of the victim in the
aforesaid manner, the nature of injuries and disability suffered as a result
thereof would be kept in mind while determining as to how much earning
has been affected thereby. Here, impact of injuries on functional disability
is to be seen. In case of death of victim, it would result in total loss of
earning. In the case of injuries, the nature of disability becomes important.
Such an exercise was undertaken in N. Manjegowda case.
24. The relevant factors which are brought on record by th e
learned senior counsel for the appellant are these: the appellant belongs
to a family of lawyers as both his parents were senior lawyers practicing
in the Supreme Court. Because of his family background, the appellant
also wanted to join legal profession, even though at the time of accident,
he was studying in school. Having regard to affluent family background,
the appellant at the time of accident was studying in prestigious Modern
School, Barakhamba Road, New Delhi. All these circumstances clearly
indicated that the appellant had a bright future and, therefore, his future
earnings could not be considered without keeping in view the aforesaid
factors. The appellant also produced evidence in respect of his disability.
This disability does not indicate much loss of prospects in earning as it is
similar to N. Manjegowda case. Of course, his movements are restricted
and he needs a Driver as he is not in a position to drive the car himself.
This would hinder the earning capacity to some extent, th ough not
significant extent.
25. From the judgment of the MACT, we find that, on this aspect,
it has followed judgment of Arun Sondhi v. Delhi Transport
Corporation , (2001) ACJ 1779 and has awarded the compensation at
Rs.4,08,000/-. It has also added Rs.75,000/- on account of 40% permanent
1109
disability on the ground that apart from resulting in loss of income, it has
severe impact on the life of the appellant as a whole. T he figure of
Rs.4,08,000/- is calculated in the following manner:
“42. Learned counsel for petitioner has argued at length tha t a
substantial amount of compensation is required to be awarded to
the petitioner on account of loss of earning capacity in future. It
has been stated that on account of injuries suffered in the accident
the income of the petitioner has reduced to 60% of what he could
have earned otherwise. I consider that this argument raised by
learned counsel for the petitioner cannot be accepted. The
petitioner was student at the time of accident. He starte d his
career after around 5 years of accident. I do not say that t he
injuries did not have an adverse impact on the petitioner, but t o
quantify the same in the manner claimed by the petitioner may
not be just. In this regard, I consider that the guidance c an be
taken from the case of Arun Sondhi v. Delhi Transport
Corporation , 2001 ACJ 1779. In this case, the injured was a
student of 21 years and he had suffered disability of 100%. In
L.P.A. the loss of future earning was assessed at Rs.5000/- p .m.
and after adopting multiplier of 16 compensation of Rs.10,80,000/
- was allowed. If the same principle is adopted and future earning
is taken at Rs.5000/- p.m. and the disability of 40%, the monthly
loss of income comes to Rs.2000/- p.m. or Rs.24,000/- p.a. It is
a settled proposition that in the case of permanent disability t he
multiplier is to be adopted according to the age at the time of trial.
In this case adopting this principle if the multiplier of 17 is adopted
the compensation on account of loss of future income comes t o
Rs.24,000/- x 17 = Rs.4,08,000/-.”
26. As can be seen from the above, loss of future earning is
assessed at Rs.2,000/- per month or Rs.24,000/- per annum. In t he
process, the MACT has not considered future prospects having regard
to the relevant facts pointed out above which should have bee n taken
into consideration. At the same time, it is the functional disability which
has to be kept in mind. Though, not very seriously, the functional capacity
has been impaired because of the disability suffered by the appellant as
the appellant cannot run around like other young advocates of his a ge.
Going by the overall circumstances, we are of the opinion that in case of
M.R. KRISHNA MURTHI v. THE NEW INDIA ASSURANCE
CO. LTD. & OTHERS [A. K. SIKRI, J.]
the appellant, loss of future earning can be fixed at Rs.5,000/- per month
i.e. Rs.60,000/- per annum on which multiplier of 1 8 is to be
applied. Calculated in this manner, the loss future earning co mes to
Rs.10,80,000/-. The appellant, thus, would be paid another sum of
Rs.6,54,000/- under this head along with interest as awarded by the
Court below. We may place on record the statement of Mr. Arun Mohan
that the appellant has volunteered to give this amount to any Government
or public charitable organisation working towards road saf ety. We
appreciate this gesture of the appellant. We leave it to the appellant to
donate the amount to any particular organisation of his choice.
Alternatively, it can also be given for MAMC project by the appellant.
Choice would entirely be that the appellant.
(II) With this, we advert to the second proposition advanced by
Mr. Arun Mohan. At the outset, we would like to point out that thi s
aspect pertains to the reforms that can be brought insofar as payment of
compensation to the victims of road accidents is concerned. We would
also like to commend the suggestions given by Mr. Arun Mohan to bring
about such reforms which are visionary in nature. The two a spects
which he has highlighted are taken up for discussion in seriatim.
(A) ROAD SAFETY AND COMPENSATION:
27. Focus here is to ensure access to justice for road accide nt
victims and also to bring about a mechanism which prevents delays and
other obstacles in awarding compensation to road accident victims. The
suggestion of Mr. Arun Mohan for establishing a MAMA in every District
is worthy of acceptance. Whatever steps are taken by the a uthorities
for reducing road accidents, harsh reality is that accidents would keep
on happening. There may be a possibility of reducing the number of
road accidents, but occurrence thereof cannot be totally eliminated. Such
accidents, particularly fatal accidents, would always lead to filing of claims
by the victims and/or kith and kin of victims, for compensation. Fatal
accidents also trigger prosecution of the driver who was negligent a nd
rash in driving which caused the accident. Insofar as disputes regarding
claims are concerned, there is a need to resolve the same at the earliest
inasmuch as compensation money may be badly needed by the claimants
for so many reasons and delay may bring insurmountable sufferings of
various kind. Having regard to the fact that large number of accidents
1111
are giving rise to phenomenal quantum jump in such cases, me thods
need to be adopted for quick resolution. Here, mediation as a concept
of dispute resolution, even before dispute becomes part of adve rsarial
adjudicatory process, would be of great significance. Advantag es of
mediation are manifold. This stands recognised by the Legis lature as
well as policy makers and need no elaboration. Mediation is here to
stay. It is here to evolve. It is because of the advantages of mediation
as a method here to find new grounds. It is here to prosper, as its ti me
has come. It is now finding statutory recognition and has been introduced
in few Statutes as well. Examples are the Companies Act , Insolvency
and Bankruptcy Code, Commercial Courts Act etc. In these enactments
provisions are made even for pre-litigation mediation by ma king this
process mandatory. There is, in any case, umbrella provis ions in the
form of Section 89 of the Code of Civil Procedure which, inte r alia,
provides for court annexed mediation as well. Time is ripe now to have
similar mechanism for settling accident claims as well. Therefore, the
suggestion of establishing MAMA is laudable. We recommen d to the
Government to examine the feasibility of setting up MAMA by making
necessary amendments in the Motor Vehicles Act itself. In fact, the
way mediation movement is catching up in this country, there is a dire
need to enact Indian Mediation Act as well.
28. Till the time such an amendment is made by the Parliament,
National Legal Services Authority (NALSA) should take up this work
as a project. A complete report/module be made about the functioning
of Motor Accident Mediation Cell (MAMC). This exercise be completed
within a period of two months. Thereafter, this project ca n be shared
with all State Legal Services Authorities (SLSA) so that State Legal
Services Authorities implement the same through their respective District
Legal Services Authorities (DLSAs).
29. There is Mediation and Conciliation Project Comm ittee
(MCPC) in the Supreme Court which takes various policy decisions for
better working of mediation, including court annexe d mediation.
Broadening the structure of MCPC, so as to have proper coordination
with High Court Mediation Centers as well as Mediation Cente rs at
District Court Level is achieved. Thus, NALSA can even co nsider
entrusting the project of MAMC to MCPC as well.
M.R. KRISHNA MURTHI v. THE NEW INDIA ASSURANCE
CO. LTD. & OTHERS [A. K. SIKRI, J.]
30. In a book titled ‘Road Accidents: Prevention, Attention and
Compensation’, authored by Mr. Arun Mohan, Senior Advocate various
aspects pertaining to access to justice to road victims are deliberated
upon. There is a specific chapter on the establishment of MAMA which
can be of immense help to the NALSA for preparing and finalizing the
project. NALSA would be well-advised to take into consideration the
suggestions and proposals given in that book. It may, inter alia, make a
provision for the accident investigator to compulsorily send a copy of
report to MAMC or email to National Road Safety Council. Forwarding
the copy to MAMC shall facilitate mediation, on the other hand giving
information to National Road Safety Council would help the council to
take measures for preventing such accidents in future.
(B) FAST TRACKING DISPOSAL OF CASES BY MACTs:
31. Establishment of MAMA/MAMC is for the purpose o f
resolving the claims before the case is filed in the MACT. It is a matter
of common knowledge that for amicable settlement of the cases pending
before MACT, ADR in the form of Lok Adalat is resorted to, which has
achieved tremendous success over a period of time. These Lok Adalats
are also organised by the Legal Services Authorities. Settl ement of
cases by Lok Adalats have their own pros and cons. Be as it ma y,
resort to Lok Adalat should continue because of its own advantages.
32. Notwithstanding, the aforesaid ADR methods, adjudicatory
process before the MACTs is indispensable. There cannot be a guarantee
that 100% cases would be settled through mediation or Lok Adala t.
Therefore, there is a dire need for deciding these cases without delays
and within reasonable period. The Delhi High Court has gi ven few
judgments providing for mechanism to speed up the disposal o f such
cases and to ensure that schemes are settled within a period of 90/120
days from the date of accident. In nutshell, these directions include that
on the occurrence of accident, the police which comes into the picture in
the first instance, should complete the investigation and along with filing
of FIR before the concerned Court of Metropolitan Magistrate , copies
are sent to MACT as well as Insurance Company also. Insurance
Company is supposed to look into the same to find out as to whether the
claim is payable and within 30 days it should respond to MACT and
once all these documents are before the MACT in the form of evidence
etc. as well it would enable the MACT to decide the case within 30
1113
days. The case where entire procedure is articulated is judgment dated
16 th December, 2009 in FAO No. 843 of 2003. This Court has also
given its imprimatur in Jaiprakash v. National Insurance Company
(SLP(Civil) No. 11801-11804 of 2005) in its order dated 13 th May,
2016 in the following manner:
“Insofar as the said suggestion is concerned, learned Solicitor
General drew our attention to the response filed before us on
behalf of the General Insurance Council, in particular paragraph
4, which states that presently the procedure sugges ted in
Paragraph 23 is being followed by the Insurance Companies i n
Delhi by way of a Scheme called “Claims Tribunal Agr eed
Procedure” which was formulated by the Delhi High Court in the
judgment dated 16.12.2009 passed in FAO No.843 of 2003 in
Rajesh Tyagi & Ors. v. Jaibir Singh 3 & Ors. It is also mentioned
therein that Tribunal as well as the Legal Service Authori ty are
taking effective steps to implement the said procedure, which i s
being carried out in the National Capital Territory of Del hi. In
paragraph 5, it is further submitted that since this procedure has
been successful in Delhi it can be extended on pan India basi s.
The agreed procedure has also been filed as Annexure R5 wi th
the response filed on behalf of the General Insurance Council.
“We have also perused the procedure, which has been placed
before us as Annexure R5 with the response which, in our
view, appears to be a comprehensive one and that we can
issue further directions to the Registrar General of the Delhi
High Court to ensure that procedure is strictly followed insofar
as Delhi is concerned and also circulate the said procedure to
all the other High Courts and the Registrar General of all t he
other High Courts are directed to ensure that the said procedure
is implemented through the Motor Accidents Claims Tribunals
in coordination with the Legal Service Authorities as well a s
the Director General of Police of the States concerned.
The Registry of the Supreme Court is directed to forward a copy
of this order along with Annexure R5 (pages 32 to 46 in the
response filed on behalf of the General Insurance Council) to all
the High Courts including the Delhi High Court to en sure
compliance of the present order.”
M.R. KRISHNA MURTHI v. THE NEW INDIA ASSURANCE
CO. LTD. & OTHERS [A. K. SIKRI, J.]
33. Vide order dated 6 th November, 2017 in Jaiprakash case,
this Court modified its order dated 13 th May, 2016 and directed all States
to implement the Modified Claims Tribunal Agreed Procedure formulated
by Delhi High Court on 12 th December, 2014. The copy of the Modified
Claims Tribunal Agreed Procedure was directed to be circulated to the
Registrar General of each High Court for necessary compli ance. The
relevant part of the said order is reproduced hereunder:
“It is also pointed out by learned amicus curiae that the or der
passed by Justice Midha referred to in our order of 13th May,
2016 was actually modified by Justice Midha on 12th December,
2014. The order dated 13th May, 2016 will, therefore , stand
modified to the extent that Justice Midha has himself modified his
earlier order on 12th December, 2014. The Registry will send a
copy of this order as well as the order passed by Justice Midha on
12th December, 2014 to the Registrar General of each High Court
for necessary information and compliance.”
34. This needs to be followed at All India Level. NALSA should
take up and monitor the same as well in coordination and cooper ation
with various high courts to facilitate the same.
(C) Ensuring receipt of compensation in the safe hands of
victims and/or kiths and kins of victims:
35. Mr. Arun Mohan has suggested that Government may frame
procedures and schemes in this behalf. In particular LIC/RBI can provide
for availability of annuity services in consultation with Pension Fund
Regulatory and Development Authority and the commerci al banks/
insurance companies. To facilitate the same, the learned senior counsel
has given two flowcharts, one under the existing law and the other on
establishment of MAMA. The details for framing such procedure an d
schemes are given in the book of Mr. Arun Mohan referred to a bove.
We impress upon the Government to look into the feasibility of framing
such schemes and for the availability of annuity certificates. This exercise
may be done within the period of six months and decision be take n
thereupon.
1115
36. In addition, we would also like to mention that the Delhi High
Court (speaking through J.R. Midha, J.) in Rajesh Tyagi v. Jaiveer
Singh and Others (FAO No. 842 of 2003) undertook the exercise of
framing Motor Accident Claims Annuity Deposit Scheme (M ACAD
Scheme) in cooperation with Indian Banks Association. Pur pose of
involving the banks was to ensure that the Scheme is implemented through
the banks. In its order dated 7 th December, 2018 passed in the aforesaid
case, the learned Judge recorded that 21 banks had taken deci sion to
implement MACAD Scheme which was approved by the Court on 1 st
May, 2018. Operative documents of these 21 banks were taken on
record. The court directed that sets of these operative doc uments be
furnished to the Registrar General of the High Court so tha t these are
circulated to all the MACTs. Further, directions for implementation of
the said Scheme are given. Therefore, we would like to rep roduce
order dated 7 th December, 2018 in its entirety.
“1. Mr. Lalit Bhasin, learned counsel for Indian Bank Association
has handed over copies of the operative documents of 21 Banks
which have implemented Motor Accident Claims Annuity Deposit
Scheme (MACAD Scheme) approved by this Court on 01st May,
2018. The compilations of the operative documents of 21 banks
are taken on record. Learned counsel for the Indian Bank
Association shall furnish the sets of the operative documents to
the Registrar General for being circulated to all t he Claims
Tribunals. 2. The Registrar General is directed to circulate the
aforesaid compilation to all the Claims Tribunals f or being
implemented forthwith. The Claims Tribunals shall disburse the
awarded amount to the claimants in a phased manner in terms of
the order dated 01st May, 2018 and the award amount be disbursed
through MACAD Scheme. 3. All the Banks are directed to appoint
a Nodal Officer within four weeks. Learned counsel for the IBA
shall compile the list of all the Nodal Officers of the Banks with
their respective addresses, phone numbers as well a s e-mail
addresses and submit the same to the Registrar General who shall
circulate the list of Nodal Officers to all the Claims Tribunals.
The Nodal Officer of each Bank shall ensure the implementation
of the MACAD Scheme by their branches. The Claims Tribunal
shall send the copy of the disbursement order by e-mail t o the
Nodal Officer of that Bank who shall ensure the disbursement by
M.R. KRISHNA MURTHI v. THE NEW INDIA ASSURANCE
CO. LTD. & OTHERS [A. K. SIKRI, J.]
the Bank within three weeks of the receipt of the e-mail. 4. The
Indian Bank Association and Delhi State Legal Services Authority
shall give adequate publicity to MACAD Scheme in the print as
well as digital media. 5. Claims Tribunal Agreed Procedure in
terms of the order dated 15th December, 2017 is further modified
to incorporate the directions contained in orders dated 18th January,
2018, 09th March, 2018, 01st May, 2018, 20th July, 2018 and 07th
September, 2018. The Modified Claims Tribunal Agreed Procedure
is annexed to this order. 6. The Registrar General shall circulate
the Modified Claims Tribunal Agreed Procedure to all the Claims
Tribunals. The Claims Tribunals, Delhi Police and Insur ance
Companies are directed to implement the Modified Claims Tribunal
Agreed Procedure with effect from 01st January, 2019. 7. Learned
amicus curiae submits that the Committee is deliberating upon the
issues referred to it by this Court. Let the final repo rt of the
Committee be submitted before this Court on the next date of
hearing. 8. List for reporting compliance on 08th February, 2019
at 02:30 P.M. 9. This Court appreciates the assistance rendered
by Mr. Lalit Bhasin, learned counsel for Indian Bank Association
for implementation of MACAD Scheme. 10. Copy of this order
along with Modified Claims Tribunal Agreed Procedure be sent
to the Registrar General of this Court, National Legal Ser vices
Authority (NALSA), Delhi State Legal Services Author ity
(DSLSA), Delhi Police as well as General Insurance Council (5th
Floor, Building No.14, National Insurance Building, Jamshedji Tata
Road, Churchgate, Mumbai-400020). General Insurance Council
shall circulate this order to all the Insurance Companies. 11. Copy
of this order be given dasti to learned counsel for the part ies as
well as learned counsel for IBA and Delhi Police under signature
of Court Master.”
37. Thus, direction for implementation of the ‘Claims Tribunal
Agreed Procedure’ which is substituted by modified procedure, as noted
above, are already there. However, we find that there i s no proper
implementation thereof by the Claims Tribunals. We, thus, direct that
there should be programmes from time to time, in all State Judicial
Academies to sensitizing the presiding officers of the Claims Tribunals,
1117
Senior Police Officers of the State Police as well as Insurance Company
for the implementation of the said Procedure.
38. The Modified Claims Tribunal Agreed Procedure as approved
by High Court of Delhi in its aforesaid order dated 7 th December, 2018
has the propensity to ensure speedy disposal of MACT cases. Likewise,
Operative Documents of 21 documents which have implemented Annuity
Deposit Scheme can ensure that compensation is delivered to the persons
for whom it is meant. It has the element of annuity payments as well.
There is, therefore, a need to implement the MACAD Scheme by the
Claims Tribunals in the entire country. We direct accordingly. We also
direct 21 banks to implement its operative documents on All India basis.
39. We sum up the various directions/recommendation s
hereinbelow:
(a) We impress upon the Government to also consider the feasibility
of enacting Indian Mediation Act to take care of various aspe cts of
mediation in general.
(b) The Government may examine the feasibility of setti ng up
MAMA by making necessary amendments in the Motor Vehicles Act.
For this purpose, it can consider the two flow charts given by the appellant.
(c) In the interregnum, NALSA is directed to set up Motor Accident
Mediation Cell which can function independently under the aegi s of
NALSA or can be handed over to MCPC. Such a project should b e
prepared within a period of two months and it should start functioning
immediately thereafter at various levels as suggested in this judgment.
We reiterate the directions contained in order dated November 6, 2017
in Jai Prakash case for implementation of the latest Modified Claims
Tribunal Agreed Procedure. For ensuring such implementation, NALSA
is directed to take up the same in coordination and cooper ation with
various High Courts. MACAD Scheme shall be implemented by a ll
Claim Tribunals on All India basis. 21 Banks, Members of Indian Banks
Assocation, who had taken decision to implement MACAD Scheme
would do the same on All India basis.
(d) We impress upon the Government to look into the feasibility of
framing necessary schemes and for the availability of annuity certificates.
M.R. KRISHNA MURTHI v. THE NEW INDIA ASSURANCE
CO. LTD. & OTHERS [A. K. SIKRI, J.]
This exercise may be done within the period of six months and decision
be taken thereupon.
(e) Likewise, we direct that there should be programmes from
time to time, in all State Judicial Academies, to sensitizing the Presiding
Officers of the Claims Tribunals, Senior Police Officers of the State
Police as well as Insurance Company for the implementation of the said
Procedure.
The appeals are disposed of in the aforesaid manner.
Nidhi Jain Appeals disposed of.