National Insurance Co Ltd Vs Renuka Saha and ors - Citation 878392 - Court Judgment

Judgment:

Bhaskar Bhattacharya, J.

1. This appeal and the cross-objection are directed against an award dated June 19, 2008 passed by the Motor Accident Claim Tribunal and Additional District Judge, Sixth Fast Track Court, Alipore, South-24 Parganas, in M.A.C. Case No. 44 of 2007 thereby disposing of an application under Section 166 of the Motor Vehicles Act filed by the cross-objectors thereby directing the Insurance Company to pay compensation of Rs. 17,81,380/- with interest @ 6% per annum from the date of filing of the claim application till payment.

2. Being dissatisfied, both the Insurance Company and the claimants have come up before this Court by filing the appeal and the cross-objection respectively.

3. According to the claimants, on August 1, 2003, the victim, born on April 1, 1953, was travelling by an auto-rickshaw which was hit by a Tata Mini-truck resulting in the death of the victim. There is no dispute that the mini-truck was insured by the National Insurance Company Ltd., the appellant before us.

4. It appears that the claimant was in service with the Jute Corporation of India as D.P.C. Manager and used to earn Rs. 20,135/- a month as gross salary. The claimants, therefore, claimed a sum of Rs. 25 lakh as compensation.

5. In spite of service of notice, the owner of the vehicle did not appear to oppose the claim and the Insurance Company after taking leave under Section 170 of the Motor Vehicles Act contested the proceeding, although no evidence was adduced on its behalf.

6. The learned Tribunal by applying the multiplier of 11 on the basis of the aforesaid gross income of the victim arrived at the figure of Rs. 17,81,380/- by applying the principles mentioned in the Second Schedule of the Act and directed the Insurance Company to pay the said amount.

7. The first point taken by the Insurance Company in this appeal is that the learned Tribunal below should have deducted the amount of conveyance allowance of Rs. 400/- payable to the victim by the employer, professional tax of Rs. 130/- and the income of tax of 2000/- payable by the victim every month from the gross income of the deceased and if these deductions were made, the salary would come to Rs. 17,605/- a month and by applying the multiplier of 11 and after deductions of one-third as the personal expenses of the victim, the figure of award would have come down to Rs. 15,49,240/-. It is, however, contended that multiplier of less than 11 should have been applied and no sum beyond the sum assured within the meaning of Section 149(1) of the Motor Vehicles Act could have been directed to be paid by the Insurance Company.

8. In the cross-objection filed by the claimants they have contended that the learned Tribunal below failed to consider that the victim was in a stable service and had the prospect of promotion were he alive till his retirement, and if such fact was taken into consideration, the claimants were entitled to get compensation of Rs. 25,00,000/-. It is pointed out that one of the witnesses for the claimants, who was a co-employee of the victim, specifically asserted that if the victim did not die of the accident, he would occupy the post of Marketing Manager. The claimants have also prayed for granting interest not @ 6% per annum but at least @ 8% per annum.

9. Mr. Pratik Prakash Banerjee, the learned advocate appearing on behalf of the Insurance Company, has made twofold submission apart from the aforesaid points taken in the memorandum of appeal.

10. According to Mr. Banerjee, the learned Tribunal had no jurisdiction to direct the Insurance Company to make payment of any sum beyond the limit mentioned Section 149(1) of the Act being 'a sum not exceeding the sum assured payable there under', that being the limit of the policy, and for this purpose, the Tribunal had a duty to first adjudicate what was the sum assured under the policy. According to Banerjee, since this was not done, the award passed was wholly without jurisdiction and the proceeding was ultra vires.

11. Mr. Banerjee next contends that the liability of the Insurance Company to make payment to the third parties is limited to a maximum amount being the sum assured under the policy under Section 149(1) of the Act and this is the situation regardless of the re-enactment of the Motor Vehicles Act by omitting the limitation under the old Section 95 of the Act of 1939 in the new Section 147. Mr. Banerjee contends that this is because the legislature knowingly retained the limit to the liability of the insurer in respect of payment to third parties under Section 149(1) of the new Act of 1988, which corresponds to old Section 96(1) of the Act of 1939, thus showing the legislative intendment to retain the said limit despite re-enactment which could not be rendered otiose or redundant.

12. Mr. Banerjee illustrates his aforesaid submission in the following way:

a. Section 149 has two parts. The first part operates after the award is passed, but the mechanics of the first part are to be worked out while passing the award. The second part, according to Mr. Banerjee, is operative during the proceeding where the award is to be passed and refers to the defences that the insurance company can take unless it has taken leave under Section 170 of the Act of 1988. This second part, however, Mr. Banerjee continues, is not germane for the purpose of the above two points of argument.

b. The First Part: 'Section 149. Duty of insurers to satisfy judgments and awards against persons insured in respect of third party risks: (1) If, after a certificate of insurance has been issued under Sub-section (3) of Section 147 in favour of the person by whom a policy has been effected, judgment or award in respect of any such liability as is required to be covered by a policy under Clause (b) of Sub-section (1) of Section 147 (being a liability covered by the terms of the policy) or under the provisions of Section 163A is obtained against any person insured by the policy, then, notwithstanding that the insurer may be entitled to avoid or cancel or may have avoided or cancelled the policy, the insurer shall, or may have avoided or cancelled the policy, the insurer shall, subject to the provisions of this section pay to the person entitled to the benefit of the decree any sum not exceeding the sum assured payable thereunder, as if he were the judgment debtor, in respect of the liability, together with any amount payable in respect of costs and any sum payable in respect of interest on that sum by virtue of any enactment relating to interest on judgments.

c. Mr. Banerjee contends that even after repeal and re-enactment of the law relating to Motor Vehicles, the above protection given to the Insurance companies has not been curtailed in anyway, and the Insurance Company cannot be held to have unlimited statutory liability to pay for third party risks, and this has been held, in so many words, according to Mr. Banerjee, in the following decisions:

i. New India Assurance Co., Shimla v. Kamla and Ors. reported in : (2001) 4 SCC 342 at paragraph 17 which holds:

It is in Section 149 that provisions, relating to the duty of the insurer for satisfying the judgments and awards in respect of third party claims, are incorporated. Sub-section (1) says that the insurer shall pay to the person entitled to the benefit of a judgment or award as if the insurer were the judgment debtor in respect of the liability, when any such judgment or award is obtained against the insured in whose favour a certificate of insurance has been issued. Of course, the said liability of the insurer is subject to the maximum sum assured payable under the policy.

ii. Ramshray Singh v. New India Assurance Co. Limited and Ors. reported in : AIR 2003 SC at page 2877, 3rd last paragraph where the Apex Court was pleased to hold that 'The appellant's final submission was that as the policy was a comprehensive one, it would cover all risks including the death of the khalasi. The submission is unacceptable. An insurance policy only covers the person or classes of persons specified in the policy. A comprehensive policy merely means that the loss sustained by such person/persons will be payable upto the insured amount irrespective of the actual loss suffered. See: New India Insurance Co. Ltd. v. C.M. Jaya : 2002 (2) SCC 278; Colinvaux's: Law of Insurance (7th Edition) p. 93-94].

iii. Oriental Insurance Co. Limited v. Inderjit Kaur and Ors. a judgment of Bench Strength 3 reported in : (1998) 1 SCC 371 at paragraph 9 quotes Section 149(1) of the Act of 1988 and then goes on to hold at paragraph 10 as follows:- 'We have, therefore, this position. Despite the bar created by Section 64VB of the Insurance Act, the appellant, an authorised insurer, issued a policy of insurance to cover the bus without receiving the premium therefor. By reason of the provisions of Section 147(5) and 149(1) of the Motor Vehicles Act, the appellant became liable to indemnify third parties in respect of the liability which that policy covered and to satisfy awards of compensation in respect thereof notwithstanding its entitlement (upon which we do not express any opinion) to avoid or cancel the policy for the reason that the cheque issued in payment of the premium thereon had not been honoured.

d. The judgments per contra, according to Mr. Banerjee, are not the authorities for the proposition that the liability is unlimited, under the Act of 1988, because those judgments are either on the basis of Section 147 of the Act of 1988 vis--vis Section 95 of the old Act of 1939 or do not notice Section 149(1) of the Act of 1988 or do not construe Section 149(1) of the Act of 1988. By way of example, Mr. Banerjee fairly drew our attention to the following judgments which apparently go against his contention:

i. The judgment in the case of National Insurance Co. Ltd. v. Behari Lal reported in : (2000) 7 SCC 137 where the decision was rendered only on the basis of Section 147 of the Act of 1988 without construing or noticing the effect of Section 149(1) of the Act of 1988.

ii. New India Assurance Co. v. Shri Satpal Singh and Ors. reported in : (2000) 1 SCC 237, construing only the provisions of Section 147 of the Act of 1988, vis--vis Section 95 of the old Act of 1939, at paragraphs 9 and 10 of the report, and then held at paragraph 10 as follows: 'Hence, under Sub-section (2), there is no upper limitation for the insurer regarding the amount of compensation awarded in respect of death or bodily injury of a victim of the accident. It is, therefore, apparent that the limit contained in the old Act has been removed and the policy should insure the liability incurred and cover injury to any person including owner of the goods or his authorised representative carried in the vehicle. The Legislature has also taken care even the policies which were in force on the date of commencement of the Act by specifically providing that any policy of insurance containing any limit regarding insurer's liability shall continue to be effective for a period of four months from commencement of the Act or till the date of expiry of such policy, whichever is earlier. This means, after the said period of four months a new insurance policy consistent with the new Act is required to be obtained' and at paragraph 11 the judgment shows that the judgment had the 'result' of holding that 'under the new Act an insurance policy covering third party risk is not required to exclude gratuitous passengers in a vehicle, no matter that the vehicle is of any type or class. Hence the decisions rendered under the old Act vis--vis gratuitous passengers are of no avail which considering the liability of the insurance company in respect of any accident which occurred or would occur after the new Act came into force

13. According to Mr. Banerjee, it is thus apparent that the said judgement did not construe or even notice the retention of Section 149(1) of the Act of 1988 which expressly limited the liability of the of the Insurer in case of third party risks to the extent of the sum assured in the policy.

14. Therefore, the said judgment, according to Mr. Banerjee, is per incuriam by way of sub silentio as it is clear that the provisions of Section 149 of the Motor Vehicles Act, 1988 was not present to the mind of the Hon'ble Court.

15. Mr Banerjee points out that the judgment in Satpal Singh (supra) was overruled by a Bench Strength of three judges New India Assurance Co. Ltd. v. Asha Rani and Ors. reported in : (2003) 3 SCC 223 : AIR 2003 SC 607, wherein the majority decision was rendered by His Lordship the Hon'ble Mr. G.B. Patnaik, the then Chief Justice of India, while His Lordship the Hon'ble Mr. Justice Satya Brata Sinha delivered a separate but concurring opinion. By referring to Paragraph 10 of the majority judgment, Mr Banerjee draws our attention to the observations of the majority that Satpal's case was not correctly decided and consequently, overruled it. It is, however, pointed out that the Hon'ble Justice Sinha construed Sections 147 and 149(2) but not Section 149(1) of the Act of 1988 to nonetheless come to the following conclusions in the second last and third last paragraphs of the report quoted below:

An owner of a passenger carrying vehicle must pay premium for covering the risks of the passengers. If a liability other than the limited liability provided for under the Act is to be enhanced under an insurance policy, additional premium is required to be paid. But if the ratio of this Court's decision in New India Assurance Co. v. Satpal Singh and Ors. : (2000) 1 SCC 237 is taken to its logical conclusion, although for such passengers, the owner of a goods carriage need not take out an insurance policy, they would be deemed to have been covered under the policy wherefor even no premium is required to be paid.

We may consider the matter from another angle. Section 149(2) of the 1988 Act enables the insurers to raise defences against the claim of the claimants. In terms of Clause (c) of Sub-section 2 of Section 149 of the Act one of the defences which is available to the insurer is that the vehicle in question has been used for a purpose not allowed by the permit under which the vehicle was used. Such a statutory defence available to the insurer would be obliterated in view of the decision of this Court in Satpal Singh's case (supra).

16. By referring to the aforesaid observations, Mr. Banerjee submitted that even Sinha, J. while giving separate but concurring opinion that the liability of the Insurer in the case of third party risks is unlimited and by overruling the decision in the case of Satpal's case the same became the ratio.

17. Mr. Banerjee, however, submits that in several subsequent two-Judges-Bench decisions of the Hon'ble Supreme Court where His Lordship the Hon'ble Justice Satyabrata Sinha was a member of the Bench, such as National Insurance Co. Limited v. Cholleti Bharatamma and Ors. reported in : (2008) 1 SCC 423, at paragraph 6, it was held as if Satpal Singh's case interpreted both Sections 147 and 149 of the Motor Vehicles Act, 1988 (though Sub-section 1 of Section 149 was not construed in that decision) and had held that there was no upper limit to the liability of the insurer in case of third party risks, though the decision in Satpal Singh stood overruled. Once again, according to Mr. Banerjee, the judgment proceeded sub silentio Section 149(1) of the Act of 1988.

18. Mr. Banerjee draws our attention to the fact that ultimately, by the judgment in the case of Bhagyalakshmi and Ors. v. United Insurance Co. Ltd. and Anr. reported in : 2009(7) Scale 550 where too His Lordship the Hon'ble Justice Satyabrata Sinha wrote the opinion for the Bench, it was held as if Satpal Singh (supra) was overruled by Asha Rani (supra) only on the question of goods carriage, yet the entire question relating to the effect of a comprehensive policy and third party liability as far as insurers were concerned was referred to a larger Bench. Mr. Banerjee submits that till today, the larger Bench has not expressed its opinion in one way or the other.

19. By making the aforesaid detail discussions, Mr. Banerjee tried to impress upon us that while there are unambiguous precedents as mentioned above which are yet to be overruled by Benches of Higher Strength of the Apex Court, that in case of third party liability, under Section 149(1) of the Act of 1988, the insurers can only be directed to pay the maximum amount that is the sum assured in the policy of insurance, on the other hand, the questions what is a comprehensive policy and what is its effect, are still not settled and the Apex Court has formed a larger Bench to decide the case as indicated above. However, according to Mr. Banerjee, the decisions mentioned above (vide sub-paragraphs (c) (i), (ii), (iii)) which do construe Section 149(1) of the Act of 1988 still hold the field.

20. According to Mr. Banerjee, the words of Section 149(1) are clear and unambiguous and must, therefore, be given their plain meaning, regardless of the consequences and in support of such contention he relied upon the decision of the Apex Court in the case of Nelson Motis v. Union of India and Anr. reported in : AIR 1992 SC 1981 : (1992) 4 SCC 711 at paragraph 8, where it has been held by the three-Judges-Bench of Apex Court as follows:

It is well established that if the words of a statute are clear and free from any vagueness and are, therefore, reasonably susceptible to only one meaning, it must be construed by giving effect to that meaning, irrespective of consequences.

21. Mr. Banerjee further emphasised on the well-settled rule of construction that a construction which renders any part of a statute redundant or otiose should be avoided. According to him, if the liability of the insurer in third party risk is held to be unlimited by only considering Section 147 of the Act of 1988 vis--vis Section 95 of the Old Act of 1939, then Section 149(1) of the Act of 1988 would be rendered meaningless and otiose. In support of such contention, Mr. Banerjee relied upon the following decisions:

1) Rao Shiv Bhadur Singh v. State of Vindhya Pradesh reported in : AIR 1953 SC 394 at page 397 paragraph 6 which holds:

While, no doubt, it is not permissible to supply a clear and obvious lacuna in a statute and imply a right of appeal, it is incumbent on the court to avoid a construction, if reasonable permissible on the language, which would render a part of the statute devoid of any meaning or application. The construction urged for the appellant renders paragraph 6 futile and leaves even a convicted person without appeal. We have no hesitation in rejecting it

2) The J.K. Cotton Spinning & Weaving Mills Co. Ltd. v. The State of Uttar Pradesh and Ors. reported in : AIR 1961 SC 1170 at 1174 paragraph 9 where it was held:

undoubtedly we have to apply the rule of harmonious construction. In applying the rule however we have to remember that to harmonise is not to destroy. In the interpretation of statues the courts always presume that the legislature inserted every part thereof for a purpose and the legislative intention is that every part of the statue should have effect.

3) Ghanshyam Das v. Regional Assistant Commissioner of Sales Tax, Nagpur reported in : AIR 1964 SC 766 at paragraph 21 of the majority judgment of the five-judges-bench which holds:

A construction which would attribute redundancy to a Legislature shall not be accepted except for compelling reasons.

4) Borosil Glass Works Ltd. Employees Union v. D.D. Bambode and Ors. reported in AIR 2001 SC 378 at page 380 : (2001) 1 SCC 350 at paragraph 7 where it was held:

It is a cardinal rule of interpretation that if two interpretations are possible, one of which leads to a harmonious reading of the entire provision and another which renders a portion nugatory then the former interpretation has to be accepted.

22. Mr. Banerjee submits that in the instant case, the Claimants/Respondents used the liberty under Section 151 of the Motor Vehicles Act, 1988 to obtain particulars of the Insurance Policy and exhibited the Certificate as Exhibit 3. Therefore, according to him, the case of Jugal Kishor reported in : AIR 1988 SC 719 : (1988) 1 SCC 626 as appears from paragraphs 4 and 10 of the report, has no application to the present case since it is not a case where Insurance Policy was not exhibited and/or certificate was not exhibited before the Learned Tribunal or in this Court. Therefore, according to Mr. Banerjee, it was incumbent on the learned Tribunal to adjudicate and determine while passing the award what was the maximum sum assured under the policy, which can be worked out arithmetically from the premium paid and direct that only that part of the award was payable by the Insurance Company which did not exceed the said sum assured, and since the Learned Tribunal did not even consider this aspect of the matter and since ex facie Section 149(1) of the Act of 1988 was not even present to its mind when it passed the award, the award is a nullity being contrary to the provisions of Section 149(1) of the Act of 1988, and not in the manner prescribed and thus, procedurally ultra vires and ought to be set aside on that ground alone.

23. On the question of quantum of compensation fixed by the Tribunal, Mr. Banerjee contends that there was no justification of applying the multiplier of 11 for the death of a person aged 50 years. In support of such contention, Mr Banerjee contended that it is not the law that the multiplier indicated in the Second Scheduled of the Motor Vehicles Act should be blindly followed and he, in this connection, relied upon the following decisions and his contention is summarised thus:

i. United India Assurance Co. Limited v. Patricia Jean Mahajan and Ors. reported in : (2002) 6 SCC 281 : 2002 (2) TAC 721 (SC) where instead of Scheduled Multiplier of 13, multiplier of 10 was used.

ii. Tamil Nadu State Transport Corporation Limited v. S. Rajapriya and Ors. reported in : (2005) 6 SCC 236 : 2005 (2) TAC 305 (SC) where for a 38 year old deceased instead of the multiplier of 16, the multiplier of 12 was used in case of claimants being mother, widow and minor son, very much like the present case, but even more pathetic.

iii. Managing Director, Tamil Nadu State Road Transport Corporation Ltd. v. K.S. Bindu and Ors. reported in 2006 (1) TAC 1 SC, where in case of a 37 year old deceased with salary of Rs. 7,427/- per month, multiplier was reduced from 17 to 13.

iv. UPSTC v. Krishna Bala and Ors. reported in : (2006) 6 SCC 249 : 2006(3) TAC (SC) where in case of a 36 year old deceased leaving Claimants being widow and children instead of multiplier of 16, multiplier of 13 was used.

v. Managing Director, Tamil Nadu State Transport Corporation v. Sripriya and Ors. reported in 2007 (1) TAC 27 (SC) where for a 37 year old deceased instead of multiplier of 16, multiplier of 12 was used where the claimants were the widow, minor daughter and the parents of the deceased.

vi. The New India Assurance Co. Limited v. Smt. Kalpana and Ors. reported in : (2007) 3 SCC 538 : 2007 (1) TAC 795 (SC) for a 33 year old deceased instead of the multiplier of 17, a multiplier of 13 was used claimants being widow and minor children.

24. On the question whether the income of the deceased should be notionally increased as was done in the case of Susamma Thomas reported in : (1994) 2 SCC 176, Mr. Banerjee contends that the said decision is not an authority in terms of Article 141 of the Constitution of India but in fact the Apex Court in exercise of power conferred under Article 142 passed such direction for doing complete justice between the parties. Mr. Banerjee further contends that if we go through the decisions of the Supreme Court in the cases of Oriental Insurance Co. Ltd. v. Jashuben and Ors. reported in 2008(2) TAC 12 (SC) and Smt. Sarla Verma and Ors. v. Delhi Transport Corporation and Anr. reported in 2009 (2) TAC 677 (SC), it will appear that the state of law is wholly unsettled as to whether the income of the deceased should be notionally increased to what he could have earned had he lived until the age of superannuation, with some judgments referred to in the decisions indicating that there is no standard or guideline whereby the same can be increased leading to uncertainty. According to Mr. Banerjee, while Sarla Verma (supra), tries to give at paragraphs 8 to 11 of the report a standard with a series of tests, culminating in paragraph 11 where it has been held that there should be no addition to the income if the age of the deceased is more than 50 years, as in the present case, where the deceased, born on April 1, 1953 died on August 1, 2003, that is, he was more than 50 years old. Mr. Banerjee submits that if this rationalizing test is used, then there can and should not be any addition to the income as prayed for by the respondents in their Cross Appeal.

25. Again, according to Mr. Banerjee, the judgment in Jashuben does not consider the entirety of the judgment in General Manager, Kerala State Road Transport Corporation, Trivandrum v. Susamma Thomas (supra), but only extracts a few stray paragraphs to come to the conclusion that is not warranted by the entirety of the judgment in Susamma Thomas. By way of example, Mr. Banerjee quoted paragraph 6 of the judgment in Susamma Thomas noted below:

In a fatal accident action, the accepted measure of damage awarded to the dependents is the pecuniary loss suffered by them as a result of the death. 'How much has the widow and family lost by the father's death?'. The answer to this lies in the oft-quoted passage from the opinion of Lord Wright in Davies and Anr. v. Power Duffryn Associated Collieries Ltd. (1942) AC 601 which says:

The starting point is the amount of wages which the deceased was earning, the ascertainment of which to some extent may depend on the regularity of his employment. Then there is an estimate of how much was required or expended for his own personal and living expenses. The balance will give a datum or basic figure which will generally be turned into a lump sum by taking a certain number of years' purchase. That sum, however, has to be taxed down by having due regard to uncertainties, for instance, that the widow might have again married and thus ceased to be dependent, and other like matters of speculation and doubt.

26. By referring to the above quoted passage, Mr Banerjee contends that it is, therefore, clear that Their Lordships were quoting and making a part of the Indian law, the principle that the regularity of employment was a factor only for ascertaining the amount of wages that the deceased was earning. In other words, Mr. Banerjee proceeded, if the deceased had an irregular employment, then the amount of wages he was earning could not be a good or proper yardstick of measuring what the widow and family had lost by the victim's death. According to Mr Banerjee, it does not follow that if the employment is regular then the amount of such loss would include future earning. Yet that is exactly what the Hon'ble Apex Court did. In this connection, Mr. Banerjee relied upon the judgment in the case of Quinn v. Leathen 1901 A.C. 495, where Lord Halsbury in the House of Lords had occasion to opine that 'A case is only an authority for what it actually decides. I entirely deny that it can be quoted for a proposition that may seem to logically follow from it. Such a mode of reasoning assumes that the law is necessarily a logical code, whereas every lawyer must acknowledge that the law is not always logical at all'.

27. The case of Susamma Thomas, according to Mr. Banerjee, if held to be an authority for the proposition that future earnings had to be notionally increased to what it could have been had he been alive and in service at the time of his superannuation, must be held to have fallen into the same error and cannot be considered good law or at least, law within the meaning of Article 141 of the Constitution of India. This is because as appears from 13 of the report. Their Lordships were not laying down any principle of law as to what must be considered, but in a very tentative and reluctant voice deciding what would serve justice in that particular case was appears from the following extract:

28. Mr. Banerjee contends that in that given case, where the victim had a paltry sum of Rs. 1032/- per month, the Apex Court tentatively held that justice in that case would be served if the future income was notionally increased to Rs. 2000/- a month and deductions made from it by taking a liberal view. This, according to Mr. Banerjee, is not an authority for the proposition that where the deceased was earning a good sum as gross salary/wages merely because he had a stable job, his income had to be notionally increased to what it could have been had he been alive and in service at the time of his superannuation, without considering that he may have died of natural causes or other causes in the meanwhile. This, Mr Banerjee continues, is therefore an order under Article 142 of the Constitution of India and does not bind this Court.

29. According to Mr Banerjee, it is the duty of this Court to ascertain the ratio of the judgment and not blindly to follow a judgment of the Apex Court cited as a precedent, as has been held in the case of Indian Bank v. ABS Marine Products Pvt. Ltd. reported in : (2006) 5 SCC 72 in the second last paragraph, to wit, 'One word before parting. Many a time, after declaring the law, this Court in the operative part of the judgment, gives some directions which may either relax the application of law or exempt the case on hand from the rigour of the law in view of the peculiar facts or in view of the uncertainty of law till then, to do complete justice. While doing so, normally it is not stated that such direction/order is in exercise of power under Article 142. It is not uncommon to find that courts have followed not the law declared, but the exemption/relaxation made while moulding the relief in exercise of power under Article 142. When the High Courts repeatedly follow a direction issued under Article 142, by treating it as the law declared by this Court, incongruously the exemption/relaxation granted under Article 142 becomes the law, though at variance with the law declared by this Court. The courts should therefore be careful to ascertain and follow the ratio decidendi, and not the relief given on the special facts, exercising power under Article 142. One solution to avoid such a situation is for this Court to clarify that a particular direction or portion of the order is in exercise of power under Article 142.'

30. Mr Banerjee, therefore, concludes by submitting that either the award should be reduced as prayed for or the matter should be sent back on an open remand to the learned Tribunal for considering the points mentioned above.

31. Mr Guha Roy, the learned Advocate appearing on behalf of the claimants has, however, opposed the aforesaid contentions of Mr Banerjee and has contended that in case of compensation for death of or bodily injury of a third party arising out of an accident, the present law has not provided any limit as regards the liability of the insurance company as would appear from Sub-section (2) of Section 147 of the Act of 1988, and thus, the submissions sought to be made by Mr Banerjee are devoid of any substance. Mr. Guha Roy, on the other hand, presses the cross-objection filed by his clients by praying for enhancement of the compensation by relying upon the decisions of the Apex Court in the cases of Jesu Ben and Susamma Thomas (supra) and submits that this Court should have awarded interest on the awarded sum at least at the rate of interest granted by a Nationalised Bank on a deposit of one year and by granting interest at the rate of 6% per annum, the learned Tribunal below committed a grave error of law causing prejudice to his clients.

32. Therefore, the first point that arises for consideration in this appeal is whether under the provisions of the Act of 1988, the liability of the Insurance Company in respect of compensation payable for the death, bodily injury or damage to any property of the third parties is unlimited.

33. In order to appreciate the said question, it will be profitable to refer to the provisions contained in Sections 147 and 149 of the Act which are quoted below:

147. Requirements of policies and limits of liability.- (1) In order to comply with the requirements of this Chapter, a policy of insurance must be a policy which-

(a) is issued by a person who is an authorised insurer; and

(b) insures the person or classes of persons specified in the policy to the extent specified in Sub-section (2)-

(i) against any liability which may be incurred by him in respect of the death of or bodily injury to any person 1[, including owner of the goods or his authorised representative carried in the vehicle] or damage to any property of a third party caused by or arising out of the use of the vehicle in a public place;

(ii) against the death of or bodily injury to any passenger of a public service vehicle caused by or arising out of the use of the vehicle in a public place:

Provided that a policy shall not be required-

(i) to cover liability in respect of the death, arising out of and in the course of his employment, of the employee of a person insured by the policy or in respect of bodily injury sustained by such an employee arising out of and in the course of his employment other than a liability arising under the Workmen's Compensation Act, 1923 (8 of 1923), in respect of the death of, or bodily injury to, any such employee-

(a) engaged in driving the vehicle, or

(b) if it is a public service vehicle engaged as a conductor of the vehicle or in examining tickets on the vehicle, or

(ii) to cover any contractual liability.

Explanation.- For the removal of doubts, it is hereby declared that the death of or bodily injury to any person or damage to any property of a third party shall be deemed to have been caused by or to have arisen out of, the use of a vehicle in a public place notwithstanding that the person who is dead or injured or the property which is damaged was not in a public place at the time of the accident, if the act or omission which led to the accident occurred in a public place.

(2) Subject to the proviso to Sub-section (1), a policy of insurance referred to in Sub-section (1), shall cover any liability incurred in respect of any accident, up to the following limits, namely:

(a) save as provided in Clause (b), the amount of liability incurred;

(b) in respect of damage to any property of a third party, a limit of rupees six thousand:

Provided that any policy of insurance issued with any limited liability and in force, immediately before the commencement of this Act, shall continue to be effective for a period of four months after such commencement or till the date of expiry of such policy whichever is earlier.

(3) A policy shall be of no effect for the purposes of this Chapter unless and until there is issued by the insurer in favour of the person by whom the policy is effected a certificate of insurance in the prescribed form and containing the prescribed particulars of any condition subject to which the policy is issued and of any other prescribed matters; and different forms, particulars and matters may be prescribed in different cases.

(4) Where a cover note issued by the insurer under the provisions of this Chapter or the rules made thereunder is not followed by a policy of insurance within the prescribed time, the insurer shall, within seven days of the expiry of the period of the validity of the cover note, notify the fact to the registering authority in whose records the vehicle to which the cover note relates has been registered or to such other authority as the State Government may prescribe.

(5) Notwithstanding anything contained in any law for the time being in force, an insurer issuing a policy of insurance under this section shall be liable to indemnify the person or classes of persons specified in the policy in respect of any liability which the policy purports to cover in the case of that person or those classes of persons.

149. Duty of insurers to satisfy judgments and awards against persons insured in respect of third party risks.- (1) If, after a certificate of insurance has been issued under Sub-section (3) of Section 147 in favour of the person by whom a policy has been effected, judgment or award in respect of any such liability as is required to be covered by a policy under Clause (b) of Sub-section (1) of Section 147 (being a liability covered by the terms of the policy) 1[or under the provisions of Section 163A] is obtained against any person insured by the policy then, notwithstanding that the insurer may be entitled to avoid or cancel or may have avoided or cancelled the policy, the insurer shall, subject to the provisions of this section, pay to the person entitled to the benefit of the decree any sum not exceeding the sum assured payable thereunder, as if he were the judgment debtor, in respect of the liability, together with any amount payable in respect of costs and any sum payable in respect of interest on that sum by virtue of any enactment relating to interest on judgments.

(2) No sum shall be payable by an insurer under Sub-section (1) in respect of any judgment or award unless, before the commencement of the proceedings in which the judgment or award is given the insurer had notice through the Court or, as the case may be, the Claims Tribunal of the bringing of the proceedings, or in respect of such judgment or award so long as execution is stayed thereon pending an appeal; and an insurer to whom notice of the bringing of any such proceedings is so given shall be entitled to be made a party thereto and to defend the action on any of the following grounds, namely:

(a) that there has been a breach of a specified condition of the policy, being one of the following conditions, namely:

(i) a condition excluding the use of the vehicle-

(a) for hire or reward, where the vehicle is on the date of the contract of insurance a vehicle not covered by a permit to ply for hire or reward, or

(b) for organised racing and speed testing, or

(c) for a purpose not allowed by the permit under which the vehicle is used, where the vehicle is a transport vehicle, or

(d) without side-car being attached where the vehicle is a motor cycle; or

(ii) a condition excluding driving by a named person or persons or by any person who is not duly licensed, or by any person who has been disqualified for holding or obtaining a driving licence during the period of disqualification; or

(iii) a condition excluding liability for injury caused or contributed to by conditions of war, civil war, riot or civil commotion; or

(b) that the policy is void on the ground that it was obtained by the non-disclosure of a material fact or by a representation of fact which was false in some material particular.

(3) Where any such judgment as is referred to in Sub-section (1) is obtained from a Court in a reciprocating country and in the case of a foreign judgment is, by virtue of the provisions of Section 13 of the Code of Civil Procedure, 1908 (5 of 1908) conclusive as to any matter adjudicated upon by it, the insurer (being an insurer registered under the Insurance Act, 1938 (4 of 1938) and whether or not he is registered under the corresponding law of the reciprocating country) shall be liable to the person entitled to the benefit of the decree in the manner and to the extent specified in Sub-section (1), as if the judgment were given by a Court in India:

Provided that no sum shall be payable by the insurer in respect of any such judgment unless, before the commencement of the proceedings in which the judgment is given, the insurer had notice through the Court concerned of the bringing of the proceedings and the insurer to whom notice is so given is entitled under the corresponding law of the reciprocating country, to be made a party to the proceedings and to defend the action on grounds similar to those specified in Sub-section (2).

(4) Where a certificate of insurance has been issued under Sub-section (3) of Section 147 to the person by whom a policy has been effected, so much of the policy as purports to restrict the insurance of the persons insured thereby by reference to any conditions other than those in Clause (b) of Sub-section (2) shall, as respects such liabilities as are required to be covered by a policy under Clause (b) of Sub-section (1) of Section 147, be of no effect:

Provided that any sum paid by the insurer in or towards the discharge of any liability of any person which is covered by the policy by virtue only of this Sub-section shall be recoverable by the insurer from that person.

(5) If the amount which an insurer becomes liable under this section to pay in respect of a liability incurred by a person insured by a policy exceeds the amount for which the insurer would apart from the provisions of this section be liable under the policy in respect of that liability, the insurer shall be entitled to recover the excess from that person.

(6) In this section the expressions 'material fact' and 'material particular' means, respectively a fact or particular of such a nature as to influence the judgment of a prudent insurer in determining whether he will take the risk and, if so, at what premium and on what conditions, and the expression 'liability covered by the terms of the policy' means a liability which is covered by the policy or which would be so covered but for the fact that the insurer is entitled to avoid or cancel or has avoided or cancelled the policy.

(7) No insurer to whom the notice referred to in Sub-section (2) or Sub-section (3) has been given shall be entitled to avoid his liability to any person entitled to the benefit of any such judgment or award as is referred to in Sub-section (1) or in such judgment as is referred to in Sub-section (3) otherwise than in the manner provided for in Sub-section (2) or in the corresponding law of the reciprocating country, as the case may be.

Explanation.- For the purposes of this section, 'Claims Tribunal' means a Claims Tribunal constituted under Section 165 and 'award' means an award made by that Tribunal under Section 168.

34. On a plain reading of the aforesaid two sections of the Act, it is clear that so far as the liability of the insurer towards the injury caused to the third party is concerned, once it is established from the evidence that there exists a valid insurance policy taken by the insured owner of the vehicle in terms of the Act whose conditions have not been violated by the insured, the statutory liability of the insurer is fixed by the Act itself as indicated below:

1. As regards its liability to pay compensation for the damage caused to the property of the third party due to negligence of the driver of the insured vehicle is concerned, it is not unlimited but is restricted to the amount specified in Sub-section (b) of Section 147(2) of the Act.

2. However, in case of compensation for the death or bodily injury of a third party travelling as a passenger in the insured vehicle due to the accident for the negligence of its driver, if such third party happens to be an employee of the insured and the death occurred or the bodily injury sustained due to an accident in course of his employment, the statutory liability of the insurer will be restricted to the amount payable by the employer as specified in the Workmen's Compensation of Act, 1923 to such employee and the excess balance amount payable under the general law of compensation as fixed by the decree or award is payable by the owner of the vehicles.

3. However, if the victim does not happen to be one of the classes of passenger specified in the policy of the vehicle insured or does not come within the purview of Section 147(1)(b) of the Act, the Insurer has no liability to make any compensation as those types of persons are gratuitous passengers.

4. In case of compensation payable for the bodily injury or the death of any third party who is not a passenger of the said vehicle or who is not an employee involved in the accident in course of his employment as mentioned above, if the injury sustained or the death occurred due to the fault of the driver of the offending insured vehicle, the liability of the Insurer will be unlimited to the extent of the 'liability incurred by the insured' as fixed by the judgment or award as provided in Section 147(2)(a) of the Act.

5. The aforesaid principles will be applicable also to the proceedings under Section 163A of the Act with this difference that the claimants in such a situation will be entitled to get compensation even if there no fault of the driver of the insured vehicle provided however that the annual income of the victim did not exceed Rs. 40,000/-. The amount of compensation in such a proceeding will be determined in accordance with the second schedule of the Act subject to such modification as indicated by the Apex Court in various decisions which have since become the law of the land by virtue of Article 141 of the Constitution of India. In all the circumstances mentioned above, there may be special contract between the insured and the insurer stipulating indemnification of the liability of the insured in excess of the amount of the statutory liability provided in the Act or even in respect of the classes of passengers in addition to those classes mentioned in Section 147(1)(b) of the Act to whom the insurer owes no statutory liability fixed by the Act.

6. Even if the insurer is successful in proving breach of the conditions of insurance as provided in Section 149(2)(a)(ii) of the Act, it has the duty to satisfy the award at the first instance and then to recover the amount from the insured and for that purpose, the principles and the guidelines indicated by the Apex Court in the case of National Insurance Co. Ltd. v. Swaran Singh reported in : AIR 2004 SC 1531 as quoted below should be followed:

(i) Chapter XI of the Motor Vehicles Act, 1988 providing compulsory insurance of vehicles against third party risks is a social welfare legislation to extend relief by compensation to victims of accidents caused by use of motor vehicles. The provisions of compulsory insurance coverage of all vehicles are with this paramount object and the provisions of the Act have to be so interpreted as to effectuate the said object.

(ii) Insurer is entitled to raise a defence in a claim petition filed under Section 163A or Section 166 of the Motor Vehicles Act, 1988 inter alia in terms of Section 149(2)(a)(ii) of the said Act.

(iii) The breach of policy condition e.g. disqualification of driver or invalid driving licence of the driver, as contained in Sub-section (2)(a)(ii) of Section 149, have to be proved to have been committed by the insured for avoiding liability by the insurer. Mere absence, fake or invalid driving licence or disqualification of the driver for driving at the relevant time, are not in themselves defences available to the insurer against either the insured or the third parties. To avoid its liability towards insured, the insurer has to prove that the insured was guilty of negligence and failed to exercise reasonable care in the matter of fulfilling the condition of the policy regarding use of vehicles by duly licensed driver or one who was not disqualified to drive at the relevant time

(iv) The insurance companies are, however, with a view to avoid their liability must not only establish the available defence(s) raised in the said proceedings but must also establish 'breach' on the part of the owner of the vehicle; the burden of proof wherefore would be on them.

(v) The court cannot lay down any criteria as to how said burden would be discharged, inasmuch as the same would depend upon the facts and circumstances of each case.

(vi) Even where the insurer is able to prove breach on the part of the insured concerning the policy condition regarding holding of a valid licence by the driver or his qualification to drive during the relevant period, the insurer would not be allowed to avoid its liability towards insured unless the said breach or breaches on the condition of driving licence is/are so fundamental as are found to have contributed to the cause of the accident. The Tribunals in interpreting the policy conditions would apply 'the rule of main purpose' and the concept of 'fundamental breach' to allow defences available to the insured under Section 149(2) of the Act.

(vii) The question as to whether the owner has taken reasonable care to find out as to whether the driving licence produced by the driver, (a fake one or otherwise), does not fulfil the requirements of law or not will have to be determined in each case.

(viii) If a vehicle at the time of accident was driven by a person having a learner's licence, the insurance companies would be liable to satisfy the decree.

(ix) The claims tribunal constituted under Section 165 read with Section 168 is empowered to adjudicate all claims in respect of the accidents involving death or of bodily injury or damage to property of third party arising in use of motor vehicle. The said power of the tribunal is not restricted to decide the claims inter se between claimant or claimants on one side and insured, insurer and driver on the other. In the course of adjudicating the claim for compensation and to decide the availability of defence or defences to the insurer, the Tribunal has necessarily the power and jurisdiction to decide disputes inter se between insurer and the insured. The decision rendered on the claims and disputes inter se between the insurer and insured in the course of adjudication of claim for compensation by the claimants and the award made thereon is enforceable and executable in the same manner as provided in Section 174 of the Act for enforcement and execution of the award in favour of the claimants.

(x) Where on adjudication of the claim under the Act the tribunal arrives at a conclusion that the insurer has satisfactorily proved its defence in accordance with the provisions of Sections 149(2) read with Sub-section (7), as interpreted by this Court above, the Tribunal can direct that the insurer is liable to be reimbursed by the insured for the compensation and other amounts which it has been compelled to pay to the third party under the award of the tribunal. Such determination of claim by the Tribunal will be enforceable and the money found due to the insurer from the insured will be recoverable on a certificate issued by the tribunal to the Collector in the same manner under Section 174 of the Act as arrears as land revenue. The certificate will be issued for the recovery as arrears of land revenue only if, as required by Sub-section (3) of Section 168 of the Act the insured fails to deposit the amount awarded in favour of the insurer within thirty days from the date of announcement of the award by the tribunal.

(xi)The provisions contained in Sub-section (4) with proviso thereunder and Sub-section (5) which are intended to cover specified contingencies mentioned therein to enable the insurer to recover amount paid under the contract of insurance on behalf of the insured can be taken recourse of by the Tribunal and be extended to claims and defences of insurer against insured by relegating them to the remedy before regular court in cases where on given facts and circumstances adjudication of their claims inter se might delay the adjudication of the claims of the victims.

35. In the case before us, it is not the case of the Insurance Company that the offending vehicle was not insured with it nor is there any allegation of breach of the terms of the policy at the instance of the owner of the offending vehicle. It is not even the case of the appellant that the victim was either a gratuitous passenger or an employee of the insured. Such being the position, the liability of the insurance company is to the extent of amount of liability incurred by the insured through the award impugned in this appeal.

36. We, therefore, find no substance in the contention of Mr Banerjee that in the facts of the present case there is any justification of remanding the case back to the tribunal for the purpose of first assessing 'the sum assured payable under the policy'. The sentence 'the insurer shall, subject to the provisions of this section, pay to the person entitled to the benefit of the decree any sum not exceeding the sum assured payable thereunder, as if he were the judgment debtor, in respect of the liability, together with any amount payable in respect of costs and any sum payable in respect of interest on that sum' appearing in Section 149(1) of the Act does not refer to the amount assured by the contract of policy between the insurer and the insured but refers to the liability incurred by the insured and payable by the insurer subject to its liability fixed under the provisions of the Act. We have already indicated that in respect of damage to the property of the third party, the compensation payable by the insurer is restricted up to the limit specified in Sub-section 2(b) of Section 147. Similarly, in case the victim is the employee of the insured and the accident occurred in course of employment, the liability of the insurer is limited to the liability specified in the Workmen's Compensation Act, 1923. But in the facts of the present case, the insurer is liable to pay the amount of just compensation fixed by the Tribunal.

37. We now proceed to deal with the decisions cited by Mr. Banerjee in this regard.

38. In the case of New India Assurance Co. Simla v. Kamala and Ors. (supra), the questions that fell for determination before the Supreme Court were as follows:

If a fake driving licence happened to be renewed by the statutory authorities, would the fakeness of the original document get legally sanctified? If it cannot, would the Insurance Company be liable to pay compensation in respect of a motor accident which occurred while the vehicle was driven by a person holding such a sham licence?

39. The Apex Court answered the first question in negative and the second question by remanding the matter back to the Tribunal to decide the disputed question involved therein with the observation that if the Insurance Company succeeded in establishing that there was breach of the conditions of the policy, the Tribunal should direct the insured to pay that amount to the insurer which the insurer had paid to the claimants with the stipulation that in default, the Insurance Company would be entitled to recover the same from the insured. While delivering such judgement, the Supreme Court in paragraph 17 thereof merely quoted Sub-section (1) of Section 149 of the Act by saying that 'the insurer shall pay to the person entitled to the benefit of a judgment or award as if the insurer were the judgment-debtor in respect of the liability, when any such judgement or award is obtained against the insured in whose favour a certificate of insurance has been issued. Of course, the said liability of the insurer is subject to the maximum sum payable under the policy.'

40. In our view, by using the phrase 'subject to the maximum sum payable under the policy' the Apex Court meant 'the maximum statutory liability of the insured fixed either by the Statute or by the contract of the insurer and the insured (by payment of additional premium) whichever is higher.' See five-Judges-Bench decision in the case of New India Insurance Co. Ltd. v. C.M. Jaya reported in : AIR 2002 SC 651.

41. The aforesaid decision, relied upon by Mr Banerjee, thus, does not help the appellant in anyway.

42. In the case of Ramashray Singh v. New India Assurance Co. Ltd. and Ors. (supra), a Bench of the Apex Court while considering the question whether the Insurance Company had the liability to indemnify loss suffered due to the death of a victim who was the Khalasi of vehicle, at paragraph 14 of the judgement held that a comprehensive policy merely meant that the loss sustained by such person or persons will be payable up to the insured amount irrespective of the loss suffered and in arriving at such conclusion the said Bench relied upon an earlier decision of a Bench of five Judges of the said Court in the case of New India Assurance Co. Ltd. v. C.M. Jaya (supra).

43. In the case of C.M. Jaya (supra), the five-Judges-Bench was considering a case under the old Motor Vehicles Act where the question was whether the Insurance Company was in the facts of that case liable to pay more than the statutory liability fixed under that old Act for a third party victim which was up to the limit of Rs. 50,000/-. In that context, the Court made the following observations:

The liability could be statutory or contractual. A statutory liability cannot be more than what is required under the statute itself. However, there is nothing in Section 95 of the Act prohibiting the parties from contracting to create unlimited or higher liability to cover wider risk. In such an event, the insurer is bound by the terms of the contract as specified in the policy in regard to unlimited or higher liability as the case may be. In the absence of such a term or Clause in the policy, pursuant to the contract of insurance, a limited statutory liability cannot be expanded to make it unlimited or higher. If it is so done, it amounts to re-writing the statute or the contract of insurance which is not permissible.

44. We have respectfully followed the aforesaid principles. But by taking aid of that principle, it cannot be contended that the insurer and the insured by virtue of a contract between them can even fix the liability of the insurer to mean an amount less than the statutory liability fixed by the statute. Therefore, the expression 'irrespective of the loss suffered' used by the Bench in the case of Ramashray Singh v. New India Assurance Co. Ltd. and Ors. (supra) cannot be interpreted to mean an amount less than the statutory liability as contended by Mr. Banerjee. The aforesaid decision, consequently, does not help the appellant in anyway.

45. In the case of Oriental Insurance Co. Ltd. v. Inderjit Kaur and Ors. (supra), the Supreme Court was dealing with a case where the question was whether the Insurance Company was liable to make payment of the compensation notwithstanding the fact that the cheque through which the payment of premium of the insurance was given by insured was dishonoured. In that context, the Supreme Court held that by reason of Sections 147(5) and 149(1) of the Act, the insurer became liable to indemnify the third party 'in respect of the liability the policy covered.' We have already pointed out that the liability covered by a policy, is either the statutory liability fixed by the Act or the higher amount, if any, contracted by the insured in lieu of the additional payment of premium, whichever is higher, by following the principles laid down by the five-Judges-Bench in the case of C.M. Jaya (supra). For instance, if on payment of additional premium, the insurer agrees to indemnify the insured to the actual loss suffered by a third party in respect of damage caused to his property where the statutory liability of the insured is limited, the Insurance Company would be liable to pay the full amount fixed by the Tribunal on that account which, but for the additional payment of premium, was not payable by the insurer. Similarly, if an employer by payment of additional premium enter into an agreement with the insurer to cover his excess liability over the Statutory liability fixed under the Workmen's Compensation Act, the insurer would be liable to pay even the amount in excess of its statutory liability fixed by the Act.

46. Thus, aforesaid observation of the Supreme Court in the case of Inderjit Kaur (supra), does not support Mr. Banerjee in anyway.

47. Similarly, in the case of Bhagyalakhsmi v. United Insurance Co. Ltd. reported in : (2009) 7 SCC 148, relied upon by Mr. Banerjee, a two-Judges-Bench has referred the matter to a larger Bench for considering whether gratuitous passengers travelling in a private car or pillion riders carried on by two-wheelers are automatically covered under a package policy or comprehensive policy. We are in the present case not concerned with such question and as such, the outcome of such reference will not be of any avail to the Insurance Company in this appeal.

48. Similarly, the other decisions, viz. Nelson Mortis, Rao Shiv Bahadur Singh, The J.K. Spinning & Weaving Mills Co. Ltd., Ghayansham Das, and Borosil Glass Ltd. (supra), relied upon by Mr. Banerjee, regarding construction of a statute has no relevancy in the facts of the present case as we find that the on the question as to the extent of the liability of the Insurance Company to indemnify a third party's death who is neither a gratuitous passenger of the insured vehicle nor is an employee of the insured involved in an accident in course of his employment is now well settled. The Insurance Company, is such a case, is bound to indemnify the liability that the insured has suffered by virtue of the award passed by the Tribunal if the terms of contract of insurance has not been violated. In this case, no case has been made out alleging any such violation. On this simple question, there is, therefore, no ambiguity in the statute nor will our construction of the statute make any portion of the same otiose.

49. We now turn over to the question of quantum of compensation.

50. There is no dispute that the victim was in stable service with the Jute Corporation of India holding the post of DPC Manager at the age of 50 years and had still 8 years of service left. His gross salary was Rs. 20,135/- a month. In this case, the negligence of the driver of the offending vehicle has been well established and there was no contributory negligence on the part of the victim. The learned Tribunal below on the basis of two-third of the gross salary of the victim and by applying the multiplier of 11, has arrived at the figure of Rs. 17,81,380/-.

51. According to the Appellant, the Tribunal below ought to have deducted the sum of Rs. 2,000/- payable by the victim as the Income tax, Rs. 130/- payable as professional tax and a further sum of Rs. 400/- paid to him as conveyance charge from the monthly gross salary and should have applied a multiplier which is less than 11. The respondents, on the other hand, contend that having regard to the future prospect of the victim who was in a stable service, the Tribunal below ought to have increased the multiplicand to a sum which is double the salary of the victim at the time of accident and then applied the multiplier of 11. They further contend that the rate of interest should have been at least 8% per annum instead of 6% per annum awarded by the Tribunal.

52. At the very outset, we must bear in mind that the right to get compensation arising out of death being part of the estate of the victim, the Court would assess the amount, the estate represented by the claimants suffered, for the untimely death of the victim after deducting the amount which the victim himself would have spent for himself if he had not died. The proceedings under Section 166 of the Act is basically an action for tort and in the absence of negligence of the respondent, the owner of the vehicle or his driver, the proceeding should fail. Since, the compensation arising out of such death cannot be determined with mathematical precision and depends on various factors including numerous events of uncertainties, the Courts, while assessing the probable loss likely to suffer by the claimants for the death, take into consideration the factors of dependency, ages of the claimants, their costs of education, expenditure for their marriage, the future prospect of the victim etc. so that it can arrive at a just and reasonable figure which the victim, if alive, would have in normal circumstance reasonably spent for the benefit of the claimants. But that does not mean that if one of the heirs was not at all financially dependent upon the victim, he would not get any compensation while his twin brother who was dependent upon his father would get his share by excluding him or that the defendant would not be required to pay the compensation payable to the solvent heir.

53. In the case of Divisional Controller, KSRTC v. Mahadeva Shetty and Anr. reported in : (2003) 7 Supreme Court Cases 197, the Apex Court made the following observations regarding the role of a Court dealing with an application under Section 166 in the light of Section 168 of the Act:

It has to be kept in view 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 to 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 the mental and physical loss, 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 be to be borne in mind that the compensation is not expected to be a wind fall for the victim. Statutory provisions clearly indicate 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 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 arbitrary. If it is not so it cannot be just. See Helen C. Rebello v. Maharashtra State Road Transport Corporation : AIR 1998 SC 3191.

54. There is no two-opinion that the assessment of compensation by applying the multiplier method is also a recognised way of calculation of the assessment of just compensation but its application is limited only to the fatal accidents because the said method involves ascertainment of loss of dependency and capitalizing the same by appropriate multiplier. What is in essence the object of the multiplier method has been summarised by the Apex Court in the case of General Manager, Kerala State Road Transport Corporation v. Mrs. Susamma Thomas and Ors. reported in : AIR 1994 SC 1631 in the following way:

The multiplier represents the number of years' purchase on which the loss of dependency is capitalised. Take for instance a case where annual loss of dependency is Rs. 10,000/-. If a sum of Rs. 1,00,00/- is invested at 10% annual interest, the interest' will take care of the dependency, perpetually. The multiplier in this case works out to 10. If the rate of interest is 5% per annum and not 10% then the multiplier needed to capitalise the loss of the annual dependency at Rupees 10,000/- would be 20. Then the multiplier, i.e., the number of years' purchase of 20 will yield the annual dependency perpetually. Then allowance to scale down the multiplier would have to be made taking into account the uncertainties of the future, the allowances for immediate lump sum payment, the period over which the dependency is to last being shorter and the capital feed also to be spent away over the period of dependency is to last etc. Usually in English Courts the operative multiplier rarely exceeds 16 as maximum. This will come down accordingly as the age of the deceased person (or that of the dependants, whichever is higher) goes up.

55. Therefore, in a proceeding under Section 166 of the Act relating to death of the victim, the Tribunal is entitled to apply the multiplier method in the true sense of the term as pointed out by the Apex Court in the abovementioned matter after taking into consideration the rate of the present-days-bank-interest but not the chart given in the Second Schedule incorporated in the Act in the year 1994. In a recent case of the Supreme Court in the case of Syed Basher Ahamed and Ors. v. Mohd. Jameel and Anr. reported in : 2009(1) T.A.C. 794 (S.C.) : 2009 (2) SCC 225, the Apex Court held that the structural formula mentioned in the second schedule of the Act may be a guiding factor but does not apply in terms to the proceedings under Section 166 of the Act. What is applicable to a special category of the victim having annual income of not more than forty thousand rupees and that too, without proving the negligence of the driver of the vehicle involved by virtue of a beneficial legislation enacted for that purpose, cannot be blindly applied in a proceeding under Section 166 of the Act where the compensation should be the 'just amount'.

56. In the case of Susamma Thomas (supra), the Supreme Court has also taken note of the question of stability of service of the victim and the future prospect in the service while assessing the compensation as would appear from the following observations:

In the present case the deceased was 39 years of age. His income was Rs. 1032/- per month. Of course, the future prospects of advancement in life and career should also be sounded in terms of money to augment the multiplicand. While the chance of the multiplier is determined by two factors, namely, the rate of interest appropriate to a stable economy and the age of the deceased or of the claimant whichever is higher, the ascertainment of the multiplicand is a more difficult exercise. Indeed, many factors have to be put into the scales to evaluate the contingencies of the future. All contingencies of the future need not necessarily be baneful. The deceased person in this case had a more or less stable job. It will not be inappropriate to take a reasonably liberal view of the prospects of the future and in estimating the gross income it will be unreasonable to estimate the loss of dependency on the present actual income of Rs. 1032/-per month. We think, having regard to the prospects of advancement in the future career, respecting which there is evidence on record, we will not be In error in, making a higher estimate of monthly income at R Rs. 2,000/-as the gross income. From this; has to be deducted his personal living expenses, the quantum of which again depends on various factors such as whether the style of; living was spartan or bohemian. In the absence of evidence it is not unusual to deduct one-third of the gross income towards the personal living expenses and treat the balance as the amount likely to have been spent on the members of the family and the dependents. 'This loss of dependency should capitalize with the appropriate multiplier. In the present case we can take about Rs. 1,400/- per month or Rs. 17,000/- per year as the loss of I dependency and if capitalized on a multiplier of 12, which is appropriate to the age of the deceased, the compensation would work out to (Rs. 17,000/- x 12 - 2,04,0001 1 - rupees) to which is added the usual award for loss of consortium and loss of the estate each in the conventional sum of Rs. 15,000/-.

57. Subsequently, in several decisions, the Supreme Court had the occasions to consider the question of stable service of the victim and the future prospect and in all the decisions, the Apex Court accepted the position that while fixing the multiplicand before applying the appropriate multiplier, the Court should not treat the income of the victim at the time of death as the appropriate multiplicand but add to it a suitable figure by taking into consideration the future income the deceased could have earned if he had not died prematurely. All those decisions have been taken note of in a recent decision of the Supreme Court in the case of Oriental Insurance Co. Ltd. v. Jashuben and Ors. reported in : AIR 2008 SC 1734 where the Supreme Court for the purpose of assessing compensation in case of a victim aged 35 years, an assistant in Oil and Natural Gas Commission, doubled the basic salary and the Dearness Allowance payable to him at the time of accident and further added the child education allowances and Child bus fare for two children payable to the employee in fixing the multiplicand and then applied the multiplier of 13 to the two-third of such multiplicand.

58. We are unable to accept the contention of Mr Banerjee that the decisions given in the cases of Susamma Thomas or Jesu Ben or Sarala Dixit (supra) are not the authority for the proposition that future prospect in stable service should be taken into consideration. No decision has yet been delivered by the Apex Court taking a view contrary to the one taken in those decisions. In the case of Sarala Verma and Ors. v. Delhi Transport Corporation reported in 2009(2) T.A.C 677 (SC), a two-Judges-Bench of the Apex Court in paragraph 11 of the judgement, although accepted the principle that in stable service future prospect should be taken into consideration, observed that Their Lordships were inclined to apply as a rule of thumb, an addition of 50% of the actual salary to the actual salary where the victim died at the age below 40 years. Similarly, Their Lordships preferred to give additional amount of 30% if the victim died between 40 and 50 years and according to Their Lordships, if the victim died above 50 years of age, there should not be any addition. In our opinion, the aforesaid rule of thumb mentioned in that paragraph cannot be said to be a precedent within the meaning of Article 141 of the Constitution in view of the fact that the said opinion formed by Their Lordships is contrary to the view taken in an earlier decision of the two-Judges-Bench in the case of Sarala Dixit v. Balawant Yadav reported in : AIR 1996 SC 1274 laying down as a proposition of law by relying upon Susamma Thomas(supra), that the average future monthly income should be arrived by adding to the monthly income of the victim at the time of his death, the monthly income that he would have attained at the time of superannuation if he were alive and then dividing the added figure by two. Their Lordships in Sarala Verma (supra) has assigned no reason why there should not be any addition if the victim dies on attaining 50 years although there will be 30% addition if he died at the age of 49 years. It is well known that in a service career the maximum pecuniary benefit is attained in the last ten years of service. As pointed out by the five-Judges-Bench decision of the Supreme Court in the case of Union of India v. Raghubir Singh reported in : AIR 1989 SC 1933 if a Bench of equal strength wants to take a view contrary to the one taken by an earlier Bench of the same strength, the latter should refer the matter to the Hon'ble Chief Justice for constitution of a larger Bench to resolve the difference. So long the conflict is not resolved by the larger Bench, the earlier view will prevail as a precedent. We, therefore, propose to rely upon the views taken in Susamma Thomas, Sarala Dixit, and Jesu Ben (supra), being valid precedent binding upon us.

59. We are quite alive to the fact that one of the witnesses for the claimants himself in this case has admitted that there is provision of family pension in the service of the victim. But such factor, in our opinion, is irrelevant for the purpose of assessing compensation in a proceeding under Section 166 of the Act in view of the following observations of the Supreme Court in the well-known case of Helen C. Rebello reported in : (1999) 1 SCC 90 at paragraph 36:

Broadly, we may examine the receipt of the provident fund which is a deferred payment out of the contribution made by an employee during the tenure of his service. Such employee or his heirs are entitled to receive this amount irrespective of the accidental death. This amount is secured, is certain to be received, while the amount under the Motor Vehicles Act is uncertain and is receivable only on the happening of the event, viz., accident, which may not take place at all. Similarly, family pension is also earned by an employee for the benefit of his family in the form of his contribution in the service in terms of the service conditions receivable by the heirs after his death. The heirs receive family pension even otherwise than the accidental death. No co-relation between the two. Similarly, life insurance policy is received either by the insured or the heirs of the insured on account of the contract with the insurer, for which insured contributes in the form of premium. It is receivable even by the insured, if he lives till maturity after paying all the premiums, in the case of death insurer indemnifies to pay the sum to the heirs, again in terms of the contracts for the premium paid. Again, this amount is receivable by the claimant not on account of any accidental death but otherwise on insured's death. Death is only a step or contingency in terms of the contract, to receive the amount. Similarly any cash, bank balance, shares, fixed deposits, etc. though are all a pecuniary advantage receivable by the heirs on account of one's death but all these have no co-relation with the amount receivable under a statute occasioned only on account of accidental death. How could such an amount come within the periphery of the Motor Vehicles Act to be termed as 'pecuniary advantage' liable for deduction. When we seek the principle of loss and gain, it has to be on similar and same plane having nexus inter se between them and not to which, there is no semblance of any co-relation. The insured (deceased) contributes his own money for which he receives the amount has no co-relation to the compensation computed as against tortfeasor for his negligence on account of accident. As aforesaid, the amount receivable as compensation under the Act is on account of the injury or death without making any contribution towards it, then how can fruits of an amount received through contributions of the insured be deducted out of the amount receivable under the Motor Vehicles Act. The amount under this Act, he receives without any contribution. As we have said the compensation payable under the Motor Vehicles Act is statutory while the amount receivable under the life insurance policy is contractual.

60. Bearing in mind the principles mentioned earlier, we now propose to assess the just amount of compensation payable to the claimants in this case.

61. In the case before us, the victim at the age of 50 having become the DPC Manager of the Jute Corporation of India and an employee of the Corporation, appearing as the witness having stated that the victim would become the Marketing Manger if he had not died and such fact not having been disputed by the Insurance Company in evidence, we are of the view that the multiplicand should be fixed not on the basis of the income of the victim at the time of death but on the basis of additional 25% amount. We, however, agree with Mr. Banerjee that while considering the income of the victim at the time of death, the Tribunal below ought to have deducted the amount of Rs. 2000/- a month payable as income tax and a further sum of Rs. 130/- a month payable towards professional tax. There is, however, no justification of deducting the conveyance allowance paid to the victim as that was also his income.

62. Therefore, by deducting the aforesaid amount of Rs. 2,130/- from the gross salary of the victim, the amount comes to Rs. 18,005/- which we make it a round figure of Rs. 18,000/-. We propose to add to it, a further 25% i.e. Rs. 4,500/- for the future prospect in the next 8 years of service still left. The amount thus comes to Rs. 22,500/- one-third of such amount should be deducted for his personal expenses and thus, the multiplicand should be (Rs.22,500/- - Rs. 7,500/-) x 12 = Rs. 15,000/- x 12 = Rs. 1,80,000/-.

63. The next question is the one of fixation of the multiplier. The learned Tribunal below has blindly followed the second schedule of the Act which is applicable strictly to the proceedings under Section 163A of the Act. In our opinion, when it has been brought on record that the victim had just eight year's service left and we have also added to the income of the victim at the time of death a further 25% for compensating his heirs for his future prospect, there is no justification of fixing a multiplier of more than 8 in the facts of the present case. By application of the multiplier of 8 on the multiplicand of Rs. 1,80,000/-the amount comes to Rs. 14,40.000/-.

64. Thus, after taking into consideration the uncertainties of the future life, the allowances for immediate lump sum payment, the period over which the dependency is to last being shorter and the capital feed also to be spent away over the period of dependency is to last etc, as pointed out in Susamma Thomas (supra), we are of the view that the sum of Rs. 14,40,000/- with interest at the rate of 8% from the date of filing of the application till actual amount is paid should be the just amount of compensation in the facts of the present case.

65. We, therefore, dispose of this appeal and the cross-objection by modifying the award impugned to a reduced sum of Rs. 14,40,000/- but enhancing the rate of interest to 8% instead of 6% per annum awarded by the Tribunal below.

66. The learned Registrar General of this Court is directed to calculate the interest on the modified amount from the date of application (7th November, 2003) till October 31, 2009 at the rate of 8% per annum and to release the total amount in favour of the three claimants by issuing three different cheques within one month from today from the amount deposited by the appellant as condition of stay granted earlier by this Court. The mother of the victim should get 20% of the total amount and the widow and the son will get 40% each. The balance should be refunded to the Insurance Company.

67. In the facts and circumstances, there will be, however, no order as to costs.

Bhaskar Bhattacharya, J.

68. I agree.

Subject	Motor Vehicles
Court	Kolkata High Court
Decided On	Oct-23-2009
Case Number	F.M.A.T. No. 1594 of 2008 and COT No. 12 of 2009
Judge	Bhaskar Bhattacharya and ;Prasenjit Mandal, JJ.
Acts	Motor Vehicles Act, 1988 - Sections 147, 147(1), 147(2), 147(3), 147(5), 149, 149(1), 149(2), 149(3), 149(4), 149(5), 149(7), 151, 163A, 165, 166, 168, 168(3), 170 and 174; ;Motor Vehicles Act, 1939 - Sections 95 and 96(1); ;Insurance Act, 1938 - Section 64VB; ;Workmen's Compensation Act, 1923; ;Code of Civil Procedure (CPC) , 1908 - Section 13; ;Constitution of India - Articles 141 and 142; ;Motor Vehicles (Amendment) Act, 1994
Appellant	National Insurance Co. Ltd.
Respondent	Renuka Saha and ors.
Appellant Advocate	Pratik Prakash Banerjee and ;Rajesh Singh, Advs.
Respondent Advocate	Hemendra Guha Roy and ;Sujoy Guha Roy, Advs.
Cases Referred	Union of India v. Raghubir Singh

National Insurance Co. Ltd. Vs. Renuka Saha and ors. - Court Judgment