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2000 DIGILAW 473 (KAR)

GULAM KHADER v. UNITED INDIA INSURANCE CO. LTD.

2000-07-11

R.V.RAVEENDRAN, V.G.SABHAHIT

body2000
RAVEENDRAN, J. ( 1 ) THIS is a claimants' appeal arising from the judgment and award dated 23. 9. 1996 passed in MVC no. 1039 of 1993 by the Motor Accidents claims Tribunal-IX, Bangalore City. For convenience, the parties will be referred to by their ranks before the Tribunal. ( 2 ) THE claimants are the parents of one hazi Mohammed Haneef. He died in a motor accident on 30. 3. 1993, when Tempo bearing No. CAA 6591 (of which the respondent no. 2 is the owner and the respondent no. 1 is the insurer) dashed against the motor cycle (KA-01-H-7054) which he was riding. Feeling aggrieved, the claimants filed MVC No. 1039 of 1993 claiming compensation of Rs. 15,12,000. ( 3 ) PETITION was resisted by the respondents. On the pleadings, Tribunal framed the following issues: (1) Whether the petitioners prove that the accident which took place on 30. 3. 93 at about 11. 10 p. m. near Maharani's college Circle, resulting in death of one hazi Mohammed Haneef, was due to rash and negligent driving of Tempo bearing No. CAA 6591 by its driver? (2) Whether the petitioners prove that they are entitled to compensation as prayed for? (3) What order? ( 4 ) THE father (claimant No. 1) was examined as PW 1. An eyewitness was examined as PW 2. The family auditor was examined as PW 3. Documents P-l to P-l2 were exhibited on behalf of the claimants. On behalf of the respondents, no evidence was let in. After appreciating the evidence, the Tribunal allowed the claim petition in part by judgment and award dated 23. 9. 96. It held that the accident occurred due to the negligent driving of the Tempo bearing No. CAA 6591. It also held that the claimants are entitled to compensation of Rs. 1,75,000 with interest at 6 per cent per annum from the date of petition to the date of realisation. The compensation amount awarded is made up of rs. 1,65,000 towards loss of dependency and Rs. 10,000 towards loss to estate and funeral expenses. ( 5 ) AT the time of accident, the deceased was aged 20 years and was a bachelor. The claimants who are the parents were aged 47 years and 42 years respectively. The deceased was a student studying in I year b. Com. 1,65,000 towards loss of dependency and Rs. 10,000 towards loss to estate and funeral expenses. ( 5 ) AT the time of accident, the deceased was aged 20 years and was a bachelor. The claimants who are the parents were aged 47 years and 42 years respectively. The deceased was a student studying in I year b. Com. He was the proprietor of a business carried under the name and style of H. S. Traders and he was an income tax assessee. The return filed for the assessment year 1992-93 disclosed that the deceased had an income of Rs. 31,494 in his business and had paid a sum of Rs. 1,647 as income tax. In view of the said evidence, the tribunal after deducting the income tax, took the annual income of the deceased as rs. 30,000. As the deceased was a bachelor, 50 per cent was deducted towards his personal and living expenses and the contribution to the family (annual loss of dependency) was determined as Rs. 15,000 per annum. The Tribunal applied multiplier of 11, having regard to the age of the parents and arrived at the total loss of dependency at Rs. 1,65,000. ( 6 ) THE appellants have filed this appeal contending that the compensation awarded is inadequate. They have no grievance in regard to the annual income arrived at by the Tribunal as Rs. 30,000. Their grievance is in regard to deduction of 50 per cent towards personal and living expenses of the deceased. They contend that only one- third ought to have been deducted towards the personal and living expenses of the deceased and if so, the annual loss of dependency would be Rs. 20,000 p. a. instead of Rs. 15,000 p. a. They also contend that as the parents were aged 47 and 42, the multiplier applied ought to have been 15 instead of 11, having regard to the provisions of the Second Schedule to Motor vehicles Act, 1988 (which was introduced with effect from 14. 11. 1994 ). Appellants, therefore, contend that the loss of dependency ought to have been Rs. 20,000 x 15 = rs. 3,00,000. ( 7 ) AS this is a claimants' appeal, the finding regarding negligence does not require to be considered. The only question that arises for consideration is whether the compensation awarded is inadequate and requires to be increased? 11. 1994 ). Appellants, therefore, contend that the loss of dependency ought to have been Rs. 20,000 x 15 = rs. 3,00,000. ( 7 ) AS this is a claimants' appeal, the finding regarding negligence does not require to be considered. The only question that arises for consideration is whether the compensation awarded is inadequate and requires to be increased? On the contentions raised, two points require to be considered:" (i) What is the deduction to be made towards personal and living expenses of a deceased bachelor; and whether deduction of 50 per cent as personal and living expenses in this case is correct? (ii) Whether the multiplier to be applied should be chosen with reference to the table given in Schedule II to the Motor vehicles Act, 1988; and whether the multiplier of 11 applied in this case is correct?"re: Point No. (i): ( 8 ) WE may conveniently refer to the three decisions of this court relied on by the claimants and the correct legal position before examining the correctness of the deduction towards living and personal expenses made by the Tribunal with reference to the facts. 8. 1. In Lakshman v. Susheela Chand choudhary, 1996 ACJ 1265 (Karnataka), the deceased was a bachelor aged 19 years. The claimants were his parents and minor sister. The Tribunal had deducted one- third of the assessed income as personal and living expenses of the deceased. The insurer had contended before this court that in several decisions, this court had deducted 50 per cent as personal expenses in the case of bachelors and, therefore, 50 per cent should be deducted towards personal expenses. The said contention was rejected by this court on the following reasons:"this may be so in respect of bachelors living in cities where there are so many diversions for spending money; but not so in a small backward town where the deceased was living, where the opportunity for spending money would be very much less. Therefore, we consider deduction of one-third towards personal expenses would be appropriate. "thus the reasons for deducting only one- third and not 50 per cent were (a) the deceased and the family were residing in a rural area where there was no scope for high personal and living expenses and (b) there were three dependants, that is parents and a minor sister. 8. 2. "thus the reasons for deducting only one- third and not 50 per cent were (a) the deceased and the family were residing in a rural area where there was no scope for high personal and living expenses and (b) there were three dependants, that is parents and a minor sister. 8. 2. In Saraswathi v. Purohit Road- lines, M. F. A. No. 2284 of 1994; decided on 3. 1. 1997, the Tribunal had deducted 50 per cent of the income towards personal expenses of the deceased who was a bachelor. This court held on the facts of the case, that it will be appropriate to treat two-thirds of the income (instead of 50 per cent) as the contribution to the family. No reasons were given nor any principles or guidelines referred. In the circumstances, that decision has to be considered as one rendered purely with reference to the facts of that case. 8. 3. The decision in Lakshman's case, 1996 ACJ 1265 (Karnataka), was followed by a learned single Judge of this court in gullarnma v. Basheer Sab, 2001 ACJ 97 (Karnataka), by holding that the deduction towards personal expenses should be only one-third. In that case, the deceased was working in a brick industry. That was also a case where the deceased was from a rural area and the claimants were mother and brother of the deceased. 8. 4. The only principle or guideline that can be evolved from these decisions is, where the deceased is a bachelor living in a rural area and the dependent members of the family are two or more, then normally the contribution towards family should be treated as two-thirds and not half. ( 9 ) THE principles in regard to deduction for personal and living expenses have been laid down in General Manager, Karnataka state Road Trans. Corpn. v. Vijaya- lakshmi, ILR 1986 Kar 2254. by a Division bench of this court as follows:"there is no hard and fast rule about the extent of the deduction to be made towards personal and living expenses of the deceased. It all depends upon the facts and circumstances of each case. In some English cases 70 per cent of the earnings has been suggested as the value of dependency. But it all depends on the extent of income, the size and standards of living of the family and habits of the deceased. It all depends upon the facts and circumstances of each case. In some English cases 70 per cent of the earnings has been suggested as the value of dependency. But it all depends on the extent of income, the size and standards of living of the family and habits of the deceased. If the deceased was devoted to the family and had no expensive habits and led a spartan life, deduction on this score, would, relatively be less. If on the contrary the deceased was a bohemian and a spendthrift and had many favourite follies, the deduction towards expenses of living and for his pleasures should be accommodated by appropriate deductions. That depends on the evidence on record as to the life style and personal habits of the deceased. No hard and fast rule, applicable to all cases, could be made as to what amount, or what percentage of income, should be deducted for such living and personal expenses. " (Emphasis supplied) ( 10 ) IN practice, all claimants have a tendency to state that the deceased was very frugal and did not have any expensive habits and was spending most of the income on the family. In quite a few cases in may be so. But, in many cases it may not be so. We are, however, yet to come across a case where the claimants admitted that the deceased was a spendthrift leading a bohemian life. It is also very difficult, if not impossible for the respondents in a claim petition to collect and produce evidence to show that the deceased was spending a considerable part of the income on himself and was contributing only a small part of the income to his family. Therefore, it becomes necessary to evolve some kind of guideline or rule of thumb, to determine the extent of personal and living expense of the deceased. This led to the practice of deducting towards persona! and living expenses of the deceased, one- third of the income, if he was married, and one -half (50 per cent) of the income, if he was a bachelor. This practice was evolved out of experience, logic and convenience. The method of determining compensation, always involved 'some guesswork and some hypothetical consideration' as observed by the Supreme Court. and living expenses of the deceased, one- third of the income, if he was married, and one -half (50 per cent) of the income, if he was a bachelor. This practice was evolved out of experience, logic and convenience. The method of determining compensation, always involved 'some guesswork and some hypothetical consideration' as observed by the Supreme Court. [see R. D. Hattangadi v. Pest Control (India) Pvt. Ltd, 1995 ACJ 366 (SC)J. ( 11 ) BUT, such percentage of deductions were not inflexible and offered merely a guideline. In fact courts evolved further guidelines in this behalf. In U. P. State road Trans. Corpn. v. Trilok Chandra, 1996 ACJ 831 (SC), the Supreme Court held that if the number of dependant members in the family of the deceased was large, in the absence of specific evidence in regard to contribution to the family, the court should adopt the unit method for arriving at the contribution of the deceased to his family. By this method, two units should be allotted to each adult and one unit should be allotted to each minor, and total number of units determined. Then the income should be divided by the total number of units The quotient should be multiplied by two to arrive at the living expenses of the deceased. To illustrate, if the family of the deceased consisted of himself, his wife, mother and four children, units allottable to the three adults will be 6 (3 x 2) and the units allottable to the four minors will be 4 (4 x 1) and thus, total units will be 10 and living expenses of the deceased will be taken as 2/1oth of the income. ( 12 ) IN so far as bachelors are concerned, normally, 50 per cent is deducted as personal and living expenses because it is considered that a bachelor will be more care free as he has not yet acquired a wife and children and, therefore, tends to spend more on himself. There is also the possibility of the bachelor getting married in a short time, in which event also the contribution to the parent/s and siblings is likely to be cut drastically. Further, subject to evidence to the contrary, the father will have his own income and will not be considered as a dependent and only the mother alone will be considered as a dependent. Further, subject to evidence to the contrary, the father will have his own income and will not be considered as a dependent and only the mother alone will be considered as a dependent. Similarly, subject to evidence to the contrary, brothers and sisters are not considered as dependants, because they will either be independent and earning, or married or be dependent on the father. Thus even if the deceased is survived by parents and siblings, the family is taken as consisting of only two members, that is the bachelor and the mother, who is considered as the only dependant, and 50 per cent is treated as the personal and living expenses of the bachelor and 50 per cent as the contribution to the family. However, where family of the bachelor was large and dependent on the income of the deceased, as in a case where he has a widowed mother and large number of younger non-earning sisters or brothers, the contribution to the family will be taken either as two-thirds, or calculated by adopting unit method. ( 13 ) THUS, the following broad criteria can be spelt out, while determining the deduction on account of the personal and living expenses of a bachelor: (a) 50 per cent may be deducted where the claimant is the mother. (b) Where the claimants are parents and siblings, but the evidence shows that father/siblings are not dependent on the deceased, then, again, deduction will be 50 per cent. (c) Where the family of deceased consisted of dependent parents/siblings, depending on the number and position of the family, deduction can be one- third or by adopting unit method, whichever is appropriate. If the brothers/ sisters are on the threshold of reaching adulthood, their dependency will be only for a few years. Therefore, deduction of one-third would be appropriate. But, where brothers/sisters are very young and the parent/s are not earning, then the unit method may be applied. (d) Where the claimants are the father, brothers or sisters who are not economically dependent on the deceased, the question of awarding any amount under the head of loss of dependency will not arise. However, in such a case award under the head of 'loss to estate' will not be conventional nominal amount, but a larger amount. These are only broad indicative guidelines. However, in such a case award under the head of 'loss to estate' will not be conventional nominal amount, but a larger amount. These are only broad indicative guidelines. A Tribunal or court will have to ultimately decide the matter with reference to the evidence. Paradoxically, even where the general rule is that there should be no general rules, still there is a tendency to evolve general rules, where there are no general rules. We have done so. Be that as it may. ( 14 ) IN this case, the claimants are the parents. The father is a businessman and an income-tax assessee. There is no pleading or specific evidence about the extent of contribution by the deceased to the family. On the other hand, the father has stated that the son was assisting him in his business. The father has not stated in his evidence that he or his wife (mother of the deceased) were dependent on the deceased. The Chartered Accountant, PW 3, of the father of the deceased has stated that after the death of Mohammed Haneef, the business of the deceased was given to his brother and the brother started carrying on the said business. In the absence of any evidence that the father or brothers were dependants and in view of the specific evidence that the father is a merchant and an income-tax assessee having independent income, at best, only the mother could be taken as dependant. Therefore, there is no error in the Tribunal adopting the normal practice of deducting 50 per cent of the income of the deceased bachelor towards his personal and living expenses. Re: Point No. (ii): ( 15 ) THE next question that arises for consideration is whether the multiplier applied by the Tribunal is correct or requires to be changed. ( 16 ) IN H. T. Bhandarv v. Muniyamma, ilr 1985 Kar 2337, a Division Bench of this court considered the matter exhaustively. It held:"then there is the estimate of, and deduction for, the personal and living expenses of the deceased. The balance so arrived at is the datum figure. This is called the multiplicand. This is turned into a lump sum on a certain number of years' purchase and represents the amount of pecuniary advantage which it is reasonably probable that the depend- ants would have received if the deceased had remained alive. The balance so arrived at is the datum figure. This is called the multiplicand. This is turned into a lump sum on a certain number of years' purchase and represents the amount of pecuniary advantage which it is reasonably probable that the depend- ants would have received if the deceased had remained alive. There are a number of imponderables, of varying degrees, in this exercise. The assessment of damages has, it is true, become an artificial and conjectural exercise. But, that is inevitable in the very nature of the task. . . This takes us to the more important question as to the real purposes that the right choice of the multiplier is expected to serve in this exercise of arriving at a 'just' compensation. As we have pointed out earlier, unlike the compensation in the land acquisition cases, the capitalisation is not in perpetuity, though, however, the purpose of a multiplier is essentially to arrive at as to what amount, with a prudent investment policy, would produce the value of the annual dependency for the future period over which the dependency was expected to last. . . . However, it appears to us that all these factors should, cumulatively, be reckoned and suitable reduction of the basic multiplier from 20' is to be made. The multiplier so reduced is the operative multiplier. If such a 'multiplier' is employed, then there would be no need to further scale down the amount of compensation so arrived, as, indeed, all the relevant factors would have been put into the scales in the process of the choice of this operative multiplier itself. All these factors, cumulatively, may be taken to bring down the multiplier by 20 per cent which would perhaps be a just measure of deduction for all the contingencies and considerations relevant to the matter in an average case. This brings down the basic multiplier to the operative multiplier of 16. This multiplier of 16 would be the highest applicable. If the deceased person was, say between 18 and 22 years this multiplier 16 would be appropriate. It will naturally come down accordingly as the age of the deceased at the time of death increases. As a rough and ready estimate it may broadly be estimated that the multiplier goes down by one count for the increase of the age of the deceased by every five years. It will naturally come down accordingly as the age of the deceased at the time of death increases. As a rough and ready estimate it may broadly be estimated that the multiplier goes down by one count for the increase of the age of the deceased by every five years. The generalisations are merely broad guidelines and are abstractions from generality of cases. " ( 17 ) IN General Manager, Kerala State road Trans. Corpn. v. Susamma Thomas, 1994 ACJ 1 (SC), the Supreme Court reiterated the said principles thus: "the multiplier represents the number of years' purchase on which the loss of dependency is capitalised. Take, for instance, a case where annual loss of dependency is Rs. 10,000. If a sum of rs. 1,00,000 is invested at 10 per cent annual interest, the interest will take care of the dependency perpetually. The multiplier in this case works out to 10. If the rate of interest is 5 per cent per annum and not 10 per cent, then the multiplier needed to capitalise the loss of the annual dependency at Rs. 10,000 would be 20. Then the multiplier, i. e. , the number of years' purchase of 20 will yield the annual dependency perpetually. Then allowance to scale down the multiplier would have to be made taking into account the uncertainties of the future, the allowances for immediate lump sum payment, the period over which the dependency is to last being shorter and the capital feed also to be spent away over the period of dependency is to last, etc. Usually in English courts the operative multiplier rarely exceeds 16 as maximum. This will come down accordingly as the age of the de- ceased person (or that of the dependants, whichever is higher) goes up. " thus, the operative multiplier that was being applied was 16. ( 18 ) THE Motor Vehicles Act, 1988 was amended by Act 54 of 1994, inter alia, inserting section 163-A and Second Schedule. The amendment came into effect on 14. 11. 1994. The Second Schedule contemplated the use of an operative multiplier of 18 instead of 16. ( 19 ) THE question of multiplier to be applied, again came up for consideration of the Supreme Court in U. P. State Road trans. Corpn. v. Trilok Chandra, 1996 acj 831 (SC ). The amendment came into effect on 14. 11. 1994. The Second Schedule contemplated the use of an operative multiplier of 18 instead of 16. ( 19 ) THE question of multiplier to be applied, again came up for consideration of the Supreme Court in U. P. State Road trans. Corpn. v. Trilok Chandra, 1996 acj 831 (SC ). The Supreme Court referred and reiterated the principles stated in susamma Thomas' case, 1994 ACJ 1 (SC), and proceeded to observe thus:"we thought it necessary to reiterate the method of working out 'just' compensation because, of late, we have noticed from the awards made by Tribunals and courts that the principle on which the multiplier method was developed has been lost sight of and once again a hybrid method based on the subjectivity of the Tribunal/court has surfaced, introducing uncertainty and lack of reasonable uniformity in the matter of determination of compensation. It must be realised that the Tribunal/court has to determine a fair amount of compensation awardable to the victim of an accident which must be proportionate to the injury caused. The two English decisions to which we have referred earlier provide the guidelines for assessing the loss occasioned to the victims. Under the formula advocated by Lord Wright in Davies, (1942) AC 601, the loss has to be ascertained by first determining the monthly income of the deceased, then deducting therefrom the amount spent on the deceased, and thus assessing the loss to the dependants of the deceased. The annual dependency assessed in this manner is then to be multiplied by the use of an appropriate multiplier. " the Supreme Court then referred to the change brought in by Amendment Act 54 of 1994 and noted that under Second schedule, the maximum multiplier can be up to 18 and not 16 as was held in Susamma thomas' case (supra ). It also pointed out certain defects in the Second Schedule and held that courts cannot go by the said table contained in Second Schedule and it may only be used as a guide. The Apex court further held: ". . . Besides, the selection of multiplier cannot in all cases be solely dependent on the age of the deceased. It also pointed out certain defects in the Second Schedule and held that courts cannot go by the said table contained in Second Schedule and it may only be used as a guide. The Apex court further held: ". . . Besides, the selection of multiplier cannot in all cases be solely dependent on the age of the deceased. For example, if the deceased, a bachelor, dies at the age of 45 and his dependants are his parents, age of the parents would also be relevant in the choice of the multiplier. But these mistakes are limited to actual calculations only and not in respect of other items. What we propose to emphasise is that the multiplier cannot exceed 18 years' purchase factor. This is the improvement over the earlier position that ordinarily it should not exceed 16. . . " ( 20 ) THE position, therefore, is that in regard to the accidents which took place before 14. 11. 1994 (introduction of Second schedule by amendment to Motor Vehicles act), the operative multiplier will be 16 and in regard to accidents which occurred after 14. 11. 1994, the operative multiplier will be 18. This court in several decisions has stated and reiterated that selection of multiplier in the cases of accidents prior to 14. 11. 1994 will have to be determined with reference to the principles laid down by this court in H. T. Bhandary v. Muniyamma, ilr 1985 Kar 2337 and the decision of the Supreme Court in General Manager, Kerala State Road Trans. Corpn. v. Susamma Thomas, 1994 ACJ 1 (SC); and in cases of accidents on and after 14. 11. 94, the selection of multiplier will be governed by the enhanced operative multiplier as per the decision in Trilok Chandra's case, 1996 ACJ 831 (SC ). ( 21 ) FOR convenience the multipliers to be applied, are given below: ( 22 ) IN this case the claimants are parents. The age of the younger of the two parents will have to be taken into account for determining the multiplier. The accident occurred prior to 14. 11. 1994. As the mother was aged 42 years, applicable multiplier would be 12 to the said decision. The age of the younger of the two parents will have to be taken into account for determining the multiplier. The accident occurred prior to 14. 11. 1994. As the mother was aged 42 years, applicable multiplier would be 12 to the said decision. Conclusion: ( 23 ) THE last question that arises for consideration is whether the total amount awarded requires interference having regard to the fact that the correct multiplier is 12 (and not 11 applied by the Tribunal ). The deceased was aged 19 years and was a student of B. Com. It is evident that the business under the name and style of U. S. Traders from which he was getting an income of Rs. 30,000 was not obviously managed by him but managed by someone else for him, i. e. , either the father or the brother or a paid employee. PW 3 who is the auditor for the family has stated that after the death of the deceased, his brother is carrying on the business of H. S. Traders, as proprietor. They would indicate that neither 'earning' of the deceased, nor the 'contribution' is lost to the family. The learned counsel for respondents submitted that on the facts the Tribunal ought not to have determined the income of the deceased as Rs. 30,000, but taken the conventional notional figure of Rs. 15,000 per annum as the income. However, it is not necessary to examine this aspect in greater detail as this is claimants' appeal. Suffice it to say that the compensation awarded is more than just and adequate and we find no reason to increase the loss of dependency that has been determined as rs. 1,65,000. ( 24 ) THE award at Rs. 10,000 under the head of 'loss of expectation of life and funeral expenses' is not open to question as normally Rs. 5,000 is awarded towards loss to the estate and Rs. 3,000 to Rs. 5,000 towards funeral expenses. ( 25 ) AS we do not find any inadequacy in the compensation awarded, no ground is made out to interfere with the award of the Tribunal. The appeal is therefore rejected. Parties to bear their respective costs. Appeal dismissed. --- *** --- .