# 1088 SUPREME COURT REPORTS [2019] 3 S.C.R. M.R. KRISHNA MURTHI v. THE NEW INDIA ASSURANCE CO. LTD. & OTHERS

- **Citation:** [2019] 3 S.C.R. 1088
- **Court:** Supreme Court of India
- **Decided:** 2019-03-05
- **Case number:** Civil Appeal Nos. 2476-2477 of 2019
- **Bench:** A. K. Sikri, S. Abdul Nazeer
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/1088-supreme-court-reports-2019-3-s-c-r-m-r-krishna-murthi-v-the-new-india-33574
- **Pages:** 31

## Headnote

Motor Vehicles Act, 1988:
Motor accident - Compensation - Assessment of -
Determination of loss of future earning - On facts, 18 year student
studying in school met with a motor accident leaving him 40%
disabled - Award of Rs. 8,48,000/- as compensation with 7% interest
for a period of 10 years - In appeal, the High Court awarded
additional lumpsum damages of Rs 50,000/- - In review petition,
the High Court enhanced the compensation by Rs. 24,000/- together
with corresponding interest - On appeal, held: Appellant because
of his family background-parents senior lawyers in the Supreme
Court, also wanted to join legal profession, even though at the time
of accident, he was studying in school - Having regard to affluent
family background, the appellant at the time of accident was
studying in prestigious School - Thus, the appellant had a bright
future and, his future earnings had to be considered keeping in
view the said factors - Though, not very seriously, the functional
capacity has been impaired because of the disability suffered by
the appellant as the appellant cannot run around like other young
advocates of his age - In view thereof, loss of future earning fixed
at Rs.5,000/- pm i.e. Rs.60,000/- pa on which multiplier of 18 is to
be applied - Loss future earning comes to Rs.10,80,000/- - Appellant
to be paid another sum of Rs.6,54,000/- under this head along with
interest as awarded by the court below
Motor accidents - Road accident victims - Reforms in
payment of compensation to victims - Mechanism to prevents delays
and other obstacles in awarding compensation to road accident
victims and/or kiths and kins of victims - Held: Issuance of direction
to the government to consider setting up of mediation authority for
speedy disposal of motor accident claims - Government to consider
[2019] 3 S.C.R. 1088
1088
A
B
C
D
E
F
G
H
1089
the feasibility of enacting Mediation Act to take care of various
aspects of mediation and examine the feasibility of setting up Motor
Accident Mediation Authority by making necessary amendments in
the Motor Vehicles Act, along with other directions/recommendations
issued.
Disposing of the appeals, the Court
HELD:1.1 In those cases where the victim of the accident
is not an earning person but a student, while assessing the
compensation for loss of future earning, the focus of the
examination would be the career prospect and the likely earning
of such a person in future. Where the claimant is pursuing a
particular professional course, the poseer would be: what would
have been his income had he joined a service commensurating
with the said course. That can be the future earning. There may
be cases where the victim is not, at that stage, doing any such
course to get a particular job. He or she may be studying in a
school. In such a case, future career would depend upon multiple
factors like the family background, choice/interest of the
complainant to pursue a particular career, facilities available to
him/her for adopting such a career, the favourable surrounding
circumstances to see which would have enabled the claimant to
successfully pick up the said career etc. If the chosen field is
employment, then the future earning can be taken on the basis of
salary and allowances which are payable for such calling. In case,
career is a particular profession, the future earning would depend
on host of other factors on the basis of which chances to achieve
success in such a profession can be ascertained. There may be
cases where even a student, the claimant would have made
earnings on part-time basis or would have received offer for a
particular job. In such cases, these factors would also assume
relevance. After ascertaining the likely earning of the victim in
the said manner, the nature of injuries and disability suffered as a
result thereof would be kept in mind while determining as to how
much earning has been affected thereby. Here, impact of injuries
on functional disability is to be seen. In case of death

## Text

_Characters 0–39,921 of 68,258. This is a partial read: ask again with offset=39921 for what follows._

A
B
C
D
E
F
G
H
1088 SUPREME COURT REPORTS [2019] 3 S.C.R.
M.R. KRISHNA MURTHI
v.
THE NEW INDIA ASSURANCE CO. LTD. & OTHERS
(Civil Appeal Nos. 2476-2477 of 2019)
MARCH 05, 2019
[A. K. SIKRI AND S. ABDUL NAZEER, JJ.]
Motor Vehicles Act, 1988:
Motor accident - Compensation - Assessment of -
Determination of loss of future earning - On facts, 18 year student
studying in school met with a motor accident leaving him 40%
disabled - Award of Rs. 8,48,000/- as compensation with 7% interest
for a period of 10 years - In appeal, the High Court awarded
additional lumpsum damages of Rs 50,000/- - In review petition,
the High Court enhanced the compensation by Rs. 24,000/- together
with corresponding interest - On appeal, held: Appellant because
of his family background-parents senior lawyers in the Supreme
Court, also wanted to join legal profession, even though at the time
of accident, he was studying in school - Having regard to affluent
family background, the appellant at the time of accident was
studying in prestigious School - Thus, the appellant had a bright
future and, his future earnings had to be considered keeping in
view the said factors - Though, not very seriously, the functional
capacity has been impaired because of the disability suffered by
the appellant as the appellant cannot run around like other young
advocates of his age - In view thereof, loss of future earning fixed
at Rs.5,000/- pm i.e. Rs.60,000/- pa on which multiplier of 18 is to
be applied - Loss future earning comes to Rs.10,80,000/- - Appellant
to be paid another sum of Rs.6,54,000/- under this head along with
interest as awarded by the court below
Motor accidents - Road accident victims - Reforms in
payment of compensation to victims - Mechanism to prevents delays
and other obstacles in awarding compensation to road accident
victims and/or kiths and kins of victims - Held: Issuance of direction
to the government to consider setting up of mediation authority for
speedy disposal of motor accident claims - Government to consider
[2019] 3 S.C.R. 1088
1088
A
B
C
D
E
F
G
H
1089
the feasibility of enacting Mediation Act to take care of various
aspects of mediation and examine the feasibility of setting up Motor
Accident Mediation Authority by making necessary amendments in
the Motor Vehicles Act, along with other directions/recommendations
issued.
Disposing of the appeals, the Court
HELD:1.1 In those cases where the victim of the accident
is not an earning person but a student, while assessing the
compensation for loss of future earning, the focus of the
examination would be the career prospect and the likely earning
of such a person in future. Where the claimant is pursuing a
particular professional course, the poseer would be: what would
have been his income had he joined a service commensurating
with the said course. That can be the future earning. There may
be cases where the victim is not, at that stage, doing any such
course to get a particular job. He or she may be studying in a
school. In such a case, future career would depend upon multiple
factors like the family background, choice/interest of the
complainant to pursue a particular career, facilities available to
him/her for adopting such a career, the favourable surrounding
circumstances to see which would have enabled the claimant to
successfully pick up the said career etc. If the chosen field is
employment, then the future earning can be taken on the basis of
salary and allowances which are payable for such calling. In case,
career is a particular profession, the future earning would depend
on host of other factors on the basis of which chances to achieve
success in such a profession can be ascertained. There may be
cases where even a student, the claimant would have made
earnings on part-time basis or would have received offer for a
particular job. In such cases, these factors would also assume
relevance. After ascertaining the likely earning of the victim in
the said manner, the nature of injuries and disability suffered as a
result thereof would be kept in mind while determining as to how
much earning has been affected thereby. Here, impact of injuries
on functional disability is to be seen. In case of death of
victim, it would result in total loss of earning. In the case of
injuries, the nature of disability becomes important.
[Para 23][1107-E-H; 1108-A-D]
M.R. KRISHNA MURTHI v. THE NEW INDIA ASSURANCE
CO. LTD. & OTHERS
A
B
C
D
E
F
G
H
1090 SUPREME COURT REPORTS [2019] 3 S.C.R.
1.2 The appellant was a student studying in a school. He
was not doing any job or was in any vocation and, thus, was not
earning anything. The loss of future earning is to be assessed on
the said basis. The relevant factors brought on record for the
appellant are that the appellant belongs to a family of lawyers as
both his parents were senior lawyers practicing in the Supreme
Court. Because of his family background, the appellant also
wanted to join legal profession, even though at the time of
accident, he was studying in school. Having regard to affluent
family background, the appellant at the time of accident was
studying in prestigious Modern School, Barakhamba Road, New
Delhi. All these circumstances clearly indicated that the appellant
had a bright future and, therefore, his future earnings could not
be considered without keeping in view the aforesaid factors. The
appellant also produced evidence in respect of his disability. This
disability does not indicate much loss of prospects in earning. Of
course, his movements are restricted and he needs a Driver as
he is not in a position to drive the car himself. This would hinder
the earning capacity to some extent, though not significant extent.
[Para 17, 24][1100-F-G; 1108-D-G]
N. Manjegowda v. Manager, United India Insurance
Company Limited (2014) 3 SCC 584 : [2013] 12
SCR 350 - relied on.
1.3 Though, not very seriously, the functional capacity has
been impaired because of the disability suffered by the appellant
as the appellant cannot run around like other young advocates of
his age. Going by the overall circumstances, in case of the
appellant, loss of future earning can be fixed at Rs.5,000/- per
month i.e. Rs.60,000/- per annum on which multiplier of 18 is to
be applied. Calculated in this manner, the loss future earning
comes to Rs.10,80,000/-. The appellant, thus, would be paid
another sum of Rs.6,54,000/- under this head along with interest
as awarded by the Court below. It is stated that the appellant has
volunteered to give this amount to any Government or public
charitable organisation working towards road safety. It is left to
the appellant to donate the amount to any particular organisation
of his choice. Alternatively, it can also be given for MAMCproject by the appellant. [Paras 26 (i)].[1109-G-H; 1110-A-C]
A
B
C
D
E
F
G
H
1091
2.1 Focus is to ensure access to justice for road accident
victims and also to bring about a mechanism which prevents delays
and other obstacles in awarding compensation to road accident
victims. The suggestion for establishing a MAMA-Motor
Accident Mediation Authority in every District is worthy of
acceptance. Whatever steps are taken by the authorities for
reducing road accidents, harsh reality is that accidents would keep
on happening. There may be a possibility of reducing the number
of road accidents, but occurrence thereof cannot be totally
eliminated. Such accidents, particularly fatal accidents, would
always lead to filing of claims by the victims and/or kith and kin of
victims, for compensation. Fatal accidents also trigger
prosecution of the driver who was negligent and rash in driving
which caused the accident. Insofar as disputes regarding claims
are concerned, there is a need to resolve the same at the earliest
inasmuch as compensation money may be badly needed by the
claimants for so many reasons and delay may bring insurmountable
sufferings of various kind. Having regard to the fact that large
number of accidents are giving rise to phenomenal quantum jump
in such cases, methods need to be adopted for quick resolution.
[Para 27][1110-E-H]
2.2 The various directions/recommendations are given: (a)
The Government is impressed upon to also consider the feasibility
of enacting Mediation Act to take care of various aspects of
mediation in general. (b) The Government may examine the
feasibility of setting up MAMA by making necessary amendments
in the Motor Vehicles Act. For this purpose, it can consider the
two flow charts given by the appellant. (c) In the interregnum,
NALSA is directed to set up Motor Accident Mediation Cell
which can function independently under the aegis of NALSA or
can be handed over to MCPC. Such a project should be prepared
within a period of two months and it should start functioning
immediately thereafter at various levels as suggested in this
judgment. The directions contained in order dated November 6,
2017 in Jai Prakash case are reitreated for implementation of
the latest Modified Claims Tribunal Agreed Procedure. For
ensuring such implementation, NALSA is directed to take up
the same in coordination and co-operation with various High
M.R. KRISHNA MURTHI v. THE NEW INDIA ASSURANCE
CO. LTD. & OTHERS
A
B
C
D
E
F
G
H
1092 SUPREME COURT REPORTS [2019] 3 S.C.R.
Courts. MACAD Scheme shall be implemented by all Claim
Tribunals on All India basis. 21 Banks, Members of Indian Banks
Assocation, who had taken decision to implement MACAD
Scheme would do the same on All India basis. (d) The Government
is implied upon to look into the feasibility of framing necessary
schemes and for the availability of annuity certificates. This
exercise may be done within the period of six months and decision
be taken thereupon. (e) Likewise, it is directed that there should
be programmes from time to time, in all State Judicial Academies,
to sensitizing the Presiding Officers of the Claims Tribunals,
Senior Police Officers of the State Police as well as Insurance
Company for the implementation of the said Procedure.
[Para 39][1117-C-H; 1118-A-B]
Arvind Kumar Mishra v. New India Assurance Co. Ltd.,
(2010) 10 SCC 254 : [ 2010] 11 SCR 857 ; Oriental
Insurance Company Limited v. Deo Patodi & Ors.,
(2009) 13 SCC 123 : [2009] 8 SCR 791 ; New India
Assurance Co. Ltd. v. Ganga Devi & Ors., MAC APP
No. 135 of 2008 decided on November 23, 2009 by
Delhi High Court ; Sarla Verma v. Delhi Transport
Corporation (2009) 6 SCALE 129 ; Raj Kumar v. Ajay
Kumar & Anr., (2011) 1 SCC 343 : [2010] 13 SCR 179
; Arun Sondhi v. Delhi Transport Corporation (2001)
ACJ 1779 ; Jaiprakash v. National Insurance Company
[2009] 16 SCR 710 ; Rajesh Tyagi v. Jaiveer Singh and
Others (FAO No. 842 of 2003) - referred to
Case Law Reference
[2010] 11 SCR 857
referred to
Para 17
[2009] 8 SCR 791
referred to
Para 18
(2009) 6 SCALE 129
referred to
Para 19
[2010] 13 SCR 179
referred to
Para 22
[2013] 12 SCR 350
relied on
Para 23, 24
(2001) ACJ 1779
referred to
Para 25
[2009] 16 SCR 710
referred to
Para 32
A
B
C
D
E
F
G
H
1093
CIVIL APPELLATE JURISDICTION : Civil Appeal Nos. 24762477 of 2019.
From the Judgment and Order dated 19.05.2017 of the High Court
of Delhi at New Delhi in MAC. APP. No. 550 of 2007 in Review
Petition No. 506 of 2016 and order dated 17.05.2016 in MAC. APP. No.
550 of 2007.
Arun Mohan, Sr. Adv., Dinesh S. B., Vipin Kumar Jai, Rituj Chopra,
Advs. for the Appellant.
Sahil Paul, Ms. Manjeet Chawla, S. S. Nehra, D. Vidyanandam,
R. K. Gupta, Vikrant Nehra, M/S. Gaur & Nehra Law Firm, Advs. for
the Respondents.
The Judgment of the Court was delivered by
A. K. SIKRI, J. 1. Leave granted.
2. The appellant herein, who is a practicing advocate, had suffered
in nasty accident at the young age of 18 years. He was a student at that
time studying in Modern School, Delhi. It was 26th May, 1988. He was
travelling along with his mother from Delhi to Mussoorie to celebrate his
18th birthday falling on 27th May, 1988. On Delhi-Dehradun highway
the accident took place in which his entire left leg was crushed. He was
rushed to the hospital and his hospitalization continued for over two
months. He had to undergo surgery for which he was operated on 31st
May, 1988. Though, the appellant was discharged from the hospital
after two months, his treatment continued for over 6 years, during which
period he had to undergo further operations. In all, three surgeries were
performed. First, for putting plates and screws, another for removal of
plates and screws wherein doctor discovered that he could not remove
the plates and screws of femur bone. The result is that even today the
said screws and plates in the femur bone remain planted. This exposes
him to the risk of another fracture anytime. The third operation was for
removal of a lump in the right leg which had developed after the accident
and had grown over the years.
3. As per the appellant, the net result of the aforesaid accident of
such severity is that he is suffering permanent disability (pain and difficulty
in locomotion) even today. This disability is certified by the District
Government Hospital, Muzaffarnagar at 40%, as per the disability
certificate dated 10th December, 2005 (Exh. PW-4/103).
M.R. KRISHNA MURTHI v. THE NEW INDIA ASSURANCE
CO. LTD. & OTHERS
A
B
C
D
E
F
G
H
1094 SUPREME COURT REPORTS [2019] 3 S.C.R.
4. The appellant filed an application claiming compensation before
Motor Accidents Claims Tribunal (MACT), Muzaffarnagar, U.P. as the
accident took place in the area within the jurisdiction of the said MACT.
However, on his application for transfer of the said claim petition, this
Court passed orders dated 12th January, 1998 transferring the case to
MACT, Patiala House, New Delhi. The MACT, after conclusion of the
trial, rendered its award dated 23rd May, 2007 attributing negligence to
the driver of the ambassador car which had hit the vehicle in which the
appellant was travelling. As the accident occurred due to the negligence
of the said driver (Respondent no. 4 in MACT case), and the offending
vehicle was insured with Respondent no. 1, namely, New India Assurance
Company Limited, the liability was fastened on the Insurance Company,
the driver of the vehicle as well as the owner of the vehicle who also
arrayed as respondents. The MACT, thereafter, dealt with the issue of
quantum of compensation and awarded a sum of Rs. 8,48,000/-, the
breakup of which is as under:
"Pain and sufferings
Rs.50,000/-
Medicines
Rs.2,10,000/-
Special Diet
Rs.15,000/-
Conveyance
Rs.15,000/-
Compensation on account
Rs.4,08,000/-
of loss of income adopting
multiplier of 18 permanent
Rs.75,000/-
disability attendant
Rs.25,000/-
loss of enjoyment
Rs.50,000/-
Total
Rs.8,48,000/-"
5. The MACT also awarded interest @7% for a period of 10
years, inter alia, taking note of the fact that the claim petition has been
dismissed in default twice.
6. The appellant filed the appeal thereagainst before the High
Court. However, when it was taken up for hearing, nobody appeared on
behalf of the appellant. Going by the fact that on several consecutive
dates the appellant was not represented and remained absent, instead of
dismissing the appeal in default, the High Court decided the matter on
merits after hearing the counsel for the Insurance Company and on
perusing the record.
A
B
C
D
E
F
G
H
1095
7. Main contention of the appellant in appeal was that MACT had
failed to take into account the disability certificate which showed that
the appellant had suffered permanent disability to the extent of 40%.
This submission is rejected by the High Court with the observations that
the MACT had, in fact, calculated the loss of future income on the basis
of inference that the claimant has suffered functional disability to the
extent of 40% corresponding to affecting his earning capacity. The
High Court also took note of the income tax returns which were filed by
the appellant for the periods 2003-04, 2004-05, 2005-06. However, as
per the High Court, these income tax returns were irrelevant and could
not be taken into consideration as accident occurred way back in the
year 1988 and, therefore, compensation had to be fixed with reference
to the date of the accident when the claimant was a boy of 18 years
only. Instead, only addition is made by the High Court, that too on some
other count. It has noted that the appellant would require services of a
driver till he attains age of 70 years, which is a normal expected lifespan.
Though, no evidence was led in support of this claim, the High Court has
awarded an additional lumpsum damages in the sum of Rs. 50,000/- on
this account, given the nature of disability and physical disfigurement
suffered by the appellant.
8. The appellant, thereafter, preferred a review petition under
Order LXVII Rule 1 of the Code of Civil Procedure seeking review of
the judgment dated 17th May, 2016 rendered by the High Court. It was
pointed out that there was an error committed by the MACT as it had
applied the multiplier of 17, whereas multiplier of 18 should have been
adopted while calculating the compensation towards loss of income, going
by the fact that the appellant was only 18 years of age when he suffered
the injuries. This plea has been accepted by the High Court thereby
applying the multiplier of 18, instead of 17 which has resulted in
enhancement of compensation by Rs.24000/- together with corresponding
interest. Main judgment dated 17th May, 2016 as well as order dated
19th May, 2017 passed in review petition are the subject matters of the
present appeals.
9. Mr. Arun Mohan, learned senior counsel appearing for the
appellant has made two-fold submissions which are paraphrased in the
following manner:
(i) In the first instance, it is submitted that the MACT as well as
the High Court have erred in computing the future earning by fixing the
M.R. KRISHNA MURTHI v. THE NEW INDIA ASSURANCE
CO. LTD. & OTHERS [A. K. SIKRI, J.]
A
B
C
D
E
F
G
H
1096 SUPREME COURT REPORTS [2019] 3 S.C.R.
income at the rate of Rs.5000/- only while assessing the loss of future
earnings. No doubt, submitted the learned senior counsel, the appellant
was only a student and, therefore, there was no real earning at that
stage. Only future prospects can be taken into consideration, as per the
law laid down by this Court in a series of judgments. However, submission
of learned senior counsel was that while assessing the loss of future
earning, the Court should have regard to the family background of the
victim, the institution in which he is getting education, his potential to
adopt the career he desired to choose, career prospects in view of
attendant circumstances etc. In this hue, Mr. Arun Mohan submitted
that the appellant belongs to a family of lawyers as both his parents
were senior lawyers practicing in Supreme Court. Because of this family
background, the appellant also wanted to join legal profession. Though,
at the time of accident, he was studying in school, after school he intended
to pursue his studies in law. He, in fact, did law and has joined the legal
profession, which fact was placed on record, as by the time the appellant
became a lawyer the case before MACT was still pending. Further,
having regard to affluent family background, the appellant at the time of
accident was studying in prestigious Modern School, Barakhamba Road,
New Delhi. All these circumstances clearly indicated that the appellant
had a bright future and, therefore, his future earnings could not be
considered without keeping in view the aforesaid factors. In such
circumstances, loss of future earning prospects by treating the future
earnings at the rate of Rs.5000/- only was abysmally low. He also
submitted that though in the review petition filed before the High Court,
specific ground to this effect was taken, it has not even been considered
by the High Court.
(ii) Second submission of Mr. Arun Mohan was a passionate plea
aimed at reforming the system at following levels:
(a) On-road safety and grant of adequate compensation to the
victims without any delay. For ensuring expeditious settlement of
claims, resort to alternate means which may include innovative
measures.
(b) Taking adequate steps including adopting innovative measures,
to ensure fast track disposal of cases by MACTs.
(c) Ensuring receipt of compensation in the safe hands of victims
and/or kiths and kins of victims, that too over a sustained period.
A
B
C
D
E
F
G
H
1097
10. Detailed submissions on these aspects and suggestions of Mr.
Arun Mohan are as under:
"Road Safety and Compensation
IT is perceived that of road accidents (1,40,000 dead per year
and 5,00,000 injured per year), less than 10% reach the MACT
with claims. Almost 90% do not have Access to Justice.
And of the 10% or so who do reach MACT, the questions arise:
1. What is the 'Cost' to the State judiciary and insurance sector
for adjudication of these claims?
2. What are the time delays?
3. On what income source do the dependents/injured survive during
pendency till the payout?
4. Of the ultimate payout, how much actually reaches the recipients
and how much is lost?
5. After, say, five years of receiving the compensation, what
actually remains with the majority of the recipients?
These were some disturbing questions on a ground level survey.
Put differently, firstly, as most are poor, there is hardly any access
to justice; the court resources are wasted; there are delays and
difficulties and slicing away (cut) from the payout; and little safety
for the money that is received.
As a Solution to these problems, there are two proposals:
1. establishing a Motor Accidents Mediation Authority (MAMA)
in every district;
2. making it compulsory for the accident investigator to:
(a) send a copy of his Report to MAMA;
(b) send e-mail to National Road Safety Council's
c e l l
identifying the accident spot and how similar accidents could be
prevented in future.
MAMA will follow the following procedure:
1. MAMA will then issue notices to the claimants and others.
M.R. KRISHNA MURTHI v. THE NEW INDIA ASSURANCE
CO. LTD. & OTHERS [A. K. SIKRI, J.]
A
B
C
D
E
F
G
H
1098 SUPREME COURT REPORTS [2019] 3 S.C.R.
2. interim compensation (with recourse) of few thousand rupees
a month pending adjudication as direct credit to Aadhaar linked
bank account;
3. completion of paperwork at MAMA;
4. mediation proceedings at MAMA;
5. complete safety in the hands of the recipient.
The amount settled is not given as rupees (or even FDRs), but as
Annuity Certificates, which have more return for the same valuemeaning lesser payout by the insurance sector with full receipt by
the claimant."
11. He further submitted that this Court may consider a direction
to the Government to frame these procedures and schemes. LIC/RBI
can provide for availability of Annuity Certificates in consultation with
the Pension Fund Regulatory and Development Authority and the
commercial Banks/insurance companies.
12. To facilitate appreciation and implementation, he gave two
flowcharts as below:
A
B
C
D
E
F
G
H
1099
13. In the Flowchart-1 (under the existing law), a direction from
this Court is sought to all MACTs to compulsorily refer motor accident
cases to the District Mediation Authority which will serve the purpose
till the Government amends the Statute. Flowchart - 2 shows where the
amended statute and the rules can provide for establishing a Motor
Accident Mediation Authority (MAMA) in every district in the country.
He also suggested that rules can provide for every accident investigator
to send information to : (1) MAMA; and (2) National Road Safety
Council's Cell.
14. Speaking with an optimist tone, Mr. Mohan submitted that
there is a hope that with a provision for MAMA:
(1) access to justice will substantially increase;
(2) the court costs will reduce;
(3) insurance sector costs (as payout) will reduce;
(4) Annuity Certificates of the payout will nearly eliminate the
'slicing away'; and
M.R. KRISHNA MURTHI v. THE NEW INDIA ASSURANCE
CO. LTD. & OTHERS [A. K. SIKRI, J.]
A
B
C
D
E
F
G
H
1100 SUPREME COURT REPORTS [2019] 3 S.C.R.
(5) the actual benefit to the recipients will be far more (with
Annuity Certificates) than it is at present.
15. Mr. Salil Paul, learned counsel appearing for the Insurance
Company advanced his argument on the quantum of compensation based
on future prospective. His submission was that the yardstick adopted
by the courts below in fixing the income based on future prospective on
the basis of which compensation is given to the appellant is in tune with
various judgments rendered by this Court as well as the High Court.
Therefore, no interference was called for, insofar as grant of
compensation is concerned. He referred to certain judgments in support.
16. With reference to the second submission of Mr. Arun Mohan,
Mr. Salil Paul gave a positive response with the plea that since suggestions
given by Mr. Arun Mohan were in larger public interest for reformation
of the system, he had no objection if the Court issues appropriate
directions in this behalf. At the same time, he also pointed out that
insofar as speedy disposal of cases and payment of compensation to the
victims, particularly, young victims are concerned, the High Court of
Delhi had given directions on the basis of which Claims Tribunal Agreed
Procedure was approved by High Court of Delhi. Modified version
thereof has now been approved as recent as on 7th December, 2018
which takes care of the speedy disposal as well as periodical payments
to be made to the young victims over a period of time. Mr. Salil Paul
placed on record the relevant judgments as well as Modified Claims
Tribunal Agreed Procedure approved by the Delhi High Court vide orders
dated 7th December, 2018.
17. We now proceed to discuss the merits of the aforesaid two
proposition advanced before us.
(I) Assessment of Compensation:
Admittedly, the appellant was a student studying in a school.
He was not doing any job or was in any vocation and, thus, was not
earning anything. The loss of future earning is to be assessed on the
aforesaid basis. Before adverting to the arguments that are raised by
Mr. Arun Mohan and taken note of above, it would be appropriate to
scan through certain judgments cited before us by both the parties in
order to decipher the principles for determining loss of future earning in
such circumstances. First case which we would like to refer is the
A
B
C
D
E
F
G
H
1101
judgment in the case of Arvind Kumar Mishra v. New India Assurance
Co. Ltd., (2010) 10 SCC 254. In that case also, the appellant who was
a victim of accident, was a student. He was in the final year of
engineering which he was doing from a reputed college. He had a
brilliant academic record, having passed all semester examinations with
distinction. In the accident that took place, the appellant suffered multiple
injuries which led to 70% permanent disability. This disability rendered
him incapacitated which had the consequence of dashing forever his
dream of becoming Mechanical Engineer, studies for which career he
had undertaken. On the aforesaid facts, his future earning were assessed
at Rs.60,000/- per annum by taking salary and allowances payable to
Assistant Engineer in public employment. This future earning was
discounted at 30% on the basis of which multiplicand was taken at
Rs.42,000/- per annum. Going by his age which was 25 years at the
time of accident, multiplier of 18 was applied and on that basis,
compensation towards loss of future earning was assessed at
Rs.7,56,0000/-.
Second case to which reference is made is Oriental Insurance
Company Limited v. Deo Patodi & Ors., (2009) 13 SCC 123. Here,
the victim was a brilliant student and while a student, he was also earning
Rs.80,000/- per month in a job on part-time basis in the United Kingdom.
He had not accepted a job offered by a US based company at a salary
of Rs.18 lakhs per annum. However, at the time of accident, he was
not working. Accident took place on June 12, 2003 when he was 22
years of age. He suffered head injuries which proved fatal and he died
within six days i.e. on June 18, 2003. While computing the compensation
under the head 'loss of dependency' (he was the only son of the claimant),
the Tribunal as well as the High Court held that the deceased would
have earned only Rs.18,000/- per month. This Court, in appeal, however,
considered the aforesaid estimation of income to be on lower side and
the Court decided to fix the earning at Rs.25,000/- per month, which
was 1/3rd of the amount that he was receiving in the United Kingdom.
The relevant discussion in this behalf runs as under:
"8. The question in regard to the calculation of loss of dependency,
it is trite, would vary from case to case. The fact that the deceased
was a brilliant student is not in dispute. He had graduated in
Business Administration in the UK. Even as a student, in a job on
M.R. KRISHNA MURTHI v. THE NEW INDIA ASSURANCE
CO. LTD. & OTHERS [A. K. SIKRI, J.]
A
B
C
D
E
F
G
H
1102 SUPREME COURT REPORTS [2019] 3 S.C.R.
a part-time basis he was being paid a salary of Rs 80,000 per
month (UK £1008.31). He paid his income tax even in the UK.
After his graduation, he came back to India. He was offered a
job as EU Controller by GOA LLC, a company based in Chicago,
USA at an annual salary of Rs 18 lakhs (i.e. $41,600). However,
when the accident took place he was not working; having not
accepted the said offer. He was still a student. It would have
been hazardous for the Tribunal to calculate the amount of
compensation towards the loss of dependency on that basis.
9. The Tribunal and the High Court, however, in our opinion, keeping
in view the aforementioned backdrop might not be correct in
holding that he would have earned only Rs 18,000 per month. It is
true that the cost of living in the western countries would be higher.
The standard of living in the western countries cannot be followed;
in the absence of any material placed before this Court it should
not be followed in India. Even in a case where the victim of an
accident was earning salary in US dollars, this Court opined that a
lower multiplier should be applied.
10. In United India Insurance Co. Ltd. v. Patricia Jean
Mahajan [(2002) 6 SCC 281] this Court held: (SCC pp. 294-95,
paras 19-20)
"19. In the present case we find that the parents of the
deceased were 69/73 years. Two daughters were aged 17
and 19 years. The main question, which strikes us in this
case is that in the given circumstances the amount of
multiplicand also assumes relevance. The total amount of
dependency as found by the learned Single Judge and also
rightly upheld by the Division Bench comes to 2,26,297 dollars.
Applying multiplier of 10, the amount with interest and the
conversion rate of Rs 47, comes to Rs 10.38 crores and with
multiplier of 13 at the conversion rate of Rs 30 the amount
comes to Rs 16.12 crores with interest. These amounts are
huge indeed. Looking to the Indian economy, fiscal and
financial situation, the amount is certainly a fabulous amount
though in the background of American conditions it may not
be so. Therefore, where there is so much of disparity in the
A
B
C
D
E
F
G
H
1103
economic conditions and affluence of the two places viz. the
place to which the victim belongs and the place where the
compensation is to be paid, a golden balance must be struck
somewhere, to arrive at a reasonable and fair mesne. Looking
by the Indian standards they may not be much too
overcompensated and similarly not very much under
compensated as well, in the background of the country where
most of the dependent beneficiaries reside. Two of the
dependants, namely, parents aged 69/73 years live in India,
but four of them are in the United States. Shri Soli J. Sorabjee
submitted that the amount of multiplicand shall surely be
relevant and in case it is a high amount, a lower multiplier can
appropriately be applied. We find force in this submission. ...
20. The court cannot be totally oblivious to the realities. The
Second Schedule while prescribing the multiplier, had
maximum income of Rs 40,000 p.a. in mind, but it is
considered to be a safe guide for applying the prescribed
multiplier in cases of higher income also but in cases where
the gap in income is so wide as in the present case income is
2,26,297 dollars, in such a situation, it cannot be said that
some deviation in the multiplier would be impermissible.
Therefore, a deviation from applying the multiplier as provided
in the Second Schedule may have to be made in this case.
Apart from factors indicated earlier the amount of multiplicand
also becomes a factor to be taken into account which in this
case comes to 2,26,297 dollars, that is to say an amount of
around Rs 68 lakhs per annum by converting it at the rate of
Rs 30. By Indian standards it is certainly a high amount.
Therefore, for the purposes of fair compensation, a lesser
multiplier can be applied to a heavy amount of multiplicand."
The said decision, however, to some extent was clarified by this
Court in Punjab National Bank v. Indian Bank [(2003) 6 SCC
79] .
11. It is in the aforementioned situation, we are of the opinion that
the fair amount of compensation should have been calculated at
Rs 25,000 per month being about one-third of the amount which
he was receiving in the UK."
M.R. KRISHNA MURTHI v. THE NEW INDIA ASSURANCE
CO. LTD. & OTHERS [A. K. SIKRI, J.]
A
B
C
D
E
F
G
H
1104 SUPREME COURT REPORTS [2019] 3 S.C.R.
 18. We may also take note of one judgment of High Court of
Delhi in MAC. APP. No. 135 of 2008 titled 'New India Assurance Co.
Ltd. v. Ganga Devi & Ors.' decided on November 23, 2009. In that
case also, accident resulted in death of the victim, named, Dr. Brij Mohan.
He was 24 years of age at the time of accident and had completed his
MBBS. He was doing one year internship and was getting stipend of
Rs.5,000/- per month. The deceased had cleared the UPSC examination
for the post of Medical Officer and was scheduled to be appointed as
Medical Officer after completing the internship. Evidence of PW-2,
Senior Assistant of the Hospital, where the deceased was interning, was
produced who deposed that after completing his internship, there was a
possibility of getting absorbed as Junior Resident Doctor in the same
hospital at salary of Rs.18,000/- to Rs.20,000/- per month.
19. The Tribunal took the view that the aforesaid evidence was
insufficient to prove the income. Accordingly, it took the minimum wages
of a graduate worker as Rs.3,543/- per month and added 50% towards
inflation and rise in price index. From this, 1/3rd was deducted towards
personal expenses and multiplier of 11 was applied to compute the loss
of dependency at Rs.9,35,352/-. The High Court set aside the order of
the Tribunal holding that evidence of PW-2 was believable. On that
basis, income was taken at Rs.18,000/- per month to which 50% was
added towards future prospects, following the judgment of this Court in
Sarla Verma v. Delhi Transport Corporation, (2009) 6 SCALE 129.
Deduction towards personal expenses was made on which multiplier of
13 was applied.
20. The aforesaid cases are of all those victims who were students
at the time of accident and were not in actual employment. In addition,
Mr. Arun Mohan had also referred to the judgment in N. Manjegowda
v. Manager, United India Insurance Company Limited, (2014) 3
SCC 584, where victim of an accident was a young advocate aged about
36 years. In the accident, he sustained whole body disability of 50%.
This judgment is cited for the purpose of showing principle laid down by
the Court in determining the loss of earning capacity of an advocate
who suffers disability in an accident. The Tribunal had assessed the loss
of future income due to disability at Rs.6,17,500/- per annum. The High
Court reduced the same to Rs.1,50,000/-. This Court noted that due to
the said accident, the appellant had suffered partial sensory loss all over
A
B
C
D
E
F
G
H
1105
his limbs and there was lack of proper coordination in all four limbs. He
needed an assistance for daily routine work. This kind of disability, in
the opinion of the Court, hindered his ability to practice as an advocate
and compete with others in the field of legal profession. He was bound
to suffer huge professional loss in the said condition. This Court, in the
aforesaid circumstances, took the view that loss of future income fixed
at Rs.6,17,500/- did not require any deduction. On the contrary, the loss
of earning should be treated as 70% and the appropriate multiplier should
be 16 in place of 13. On that basis, the loss of income due to disability
needed enhancement from Rs.6,17,500/- by at least Rs.4,00,000/- and
the compensation under the head loss of income due to disability was
worked out accordingly.
21. It would be also appropriate to take note of certain judgments
dealing with the assessment of loss of future earnings on account of
disability suffered as a result of accident, even when these cases pertain
to those victims who were having their earnings, as these cases would
throw light on the general principles which were laid down for assessing
such a loss.
22. In the case of Raj Kumar v. Ajay Kumar & Anr., (2011) 1
SCC 343, where the victim suffered 45% disability to left lower limb and
permanent functional disability of 25%, the Court held that it is a functional
disability which would be the operative criteria for assessing the loss of
future earnings and not physical disability. There is a detailed and lucid
discussion of assessment of future loss of earning due to permanent
disability, covering all possible facets and discussing every nuance of the
subject matter. After explaining the meaning of permanent disability
and contrasting it with temporary disability and also the manner in which
permanent disability of different limbs expressed by Doctors in the
Disability Certificates is to be interpreted, the Court clarified that the
assessment of compensation under the head of loss of future earnings
would depend upon the effect and impact of such permanent disability
on his earning capacity. The manner in which the assessment is to be
carried out is contained in the following passages in the said judgment:
"12. Therefore, the Tribunal has to first decide whether there is
any permanent disability and, if so, the extent of such permanent
disability. This means that the Tribunal should consider and decide
with reference to the evidence:
M.R. KRISHNA MURTHI v. THE NEW INDIA ASSURANCE
CO. LTD. & OTHERS [A. K. SIKRI, J.]
A
B
C
D
E
F
G
H
1106 SUPREME COURT REPORTS [2019] 3 S.C.R.
(i) whether the disablement is permanent or temporary;
(ii) if the disablement is permanent, whether it is permanent total
disablement or permanent partial disablement;
(iii) if the disablement percentage is expressed with reference to
any specific limb, then the effect of such disablement of the limb
on the functioning of the entire body, that is, the permanent disability
suffered by the person.
If the Tribunal concludes that there is no permanent disability then
there is no question of proceeding further and determining the
loss of future earning capacity. But if the Tribunal concludes that
there is permanent disability then it will proceed to ascertain its
extent. After the Tribunal ascertains the actual extent of permanent
disability of the claimant based on the medical evidence, it has to
determine whether such permanent disability has affected or will
affect his earning capacity.
13. Ascertainment of the effect of the permanent disability on
the actual earning capacity involves three steps.