Partly allowed

The New India Assurance Co. Ltd. v. Alpa Rajesh Shah and Ors.

Bombay HC19 Oct 2013FA/848/2012

Case brief

AI extract

What is this about?

The High Court modified a Motor Accident Claims Tribunal award against an insurance company. The court rejected averaging past income, opting for the death-date income of Rs. 2,00,000. Applying a multiplier of 17 and deducting 1/3 for personal expenditure, the compensation was rounded to Rs. 23,16,700.

What did the court decide?

Total compensation modified to Rs. 23,16,700/-; First Appeal dismissed; Cross Objection partly allowed; Apportionment maintained.

The New India Assurance Co. Ltd. Vs Alpa Rajesh Shah… — Execution and Attachment | Bombay HC (2013)

fa848 final draft

ssp

IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CIVIL APPELATE JURISDICTION
FIRST APPEAL NO.848 OF 2012 WITH
 CROSS OBJECTION ST.NO.25362 OF 2013

¶5

The New India Assurance Co. Ltd.

¶6

...Appellant

¶7

vs.

¶8

Smt.Alpa Rajesh Shah
Master Urvil Rajesh Shah
Kasturben Mulchand Shah
Ramkrishna S. Ghawte ...Respondents

¶9

Mr.Devendranath S. Joshi for the Appellant in FA
848/2012

¶10

Mr.T.J.Mendon for the respondent in FA 848/2012 and
in Cross Objection

¶11

CORAM : A.S.OKA, AND REVATI MOHITE DERE, JJ.
DATE ON WHICH JUDGMENT IS RESERVED:SEPTEMBER 30,2013
DATE ON WHICH JUDGMENT IS PRONOUNCED:OCTOBER 19,2013

¶12

JUDGMENT: (Per A.S.Oka,J.)

¶13

1By this appeal, the appellant the New India
Assurance Company Limited has taken an exception to
the Judgment and Award dated 23rd September 2011
passed by the learned Chairman of the Motor Accident
Claims Tribunal, Mumbai in a claim petition filed by
the respondents under section 166 of the Motor
Vehicles Act,1988 (for short “the said Act”). The
claim for compensation was made on account of death
of one Rajesh Shah in a vehicular accident on 18th
February 1989. The first respondent is the widow of
the deceased Rajesh. The second respondent is the
minor son of the deceased Rajesh and the third

¶14

2 fa848 final draft

¶15

respondent is the mother of the deceased Rajesh. To
the original claim petition, even the father of the
deceased Rajesh was made a party who died during the
pendency of the claim petition. Thereafter, his
name has been deleted.

¶16

2The case made out in the claim petition was
that on 18th February 1999, the deceased Rajesh was
proceeding by a car on Mumbai Pune highway. The
accident occurred at about 9.00 p.m close to
Balewadi stadium near Pune. At that time, a motor
tanker came from the opposite direction. The motor
tanker was admittedly owned by the fourth respondent
which was admittedly insured with the appellant on
the date of accident. The tanker gave a dash to the
car by which the deceased was travelling. It is
alleged that the accident occurred due to rash and
negligent driving of the tanker by its driver. As a
result of the injuries sustained in the accident,
Rajesh died.

¶17

3Though the claim petition was not contested by
the fourth respondent, after obtaining a leave under
section 170 of the said Act, the appellant contested
the claim. The Tribunal held that the accident
occurred due to rash and negligent driving on the
part of the driver of the tanker. The Tribunal
proceeded to grant compensation of Rs.21,90,000/-
with interest thereon at the rate of 7.5% per annum
from the date of filing of the claim petition. First
to third respondents claimed compensation of Rs.1
crore. Cross objection Stamp No.25362 of 2013 has

¶18

fa848 final draft

¶19

¶20

been filed by the first to third respondents
claiming additional compensation of Rs.30,00,000/-.

¶21

4The learned counsel for the appellant urged
that it was a case of head on collision and
therefore, even the driver of the car had
contributed to the accident. He urged that the
Tribunal ought to have held that the liability of
both the vehicles was equal. He submitted that the
income taken by the Tribunal for the purposes of
calculating multiplicand is on the higher side. He
urged that even in the deposition of the first
respondent, she did not state that the father of the
deceased was financially dependent on the deceased.
He, therefore, urged that there were only three
dependents viz; widow, son and mother of the
deceased. He, therefore, urged that the Tribunal
committed an error by deducting only ¼ income of the
deceased on account of personal expenditure of the
deceased and that the deduction ought to have been
1/3. He submitted that the age of the deceased on
the date of accident was more than 30 but less than
31. Relying upon the decision of the Apex Court in
case of Sarla Verma and others vs. Delhi Transport
Corporation1, he submitted that the multiplier of 16
ought to have been applied which is applicable to
the age group of 31 to 35 years. He urged that the
compensation granted is exorbitant.

¶22

5 The learned counsel for the respondent Nos.1 to

¶23

3 submitted that as the deceased had not completed

¶24

1 2009 (6) SCC 121

¶25

4 fa848 final draft

¶26

age of 31 years, multiplier of 17 has been rightly
applied as per the decision of the Apex Court in
case of Sarla Verma. He urged that in the claim
application it is stated that even the father of the
deceased was dependent on the deceased. He urged
that merely because the father died during the
pendency of the claim application, his dependency
cannot be ignored. He urged that in the income tax
returns for the Assessment years 1997-1998 to 1999-
2000 show that there was a steady increase in the
income of the deceased who was running a liquor
shop. He, therefore, urged that the future
prospects increase in the earnings of the deceased
ought to have been taken into consideration by the
Tribunal. He submitted that 50% of the income of the
deceased on the date of accident ought to have been
added for the purpose of calculating the
multiplicand. He urged that in the light of the
decision of the Apex Court in the case of Vimal
Kanwar and others Vs. Kishore Dan and others2 a sum
of Rs.1,00,000/- each ought to have been granted to
the respondent Nos.1 to 3 on account of loss of love
and affection.

¶27

6The learned counsel for the appellant relying
upon the recent decision of the Apex Court in case
of Reshma Kumari and others vs. Madan Mohan and
another3, submitted that the Apex Court has held
that in case of a deceased who was self employed,

¶28

2 2013 ACJ 1441

¶29

3 Civil Appeal No.4646 of 2009 and 4647 of 2009
decided on 2nd April 2013

¶30

5 fa848 final draft

¶31

future prospects of enhancement of income can be
considered only in exceptional cases.

¶32

7We have considered the submissions. The first
question will be as regards the negligence. The
first to third respondents examined one Hemant who
was travelling with the deceased at the time of
accident. He has deposed that at the time of
accident, the car was proceeding in a moderate
speed. He deposed that the tanker came on its wrong
side and gave a dash. In the cross examination, he
admitted that the accident took place at about 9.30
p.m. He stated that the headlight of the motor car
were on. In the cross examination, he denied the
correctness of the suggestion that the driver of the
car was driving the vehicle in a very high speed.
In the cross examination, it is brought on record
that the width of the road at the spot of the
accident was 60 feet. He stated that at the time of
accident, Maruti Zen car by which he was travelling
was at the distance of 12 feet from the left edge
of the road. Thus, there was a distance of about 18
feet between the car and the center of the road. It
is stated that the front portion of the tanker
dashed against the car. All this has come on record
in the cross examination of the witness made by the
appellant. All this supports the case that the
tanker came on its wrong side. There was no attempt
made by the appellant to examine the driver of the
Tanker. Therefore, it was a fit case to draw an
adverse inference against the Appellant and the
insured. That is why the Tribunal rightly came to

¶33

6 fa848 final draft

¶34

the conclusion that the accident occurred on the
part of the driver of the tanker. There is no reason
to disturb the said finding.

¶35

8Now, the other issue is regarding the quantum
of compensation. The first respondent (the widow of
the deceased) stepped into the witness box. She
stated that at the time of death, the deceased was
the Proprietor of business of M/s.Roshni Wines. She
produced income tax returns of the deceased in
evidence. The said income tax returns were marked as
Exh.25 (collectively). The income tax return of the
assessment year 1997-98 shows that the net profit of
earned by the deceased was Rs.1,75,739/-. Income
tax return for the assessment year 1998-99 shows
that the net income of the deceased was
Rs.2,30,453/-. The income tax return for the
assessment year 1999-2000 shows that the net income
of the deceased was Rs.2,10,750/-. We must note here
that the deceased died on 18th February 1999. Thus,
the net income of the deceased of Rs.2,10,750/- for
the financial year ending with 31st March 1999 was in
fact the income for the period of approximately 11
months.

¶36

9The learned Member of the Tribunal while
calculating the multiplicand has deducted the tax
payable from the net income for the said three years
and has taken the average of the income of three
years. Thus, he has taken the yearly income of the
deceased at Rs.1,60,000/- for the purposes of
computing multiplicand. We find that the learned

¶37

7 fa848 final draft

¶38

Member has committed an error by taking the average
of the income for last three years. The income on
the date of death ought to have been taken into
consideration after deducting the income tax
payable.

¶39

10Now another question is whether future
prospects of income should be taken into
consideration. In the case of Reshma Kumari and
others, in paragraph 36 of the decision, the Apex
Court observed thus:

¶40

“36...In the case where the deceased was
self-employed or was on a fixed salary
without provision for annual increments,
the actual income at the time of death
without any addition to income for future
prospects will be appropriate. A departure
from the above principle can only be
justified in extraordinary circumstances
and very exceptional cases.”

¶41

(emphasis added)

¶42

This observation will apply only to the cases where
the deceased was self employed or was employed on a
fixed salary with no provision for increments. In
other cases, the decision of Sarla Verma will
apply.

¶43

11We must refer to another decision of the Apex
Court in case of Santosh Devi vs. National Insurance
Co. Ltd.4. In paragraph 14 of the said decision,
4 Civil AppealNo.3723/2012 decided on 23rd April 2012

¶44

fa848 final draft

¶45

¶46

the Apex Court considered the decision in case of
Sarla Verma (supra). The Apex Court observed that
the decision in case of Sarla Verma (supra) does
not lay down a rule that there will be no addition
in the income of the persons who were self employed.
In fact the Apex Court also observed that it would
be reasonable to say that a person who is self
employed will also get 30% increase in his total
income over a period of time.

¶47

12Thus, there is no prohibition on considering
the future prospects of increase in the earning of
the deceased who was self employed. However, the
claimants must produce satisfactory evidence to show
that there were genuine prospects of increase or
enhancement in the earnings of the deceased. The
observation of the Apex Court in case of Reshma
Kumari (supra) means that normally in case of a
deceased who was self employed, the Tribunal cannot
take into account the future prospects of increase
in earnings of the deceased. However, only when
there is strong and positive evidence on record to
show that there were definite prospects of increase
in the income of the deceased in future, such a case
can be treated as an exceptional case in which
future prospects of increase in the earning can be
considered by the Tribunal.

¶48

13Turning to the facts of the case, the learned
Member of the Tribunal has recorded a finding that
for carrying on business of sale of wine or liquor,
a licence is required. The Tribunal observed that

¶49

fa848 final draft

¶50

¶51

even the licence has not been produced by the
respondent No.1 to 3. Perusal of the affidavit in
lieu of examination-in-chief of the first respondent
shows that she has not even stated that the deceased
had obtained a licence which was in force up to a
particular date. In the cross examination, she
stated that she was not aware where the certificate
of shop of the deceased under the Shop and
Establishment Act,1948 and liquor licence were
lying. She admitted that at the place where
business of M/s.Roshni Wines was being conducted,
the brother-in-law of her sister-in -law (wife of
the brother of deceased)is carrying on the business
sale of dry fruits. The first respondent has not
even disclosed the year from which the deceased
started business of Roshni Wines. She has not given
any particulars as regards the investments made by
the deceased, the number of staff members employed
by the deceased and the right of the deceased in
respect of the premises in which he was carrying on
business. There was no evidence adduced as regards
the potential to earn more income in future. In
absence of any such evidence, it is not possible to
consider the future prospects of increase in
earnings of the deceased who was self employed.

¶52

14Income tax returns for the period of three
years immediately prior to the date of death of the
deceased show that the net income of the deceased
was Rs.1,75,739/-, Rs.2,30,435/- and Rs.2,10,750/-
respectively. The last figure represents income for
about 11 months. The income on the date of death

¶53

10 fa848 final draft

¶54

will have to be taken into consideration for
determination of multiplicand. It is true that for
the purpose of calculating multiplicand, income tax
payable on net income has to be deducted. The
income tax paid by the deceased for the assessment
year 1999-2000 was Rs.29,554/- out of which a sum of
Rs.25,000/- was already paid on 15th December 1998
during the life time of the deceased. After
deducting the said amount of Rs.29,554/- from the
income of the deceased of Rs.2,10,750/- for about 11
months, the net amount comes to Rs.1,81,196/-.
Thus, the net monthly income after deducting income
tax was Rs.16,472/-. Adding Rs.16,472/- to
Rs.1,81,196/-, the yearly net income at the time of
death of deceased comes to Rs.1,97,668.00 which can
be rounded off to Rs.2,00,000/-.

¶55

15The other issue is regarding the number of the
dependents on the deceased at the time of his death.
In the deposition of the first respondent, she has
stated that she herself, her daughter and her
mother-in-law were dependents. She has not at all
stated that her father-in-law was also depending on
the deceased for financial support. Therefore, the
learned counsel for the appellant was right to the
extent that the total number of dependents ought to
have been taken as three and in terms of the
decision of the Apex Court in the case of Sarla
Verma, 1/3rd amount ought to have been deducted on
account of personal expenditure of the deceased.
After deducting 1/3rd amount from Rs.2,00,000/-,
yearly income can be taken at Rs.1,33,333/-.

¶56

fa848 final draft

¶57

¶58

16The other issue is regarding the multiplier to
be applied in terms of the decision of the Apex
Court in the case of Sarla Verma (supra). The date
of birth of the deceased was 29th June 1968. So on
the date of accident, his age was about 30 years
and 8 months. The Apex Court in paragraph 42 of
its decision in the case of Sarla Verma (supra) has
held that the multiplier of 17 shall be applied for
the age group of 26 to 30 years and multiplier of
16 shall be applied for the age group of 31 to 35
years. The submission of the learned counsel for
the appellant is that the deceased was falling in
the age group of 31 to 35 years. However, the
deceased had not completed age of 31 years. On this
aspect, it will be necessary to make a reference to
the decision of this Court in the case of National
Insurance Company Limited vs. Vaishali Harish
Devare and others5. This was a case where the age
of the deceased was more than 40 years but less than
41 years. The issue was whether the deceased will
fall in the age group of 36 to 40 years or the age
group of 41 to 45 years in terms of the decision of
the Apex Court in the case of Sarla Verma. Relying
upon the decision of the Apex Court in the case of
Sarla Verma (supra), in paragraph 26 this Court held
thus:

¶59

“26....The completed age of the deceased at
the time of death was 40 years. In terms

¶60

5 First Appeal No.1068 of 2012 decided on 31st
August 2012

¶61

fa848 final draft

¶62

¶63

of the decision of the Apex Court in case
of Sarla Verma and others (supra), for the
age group of 36 to 40 multiplier of 15 has
been specified. For the age group of 41 to
45, multiplier of 14 has been specified.
Therefore, by applying multiplier of 15,
the total 1000 of dependency will be
Rs.49,95,000/-...”

¶64

17The said decision of this Court was challenged
by the appellant therein before the Apex Court by
filing a Special Leave Petition. The Special Leave
Petition was dismissed by the Judgment and Order
dated 28th January 2013. While dismissing the
Special Leave Petition, the Apex Court held thus:

¶65

“In our view, the findings recorded by the
Tribunal, which have been approved by the
High Court, on the issues of rash and
negligent driving of the offending truck by
its driver and liability of the petitioner
to pay compensation to the claimants are
based on correct analysis of the pleadings
and evidence produced by the parties. The
approach adopted by the Tribunal and the
High Court for determination of the amount
of compensation is also correct and is
consistent with the law laid down by this
Court and the impugned Judgment does not
call for interference under Article 136 of
the Constitution.”

¶66

(underline supplied)

¶67

13 fa848 final draft

¶68

18Therefore, in the present case, the deceased
will fall in the age group of 26 to 30 years. Hence,
multiplier of 17 will have to be applied. If
multiplier of 17 is applied, total amount comes to
Rs.22,66,661/-. Relying upon the decision of Vimal
Kanwar and others the learned counsel for the
claimant contended that a sum of Rs.1,00,000/- will
have to be granted to the respondent Nos.1 to 3 each
account of loss of love and affection. Perusal of
the said decision shows that the Apex Court has not
laid down as a proposition of law that the children
and parents of the deceased are entitled to
compensation of Rs.1,00,000/- each on account of
loss of love and affection. It is in the facts of
the case before the Apex Court that such amounts
have been granted. We are dealing with the accident
of the year 1999. Therefore, amount of Rs.25,000/-
each deserves to be granted on account of funeral
expenses and loss of consortium to the respondent
Nos.1. Thus, adding a sum of Rs.50,000/-, total
compensation payable will be Rs.23,16,661/- which
can be rounded off to Rs.23,16,700/-. The Tribunal
has granted interest on the compensation amount at
the rate of 7.5% per annum from the date of the
claim application till its realization. We find no
fault with the said part of the impugned Judgment
and Award.

¶69

19Hence, we pass the following order:

¶70

(I)Impugned Judgment and Award dated 23rd
September 2011 is hereby modified. We direct

¶71

14 fa848 final draft

¶72

that total compensation payable to the
respondent Nos.1 to 3 shall be Rs.23,16,700/-
(inclusive of no fault liability under section
140 of the Motor Accident Act,1988) instead of
Rs.21,90,000/-. Rest of the award as regards
the interest and proportionate costs of the
claim petition is maintained.

¶73

(II)First Appeal No.848 of 2012 is accordingly
dismissed. Cross Objection Stamp No.25362 of
2013 is accordingly partly allowed. The
respondent Nos.1 to 3 shall be entitled to
proportionate costs of both the Appeal and
Cross Objection from the Appellant;

¶74

(III)Apportionment of the compensation shall be
as per the impugned Judgment and Award;

¶75

(IV)Civil application No.1789 of 2012 does not
survive and the same is disposed of.

¶76

(REVATI MOHITE DERE,J.)(A.S.OKA,J.)

The New India Assurance Co. Ltd. v. Alpa Rajesh Shah and Ors.

Case brief

What is this about?

What did the court decide?

The New India Assurance Co. Ltd. v. Alpa Rajesh Shah and Ors.

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Cases cited

Statutes considered

Parties & counsel

Coram

Case details

Similar cases

Gururaj Narsinha Joshi Vs Milind Arvind Mangrulkar and Othrs

Mrs. Shefali Milind Mangrulkar Vs 1)MILIND Arvind Mangrulkar and Ors.

Mr. Uttam Sheka Kshirsagar Vs Mr. Shivshankar Sidramappa Mashalkar and Ors.

Shri. Baburao Haribhau Jadhav Vs State of Maharashtra, through Secretary, Rural Development Dept and Ors.

Milind Hari Londhe Vs Vidya Milind Londhe

Vidya Milind Londhe Vs Milind Hari Londhe