SALIENT FEATURES OF PRANAY SETHI’S CASE AND GUIDELINES GIVEN WHILE DEALING WITH MATOR ACCIDENT CLAIMS CASES

SALIENT FEATURES OF PRANAY SETHI’S CASE AND GUIDELINES GIVEN WHILE DEALING WITH MATOR ACCIDENT CLAIMS CASES

A five judge bench of supreme court of india has given a landmark judgement regarding a case of motor vehicle claims in National insurance co.ltd.,   VS   Pranay sethi and others 2017 (2) TNMAC 609 (SC). I has given guidelines for arriving compensation in death cases.

Compensation – Quantum – Determination – Standardization of

Income – Future prospects – Addition of, in respect of person self employed

Or on fixed salary –

Age below 40 years                :   40%

Age between 40 – 50 years  :    25%

Age between 50 – 60 years  :     10%

Income – Future prospects – Addition of, in respect of person in permanent job –

Age below 40 years                :   50%

Age between 40 – 50 years  :    30%

Age between 50 – 60 years  :     15%

PERSONAL EXPENSES : Deduction towards – Ratio in Sarala varma followed.

MULTIPLIER – SELECTION OF  - Table in Sarala varma to be followed – Age of the deceased to be taken as basis for selection.

Conventional heads – compensation fixed:

Loss of estate                       :  Rs.15,000/

Loss of consortium              :  Rs. 40,000/

Funeral expenses                 :  Rs. 15,000/

Three judge bench decision in Rajesh is not binding precedent.

 

Section 168 of the motor vehicles act deal with “just compensation” and the same has to be determined on the foundation of fairness, reasonableness and equitability on acceptable legal standard because such determination can never be in arithmetical exactitude. It can never be perfect. The aim is to achieve an acceptable degree of proximity to arithmetical precision on the basis of materials brought on record in individual case. The conception of just compensation has to be viewed through the prism of fairness, reasonableness and non – violation of the principle of equitability. In a case of death, the legal heirs of the claimants cannot expect a windfall. Simultaneously, the compensation granted cannot be an apology for compensation. It cannot be a pittance. Though the discretion vested in the tribunal is quite vide, yet it is obligatory on the part of the tribunal to be guided by the expression, that is ‘just compensation’. The determination has to be on the foundation of the evidence brought on record as regards the age and the income of the deceased and thereafter the appropriate multiplier to be applied. The formula relating to multiplier has been clearly stated in Sarala verma and it has been approved in reshma kumarai. The age and income, have to be established by adducing evidence. The tribunal and the courts have to bear in mind that the basic principle lies in pragmatic computation which is in proximity to reality. It is well accepted norm that money cannot substitute a life lost but an effort has to be made for grant of just compensation having uniformity of approach. There has to be a balance between the two extremes, that is , a windfall and a pittance, a bonanza and a modicum. In such an adjudication, the duty of the tribunal and courts is difficult and hence an endeavour has been made by the court for standardization  which in its ambit includes addition of future prospects on the proven income at present. As far as future prospects are concerned, there has been standardization keeping in view the principle of certainity, stability and consistency. The court approves the principle of  ‘standaridization’ so that a specific and certain multiplicand is determined for applying the multiplier on the basis of age.

The seminal issue is the fixation of future prospects in cases of deceased who is self employed or on a fixed income salary. Sarala verma has carved out an exemption permitting the claimants to bring materials on record to get  the benefit of addition of future prospects. It has not per se allowed any future prospects in respect of the said category.

When the principle of standardization is accepted, there is really no rationale not to apply the same principle to the self employed or a person who is on a fixed salary. 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. 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.

Hence 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 tax component.

Deduction towards personal expenses

Where the deceased was married, the deduction towards personal and living expenses should be one third (1/3^rd )where the number of dependant family members is 2 to 3, one fourth (1/4^th ) where the number of dependant family members is 4 to 6, one fifth (1/5^th ) where the number of dependant family members is more than  6,

Where the deceased was a bachelor and the claimants are the parents, the deduction follows a different principle. In regard to bachelor normally 50% is deducted as personal and living expenses, because it is assumed that a bachelor would tend to spend more on himself.

However, where the family of the bachelor is large and dependent on the income of the deceased, as in a case where he has a widowed mother and large number of younger non-earning sisters and brothers, his personal and living expenses may be restricted to 1/3 and contribution to the family will be taken as two – third.

Selection of multiplier

As far as multiplier is concerned the claims tribunal and courts shall be guided by step 2 that finds palce in para 19 of sarala verma read with paragraph 42 is extracted below:

It starts with the operative multiplier of 18 (for the age group of 15 to 20 and 21 to 25 years)reduced by one unit for every five years, that is M-17 for  26 to 30 years, M-16 for  31 to 35 years, M-15 for  36 to 40 years, M-14 for  41 to 45 years, M-13 for  46 to 50 years, then reduced by two unites for every five years, that is  M-11 for  50 to 55 years, M-9 for  55 to 60 years, M-7 for  61 to 65 years, and M-5 for  66 to 70 years.

Compensation under conventional heads:

Reasonable figures on conventional heads , namely loss of estate, loss of consortium and funeral consortium and funeral expenses should be Rs.15,000/, Rs.40,000/ and Rs.15,000/respectively. The amount should be enhanced on percentage basis in every three years and the enhancement should be at the rate of 10% in a span of three years.