Supreme Court Enhances Compensation for Road Accident Victim with 100% Disability: Lalan D. @ Lal & Anr. vs. The Oriental Insurance Company Ltd. (2020) INSC 650 (17 September 2020)

Introduction

Date of the Judgment: 17th September, 2020
Citation: (2020) INSC 650
Judges: Sanjay Kishan Kaul, J., Ajay Rastogi, J., Aniruddha Bose, J. (authored the judgment).
Can a severely disabled road accident victim receive adequate compensation that accounts for their lifelong needs? The Supreme Court of India addressed this critical question in a recent judgment, focusing on a case where the victim suffered a 100% disability. The court enhanced the compensation awarded by the High Court, emphasizing the need to consider future prospects and the continuous care required by the victim. This judgment underscores the judiciary’s commitment to ensuring that victims of road accidents receive just and comprehensive compensation.

Case Background

On December 31, 2003, the first appellant, while riding his bicycle along the Alappuzha-Kolam highway, was involved in a road accident. He sustained severe injuries, including a head injury causing brain concussion, brain stem injury, and diffuse axonal injury on the left side. At the time of filing the claim petition under Section 166 of the Motor Vehicles Act, 1988, before the Motor Accidents Claims Tribunal, Alappuzha, he was unconscious and was represented by his wife. The victim was a skilled laborer in a building construction project, born on May 20, 1969. The Tribunal determined his age to be above 34 years at the time of the accident. He underwent extensive treatment in two hospitals and was found to have right-sided hemiparesis, weakness on the other side, bedridden, unable to speak properly, and experiencing mental problems. The Tribunal assessed his permanent disability at 50%.

Timeline

Course of Proceedings

The Motor Accidents Claims Tribunal, Alappuzha, awarded compensation of Rs. 4,00,000, assessing the permanent disability at 50%. The victim and his wife appealed to the High Court of Kerala at Ernakulam seeking enhancement of compensation. The High Court, considering additional documents and the victim’s condition, assessed the degree of disability to be 100% and enhanced the compensation. The High Court also increased the notional monthly income to Rs. 3,500 and applied a multiplier of 16. The appellants then appealed to the Supreme Court seeking further enhancement of compensation.

Legal Framework

The case was adjudicated under Section 166 of the Motor Vehicles Act, 1988, which deals with the procedure for claiming compensation in motor accident cases. The Supreme Court also referred to the principles laid down in several previous judgments to determine the appropriate compensation, particularly concerning the assessment of disability, loss of future prospects, and the need for continuous care.

The relevant legal provision is Section 166 of the Motor Vehicles Act, 1988, which states:
“Application for compensation.—(1) An application for compensation arising out of an accident of the nature specified in sub-section (1) of section 165 may be made—
(a) by the person who has sustained the injury; or
(b) by the owner of the property; or
(c) where death has resulted from the accident, by all or any of the legal representatives of the deceased; or
(d) by any agent duly authorised by the person injured or all or any of the legal representatives of the deceased, as the case may be:
Provided that where all the legal representatives of the deceased have not joined in any such application for compensation, the application shall be made on behalf of or for the benefit of all the legal representatives of the deceased and the legal representatives who have not so joined, shall be impleaded as respondents to the application.
(2) Every application under sub-section (1) shall be made to the Claims Tribunal having jurisdiction over the area in which the accident occurred, and shall be in such form and shall contain such particulars as may be prescribed:
Provided that where no Claims Tribunal has been constituted for any area, such application shall be made to the Collector of that area:
Provided further that where such claim includes a claim for compensation in respect of damage to any property exceeding the amount prescribed, the application shall be made to the High Court:
Provided also that where the Claims Tribunal is satisfied that the person who has sustained the injury or the legal representatives of the deceased, as the case may be, are unable to file such application, the Claims Tribunal may, in its discretion, treat a report of the accident forwarded to it by a police officer or the officer of the Motor Vehicles Department, as an application for compensation under this Act.
(3) No application for compensation shall be entertained unless it is made within six months of the occurrence of the accident:
Provided that the Claims Tribunal may entertain the application after the expiry of the said period of six months but not later than twelve months, if it is satisfied that the applicant was prevented by sufficient cause from making the application in time.”

Arguments

Appellants’ Arguments:

• The appellants argued that the victim had been under-compensated, given the severity of his injuries and the fact that he was virtually in a vegetative state.
• They specifically sought compensation for loss of future prospects.
• The appellants contended that the High Court erred in applying a multiplier of 16 and argued that the multiplier of 17, as per the Tribunal’s award, should have been retained.

Respondent (Insurance Company) Arguments:

• The insurance company argued that there was contributory negligence on the part of the first appellant, claiming he was under the influence of alcohol at the time of the accident, and sought a 50% reduction in compensation.
• They questioned the quantification of the monthly income as Rs. 3,500.
• The insurance company contended that the victim must have received compensation under the Building and Other Construction Workers Welfare Cess Act, 1966, and the Workmen Compensation Act, 1923.
• They argued that personal expenses of the victim should be taken as one-fourth of the loss of income.
• The insurance company resisted the plea for attendant charges, stating no service by any bystander was proven, and no bills for expenses for surgery or hospitalization during the last 17 years had been produced.

Issues Framed by the Supreme Court

The Supreme Court did not explicitly frame issues in a separate section. However, the primary issues addressed were:

1. Whether the compensation awarded by the High Court was adequate considering the severity of the victim’s disability.
2. Whether the High Court was correct in its assessment of the victim’s monthly income and application of the multiplier.
3. Whether the victim was entitled to compensation for loss of future prospects.
4. Whether the victim was entitled to compensation for medical attendant charges and future medical treatment.
5. Whether the victim was entitled to compensation for pain and suffering and loss of amenities.

Treatment of the Issue by the Court

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

Authorities

The Supreme Court considered the following authorities:

Judgment

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

How each authority was viewed by the Court?

• The Court did not follow Sri Ramachandrappa vs. The Manager, Royal Sundaram Alliance Insurance Company Ltd. [(2011) 13 SCC 236], Arvind Kumar Mishra vs. New India Assurance Co. Ltd. & Anr. [(2010) 10 SCC 254] and National Insurance Company Ltd. vs. Kusuma and Anr. [(2011) 13 SCC 306], as they were not directly applicable to the facts of the case.
• The Court acknowledged Mohan Soni vs. Ram Avatar Tomar & Ors. [(2012) 2 SCC 267], but noted that the Tribunal and High Court had already considered the nature of work while assessing disability.
• The Court rejected the applicability of Priya Vasant Kalgutkar vs. Murad Shaikh & Ors. [(2009) 15 SCC 54], as it related to a minor.
• The Court followed National Insurance Company Ltd. vs. Pranay Sethi & Ors. [(2017) 16 SCC 680] for awarding compensation for future prospects.
• The Court followed the methodology of Parminder Singh vs. New India Assurance Co. Ltd. & Ors. [(2019) 7 SCC 217] for computing loss of future prospects.
• The Court applied the multiplier as specified in Sarla Verma & Ors. vs. Delhi Transport Corporation & Anr. [(2009) 6 SCC 121].
• The Court referred to Kajal vs. Jagdish Chand & Ors. [(2020) 4 SCC 413] for attendant charges but decided to award a lumpsum amount instead of applying the multiplier method.
• The Court distinguished Mallikaarjun Vs. Divisional Manager, National Insurance Company Ltd. & Anr. [(2014) 14 SCC 396] as it involved minor children and awarded a lower amount for pain and suffering.
• The Court followed the principle in Raj Kumar vs. Ajay Kumar & Anr. [(2011) 1 SCC 343] to reduce the amount for loss of amenities.

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily driven by the need to ensure just compensation for the victim, considering his severe disability and the continuous care required. The court emphasized that the victim’s condition was akin to being in a “coma stage,” which necessitated a comprehensive approach to compensation. The Court also considered the victim’s socio-economic background and the fact that he was a daily laborer, which made it difficult for his family to maintain detailed records of expenses. The Court also took into account the need to provide a lumpsum amount for medical attendant charges and future medical treatment, given that the victim’s family was unlikely to have maintained detailed records of expenses. The Court also considered the need to provide compensation for pain and suffering, given the severity of the victim’s condition.

Logical Reasoning:

The court rejected the insurance company’s arguments of contributory negligence and that the victim must have received compensation under welfare statutes, as no evidence was provided. It also rejected the plea for deduction of personal expenses, considering the victim’s condition. The court emphasized that the victim was in a “coma stage,” which meant that he required continuous care and attention.

The Court quoted from the High Court’s judgment stating that “the condition of the appellant was such that it was more than sufficient to arrive at a finding that he was virtually lying as vegetable”. The Court also observed that “Judging by the stratum of the society he comes from, it would be irrational to expect that he would have been in a position to directly engage a caregiver after his accident.” The court further noted that “They could perform the role of caregiver only by diverting their own time from any form of gainful employment which could have generated some income.”

Key Takeaways

• Victims of road accidents with severe disabilities are entitled to comprehensive compensation that includes loss of future prospects and the cost of continuous care.
• Courts should consider the socio-economic background of the victim while assessing compensation and not expect detailed records of expenses from daily laborers.
• A lumpsum amount can be awarded for medical attendant charges and future medical treatment in cases where the victim requires continuous care and is unlikely to have maintained detailed records of expenses.
• Compensation for pain and suffering should be awarded even when the loss of future earning capacity is assessed at 100%.
• The Court emphasized the importance of applying the principles laid down in previous judgments to ensure just compensation in motor accident cases.

Directions

The Supreme Court directed the respondent insurance company to make payment of the enhanced compensation, totaling Rs. 20,26,800, with interest at 9% per annum from the date of filing of the application under Section 166 of the Motor Vehicles Act, 1988. The Court also directed that the amount be invested in an interest-bearing fixed deposit account of a Nationalized Bank for a period of one year in the name of the first appellant, with the appellants entitled to withdraw the interest regularly. After the tenure of the fixed deposit, the entire sum should be paid over to the appellants.

Development of Law

The ratio decidendi of this case is that in cases of severe disability resulting from road accidents, compensation must include loss of future prospects, the cost of continuous care, and adequate compensation for pain and suffering. This case reinforces the principles established in National Insurance Company Ltd. vs. Pranay Sethi & Ors. [(2017) 16 SCC 680] and Parminder Singh vs. New India Assurance Co. Ltd. & Ors. [(2019) 7 SCC 217], further developing the law on just compensation in motor accident claims. The Court also clarified that even when loss of future earning capacity is assessed at 100%, some compensation for pain and suffering should be awarded.

Conclusion

The Supreme Court’s judgment in Lalan D. @ Lal & Anr. vs. The Oriental Insurance Company Ltd. significantly enhanced the compensation awarded to a road accident victim with 100% disability. The Court’s decision underscores the importance of considering future prospects, the need for continuous care, and the socio-economic background of the victim while determining just compensation. This judgment serves as a crucial precedent for future cases involving severe disabilities, ensuring that victims receive comprehensive and adequate compensation.