SEBASTIANI LAKRA & Ors. v. NATIONAL INSURANCE COMPANY LTD & Anr.

HELD: 1. The High Court, without giving any reasons, has reduced the compensation by almost Rs.5,00,000/-. Reasons are the heart and soul of any judicial pronouncement. No judicial order is complete without reasons and it is expected that every court which passes an order, should give reasons for the same. [Para 3][1058-D]

2.1 Section 168 of the Motor Vehicles Act, 1988 mandates that “just compensation” should be paid to the claimants. Any method of calculation of compensation which does not result in the award of ‘just compensation’ would not be in accordance with the Act. The word “just” is of a very wide amplitude. The Courts must interpret the word in a manner which meets the object of the Act, which is to give adequate and just compensation to the dependents of the deceased. Compensation can be paid only once and not time and again. [Para 5][1059-A-B]

2.2 The law is well settled that deductions cannot be allowed from the amount of compensation either on account of insurance, or on account of pensionary benefits or gratuity or grant of employment to a kin of the deceased. The main reason is that all these amounts are earned by the deceased on account of contractual relations entered into by him with others. It cannot be said that these amounts accrued to the dependents or the legal heirs of the deceased on account of his death in a motor vehicle accident. The claimants/dependents are entitled to ‘just compensation’ under the Motor Vehicles Act as a result of the death of the deceased in a motor vehicle accident. Therefore, the natural corollary is that the advantage which accrues to the estate of the deceased or to his dependents as a result of some contract or act which the deceased performed in his life time cannot be said to be the outcome or result of the death of the deceased even though these amounts may go into the hands of the dependents only after his death. [Para 12][1063-E-H] B C D E F G H SEBASTIANI LAKRA & ORS. v. NATIONAL INSURANCE COMPANY LTD. & ANR. 1055

2.3 As far as any amount paid under any insurance policy is concerned whatever is added to the estate of the deceased or his dependents is not because of the death of the deceased but because of the contract entered into between the deceased and the insurance company from where he took out the policy. The deceased paid premium on such life insurance and this amount would have accrued to the estate of the deceased either on maturity of the policy or on his death, whatever be the manner of his death. These amounts are paid because the deceased has wisely invested his savings. Similar would be the position in case of other investments like bank deposits, share, debentures etc.. The tort-feasor cannot take advantage of the foresight and wise financial investments made by the deceased. [Para 13] [1064-A-C]

2.4 As far as the amounts of pension and gratuity are concerned, these are paid on account of the service rendered by the deceased to his employer. It is now an established principle of service jurisprudence that pension and gratuity are the property of the deceased. They are more in the nature of deferred wages. The deceased employee works throughout his life expecting that on his retirement he will get substantial amount as pension and gratuity. These amounts are also payable on death, whatever be the cause of death. Therefore, applying the same principles, the said amount cannot be deducted. [Para 14][1064-D]

2.5 Deduction can be ordered only where the tort-feasor satisfies the court that the amount has accrued to the claimants only on account of death of the deceased in a motor vehicle accident. [Para 16][1064-F]

2.6 Under the employees family Benefit Scheme, the nominee or legal heir(s) of the deceased employee have to deposit the entire amount of gratuity and all other benefits payable to them on the death of the employee. In the present case, it stands proved that the claimants have deposited a sum of Rs.27,43,991/- received by them on the death of the deceased with the employer and are now getting about Rs.50,082/- per month. This amount of Rs.50,082/- is to be paid to the legal heirs under the Scheme only till date of retirement of the deceased. Even if an interest @ of 12% per annum is calculated A B C D E F G H 1056 SUPREME COURT REPORTS [2018] 13 S.C.R. A B C D E F G H on the amount of Rs.27,43,991/-, that would amount to Rs.3,30,000/- per year or Rs.27,500/- per month. The appellants- claimants are getting about Rs.50,000/- per month i.e. about Rs.22,500/- per month more, but this is only to be paid for a period of about 7 years till 30.04.2021. This payment will cease thereafter. This amount cannot be deducted. [Paras 18, 19 and 20][1064-G-H; 1065-A-C]

2.7 However, since the claimants are getting quite an advantage, the MACT was right in not taking into consideration the future prospects in the peculiar facts and circumstances of the case. Therefore, though the amount payable to the claimants, are not to be deducted, in the peculiar facts and circumstances of the case, they are not entitled to claim another amount @ of 15% by way of future prospects. The payment of the amount under the Scheme more than offsets the loss of future prospects. This, would be ‘just’ compensation. [Para 21][1065-D-E]

2.8 It is not disputed that the last drawn income of the deceased including DA was Rs.58,565/-. On this amount, the deceased would definitely have been paying some income tax. Since exact calculations of the same has not been given, the Court deducts about Rs.2,565/- per month for this purpose and for purposes of calculation of loss of income, assesses the income as Rs.56,000/- per month. Out of this amount 1/3 is deducted i.e. Rs.18,667/-, for personal expenses leaving a balance of Rs. 37,333/- per month as loss of dependency to the family, which works out to Rs.4,47,996/- per annum. Applying a multiplier of 11, the compensation works out to Rs.49,27,956/-. In addition thereto, the claimants are entitled to Rs.15,000/- for loss of estate, Rs.40,000/- for loss of consortium, Rs.15,000/- for funeral expenses i.e. a total amount of Rs.49,97,956/- which is rounded off to Rs.50,00,000/-. On this amount, the claimants shall be entitled to interest @ of 9% per annum from the date of filing of the petition till the payment of the amount. [Para 22][1065-F-H; 1066-A]