Partly allowed

Master Karthik R v. National Insurance Co. Ltd.

Karnataka HC27 Sept 2024MFA/426/2020

Case brief

AI extract

What is this about?

The Karnataka High Court laid down a three-step methodology for compensating minors injured in motor vehicle accidents: (1) apply the multiplier method with a baseline notional income of Rs.40,000 p.a. compounded annually by inflation plus 40% future prospects (for disability above 20%) and an 18 multiplier; (2) add non-pecuniary damages per Master Mallikarjun's slab amounts compounded by inflatio

What did the court decide?

Enhanced compensation awarded in all three appeals with directions to invest specified amounts in fixed deposits for 10-20 years; interest payable quarterly/periodically to the minors.

Master Karthik R Vs National Insurance Co. Ltd. — Motor Accident Claims | Karnataka HC (2024)

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IN THE HIGH COURT OF KARNATAKA AT BENGALURU

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DATED THIS THE 27^TH DAY OF SEPTEMBER, 2024

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BEFORE

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THE HON'BLE MR JUSTICE N S SANJAY GOWDA

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MISCELLANEOUS FIRST APPEAL NO. 426 OF 2020

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(MV-I)

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C/W

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MISCELLANEOUS FIRST APPEAL NO. 4124 OF 2020

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(MV-I)

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MISCELLANEOUS FIRST APPEAL NO. 7008 OF 2021

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(MV-I)

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IN MFA No. 426/2020

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BETWEEN:

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MASTER KARTHIK.R., S/O V.RAJABABU,

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Digitally signed by KIRAN KUMAR R Location: HIGH COURT OF KARNATAKA

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AGED ABOUT 17 YEARS,

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MINOR REPRESENTED BY HIS FATHER AS NATURAL GUARDIAN AND NEXT FRIEND RAJABABU, R/AT OLAGERANAHALLI VILLAGE, BYRAKUR HOBLI, MULBAGAL TALUK, KOLAR DISTRICT-563 101.

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…APPELLANT

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(BY MISS. SWATI.G.HEGDE, ADVOCATE FOR SRI. PAVANA CHANDRA SHETTY.H, ADVOCATE)

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AND:

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NATIONAL INSURANCE CO. LTD., CHIKKA MAGALUR BRANCH OFFICE CODE:604901

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YASHORAM CHAMBERS, 2NF FLOOR, RATHNAGIRI ROAD, B.No.179-577101. REP: BY ITS BRANCH MANAGER.

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DR.B.RAJANEESH, S/O K.T.BASAVARAJ, R/O LAKSHMI NILAYA, OPP:GOVT COLLEGE No.206, B.H.ROAD, KADUR TOWN, KADUR, CHIKKAMAGALUR DISTRICT, PIN-577 548.

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…RESPONDENTS

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(BY SRI. ASHOK.N.PATIL, ADVOCATE FOR R-1; VIDE ORDER DATED:15/07/2022, NOTICE TO R-2 IS DISPENSED WITH.)

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THIS MFA IS FILED UNDER SECTION 173(1) OF MV ACT AGAINST THE JUDGMENT AND AWARD DATED 29.04.2019 PASSED IN MVC No.198/2017 ON THE FILE OF THE MACT AND SENIOR CIVIL JUDGE, MULBAGAL, PARTLY ALLOWING THE CLAIM PETITION FOR COMPENSATION AND SEEKING ENHANCEMENT OF COMPENSATION.

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IN MFA No. 4124/2020

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BETWEEN:

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SIDDU @ SIDDANNA, S/O MARTHANDAPPA, AGED AOBUT 8 YEARS, C/O LOKESH, No.853, CHUNCHAGATTA MAIN ROAD, BHEERAVESWARANAGAR, KONANAKUNTE POST, BENGALURU-560 062.

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PERMANENT ADDRESS: HONNAL VILLAGE, BIRALABI POST, ANDONA HOBLI, KALABURGI DISTRICT-585 101.

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APPELLANT BEING MINOR REPRESENTED BY HIS FATHER, AND NATURAL GUARDIAN MARATHANDAPPA, S/O HUSANAPPA

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…APPELLANT

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(BY SRI. GIRIMALLAIAH, ADVOCATE)

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AND:

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THE NEW INDIA ASSURANCE COMPANY LTD., No.9/2, 2^ND FLOOR, MAHALAKSHMI CHAMBERS, M.G.ROAD, BENGALURU-560 001.

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MR. BHADRA REDDY.A. S/O ASWATH REDDY, MAJOR, (AGE NOT KNOWN TO APPELLANT) No.293, MURALI MEDICALS, ZUAUVADI, HOSUR TALUK, KRISHNAGIRI DISTRICT, TAMIL NADU-635 109.

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…RESPONDENTS

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(BY SMT.GEETHA RAJ, ADVOCATE FOR R-1; VIDE ORDER DATED:23.05.2022, NOTICE TO R-2 IS DISPENSED WITH)

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THIS MFA IS FILED UNDER SECTION 173(1) OF MV ACT AGAINST THE JUDGMENT AND AWARD DATED 31.12.2019, PASSED IN MVC No.2493/2018, ON THE FILE OF THE MEMBER, PRINCIPAL MACT AND CHIEF JUDGE, COURT OF SMALL CAUSES, BENGALURU, PARTLY ALLOWING THE CLAIM

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PETITION FOR COMPENSATION AND SEEKING ENHANCEMENT OF COMPENSATION.

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IN MFA No. 7008/2021

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BETWEEN:

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SYED GHAZI ABBAS, S/O HASSAN ABBAS, AGED ABOUT 5 YEARS, No.96, SOUTH CROSS STREET, NEELASANDRA, BENGALURU-560 047.

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APPELLANT BEING MINOR REPRESENTED BY HIS MOTHER AND NATURAL GUARDIAN MRS NJUM FATHIMA.R. W/O HASSAN ABBAS.

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…APPELLANT

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(BY SRI. GIRIMALLAIAH, ADVOCATE)

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AND:

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ICICI LOMBARD GENERAL INSURANCE COMPANY LTD., No.121, THE ESTATE, 9^TH FLOOR, DICKENSON ROAD, M.G.ROAD, BENGALURU-560 042 REPRESENTED BY ITS MANAGER.

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SRI. NASIR, S/O LATE ABDUL RAJAK, MAJOR R/O HOLAVANAHALLI, 6^TH BLOCK, KORATAGERE TALUK, TUMKUR DISTRICT-572 121.

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…RESPONDENTS (BY SRI. B.C.SHIVANNE GOWDA, ADVOCATE FOR R-1; VIDE ORDER DATED 28.09.2022, NOTICE TO R-2 IS DISPENSED WITH)

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THIS MFA IS FILED UNDER SECTION 173(1) OF MC ACT AGAINST THE JUDGMENT AND AWARD DATED 01.10.2021 PASSED IN MVC No.6042/2019 ON THE FILE OF THE I ADDITIONAL SMALL CAUSED JUDGE AND MACT, BENGALURU SCCH-11, ALLOWING THE CLAIM PETITION FOR COMPENSATION AND SEEKING ENHANCEMENT OF COMPENSATION.

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THESE APPEALS HAVING BEEN HEARD AND RESERVED FOR JUDGMENT ON 12.06.2024, COMING ON FOR PRONOUNCEMENT THIS DAY, THE COURT DELIVERED THE FOLLOWING:

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CORAM: HON'BLE MR JUSTICE N S SANJAY GOWDA

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CAV JUDGMENT

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For convenience, this order has been indexed as

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follows:

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Sl.	Particulars	Page
1.	Bifurcation of death cases from that of injuries in the present batch of appeals.	06
2.	Basic principles relating to assessment of future income in respect of a minor.	09
3.	Judgments of the Apex Court relating to payment of compensation.	11
4.	The 1^st Method — the multiplier method.	18
	4.1 Table—1	26

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5.	The 2^ndMethod — adding the non- pecuniary damages stipulated in Master Mallikarjun’s case to the annual inflation rates.	28
	5.1 Table—2	30
6.	Inapplicability of the lump sum compensation prescribed for injuries in the rules framed under the Railways Act.	31
7.	Conclusion regarding the methodology to be adopted.	33
8.	Facts involved in these appeals and the compensation payable.	34

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I. BIFURCATION OF DEATH CASES FROM THAT OF INJURIES

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IN THE PRESENT BATCH OF APPEALS:

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In a batch of appeals disposed of by a separate order

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on 17.09.2024, this Court has elaborately detailed the manner in which compensation should be determined and paid to the parents in the unfortunate event of losing their minor child in a motor vehicle accident.

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This Court has also reiterated the general principles

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that have been relating to compensation that would have

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to be paid to satisfy the two components of compensation, namely — the components of ‘pecuniary’ and ‘nonpecuniary’ loss.

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For the pecuniary loss suffered by the parents i.e., the future dependency of the parents on their children, this Court has held that the compensation payable should be the average of the sum total of the compensation determined by the two methods of determining the compensation, namely — ‘ the multiplier method ’ indicated in the Second Schedule of the Motor Vehicles Act, 1988 (“ the MV Act ”), and ‘ the lump sum amount ’ prescribed in the Rules framed under the Railways Act, 1989.

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However, while computing this sum, this Court has held in MFA 11440/2011 and connected matters that to the notional income of Rs.15,000/- and the lump sum compensation of Rs.4 lakhs, the recorded inflation rate for every year should be compounded annually. A ready reckoner of the compensation payable is also indicated therein in the form of 4 Tables.

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The said judgment provides for determination of

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compensation for both pecuniary and non-pecuniary loss that the parents would entail in the event of their child being killed in a motor vehicle accident.

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These batch of appeals relate to cases where minors have suffered injuries as a result of a motor vehicle accident. Thus, the manner in which the pecuniary and non-pecuniary loss that befalls a minor child, keeping in mind that compensation is granted only once, will have to be ascertained in this judgment.

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The pecuniary loss — which would include the financial loss suffered by the parents of the minor and also other future losses that the minor may incur — will also have to be estimated. For this, the most appropriate method for determining these two losses, which together form the compensation payable to the minor, will have to be laid out in detail.

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In fact, the present appeals were also heard along

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with the above mentioned batch of appeals relating to compensation payable for a minor’s death. Learned counsel appearing for the claimants as well as the learned counsel for the insurers were heard on several occasions and their views were elicited in relation to the manner in which compensation should be paid in cases relating to injuries suffered by minors.

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Learned Counsel, on both sides, took the Court through the entire law relating to compensation payable under the MV Act and also rendered their valuable suggestions and placed on record all relevant citations relating to compensation payable to minors or their parents in cases of motor vehicle accidents. This Court places on record its appreciation for their contribution on this issue.

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II. BASIC PRINCIPLES RELATING TO ASSESSMENT OF

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FUTURE INCOME IN RESPECT OF A MINOR:

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The only thing that is certain about the future is that it is uncertain. How the future would play out would only

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be in the realm of imagination and there is yet to be discovered a method where the future can be predicted with any degree of precision. However, given the background and present facts relating to a person, the probability of the person’s future can be estimated, though this estimation, by no means, would be fool-proof or guaranteed.

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If the future can’t be predicted, then the question of predicting an income for a minor child would not also be possible. However, the possibility of a modicum of success of a minor can be assumed given the existing background of the minor, his family’s background and an intelligent guess can be made on the basis of these attendant circumstances.

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One of provisions in the Directive Principles of State Policy i.e., Article 43 states that it shall be the endeavour of the State to secure not only work but also a living wage, conditions of work, a decent standard of life and full enjoyment of leisure. Living wages are, however, not

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defined either under the Constitution or under any other law. Living wages, as the name suggests, means a wage which enables a man to have a dignified life as compared to a minimum wage which, as the name suggests, is the bare minimum that would be required for sustenance.

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III. JUDGMENTS OF THE APEX COURT RELATING TO PAYMENT

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OF COMPENSATION:

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In the appeals relating to the death of a minor child, the cases relating to both death and injury are stated. However, in this batch of appeals, only those case laws relating to injuries are being considered to render the proper context to the issues involved in this case.

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In 2008, in Sapna ’s case¹ , the Apex Court, for awarding compensation to 12 year old Sapna who was completely disabled and unable to walk, applied the multiplier method and adopted a notional income of Rs.15,000/- p.a. and added a sum of Rs.75,000/- and

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1 Sapna v. United Insurance Co. Ltd. & Anr., (2008) 7 SCC 613 .

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awarded a total sum of Rs.3 lakhs as compensation for the injuries suffered by her.

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In 2013, in Michael ’s case² , for awarding compensation to Michael, an 8 year old who had suffered 16% disability, a total sum of Rs.4 lakhs was awarded, out of which Rs.2.8 lakhs was towards ‘Pain’, ‘Suffering’ and ‘Disability’, and Rs. lakh was for ‘Loss of Amenities’ and the remaining was for medical expenses.

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17. In the case of Master Mallikarjun³ in 2014, for

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awarding compensation to a 12 year old who had suffered 18% disability, the Apex Court held as follows:

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“ 8. While considering the claim by a victim child, it would be unfair and improper to follow the structured formula as per the Second Schedule to the Motor Vehicles Act for reasons more than one. The main stress in the formula is on pecuniary damages. For children there is no income. The only indication in the Second Schedule for non-earning persons is to take the notional income as Rs 15,000 per year. A child

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2 Michael v. Regional Manager, Oriental Insurance Co. Ltd, (2013) 14 SCC 774.

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3 Mallikarjun v. National Insurance Co. Ltd., (2014) 14 SCC 396.

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cannot be equated to such a non-earning person. Therefore, the compensation is to be worked out under the non-pecuniary heads in addition to the actual amounts incurred for treatment done and/or to be done, transportation, assistance of attendant, etc. 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. The 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.

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********

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12. Though it is difficult to have an accurate assessment of the compensation in the case of children suffering disability on account of a motor vehicle accident, having regard to the relevant factors, precedents and the approach of various High Courts, we are of the view that the appropriate compensation on all other heads in addition to the actual expenditure for treatment, attendant, etc. should be, if the disability is above 10% and up to 30% to the whole body, Rs 3 lakhs; up to 60%, Rs 4

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lakhs; up to 90%, Rs 5 lakhs and above 90%, it should be Rs 6 lakhs. For permanent disability up to 10%, it should be Rs 1 lakh, unless there are exceptional circumstances to take a different yardstick. ”

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As could be seen from the above, the Apex Court awarded compensation only towards non-pecuniary loss and did not award any sums towards pecuniary loss on the reasoning that a minor would be a non-earning person. The possibility of a future loss in earning was not considered in this case.

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In 2020, in Kajal ’s case⁴ , for awarding compensation to Kajal, a 12 year old who had suffered 100% disability, the Apex Court applied the multiplier method and considered the minimum wage as the notional income, added 40% to it as future prospects and applied a multiplier of ‘18’ for determining the loss of future income, apart from awarding other sums towards expenses incurred and also regarding the non-pecuniary losses.

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4 Kajal v. Jagdish Chand, (2020) 4 SCC 413 .

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In 2022, in the case of Master Ayush⁵ , for awarding compensation to 5 year old Ayush who had become a paraplegic thereby suffering 100% disability, the Apex Court applied the multiplier method and adopted the ‘Skilled Minimum Wages’ prescribed (under minimum wages), added 40% future prospects to it for determining the loss of future income.

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As could be seen from the above, the Apex Court from 2020 has been applying the multiplier method and a multiplier of ‘18’ for awarding compensation to minors for determining loss of future income of a minor child and in these cases, the Apex Court has applied minimum wages as the notional income for this purpose.

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It is to be noticed here that only in Master Mallikarjun ’s case has the Apex Court held that amounts can be awarded for a minor’s disability only towards for non-pecuniary loss, while in the subsequent decisions, the Apex Court has awarded compensation towards pecuniary

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5 Master Ayush v. The Branch Manager, Reliance General Insurance Co. Ltd. & Anr., (2022) 7 SCC 738.

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losses that the minor may suffer i.e., a future loss of income.

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Since it is settled law that there are two components of compensation to be ascertained and awarded to victims in cases of a motor vehicle accident, it would be necessary to compensate a child for both the pecuniary and nonpecuniary loss. It must be stated here that as the time of the accident, the child would not suffer any financial loss and it is only the parents who would suffer a pecuniary loss. However, it is also to be borne in mind that the minor would also suffer a pecuniary loss i.e., a reduced earning capacity, which would however show up in future when the minor attains the age of majority and would not be able to lead a normal life. In fact, the disability would have to be endured for the remainder of the life of the minor and would result in a clouded future.

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As the law demands that compensation for a loss that accrues to a victim of a motor vehicle can be compensated only once and the victims cannot approach

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the Courts for a second time or whenever the effect of disability rears its ugly head, the Court are required to take into consideration the pecuniary loss which occurs immediately on the occurrence of the accident and also the future loss that the victim would have to endure, apart from awarding compensation for the non-pecuniary loss also.

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In light of the fact that the Apex Court has accepted that the minor would suffer a pecuniary loss and has awarded compensation under this account in the case in Kajal ’s case and Ayush ’s case and it has held that the minor should be awarded non-pecuniary loss for the injuries suffered in Master Mallikarjun ’s case, the ideal method for determining the compensation for a minor would be to combine both the components i.e., compensation for the pecuniary loss (as determined in Kajal ’s and Ayush ’s cases) and also for the non-pecuniary loss (as determined in Master Mallikarjun ’s case). This methodology in determining the compensation would

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essentially take care of both the pecuniary and nonpecuniary loss that a child would suffer as a result of a disability and would therefore constitute ‘just compensation’ as contemplated under the MV Act.

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IV. 1^st METHOD — THE MULTIPLIER METHOD:

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The fundamental requirement for applying the multiplier method would be the ascertainment of the income of the victim. A minor at the time of the accident would not be earning an income, and the probable income that the minor may earn in the future would be difficult to ascertain. Adopting the notional income stated for nonearning persons of Rs.15,000/- in the Second Schedule would be unfair since an assumption would be made that the child would be a non-earning person for the remainder of his life.

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The law must presume that children who were minors at the time of the accident would have, but for the accident, gone on to become respectable citizens of the

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country and would be capable of earning a living wage for themselves. The adoption, therefore, of a notional income of Rs.15,000/- p.a. would not be appropriate.

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Though our country does have a large population of people who are poor, drawing a presumption that every child of a poor person would continue to be poor on attaining majority and earn only a minimal sum would be arbitrary and irrational. It is no doubt true that if the parents are not well endowed financially, the possibility of the child continuing in the same vein is a definite possibility, but drawing a presumption of that kind would be wrong.

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It is to be stated here that the GDP of our country has been steadily rising ever since our independence and every year, a greater number of people are being lifted out of poverty and this is because of the undeniable economic growth of our country. It would therefore be safe to presume that every generation achieves greater successes

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than the previous one, both in terms of education and affluence.

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Similarly, drawing a presumption that a child of an affluent set of parents would go onto achieve the same success and would be as affluent, if not more affluent than their parents, would be incorrect, though this is also a distinct possibility.

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It would therefore be prudent to adopt a middle path and assume that every child would achieve a greater degree of success than his parents and at any rate assume that a child would be able to achieve a status in his life where his earning a living wage would not be beyond the realm of possibility.

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The Second Schedule to the MV Act (which has since been omitted) was designed to ensure that citizens whose annual income was up to a particular sum, who would be financially disadvantaged, should be able to secure compensation in case of an accident without having to

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undergo the travails of a long drawn out litigation in which they were required to establish fault and then be entitled to compensation. This Second Schedule was accordingly limited in its application to only those persons who were earning a maximum of Rs.40,000/- p.a.. Thus, the law envisaged that when the Second Schedule was inserted in 1994, those who earned Rs.40,000/- p.a. were at the bottom of the pyramid and required a mechanism which ensured determination and securing speedy compensation.

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In the batch of appeals relating to determination of compensation in case of a death of a minor, the notional income of Rs.15,000/- p.a. was accepted as the baseline income essentially because the Court was considering the future financial dependency of the parents and not that the pecuniary loss that the child would suffer. This was on the assumption that the minor, on attaining majority and getting an avocation, would be contributing only about 2025% of his income towards his parents. It would thus be imprudent and irrational to adopt the same amount of

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Rs.15,000/- p.a. for awarding compensation to a minor

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who is alive and who has the clear potential to earn a decent living for himself in future.

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It would be fair and rational to draw a presumption that a minor, will on coming of age, be able to secure a living wage, if not a fair wage. But in ascertainment of a fair or a living wage that a minor may be able to earn in future with any degree of precision would not be possible and any attempt to do so would be fraught with uncertainties and would have its own pitfalls. Hence, a cautious approach would have to be adopted in ascertaining a future wage of a minor.

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Since the law envisaged in 1994 that a person who earned Rs.0,000/- per annum was at the bottom of the pyramid and was therefore at the edge of becoming a part of the relatively well-off strata of the society, this sum of Rs.40,000/- p.a. can be taken as the baseline future income of the minor to determine the compensation to a

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minor who has suffered injuries in a motor vehicle accident.

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An argument can be advanced that a sum of Rs.60,000/- p.a. or Rs.80,000/- p.a. can also be adopted as the nation is progressing at a fast pace and minors are being given the opportunity of getting good education and they are also availing it. Though this cannot be denied, however, it would be better to be cautious and adopt the highest amount prescribed in the Second Schedule, since the assumption is that the child would reach the level of affluence which was considered at the stage below that of a reasonably well-off person.

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As already decided in the batch of appeals relating to the death of a minor in a motor vehicle accident, the fall in the value of rupee would have to be taken note of and should be suitably remedied. To achieve this, to the notional income of Rs.40,000/- p.a., the recorded rate of inflation for each year will have to be added and this would

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take into consideration the fall in the value of the rupee and compensate that loss.

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To this notional income of Rs.40,000/- p.a. with the inflationary rate being added along with the future prospects of 40%, which has been expounded by the Constitutional Bench of the Apex Court in Pranay Sethi ’s case⁶ , the notional income would reflect the most rational notional income for a minor.

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It is, however, to be stated here that in light of the judgment rendered by a Division Bench of this Court in Abdul ’s case⁷ , if the percentage of disability is only above 20%, future prospects are to be added and if it is less than 20%, no future prospect amounts are to be added.

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To this sum, a multiplier of ‘18’ is required to be applied since this multiplier has been considered in both Kajal ’s and Ayush ’s cases (both supra ) by the Apex Court.

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6 National Insurance Co. Ltd v. Pranay Sethi & Ors., (2017) 16 SCC 680. 7 MFA No.103807 of 2016 c/w MFA 103835 of 2016, DD.27.05.2022 (Dharwad).

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The application of a ‘15’ multiplier if the child is

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below 15 years of age, and a multiplier of ‘18’ if the child is between 15 to 18 years of age need not be applied in this case as the concept of the ‘15’ and ‘18’ multipliers was adopted by the Apex Court only in the case of a death of a minor.

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Lastly, to this notional income and further addition of the ’18’ multiplier, the percentage of disability assessed

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can be applied to determine the compensation.

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The formula would thus be in the following terms:

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N x ‘18’ x % of disability = Compensation

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o Where ‘N’ would be the notional income (with the inflation added) for the year of the accident;

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o ‘18’ is the multiplier; and

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o ‘% of disability’ is the percentage of disability as assessed by the Court/Tribunal .

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For ready reference, a table indicating the notional

¶182

income for every year from 1994 upto 2024 along with the annual inflation rate compounded is stated hereunder:

¶183

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¶185

A	B	Table—1 C	D	E
Year	Inflation⁸	Amount with inflation rates (****also for injuries *below 20%* **disability) **	40% FP *(for* *injuries* *above* *20%)*	C+D *(for* *injuries* *above* *20%)*
1994	10.2	40,000	16,000	56,000
1995	10.22	44,088	17,635	61,723
1996	8.97	48,043	19,217	67,260
1997	7.25	51,526	20,610	72,136
1998	13.15	58,301	23,320	81,621
1999	4.84	61,123	24,449	85,572
2000	4.02	63,580	25,432	89,012
2001	3.76	65,971	26,388	92,359
2002	4.31	68,814	27,526	96,340
2003	3.81	71,436	28,574	1,00,010
2004	3.76	74,122	29,649	1,03,771
2005	4.24	77,265	30,906	1,08,171
2006	6.16	82,024	32,810	1,14,834
2007	6.38	87,258	34,903	1,22,161
2008	8.31	94,509	37,804	1,32,313
2009	10.82	1,04,735	41,894	1,46,629
2010	12.11	1,17,418	46,967	1,64,385
2011	8.86	1,27,821	51,128	1,78,949
2012	9.29	1,39,696	55,878	1,95,574
2013	10.92	1,54,951	61,980	2,16,931
2014	6.37	1,64,821	65,928	2,30,749
2015	5.88	1,74,512	69,805	2,44,317
2016	4.96	1,83,168	73,267	2,56,435
2017	2.49	1,87,729	75,092	2,62,821
2018	4.85	1,96,834	78,733	2,75,567
2019	7.66	2,11,911	84,764	2,96,675
2020	5.57	2,23,715	89,486	3,13,201
2021	4.88	2,34,632	93,853	3,28,485

¶186

8 Official inflation rates obtained from the Labour Bureau — Ministry of Labour and Employment’s website: https://labourbureau.gov.in/rate-of-inflation.

¶187

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¶189

2022	5.9	2,48,475	99,390	3,47,865
2023⁹	4.25	2,59,036	1,03,614	3,62,650
2024 (until July)	5.4	2,73,024	1,09,210	3,82,234

¶190

For every year after 2024, the rate of inflation of the previous year would have to be added to arrive at the notional income for that year.

¶191

To illustrate, for an accident of the year 2020, the base line income is Rs. 2,23,715/-. If the child is aged 16 years and has suffered a disability of 15%, then, the child would be entitled to:

¶192

Rs.2,23,715/- ( Notional Income as per the Table for

¶193

the year 2020 ( percentage of disability assessed ) X ‘ 18’ (multiplier) ) X 15% = Rs.6,40,031/- ( Compensation ).

¶194

This sum would be the future loss of income that the child would suffer and would constitute the component of the pecuniary loss.

¶195

9 The inflation rates for the years 2023 and 2024 have been obtained from the Labour Bureau’s website as well as from Government publications on www.pib.gov.in

¶196

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¶197

To this sum, the other pecuniary losses suffered,

¶198

such as medical expenditure, loss of income to the parents, conveyance, attendant charges and nutrition, any special damages to be awarded (such as for wheel chair, any aid to facilitate the future life of the minor) would have to be added.

¶199

Thereafter, appropriate sums towards ‘pain and suffering’ and ‘loss of amenities’, which form part of the non-pecuniary loss, will have to be added and the total compensation would have to be determined as narrated hereinafter.

¶200

V. THE 2ND METHOD — ADDING THE NON-PECUNIARY

¶201

DAMAGES STIPULATED IN MASTER MALLIKARJUN’S CASE TO

¶202

THE ANNUAL INFLATION RATES:

¶203

As already observed above, to the pecuniary loss assessed, the second component of compensation i.e., the non-pecuniary loss would also have to be added. This is because as per the passage already extracted above, in

¶204

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¶205

Master Mallikarjun ’s case ( supra ), the Apex court has held that the minor is to be awarded non-pecuniary damages in sums as indicated therein.

¶206

As could be seen from the above, the Apex Court has stated that the Second Schedule is designed to compensate the pecuniary loss and cannot be a safe yardstick to determine compensation. The Apex Court has also stipulated the compensation is required to be awarded only towards non-pecuniary losses and the sums that are required to be awarded towards non-pecuniary damages is also stipulated and the sums are actually dependent of the percentage of disability assessed.

¶207

As already noticed above, the compensation payable to a victim of a motor vehicle accident would be the aggregate of both the pecuniary and non-pecuniary losses suffered by the victim. Since the Apex Court has held in Kajal ’s case and Ayush ’s case that the pecuniary loss would have to be computed by adopting the multiplier method i.e., ascertaining a notional income and applying

¶208

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¶209

an ‘18’ multiplier, as far as the non-pecuniary loss is concerned, the sums determined in Master Mallikarjun ’s

¶210

case where only the non-pecuniary loss was awarded will have to be added.

¶211

As the judgment in Master Mallikarjun ’s case was

¶212

rendered in 2013, the compounded annual inflation rate would have to be added to the sums mentioned in the order for every year thereafter.

¶213

The aggregate of this non-pecuniary loss and pecuniary loss (as already determined above) shall be the sum payable to a minor in case of an injury is suffered by him.

¶214

For the sake of convenience, the sums payable towards non-pecuniary loss is stated in tabular form below:

¶215

			TABLE—	2
Year	Inflation Rates	Upto 10% disability	Above 10% upto 30% disability	Above 30% upto 60% disability	Above 60% upto 90% disability	Above 90% disability
2013	10.92	1,00,000	3,00,000	4,00,000	5,00,000	6,00,000

¶216

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¶217

2014	6.37	1,06,370	3,19,110	4,25,480	5,31,850	6,38,220
2015	5.88	1,12,625	3,37,874	4,50,498	5,63,123	6,75,747
2016	4.96	1,18,211	3,54,633	4,72,843	5,91,054	7,09,264
2017	2.49	1,21,154	3,63,463	4,84,617	6,05,771	7,26,925
2018	4.85	1,27,030	3,81,091	5,08,121	6,35,151	7,62,181
2019	7.66	1,36,760	4,10,283	5,47,043	6,83,804	8,20,564
2020	5.57	1,44,378	4,33,136	5,77,513	7,21,892	8,66,269
2021	4.88	1,51,424	4,54,273	6,05,696	7,57,120	9,08,543
2022	5.9	1,60,358	4,81,075	6,41,432	8,01,790	9,62,147
2023	4.25	1,67,173	5,01,521	6,68,693	8,35,866	10,03,038
2024
(until July)	5.4	1,76,200	5,28,603	7,04,802	8,81,003	10,57,202

¶218

VI. INAPPLICABILITY OF THE LUMP SUM COMPENSATION

¶219

PRESCRIBED FOR INJURIES IN THE RULES FAMED UNDER THE

¶220

RAILWAYS ACT:

¶221

In the judgment rendered relating to the death of a minor child, the sum of Rs.4 lakhs fixed in 1997 for the death of a passenger in a railway accident has also been taken as the baseline compensation and to that sum, the annual inflation rate is compounded annually and the sum payable is determined.

¶222

A cautionary note must, however, be made here.

¶223

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¶224

It is to be kept in mind that the lump sum amounts prescribed under the Rules framed under the Railways Act may not be proper in cases of injuries suffered in a motor vehicle accident, since the injuries stated in the table in the schedule to the Rules under the Railways Act would not cover all the injuries and, consequently, the percentage of disability prescribed therein would not be an accurate or a fair yardstick. It must be kept in mind that an accident to a train causes immense damage to both the train and the passengers, and the injuries caused to a passenger would also be severe, as a consequence of which the injuries prescribed under the Rules would have been designed keeping that in mind.

¶225

The injuries caused due to a motor vehicle accident could, however, either be severe, simple or a combination of both. Normally, the injuries which occur due to a motor vehicle accident and a train would not be comparable. In the majority of cases, injuries in a motor vehicle accident would result in fractures and the resultant percentage of

¶226

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¶227

disability would also vary widely. The percentage of disability assessed, in relation to the avocation of the victim, would determine the actual functional disability. In this view of the matter, the Table of injuries specified under the Table would not be appropriate and is hence not taken into consideration in these batch of appeals, which relate to compensation payable for injuries suffered by a victim of a motor vehicle accident.

¶228

VII. CONCLUSION REGARDING THE METHODOLOGY TO BE

¶229

ADOPTED:

¶230

60. FIRST STEP: Apply the multiplier method and adopt

¶231

the notional income of Rs.40,000/- p.a. with the annual compounded inflation rate added (as stated in Table 1) and multiply the same by the percentage of disability as assessed.

¶232

61. SECOND STEP: To the sum determined above, add

¶233

the sum as indicated in Table-2 mentioned above towards non-pecuniary damages.

¶234

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¶235

THIRD STEP: to the sums arrived at under the 1^st

¶236

and 2^nd step, add the sums incurred towards medical expenses, conveyance, nutrition, attendant charges, loss of income to the parents for the laid up period of the parents, special damages.

¶237

Since, the non-pecuniary damages are awarded in a lump um, the award of compensation towards loss of marital prospects would not arise.

¶238

It is to be clarified here that this adoption of Rs.40,000/- as the notional income along with the addition of the annual compounded inflation rate can be increased to a higher sum, if there is clear and positive evidence indicating that the minor has a definite chance of earning

¶239

a fair wage i.e., if the child is exceptionally intelligent, studying in a reputed school, the success of his/her sibling, the child’s family background.

¶240

VIII. FACTS INVOLVED IN THESE APPEALS AND THE

¶241

COMPENSATION PAYABLE:

¶242

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¶243

MFA 7008/2021:

¶244

Syed Khazi, the claimant in MFA No.7008/2021, was aged 3 years old when he suffered an accident, as a result of which he has suffered a subtrochanteric fracture in his left femur. The doctor has assessed the disability at 14% and on that basis, the Tribunal has assessed the disability at 10%. In my view, this assessment of 10% by the Tribunal cannot be found fault with.

¶245

By taking the notional income at Rs.2,11,911/- (as indicated in Table No. 1 for the accident of the year 2019) and by applying the multiplier of ‘18’, the claimant would be entitled to a sum of Rs.3,81,440/- (Rs.38,14,398/- x 10%) towards loss of future income.

¶246

The sum of Rs.41,036/- awarded by the Tribunal

¶247

medical expenses being based on documentary evidence is affirmed.

¶248

A further sum of Rs.15,000/- is granted towards attendant, food and nourishment and conveyance charges.

¶249

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¶250

As against the sum of Rs.5,000/- awarded towards

¶251

loss of earnings, it would be appropriate to award a sum of

¶252

Rs.15,000/- under this head.

¶253

In addition, per Master Mallikarjun ’s case, he is

¶254

also entitled to non-pecuniary damages to the extent of Rs.1,36,760/- (for 10% disability as indicated in Table 2 for an accident of the year 2019).

¶255

In all Khazi would be entitled to as sum of Rs. 5,89,236/- [Rs. 3,81,440/-+41,036/-+15,000/-

¶256

+15,000/-+1,36,760/-].

¶257

Out of this sum, a sum of Rs. 5 lakhs will be invested

¶258

in a Fixed Deposit for 10 years and Khazi will be entitled to withdraw the interest that would accrue on the deposit every quarter.

¶259

MFA No 426/2020:

¶260

Master Karthik R. is the claimant/appellant in MFA No.426/2020. Karthik R. was aged 14 years old when he met with an accident while was riding pillion. As a result of

¶261

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¶262

the accident, Karthik suffered three simple injuries, and two grievous injuries i.e., a displaced frontal bone fracture and Subarachnoid Haemorrhage over the frontal region. The doctor who was examined has stated that Karthik has lost his visual disability to the extent of 40% and he has also stated that the visual disability was permanent and irreversible. The Tribunal has accordingly assessed the disability at 40%. However, in my view, having regard to the fact that the 14 year old has virtually lost half of his visual disability and his entire future is at peril while also considering the chances of him leading a reasonable normal life, it would be appropriate to assess the disability at 50%.

¶263

Since the accident occurred in the year 2017, the notional income will have to be taken as Rs.2,62,821/which is inclusive of 40% towards future prospects. A sum of Rs. 23,65,389/- (Rs.2,62,821/- x ‘18’ x 50%) towards

¶264

loss of future income would have to be awarded.

¶265

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¶266

A sum of Rs.20,250/- awarded towards medical expenses being based on documentary evidence is affirmed.

¶267

A sum of Rs. 25,000/- would have to be added as loss of earning to his parents.

¶268

The sum of Rs.10,000/awarded towards conveyance, food and other incidental charges is enhanced to Rs.25,000/-.

¶269

Apart from the above, Karthik R., would also be entitled for compensation of towards the non-pecuniary loss as held in Master Master Mallikarjun ’s case but however by the addition of the compounded annual inflation rate (as indicated in Table 2 for an accident of the year 2017) which would be a sum of Rs.4,84,617/- .

¶270

In all, Karthik would be entitled to Rs. 29,20,256/- [Rs.3,65,389/-+20,250/-+25,000/-+25,000/-+4,84,617/-] 80. Out of this sum, a sum of Rs. 25 lakhs shall be invested in a Fixed Deposit for a period of 20 years and

¶271

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¶272

Karthik would be entitled to withdraw the interest every quarter.

¶273

MFA 4124/2020:

¶274

Siddu @ Siddanna is the appellant in MFA No.4124/2020. He was 6 years old when a lorry ran over his legs 31.03.2018, as a result of the accident of which, Siddu suffered a serious crush injury which ultimately resulted in an amputation of his left leg below the knee and the amputation of his right big toe.

¶275

The Tribunal has assessed the disability at 75%. In my view, this assessment by the Tribunal is just and correct.

¶276

Since the accident was of the year 2018, the notional income (which would include the inflation rate added compounding only) of Siddu will have to be taken as Rs.2,96,675/- indicated in the tabular column above and he would be entitled to a sum of Rs.38,68,960/-

¶277

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¶278

(Rs.2,75,567/- x ‘18’ x 75%) towards loss of future income.

¶279

The Tribunal has awarded a sum of Rs.25,000/towards food, nourishment and incidental charges. The said sum would be enhanced to Rs.45,000/- .

¶280

The sum of Rs.25,000/- awarded towards loss of

¶281

earning to the parents and their discomfort, the same is affirmed.

¶282

The Tribunal has awarded a sum of Rs.3,00,000/-

¶283

towards artificial limb and since this is based on medical evidence and the same is confirmed.

¶284

As regards the compensation for non-pecuniary loss as per the judgment rendered in Master Mallikarjun ’s case with the addition of the inflation rate, the Siddu would also be entitled to Rs.6,35,150/- (as per Table No.

¶285

2 for an accident of the year 2018)

¶286

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¶288

In all, Siddu would be entitled to Rs. 48,69,110/-

¶289

[Rs. 38,68,960/- + 40,000/-+25,000/- + 3,00,000/- +

¶290

6,35,150/-]

¶291

Out of this sum, a sum of Rs. 40 lakhs shall be kept in a Fixed Deposit for a period of 20 years and Siddu will be entitled to withdraw the interest periodically.

¶292

90. The appeals are, accordingly, allowed in part .

¶293

SD/(N S SANJAY GOWDA) JUDGE

¶294

List No.: 9 Sl No.: 1

Master Karthik R v. National Insurance Co. Ltd.

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Master Karthik R v. National Insurance Co. Ltd.

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