Cholan Roadways Corporation Ltd., Rep. by Its Managing Director Vs. Ahmed Thambi and ors. - Court Judgment

Ajit Prakash Shah, C.J.

1. When C.M.A. No. 231 of 1994 came up for hearing, Justice K.P.Sivasubramaniam noticed that apparently conflicting views expressed by two Division Benches on the question canvassed by the appellant - Cholan Roadways Corporation Limited namely, whether compensation could be awarded separately on account of permanent disability and also on account of loss of earning capacity. There being conflict of opinions by two Division Benches of this Court, the learned single Judge deemed it fit to refer the matter to the Full Bench.

2. The facts giving rise to the present CMA are that on 27.05.1991 the 1st respondent was travelling on a TVS-50 motor cycle from Ayyampettai to Thanjavur. The 1st respondent was the pillion rider and one M.R.Abu Bakker was driving the motor cycle. When they were nearing Pasubathi Temple the appellant - transport corporation's bus bearing Registration No. TN-49-N-0099 coming from opposite direction hit the motor cycle. Abu Bakker died on the spot. The 1st respondent, who was the pillion rider suffered serious injuries. The 1st respondent was 35 years old and was working as supervisor in Rahman Shop at Kumbakonam. He was earning Rs. 1,500/- per month. He was the sole bread-winner of the family. The 1st respondent filed a claim petition before the Tribunal claiming compensation of Rs. 1,50,000/-. The Tribunal awarded Rs. 6,000 as loss of income, Rs. 4,000/- towards extra nourishment and Rs. 30,000/- as compensation towards pain and suffering. It was found that he suffered 50% partial permanent disability. Therefore, towards this head the tribunal awarded Rs. 20,000/- as against Rs. 50,000/- claimed by the respondent. As against the claim of Rs. 50,000/- towards the future loss of earning, the tribunal awarded Rs. 10,000/-. Thus, a total compensation of Rs. 70,000/- was awarded to the respondent. The contention of the appellant is that when the tribunal had awarded Rs. 20,000/- towards partial permanent disability, there was no justification for awarding Rs. 10,000/- towards loss of earning. The learned single Judge noticed the apparent conflict of the views expressed by the two Division Benches and referred the matter to a Larger Bench.

3. On behalf of the appellant it is argued by the learned Advocate General that the award made by the tribunal cannot be sustained, as it would amount to double compensation. Reliance is placed on the ruling of the Division Bench in National Insurance Co. Ltd. v. A. Kala Mohan and Anr. : (1997)IILLJ1179Mad , where it was held that when tribunal has awarded compensation for disability no amount is separately payable for loss of earning power. It is submitted that when once an injured is compensated for permanent disability as a result of the accident, it will be illogical for him to contend that he should be compensated for his loss of earning capacity, once again in a separate head. They are really not separable and perhaps could be considered as mutually excluding. Our attention is also drawn to the decision of a Full Bench of the Kerala High Court in Oriental Insurance Co. Ltd. v. Hariprasad 2006 (1) CTC 81, where it was held that the tribunal should not take into consideration loss of earning power as separate head after the fixation of compensation for permanent disability.

4. In reply, learned Counsel for the respondent contended that the submissions made on behalf of the appellant may not be fully acceptable. He firstly referred to the form prescribed by the Motor Accident Claims Tribunal Rules, wherein compensation for the permanent disability and compensation for the loss of earning power are shown as separate heads of compensation. According to him, this is an indication of the intention of the rule making authority, and this has to be sufficiently taken notice of. He placed reliance on a decision of another Division Bench of this Court in Managing Director, Tiruvalluvar Transport Corporation, Madras v. Thangavelu and Anr. 1995 (2) MLJ 571. In that judgment, the Division Bench has held that there is no merit in the contention of the appellant that the compensation cannot be awarded for permanent disability if compensation was awarded under the head loss of earning power and that they are distinct and separate claims. Learned Counsel for the respondents also referred to the judgment of the Supreme Court in Ramesh Chandra v. Randhir Singh : (1966)IILLJ152SC .

5. Under Section 168 of the Motor Vehicles Act, the tribunal is required to fix such compensation which appears to it to be just. The power given to the tribunal in the matter of fixing compensation is wide. The Supreme Court and this Court repeatedly held and reiterated that the compensation to be awarded by the tribunals under any head should not be a token compensation, but it should be adequate and reasonable to achieve the statutory goal. The tribunals are well advised to take into account the facts and circumstances of the individual case, the age of the injured or the deceased on the date of the accident, social and economic status of the deceased or injured, the prospects of the deceased/injured earning more income if the accident had not taken place. The courts and tribunals, in bodily injury cases while assessing compensation should take into account all relevant circumstances, evidence, legal principles governing quantification of compensation. However, they have to approach the issue of awarding compensation on the larger perspective of justice, equity and good conscience and eschew technicalities in the decision making. It is now well settled that a victim of accident for personal injury is entitled for full compensation. The injured person must be compensated in damages for the loss he suffers on account of the injury. Lord Blackburn stated this in 1880 in Livingstone v. Rawyards Coal Co. (1880) 5 AC 25 (HL) that 'you should as nearly as possible get at the sum of money which will put the party who has been injured, or who has suffered, in the same position as he would have been if he had not sustained the wrong for which he is now getting compensation or reparation'. This theory of full compensation by the House of Lords ran a little inconsistent with the theory of 'fair' or moderate compensation laid down earlier in 1873 by Brett, LJ. in Rowley v. London & N.W. Rly. Co. (1873) LR 8 Ex 221. However, in the subsequent judgments in Lim Poh Choo v. Camden and Islington Area Health Authority 1980 ACJ 486 (HL), England) the theory of payment of full and fair compensation has been upheld. In Divisional Controller, KSRTC v. Mahadeva Shetty and Anr. 2004 (1) TN MAC (SC) 534 Arijit Pasayat, J. speaking for the Bench endorses the theory of full and fair compensation as follows:

13. The damages for vehicular accidents are in the nature of compensation in money for loss of any kind caused to any person. In case of personal injury the position is different from loss of property. In the later case there is possibility of repair or restoration. But in the case of personal injury, the possibility of repair or restoration is practically non-existent. In Parry v. Cleaver 1969 (1) AH. E.R. 555, Lord Morris stated as follows:

To compensate in money for pain and for physical consequences is invariably difficult but ... no other process can be devised than that of making a monetary assessment.14. The main principles of law on compensation for injuries were worked out in the 19th century, where railway accidents were becoming common and all actions were tried by the jury. Though the cases have an antiquated air it is still useful to refer to them. The necessity that damages should be 'full' and 'adequate' was stressed by the Court by the Queen's Bench in Fair v. London and North-Western Rly. Co. 1869 (21) LT 326. The word 'compensation' is derived from the Latin word 'com-pensare' meaning 'weigh together' or 'balance'. In Rushton v. National Coal Board, 1953(1) All.E.R.314, it was observed:Every member of this Court is anxious to do all he can to ensure that the damages are adequate for the injury suffered, so far as there can be compensated for an injury, and to help the parties and others to arrive at a fair and just figure....

6. In Helen C. Rebello v. Maharashtra State Road Transport Corporation : AIR1998SC3191 , the Supreme Court observed that the tribunal constituted under the Act as provided in Section 168 is required to make an award determining the amount of compensation which to it appears to be 'just'. It has to be borne in mind that compensation for loss of limbs or life can hardly be weighed in golden scales. Bodily injury is nothing but a deprivation which entitles the claimant to damages. The quantum of damages fixed should be in accordance with the injury. An injury may bring about many consequences like loss of earning capacity, loss of mental pleasure and many such consequential losses. A person becomes entitled to damages for mental and physical impairment, his or her life may have been shortened or that he or she cannot enjoy life, which has been curtailed because of physical handicap. The normal expectation of life is impaired. But at the same time it has to be borne in mind that the compensation is not expected to be a windfall for the victim. Statutory provisions clearly indicate that the compensation must be 'just' and it cannot be a bonanza; not a source of profit but the same should not be a pittance. The courts and tribunals have a duty to weigh the various factors and quantify the amount of compensation, which should be just. What would be 'just' compensation is a vexed question. There can be no golden rule applicable to all cases for measuring the value of human life or a limb. Measure of damages cannot be arrived at by precise mathematical calculations. It would depend upon the particular facts and circumstances, and attending peculiar or special features, if any. Every method or mode adopted for assessing compensation has to be considered in the background of 'just' compensation which is the pivotal consideration. Though by the use of the expression 'which appears to it to be just', a wide discretion is vested on the tribunal, the determination has to be rational, to be done by a judicious approach and not the outcome of whims, wild guesses and arbitrariness. The expression 'just' denotes equitability, fairness and reasonableness, and non-arbitrariness.

7. The Supreme Court in R.D.Hattangadi v. Pest Control (India) (P) Ltd. : [1995]1SCR75 laying the principles posited:

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 as 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.

8. In Oriental Insurance Co. Ltd. v. Hariprasad 2006 1 CTC 81 a Full Bench of the Kerala High Court has held that when permanent disablement is adequately compensated, there arises no question of granting of further compensation for loss of earning capacity. The Court held that (1) Loss of earning power is one of the consequences that follows from a permanent disability; (2) Permanent disability is a physical impairment which results in distinct personal, social and financial consequences to be classified as one head requiring compensation to be worked out as one entitling for non-pecuniary damages; (3) An injured, who sustained a disability is entitled to claim compensation under the head 'permanent disability'. If the resultant deprivation is categorized and claim is made under separate heads and compensation is awarded under the above heads, over and above the same, for the deprivation suffered compensation is not to be granted under the general head 'permanent disability'; (4) All the eventualities that may surface on account of a disability, which deserve to be compensated may not be possible to be catalogued and essentially the Tribunal has to determine the claim bearing in mind the statutory mandate that what is payable is a just compensation; and (5) While awarding compensation under the head 'permanent disability', the tribunal should take notice of the loss of earning power, in each individual case, in case a claim is made as one of the contributory to the total packet of compensation and shall not take into consideration the loss of earning power as a separate head after fixation of compensation for permanent disability.

9. In Halsbury's Laws of England, Fourth Edition, Para 879 states that a person injured by another's wrong is entitled to general damages for non-pecuniary loss, such as his pain and suffering and loss of amenity, and to damages for pecuniary loss, both past and future, including loss of earnings, medical expenses, cost of nursing care and for loss of earning capacity where he is handicapped in the labour market. Broadly the heads of damages can be divided as follows:

A. Pecuniary loss:

(1) expenses caused by the injuries;

(2) loss of earning or profits--

(a) from the date of accident till the date of trial

(b) prospective loss

(c) incidental expenses.

B. Non-pecuniary loss:

(1) pain and sufferings

(2) loss of the amenities of life

(3) loss of expectation of life

The normal practice is to itemise the award broadly while keeping an eye on the whole, to be just and fair. Further the amount awarded must be liberal and not meager since the law values life and limb in a free society on generous scales. However, all these elements have to be viewed with objective standards.

10. Pecuniary loss: Generally in the case of pecuniary loss, such as loss of profits or earnings, the principle of restitutio in integrum applies, and the plaintiff is entitled to be put in the same position as he would have been in if the injury had not occurred, though deductions may be made for benefits received. As regards future loss the chances, both favourable and unfavourable, are to be reflected in the award. Pecuniary loss incurred in a case of personal injury consequential upon the tortious act of the defendant may cover (1) consequential expenses; (2) the cost of care; and (3) loss of earnings. It may also be broadly classified under two heads: (a) past; and (b) future pecuniary losses. The loss of earnings is sometimes called the 'negative burden' while the incurring of extra expenditure is called the 'positive burden'. Damages for future loss of earnings are assessed by the multiplicand multiplier method. The multiplicand (or the 'basis' figure or 'datum') is selected by estimating the yearly loss of income after making allowances for the expenses, if any, including taxes, etc required for earning that income. The selection of the multiplier takes into account the accelerated receipt of the entire amount in a lump sum and the vicissitudes of life and therefore, is generally much less than the estimated period of future loss of earnings. The plaintiff is also entitled to claim loss of earnings for the 'lost years', that is for the years that he would have lived had he not suffered the injury.

11. With effect from 14.11.1994 a statutory multiplier Table has been introduced in the Motor Vehicles Act. The amendment by Act 54 of 1994 to the Motor Vehicles Act, 1988 contains a multiplier Table in the Second Schedule. The advantage of the actuarial multiplier is that it will give a sum which will exhaust the principal over the period for which the future dependency (or the earnings in injury case) is to last. The amount arrived at is not like the one arrived at in the interest method where the principal remains as an additional gain while interest is consumed periodically. The multiplier method takes care of inflation and therefore, no amount should be separately awarded for inflation. After the pecuniary damages are arrived at, courts are also awarding 9 per cent interest generally on the sum arrived at. As the statutory multiplier reduces, by means of a mathematical formula, the future amounts to present value, there is no need to further deduct 1/3 or 1/4. The multiplier takes in not only mortality and future inflation but also the fact that the claimants are receiving an accelerated payment once and for all.

12. Non-pecuniary loss - Generally non-pecuniary losses in cases of personal injury as a result of a tortious act may cover the following heads of damages: (1) damages for mental and physical shock, pain and suffering already suffered or likely to be suffered in the future; (2) damages to compensate for loss of amenities of life; (3) damages for the loss of expectation of life, where the normal longevity of the person concerned is shortened on account of the injury; and (4) damages for inconvenience, hardship, discomfort, disappointment, frustration, disfigurement and mental stress in life. In Ramesh Chandra v. Randhir Singh : (1966)IILLJ152SC , the Supreme Court, while rejecting the argument that the sum awarded for pain, suffering and loss of enjoyment of life etc. termed as general damages should be taken to be covered by damages granted for loss of earnings, observed as follows:

The pain and suffering and loss of enjoyment of life which is a resultant and permanent fact occasioned by the nature of injuries received by the claimant and the ordeal he had to undergo. If money be any solace, the grant of Rs. 20,000/- to the claimant represents that solace. Money solace is the answer discovered by the Low of Torts. No substitute has yet been found to replace the element of money. This, on the face of it appeals to us as a distinct head, quite apart from the inability to earn livelihood on the basis of incapacity or disability which is quite different. The incapacity or disability to earn a livelihood would have to be viewed not only in-praesent but in futuro on reasonable expectancies and taking into account deprival of earnings of a conceivable period. This head being totally different cannot in our view overlap the grant of compensation under the head of pain, suffering and loss of enjoyment of life. One head relates to the impairment of person's capacity to earn, the other relates to the pain and suffering and loss of enjoyment of life by the person himself.

13. Pain and suffering: 'Pain and suffering' was first recognised by law as a ground for grant of damages, per Lord Halsbury, L.C. in The Mediana (1960) A.C. 113 . It is enumerated as a distinct factor from bodily injury in the passage extracted from the judgment of Cockburn C.J. in Philips v. South Western Rail Co. (1879) 4 Q.B.D. 406. This head of damages includes both physical pain and mental anguish caused by the injury. A person is entitled to damages for the mental suffering caused by the knowledge that his life has been shortened and that his capacity for enjoying life has been curtailed through physical handicap. Damages for pain and suffering are clearly incapable of exact estimation and their assessment must necessarily be a matter of degree. They must be assessed on the basis of giving reasonable compensation for the actual prospective suffering entailed. As Bramwell L.J. said, the proper direction for a jury was: 'You must give the plaintiff a compensation for his pain and bodily suffering of course it is almost impossible for you to give to an injured man what can be strictly called a compensation, but you must take a reasonable view of the case and must consider under all the circumstances, what is a fair amount to be awarded to him.' As Greer, L.J. said in Heaps v. Perrite Ltd. (1937) 2 All E.R. 60, we have to take into account not only the suffering which he had immediately after the accident but the suffering that he will have throughout his life in future.

14. Loss of amenities : The next head of non-pecuniary loss is 'loss of amenities'. Besides damages for the pain and suffering sustained by a plaintiff by reason of his injuries, damages may be awarded for the losses sustained by him. Loss of amenities covers deprivation of the ordinary experiences and enjoyment of life and includes loss of the ability to walk or see, loss of a limb or its use, loss of congenial employment, loss of pride and pleasure in one's work, loss of marriage prospects and loss of sexual function. In India loss of marriage prospects and loss of enjoyment of life are awarded separately. Damages under this head are awarded whethere the plaintiff is aware of the loss or not. They are awarded for the fact of the deprivation, rather than for the awareness of it.

15. Loss of expectation of life : Damages are also awarded for loss of expectation of life. Loss of expectation of life is considered in the assessment of damages only when the injuries sustained lead to the curtailment of the normal expectation of life of the injured person. Damages are assessed under this head by putting a money value on the prospective balance of happiness in the years that the injured might have otherwise lived. However, having regard to the uncertainties of life and difficulties in assessment, very moderate sums are awarded under this head.

16. In K.Sapana v. B. Appa Rao (1988) 1 ACJ 113 (A.P) and Rattan Lal Mehta v. Rajinder Kapoor (1996) 2 TAC 406 (Del), M.Jagannadha Rao, C.J. as he then was, on consideration of common law principles and Indian case law, distilled the following principles relating to the assessment of non-pecuniary damages in cases of personal injury.

1. Damages are liable to be awarded for loss of expectation of life and loss of amenities or enjoyment of life, to plaintiffs who become unconscious as a result of the injury.

2. An objective approach must be adopted for the assessment of non-pecuniary damages.

3. Comparison should not be made with the total awards given in earlier cases as those awards include both pecuniary and non-pecuniary losses. Comparison must be limited to non-pecuniary losses because pecuniary losses are not comparable as they depend upon the earning capacity of the injured person.

4. Sums higher than those claimed under particular heads of damages can be awarded, so long as the court does not exceed the total amount claimed.

5. Conventional figures adopted by the courts for loss of particular limbs must be upgraded depending upon inflation.

6. There should be no discrimination between rich and poor in evaluating non-pecuniary losses.

7. Each sub-head of non-pecuniary damages must be separately computed and added up. There must be no overlapping between the individual components.

8. Exemplary damages may be awarded in an action of tort where the defendant has not only committed a legal wrong but has also behaved in an outrageous and insulting manner.

9. Though the claimants have estimated different sums of damages under various heads, it is open to the court to award sums which are higher than those claimed under particular heads of damages, so long as the court does not exceed the total amount claimed.

10. The damages awarded for non-pecuniary damages for pain, suffering and loss of amenities cannot be reduced even if the quantum of pecuniary damages payable is high. Exemplary damages could be awarded in an action of tort where the defendant has not only committed a legal wrong but has also behaved in an outrageous and insulting manner. Aggravated damages take into effect the motives or conduct of the defendant.

17. It is necessary to mention at this stage that there is really no conflict between the two Division Bench decisions of this Court referred to earlier. In Managing Director, Tiruvalluvar Transport Corporation, Madras v. Thangavelu and Anr. 1995 2 MLJ 571 the loss of income was assessed at Rs. 112.50 per month and calculating the same for 25 years, the tribunal had fixed the compensation on this head at Rs. 33,750/-. However, since lump sum payment was directed to be paid the tribunal deducted 1/6th of the total amount arrived at viz., Rs. 5,625/- and ordered payment of Rs. 28,125/- under this head. For pain and suffering and mental agony the tribunal had awarded a sum of Rs. 10,000/-, and for permanent disability, the tribunal had awarded Rs. 10,000/- to the first respondent. The Division Bench rejected the contention of the appellant that compensation cannot be awarded for permanent disability if compensation is awarded under the heading 'loss of earning power'. The Court observed that it is well known that permanent disability will have several consequences apart from inability to work or earn as before. To be specific, the victim of the accident who suffers from permanent disability will not be in a position to carry on his normal house-hold activities in his house. More than anything else, he will be brooding over the disability day after day till the end of his life and suffer untold mental agony. The compensation for pain and suffering is only for the pain and suffering undergone at the time of injury and the treatment which followed. Thus, compensation for permanent disability will cover the mental agony to be suffered by the injured in his future life and his inability to attend his normal house-hold activities. This reasoning of the Division Bench would clearly indicate that compensation was awarded taking into account the non-pecuniary loss under the head of loss of amenities of life, hardship, discomfort, mental stress, etc. Therefore, though the amount was awarded under the general head of 'permanent disability', it would clearly fall under non-pecuniary loss on account of loss of amenities of life, hardship and mental stress in life.

18. Then turning to the other judgment of the Division Bench of this Court in National Insurance Co. Ltd. v. A. Kala Mohan , it is seen that it was a case of total disability. The claimant had suffered 100% disability in his spinal cord. The injured had broken his spinal cord and his entire body below the hip had become functionless and senseless. It had also come in the evidence that passing of urine and motion was out of his control. The medical evidence also disclosed that he was unfit for sexual life any more and was not able to sit or stand and because of the multiple grievous injuries and fractures, he would not be able to work any more. The Division Bench awarded a total sum of Rs. 3,00,000/- as compensation under all the three heads of the non-pecuniary losses namely, pain and suffering, loss of amenities and enjoyment of life. The Division Bench also awarded Rs. 1,00,000/- for loss of prospect of marriage. The award of the Tribunal of Rs. 2,00,000/- under the head permanent disability that is, loss of earning power, was also confirmed by the Division Bench. However, the Division Bench set aside the finding of the tribunal in awarding Rs. 2,00,000/- for loss of earning power, as it would amount to double compensation. Thus, we do not find any inconsistency in the approach of the Court in the case of National Insurance Co. Ltd. v. A. Kala Mohan and Managing Director, Tiruvalluvar Transport Corporation, Madras v. Thangavelu and Anr. in the light of the headings we extracted.

19. In order to avoid any future confusion and to bring more clarity and transparency in the award of damages, it is necessary that the tribunal, while awarding damages, should itemise the award under each of the head namely, pecuniary losses and non-pecuniary losses. In the non-pecuniary losses the tribunal shall consider a) pain and suffering, b) loss of amenity, c) loss of expectation of life, hardship, mental stress, etc (d) loss of prospect of marriage and under the head pecuniary losses, the tribunal shall consider loss of earning capacity and loss of future earnings as one component apart from medical and other expenses and loss of earning, if any from the date of accident till the date of trial. When loss of earning capacity is compensated as also the non-pecuniary losses under (a) to (d), permanent disability need not be separately itemised. The reference is answered accordingly. C.M.A. No. 231/94 be placed before the single Judge for final disposal in the light of our answer to the reference.