Case BriefsForeign Courts

Court of Appeal of the Democratic Socialist Republic of Sri Lanka: A Division Bench of Yasantha Kodagoda and Arjuna Obeyesekere, JJ., dismissed an appeal which was filed after being dissatisfied with the decision of the Board.

The Petitioner owned one half of land in extent of 2.25P situated in Mahabuthgamuwa and that he had been carrying on a business of manufacturing rubber bushes, beadings and packing under the name of ‘Sarath Rubber Industries’ at the said premises. The petitioner also stated that proceedings in terms of the Land Acquisition Act to acquire the said land for the purpose of road expansion and development work had commenced in 2012 and that the Minister had made an Order to take over immediate possession of the said land, the petitioner did not have any objection to the said acquisition even though he had to relocate his business premises. The Petitioner had accordingly submitted a claim for compensation. The Petitioner stated that the Acquiring Officer had published his award but failed to take into consideration his loss of earnings from his business and consequently had filed an appeal with the Board of Review which is pending and the instant appeal had been filed in terms of Section 28 as legislature has provided a person dissatisfied with the decision of the Board of Review with a further right of appeal on a question of law. 

The Counsel for the Respondents, Avanti Weerakoon, submitted that the land of the Petitioner with several other lands, was required for the Ambathale Road widening Project, which was funded by the Organisation of Petrol Exporting Countries (OPEC) and further submitted that other lands were acquired and only petitioner’s land remained for the takeover and the project was due to be completed by December end thus it was required urgently.

The Court while dismissing the appeal held that the Respondent was entitled to take possession of the Petitioner’s land; any time after an Order is made in terms of proviso (a) of Section 38 and directed the respondents to compensate the petitioner within a period of eight weeks. [Wanniarachchi Kankanamge Sarath v. Road Development Authority, CA (Writ) Application No: 401 of 2019, decided on 13-01-2020]

Case BriefsTribunals/Commissions/Regulatory Bodies

National Consumer Disputes Redressal Commission (NCDRC): R.K. Agrawal (President) while deciding the present consumer case held that,

“Wherever the Builder commits a particular date or time frame for completion of the construction and offering possession to the Buyer, they must necessarily honour the commitment made by them.”

In the present matter, Consumer Complaints, under Section 21 read with Section 12(1)(a) of the Consumer Protection Act, 1986  have been filed by the Complainants, the Allottees of Residential Flats/Apartments in a Project, namely, “Mahagun Mezzaria” to be developed and constructed by the Opposite Party, seeking possession of their respective booked Flats or refund of the amount paid with interest and compensation for the losses suffered by them on account of Unfair and Restrictive Trade Practices adopted and the deficient services rendered by the Opposite Party in not handing over the possession of the allotted Flats/Apartments within the stipulated time.

Complainant stated that despite paying the entire sale consideration for the booked flat, the possession of the same, which was to be delivered has not materialized till date, penalty promised in the Allotment Letter for the delay in construction has also not been paid, layout plan of the project has been got amended twice making various changes to the Project including addition of commercial shops open to general public raising various concerns including safety and security, that the Complainants have to pay enhanced Samp duty due to delay in handing over of possession and that the OP has levied the maintenance charges that would be enhanced @15% annually.

Analysis & Decision

Counsel for OP’s contention that Complainants are not ‘Consumers’ and have booked the Flat for earning high speculative gains is not supported by any documentary evidence. Court also noted that Complainants are ‘Consumer’ as defined under Section 2(1) (d) of the Consumer Protection Act, 1986.

Tribunal further stated that the only question for consideration in the present case is, as to whether the Complainants are entitled to any compensation for the delay on the part of the OP in offering possession to them and if so, what should be the quantum of compensation that OP needs to pay to them.

With respect to delay in completion of the construction, the tribunal stated that unless prevented by reasons beyond it control, the OP was under a contractual obligation to complete the construction and handover possession of the apartments within 38 months from the date of completion of raft or on or before 31-12-2012.

The reasons for the delay as stated by the Developer amounted to demonetization and implementation of GST, which ultimately resulted to cause delay on account of the shortage of cash for payment to the labour, shortage of labour and material, no documents were placed on record by the OP. Therefore the said contention cannot be accepted.

OP is ready and willing to hand over possession of the allotted flats with compensation to the Complainants, but some Complainants are not interested in the same due to delay of more than 4 years in delivering the possession change in layout plan and there being no committed date in the near future of completion of the Project. Therefore, they have sought a refund of the amount along with interest and compensation.

Tribunal in view of the stated that, Complainants cannot be made to wait indefinitely for the delivery of the possession when they had already paid almost entire consideration. In such circumstances, it is well within the Complainant’s right to seek for refund of the principal amount with interest and compensation.

In the present case, Tribunal in favour of the Complainants also stated that, Complainants cannot be made to wait indefinitely as the possession of the Unit has not been handed over to them so far and the Opposite Party is enjoying the benefits of their hard-earning money deposited with it.

“If the Builder fails to comply with the contractual obligation and at the same time, is unable to show that the delay in completion of the Flat and offering its possession to the Consumer is on account of circumstances beyond his control, this would constitute deficiency on the part of the Builder/Service Provider in rendering services to the Consumer.”

Hence, Complainants cannot be made to wait for such a long period, they are entitled to refund of the deposited amount along with compensation @12%. [Anil Kumar Jain v. Nexgen Infracon (P) Ltd., 2019 SCC OnLine NCDRC 716, decided on 23-12-2019]

Case BriefsHigh Courts

Karnataka High Court: Krishna S. Dixit, J. allowed a writ petition praying for quashing of a circular whereby overtime dues were denied to employees of the respondent.

The petitioner herein was not granted an allowance for the overtime job done by him, and aggrieved thereby he filed the present writ petition under Articles 226 and 227 of the Constitution of India praying to quash the impugned circular.

The respondent resisted the writ petition banking upon the impugned circular.

The Court opined that the impugned circular contained a strange reason for variability for denying the overtime allowance. Thus, it did not have the force of law, nor justification. It was held that a legal claim of an employee cannot be negated by quoting such a circular.

The Court further opined that withholding the amount payable amounted to acquiring property sans compensation, therefore, the same is violative of Article 300-A of the Constitution of India.

Reliance was placed on the case of State of Gujarat v. High Court of Gujarat, (1998) 7 SCC 392, where the right of sentence serving prisoners to wages for the work done in prison was recognized and denial of overtime allowance was held to be an infringement of Article 23 of the Constitution of India.

In view of the above, the writ petition was allowed and the impugned circular was quashed; holding that the amount payable for the overtime is ascertainable and variability spoken of by the circular offends law, reason and logic.

The Court directed the respondent to consider and grant the allowance to the petitioner within a period of eight weeks and held that any delay in payment of the allowance would amount to an additional payment of Rs 20,000 by the respondent to the petitioner.[G.M. Poovaiah v. KSRTC, WP No. 2463 of 2015, decided on 28-11-2019]

Case BriefsHigh Courts

Allahabad High Court: A Division Bench of Pradeep Singh Baghel and Piyush Agarwal, JJ. was hearing a PIL inviting the attention of the court to the casual approach of State functionaries with the menace of dengue fever.

The petitioner, who was also the counsel, in this case, wrote a letter and requested the court to be treated as Public Interest Litigation. Petitioner’s son was bought to Swaroop Rani (S.R.N) Medical College, Allahabad where he was diagnosed with viral fever. The diagnosis was made after doing a medical test which clearly showed the symptoms of dengue fever. Without studying the medical report treatment of patient began. This clearly showed the gross medical negligence from the side of doctors. When the condition of patient became critical he was shifted to S.G.P.G.I Lucknow where unfortunately the patient died and the cause of death was dengue.

In enquiry report, it was mentioned that the patient was hemodynamically unstable but from the medical report, it was shown that the wrong diagnosis was made on the part of local doctor and from S.R.N Medical College. 

The Court, in this case, considered medical negligence was on part of doctor of S.R.N Medical College and the circumstances in which the petitioner lost his young son. Petitioner was compensated with 25 lakhs from District Magistrate. In the same manner, the Court also ordered the State Government to release sufficient funds for Government Hospitals to provide sufficient dialysis units. Apart from this court ordered strict implementation of the Uttar Pradesh Preventive and Control of Malaria, Dengue, Kala-azar and Vector Borne Disease Regulations, 2016 and also separate blood units to be set for dengue patients. The Chief Medical Officer was directed to ensure the implementation of directions issued by court.

With this direction, public interest litigation is disposed of. [B.P Mishra v. State of U.P, PIL No 53904 of 2016, decided on 14-11-2019]

Case BriefsForeign Courts

Supreme Court of United Kingdom: Full Bench of Lady Hale (President), Lord Reed (Deputy President), Lord Hodge, Lady Black and Lord Kitchin, JJ., examined the considerations to be taken into account when deciding whether it is appropriate to award compensation to an employee for an invention made during employment. The instant appeal was filed by Professor Ian Shank (appellant) for compensation under Section 40 of Patents Act, 1977 for an invention made by him in 1982 that was granted patent and which provided benefit to his employer Unilever UK Central Resource Ltd. (3rd respondent/ CRL).

Appellant was the inventor of technology used in glucose testing for diabetics while he was employed at CRL, a wholly-owned subsidiary of Unilever Plc. In October 1982, Shank built the first prototype and was known as ECFD. Appellant accepted that right of his invention belonged to CRL from Section 39(1) of Patents Act, 1977 later these rights were given to Universal Plc. Universal Plc filed for the patents application for both ECFD and FCFD technologies. Since Universal was not interested in developing business so they did little to develop ECFD. Appellant left Unilever in October 1986.

The appellant represented by Patrick Green submitted that court didn’t consider that CRL was appellant employer and the entire Unilever Group can’t be considered as CRL undertaking. The argument was made it is impossible for an employee to establish benefits from the patent of a business and it will also be unjust to employ employee inventors.

The respondent represented by Daniel Alexander submitted that CRL should not be considered as undertaking because it never generated any material revenue and was neither the beneficiary of royalties in question. It was merely a service company for Unilever Group.

The exact amount of the compensation is to be determined in accordance with Section 41 of the Patents Act, which requires that the employee is awarded a “fair share” of the benefit which the employer has derived (or may reasonably be expected to derive) from the invention and/or the patent. To determine what constitutes a “fair share”, Section 41(4) of the Act provides a number of matters that must be taken into account, including the nature of the employee’s duties and remuneration, the effort and skill which the employee has devoted to making the invention, the contribution of other employees (be they joint inventors or not) and the contribution of the employer to the making, developing and working of the invention by the provision of advice, facilities and other assistance, opportunities, and managerial and commercial skill.

The Court analysed overall profit and turnover of Unilever Group and found there was an extreme disparity in numerical terms between the amount that Unilever received and the salary that the appellant was paid. It opined that the correct approach is to determine the part played by the size and success of the employer’s business as a whole in securing the benefit from the invention. Shank patent had produced a very high rate of return and Unilever made a small effort to commercialise it. Unilever had generated benefits from Shank’s patent.

The appeal of Professor Shank was allowed and it was held that Universal and CRL had an outstanding benefit from the patents of Shank and fair share was not given to appellant. Professor Shanks was awarded £2m compensation, roughly a 5 per cent share of the £24m benefit derived by Unilever from the invention, uplifted from 1999 at an average inflation rate of 2.8 per cent. [Shanks v. Unilever Plc, [2019] 1 WLR 5997, decided on 23-10-2019]

Case BriefsHigh Courts

Karnataka High Court: The Division Bench of Alok Aradhe and P.G.M. Patil, JJ. while allowing the appeal set aside the award of the Commissioner as he committed an error of law in applying the provisions of the Act, which was already repealed.

In the instant case, the appeal under Section 30 of the Workmen’s Compensation Act, 2009 was filed to assail the validity of the award of the Commissioner for Workmen’s Compensation. The commissioner had allowed the claim in part and awarded compensation to the tune of Rs 8,61,120.

Prashant (deceased) was working as an Assistant Manager in a factory when at on 02.08.2011 he fell inside the water pit and sustained injuries and thereafter died of it in the hospital. The deceased was 26 and was drawing a salary of Rs 41,062 per month.

Counsel for the appellant, Sangram S. Kulkarni submitted that the Commissioner erred in assessing the compensation as per the provisions of Workmen’s Compensation Act, which was already repealed.

The substantial question of law before the Court was that whether Commissioner committed an error of law in deciding the claim of the appellant in view of the fact that the provisions of Employee’s Compensation Act, 1923, came into force with effect from 18.01.2010 and the accident took place on 02.08.2011.

The Court after considering the facts and circumstances of the case observed that provisions of Employees Compensation Act, 1923, came into force with effect from 18.01.2010 and the accident took place on 02.08.2011. Therefore, the computation of compensation has to be made under the Employee’s Compensation Act, 1923 not under Workmen’s Compensation Act, which was already repealed.

Taking half of the net salary payable to the deceased which comes to Rs 16, 463 and after applying the factor of 215.28, the amount of compensation comes to Rs 35,44,154. The enhanced amount shall carry interest at the rate of 12% per annum from the date of death, till its realization. [B. Basappa v. J.S.W. Steel Ltd., 2019 SCC OnLine Kar 2185, decided on 06-11-2019]

Case BriefsHigh Courts

Karnataka High Court: H.T. Narendra Prasad, J. while allowing the appeal in part and condoning the delay ordered that the claimant was not entitled to the interest for the delayed period of 358 days.

This Miscellaneous First Appeal was filed under Section 173(1) of Motor Vehicles Act, 1988 seeking enhancement of compensation as the Motor Accident Claim Tribunal granted the compensation of Rs 80, 340 with interest of 6% interest and fastened liability on the owner of the vehicle.

The claimants were on a two-wheeler motorcycle, in one moment a tempo driven in a rash and negligent manner coming from opposite side dashed against the motorcycle. Due to this, the claimant suffered grievous injuries.

Counsel for the appellant, Harish S. Maigur, referred a case of Rani v. National Insurance Company Limited, (2018) 8 SCC 492 in which was held that the insurance company has to pay award amount to the owner of the vehicle. After then, they can recover the same from the owner. The Counsel submitted in the light of this judgment that the Tribunal did not pay heed to this particular observation of the Supreme Court.

Counsel for Respondent 2-Insurance Company, G.N. Raichur, submitted that the permit of the Respondent 1 was not valid on the date of the accident. Hence, the Tribunal rightly passed the liability on the owner of the vehicle.

The Court agreed with the submissions of the parties but cited the aforesaid Judgment in which it was also held that even though the offending vehicle did not possess a valid permit to operate in the State concerned, the Insurance Company has to satisfy the award first. Thereafter, it can recover the same from the offending vehicle.

In view of the above, the Court modified the judgment and award of the Tribunal and directed the Insurance Company to pay the compensation with interest instead of the owner. Once, that is paid it can recover that amount from the owner of the vehicle. [Manjunath v. Mrityunjaya, 2019 SCC OnLine Kar 2098, decided on 16-10-2019]

Case BriefsHigh Courts

Himachal Pradesh High Court: Sandeep Sharma, J., allowed an appeal which questioned the legality of the Order passed by the Motor Accident Claims Tribunal, H.P. where they dismissed the application of the appellants stating that it was not maintainable as they had failed to demonstrate that the income of the deceased Kishan Singh was not less than the maximum limit of Rs 40,000 per annum.

The issue placed before the Tribunal was, “Whether the petitioners (successors-in-interest of deceased who was employed by the respondent) were entitled to claim compensation in the sum of Rs 15,00,000 along with interest from the respondents jointly and/or severally on account of the death of the deceased in the accident in question as alleged?” The Tribunal held that since the income of the deceased was exceeding the maximum limit of Rs 40,000 per annum which is a maximum limit to maintain a petition under Section 163-A of MV Act, the petition so filed by the petitioners in view of the ration was not maintainable.

The appellants argued that de hors the fact as to whether the income of the deceased is Rs 40,000 or more per annum, once the claim petition has been filed by the claimant, maybe under Section 163-A of the Motor Vehicles Act, the same has to be decided by the Tribunal on merit and the claim petition cannot be thrown out on flimsy grounds of income.

Division Bench of Himachal Pradesh High Court in Oriental Insurance Co. Ltd. v. Sihnu Ram, 2016 SCC OnLine HP 2224 held that once the jurisdiction of the Claims Tribunal has been invoked and during trial evidence has come to the effect that the accident was outcome of rash and negligent act and income of the victim was more than Rs 40,000, the petition under Section 163-A of the Motor Vehicles Act cannot be dismissed. They further held that the mandate of Section 163-A of the Motor Vehicles Act is to provide compensation ‘On Structured formula Basis’ and was not an interim measure. Once it is granted, the victims cannot file a claim petition under Section 166 of the MV Act for grant of enhanced compensation. But, in case the Claims Tribunal comes to the conclusion that the income of the victim is more than Rs 40,000 per annum, it is not supposed to dismiss the claim petition. If the claim petition is dismissed on this ground then the aim, purpose and object of Sections 158(6), 163-A and 166(4) of the Motor Vehicles Act would be defeated.

The High Court concurred with the decision and allowed the appeal of the appellants. They quashed and set aside the award passed by the Motor Accident Claims Tribunal and remanded the matter back to them directing them to decide the claim petition afresh on merit, on the basis of evidence on record, after affording the parties reasonable opportunity(s) to put forth their respective contentions. [Neema v. Sohan Singh, 2019 SCC OnLine HP 1805, decided on 31-10-2019]

Legislation UpdatesNotifications

Guidelines on Compensation of Whole Time Directors/ Chief Executive Officers/ Material Risk Takers and Control Function staff

The compensation practices, especially of large financial institutions, were one of the important factors which contributed to the global financial crisis in 2008. Employees were often rewarded for increasing short-term profit without adequate recognition of the risks and long-term consequences that their activities posed to the organisations. These perverse incentives amplified excessive risk taking that severely threatened the global financial system. The compensation issue has, therefore, been at the centre stage of regulatory reforms.

2. In the wake of financial crisis, in order to address the issues in a coordinated manner across jurisdictions, the Financial Stability Forum (later the Financial Stability Board i.e. FSB) brought out a set of Principles (FSF Principles for Sound Compensation Practices, dated April 02, 2009) and Implementation Standards (FSB Principles for Sound Compensation Practices – Implementation Standards, dated September 25, 2009) on sound compensation practices. The Principles are intended to reduce incentives towards excessive risk taking that may arise from the structure of compensation schemes. The Principles call for effective governance of compensation, alignment of compensation with prudent risk taking, effective supervisory oversight and stakeholder engagement. The Principles have been endorsed by the G-20 countries and the Basel Committee on Banking Supervision (BCBS). The Implementation Standards are specific norms, prioritizing the areas that should be addressed by firms and supervisors to achieve effective global implementation of the Principles.

3. The BCBS published in May 2011 the final report on ‘Range of Methodologies for Risk and Performance Alignment of Remuneration’. The main objectives of the report are (a) to present certain remuneration practices and methodologies that support sound incentives; and (b) the elements influencing the effectiveness of risk alignment that should be considered by banks when developing their methodologies as well as by supervisors, when reviewing and assessing banks’ practices. In July 2011, the BCBS in consultation with the FSB has also published Pillar 3 disclosure requirements for remuneration.

4. Taking into account the stipulations in these documents, Reserve Bank had issued the Guidelines on compensation vide Circular DBOD No.BC.72/29.67.001/2011-12 dated January 13, 2012, applicable to Whole Time Directors / Chief Executive Officers / Risk Takers and Control Function Staff, etc. for implementation by private sector and foreign banks from the financial year 2012-13.

5. These Guidelines have since been reviewed based on experience gained and evolving international best practices. The objective has also been to better align these Guidelines with FSB Principles and Implementation Standards for Sound Compensation Practices and the Supplementary Guidance issued by FSB in March 2018 on the use of compensation tools to address misconduct risk. Consequently, a Discussion Paper on the proposed Guidelines was published on the RBI website and comments were invited from banks and other interested parties by March 31, 2019.

6. The final Guidelines, taking into consideration the responses received, are given in the Annex.

7. These Guidelines will be applicable for pay cycles beginning from/after April 01, 2020. All applications for approval of appointment/re-appointment or approval of remuneration/revision in remuneration of Whole Time Directors (WTDs)/ Chief Executive Officers (CEOs) shall be submitted with full details as prescribed in Appendix 1.

8. Private sector banks, foreign banks operating under the Wholly Owned Subsidiary mode (WOS), and foreign banks operating in India under the branch mode are required to obtain regulatory approval for grant of remuneration (i.e. compensation) to WTDs/ CEOs in terms of Section 35B of the Banking Regulation Act, 1949 (B.R. Act, 1949). The approval process will involve, inter alia, an assessment of whether the bank’s compensation policies and practices are in accordance with the Guidelines set out in the Annex, and the BCBS Methodologies detailed in Appendix 2.

9. In view of above, the instructions issued vide the circular DBOD No.BC.72/29.67.001/2011-12 dated January 13, 2012 stand superseded with effect from April 01, 2020.

Reserve Bank of India

[Press Release dt. 04-11-2019]

Case BriefsHigh Courts

Jharkhand High Court: Deepak Roshan, J., modified the sentence of the trial court to the extent in lieu of compensation which should be paid to the victim-wife.

In the pertinent case, the petitioner moved to this Court against the judgment passed by the Additional Sessions Judge-I, whereby the appeal preferred by the petitioners was dismissed and the judgment of conviction and order of sentence whereby the petitioners were found guilty for offence punishable under Section 498-A of Penal Code, 1860 and they were convicted and sentenced to undergo RI for 18 months and fine of Rs 1000 each has been affirmed.

The counsel for the petitioners, J.P. Pandey, submitted that there are contradictions in prosecution witnesses and the allegations made in the FIR does not corroborate with the evidence of the informant hence, the petitioners deserve to be acquitted. Further, the petitioners have remained in custody for about one month as such some leniency may be granted by this Court.

The Court held that it cannot interfere with the findings of the courts below due to the limited scope of the revisional jurisdiction, therefore, the conviction against the petitioners are confirmed. With respect to the sentence, the Court observed that the incident is of the year 2004 and 15 years have elapsed and the petitioners have suffered the rigors of litigation for the last 15 years and also remained in custody for 36 days. The court was of the view that it may not be proper for this Court to send the accused persons back to prison and found that it is expedient in the interest of justice that the sentence should be modified in lieu of compensation which should be paid to the victim-wife. Hence, the Court modified the impugned order to the extent that the petitioners are sentenced to undergo for the period already undergone subject to the payment of fine of Rs 5000 each failing which they shall serve the rest of the sentence as directed by the trial court. [Santosh Mandal v. State of Jharkhand, 2019 SCC OnLine Jhar 1453, decided on 18-10-2019]

Case BriefsHigh Courts

Punjab and Haryana High Court: Dr Ravi Ranjan, J. allowed the appeal filed by legal heirs of a person who died in a ‘railway untoward accident’, under Section 16 of the Railway Claims Tribunal Act, 1987.

The claimants herein were the sons of the deceased person who died in an accident during his railway journey. The claimants filed a case seeking compensation from the railway authority. However, the case was dismissed by the Railway Claims Tribunal on the ground that the deceased was not a bona fide passenger as no journey ticket was found with the dead body. Also, the train was a reserved one with no general class compartments and the deceased had no reservation. So the accident would not be included under the ‘railway untoward incident’. Aggrieved thereby, this appeal was preferred by the claimants.

The Court relied on Union of India v. Rina Devi, (2019) 3 SCC 572 where it was held that the mere absence of ticket cannot be proof that the deceased was not a passenger. Further, placing reliance on the judgment in Union of India v. Rani Devi, 2016 SCC OnLine Pat 777 the Court held that the fact the claimant was not traveling in the assigned class, does not deprive the claimants of the compensation. It was opined that the fact that the deceased was in the precinct of the railway is presumed proof that he had a valid ticket.

Hence, the appeal was allowed granting just and proper compensation. [Rakesh Kumar v. Union of India, 2019 SCC OnLine P&H 2083, decided on 20-08-2019]

Case BriefsHigh Courts

Allahabad High Court: Rajnish Kumar, J. while allowing the instant appeal ordered for enhanced compensation to the appellant/claimant.

In the instant case, the appellant/claimant filed a claim petition after his son died in a motor accident.

The Motor Accident Claims Tribunal/Additional District Judge allowed the above claim petition and awarded Rs 55,000 as compensation along with interest at the rate of 8% per annum, out of which Rs 27,500 for the appellant/claimant and Rs 27,500 to his wife, i.e., the mother of the deceased.

Aggrieved by the compensation, this instant first appeal was filed.

Counsel for the appellant, M. Saeed submitted that the deceased was young and studied in Class VIII l. He was a bright student. There are six dependants in the family. If he would have been alive, he would have earned a lot and helped the appellant in maintaining all. But, the Tribunal wrongly and illegally assessed the notional income of the deceased as Rs 15,000 which should have been higher in view of Kishan Gopal v. Lala, (2014) 1 SCC 244. He further submitted that the multiplier of 5 should have been applied to the age of the father, instead, it should be applied to the age of the deceased. Lesser amount was awarded towards conventional heads, namely loss of estate, loss of consortium and loss of funeral expenses, which are also liable to be enhanced.

He also relied on the judgment of the Supreme Court i.e., Reshma Kumari v. Madan Mohan, (2013) 9 SCC 65 by which a multiplier of 15 is liable to be applied in the present case.

Counsel for the respondent, R.C. Sharma submitted that the deceased was aged about 14 years, as such, he was minor at the time of death. Therefore, the notional income of Rs 15,000 has rightly been assessed and the multiplier has rightly been applied to the age of the father. Moreover, relied on two cases i.e., Khalil Ahmad v. Jitendra Bhushen Pandey, F.A.F.O. No.377 of 2001 and Om Prakash Verma v. Krishna Goel, F.A.F.O. No.285 of 2009 and submitted that the appellant is entitled only for a fixed compensation of Rs 1,50,000.

After analyzing the facts and submissions of the parties, the Court observed that the notional income of Rs 15,000 was assessed by the Tribunal as no evidence was adduced as to the income of the deceased. The case of Kishan Gopal was not applicable to the facts and circumstances of the present case because in that case the deceased was assisting the appellants in their agricultural occupation. While citing two judgments of the Supreme Court – National Insurance Co. Ltd. v. Pranay Sethi, (2017) 16 SCC 680, in paragraph 59.7 and Royal Sundaram Alliance Insurance Co. Ltd. v. Mandala Yadagiri Goud, (2019) 5 SCC 554, the Court came to a conclusion that the multiplier should be applied on the age of the deceased.

But, observed one factor that in the case of Sarla Verma v. DTC, (2009) 6 SCC 121, the multiplier was provided from the age of 15. The Supreme Court in Reshma Kumar held that in cases where the age of the deceased is up to 15 years, irrespective of Section 166 or Section 163-A under which the claim for compensation has been made, a multiplier of 15 should be followed.

In view of the above, this Court held that a multiplier of 15 should be applied in the present case in place of 5. Furthermore, the court held that the appellants are entitled to Rs 15,000, Rs 40,000 and Rs 15,000 under the conventional heads in view of National Insurance Company in place of Rs 2000 and Rs 3,000. [Gaya Prasad v. K. Trivedi, 2019 SCC OnLine All 3670, decided on 01-10-2019]

Case BriefsHigh Courts

Patna High Court: S. Kumar, J. dismissed the appeal filed by the insurance company on the grounds that the parties were liable severally as well as jointly. Although the company had the right to recover such compensation paid from the other party involved in the accident for which insurance was being claimed.

A miscellaneous appeal was filed under Section 173 of Motor Vehicle Act by the appellant against the Judgment and Award passed by the 1st Additional District Judge-cum-Motor Accident Claim Tribunal, Saran at Chapra in Claim Case No. 22 of 2002, by which the learned Claims Tribunal directed the appellant to pay a sum of Rs 3,50,000 to the claimant with interest @ 6 % per annum from the date of claim case till its realization.

The claimant was the husband of one Parwati Devi who died in a motor accident while travelling on a Commander Jeep which collided with another Commander Jeep on 19-09-2001 at about 10:00 PM The deceased was seriously injured and while she was being taken to hospital she succumbed to the injuries. An FIR was instituted under Sections 279, 338 and 304-A of the Penal Code against the drivers of both the vehicles and after investigation the police found the case to be true against drivers of both vehicles.

The appellant had appeared and had filed their written statement in which they denied the claim of claimants. The tribunal, after having examined the material brought on as evidence, held that the deceased died due to rash and negligent driving by the drivers of both vehicles and there was composite negligence on part of both the drivers. The Tribunal had further held that it was a case of composite negligence and the claimant was entitled to claim the compensation amount from either the owner or the insurer of the vehicle and had directed the appellant who was the insurer, to pay compensation.

High Court did not find any error or infirmity in the order passed by the tribunal and as such present appeal was dismissed as a liability to pay the compensation was joint and as well as several. However, since there was a specific finding of the tribunal that there was composite negligence on part of drivers of both the vehicles as such the appellant was entitled to recover 50% of the compensation amount paid to the claimant from the owner /insurer of the other offending vehicle.

In view of the above noted facts, the instant appeal was dismissed with the directions that the insurance company had to pay the balance claim amount with interest @ 6% from the date of presentation of claim till its realization within one month from the receipt of a copy of order passed by the court with a right of recovery of 50% of the compensation amount so paid from the owner /insurer of the other offending vehicle.[New India Assurance Co. Ltd v. Kanchan Bhagat, 2019 SCC OnLine Pat 1737, decided on 02-09-2019]

Case BriefsHigh Courts

Himachal Pradesh High Court: Tarlok Singh Chauhan, J. partly allowed the appeal of filed by an employer challenging the compensation granted to a deceased employee’s wife under the Employees Compensation Act, 1923 on the ground that before passing a penalty order against the employer, a reasonable opportunity must have been given to him to justify himself.

Appellant herein was the employer of the respondent’s husband (deceased employee) who was employed as a driver by the appellant and died in an accident. Respondent’s wife filed a petition against the appellant seeking payment of compensation along with interest and penalty against the appellant and other respondents towards their joint and severe liability under the Employees Compensation Act, 1923. The appellant in his reply denied the salary as claimed and requested the recovery of the insurance amount. However, the Employee’s Compensation Commissioner-II awarded the respondent with compensation and interest along with a penalty. Aggrieved by this award, the appellant filed the present appeal.

Navlesh Verma learned counsel for the appellant, contended that there was no employer-employee relationship between the appellant and the deceased employee; and secondly that no show-cause notice was issued on the appellant-employer before passing an adverse award against him.

The Court held that the records proved that there was a relationship of employer and employee between the appellant and the deceased.

With respect to the second contention, it was held that as per the judgment in Ved Prakash Garg v. Premi Devi, (1997) 8 SCC 1 penalty under Section 4-A(3)(b) of the Act can only be imposed when the employer is given a prior notice and an opportunity to defend himself against the same which was certainly not given to the appellant herein.

Hence, the court allowed the appeal and set aside the penalty imposed on the appellant. [Amandeep Singh v. Shaheena Parveen, 2019 SCC OnLine HP 1416, decided on 30-08-2019]

Case BriefsHigh Courts

Delhi High Court: Najmi Waziri, J. dismissed an appeal filed by the insurer against the award of compensation made by the Motor Accident Claims Tribunal, and also rejected insurer’s claim to recover the amount so awarded from the owner of the offending vehicle.

The insurer, represented by Hetu Arora Sethi, Advocate impugned the award of compensation on the ground, inter alia, that the deceased (a minor) was not holding a valid driving license at the time of the accident and was liable for contributory negligence.

Perusing the record and noting the arguments on the issue, dealt with by the Tribunal, the High Court observed: “Non-possession of the driving license by itself would not be a reason for not granting the award of compensation, if it is proven that the accident was on account of rash and negligent driving of the offending vehicle.” The High Court was of the opinion that the rashness and negligence of the offending vehicle had been duly established in terms of the facts and reasoning of the impugned order.

Relying on Sudhir Kumar v. Surinder Singh, (2008) 12 SCC 436, the Court reached the conclusion that the rationale of the impugned order could not be faulted because the negligence of the offending vehicle was evidently much larger than that of the deceased motorcyclist. The offending vehicle was imprudently being driven, i.e. in a rash and negligent manner, as stated by the eyewitness — the pillion rider. Accordingly, the argument regarding apportionment of liability too was rejected.

The insurer lastly contended that the right of recovery was not granted to them although the driver was not holding a valid driving license for the insured vehicle which was a goods-carrier/ transport vehicle; the driver possessed a license only for a Light Motor Vehicle and motorcycle. It was noted that this issue has been referred to a 3-Judge Bench by the Supreme Court in Bajaj Allianz General Insurance Co. Ltd. v. Rambha Devi, 2018 SCC OnLine SC 3325. However, the High Court held that till the disposal of the said matter, the issue is governed by Mukund Dewangan v. Oriental Insurance Co. Ltd., (2017) 14 SCC 663, which held that “there is no requirement to obtain separate endorsement to drive transport vehicle, and if a driver is holding license to drive light motor vehicle, he can drive transport vehicle of such class without any endorsement to that effect.”

Resultantly, the appeal was dismissed.[National Insurance Co. Ltd. v. Sushila, 2019 SCC OnLine Del 10045, decided on 21-08-2019]

Case BriefsHigh Courts

Rajasthan High Court: Sandeep Mehta, J. dismissed an appeal from the Insurance company seeking exoneration of a lower court order.

In the present case, two appeals arose challenging the lower court judgment-cum-award. The parties have challenged the amount awarded by the trial court, primarily disputing over the salary amount earned by the deceased driver. Due to contradictions in the statements of the claimants, the insurance company and the employer of the deceased, the trial court had considered the income being Rs 2000 per month and accordingly had calculated the compensation amount under Section 163A of the Motor Vehicles Act, 1988. The claimants being one of the appellants filed for enhancement of the compensation amount awarded and the Insurance Company, being the other appellants was seeking exoneration of the award.

The counsel representing the insurance company, D.K. Gaur, claimed exoneration on two grounds, that the deceased driver was not having a valid driving license to drive a light motor vehicle and he was driving in a rash and negligent manner.

The Court upon perusal of facts, circumstances, and records dismissed the appeal of the claimants stating the award passed by the trial court is not on the lower end and is absolutely justified. The Court also dismissed the contentions of the insurance company stating that the controversy relating to the deceased not having the valid license was decided as no longer res Integra by Mukund Dewangan v. Oriental Insurance Company Ltd. (2017) 14 SCC 663 and stated that in United India Insurance Co. Ltd. v. Sunil Kumar, (2014) 1 SCC 680, it was decided that regarding negligence of the owner it is “to be decided by the structured formula and the adjudication thereunder is required to be made without requirement of any proof of negligence of the driver/owner of the vehicle involved in the accident”. Thus, the Court decided both the appeals are to be dismissed and the award passed by the trial court was justified.[Maniram v. Jenudeen, 2019 SCC OnLine Raj 2809, decided on 09-09-2019]

Case BriefsHigh Courts

Rajasthan High Court: Sandeep Mehta, J. rejected an appeal filed by the National Insurance Company challenging the order passed by the Motor Accident Claims Tribunal, Jaitaran on 11-01-2008.

The claim application was filed by the claimants Amra Ram and Kamla, where they were awarded a compensation to the tune of Rs 2,25,000 for the death of their son Rajuram, who died in an accident on 07-12-2003 while he was driving his motorcycle driven and collided with a Utility Jeep which was insured with the appellant Insurance Company. The plea which was raised by the appellant was that the driver of the insured vehicle was having a licence authorizing him to drive a light motor vehicle only and as the jeep was a light commercial vehicle, the same was being used in contravention of the policy conditions and as such, the Insurance Company was wrongly held liable to satisfy the award.

The Court held that the claims raised by the Insurance Company in this appeal were not res-integra in view of the law laid down by the Supreme Court in the case of Mukund Dewangan v. Oriental Insurance Company Ltd. (2017) 14 SCC 663 wherein, it has held that, “A transport vehicle and omnibus, the gross vehicle weight of either of which does not exceed 7500 kg would be a light motor vehicle and holder of a driving licence to drive a light motor vehicle as provided in section 10(2)(d) is competent to drive a transport vehicle or omnibus, the gross vehicle weight of which does not exceed 7500 kg.” Therefore, no separate endorsement on the licence is required to drive a transport vehicle of light motor vehicle class. A licence issued under Section 10(2)(d) continues to be valid after Amendment Act 54 of 1994. The Court finally rejected this appeal.[National Insurance Company Ltd. v. Amra Ram, 2019 SCC OnLine Raj 2810, decided on 09-09-2019]

Case BriefsHigh Courts

Himachal Pradesh High Court: An appeal was contemplated by Vivek Singh Thakur, J. arising out of a civil suit where the appellant was sued for recovery of damages amounted to Rs 10 lakh on account of the death of a child due to negligence. The appellant hence challenged the judgments in the instant appeal.

Factual matrix of the case was that a decree was passed in favor of the respondent in the original civil suit, where it was held that the girl who was a trainee at Co-operative Management Course went to Chamba to study Chamera Project and was standing near a tunnel, officials of appellant had opened the gates of water all of a sudden without any warning only by blowing siren, due to the sudden water outburst the girl washed away in the water and died. The respondent had contended that due to the negligent act of the appellant the girl died and they were liable to compensate. The respondent had argued that the appellant had failed to warn the visitors and also allowed the students to visit a site which was located in danger zone.

Appeal was filed on the ground that for want of sufficient material on record, learned District Judge had committed a mistake by holding that accident had taken place on account of sheer negligent act on the part of officials of the appellant as respondent had failed to place on record any permission to visit Dam area and deceased daughter of plaintiff was herself negligent for entering in the prohibited area despite warnings published on signboards affixed on the spot and adequate steps had already been taken by the appellant to warn the intruders from going in the Dam area and area was duly fenced. Further that in case it is found that there was some negligence on the part of the appellant, then, the amount of compensation was liable to be reduced as it had been determined on the higher side without any sufficient material on record and thus it is contended that impugned judgment suffers infirmity, illegality, irregularity and perversity.

The respondent in the instant appeal is the mother of the girl who also contested that she was dependent on the income of the girl for her day to day expenditure. It was submitted that the monthly income of the girl was Rs 8500 before the incident from a different source and after the completion of the course she was to get Rs 12000 as her monthly salary.

On the contrary, the appellant had submitted that the claim of the respondent was not maintainable and the story narrated was wrong. It was alleged that silt was collected in the dam area the same was to be flushed out and gates of flushing tunnels were required to be opened and flushing gates were opened after incorporating entries in the logbook by the officials concerned and as per practice as and when gates were required to be opened, Supervising Officer deputes subordinate employees for opening the gates from the control panels after informing Security Guard, who was deputed at the flushing outlet at Bakani around the clock and on receiving information siren is blown thrice by Security Guard and thereafter employees go back to control panels and open the gates. It was further claimed that for the orders, notified by the District Magistrate, gates can be opened at any time without notice and people have been cautioned not to go in the river even at the time when there is no flow of water and further that girls washed away in incident, who were warned and sent back by the Security Guard, had possibly sneaked into the place and went into the river and despite blowing of siren they did not come out and unfortunately were washed away in the water of flushing tunnels and these girls were trespassers in the area in question. It is canvassed that these girls were grown up and were able to understand the perils involved.

The trial court had already decided the matter in favor of the respondents and a total sum of Rs 7 lakhs was imposed upon the appellant.

In the instant appeal, the appellant had placed witness who had testified that the girl was not having the said permission to visit the dam area but Court held that the photographs showing the particular fenced area was not the area of the incident. The Court noted that there was wire fencing and warning boards on the spot and hence it substantiated the plea of the appellant that adequate steps by fencing and boards were taken to prevent the incidents. It was further noted that the girl was not having any permission to visit the area. Court observed that the gates were opened by the orders of the Chief Engineer but there was no documentary evidence and the order alleged was verbally communicated.

The Court thus further observed that the fencing was completed after the accident; it was held that, “It is evident that there is no force in the contentions raised by the appellant that there was no negligence on their part.” Hence, the appeal was dismissed and the quantum of compensation was increased. [NHPC v. Rukmani Devi, 2019 SCC OnLine HP 1469, decided on 06-09-2019]

Case BriefsHigh Courts

Bombay High Court: Vibha Kankanwadi, J. partly modified the award granted by Motor Accident Claims Tribunal on being challenged.

The trail of events in the case is as follows:

Original claimants filed the claim petition for getting compensation on account of the death of their son—Krushna Murlidhar Kabra. Deceased along with his friend were on a motorcycle and were dashed by Mahindra Bolero Vehicle which had come in a rash and negligent manner and dashed from the backside due to which both the riders on the motorcycle received severe injuries.

Further, Respondent 1 was the owner of the Bolero Vehicle which was insured with Respondent 2 on the date of the accident.

It was contended that the deceased was 22 years old and attaining a degree in M.Com. He was also doing some private job with a monthly salary of Rs 18,000 per month. He was also involved in share purchasing and selling out of which he used to earn Rs 3000 per month and in total his income for the month was estimated to be Rs 21,000 per month. On the basis of the said amount, compensation claimed was of Rs 55,00,000.

Taking into consideration the evidence placed, the Motor Accident Claims Tribunal had held that claimants had proved that Krushna died in the said accident due to rashness and negligence if the driver of the offending vehicle. Insurance Company had also failed to prove breach of terms of policy and therefore, both the respondents were held liable to pay compensation to the claimants.

Advocate, V.N. Upadhye represented the appellant. Advocate P.R. Katneshwarkar, holding for Advocate L.B. Pallod, appeared for Respondents 1 and 2.

The appellant submitted that he is challenging the Judgment & Award on the point of quantum. He submitted that, excessive compensation was awarded when, in fact, the law requires just compensation. Tribunal’s basis for granting award and calculating the same based on an imaginary figure ended in granting bonanza to the claimants.

High Court stated that, “What remains after discarding the oral evidence in respect of point of income adduced by the claimants is, the only guess work that has been done by the learned Tribunal.”

Courts are required to take a note of the fact of unemployment prevailing in the society. Highly qualified persons are unable to get job and if at all they are able to get, then they are required to be satisfied with a lesser salary.

Due to the above-stated circumstances, merely on the count that deceased was a brilliant student, his monthly salary cannot be assessed to Rs 20,000 per month, but it was reasonable to derive that he could have fetched a job with a salary of Rs 10,000 per month with the qualifications he seemed to have attained.

Tribunal included the future prospectus in the amount as stated above of Rs 20,000, but on placing reliance on the decision of National Insurance Co. Ltd. v. Pranay Sethi, (2017) 16 SCC 680, the type of calculation as stated was not expected. High Court modified the same and did the calculations based on taking into consideration his income at Rs 10,000 per month.

The fact that the deceased was a bachelor and in view of the decision in Sarla Verma v. DTC, (2009) 6 SCC 121, 50% is required to be deducted towards personal expenditure.

Thus, the claimants were entitled to get compensation of Rs 15,82,000. Accordingly, the Court gave the following order:

  • Judgment and award passed by the Member of the Motor Accident Claims Tribunal is hereby set aside and modified.
  • Rest of the award is kept as it is. [Reliance General Insurance Co. Ltd. v. Murlidhar, 2019 SCC OnLine Bom 1548, decided on 13-08-2019]
Case BriefsHigh Courts

Punjab and Haryana High Court: Ritu Bahri, J. allowed the petition and modified the award according to the prevalent rate in accordance with the decision by the Supreme Court.

An appeal was made by the Claimant-Appellants to seek the enhancement of compensation awarded by Motor Accident Claim Tribunal on the account of the death of Ashok Kumar in a motor accident. 

The facts of the case were that the Ashok Kumar had died in a road accident by the car being driven by its driver rashly and negligently and at high speed and struck Ashok Kumar while he was returning with his brother, due to which he fell down and sustained serious injuries on his body. Soon he died. The claimant-appellant thus filed a claim petition before the tribunal. The tribunal passed an order where the compensation was awarded along with the interest at 7.5% per annum. Feeling dissatisfied with the impugned award, the present appeal was preferred.

The court opined that to meet the ends of justice the compensation had to be assessed keeping in view the minimum wages prevalent in Haryana as passed by Hon’ble Supreme Court in Magma General Insurance Co. Ltd. v. Nanu Ram, Civil Appeal No. 9581 of 2018. Thus, the amount was modified with the interest at 9% per annum. [Usha v. Rajesh Arora, 2019 SCC OnLine P&H 1415, decided on 13-08-2019]