Motor Accident Claims : Important Judgments

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Award of Compensation shall be reasonable and just

Case name: K.Suresh v. New India Assurance Company Limited and Another, [(2012) 12 SCC 274]

In this case, the Supreme Court observed:

  • That while assessing the quantum of compensation some guess work, some hypothetical considerations and some sympathy come into play but, a significant one, the ultimate determination is to be viewed with some objective standards.
  • That neither the Tribunal nor a court can take a flight in fancy and award an exorbitant sum. In conceptual eventuality “just compensation” plays a dominant role.
  • That an adjudicating authority, while determining the quantum of compensation, has to keep in view the sufferings of the injured person which would include his inability to lead a full life, his incapacity to enjoy the normal amenities which he would have enjoyed but for the injuries and his ability to earn as much as he used to earn or could have earned.

Compensation under the head disability to earn livelihood in future distinct from compensation under the head suffering and loss of enjoyment of life

Case name: Ramesh Chandra v. Randhir singh and others [(1990) 3 SCC 723]

In this case, the Supreme Court, while considering the disability to earn livelihood in future, held that the amounts under that head can be awarded notwithstanding the grant of compensation under the head pain and suffering and loss of enjoyment of life. The Apex Court opined that:

  • That the sum awarded for pain, suffering and loss of enjoyment of life etc. termed as general damages should be taken to be covered by damages granted for loss of earnings is concerned that too is misplaced and without any basis.
  • The pain and suffering and loss of enjoyment of life which is a resultant and permanent fact occasioned by the nature of injuries received by the claimant and the ordeal he had to undergo.
  • Money solace is the answer discovered by the Law of Torts. No substitute has yet been found to replace the element of money. This, on the face of it appeals to us as a distinct head, quite apart from the inability to earn livelihood on the basis of incapacity or disability which is quite different.
  • The incapacity or disability to earn a livelihood would have to be viewed not only in praesenti but in futuro on reasonable expectancies and taking into account deprival of earnings of a conceivable period. This head being totally different cannot in our view overlap the grant of compensation under the head of pain, suffering and loss of enjoyment of life.
  • One head relates to the impairment of person’s capacity to earn, the other relates to the pain and suffering and loss of enjoyment of life by the person himself.

Compensation for permanent disability cannot exclude compensation under other heads

Case name: B. Kothandapani v. Tamil Nadu State Transport Corporation Limited [(2011) 6 SCC 420]

The Supreme Court made the following observations in the case:

  • That the compensation for loss of earning power/capacity has to be determined based on various aspects including permanent injury/disability. At the same time, it cannot be construed that compensation cannot be granted for permanent disability of any nature.
  • It cannot be disputed that apart from the fact that the permanent disability affects the earning capacity of the person concerned, undoubtedly, one has to forego other personal comforts and even for normal avocation they have to depend on others.

Courts to adequately compensate the victim for not only physical injury but also for leading a normal life

Case name: Kavitha v. Deepak and Others [(2012) 8 SCC 604]

In this case, the Supreme Court stated that:

  • The Courts while determining the quantum of compensation, either for permanently or temporarily disabled persons, must make effort to adequately compensate them not merely for physical injury and treatment but also for loss of earning, inability to lead a normal life and to enjoy life’s amenities.
  • That in determining the quantum of compensation payable to the victims of accident, who are disabled either permanently or temporarily, efforts should always be made to award adequate compensation not only for the physical injury and treatment, but also for the loss of earning and inability to lead a normal life and enjoy amenities, which would have been enjoyed but for the disability caused due to the accident.
  • The amount awarded under the head of loss of earning capacity are distinct and do not overlap with the amount awarded for pain, suffering and loss of enjoyment of life or the amount awarded for medical expenses.

Compensation can be granted towards permanent-disability as well as loss of future earnings

Case name: Subulaxmi v. Managing Director, Tamil Nadu State Transport Corporation and Another [(2012) 10 SCC 177]

In this case, the seminal issue that cropped up before the Apex Court was whether the High Court was justified in awarding compensation on a singular head relating to permanent disability and loss of future earning?

In the aforesaid context, the Apex Court made the following observations:

  • The Court in the case held that compensation can be granted towards permanent-disability as well as loss of future earnings, for one head relates to the impairment of person’s capacity and the other relates to the sphere of pain and suffering and loss of enjoyment of life by the person himself.
  • If the victim of an accident suffers permanent or temporary disability, then efforts should always be made to award adequate compensation not only for the physical injury and treatment, but also for the pain, suffering and trauma caused due to the accident, loss of earning and the victim’s inability to lead a normal life and enjoy amenities, which he would have enjoyed but for the disability caused due to the accident.

Fair Compensation to be awarded for non-pecuniary losses

Case name: Jai Bhagwan v. Laxman Singh and Others [(1994) 5 SCC 5]

In this case, the Supreme Court made reference to In Clerk and Lindsell on Torts (16th Edn.), wherein while referring to damages for personal injuries, it was stated that

“In all but a few exceptional cases the victim of personal injury suffers two distinct kinds of damage which may be classed respectively as pecuniary and non-pecuniary. Bu pecuniary damage is meant that which is susceptible of direct translation into money terms and includes such matters as loss of earnings, actual and prospective, and out-of-pocket expenses, while non-pecuniary damage includes such immeasurable elements as pain and suffering and loss of amenity or enjoyment of life. In respect of the former, it is submitted, the court should and usually does seek to achieve restitutio in integrum in the sense described above, while for the latter it seeks to award ‘fair compensation’. This distinction between pecuniary and non-pecuniary between ‘special’ and ‘general’ damages, for while the former is necessarily concerned solely with pecuniary losses – notably accrued loss of earnings and out-of-pocket expenses – the latter comprises not only non-pecuniary losses but also prospective loss of earnings and other future pecuniary damage.”

  • In view of the aforesaid, the Court reiterated that non-pecuniary losses are different from pecuniary losses in that the restitutio in integrum objective cannot be applied liberally to them – damages cannot restore a lost limb or happiness.
  • That the practice of the courts is not to subdivide non-pecuniary damages under specific heads, nevertheless proper consideration cannot be given to the plaintiff’s claim without taking into account the various types of loss he has s

Compensation in case where Victim is a Child

Case name: Master Mallikarjun v. Divisional Manager, The National Insurance Company Limited & Anr. [2013 (3) KLJ 815]

In this case, the Supreme Court considered the issue of fair compensation to be awarded to a child, who suffered a disability in a motor accident.

The Apex Court in the case declared that the minimum compensation in such cases should be Rs.3,00,000/, if the child suffers whole-body disability between 10% to 30%, Rs.4,00,000/- for disability up to 60%, Rs.5,00,000/- for disability up to 90% and Rs.6,00,000/-, if the disability is above 90%.

However, in the case, the Supreme Court did not fix the aforesaid parameters as an inviolable standard and declared that in exceptional circumstances, the Tribunals and courts would be empowered to grant more as per the factual requirements to be assessed from case to case.

  • Other observation made by the Court in the case was that the main elements of damage in the case of child victims are the pain, shock, frustration, deprivation of ordinary pleasures and enjoyment associated with healthy and mobile limbs. The compensation awarded should enable the child to acquire something or to develop a lifestyle which will offset to some extent the inconvenience or discomfort arising out of the disability.
  • That appropriate compensation for disability should take care of all the non-pecuniary damages. In other words, apart from this head, there shall only be the claim for the actual expenditure for treatment, attendant, transportation, etc.

Case name: Kumari Kiran through Her Father Harinarayan v. Sajjan Singh and Others [(2015) 1 SCC 539]

In this case, the Apex Court took note of the agony of the parents wherein in the disability is suffered by a minor child.

The Court while determining fair compensation the agony of the parent should also be one of the factors, since their sorrow will continue for the whole life seeing their child in a vegetative state on account of the negligence of the hospital authorities.

Compensation on the grounds of Sympathy

Case name: Nizam’s Institute of Medical Sciences v. Prasanth S. Dhananka and Ors[(2009) 6 SCC 1]

The Supreme Court in the case opined that while determining quantum of compensation in such cases the court has to strike a balance between the inflated and unreasonable demands of a victim and the equally untenable claim of the opposite party saying that nothing is payable.

That Sympathy for the victim does not, and should not, come in the way of making a correct assessment, but if a case is made out, and the court must not be chary of awarding adequate compensation.

That the “adequate compensation” that we speak of must to some extent, be a rule of thumb measure, and as a balance has to be a struck, it would be difficult to satisfy all the parties concerned.

Child was not Earning Money doesn’t Disentitle Parents from Claiming Full Benefits u/Fatal Accidents Act

Case name: R. Ayyavu and Anr. v. Gopinathan Nair and Anr. (AIR 1991 ACJ 718)

In the case, the Supreme Court held:

  • That the mere fact that the children were not earning any money or money’s worth would not disentitle their parents from claiming the full benefits under the Fatal Accidents Act.
  • That in the absence of statutory guidelines, the court has to make an estimate of the pecuniary loss suffered by the members of the family of the deceased. Greater value is attributed to life while the purchasing power of the Rupee has considerably diminished.
  • That sentiments indeed have no place, but the court has to evaluate the pecuniary loss resulting from death on the basis of a proper appreciation of the relevant circumstances and hard realities.
  • In doing so, the court has to take into account all reasonable probabilities of future benefits, but exclude, from its consideration all fancied or bare possibilities or speculative conjectures.
  • Thus, damages are to be based on the reasonable expectation of pecuniary benefit and on other non-pecuniary benefit.

Owner as per RTO records liable for accident, if transfer is not recorded

In  Naveen Kumar vs Vijay Kumar and others,

  • the SC reiterated the legal position that it is the registered owner of the vehicle as per RTO records who is liable for accident caused by the vehicle. Therefore, even if the ownership of vehicle is transferred, if the transfer is not recorded in the RTO records, the original owner will continue to be liable.
  • Because, owner, as per Section 2(30) of the MV Act, is the registered owner. “The principle underlying the provisions of Section 2(30) is that the victim of a motor accident or, in the case of a death, the legal heirs of the deceased victim should not be left in a state of uncertainty. A claimant for compensation ought not to be burdened with following a trail of successive transfers, which are not registered with the registering authority”, observed the SC.

Insurer will be absolved if transport vehicle had no permit

  • The SC held that if a transport vehicle plying without permit gets involved in an accident, the insurer will not be liable, as absence of permit is a statutory breach( Amrit Paul Singh and anothers v TATA AIG General Insurance)

Stationary vehicle can also cause accident

  • To incur liability under MV Act, it is not necessary that the vehicle was moving. As per Section 165 of the Act, to give rise to a claim for compensation, the accident need to “arise out of the use of the vehicle”. “The word “use” has a wider connotation to cover the period when the vehicle is not moving and is stationary”, observed the Supreme Court, while sustaining the claim in relation to accident caused by a stationary tractor.
  • In this case, the battery of the tractor was used to power a blasting machine in a field. During the blasting operation, a rock fell on a passer by, causing his death. The SC held that the accident had causal link with “use of vehicle”, and held the MACT claim to be maintainable.(Kalim Khan and others v Fimidabee and others)

Term of third party insurance raised as 3 years for four wheelers and 5 years for two wheelers for vehicles sold from Sep 1

  • On July 20, the Supreme Court ordered that third party insurance coverage of three years for cars and five years for two wheelers should be mandatory for all vehicles sold from September 1.
  • The direction was on the basis of decisions taken by the Supreme Court Committee on Road Safety, headed by former SC judge Justice K. S Radhakrishnan. The bench noted that in a meeting held by Committee on 26th March, 2018, it was recorded that there are about 18 crore vehicles plying on the road and only about 6 crore vehicles have the mandatory third party cover, which meant that 66% of the vehicles were plying without third party insurance (S Rajaseekaran v Union of India and others)

On August 28, IRDA issued a circular, putting in effect the SC direction.

Doctrine of “pay and recover” holds the field in cases of breach of policy conditions

  • The SC held that in cases of breach of statutory conditions of policy, the insurer will have to first pay compensation to the claimant and can recover the amount later from the insured owner. The insurer cannot seek absolute exoneration.
  • The SC set aside the HC judgment, which had quashed the Tribunal direction to the insurer to “pay and recover” in a case where the driver of the offending vehicle was found to have no driving license.  The HC completely exonerated the insurer ,relying on the SC decision in National Insurance Co Ltd v Parvathneni. In Parvathneni, the SC had referred to larger bench the issue whether directions to “pay and recover” could be given under Article 142 of the Constitution, in cases where insurer had no liability.
  • In the present case, the SC held that the questions raised in Parvathneniwas no attracted. Because, this was a case of breach of policy condition, and not a case where policy did not cover the accident.(Shamana and another vs The Divisional Manager Oriental Insurance)

Disabled victim must be compensated for inability to lead full life

  • In a case relating to compensation claim for disability caused by accident, the SC held : “In cases of motor accidents leading to injuries and disablements, it is a well settled principle that a person must not only be compensated for his physical injury, but also for the non­pecuniary losses which he has suffered due to the injury. The Claimant is entitled to be compensated for his inability to lead a full life, and enjoy those things and amenities which he would have enjoyed, but for the injuries”
  • In this case, the SC accepted the statement given by the employer regarding the salary paid to the victim. The HC was criticised for taking a lower amount than the figure stated by the employer(Anant Son of Sidheshwar Dhukre v Pratap Son of Zhamnappa Lamzane and another)

Claim petition not maintainable for self-accident

  • The Supreme Court reiterated that when an owner-cum-driver of a vehicle is himself responsible for the accident caused, in which no other vehicle is involved; no claim petition will be maintainable under Motor Vehicles Act(National Insurance Co. Ltd. vs. Ashalata Bhowmik)

Parents entitled to compensation for “loss of filial consortium” for death of children in accident

  • The Supreme Court held that in a case where a parent has lost their minor child, or unmarried son or daughter, the parents are entitled to compensation for loss of consortium under the head of filial consortium.
  • “An accident leading to the death of a child causes great shock and agony to the parents and family of the deceased. The greatest agony for a parent is to lose their child during their lifetime. Children are valued for their love, affection, companionship and their role in the family unit.”, observed the bench.
  • The bench further said the amount of compensation to be awarded as consortium would be governed by the principles of awarding compensation under ‘Loss of Consortium’ as laid down by the constitution bench in Pranay Sethcase. ( Magma General Insurance Co Ltd vs Nanu Ram Alias Churhu Ram and others)

HC should assign reasons for reducing compensation or for not enhancing it

  • The Supreme Court reiterated that the High court while sitting in appeal above a MACT order, should assign the reasons for not granting enhancement of compensation and/or its reduction(Sudarsan Puhan vs. Jayanta Ku. Mohanty).

Procedural lapses should not result in denial of compensation

  • Motor Vehicles Act is a beneficial legislation, and procedural lapses in conduct of case should not result in denial of compensation. “The Act is designed in a manner, which relieves the victims from ensuring strict compliance provided in law, which are otherwise applicable to the suits and other proceedings while prosecuting the claim petition filed under the Act for claiming compensation for the loss sustained by them in the accident”, observed the Court (Vimla Devi v National Insurance Co Ltd and others).

Compensation can be awarded in excess of the claim.

  • It was held by SC that there was no restriction to award compensation exceeding the amount claimed by the claimants, as the “function of the Tribunal or Court under Section 168 of the Motor Vehicles Act, 1988 is to award “just compensation” (Ramla v National Insurance Co Ltd and others)

Salary certificate not the only basis for computing income

  • The Supreme Court in United India Insurance Co Ltd v Indiro Devi has held that salary certificate need not be the only basis to assess income of the deceased for arriving at a just and fair compensation to be paid to the claimants for the loss of life.
  • The SC upheld a Punjab and Haryana High Court judgment that had taken the income of the deceased as found in the income tax assessment and increased the compensation awarded by the tribunal.

Vehicle owner as per RTO records liable even if accident occurred within the prescribed 30 days for reporting transfer

  • The Supreme Court held that, if an accident occurs within the period prescribed for reporting transfer of a vehicle, the transferor is not absolved of the liability, so long as his name continues in RTO records. ““These timelines and obligations are only to facilitate the reporting of the transfer. It is not as if that if an accident occurs within the period prescribed for reporting said transfer, the transferor is absolved of the liability.”, the court observed (Prakash Chand Daga v Saveta Sharma and others)

High Court Decisions

Academic qualifications not the only criteria to determine future prospects, Tripura HC

  • While upholding compensation awarded by the Motor Accident Claims Tribunal (MACT) to a student who suffered accident, the Tripura High Court has observed that academic qualification cannot be the sole criteria to determine the merits of a person and there should not be any discrimination in determining the loss of earning capacity on account of disability occurred due to road traffic accident, particularly, when claimant-victims are students.
  • ‘In our country, there are so many instances that a person with less academic career has become a successful industrialist and even participated in generating the economic growth of the nation”, observed the HC ( New India Assurance Co Ltd v Sri Bapi Debbarma and others)

Absence of fitness certificate is a fundamental breach of policy, Kerala HC 5 Judges’ Bench

  • A Full Bench of the High Court of Kerala comprising five judges has held that absence of fitness certificate for a transport vehicle amounts to fundamental breach of third party insurance policy. It was held that the insurer will get ‘pay and recover’ option in compensation cases arising out of accidents caused by transport vehicles without fitness certificate.
  • The five judges’ bench was constituted to consider the correctness of decision of a three judges’ bench in Augustine vs Ayyappankutty 2015(2) KLT 139, which held that lack of fitness certificate was only a technical breach and that insurer cannot seek exoneration from liability on that ground.
  • Certificate of Registration, existence of valid Permit and availability of Fitness Certificate, all throughout, are closely interlinked in case of a transport vehicle and one requirement cannot be segregated from another”, the Full Bench held overruling three judges’ bench decision in Augustine vs. Ayyappankutty  Pareed Pillai v Oriental Insurance Co Ltd )

The burden is on insurer to prove that it had intimated the insured about cancellation of policy, Kerala HC 3 Judges’ bench

  • The Full Bench of the High Court of Kerala clarified that once the insurer shows that it has intimated the cancellation of insurance policy to the insured through post addressed to him, then the burden to show that the intimation was not received shifts to the insured. The Court was considering third party insurance policy under the Motor Vehicles Act.

Sec.24 CPC cannot be invoked to transfer MACT claims, Allahabad HC

  • The Allahabad High Court held that Section 24 of the Code of Civil Procedure cannot be invoked to seek transfer of claim petition pending before the Motor Accident Claims Tribunal.
  • ‘Since a Claims Tribunal is created by a notification of the State Government under the provisions of the Motor Vehicles Act, it cannot be said that such Tribunal is a Court subordinate to the High Court’, reasoned the Court.

Insurance company not liable for injury to unauthorized passengers, Madras HC

  • The Madras High Court  reiterated that insurance companies cannot be held liable to compensate for deaths or injuries to unauthorised/ gratuitous passengers in goods or transport vehicles.
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