Case BriefsSupreme Court

Supreme Court: In reference relating to the computation of compensation under Sections 163-A and 166 of the Motor Vehicles Act, 1988 (MV Act) and the methodology for computation of future prospects, giving a unanimous decision, the 5-judge bench of Dipak Misra, CJ and Dr. AK Sikri, AM Khanwilkar, Dr. DY Chandrachud and Ashok Bhushan, JJ held that the determination of income while computing compensation has to include future prospects so that the method will come within the ambit and sweep of just compensation as postulated under Section 168 of the Act. The bench said:

“To follow the doctrine of actual income at the time of death and not to add any amount with regard to future prospects to the income for the purpose of determination of multiplicand would be unjust.”

Stating that this concept is to be applied to salaried employees and self-employed persons, both, the Court explained that the purchasing capacity of a salaried person on permanent job when increases because of grant of increments and pay revision or for some other change in service conditions, there is always a competing attitude in the private sector to enhance the salary to get better efficiency from the employees. Similarly, a person who is self-employed is bound to garner his resources and raise his charges/fees so that he can live with same facilities. Regarding self-employed persons it was said:

“To have the perception that he is likely to remain static and his income to remain stagnant is contrary to the fundamental concept of human attitude which always intends to live with dynamism and move and change with the time.”

The Court, hence, laid down the following guidelines for computation of compensation:

  • While determining the income, an addition of 50% of actual salary to the income of the deceased towards future prospects, where the deceased had a permanent job and was below the age of 40 years, should be made. The addition should be 30%, if the age of the deceased was between 40 to 50 years. In case the deceased was between the age of 50 to 60 years, the addition should be 15%. Actual salary should be read as actual salary less tax.
  • In case the deceased was self-employed or on a fixed salary, an addition of 40% of the established income should be the warrant where the deceased was below the age of 40 years. An addition of 25% where the deceased was between the age of 40 to 50 years and 10% where the deceased was between the age of 50 to 60 years should be regarded as the necessary method of computation. The established income means the income minus the tax component.
  • The age of the deceased should be the basis for applying the multiplier.
  • 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.
  • The decision in Sarla Verma v. Delhi Transport Corporation, (2009) 6 SCC 121, is to be relied upon for determination of the multiplicand, the deduction for personal and living expenses, and the selection of multiplier. [National Insurance Company Limited v. Pranay Sethi, 2017 SCC OnLine SC 1270, decided on 31.10.2017]

 

Case BriefsForeign Courts

High Court of Australia: In the instant case, the respondent sustained serious spinal injuries which rendered her paraplegic, when she was thrown from the back seat of a car being driven by the appellant who was drunk at the time of the accident. The issue for determination was whether the respondent was contributorily negligent  for choosing to travel in the car driven by the appellant when she ought to have known that he was intoxicated and, secondly, for failing to engage her seatbelt.

The trial Judge rejected the contention of the respondent that the appellant’s erratic driving had prevented her from fastening her seatbelt and held that failure to wear a seatbelt constitutes contributory negligence under Section 49 of the Civil Liability Act 1936. The Judge further held that the exception in Section 47(2)(b) of the Act applies in the present case as the respondent could not reasonably be expected to have avoided the risk of riding with the appellant in the circumstances. On appeal, a majority of the Full Court of the Supreme Court of South Australia dismissed the appellant’s appeal on the Section 47(2)(b) issue, and allowed the respondent’s cross-appeal on the issue of Section 49 and held that her failure to fasten her seatbelt was a result of her direct and natural response to the appellant’s erratic driving.

The appellant appealed to the High Court on both issues. A bench of French CJ, Kiefel, Bell, Keane And Gordon JJ unanimously dismissed the appeal on the Section 47(2)(b) issue and held that the respondent, who suffered major injuries as a result of a motor vehicle accident, was not contributorily negligent under Section 47 of the Civil Liability Act 1936 for travelling in a car driven by an intoxicated driver, as according to the facts of the case, she could not reasonably be expected to have avoided the risk of travelling with the appellant. However, the Court allowed the appeal and affirmed the trial judge’s finding that the appellant’s driving did not prevent the respondent from fastening her seatbelt and accordingly held that the respondent was contributorily negligent under Section 49 of the Act for failing to wear the seatbelt. [Alex Allen v. Danielle Louise Chadwick, decided on 9-12-2015]

Supreme Court

Supreme Court:  While dealing with the never ending dissension regarding the compensation to be granted in Motor Vehicle Accident cases, a three Judge Bench comprising of Anil R. Dave, Madan B. Lokur and Kurian Joseph,  JJ., held that the correct multiplier to be used shall be with reference to the age of the deceased and not that of the dependents as there is certainty with regard to the age of the deceased but as far as that of dependants is concerned, there will always be room for dispute as to whether the age of the eldest or youngest or even the average, etc., is to be taken. Also, in case of a self-employed bachelor, 50% deduction shall be made towards personal and living expenses.

The present case evolved from the decision of the Motor Vehicles Claim Tribunal and the subsequent appeal in the High Court regarding the award granted for the loss of dependency wherein the claimants are the parents of the deceased, a self-employed bachelor aged 30 years.

The Court with regards to the deduction towards personal and living expenses, fixed it at 50% in cases of bachelors as they would be expected to spend more on themselves unless there is evidence of the dependents. With regards to the multiplier used, the bench altered it from 13 to 17 as the age of the deceased is to be considered while determining the multiplier and the deceased was between 26 to 30 years.  Munna Lal Jain v. Vipin Kumar Sharma2015 SCC OnLine SC 505, decided on 15.05.2015

 

 

Amendments to existing lawsLegislation UpdatesStatutes/Bills/Ordinances

Motor Vehicle (Amendment) Act, 2015 received the assent of the President on 19-03-2015. The objective of the Act is to further amend the provisions of the Motor Vehicle Act, 1988 and replace the Motor Vehicles (Amendment) Ordinance, 2015. The Act provides for following amendments in the Motor Vehicle Act, 1988:

  • Insertion of a new Section 2A, which brings e-carts and e-rickshaws under the ambit of Motor Vehicle Act, and provides that the provisions of the Act shall apply to e-carts and e-rickshaws as well. The Section further defines “e-cart or e-rickshaw” as ‘a special purpose battery powered vehicle of power not exceeding 4000 watts, having three wheels for carrying goods or passengers, as the case may be, for hire or reward, manufactured, constructed or adapted, equipped and maintained in accordance with such specifications, as may be prescribed in this behalf’.
  • Amendment in Section 7 so as provide that the restrictions on the granting of learner’s licenses for certain vehicle shall not be applicable on e-cart or e-rickshaw.
  • Amendment in Section 9 so as to provide that notwithstanding anything contained in this section for grant of driving licence, the driving licence to drive e-cart or e-rickshaw shall be issued in such manner and subject to such conditions, as may be prescribed in the Act.
  • Amendment in Section 27 in order to empower the Central Government to make rules with respect to specifications relating to e-carts and e-rickshaws, as well as the manner and conditions subject to which the driving licence for e-carts and e-rickshaws may be issued.

-Ministry of Law and Justice.