February 06, 2020

In motor accident cases involving 100% disability, Courts should take a liberal view while awarding compensation: SC

[ by Kavita Krishnan ]


A Supreme Court bench of Justices L Nageswara Rao and Deepak Gupta held that the courts or tribunals assessing the compensation in a case of 100% disability, especially where there is mental disability also, should take a liberal view of the matter when awarding compensation.

In this case, a 12 year old girl who was traveling in a tractor with her parents was hit by a rashly driven truck. The girl suffered serious injuries resulting in 100% disability, severe hysteria and damage to her brain. A disability certificate was issued by Post Graduate Institute of Medical Education and Research, Chandigarh (PGI) stating that her I.Q. is less than 20% of a child of her age and her social age is only of a 9 month old child. In the future, although she would grow upto be an adult with all physical and biological attributes of a woman, her mind will remain of a 9 month old child.

The Motor Accident Claims Tribunal (MACT) awarded Rs.11,08,501/- and held that since there was a violation of the terms of policy the insurance company would pay the amount but would be entitled to recover the same from the owner. The High Court enhanced the award amount to Rs.25,78,501/-.

Aggrieved by the award the claimants approached the Supreme Court.

The Supreme Court held that further the courts have to make a judicious attempt to award damages, so as to compensate the claimant for the loss suffered by the victim. While the compensation should not be assessed very conservatively, it should also be noted that the compensation should also not be assessed in so liberal a fashion so as to make it a bounty to the claimant. The court while assessing the compensation should have regard to the degree of deprivation and the loss caused by such deprivation known as “just compensation”.

The Court observed that the compensation or damages assessed for personal injuries should be substantial to compensate the injured for the deprivation suffered by the injured throughout his/her life and that they should not be just token damages.

Relying on K. Suresh v. New India Assurance Company Ltd. and Ors, the Court cited that “..there cannot be actual compensation for anguish of the heart or for mental tribulations. The quintessentiality lies in the pragmatic computation of the loss sustained which has to be in the realm of realistic approximation. Therefore, Section 168 of the Motor Vehicles Act, 1988 (the Act) stipulates that there should be grant of “just compensation”. Thus, it becomes a challenge for a court of law to determine “just compensation” which is neither a bonanza nor a windfall, and simultaneously, should not be a pittance.”

The Supreme Court applied the multiplier system to determine compensation. According to the Court, out of all the various alternative methods, the multiplier method has been recognized as the most realistic and reasonable method to ascertain “just compensation”.

The Court, considering the nature of her injuries and the fact that the girl requires an attendant virtually 24 hours a day awarded attendant charges for life. The Court observed, “The multiplier system should be followed not only for determining the compensation on account of loss of income but also for determining the attendant charges etc.”

The Court further pointed out that while assessing the compensation in a case like the present one is that the claim can be awarded only once. The claimant cannot come back to court for enhancement of award at a later stage praying that something extra has been spent. Therefore, the courts or tribunals assessing the compensation in a case of 100% disability, especially where there is mental disability also, should take a liberal view of the matter when awarding compensation.

The Court enhanced the compensation payable to the victim to Rs. 62,27,000/- directing the amount to be deposited by the insurance company with the MACT. Further, the Court also directed the MACT to keep the entire amount in a fixed deposit in a nationalized bank, for a period of 5 years, giving highest rate of interest. The interest payable on that amount would be released on a quarterly basis to the father of the child which should be spent for paying the attendants and for the care of the child alone.

The Court summed up stating that, “In special cases, for reasons to be given in writing, the MACT or the trial court may release such amount as is required. We reiterate these guidelines and direct that they should be followed by all the tribunals and High Courts to ensure that the money of the victims is not frittered away.”

View Full Judgement

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