Supreme Court Clarifies Compensation for Loss of Consortium in Motor Accident Cases: New India Assurance Co. Ltd. vs. Smt. Somwati (2020) INSC 398 (07 September 2020)

Date of the Judgment: 07 September 2020
Citation: (2020) INSC 398
Judges: Ashok Bhushan, J., R. Subhash Reddy, J.

When a family loses a loved one in a motor vehicle accident, what is the extent of compensation they are entitled to? The Supreme Court of India recently addressed this crucial question, particularly focusing on the heads of “loss of consortium” and “loss of love and affection.” The court clarified who can claim compensation under the head of “loss of consortium” and whether compensation can be awarded under the head of “loss of love and affection” separately. This judgment is significant for families seeking fair compensation in motor accident cases. The bench comprised Justice Ashok Bhushan and Justice R. Subhash Reddy.

Case Background

The case originated from a series of appeals filed by various insurance companies challenging the judgments of High Courts. These judgments had awarded compensation to claimants under two specific heads: “loss of consortium” and “loss of love and affection.” The core issue revolved around the interpretation and application of these heads of compensation in cases of death due to motor vehicle accidents.

In the lead case, New India Assurance Company Limited v. Smt. Somwati and Others, Ram Jiyawan, the husband of Smt. Somwati, tragically died in a motor vehicle accident on 06 December 2001. He left behind his widow and seven minor children. The Motor Accident Claims Tribunal (MACT) initially awarded a compensation of Rs. 1,67,000. However, the High Court enhanced this amount to Rs. 12,54,000, which included Rs. 4,00,000 for “loss of love and affection” and Rs. 2,80,000 for “loss of parental consortium.” The insurance company challenged this enhanced compensation, leading to the Supreme Court appeal. Similar issues were raised in other connected appeals.

Timeline

Course of Proceedings

The Motor Accident Claims Tribunal (MACT) initially awarded compensation in each case. However, the claimants, dissatisfied with the amount, appealed to the respective High Courts. The High Courts, relying on previous judgments, enhanced the compensation, particularly under the heads of “loss of consortium” and “loss of love and affection.” The insurance companies then filed appeals in the Supreme Court, challenging the High Court’s decisions. The Supreme Court also issued a stay on the payment of compensation amount towards “loss of love and affection” in the case of New India Assurance Company Limited v. Smt. Somwati and Others.

Legal Framework

The legal framework for this case is primarily based on Section 166 of the Motor Vehicles Act, 1988, which deals with the procedure for claiming compensation in motor accident cases. The Act aims to provide “just compensation” to the victims or their families. The Supreme Court has interpreted this to mean that the compensation should be fair and equitable, considering the loss suffered by the claimants.

The Court also referred to previous judgments, including:

• General Manager Kerala State Road Transport Corporation, Trivandrum v. Susamma Thomas (Mrs) and Others, (1994) 2 SCC 176, which emphasized that compensation should be fair and reasonable by accepted legal standards.
• Sarla Verma (Smt) and Others v. Delhi Transport Corporation and Another, (2009) 6 SCC 121, which defined “just compensation” as adequate compensation that is fair and equitable.
• National Insurance Company Ltd. v. Pranay Sethi and Others, (2017) 16 SCC 680, a Constitution Bench judgment that laid down three conventional heads for compensation: “loss of estate,” “loss of consortium,” and “funeral expenses.”
• Magma General Insurance Company Ltd. v. Nanu Ram @ Chuhru Ram and Ors., (2018) 18 SCC 130, which expanded the definition of “consortium” to include spousal, parental, and filial consortium.
• United India Insurance Company Ltd. v. Satinder Kaur alias Satvinder Kaur and others, (2020) SCC Online 410, which reaffirmed the broader interpretation of “consortium” and clarified that “loss of love and affection” is comprehended within “loss of consortium.”

Arguments

The appellants, the insurance companies, argued that the High Courts had erred in awarding compensation under both “loss of consortium” and “loss of love and affection.” They contended that the Constitution Bench in National Insurance Company Ltd. v. Pranay Sethi and Others had specified only three conventional heads of compensation and that the amount under these heads could not exceed Rs. 70,000. They argued that “loss of consortium” should only be granted to the wife, and the amount should be limited to Rs. 40,000. They further submitted that the award under the head “loss of love and affection” was without jurisdiction.

The respondents, the claimants, argued that the award of compensation under the head “consortium” to each claimant was in accordance with the law. They contended that the term “consortium” should not be narrowly interpreted and should include not only the wife but also children and parents. They supported the High Court’s judgments, emphasizing the need for fair and just compensation.

The innovativeness of the arguments lay in the insurance companies’ attempt to strictly limit the scope of compensation based on a narrow interpretation of the Pranay Sethi judgment, while the claimants sought to expand the definition of “consortium” to include all family members affected by the loss.

Issues Framed by the Supreme Court

The Supreme Court framed the following key issues for consideration:

1. Whether compensation can be awarded under both “loss of consortium” and “loss of love and affection.”
2. Whether “consortium” is limited to the wife or can be awarded to children and parents as well.

Treatment of the Issue by the Court

The following table demonstrates as to how the Court decided the issues:

Authorities

The Supreme Court relied on the following authorities:

Judgment

The Supreme Court partly allowed the appeals. The Court held that:

The Court considered the following authorities:

• National Insurance Company Ltd. v. Pranay Sethi and Others, (2017) 16 SCC 680: The Court clarified that while this judgment laid down the three conventional heads of compensation, it did not specify that “consortium” is limited to the wife.
• Magma General Insurance Company Ltd. v. Nanu Ram @ Chuhru Ram and Ors., (2018) 18 SCC 130: The Court followed this judgment, which expanded the definition of “consortium” to include spousal, parental, and filial consortium.
• United India Insurance Company Ltd. v. Satinder Kaur alias Satvinder Kaur and others, (2020) SCC Online 410: The Court reaffirmed the view that “loss of love and affection” is comprehended within “loss of consortium” and thus, no separate compensation can be granted under this head.

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily influenced by the need to provide a comprehensive and just interpretation of “consortium” in motor accident cases. The Court emphasized that the term “consortium” should not be narrowly construed to apply only to the relationship between a husband and wife. Instead, it recognized the emotional and relational loss suffered by all family members, including children and parents, when a loved one dies. The Court also aimed to bring uniformity in the award of compensation by clarifying that “loss of love and affection” is not a separate head but is included within “loss of consortium.”

The Court’s reasoning was based on a careful analysis of previous judgments and the need to provide a fair and just interpretation of the Motor Vehicles Act. The Court’s decision was primarily driven by legal considerations and the need to ensure consistency in the application of the law.

Logical Reasoning

The Court considered alternative interpretations, particularly the narrow interpretation of “consortium” as only applicable to the wife, but rejected it based on the broader understanding of family relationships and the need to provide fair compensation. The Court also rejected the argument that the amount under conventional heads should not exceed Rs.70,000, stating that the amount of Rs.40,000 for consortium is applicable to each claimant.

The decision was reached by interpreting the term “consortium” in a comprehensive manner, considering the emotional and relational loss suffered by all family members. The Court also emphasized that the Motor Vehicles Act is a beneficial legislation aimed at providing relief to the victims and their families.

The Court stated, “The expression ‘compensation’ is a comprehensive term which includes a claim for the damages. Compensation is by way of atonement for the injury caused.”

The Court further stated, “The claimant in a claim for award of compensation under Section 166 of Motor Vehicles Act, 1988, is entitled for just compensation. The just compensation has to be equitable and fair.”

The Court also stated, “The Motor Vehicles Act, 1988 is a beneficial legislation which has been framed with the object of providing relief to the victims, or their families, in cases of genuine claims.”

There was no minority opinion in this case.

Key Takeaways

• Compensation for “loss of love and affection” cannot be awarded as a separate head; it is included within “loss of consortium.”
• “Consortium” is not limited to the wife; it includes spousal, parental, and filial consortium, and can be awarded to the wife, children, and parents.
• The amount of Rs. 40,000 for “loss of consortium” is applicable to each claimant (wife, children, and parents).
• The Motor Vehicles Act is a beneficial legislation aimed at providing relief to victims and their families.

Directions

The Motor Accident Claims Tribunals were directed to recompute the amount payable in light of the judgment, setting aside the compensation awarded under the head ‘loss of love and affection’.

Development of Law

The ratio decidendi of this case is that the term “consortium” includes spousal, parental, and filial consortium, and that “loss of love and affection” is not a separate head of compensation. This clarifies the position of law by reaffirming the broader interpretation of “consortium” and specifying that “loss of love and affection” is comprehended within “loss of consortium.”

Conclusion

The Supreme Court’s judgment in New India Assurance Co. Ltd. vs. Smt. Somwati clarifies the scope of compensation in motor accident cases, particularly regarding “loss of consortium” and “loss of love and affection.” The Court affirmed that “consortium” includes spousal, parental, and filial relationships, ensuring that all family members affected by the loss receive fair compensation. The judgment also eliminates the confusion surrounding “loss of love and affection,” clarifying that it is not a separate head of compensation. This decision provides much-needed clarity and guidance for the lower courts and tribunals in awarding just compensation to the victims of motor accidents and their families.