# National Insurance Company Ltd v. Smt. Kiran & Ors

- **Citation:** (2021) 1 ILRA 221
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2020-10-13
- **Bench:** Vivek Kumar Birla
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/national-insurance-company-ltd-v-smt-kiran-ors-45987
- **Pages:** 6

## Headnote

Civil Law - Motor Vehicles Act (59 of
1988)- Section 168 - Compensation -
Computation - Insurance company
challenged
Motor
Accident
Claims
Tribunal award on the ground of
excessive compensation awarded to
claimants - Deceased aged about 35
years - earned Rs.15,000/- per month
as self employed tailor working from
home - Tribunal awarded 50%
towards future prospects & awarded
Rs. 1 lakh each to three persons
towards love and affection - Held - in
view of the judgment of the Hon'ble
Apex Court in the case of Sarla Verma
and Pranay Sethi future prospects
reduced
from
50%
to
40%
-
Conventional Head which includes
loss of love & affection and funeral
expenses
as
per
Pranay
Sethi
modified to Rs 70,000/- (Para 15, 16)

Partly allowed. (E-4)

List of cases cited :

## Text

1 All. National Insurance Company Ltd. Vs. Smt. Kiran & Ors.
221

6. Learned counsel Sri S.K. Mehrotra
tried to point out that the Judgment is just
and proper, however, I am not convinced as
the statute demands that the claimant
becomes entitled to interest within a period
of one month from the date the amount
accrues to him. In our case, the amount
accrued to him one month after the accident
took place, i.e., 25.10.2017 and the owner
Vimal Kumar Verma, who was insured by
the respondent no.2 did not make the
payment.

7. In view of the aforesaid, Judgment
and award impugned herein is modified. If
the Insurance Company has not yet
deposited the amount, it shall deposit the
amount with interest at the rate of 12%
from one month from the date of accident,
i.e., 25.11.2017.

8. It goes without saying that once the
amount is deposited, the Tribunal shall
disburse the same and the Insurance
company shall not deduct TDS as against
the settled principles of law.

9. The appeal is, therefore, partly
allowed.

10. This Court is thankful to Sri S.K.
Mehrotra for ably assisting this Court and
Sri Vidya Kant Shukla, for acting as
Amicus Curiae for pointing out the
Judgments on the matter.
----------

(2021)01ILR A221
APPELLATE JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 13.10.2020

BEFORE

THE HON'BLE VIVEK KUMAR BIRLA, J.

FAFO No.- 1615 of 2017

National Insurance Company Ltd.
 ...Appellant
Versus
Smt. Kiran & Ors. ...Respondents

Counsel for the Appellant:
Sri Arvind Kumar

Counsel for the Respondents:
Sri Chandra Bhan Gupta, Sri Vidya Kant
Shukla

Civil Law - Motor Vehicles Act (59 of
1988)- Section 168 - Compensation -
Computation - Insurance company
challenged
Motor
Accident
Claims
Tribunal award on the ground of
excessive compensation awarded to
claimants - Deceased aged about 35
years - earned Rs.15,000/- per month
as self employed tailor working from
home - Tribunal awarded 50%
towards future prospects & awarded
Rs. 1 lakh each to three persons
towards love and affection - Held - in
view of the judgment of the Hon'ble
Apex Court in the case of Sarla Verma
and Pranay Sethi future prospects
reduced
from
50%
to
40%
-
Conventional Head which includes
loss of love & affection and funeral
expenses
as
per
Pranay
Sethi
modified to Rs 70,000/- (Para 15, 16)

Partly allowed. (E-4)

List of cases cited :

1.
Sarla
Verma
Vs
Delhi
Transport
Corporation (2009) 6 SCC 121 : 2009 (2)
TAC 677

2. National Insurance Co. Ltd. Vs Pranay
Sethi & 3 ors. (2017) 16 SCC 680 : 2017
(4) TAC 673
222 INDIAN LAW REPORTS ALLAHABAD SERIES
3. New India Assurance Company Vs
Somwati 2020 Legal Eagle (SC) 541 : 2020
SCC Online SC 720

(Delivered by Hon'ble Vivek Kumar Birla, J.)

1. Heard Sri Arvind Kumar, learned
counsel for the appellant and Sri Vidya
Kant Shukla, learned counsel appearing for
the claimant-respondents no. 1 to 8.

2. Present appeal has been filed
challenging the judgment and order dated
21.2.2017 passed by the Additional District
Judge, Court No. 7, Kanpur Nagar/Motor
Accident Claims Tribunal, Kanpur Nagar
in M.A.C. No. 737 of 2015.

3. The award is being challenged on
the ground of excessive compensation
awarded to the claimants.

4. Shorn of details, facts of the case
are that on 17.6.2015 at about 10 p.m. on
GT
road
near
R.K.
Hospital,
P.S.
Chaubeypur, district Kanpur when the
deceased
Jai
Prakash
was
coming
alongwith his friend on Motorcycle no. UP
77 Q 5127 he was hit by Truck no. UP 78
AT 2282 which was allegedly being driven
rashly and negligently. He was taken to the
Hospital and ultimately he died due to
injuries suffered in the accident. It was
claimed that he was aged about 35 years
and was earning Rs.15,000/- per month as
self-employed tailor working from home.

5. In view of the ground taken in the
appeal this Court is concerned with Issue
no. 2 which is to the effect as to what
compensation the claimants are entitled
for?

6. The appellant-Company is not
challenging its liability as apparently there
was no breach of policy conditions. Per
month income of the deceased was
assessed and presumed @ Rs. 6,000/- by
the learned Tribunal is also not under
challenge. However, learned counsel for
the appellant submits that 1/4th amount is
to
be
deducted
towards
personal
expenditure of the deceased and not 1/5th.
The Tribunal has committed mistake in
making deduction of 1/5th only towards
personal expenditure of the deceased on the
ground that there are eight dependents. He
submits that the minors are to be taken as
half unit and therefore, the total unit comes
to 5 and 1/2 only and accordingly 1/4th
deduction has to be made towards personal
expenditure. The multiplier applied is not
in issue. However, he submits that only
40% could have been awarded towards
future prospects and 50% has been
incorrectly
awarded.
It
was
further
submitted that in view of the judgment of
the Hon'ble Apex Court passed in Civil
Appeal No. 3093 of 2020, New India
Assurance Company Vs. Pinki only Rs.
40,000/- should be awarded towards love
and affection and consortium and separate
amount cannot be awarded to different
individuals. Submission, therefore, is that
the
compensation
awarded
is
highly
excessive.

7.

Per-contra,
learned
counsel
appearing for the claimant-respondents has
supported the impugned award, however,
he submitted that in view of the judgement
of the Hon'ble Apex Court in the case of
Sarla
Verma
Vs.
Delhi
Transport
Corporation (2009) 6 SCC 121 : 2009 (2)
TAC 677 the learned Tribunal has rightly
deducted
1/5th
towards
personal
expenditure
of
the
deceased
taking
dependency of eight persons. He further
submitted that 50% has rightly been
awarded towards future prospects. He
1 All. National Insurance Company Ltd. Vs. Smt. Kiran & Ors.
223
further submits that the award is not liable
to be disturbed and justified amount has
been awarded.

8. I have considered the rival
submissions and have perused the record.

9. In Sarla Verma (supra) in
paragraph 42 it was held as under:-

"42. We therefore hold that the
multiplier to be used should be as
mentioned in column (4) of the Table
above (prepared by applying Susamma
Thomas, Trilok Chandra and Charlie),
which starts with an operative multiplier of
18 (for the age groups 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, and M-13
for 46 to 50 years, then reduced by two
units for every five years, that is, M-11 for
51 to 55 years, M-9 for 56 to 60 years, M-7
for 61 to 65 years and M-5 for 66 to 70
years."

10. In National Insurance Co. Ltd.
Vs. Pranay Sethi and others (2017) 16
SCC 680 (5 Judges) : 2017 (4) TAC 673
in paragraphs 39, 40, 41, 42 and 59 it was
held as under:-

"39. In Reshma Kumari, the
three-Judge Bench, reproduced paragraphs
30, 31 and 32 of Sarla Verma and approved
the same by stating thus:-

"41. The above does provide
guidance for the appropriate deduction for
personal and living expenses. One must
bear in mind that the proportion of a man's
net earnings that he saves or spends
exclusively for the maintenance of others
does not form part of his living expenses
but what he spends exclusively on himself
does. The percentage of deduction on
account of personal and living expenses
may vary with reference to the number of
dependent members in the family and the
personal living expenses of the deceased
need not exactly correspond to the number
of dependants.

42.
In
our
view,
the
standards fixed by this Court in Sarla
Verma on the aspect of deduction for
personal living expenses in paras 30, 31
and 32 must ordinarily be followed unless a
case for departure in the circumstances
noted in the preceding paragraph is made
out."

40. The conclusions that have
been summed up in Reshma Kumari are as
follows:-

"43.1. In the applications for
compensation made under Section 166 of
the 1988 Act in death cases where the age
of the deceased is 15 years and above, the
Claims Tribunals shall select the multiplier
as indicated in Column (4) of the Table
prepared in Sarla Verma read with para 42
of that judgment.

43.2. In cases where the age
of the deceased is up to 15 years,
irrespective of Section 166 or Section 163A under which the claim for compensation
has been made, multiplier of 15 and the
assessment as indicated in the Second
Schedule subject to correction as pointed
out in Column (6) of the Table in Sarla
Verma should be followed.

43.3. As a result of the
above,
while
considering
the
claim
applications made under Section 166 in
death cases where the age of the deceased
is above 15 years, there is no necessity for
the Claims Tribunals to seek guidance or
for placing reliance on the Second
Schedule in the 1988 Act.

43.4. The Claims Tribunals
shall follow the steps and guidelines stated
224 INDIAN LAW REPORTS ALLAHABAD SERIES
in para 19 of Sarla Verma for determination
of compensation in cases of death.

43.5. While making addition
to income for future prospects, the
Tribunals shall follow para 24 of the
judgment in Sarla Verma.

43.6. Insofar as deduction
for personal and living expenses is
concerned, it is directed that the Tribunals
shall ordinarily follow the standards
prescribed in paras 30, 31 and 32 of the
judgment in Sarla Verma subject to the
observations made by us in para 41 above."

41. On a perusal of the analysis
made in Sarla Verma which has been
reconsidered in Reshma Kumari, we think
it appropriate to state that as far as the
guidance
provided
for
appropriate
deduction for personal and living expenses
is concerned, the tribunals and courts
should be guided by conclusion 43.6 of
Reshma Kumari. We concur with the same
as we have no hesitation in approving the
method provided therein.

42. As far as the multiplier is
concerned, the claims tribunal and the
Courts shall be guided by Step 2 that finds
place in paragraph 19 of Sarla Verma read
with paragraph 42 of the said judgment.
For the sake of completeness, paragraph 42
is extracted below :-

"42. We therefore hold that
the multiplier to be used should be as
mentioned in Column (4) of the table above
(prepared by applying Susamma Thomas,
Trilok Chandra and Charlie), which starts
with an operative multiplier of 18 (for the
age groups 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, M14 for 41 to 45 years, and M-13 for 46 to
50 years, then reduced by two units for
every five years, that is, M-11 for 51 to 55
years, M-9 for 56 to 60 years, M-7 for 61 to
65 years and M-5 for 66 to 70 years."

59. In view of the aforesaid
analysis, we proceed to record our
conclusions:-

(i) The two-Judge Bench in
Santosh Devi should have been well
advised to refer the matter to a larger
Bench as it was taking a different view than
what has been stated in Sarla Verma, a
judgment by a coordinate Bench. It is
because a coordinate Bench of the same
strength cannot take a contrary view than
what has been held by another coordinate
Bench.

(ii) As Rajesh has not taken
note of the decision in Reshma Kumari,
which was delivered at earlier point of
time, the decision in Rajesh is not a binding
precedent.

(iii) 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.

(iv) 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.
1 All. National Insurance Company Ltd. Vs. Smt. Kiran & Ors.
225

(v) For determination of the
multiplicand, the deduction for personal
and living expenses, the tribunals and the
courts shall be guided by paragraphs 30 to
32 of Sarla Verma which we have
reproduced hereinbefore.

(vi)
The
selection
of
multiplier shall be as indicated in the Table
in Sarla Verma read with paragraph 42 of
that judgment.

(vii) The age of the deceased
should be the basis for applying the
multiplier.

(viii) 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."

11. A reference may also be made to
law laid down by the Hon'ble Apex Court
in the case of New India Assurance
Company Vs. Somwati 2020 Legal Eagle
(SC) 541 : 2020 SCC Online SC 720,
paragraph 63 whereof is quoted as under:

"63. At this stage, we consider it
necessary to provide uniformity with
respect to the grant of consortium, and loss
of love and affection. Several Tribunals and
High
Courts
have
been
awarding
compensation for both loss of consortium
and loss of love and affection. The
Constitution Bench in Pranay Sethi (supra),
has recognized only three conventional
heads under which compensation can be
awarded viz. loss of estate, loss of
consortium and funeral expenses."

12. In this case "loss of consortium" is
"loss of love and affection" has been dealt
with in detail and it was held that
consortium is to include loss of love and
affection and if consortium is awarded to
all the amount that can be awarded under
the same head cannot exceed Rs. 40,000/-.

13. In such view of the matter, I am of
the opinion that the amount awarded by the
Tribunal is excessive in nature and the
same is to be re-assessed which can be
done in this appeal as well.

14. In so far as the award of deduction
of 1/5th of the amount towards personal
expenditure is concerned, in view of the
fact that the total amount is being reduced
ultimately, I am not inclined to interfere in
the said deduction made by the Tribunal in
the facts and circumstances of the case.

15. In so far as the award towards
future prospects to the extent of 50% is
concerned, in view of the judgment of the
Hon'ble Apex Court in the case of Sarla
Verma (Supra) and Pranay Sethi (Supra)
the same is to be reduced from 50% to 40%
and is accordingly reduced.

16. In so far as the amount awarded
towards love and affection to three persons
at the rate of Rs. 1 lakh each that is to be
reduced to Rs. 40,000/- maximum as held
by the Hon'ble Apex Court in the case of
Somwati (Supra), however, a sum of Rs.
70,000/- is to be awarded to the maximum
under all such head which includes loss of
love and affection and funeral future
expenses also. In view thereof, the total
amount which can be granted under this
head is modified to Rs. 70,000/-. Therefore,
the amount is now to be calculated in the
following manner:-

Income - Rs. 6,000 x 12
 = Rs. 72,000.00
40% future prospects
Rs. 2400 x 12
 = Rs. 28,800.00
= Rs. 1,00,800.00
226 INDIAN LAW REPORTS ALLAHABAD SERIES
1/5
Deduction
for
personal expenses
- Rs. 20,160.00
Rs. 80,640.00
Multiplier
 x 17
Rs.13,70,880.00
Medical Bills
+1,12,176.00
Conventional Head as
per Pranay Sethi
 + 70,000.00
Rs.15,53,056.00

17. The awarded compensation is
accordingly reduced from Rs. 20,13,376/-
to Rs. 15,53,056/- as calculatee above,
however, the aforesaid amount shall carry
interest as dirtected by the learned
Tribunal.

18. The appeal, accordingly, stands
partly allowed.
----------
(2021)01ILR A226
APPELLATE JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 17.11.2020

BEFORE

THE HON'BLE ROHIT RANJAN AGARWAL, J.

FAFO No.- 3316 of 2013

M/s Vidyawati Constructions Company
 ...Appellant
Versus
Union of India ...Opposite Party

Counsel for the Appellant:
Sri Vinod Sinha, Sri Krishna Agrawal, Sri
Mahesh Sharma, Sri Manish Goyal

Counsel for the Respondent:
Sri Anil Kumar, Sri Tarun Varma

A.
Civil
Law
-
Arbitration
and
Conciliation Act (26 of 1996)- Section
11 - Appointment of arbitrators -
Derogation - no derogation in the
appointment of arbitrator can be
made where the clause specifically
provides for certain persons to be
appointed as arbitrator - In the
instant case clause 64(3)(b) of the
agreement
provided
for
the
composition of the Arbitral Tribunal of
two arbitrators, who are gazetted
railway officer, who were to appoint
an Umpire - as agreement itself
provided for arbitrators, then no
question arises to derogate from the
said arbitration clause and appoint a
retired Judge (Para 76, 88)

B.
Civil
Law
-
Arbitration
and
Conciliation
Act
(26
of
1996)-
Sections 11, 34(2)(a)(v) & 37 -
Arbitral award - Setting aside of on
the ground composition of the arbitral
tribunal was not in accordance with
the agreement of the parties

Appellant awarded contract for construction
of building complex - As respondents did
not make full payment hence appellant
invoked arbitration clause - Application filed
for appointment of arbitrator under Section
11 (4) - Court on 26.08.1998 appointed
two arbitrator in terms of Clause 64 of the
GCC - Arbitral Tribunal entered into
reference - Appellant filed modification
Application
filed
with
a
prayer
for
appointing another person as presiding
arbitrator - on 26.09.2003, the then Chief
Justice, treated the modification application
as application u/s 11 & appointed retired
Chief Justice as the sole arbitrator without
taking note of earlier Arbitral Tribunal -
respondents filed objections u/s 16 raising
preliminary
objection
regarding
composition & constitution of the Arbitral
Tribunal - Held - constituting fresh Arbitral
Tribunal without replacing the earlier
Tribunal or terminating its mandate, was
against
the
agreement
entered
into
between the parties - there was no dispute