Supreme Court Enhances Compensation in Motor Accident Case Involving Child: Kurvan Ansari vs. Shyam Kishore Murmu (2021)

Introduction

Date of the Judgment: November 16, 2021
Citation: 2021 INSC 737
Judges: R. Subhash Reddy, J., Hrishikesh Roy, J.

What is a just and fair compensation for the loss of a child’s life in a motor vehicle accident, especially when the child is not an earning member? The Supreme Court of India, in this case, grapples with this question, focusing on the adequacy of compensation awarded under Section 163-A of the Motor Vehicles Act, 1988. The court addresses the issue of notional income for non-earning members, particularly children, and the need to revise the outdated compensation amounts. The judgment was delivered by a bench of Justices R. Subhash Reddy and Hrishikesh Roy.

Case Background

On September 6, 2004, Ibran Ali, a 7-year-old boy studying in Class II, was standing by the side of the road in front of his maternal grandparents’ house when a motorcycle hit him. The accident caused grievous injuries, resulting in his death. The motorcycle was driven by Mr. Sunil Gurum, owned by Shyam Kishore Murmu, and insured with an insurance company.

The parents of the deceased, Kurvan Ansari and another, filed a claim petition under Section 163-A of the Motor Vehicles Act, 1988, seeking compensation for the loss of their child. They argued that the accident occurred due to the rash and negligent driving of the motorcycle by Mr. Sunil Gurum. The Motor Accidents Claims Tribunal initially awarded compensation based on a notional income of Rs. 15,000 per annum, as prescribed in Schedule II of the Motor Vehicles Act, 1988, along with interest.

Timeline:

Course of Proceedings

The Motor Accidents Claims Tribunal concluded that the accident was due to the rash and negligent driving of the motorcycle driver, Mr. Sunil Gurum. The Tribunal determined a notional annual income of Rs. 15,000 for the deceased child, applied a multiplier of 15, and awarded a compensation of Rs. 2,25,000, along with 6% interest from the date of the judgment. The Tribunal also directed the insurance company to pay the compensation and recover it from the owner of the motorcycle, as the driver did not possess a valid driving license at the time of the accident.

Both the insurance company and the claimants appealed the Tribunal’s decision before the High Court of Jharkhand at Ranchi. The insurance company pleaded contributory negligence, while the claimants sought an enhancement of the compensation. The High Court dismissed the insurance company’s appeal and partly allowed the claimants’ appeal, enhancing the compensation by Rs. 15,000 towards funeral expenses. The High Court upheld the Tribunal’s compensation of Rs. 2,25,000, adding Rs. 15,000 for funeral expenses, totaling Rs. 2,40,000, with interest from the date of filing the claim petition.

Legal Framework

The case primarily revolves around Section 163-A of the Motor Vehicles Act, 1988, which provides for a structured formula for compensation in motor accident cases, particularly in cases of no-fault liability. This section allows for compensation to be awarded based on a pre-determined formula, without the need to prove negligence.

Section 163-A(3) of the Motor Vehicles Act, 1988 states: “The Central Government may, by notification in the Official Gazette, make rules specifying the manner in which the claims for compensation under sub-section (1) may be preferred, the form in which such claims may be made, the particulars which such claims shall contain, and any other matter which may be necessary or expedient for the purpose of giving effect to the provisions of this section.”

Schedule II of the Motor Vehicles Act, 1988, provides a structured formula for calculating compensation, including a notional income of Rs. 15,000 per annum for non-earning members. This schedule was framed in 1994 and had not been amended since then, despite the directions of the Supreme Court in previous cases.

Arguments

Arguments by the Appellants (Claimants):

• The appellants argued that the compensation awarded by the Tribunal and confirmed by the High Court was insufficient and not just.
• They contended that the notional income of Rs. 15,000 per annum, as per Schedule II of the Motor Vehicles Act, 1988, was outdated and did not reflect the current cost of living.
• They emphasized that Section 163-A(3) of the Motor Vehicles Act, 1988, obligated the government to amend Schedule II, which had not been done since 1994, despite repeated directions from the Supreme Court.
• The appellants relied on the judgments of the Supreme Court in Puttamma & Ors. v. K.L. Narayana Reddy & Anr., R.K. Malik & Anr. v. Kiran Pal & Ors., and Kishan Gopal & Anr. v. Lala & Ors., which had previously highlighted the need to increase the notional income.

Arguments by the Respondent (Insurance Company):

• The respondent argued that there were no grounds to interfere with the High Court’s judgment.
• They relied on the judgment of the Supreme Court in Rajendra Singh & Ors. v. National Insurance Company Limited & Ors. to support their position.

Issues Framed by the Supreme Court

The Supreme Court considered the following issue:

• Whether the compensation awarded by the Tribunal and confirmed by the High Court was just and fair, considering the outdated notional income prescribed in Schedule II of the Motor Vehicles Act, 1988.

Treatment of the Issue by the Court

Authorities

The Supreme Court considered the following authorities:

Judgment

How each authority was viewed by the Court?

The Supreme Court relied on its previous judgments in Puttamma & Ors. v. K.L. Narayana Reddy & Anr. [2013] 15 SCC 45*, R.K. Malik & Anr. v. Kiran Pal & Ors. [2009] 14 SCC 13* and Kishan Gopal & Anr. v. Lala & Ors. [2014] 1 SCC 244* , which had emphasized the need to increase the notional income for non-earning members. The Court distinguished the judgment in Rajendra Singh & Ors. v. National Insurance Company Limited & Ors. [2020] 7 SCC 256* stating that it did not address the issue of outdated notional income.

The Court also emphasized the importance of Section 163-A of the Motor Vehicles Act, 1988, and the obligation of the Central Government under Section 163-A(3) to amend Schedule-II to reflect the current cost of living. The Court noted that the notional income fixed in Schedule II was outdated and needed revision.

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily influenced by the need to provide just and fair compensation to the victims of motor accidents, particularly in cases involving non-earning members like children. The Court emphasized that the notional income fixed in Schedule II of the Motor Vehicles Act, 1988, was outdated and did not reflect the current economic realities. The Court also took into consideration the repeated directions it had issued in previous cases for the amendment of Schedule II, which had not been complied with by the government. The Court also considered the need to provide adequate compensation in line with the increase in the cost of living and devaluation of the rupee. The Court’s reasoning was also driven by the need to ensure that the victims of motor accidents are not left with inadequate compensation due to outdated legal provisions.

Logical Reasoning

Judgment

The Supreme Court, considering the judgments in Puttamma & Ors. v. K.L. Narayana Reddy & Anr., R.K. Malik & Anr. v. Kiran Pal & Ors., and Kishan Gopal & Anr. v. Lala & Ors., enhanced the notional income of the deceased child to Rs. 25,000 per annum. The court observed that the notional income of Rs. 15,000 per annum fixed in 1994 was not just and reasonable. The Court stated: “In view of the judgments in the cases in Puttamma & Ors., R.K. Malik & Anr. and Kishan Gopal & Anr., we are of the view that it is a fit case to increase the notional income by taking into account the inflation, devaluation of the rupee and cost of living.”

The Court calculated the compensation as follows:

• Loss of Dependency: Rs. 3,75,000 (Rs. 25,000 x Multiplier 15)
• Filial Consortium: Rs. 80,000 (Rs. 40,000 x 2)
• Funeral Expenses: Rs. 15,000
• Total Compensation: Rs. 4,70,000

The Court also observed: “Accordingly, the appellants are entitled for a sum of Rs.4,70,000/- (Rupees four lakhs seventy thousand only) towards total compensation with interest at 6% per annum from the date of claim petition till the date of realisation.”

The Court directed the insurance company to pay the enhanced compensation to the appellants, with the liberty to recover the same from the owner of the motorcycle, as the driver did not possess a valid driving license at the time of the accident. The Court stated: “The entire compensation shall be paid to the appellants by respondent No.2 – Insurance Company, and we keep it open to the Insurance Company to recover the same from respondent No.1 – owner of the motorcycle by initiating appropriate proceedings as the motorcycle was driven by the driver who was not possessing valid driving licence on the date of the accident.”

Key Takeaways

• The Supreme Court has emphasized the need to revise the outdated notional income fixed in Schedule II of the Motor Vehicles Act, 1988, for non-earning members.
• The judgment highlights the need for the government to amend Schedule II to reflect the current cost of living and inflation.
• The decision provides a higher compensation for the loss of a child’s life in a motor accident, recognizing the emotional and financial loss suffered by the parents.
• The judgment will likely influence future cases involving compensation for non-earning members, particularly children, in motor accident claims.

Directions

The Supreme Court directed the insurance company to pay the enhanced compensation of Rs. 4,70,000 to the appellants, with interest at 6% per annum from the date of the claim petition until the date of realization. The Court also allowed the insurance company to recover the compensation from the owner of the motorcycle, as the driver did not have a valid driving license at the time of the accident.

Specific Amendments Analysis

This judgment does not discuss any specific amendments.

Development of Law

The ratio decidendi of this case is that the notional income fixed in Schedule II of the Motor Vehicles Act, 1988, for non-earning members, particularly children, must be revised to reflect the current economic realities and cost of living. The Supreme Court has reiterated that the notional income of Rs. 15,000 per annum is outdated and inadequate. This judgment reinforces the principle that compensation in motor accident cases must be just and fair, taking into account the inflation and devaluation of the rupee. The Court has also reaffirmed its earlier stance that the government must amend Schedule II to address the issue of outdated notional income.

Conclusion

In conclusion, the Supreme Court’s judgment in Kurvan Ansari alias Kurvan Ali & Anr. vs. Shyam Kishore Murmu & Anr. is a significant step towards ensuring fair compensation for the loss of a child’s life in motor accidents. The Court has enhanced the compensation by increasing the notional income, emphasizing the need to revise outdated legal provisions. The judgment underscores the importance of just and equitable compensation in motor accident claims and serves as a reminder to the government to amend Schedule II of the Motor Vehicles Act, 1988, to reflect current economic realities.