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 IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL No. 2460  OF 2008                      [Arising out of SLP(C) No.9833 of 2006]

KAMLA SHARMA & ANR                                       Appellant(s)

                       VERSUS

M/S ORIENTAL INSURANCE CO. LTD.                          Respondent(s)

      O R D E R

Leave granted.

One Raj Kamal Sharma died in a road accident  on 19th February, 1993.  At the

time  of  his  death  he  was  unmarried  and  22  years  old.   His  parents,  who  are  the

appellants before us, filed an application for compensation before the Motor Accident

Claims Tribunal and the Tribunal upon computing the estimated income of the deceased

at Rs.2000/- per month at the time of the accident came to the conclusion that the annual

loss of dependency of the appellants was Rs.12,000/- after deducting 50% of the income

towards personal expenses.  Keeping in view the age of the appellant at the time of the

accident,  the  Tribunal  applied  the  multiplier  of  11  and  computed  the  compensation

payable for the loss of dependency as Rs.1,32,000/-.  After making certain other additions

on account of loss of love and affection, loss of estate, funeral expenses, the total amount

of  compensation was determined as Rs.1,49,500/-.   The appellants were also awarded

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interest @ 9% per annum from the date of filing of the Claim Petition till payment.

Being dissatisfied with the compensation awarded by the learned Tribunal, the

appellants filed an appeal before the High Court under Section 173 of the Motor Vehicles

Act, 1988 and claimed that the income of the deceased had been computed at a lower

figure than what it should have been.  It was urged that as a pujari,  performing pujas at

various  places   and also in  well  known  companies,  his  monthly  income was  at  least

between Rs.8000/- and Rs.10,000/-.  It was also contended that the future prospects of the

deceased had not been taken into consideration while applying the multiplier of 11.

The claim of the appellants was contested and it was urged on behalf  of the

respondent-insurance company that there was no reliable evidence to prove or establish

that the monthly income of the deceased was more than what had been estimated by the

learned Tribunal.  It was also urged that the multiplier  applied by the Tribunal was

correct.

After considering the submissions made on behalf of the respective parties, the

High  Court  concluded  that  the  monthly  income of  the  deceased  had been computed

without taking into consideration the future prospects of the deceased and accordingly it

raised the monthly income from Rs.2000/- to Rs.3000/-.  Taking into account the age of

the  victim  and  the  age  of  the  appellants,  the  High  Court  also  concluded  that  the

multiplier  which had been applied by the learned tribunal was erroneous and the same

should have been 12 instead of  11.   Accordingly,  after enhancement of the estimated

income of the deceased and application of the  multiplier of 12, the total compensation

was enhanced by the High Court to Rs.2,33,500/- plus Rs.10,000/-  plus Rs.5000/- plus

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Rs.2500/-.  The interest was, however, reduced from 9% to 8% and it was directed that

the enhanced amount of compensation with interest @ 8% per annum from the date of

the filing  of  the Claim Petition till  payment would have to be paid by the insurance

company within a period of two months from the date of the order.  The total amount

awarded was directed to be shared by the appellants equally.   

Aggrieved  by  the  aforesaid  order  of  the  High  Court,  the  appellants  have

preferred the instant appeal.

Appearing  in  support  of  the  appeal,  Mr.  K.K.  Rai,  learned  senior  counsel,

submitted that both the learned Tribunal as also the  High Court had confused issues by

applying the principles both of Section 163A and Section 166 of the Motor Vehicles Act,

1988, in determining the compensation payable to the appellants on account of the death

of their son who at the relevant point of time was only 22 years old.  According to Mr.

Rai, having referred to the Second Schedule to the Motor Vehicles Act, 1988, and having

assessed the estimated income of  the deceased   below  40,000/-  per annum, both the

Tribunal as well as the High Court should have strictly applied the structured formula

contained in Schedule II to the Act.  He also urged that even if the Second Schedule was

not strictly applicable to a claim made in terms of Section 166 of the Act, a reasoned

approach should have been taken to arrive at a just and fair  compensation on account of

the death of the appellants' son.

Reference was made by him to the decision of this Court in Oriental Insurance

Co. Ltd. Vs. Hansrajbhai V. Kodala & Ors., 2001 (5) SCC 175, which dealt strictly with

compensation assessable  in  terms of  the  structured formula  under Section 163A and

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submitted that the ratio of the said  decision ought to have been followed by the High

Court.

Mr.  P.K.  Seth,  learned  advocate  appearing  for  the  respondent,  however,

clarified that the application for compensation having been made under Section 166 of

the aforesaid Act, the appellants could not claim determination of compensation in terms

of the Second Schedule and the structured formula contained therein.  According to Mr.

Seth,  both  the  Tribunal  as  well  as  the  High  Court  had  applied  the  law correctly  in

determining the compensation since in an application under Section 166 of the Act, the

Second Schedule to the Motor Vehicles Act, 1988, did  not strictly apply.  In support of

the submissions, he referred to and relied upon a recent decision of this Court in the case

of  Ramesh Singh & Anr. Vs.  Satbir Singh & Anr.,  2008 (1) SCALE 630, which too,

however,  dealt with a claim for compensation made under Section 163A of the aforesaid

Act.  What has been held in the said decision is not, therefore,  relevant for the purpose

of this case, since the application in this case  was made under Section 166 and not 163A

of the Motor Vehicles Act, 1988.  In such a case, the question, as to whether the age of the

deceased or the age of the parents ought to be taken into consideration for assessing the

compensation, loses all significance.

It must also be noted that the appellants had availed of the benefit of Section

140 of the Motor Vehicles Act which disentitled them to apply for compensation under

Section 163A having regard to the provisions of Section 163B.

We, therefore, need  not be detained by either of the judgments which have been

cited on behalf  of the respective parties since we are satisfied that the application as

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made under Section 166 of the Act has been dealt with correctly by the Tribunal as also

the  High  Court.   Both  the  Tribunal   as  well  as  the  High  Court  were  within  their

discretion to refer to the Second Schedule as a guideline for the purpose of arriving at the

final compensation to be awarded as also the multiplier to be applied to the multiplicand

which was computed both by the Tribunal as also the High Court.

There  was  one  other  point  which  was  raised  by  Mr.  Rai  regarding  the

assessment of the loss of dependency which according to him should not have been taken

as 50% but one-third as is generally taken in similar cases.  On this point we are in

agreement with Mr. Rai and we feel that both the forums below took a wrong view of the

matter and that loss of dependency should have been taken as 1/3rd and not 50% as has

been awarded.

The judgement of the High Court is accordingly, modified to the extent that in

calculating the amount of compensation to be awarded, the loss of dependency should be

taken as 1/3rd and not 50%.

The Tribunal is directed to work out the compensation payable on the basis of

these directions and thereafter to finalise the compensation payable to the appellants.

Once such assessment is made,  the insurance company shall make payment of the same

within two months from the date of the order of the Tribunal.

The appeal stands disposed of.

There will be no orders as to costs.  

......................J.

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 (ALTAMAS KABIR)

......................J.   (MARKANDEY KATJU)

New Delhi; April 03, 2008.