SC Reiterates Principles For Grant Of Compensation In Motor Accident Cases [Read Judgment]

The Supreme Court, while enhancing compensation awarded to a young girl who became 100% disabled due to an accident, reiterated some principles for grant of compensation in motor accident claim cases.

The bench comprising Justices L. Nageswara Rao and Deepak Gupta observed that Motor Vehicles Act, 1988 requires determination of payment of just compensation and it is the duty of the court to ensure that she is paid compensation which is just. Referring to various judgments, the court said:

"It is impossible to equate human suffering and personal deprivation with money. However, this is what the Act enjoins upon the courts to do. The court has to make a judicious attempt to award damages, so as to compensate the claimant for the loss suffered by the victim. On the one hand, the compensation should not be assessed very conservatively, but on the other hand, 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. Such compensation is what is termed as just compensation. 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. They should not be just token damages. "

In this case, the court noted that some of the medical bills have been excluded by the courts below only on the ground that the name of the patient is not written on the bill. Limiting the amount only to the bills which have been paid in the name of the claimant only, would not be reasonable, the bench said.

Multiplier Method For Determining Attendant Charges 

While awarding attendant charges, the bench observed that 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. It said:

"The multiplier system factors in the inflation rate, the rate of interest payable on the lump sum award, the longevity of the claimant, and also other issues such as the uncertainties of life. Out of all the various alternative methods, the multiplier method has been recognised as the most realistic and reasonable method. It ensures better justice between the parties and thus results in award of 'just compensation' within the meaning of the Act."

Liberal View While Assessing Compensation In Case Of 100% Disability

The courts or the tribunals, the bench said, while 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. It added:

One factor which must be kept in mind 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 the 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. While awarding this amount we are not only taking the physical disability but also the mental disability and various other factors. This child will remain bed­ridden for life. Her mental age will be that of a nine month old child. Effectively, while her body grows, she will remain a small baby. We are dealing with a girl who will physically become a woman but will mentally remain a 9 month old child. This girl will miss out playing with her friends. She cannot communicate; she cannot enjoy the pleasures of life; she cannot even be amused by watching cartoons or films; she will miss out the fun of childhood, the excitement of youth; the pleasures of a marital life; she cannot 17 have children who she can love let alone grandchildren. She will have no pleasure. Her's is a vegetable existence.

Guidelines To Ensure Victims Money Is Not Frittered Away

In this case, the High Court while enhancing the amount of compensation had directed that the enhanced amount be paid to the appellant within 45 days. The Court said that the following guidelines issued in General Manager, Kerala State Road Transport Corporation, Trivandrum v. Susamma Thomas 1994 SCC (2) 176 should be followed by all the tribunals and High Courts to ensure that the money of the victims is not frittered away

• The Claims Tribunal should, in the case of minors, invariably order the amount of compensation awarded to the minor be invested in long term fixed deposits at least till the date of the minor attaining majority. The expenses incurred by the guardian or next friend may, however, be allowed to be withdrawn;
• In the case of illiterate claimants also the Claims Tribunal should follow the procedure set out in (i) above, but if lump sum payment is required for effecting purchases of any movable or immovable property such as, agricultural implements, rickshaw, etc., to earn a living, the Tribunal may consider such a request after making sure that the amount is actually spent for the purpose and the demand is not a ruse to withdraw money;
• In the case of semi­literate persons the Tribunal should ordinarily resort to the procedure set out at (i) above unless it is satisfied, for reasons to be stated in writing, that the whole or part of the amount is required for expanding and existing business or for purchasing some property as mentioned in (ii) above for earning his livelihood, in which case the Tribunal will ensure that the amount is invested for the purpose for which it is demanded and paid;
• In the case of literate persons also the Tribunal may resort to the procedure indicated in (i) above, subject to the relaxation set out in (ii) and (iii) above, if having regard to the age, fiscal background and strata of society to which the claimant belongs and such other considerations, the Tribunal in the larger interest of the claimant and with a view to ensuring the safety of the compensation awarded to him thinks it necessary to do order;
• In the case of widows the Claims Tribunal should invariably follow the procedure set out in (i) above;
• In personal injury cases if further treatment is necessary the Claims Tribunal on being satisfied about the same, which shall be recorded in writing, permit withdrawal of such amount as is necessary for incurring the expenses for such treatment;
• In all cases in which investment in long term fixed deposits is made it should be on condition that the Bank will not permit any loan or advance on the fixed deposit and interest on the amount invested is paid monthly directly to the claimant or his guardian, as the case may be;
• In all cases Tribunal should grant to the claimants liberty to apply for withdrawal in case of an emergency. To meet with such a contingency, if the amount awarded is substantial, the Claims Tribunal may invest it in more than one Fixed Deposit so that if need be one such F.D.R. can be liquidated…."

Normally interest should be granted from the date of filing of the petition

On awarding interest, the bench said:

"Normally interest should be granted from the date of filing of the petition and if in appeal enhancement is made the interest should again be from the date of filing of the petition. It is only if the appeal is filed after an inordinate delay by the claimants, or the decision of the case has been delayed on account of negligence of the claimant, in such exceptional cases the interest may be awarded from a later date. However, while doing so, the tribunals/High Courts must give reasons why interest is not being paid from the date of filing of the petition"

In this case, the bench awarded a compensation of Rs.62,27,000. 

Case name: KAJAL vs. JAGDISH CHAND   
Case no.: CIVIL APPEAL NO. 735 OF 2020
Coram: Justices L. Nageswara Rao and Deepak Gupta

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