Supreme Court Enhances Compensation in Motor Accident Case: Rasmita Biswal & Ors. vs. National Insurance Company Ltd. (2021)

Date of the Judgment: December 08, 2021

Citation: (2021) INSC 770

Judges: S. Abdul Nazeer, J. and Krishna Murari, J.

When a tragic road accident takes a life, what is the true measure of compensation for the family left behind? The Supreme Court of India recently addressed this critical question in a case involving a motor accident claim, focusing on the calculation of compensation for loss of dependency, future prospects, and conventional heads. This judgment clarifies the principles for determining just compensation, ensuring that families receive adequate support after such devastating losses. The bench consisted of Justice S. Abdul Nazeer and Justice Krishna Murari, who delivered a unanimous decision.

Case Background

On May 9, 2013, Manoj Kumar Biswal tragically died in a motor vehicle accident. His wife, Rasmita Biswal, and their two minor sons filed a claim petition before the Motor Accident Claims Tribunal, seeking compensation for his death. The claim was filed against the owner of the offending truck and the insurance company. The Tribunal initially awarded Rs. 12,90,064, which was challenged by both the claimants and the insurer. The High Court remanded the matter back to the Tribunal. The Tribunal then awarded Rs. 22,60,000. The insurer again challenged this award before the High Court, which reduced the compensation to Rs. 17,00,000.

Timeline

Course of Proceedings

The Motor Accident Claims Tribunal initially awarded a compensation of Rs. 12,90,064. Both the claimants and the insurer appealed this decision to the High Court. The High Court set aside the Tribunal’s award and sent the case back for fresh consideration. The Tribunal then awarded a total compensation of Rs. 22,60,000. The insurer challenged this revised award in the High Court. The High Court, without providing specific reasons, reduced the compensation to Rs. 17,00,000. This led to the appeal before the Supreme Court by the claimants.

Legal Framework

The case primarily revolves around Section 173 of the Motor Vehicles Act, 1988, which provides for appeals against the awards passed by the Claims Tribunal. According to the Supreme Court, an appeal is a continuation of the original proceedings, and the appellate court is required to address all questions of fact and law. The Court also relied on the principles laid down in National Insurance Company Limited v. Pranay Sethi and Others [(2017) 16 SCC 680], which provides guidelines for calculating compensation, including additions for future prospects.

Section 173 of the Motor Vehicles Act, 1988 states:

“173. Appeals.—(1) Subject to the provisions of sub-section (2), any person aggrieved by an award of a Claims Tribunal may, within ninety days from the date of the award, prefer an appeal to the High Court: Provided that no appeal by the person who is required to pay any amount in terms of such award shall be entertained by the High Court unless he has deposited with it twenty-five thousand rupees or fifty per cent. of the amount so awarded, whichever is less, in the manner directed by the High Court: Provided further that the High Court may entertain the appeal after the expiry of the said period of ninety days, if it is satisfied that the appellant was prevented by sufficient cause from preferring the appeal in time.”

Arguments

Arguments by the Appellants (Claimants):

• The High Court was not justified in reducing the compensation without assigning any reason.
• The deceased was 28 years old at the time of his death and not 33 years. The multiplier should have been 15 instead of 16.
• The deceased had a permanent job and the courts below should have awarded compensation towards loss of future prospects.
• The compensation awarded under the conventional heads was not in accordance with the judgment of the Supreme Court in National Insurance Company Limited v. Pranay Sethi and Others [(2017) 16 SCC 680].

Arguments by the Respondent (Insurer):

• The respondent supported the judgment of the High Court.

Submissions Table

Issues Framed by the Supreme Court

The primary issue before the Supreme Court was:

1. Whether the compensation awarded by the High Court was adequate and justified.

Treatment of the Issue by the Court

Authorities

The Supreme Court relied on 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 Supreme Court followed the principles laid down in National Insurance Company Limited v. Pranay Sethi and Others [(2017) 16 SCC 680]* for calculating compensation for loss of dependency, future prospects, and conventional heads.

✓ The Supreme Court interpreted Section 173 of the Motor Vehicles Act, 1988 to emphasize the appellate court’s duty to address all questions of fact and law with reasons.

What weighed in the mind of the Court?

The Supreme Court was primarily influenced by the need to ensure just and fair compensation for the victims of motor accidents. The Court emphasized that the High Court’s reduction of compensation without any reasons was not justified. The Court also noted that the Tribunal had correctly assessed the income and age of the deceased. The Court was also influenced by the principles laid down in Pranay Sethi for calculating compensation, including future prospects and conventional heads.

The Court’s decision was guided by a combination of factual analysis and legal interpretation. The Court considered the factual aspects of the case, such as the deceased’s income and age, and also applied the legal principles laid down in Pranay Sethi. This resulted in a balanced approach to determine fair compensation.

Logical Reasoning

Judgment

The Supreme Court held that the High Court was not justified in reducing the compensation without providing any reasons. The Court reaffirmed the principles laid down in Pranay Sethi for calculating compensation, including additions for future prospects and conventional heads. The Court calculated the compensation as follows:

• The deceased’s monthly income was assessed at Rs. 15,000, which was not disputed by the Court.
• The deceased was 33 years old at the time of his death.
• The multiplier of 16 was correctly applied by the Tribunal.
• 40% of the income was added towards loss of future prospects.
• 1/4th of the income was deducted towards personal expenses.
• Rs. 16,500 was awarded towards loss of estate and conventional expenses, and Rs. 44,000 was awarded towards spousal consortium.

The total compensation payable to the claimants was determined to be Rs. 31,01,000. Since the High Court had already awarded Rs. 17,00,000, the balance amount of Rs. 14,01,000 was directed to be paid to the claimants with interest at the rate of 7.5% per annum from the date of the claim petition.

The Supreme Court observed that a large number of appeals are pending before the High Courts concerning motor accident claims. The Court suggested that the Department of Justice, Ministry of Law and Justice, should consider constituting ‘Motor Vehicle Appellate Tribunals’ by amending Section 173 of the Motor Vehicles Act, 1988. These tribunals could consist of two Senior District Judges and could be set up in various regional cities to ensure speedy disposal of appeals. The court also suggested that no further appeal against the order of the Appellate Tribunal need be provided, and if any party is aggrieved, they can invoke the writ jurisdiction of the concerned High Court.

The Supreme Court quoted from the judgment:

“Therefore, the appellate court is required to address all the questions before it and decide the case by giving reasons.”

“In case the deceased was self-employed or on a fixed salary, an addition of 40% of the established income should be the warrant where the deceased was below the age of 40 years.”

“The various Benches of such an Appellate Tribunal could consist of two Senior District Judges.”

Key Takeaways

• Appellate courts must provide reasons for modifying awards passed by the Claims Tribunal.
• Compensation for loss of future prospects should be added to the income of the deceased, especially when the deceased is below 40 years of age.
• The principles laid down in Pranay Sethi should be followed for calculating compensation in motor accident claims.
• The Supreme Court has suggested the constitution of Motor Vehicle Appellate Tribunals to reduce the pendency of appeals in High Courts.

Directions

The second respondent-Insurer was directed to deposit a sum of Rs. 14,01,000 before the Tribunal along with interest at the rate of 7.5% per annum from the date of claim petition till the date of realization, within eight weeks from the date of the judgment. The amount was to be disbursed to the claimants in the same proportion as directed by the Tribunal in its award dated 27.02.2016.

Development of Law

The ratio decidendi of this case is that the appellate courts must provide reasons for modifying the awards passed by the Claims Tribunal. The judgment also reinforces the principles laid down in Pranay Sethi for calculating compensation, including additions for future prospects and conventional heads. There is no change in the previous position of law, but the judgment emphasizes the need for appellate courts to adhere to the principles of natural justice and provide reasons for their decisions.

Conclusion

The Supreme Court’s judgment in the case of Rasmita Biswal & Ors. vs. Divisional Manager, National Insurance Company Ltd. and Anr. is a significant step towards ensuring fair compensation for the victims of motor accidents. The Court’s decision to enhance the compensation and emphasize the need for reasoned decisions by appellate courts reinforces the principles of justice and equity. The suggestion to constitute Motor Vehicle Appellate Tribunals also highlights the Court’s concern for speedy disposal of cases and access to justice for all.