The Oriental Insurance Company Ltd. v. Padma Baghel

: Shri HAPS Bhatia, Advocate : Shri Praveen Dhurander, Advocate : Shri Sumit Singh, Advocate Hon’ble Shri Justice Arvind Kumar Verma Order On Board 15/03/2024 These two appeals are arising out of the award dated 07.09.2022 passed by the learned Third Additional Motor Accident Claims Tribunal, Bastar at Jagdalpur CG in Claim Case No. 141/2019 hence, they are being heard and decided by this common order.

#2. MAC No. 20 of 2023 has been filed by the Insurance Company challenging the quantum of compensation and exemption from liability to pay compensation whereas MAC No. 245 of 2023 has been filed seeking for enhancement of the compensation by the claimants/appellants. The parties are hereinafter referred to as the original status in the learned Tribunal. 3

#3. Facts of the case in brief are that on 28.01.2019, deceased Dholuram Baghel died on account of the injuries sustained by him in the accident and the appellants have claimed for compensation of Rs. 25,58,000/- under Section 166(1) and 140 of the Motor Vehicles Act with interest @ 10%.It is stated that on the date of incident, deceased was going to the temple at Village Chhaapar, Bhanpuri along with Bhawani and Hariram in a motorcycle and on the way, near Pujarilpara, the driver of the offending vehicle Jeep Force bearing No. CG17 KP4064 driving rashly and negligent hit the motorcycle from behind as a result of which the deceased sustained grievous injuries and died on the spot.

#4. As per the pleadings of the claim application, the deceased was unmarried, was a farmer and worked as labourer, earning Rs. 10,000/- per month. He has spent huge amount of money for his treatment and as a result of permanent disablement, he has lost 100% of earning capacity. The claim application was resisted by the owner, driver and Insurance Company on various grounds. Learned Tribunal framed issues and decided the same in favour of the claimant and awarded Rs. 15,69,800/- as compensation.

#5. On claim petition filed by the Claimants under Section 166(1) and 140 of the Motor Vehicles Act, the Claims Tribunal considering the pleadings of the respective parties and the evidence adduced in support thereof passed the impugned award as mentioned in the judgment.

#6. Learned counsel for the appellant/insurance company in MAC No. 20 of 2023 submits that the impugned award is contrary to the facts and law applicable to the case. In fact, present is a case of contributory 4 negligence on the part of the deceased but the Tribunal has recorded negative finding in this regard. The Tribunal was also not justified in assessing the monthly income of the deceased as Rs.9,000/- without any cogent and reliable evidence being available in this regard. He submits that present is a case where the driver was not having valid and effective driving license and plying the vehicle without permit, therefore there was a breach of the insurance policy and despite that the Tribunal has fastened liability on the Appellant/Insurance Company on the ground that the breach is not fundamental. Further in view of the oral and documentary evidence, it is clear that the Tribunal has wrongly fastened the liability on the Insurance Company. For all these reasons, the impugned award is liable to be set aside and the appellant be exonerated of its liability.

#7. Undisputedly, the accident did take place on 28.01.2019, the offending vehicle in the said accident was the Motorcycle bearing registration Number Jeep Force bearing No. CG17 KP4064. As a result of the accident, the deceased Dholuram Baghel who was traveling as a pillion rider on the motor cycle along with two others, was hit by the jeep belonging to the respondent No. 2/Vishwanath Kawasi and driven by the respondent No. 1/Bodku Podiyami resulting in his suffering grievous injuries to which he later on succumbed. The deceased was aged about 21 years at the time of accident. He also submitted that so far as the quantum of compensation awarded is concerned the same also has been sufficiently awarded by the Tribunal and that there is no scope of any further enhancement of compensation.

#8. Hon'ble Supreme Court in the case of National Insurance Co. Ltd. 5 V.Swaran Singh, reported in (2004) 3 SCC 297 while laying down Parameters/guidelines while deciding the claim application by the Tribunal in clause (iii), (iv) & (vi) of paragraph 110, has held as under:- (iii) The breach of policy condition e.g. disqualification of the driver or invalid driving licence of the driver, as contained in sub-section (2)(a)(ii) of Section 149, has to be proved to have been committed by the insured for avoiding liability by the insurer. Mere absence, fake or invalid driving licence or disqualification of the driver for driving at the relevant time, are not in themselves defences available to the insurer against either the insured or the third parties. To avoid its liability towards the insured, the insurer has to prove that the insured was guilty of negligence and failed to exercise reasonable care in the matter of fulfilling the condition of the policy regarding use of vehicles by a duly licensed driver or one who was not disqualified to drive at the relevant time. (iv) Insurance companies, however, with a view to avoid their liability must not only establish the available defence(s) raised in the said proceedings but must also establish “breach” on the part of the owner of the vehicle; the burden of proof wherefor would be on them. (vi) Even where the insurer is able to prove breach on the part of the insured concerning the policy condition regarding holding of a valid licence by the driver or his qualification to drive during the relevant period, the insurer would not be allowed to avoid its liability towards the insured unless the said breach or breaches on the condition of driving licence is/are so fundamental as are found to have contributed to the cause of the accident. The Tribunals in interpreting the policy conditions would apply “the rule of main purpose” and the concept of “fundamental breach” to allow defences available to the insurer under Section 149(2) of the Act.

#9. Reiterating the said principle, the Hon'ble Supreme Court again in the case of Jawahar Singh v. Bala Jain reported in (2011) 6 SCC 425, in Paragraph 10, 11, 12, has held as under:- 6 “10. On behalf of Respondent 6, National Insurance Company Ltd., it was sought to be urged that at the time of the accident, the motorcycle was being driven in breach of the terms and conditions of the insurance policy and, accordingly, the Insurance Company could not be held liable for making payment of the compensation awarded by the Motor Accidents Claims Tribunal. Apart from the fact that Jatin, who was riding the motorcycle, did not have a valid driving license, it had also been established that he was a minor at the time of the accident and consequently the Insurance Company had been rightly relieved of the liability of payment of compensation to the claimants and such liability had been correctly fixed on the owner of the motorcycle, Jawahar Singh.

#11. It has been well settled that if it is not possible for an awardee to recover the compensation awarded against the driver of the vehicle, the liability to make payment of the compensation awarded fell on the owner of the vehicle. It was submitted that in this case since the person riding the motorcycle at the time of accident was a minor, the responsibility for paying the compensation awarded fell on the owner of the motorcycle. In fact, in Ishwar Chandra v. Oriental Insurance Co. Ltd., (2007) 10 SCC 650, it was held by this Court that in case the driver of the vehicle did not have a licence at all, the liability to make payment of compensation fell on the owner since it was his obligation to take adequate care to see that the driver had an appropriate licence to drive the vehicle.

#12. Before the Tribunal, reliance was also placed on the decision in National Insurance Co. Ltd. v. Gh. Mohd. Wani, 2004 ACJ 1424 (J&K) and National Insurance Co. Ltd. v. Gadigewwa, 2005 ACJ 40 (Kant), wherein it was held that if the driver of the offending vehicle did not have a valid driving licence, then the Insurance Company after paying the compensation amount would be entitled to recover the same from the owner of the vehicle. It was submitted that no interference was called for with the judgment and order of the High Court impugned in the special leave petition.”

#10. The same view has further being reiterated in the case of Shamanna v. Divisional Manager, Oriental Insurance Company Limited), reported in (2018) 9 SCC 650, wherein again the Hon'ble Supreme Court in Paragraph 6 has held as under:- 7 “6. As per the decision in National Insurance Co. Ltd. v. Swaran Singh, (2004) 3 SCC 297, onus is always upon the insurance company to prove that the driver had no valid driving licence and that there was breach of policy conditions. Where the driver did not possess the valid driving licence and there are breach of policy conditions, “pay and recover” can be ordered in case of third-party risks. The Tribunal is required to consider “as to whether the owner has taken reasonable care to find out as to whether the driving licence produced by the driver … does not fulfill the requirements of law or not will have to be determined in each case. 7. The Supreme Court considered the decision of National Insurance Company Ltd. Vs. Swaran Singh, (2004) 3 SCC 297 in subsequent decision in National Insurance Co. Ltd. Vs. Laxmi Narain Dhut, (2007) 3 SCC 700, wherein this Court held that: “5. The decision in National Insurance Company Ltd. Vs. Swaran Singh (2004) 3 SCC 297 has no application to cases other than third party risks and in case of third-party risks the insurer has to indemnify the amount and if so advised, to recover the same from the insured.”

#11. The same view has further been followed in two of the recent decisions in the case of Parminder Singh v. New India Assurance Company Limited reported in (2019) 7 SCC 217, whereby the Supreme Court has approved the principle of “Pay and Recovery” in such cases. More recently again in the case of Kurvan Ansari Alias Kurvan Ali v. Shyam Kishore Mummu reported in (2022) 1 SSC 317, in paragraph 17 applying the principle of pay and recovery, the Supreme Court has held as under:- “17. Accordingly, the appellants are entitled for a sum of Rs.4,70,000 (Rupees four lakhs seventy thousand only) towards total compensation with interest @ 6% p.a. from the date of claim petition till the date of realization. The enhanced compensation shall be apportioned between the appellants as ordered by the Tribunal. The entire compensation shall be paid to the appellants by Respondent 2 insurance company, and we keep it open to the insurance company to recover the same from Respondent 1 owner of the motorcycle by initiating appropriate proceedings as the motorcycle was driven 8 by the driver who was not possessing valid driving licence on the date of the accident.”

#12. However, Learned Tribunal has held in para 23 of the award of the Tribunal, that the offending vehicle was driven without permit and the driver was not holding valid and effective license at the time of accident. Therefore, it is the fundamental breach of of policy. Hence, the Insurance Company has been exonerated from its liability to pay compensation to the appellants/claimants.

#13. For all the aforesaid reasons, this Court does not find any strong case made out by the appellant in MAC No. 20/2023 calling for an interference with the order of the Tribunal so far as pay and recovery is concerned. At the same time, there is a cross appeal (MAC No. 245 of 2023) also filed by the claimants seeking for enhancement of compensation as quantified by the Tribunal.

#14. According to the counsel for the claimants in MAC No. 245 of 2023, the income of the deceased assessed by the Tribunal is on the lower side. It is further contended that the deceased was a farmer and worked as labour and was earning Rs. 10,000/- per month which was much more amount than what has been assessed by the Tribunal and the assessment of income by the Tribunal is unreasonably low and could have enhanced the compensation substantially. He would further contend that the deceased was unmarried person, the deduction of personal income ought to have been 1/3rd because the dependents are four.

#15. Per contra, counsel for the respondent/insurance company would 9 submit that the Tribunal has rightly assessed the income of the deceased. He submits that present is a case where the driver was not having valid and effective driving license and therefore there was a breach of the insurance policy and despite that the Tribunal has fastened liability on the Appellant/Insurance Company on the ground that the breach is not fundamental.

#16. Having heard the contentions put forth on either side and on perusal of record, if we look into the factual details of the case, admittedly, the accident did place on 28.01.2019; the deceased met with the accident when the offending vehicle Jeep dashed from the rear side to the motor cycle in which the deceased was riding. At the time of accident, the motorcycle was driven by one Hariram and it met with an accident by the offending vehicle hence, it is not a case of contributory negligence. However, it is a case of composite negligence. Therefore, the claimant has a choice to claim compensation either from the owner of the vehicle or the owner, driver and Insurance Company of both the vehicles. The appellants/claimants did not adduce any documentary evidence regarding the income of the deceased on record.

#17. In the light of judgment of the Supreme Court in the case of Reshma Kumari & Ors vs Madan Mohan & Anr reported in (2013). 9 SCC 65, it has been propounded as follows: “ In the cases where the deceased was self- employed or was on a fixed salary without provision for annual increments, the actual income at the time of death without any addition to income for future prospects will be appropriate. A departure from the above principle can only be justified in extraordinary circumstances and very exceptional cases.” The aforesaid analysis vividly exposits that standardization of addition to income for future 10 prospects is helpful in achieving certainty in arriving at appropriate compensation. Thus, the larger Bench has concurred with the view expressed by Sarla Verma (supra) as per the determination of future income. “

#18. Given the facts and circumstances of the case, this Court is of the opinion that the finding of contributory negligence arrived at by the Tribunal does not seem to be proper and justified and the same deserves to be and is accordingly set aside. The income of the deceased assessed by the learned Tribunal looking to the age of the deceased which was 21 years at the time of accident, the minimum wages and that he was a skilled labour therefore has rightly assessed the income of the deceased. The future prospect has also been correctly assessed and the income is exorbitant and therefore, this Court finds that amount of compensation awarded to the appellants/claimants is justified after taking into account the inflation, devaluation of the rupee and cost of living. The Tribunal took the view that the aforesaid evidence was insufficient to prove the income.

#19. Accordingly, it took the minimum wages of a skilled worker as Rs.9,000/- per month and added 40% towards inflation and rise in price index. From this, 1/2 was deducted towards personal expenses and multiplier of 18 was applied to compute the loss of dependency at Rs.13,60,800/-. It has been rightly stated in Sarla Verma and others Vs Delhi Transport Corporation and another (2009) 6 SCC 121 that the claimants in case of death claim for the purposes of compensation must establish (a) age of the deceased; (b) income of the deceased; and (c) the number of dependents. To arrive at the loss of dependency, the Tribunal consider (i) 11 additions/deductions to be made for arriving at the income; (ii) the deductions to be made towards the personal living expenses of the deceased; and (iii) the multiplier to be applied with reference to the age of the deceased. The function of the Claims Tribunal or the High Court is to award 'just' compensation which is reasonable on the basis of evidence placed on record. Therefore, the only requirement for determining the compensation is that it must be 'just'.

#20. The deceased was unmarried, at the time of accident he was aged about 21 years, appellant No.1 was mother, appellant No.2 was brother aged about 20 years and appellant No.3 is sister, aged about 18 years and were dependant upon the deceased for their livelihood. As the deceased was unmarried and his brothers and sisters have not led any cogent evidence to establish their dependency upon the deceased, the pivotal question which arises for consideration is whether they would be entitled to compensation under the head of loss of dependency or to compensation under conventional heads only.

#21. In Pranay Sethi (supra), Hon’ble Supreme Court has held that if the deceased is unmarried, the criteria which are to be taken into consideration for assessing compensation in the case of death, are : (i) the age of the deceased at the time of his death; (ii) the number of dependents left behind by the deceased; and (iii) the income of the deceased at the time of his death. In Sarla Verma (supra) (paras 30, 31 and 32), this Court took the view that it was necessary to standardize the deductions to be made under the head personal and living expenses of the deceased. Accordingly, it was held that : 12  where the deceased was married, the deduction towards personal and living expenses should be 1/3rd if the number of dependent family members is two to three; 1/4th if the number of dependent family members  is four to six; and 1/5th if the number of dependent family members  exceeds six. If the deceased was a bachelor, and the claim was  filed by the parents, the deduction would normally be 50% as personal and living expenses of the bachelor. Subject to evidence to the contrary, the father was likely to have his own income, and would not be considered to be a dependent. Hence, the mother alone will be considered to be a dependent. In the absence of any evidence to the contrary, brothers and sisters of the deceased bachelor would not be considered to be dependents, because they would usually either be independent and earning, or married, or dependent on the father. Thus, even if the deceased was survived by parents and siblings, only the mother would be considered to be a dependent. The deduction towards personal expenses of a bachelor would be 50%, and 50% would be the contribution to the family. However, in a case where the family of the  bachelor was large and dependent on the income of the deceased, as in a case where he had a widowed mother, and a large number of younger non-earning sisters or brothers, his personal and living expenses could be restricted to 1/3rd, and contribution to the family be taken as 2/3rd.

#22. A three-judge bench in Reshma Kumari & Ors. v. Madan Mohan & Anr.,(2013) 9 SCC 65 affirmed the standards fixed in Sarla Verma (supra) with respect to the deduction for personal and living expenses, and held that these standards must ordinarily be followed, unless a case for departure is made out. The Court held that : 13 “41. The above does provide guidance for the appropriate deduction for personal and living expenses. One must bear in mind that the proportion of a man’s net earnings that he saves or spends exclusively for the maintenance of others does not form part of his living expenses but what he spends exclusively on himself does. The percentage of deduction on account of personal and living expenses may vary with reference to the number of dependent members in the family and the personal living expenses of the deceased need not exactly correspond to the number of dependents.

#42. In our view, the standards fixed by this Court in Sarla Verma 2009 (6) SCC 121 on the aspect of deduction for personal living expenses in paragraphs 30, 31 and 32 must ordinarily be followed unless a case for departure in the circumstances noted in the preceding para is made out.”

#43. In what we have discussed above, we sum up our conclusions as follows: …43.6. Insofar as deduction for personal and living expenses is concerned, it is directed that the Tribunals shall ordinarily follow the standards prescribed in paragraphs 30, 31 and 32 of the judgment in Sarla Verma 2009 (6) SCC 121 subject to the observations made by us in para 38 above. …”

#23. A Constitution Bench of this Court in National Insurance Co. Ltd. v. Pranay Sethi & Ors.,(2017) 16 SCC 680 held that the standards fixed in Sarla Verma (supra) would provide guidance for appropriate deduction towards personal and living expenses, and affirmed the conclusion in para 43.6 of Reshma Kumari (supra). Further this aspect of the matter in the case of National Insurance Co. Ltd v. Pranay Sethi & Ors., where it was held that claimants are entitled to 40% of the income towards future prospects which has been rightly assessed by the Tribunal.

#24. Consequently, MAC No. 20 of 2023 is allowed and the impugned award is modified to the extent that the appellant/Insurance 14 company is exonerated from liability. However, it is directed that the appellant/Insurance Company shall pay the compensation awarded to the claimants first and then to recover the same from the driver and owner of the offending vehicle (respondents 3 & 4) in the same proceedings by applying the principle of “pay and recover”.

#25. The appeal is allowed in part to the extent shown above. So far as MAC No. 245 of 2023is concerned, it fails and is hereby dismissed. Sd/- (Arvind Kumar Verma) Judge suguna