Supreme Court Enhances Compensation for Accident Victim with Severe Disabilities: Divya vs. National Insurance Co. Ltd. (2022)

Date of the Judgment: October 18, 2022

Citation: Civil Appeal No. 7605 of 2022 (@ Special Leave Petition (C) No.25303 of 2019)

Judges: B. R. Gavai, J. and C.T. Ravikumar, J.

Can a victim of a motor vehicle accident, who has suffered severe and permanent disabilities, be adequately compensated? The Supreme Court of India recently addressed this critical question in a case involving a young girl who sustained life-altering injuries. This judgment underscores the judiciary’s commitment to ensuring ‘just compensation’ for victims of motor accidents, particularly those with lifelong disabilities. The bench, consisting of Justices B. R. Gavai and C.T. Ravikumar, delivered the judgment.

Case Background

On August 8, 1998, a two-year-old girl, the appellant, was traveling in an autorickshaw with her parents near Vaishnav College. A car, driven rashly and negligently from the opposite direction, collided with the autorickshaw. The young girl sustained severe injuries as a result of the accident. The appellant filed a claim for compensation under Section 166 of the Motor Vehicles Act, 1988, initially limiting the claim to Rs. 30 lakhs, while assessing the actual compensation at Rs 60 lakhs.

The Motor Accident Claims Tribunal (MACT) determined that the car driver was responsible for the accident. However, the Tribunal dismissed the claim on technical grounds, noting that the car had been sold before the accident and the actual owner was not impleaded. The claimant appealed to the High Court of Judicature at Madras.

The High Court, recognizing the error in dismissing the claim on technical grounds, referred the claimant to a Medical Board. The Board assessed the claimant’s locomotive disability at 75% and neuro-physical disability at 40%, concluding that the overall disability was almost 100%. The High Court set aside the Tribunal’s award and granted a compensation of Rs. 13,34,000 with 7.5% interest from the date of the petition. The claimant, dissatisfied with the quantum of compensation, appealed to the Supreme Court.

Timeline:

Course of Proceedings

The Motor Accident Claims Tribunal (MACT) initially dismissed the claim petition on technical grounds, stating that the vehicle involved in the accident had been sold prior to the accident, and the claimant had failed to implead the actual owner. The High Court of Judicature at Madras, upon appeal, found that the claim should not have been dismissed on such technical grounds, especially considering Section 157 of the Motor Vehicles Act, 1988. The High Court then referred the claimant to a Medical Board, which assessed her permanent disability. Based on the Medical Board’s assessment, the High Court set aside the MACT’s award and granted a compensation of Rs. 13,34,000. The claimant, still dissatisfied with the amount of compensation, appealed to the Supreme Court, seeking an enhancement.

Legal Framework

The judgment primarily revolves around Section 166 of the Motor Vehicles Act, 1988, which deals with the application for compensation arising out of motor vehicle accidents. This section mandates that the Claims Tribunal must award ‘just compensation’. The court also considers Section 157 of the Motor Vehicles Act, 1988, which pertains to the transfer of ownership of a vehicle and its implications on insurance coverage. The court also discusses the principles of awarding compensation for personal injuries, referring to various precedents.

The relevant provisions are:

• Section 166 of the Motor Vehicles Act, 1988: This section allows for the filing of an application for compensation by persons who have sustained injuries in a motor vehicle accident. It mandates the tribunal to award ‘just compensation’.
• Section 157 of the Motor Vehicles Act, 1988: This section deals with the transfer of ownership of a vehicle and its effect on insurance coverage.

Arguments

Appellant’s Arguments:

• The appellant argued that the compensation awarded by the High Court was not ‘just’ considering the severity of her disabilities, which were assessed to be almost 100%.
• The counsel for the appellant contended that the notional income of Rs. 2000 per month fixed by the High Court was too meager, and the calculations for loss of earning and permanent disability were on the lower side.
• It was argued that the amounts granted for “Pain and suffering,” “Medical expenses,” “Loss of amenities,” “Extra nourishment,” “Mental agony,” “Future medical expenses,” and “Attender charges” were inadequate and needed enhancement to achieve ‘just compensation’.
• The appellant relied on the decision in Kajal v. Jagdish Chand & Ors., to claim enhancement of compensation under different heads.

Respondents’ Arguments:

• The respondents (insurance company and the erstwhile owner of the car) contended that the High Court had already awarded ‘just compensation’ and, therefore, the appellant was not entitled to any further enhancement.
• The insurance company argued that the claimant had failed to provide documentary evidence regarding proof of income.
• The respondents did not dispute the certification of permanent disability by the Medical Board.

The innovativeness in the argument of the appellant was that despite the High Court awarding a compensation, the appellant argued that the compensation was not just considering her condition.

Issues Framed by the Supreme Court

The Supreme Court did not explicitly frame issues in a separate section. However, the core issue before the court was:

1. Whether the compensation awarded by the High Court was ‘just’ considering the severe and permanent disabilities suffered by the appellant, and if not, what would constitute ‘just compensation’ in this case.

Treatment of the Issue by the Court

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

Authorities

The Court relied on the following cases and legal provisions:

Judgment

How each submission made by the Parties was treated by the Court?

How each authority was viewed by the Court?

• The Court relied on Philipps v. London & South Western Railway Co. [CITATION] to highlight the need for full and fair compensation.
• The Court followed Kajal v. Jagdish Chand & Ors. [CITATION] for computing compensation and applying the multiplier system.
• The Court referred to Raj Kumar v. Ajay Kumar [CITATION] to outline the heads of compensation for personal injury cases.
• The Court followed National Insurance Company Ltd. vs. Pranay Sethi [CITATION] for the correct method of selection of multiplier.
• The Court followed Sarla Verma (Smt) & Ors. vs. Delhi Transport Corporation & Anr. [CITATION] for the formula relating to multiplier.
• The Court followed Reshma Kumari & Ors. V . Madan Mohan & Anr. [CITATION] for the multiplier to be applied in cases where the age of the victim is up to 15 years.
• The Court held Rajesh v. Rajbir Singh [CITATION] as not a binding precedent.
• The Court referred to Abhimanyu Pratap Singh Vs. Namita Sekhon & Anr. [CITATION] for the selection of multiplier.
• The Court referred to Mallikarjun v. Divisional Manager, National Insurance Company Limited & Anr. [CITATION] to determine the amount under ‘Pain and Sufferings’ and ‘Loss of Amenities’.
• The Court followed Kerala SRTC v. Susamma Thomas [CITATION] for guidelines on investment of compensation amounts.

What weighed in the mind of the Court?

The Supreme Court was primarily concerned with ensuring ‘just compensation’ for the appellant, given the severity of her disabilities and the lifelong impact of the accident. The court emphasized that the appellant’s condition was irreversible, and she would require lifelong care and support. The court also considered the fact that the appellant’s marriage prospects were severely diminished due to her physical condition. The court was also concerned with the fact that the appellant was a minor at the time of the accident and that the notional income fixed by the High Court was too low. The court also considered the fact that the appellant would require lifelong medical care.

Fact:Law Ratio

Logical Reasoning

The logical reasoning of the Supreme Court can be represented as follows:

Judgment

The Supreme Court enhanced the compensation awarded by the High Court by Rs. 24,90,000. The court increased the compensation under various heads, including:

• Attender Charges: Increased to Rs. 18 lakhs (Rs. 17 lakhs additional) by applying a multiplier of 15 and considering a monthly expense of Rs. 10,000.
• Pain and Suffering and Loss of Amenities: Increased by Rs. 3 lakhs, bringing the total to Rs. 6 lakhs.
• Marriage Prospects: Granted Rs. 3 lakhs for loss of marriage prospects.
• Future Medical Treatment: Increased by Rs. 1 lakh, bringing the total to Rs. 2 lakhs.
• Special Diet: Granted an additional Rs. 90,000 for special dietary needs.

The court directed the insurance company to deposit the enhanced amount with 7.5% interest from August 29, 2018, until the date of deposit. The court also issued directions for the investment of the compensation amount in a nationalized bank to ensure the appellant’s financial security. The court also directed the insurance company to pay the balance court fee for the amount granted in excess of Rs. 30 lakhs.

The Court quoted Philipps v. London & South Western Railway Co., stating, “You cannot put the plaintiff back again into his original position, but you must bring your reasonable common sense to bear, and you must always recollect that this is the only occasion on which compensation can be given.”

The Court also quoted from Raj Kumar v. Ajay Kumar, stating, “The heads under which compensation is awarded in personal injury cases are the following: Pecuniary damages (Special damages) (i) Expenses relating to treatment, hospitalisation, medicines, transportation, nourishing food, and miscellaneous expenditure. (ii) Loss of earnings (and other gains) which the injured would have made had he not been injured, comprising: (a) Loss of earning during the period of treatment; (b) Loss of future earnings on account of permanent disability. (iii) Future medical expense. Non-pecuniary damages (General damages) (iv) Damages for pain, suffering and trauma as a consequence of the injuries. (v) Loss of amenities (and/or loss of prospects of marriage). (vi) Loss of expectation of life (shortening of normal longevity).”

The Court also observed, “The physical condition of the appellant would, undoubtedly, reveal that she would require lifelong services of two attendants.”

Key Takeaways

• The Supreme Court emphasized the need for ‘just compensation’ in motor accident cases, especially where victims suffer severe and permanent disabilities.
• The court highlighted the importance of considering all relevant factors, including the victim’s age, the severity of the disability, and the impact on their future life, when determining compensation.
• The judgment reinforces the principle that compensation should not only cover immediate expenses but also address the long-term needs of the victim, including medical care, attendant charges, and loss of amenities.
• The court clarified the application of the multiplier method in cases involving minors, setting a multiplier of 15 for victims up to 15 years of age, based on the decision in Reshma Kumari & Ors. V . Madan Mohan & Anr.
• The decision underscores the judiciary’s commitment to protecting the rights of vulnerable victims, ensuring that they are not deprived of adequate compensation due to technicalities or inadequate assessments.

Directions

The Supreme Court gave the following directions:

• The insurance company shall deposit the enhanced amount with interest at the rate of 7.5% per annum with effect from 29.08.2018 till the date of deposit.
• The insurance company shall draw a cheque covering the balance court fee for the amount in excess of Rs. 30 lakhs awarded under this judgment and produce it before the MACT.
• The balance amount need be deposited to comply with the judgment before the MACT by way of two cheques, in which one should be for an amount of Rs. 15 lakhs.
• MACT shall keep the said amount of Rs. 15 lakhs in a fixed deposit in a nationalized bank, for a period of 5 years.
• The bank concerned shall not permit any loan or advance on the fixed deposit and the interest payable on this amount shall be released on quarterly basis and for the care of the appellant alone.
• After the period of 5 years the MACT shall keep renewing the said amount on such terms as it deems just and proper, for a further term of 5 years.
• The amount covered by the other cheque shall be released to the appellant.
• The insurance company shall deposit the enhanced amount as above, within a period of 3 months from today.

Development of Law

The ratio decidendi of this case is that in cases of severe and permanent disabilities resulting from motor vehicle accidents, the compensation awarded must be ‘just’ and comprehensive. This judgment clarifies the application of the multiplier method for minors, setting a multiplier of 15 for victims up to 15 years of age, based on the decision in Reshma Kumari & Ors. V . Madan Mohan & Anr. This decision also reinforces the principle that compensation should address not only immediate expenses but also the long-term needs of the victim, including medical care, attendant charges, and loss of amenities. This judgment also emphasizes that the court must consider all relevant factors, including the victim’s age, the severity of the disability, and the impact on their future life, when determining compensation.

Conclusion

The Supreme Court’s judgment in Divya vs. National Insurance Co. Ltd. is a landmark decision that emphasizes the importance of ‘just compensation’ for victims of motor vehicle accidents, particularly those with severe and permanent disabilities. The court’s decision to enhance the compensation amount reflects its commitment to ensuring that victims receive adequate support to cope with the lifelong challenges they face. The judgment also provides clarity on the application of the multiplier method in cases involving minors and reinforces the principle that compensation should address all aspects of the victim’s loss, including medical care, attendant charges, and loss of amenities.