Right from the time when Motor Vehicles Act, 1988 ("Act") was enacted, the Motor Accident Claims Tribunal (MACT) have been struggling to adopt a rather standardised method of calculating compensation which is both just and fair. Over the years Hon'ble Supreme Court has made various attempts to draw a yard stick for calculating the compensation, latest in the line being 5 Judges Bench decision of NationalInsurance Corporation Vs. Pranay Sethi, (2017) 16 SCC 680.
This decision had put to rest dispute with regard to grant of future prospects and gave a standardised formula calculating compensation. The Hon'ble Court further reiterated and reaffirmed, the principle of multipliers provided for in the decision of Sarla Verma v. DTC, (2009) 6 SCC 121. Even with regard to deductions to be made, the court adopted the view taken in Sarla Verma. In order to standardised the compensation and reduce litigation further, the Hon'ble Apex Court directed grant of Rs. 15,000/- each towards Loss of Estate and Funeral Expenses. No quarrel can be raised with regard to the aforesaid and this decision has brought clarity with regard to manner of computation of compensation under various heads.
However, with regard to grant of compensation under conventional head of 'Loss of Consortium', the decision of Pranay Sethi has created confusion and has completely upset settled position of law. It won't be long before Apex Court as well as High Courts are again flooded with appeals challenging compensation granted under the head of loss of consortium.
Pranay Sethi in its Para 49 relied on Clause 3(ii) of Schedule-II of the Act, as it stood then, which provided for 'Loss of Consortium', if beneficiary is the spouse. Thereafter, the Apex Court in Para 52 held that "The head relating to loss of care and minor children does not exist." and therefore confined compensation of Rs. 40,000/- under the head of 'Loss of Consortium' only to the Wife. Para 52 of the decision reads as under:
"52. As far as the conventional heads are concerned, we find it difficult to agree with the view expressed in Rajesh. It has granted Rs 25,000 towards funeral expenses, Rs 1,00,000 towards loss of consortium and Rs 1,00,000 towards loss of care and guidance for minor children. The head relating to loss of care and minor children does not exist."
In para 58, Hon'ble Court goes on to hold as under:
59.8. Reasonable figures on conventional heads, namely, loss of estate, loss of consortium and funeral expenses should be Rs 15,000, Rs 40,000 and Rs 15,000 respectively. The aforesaid amounts should be enhanced at the rate of 10% in every three years.
It is therefore clear that Hon'ble Court had expressly confined grant of compensation towards 'Loss of Consortium' only to wife. It appears that only reason supplied by the Hon'ble Court, was that Schedule II of the Act confines the conventional head of 'Loss of Consortium' only to wife. It is submitted that the said reasoning does not hold good on the following counts:-
Schedule II of the Act is application only for Claims under Section 163A (No Fault Basis) and not under Section 166
Schedule II of the Act comes into play only when a claim is filed under Section 163A of the Act which provides for grant of compensation on No Fault Basis. Under Section 163 A, the Claimant is not required to prove or plead that the death or permanent disability has occurred due to wrongful Act or negligence of the owner of the vehicle. In such circumstances irrespective of the negligence or fault compensation is given under Schedule II. It goes without saying that compensation under Section 163 A is of a 'nominal' nature and not based on the principle of restitution.
It is submitted that nearly all claims are filed under Section 166, which provides for grant of just and fair compensation, and not under Section 163A. It is to be noted that Schedule II of the Act has no role to play for grant of compensation under Section 166. In such a scenario Hon'ble Court erred in placing reliance on Schedule II for confining compensation under Section 166.
The intent of the legislature behind Section 163A was to provide some relief to the Claimants even in case where there was no liability or negligence of the Respondent side. It goes without saying that quantum of compensation in such cases was deliberately kept at bare minimum which is clear from Schedule II itself. The Section 163A is not based on principle of restitution unlike Section 166. Rather, there is a fundamental difference between section 163A and Section 166.
In the matter of Oriental Insurance Co. Ltd. v. Meena Variyal, (2007) 5 SCC 428 this stark contrast between Section 163A and Section 166 was discussed in detail holding that:
27. We think that the law laid down in Minu B. Mehta v. Balkrishna Ramchandra Nayan was accepted by the legislature while enacting the Motor Vehicles Act, 1988 by introducing Section 163-A of the Act providing for payment of compensation notwithstanding anything contained in the Act or in any other law for the time being in force that the owner of a motor vehicle or the authorised insurer shall be liable to pay in the case of death or permanent disablement due to accident arising out of the use of the motor vehicle, compensation, as indicated in the Second Schedule, to the legal heirs or the victim, as the case may be, and in a claim made under sub-section (1) of Section 163-A of the Act, the claimant shall not be required to plead or establish that the death or permanent disablement in respect of which the claim has been made was due to any wrongful act or neglect or default of the owner of the vehicle concerned. Therefore, the victim of an accident or his dependants have an option either to proceed under Section 166 of the Act or under Section 163-A of the Act. Once they approach the Tribunal under Section 166 of the Act, they have necessarily to take upon themselves the burden of establishing the negligence of the driver or owner of the vehicle concerned. But if they proceed under Section 163-A of the Act, the compensation will be awarded in terms of the Schedule without calling upon the victim or his dependants to establish any negligence or default on the part of the owner of the vehicle or the driver of the vehicle.
Hon'ble Supreme Court further in decision of UPSRTC v. Trilok Chandra, (1996) 4 SCC 362 reiterated the position that for the purposes of calculating just and fair compensation under Section 166, proper course would be to adopt multiplier method. However, manner in which multiplier is to be calculated still suffered from inconsistencies. In Sarla Verma v. DTC, (2009) 6 SCC 121 Hon'ble Court held that only for the purposes of calculating multiplier for Section 166, limited assistance is being taken from Schedule II with required modifications by borrowing principles of multiplier, even though Schedule II has no application for computation under Section 166. Relevant excerpts of Sarla Verma's decision are as under:
34… Therefore, where the application is under Section 163-A of the Act, it is possible to calculate the compensation on the structured formula basis, even where the compensation is not specified with reference to the annual income of the deceased, or is more than Rs 40,000, by applying the formula: (2/3 × AI × M), that is two-thirds of the annual income multiplied by the multiplier applicable to the age of the deceased would be the compensation. Several principles of tortious liability are excluded when the claim is under Section 163-A of the MV Act.
37. The principles relating to determination of liability and quantum of compensation are different for claims made under Section 163-A of the MV Act and claims under Section 166 of the MV Act. (See Oriental Insurance Co. Ltd. v. Meena Variyal.) Section 163-A and the Second Schedule in terms do not apply to determination of compensation in applications under Section 166. In Trilok Chandra this Court, after reiterating the principles stated in Susamma Thomas, however, held that the operative (maximum) multiplier, should be increased as 18 (instead of 16 indicated in Susamma Thomas), even in cases under Section 166 of the MV Act, by borrowing the principle underlying Section 163-A and the Second Schedule.
40. The multipliers indicated in Susamma Thomas, Trilok Chandra and Charlie (for claims under Section 166 of the MV Act) is given below in juxtaposition with the multiplier mentioned in the Second Schedule for claims under Section 163-A of the MV Act (with appropriate deceleration after 50 years)
41.. We are concerned with cases falling under Section 166 and not under Section 163-A of the MV Act. In cases falling under Section 166 of the MV Act, Davies method is applicable."
It is therefore, clear that Schedule II which is confined to Section 163A cannot be used as aid or yardstick for determining just and fair compensation under Section 166 as the two Sections are based on entirely different concepts of jurisprudence. Pranay Sethi therefore, erred in secluding all the other Claimants accept wife for grant of damages under conventional heads on the basis of Schedule II for claims under Section 166. Therefore, on the face of it reasoning given in Pranay Sethi requires are revisit.
Settled position of law that Schedule II is erroneous and cannot be relied upon
Hon'ble Supreme Court has been consistent in holding that Schedule II of the Act is erroneous, illogical and cannot be relied upon. This makes, Pranay Sethi's decision self contradictory as on one hand Pranay Sethi itself provides for grant of future prospects, a concept to alien and contrary to Schedule II and on other hand relies on Schedule II to debar all other claimants accept wife for grant of 'Loss of Consortium'. Rather, entire premise on which Pranay Sethi's decision is based is that the Schedule II cannot and should not be followed.
Parnay Sethi itself notes that Schedule II is defective and cannot be relied upon. Relevant excerpts of Pranay Sethi's decision are as under:
"48. This aspect needs to be clarified and appositely stated. The conventional sum has been provided in the Second Schedule to the Act. The said Schedule has been found to be defective as stated by the Court in Trilok Chandra. Recently, in Puttamma v. K.L. Narayana Reddy it has been reiterated by stating: (SCC p. 80, para 54)
"54. … we hold that the Second Schedule as was enacted in 1994 has now become redundant, irrational and unworkable due to changed scenario including the present cost of living and current rate of inflation and increased life expectancy."
50. On a perusal of various decisions of this Court, it is manifest that the Second Schedule has not been followed starting from the decision in Trilok Chandra and there has been no amendment to the same."
The isolated reliance of Pranay Sethi on Schedule II for the sole purposes of restricting grant of compensation under conventional head to wife, therefore is self-contradictory.
Act has been amended twice and Schedule II does not exist now
Interestingly, the basis of reasoning in Pranay Sethi does not exists anymore as vide notification dated 22.5.2018 the Central Government amended Schedule II of the Act and confined the same to specific quantum of compensation deleting all conventional heads. Consequently, even if reasoning given by Pranay Sethi is accepted, the impediment in granting compensation to each of the Claimants has now been lifted.
Further, under the Motor Vehicles (Amendment) Act, 2019 which has revamped the entire Act, the Schedule II has been deleted in entirety. The Section 164 of the Amended Act which is akin to the erstwhile Section 163A now provides for compensation of Rs. 5,00,000/- in case of death and Rs. 2,50,000/- in case of grievous hurt on No Fault Basis. The entire concept of Schedule II and ingredients thereof have been done away with.
Solely, due to the said amendments, the decision of Pranay Sethi confining grant of compensation for loss of consortium only to wife requires reconsideration.
Even otherwise, differential treatment of wife for grant of compensation for loss of love, affection, care and guidance as compared to children and parents is arbitrary.
Once it is established that Schedule II could not have been relied upon for determining conventional head, the judgment of Pranay Sethi and reasoning provided therein has to stand on its own footing without the aid of Schedule II.
Age old litmus test to check whether a classification is arbitrary or not has been reiterated in recent decision of Navtej Singh Johar v. Union of India, (2018) 10 SCC 1, at page 209 holding that :
408. A litany of our decisions—to refer to them individually would be a parade of the familiar—indicates that to be a reasonable classification under Article 14 of the Constitution, two criteria must be met: (i) the classification must be founded on an intelligible differentia; and (ii) the differentia must have a rational nexus to the objective sought to be achieved by the legislation. There must, in other words, be a causal connection between the basis of classification and the object of the statute. If the object of the classification is illogical, unfair and unjust, the classification will be unreasonable.
Additionally, the said decision also noted other grounds for holding any classification to be bad in law, namely manifest arbitrariness, when the provision is capricious, irrational and/or without adequate determining principle, as also if it is excessive or disproportionate. The Court held as under:
"353. Insofar as Article 14 is concerned, this Court in Shayara Bano v. Union of India, has stated, in para 101, that a statutory provision can be struck down on the ground of manifest arbitrariness, when the provision is capricious, irrational and/or without adequate determining principle, as also if it is excessive or disproportionate."
In present situation, classification of wife as a distinct category from that of children or parents cannot be considered as an intelligible differentia as it cannot be said that only the wife has suffered loss of love, affection, care, guidance etc. It view has further created an anomaly that wife would get compensation for loss of consortium in case of death of husband, however, husband won't get the same in case of death of wife. The same seems to be irrational and illogical.
Further, the object of the Act is to be provide just, fair and adequate compensation to all the Claimants. It therefore, cannot be said that the classification is in furtherance of object of classification. Rather, any such classification would be contrary to the object of the Act. It is therefore, clear that putting wife as a different category would clearly be an unreasonable classification and hence arbitrary and therefore, liable to be set aside. Rather erstwhile Schedule II itself was liable to be set-aside as unconstitutional and violative of Article 14, rather than the same being followed selectively by the Apex Court.
Subsequent decisions taking view contrary of Pranay Sethi
It is clear that reason given in Pranay Sethi was misplaced and even otherwise the outcome is difficult to be accepted as a binding judicial precedent which is evident from the fact that this Hon'ble Court itself has started deviating on this aspect of compensation under conventional head from the decision of Pranay Sethi. This is leading to further confusion across the country with regard to grant of compensation under conventional heads.
The most important and categorical departure from Pranay Sethi is the decision in Magma General Insurance Co. Ltd. Vs. Nanu Ram, (2018) 18 SCC 130 whereby it has been held that there are 3 kind of consortium being:
(1) Spousal Consortium given to husband/wife
(2) Parental Consortium granted to children and
(3) Filial Consortium given to parents upon death of child
This Hon'ble Court in the said decision held that each of the Claimant therefore, is entitled to a separate compensation under conventional head of Loss of Consortium. On one hand the Division Bench held that the "The amount of compensation to be awarded as consortium will be governed by the principles of awarding compensation under loss of consortium as laid down in Pranay Sethi" and therefore, relied on decision of Pranay Sethi. On the other hand it failed to appreciate that Pranay Sethi had expressly confined grant of consortium only to Wife. The Division Bench therefore, took a view directly in conflict with that of Larger Bench. Through the correct approach would have been to refer the matter to larger bench, nevertheless, per se view taken in Magma General Insurance Co. Ltd appears to be correct.
The decision of Magma was however, not an isolated case and in last two years of passing of the decision of Pranay Sethi following are the instances where the Division Benches have expressly or impliedly not followed Pranay Sethi with regard to confining loss of consortium to wife:
Joginder Singh and anr. Vs. ICICI Lombard General Insurance Company, Civil Appeal No. 6291 of 2019 decided on 14.08.2019.
National Insurance Company Limited v. Satish Kumar Verma & Ors, (2019) 8 SCC 660
Vimla Devi v. National Insurance Company Ltd, (2019) 2 SCC 186
United India Insurance Company Ltd. Vs. Indiro Devi and other, (2018) 7 SCC 715.
Sureshchandra Bagmal Doshi and another vs. New India Assurance Company Limited and others., (2018) 15 SCC 649.
Bhogireddi Varalakshmi v. Mani Muthupandi, (2018) 11 SCC 73
Kishan Devi v. Oriental Insurance Co. Ltd & Ors, C.A. No. 8262/2018 decided on 14.8.2018
Different Benches are therefore, repeatedly taking a view that each of the Complainants is entitled to receive compensation under loss of consortium which is not only logical but also in line with entire judicial history regarding Motor Accident Claims. Rather, it appears that decision of Pranay Sethi was a departure from the norm.
These divergent views have not only created a massive confusion for the Tribunals but has also generated appeals to the High Courts across the country unnecessarily adding to pendency of litigation which is wholly avoidable if the Hon'ble Supreme Court clarifies the stand.
It therefore appears that decision of Pranay Sethi requires a revisit by the Apex Court to the limited extent of confining loss of consortium only to wife. The benefit of loss of consortium has to be obviously extended to children and parents of the deceased.
Views Are Personal Only.