ICICI LOMBARD GENERAL INSURANCE COMPANY LTD vs. RAM MANIK AND ORS

* IN THE HIGH COURT OF DELHI AT NEW DELHI

th
Date of decision: 16 January, 2015
+ MAC.APP. 498/2013

ICICI LOMBARD GENERAL INSURANCE COMPANY LTD
..... Appellant
Through: Ms. Neerja Sachdeva, Adv.

versus

RAM MANIK AND ORS ..... Respondents
Through: Nemo.

CORAM:
HON'BLE MR. JUSTICE G.P.MITTAL
G. P. MITTAL, J. (ORAL)
1. The appeal is for reduction of compensation of Rs.16,90,806/-
awarded by the Motor Accident Claims Tribunal (the Claims
Tribunal) in favour of Respondent no.1 for having suffered injuries to
his right leg in a motor vehicular accident which occurred on
02.05.2008 while Respondent no.1 was riding a cycle pursuing his
vocation of selling cigarettes.
2. At the time of hearing of the appeal, following contentions were raised
by the learned counsel for the Appellant Insurance Company:-
(i) Respondent no.1 claimed compensation of Rs.6,00,000/- but as
against this, he was awarded a compensation of Rs.16,90,806/-;
MAC. APP. 498/2013 Page 1 of 18


(ii) Respondent no.1 claimed his income to be Rs.6,000/- to
Rs.7,000/- from selling cigarettes on a cycle. In the absence of
any proof of income, his income ought to have been taken as
per the minimum wages of an unskilled worker;
(iii) The Claims Tribunal erred in making addition of 30% towards
future prospects relying on the judgment of the Supreme Court
in Santosh Devi v. National Insurance Company Limited & Ors.
Civil Appeal No.3723/2012, decided on 23.04.2012. It is urged
that in view of the judgment of the Supreme Court in Reshma
Kumari & Ors. v. Madan Mohan & Anr., (2013) 9 SCC 65 such
increase was not permissible; and
(iv) The Claims Tribunal erred in taking loss of earning capacity as
100% through there was disability of only 62% in respect of
right lower limb.
3. The minimum wages of an unskilled worker as on 02.05.2008 were
Rs.3633/- per month. Respondent no.1’s testimony that he was selling
cigarettes on a cycle and that the accident took place while he was
riding on a cycle for supplying his goods has not been challenged in
cross-examination. Respondent no.1 could not have produced any
documentary evidence regarding his income. The court was justified
MAC. APP. 498/2013 Page 2 of 18


in making guess work and accepting the income of Respondent no.1
from his vocation as Rs.6,000/- per month.
4. As stated earlier, Respondent no.1’s job was to supply cigarettes to
various shopkeepers and stall holders on his cycle.
5. In Raj Kumar v. Ajay Kumar & Anr., 2011 (1) SCC 343, the Supreme
Court brought out the distinction between permanent disability and
functional disability resulting in loss of earning capacity. It was laid
down that compensation on account of loss of earning capacity has to
be granted in accordance with the nature of the job undertaken by the
victim of the motor accident. Paras 11 and 14 of the report are
extracted hereunder:
“11. What requires to be assessed by the Tribunal is the
effect of the permanently disability on the earning
capacity of the injured; and after assessing the loss of
earning capacity in terms of a percentage of the income,
it has to be quantified in terns of money, to arrive at the
future loss of earnings (by applying the standard
multiplier method used to determine loss of dependency).
We may however note that in some cases, on
appreciation of evidence and assessment, the Tribunal
may find that percentage of loss of earning capacity as a
result of the permanent disability, is approximately the
same as the percentage of permanent disability in which
case, of course, the Tribunal will adopt the said
percentage for determination of compensation (see for
example, the decisions of this Court in Arvind Kumar
Mishra v. New India Assurance Co. Ltd. 2010 (10) SCC
MAC. APP. 498/2013 Page 3 of 18


254 and Yadava Kumar v. D.M., National Insurance Co.
Ltd. 2010 (10) SCC 341.
x x x x x x x
14. For example, if the left hand of a claimant is
amputated, the permanent physical or functional
disablement may be assessed around 60%. If the
claimant was a driver or a carpenter, the actual loss of
earning capacity may virtually be hundred percent, if he
is neither able to drive or do carpentry. On the other
hand, if the claimant was a clerk in government service,
the loss of his left hand may not result in loss of
employment and he may still be continued as a clerk as
he could perform his clerical functions; and in that event
the loss of earning capacity will not be 100% as in the
case of a driver or carpenter, nor 60% which is the
actual physical disability, but far less. In fact, there may
not be any need to award any compensation under the
head of 'loss of future earnings', if the claimant continues
in government service, though he may be awarded
compensation under the head of loss of amenities as a
consequence of losing his hand. Sometimes the injured
claimant may be continued in service, but may not found
suitable for discharging the duties attached to the post or
job which he was earlier holding, on account of his
disability, and may therefore be shifted to some other
suitable but lesser post with lesser emoluments, in which
case there should be a limited award under the head of
loss of future earning capacity, taking note of the
reduced earning capacity.”
6. Thus, while considering functional disability, the Court has to take
into account the vocation of the injured/Claimant. The Court is further
to consider whether the injured could follow an alternative vocation.
Since Respondent no.1 was selling cigarettes on a cycle, his earning
was substantially affected. But at the same time, Respondent no.1
MAC. APP. 498/2013 Page 4 of 18


would be able to follow the same vocation by purchasing a motorised
tricycle or could follow some other vocation. In view of this, I am of
the view that loss of functional disability in case of Respondent no.1
ought to have been taken as 60% instead of 100%.
7. The Claims Tribunal awarded enhancement of 30% towards future
prospects on the basis of judgment of the Supreme Court in Santosh
Devi (supra) . I have dealt with this aspect in great detail in HDFC
Ergo General Insurance Co Ltd. v. Smt Lalta Devi & Ors, MAC.APP.
189/2014, decided on 12.01.2015. I had gone into the question
whether increase of 30% or 50%, as the case may be, has to be given
in case of the persons earning a fixed salary. I have held that the
judgment in Reshma Kumari & Ors. v. Madan Mohan & Anr. (2013) 9
SCC 65 shall be taken as a binding precedent. Paras 9 to 21 of the
report in Lalta Devi are extracted hereunder:-
“9. The learned counsel for the Claimants has referred
to a three Judge Bench decision of the Supreme Court in
Rajesh & Ors. v. Rajbir Singh & Ors., (2013) 9 SCC 54
to contend that the future prospects have to be added in
all cases where a person is getting fixed wages or is a
seasonal employee or is a student.
10. It is urged by the learned counsel for the
Claimants that the law laid down in Sarla Verma (Smt.) &
Ors. v. Delhi Transport Corporation & Anr., (2009) 6 SCC
121 was extended in Rajesh & Ors. v. Rajbir Singh &
Ors., (2013) 9 SCC 54 to hold that future prospects ought
to be extended in all cases.
MAC. APP. 498/2013 Page 5 of 18


11. On the other hand, the learned counsel for the
Insurance Company refers to a three Judge Bench
decision of the Supreme Court in Reshma Kumari & Ors.
v. Madan Mohan & Anr., (2013) 9 SCC 65 wherein while
approving the ratio with regard to future prospects in
Sarla Verma (Smt.) & Ors. (supra) and relying on
General Manager, Kerala State Road Transport
Corporation, Trivandrum v. Susamma Thomas (Mrs.)
and Ors. (1994) 2 SCC 176; Sarla Dixit v. Balwant
Yadav, (1996) 3 SCC 179 and Abati Bezbaruah v. Dy.
Director General, Geological Survey of India & Anr.,
2003 (3) SCC 148, the Supreme Court held as under:-
“38. With regard to the addition to income
for future prospects, in Sarla Verma [Sarla
Verma v. DTC, (2009) 6 SCC 121 : (2009) 2
SCC (Civ) 770 : (2009) 2 SCC (Cri) 1002] ,
this Court has noted the earlier decisions
in Susamma Thomas [Kerala
SRTC v. Susamma Thomas, (1994) 2 SCC
176 : 1994 SCC (Cri) 335] , Sarla
Dixit[(1996) 3 SCC 179] and Abati
Bezbaruah [Abati Bezbaruah v. Geological
Survey of India, (2003) 3 SCC 148 : 2003
SCC (Cri) 746] and in para 24 of the Report
held as under: (Sarla Verma case [Sarla
Verma v. DTC, (2009) 6 SCC 121 : (2009) 2
SCC (Civ) 770 : (2009) 2 SCC (Cri) 1002] ,
SCC p. 134)
“24. … In view of the imponderables and
uncertainties, we are in favour of adopting
as a rule of thumb, an addition of 50% of
actual salary to the actual salary income of
the deceased towards future prospects,
where the deceased had a permanent job
and was below 40 years. (Where the annual
income is in the taxable range, the words
„actual salary‟ should be read as „actual
salary less tax‟). The addition should be
only 30% if the age of the deceased was 40
to 50 years. There should be no addition,
MAC. APP. 498/2013 Page 6 of 18


where the age of the deceased is more than
50 years. Though the evidence may indicate
a different percentage of increase, it is
necessary to standardise the addition to
avoid different yardsticks being applied or
different methods of calculation being
adopted. Where the deceased was self-
employed or was on a fixed salary (without
provision for annual increments, etc.), the
courts will usually take only the actual
income at the time of death. A departure
therefrom should be made only in rare and
exceptional cases involving special
circumstances.”
39. The standardization of addition to
income for future prospects shall help in
achieving certainty in arriving at
appropriate compensation. We approve the
method that an addition of 50% of actual
salary be made to the actual salary income
of the deceased towards future prospects
where the deceased had a permanent job
and was below 40 years and the addition
should be only 30% if the age of the
deceased was 40 to 50 years and no addition
should be made where the age of the
deceased is more than 50 years. Where the
annual income is in the taxable range, the
actual salary shall mean actual salary less
tax. In the cases where the deceased was
self-employed or was on a fixed salary
without provision for annual increments, the
actual income at the time of death without
any addition to income for future prospects
will be appropriate. A departure from the
above principle can only be justified in
extraordinary circumstances and very
exceptional cases.”
12. The learned counsel for the Insurance Company
relies upon a Constitutional Bench judgment of the
MAC. APP. 498/2013 Page 7 of 18


Supreme Court in Central Board of Dawoodi Bohra
Community & Anr. v. State of Maharashtra & Anr.,
(2005) 2 SCC 673; Safiya Bee v. Mohd. Vajahath
Hussain @ Fasi, (2011) 2 SCC 94; and Union of India &
Ors. v. S.K. Kapoor, (2011) 4 SCC 589 to contend that in
case of divergence of opinion in judgments of benches of
co-equal strength, earlier judgment will be taken as a
binding precedent.
13. It may be noted that in Reshma Kumari & Ors. v.
Madan Mohan & Anr., (2013) 9 SCC 65; the three Judge
Bench was dealing with a reference made by a two Judge
Bench (S.B. Sinha and Cyriac Joseph, J.J.). The two
Hon‟ble Judges wanted an authoritative pronouncement
from a Larger Bench on the question of applicability of
the multiplier and whether the inflation was built in the
multiplier. The three Judge Bench approved the two
Judge Bench decision of the Supreme Court in Sarla
Verma (Smt.) & Ors. v. Delhi Transport Corporation &
Anr., (2009) 6 SCC 121 with regard to the selection of
multiplier. It further laid down that addition towards
future prospects to the extent of 50% of the actual salary
shall be made towards future prospects when the
deceased had a permanent job and was below 40 years
and addition of 30% should be made if the age of the
deceased was between 40-50 years. No addition towards
future prospects shall be made where the deceased was
self-employed or was getting a fixed salary without any
provision of annual increment.
14. Of course, three Judge Bench of the Supreme
Court in its later judgment in Rajesh relying on Santosh
Devi v. National Insurance Company Ltd. & Ors., 2012
(6) SCC 421 observed that there would be addition of
30% and 50%, depending upon the age of the deceased,
towards future prospects even in the case of self-
employed persons. It may, however, be noted that in
Rajesh, the three Judge Bench decision in Reshma
Kumari (supra) was not brought to the notice of their
Lordships.
15. The divergence of opinion was noted by another
three Judge Bench of the Supreme Court in Sanjay
MAC. APP. 498/2013 Page 8 of 18


Verma v. Haryana Roadways, (2014) 3 SCC 210. In
paras 14 and 15, the Supreme Court observed as under:-

15. Answering the above reference a three-Judge
Bench of this Court in Reshma Kumari v. Madan
Mohan [(2013) 9 SCC 65 : (2013) 4 SCC (Civ)
191 : (2013) 3 SCC (Cri) 826] (SCC p. 88, para
36) reiterated the view taken in Sarla
Verma [Sarla Verma v. DTC, (2009) 6 SCC 121 :
(2009) 2 SCC (Civ) 770 : (2009) 2 SCC (Cri)
1002] to the effect that in respect of a person who
was on a fixed salary without provision for annual
increments or who was self-employed the actual
income at the time of death should be taken into
account for determining the loss of income unless
there are extraordinary and exceptional
circumstances. Though the expression
“exceptional and extraordinary circumstances” is
not capable of any precise definition, in Shakti
Devi v. New India Insurance Co. Ltd. [(2010) 14
SCC 575 : (2012) 1 SCC (Civ) 766 : (2011) 3 SCC
(Cri) 848] there is a practical application of the
aforesaid principle. The near certainty of the
regular employment of the deceased in a
MAC. APP. 498/2013 Page 9 of 18


government department following the retirement of
his father was held to be a valid ground to
compute the loss of income by taking into account
the possible future earnings. The said loss of
income, accordingly, was quantified at double the
amount that the deceased was earning at the time
of his death.”

16. Further, the divergence of opinion in Reshma Kumari &
Ors. v. Madan Mohan & Anr., (2013) 9 SCC 65 and Rajesh &
Ors. v. Rajbir Singh & Ors., (2013) 9 SCC 54 was noticed by
the Supreme Court in another latest judgment in National
Insurance Company Ltd. v. Pushpa & Ors., CC No.8058/2014,
decided on 02.07.2014 and in concluding paragraph while
making reference to the Larger Bench, the Supreme Court held
as under:-
“Be it noted, though the decision in Reshma
(supra) was rendered at earlier point of time, as is
clear, the same has not been noticed in Rajesh
(supra) and that is why divergent opinions have
been expressed. We are of the considered opinion
that as regards the manner of addition of income
of future prospects there should be an
authoritative pronouncement. Therefore, we think
it appropriate to refer the matter to a larger
Bench.”

17. Now, the question is which of the judgments ought to be
followed awaiting answer to the reference made by the Supreme
Court in Pushpa & Ors. (supra).
18. In Central Board of Dawoodi Bohra Community & Anr.
v. State of Maharashtra & Anr., (2005) 2 SCC 673 in para 12,
the Supreme Court observed as under:-

“12. Having carefully considered the submissions
made by the learned Senior Counsel for the parties
and having examined the law laid down by the
Constitution Benches in the abovesaid decisions,
we would like to sum up the legal position in the
following terms:
MAC. APP. 498/2013 Page 10 of 18

MAC. APP. 498/2013 Page 11 of 18

MAC. APP. 498/2013 Page 12 of 18

8. Thus, addition of 30% towards future prospects was not permissible in
the income of Respondent no.1.
9. As far as Appellant’s contention on grant of compensation more than
what was claimed by Respondent no.1 is concerned, it is well settled
that the duty of the Claims Tribunal and the Court is to award ‘ just
compensation‟ and there is no bar to award compensation amount
more than what is claimed by the victim. The issue was discussed by
me in my judgment MAC.APP.629/2010 decided on 06.09.2012.
Paras 13 to 19 of the judgment are extracted hereunder:
“13.The theory of not awarding compensation more than the
amount claimed got a sea change with the judgment of the
MAC. APP. 498/2013 Page 13 of 18


Supreme Court in Nagappa v. Gurudayal Singh & Ors.,
(2003) 2 SCC 274, wherein the Supreme Court held that there
is no restriction that compensation could be awarded only up
to the amount claimed by the Claimant. In an appropriate
case where from the evidence brought on record if the
Tribunal/Court considers that claimant is entitled to get more
compensation than claimed, the Tribunal may pass such an
award. The Supreme Court said that the only embargo was;
that it should be „just‟ compensation, that is to say, it should
be neither arbitrary, fanciful nor unjustifiable. Para 21 of
the report is extracted hereunder:
“21. In our view, under the M.V. Act, there is no restriction
that Tribunal/Court cannot award compensation amount
exceeding the claimed amount. The function of the
Tribunal/Court is to award „just‟ compensation which is
reasonable on the basis of evidence produced on record.
Further, in such cases there is no question of claim
becoming time barred or it cannot be contended that by
enhancing the claim there would be change of cause of
action. It is also to be stated that as provided under Sub-
section(4) to Section 166, even report submitted to the
Claims Tribunal under Sub-section (6) of Section 158 can be
treated as an application for compensation under the M.V.
Act, If required, in appropriate cases, Court may permit
amendment to the claim Petition.”
14. In National Insurance Company Ltd. v. Rani, 2006 ACJ
1224, a Division Bench of Madras High Court held that without
filing any Appeal or Cross-Objections, High Court is competent
to enhance the compensation in favour of a victim of a motor
vehicle accident by invoking provisions of Order XLI Rule 33
Code of Civil Procedure(Code). Para 16 of the report is
extracted hereunder:
“16. At the risk of repetition it may be stated that the
contention put forward is that the Court is duty bound to fix
the just compensation. The fact that the Claimants have not
filed any cross objection would not stand in the way and
further the Court can by invoking the powers conferred
under Order XLI Rule 33 of CPC, is satisfied, can enhance
the compensation and call upon the Claimants to pay
MAC. APP. 498/2013 Page 14 of 18


necessary court fee. In that context, the learned counsel
also submitted, when the Supreme Court has ruled that even
at the appellate stage original petition can be amended
claiming enhanced compensation, the Court enhancing
compensation in the instant case, if satisfied, invoking
powers under Order XLI, Rule 33 will certainly be in
order.”
15.In Oriental Fire and General Insurance Co. Ltd. v. Amarsingh
Pratapsingh Sikliker, 1(1993) ACC 627, a Division Bench of
Gujarat High Court held that the Appellate Court was
empowered to grant adequate compensation so as to do
substantial justice between the parties even in absence of Cross-
Objections or Appeal. Para 17 of the report is extracted
hereunder:
“17. It becomes very clear from the aforesaid provisions
that the appellate Court is empowered to grant adequate
relief so as to do substantial justice between the parties
even in absence of cross-objections or appeal….”

16.In Sone Ram v. Jayaprakash, AIR 1986 MP 21, the High
Court of Madhya Pradesh exercising power under Order XLI
Rule 33 of the Code enhanced the compensation granted by the
Claims Tribunal even though no Appeal was preferred by the
Claimant. In the case of Sewaram alias Sewan v. Nanhe Khan
alias Asgar Beg, 1987 ACJ 354(MP), the High Court of Madhya
Pradesh awarded 10% interest on the compensation amount in
the absence of any Appeal or Cross-Objections by the Claimants.
17.A learned Single Judge of this Court in National Insurance
Co. Ltd. v. Komal & Ors., MANU/DE/2870/2012, (MAC. APP.
No.595/2007 decided on: 27.04.2012) referred to the judgments
of the Supreme Court in Pannalal v. State of Bombay, AIR 1963
SC 1516; Rameshwar Prasad v. M/s Shyam Beharilal Jagannath,
(1964) 3 SCR 549; Nirmal Bala Ghose v. Balai Chand Ghose,
AIR 1965 SC 1874; Giasi Ram v. Ramjilal, AIR 1969 SC 1144;
Harihar Prasad Singh v. Balmiki Prasad Singh, (1975) 2 SCR
932; Mahant Dhangir v. Madan Mohan, (1988) 1 SCR 679;
State of Punjab v. Bakshish Singh, (1999) 8 SCC 222 and
judgments of various High Courts to opine that the High Court is
MAC. APP. 498/2013 Page 15 of 18


empowered to enhance the compensation without filing any
Appeal or Cross-Objections by a Claimant.
18.In Ibrahim v. Raju, AIR 2012 SC 534, a compensation of
` 3,00,000/- was claimed by the Appellant which resulted in an
award of ` 60,000/- by the Claims Tribunal. The compensation
was enhanced to ` 1,89,440/- by the High Court, which was
enhanced to ` 6,00,000/- by the Supreme Court. Para 21 of the
report is extracted hereunder:
“21. We are conscious of the fact that in the petition filed
by him, the Appellant had claimed compensation of Rs. 3
lacs only with interest and cost. It will be reasonable to
presume that due to financial incapacity the Appellant
and his family could not avail the services of a competent
lawyer and make a claim for adequate compensation.
However, as the Tribunal and the High Court and for
that reason this Court are duty bound to award just
compensation, (emphasis supplied) we deem it proper to
enhance the compensation from Rs. 1,89,440/- to Rs. 6
lacs. This approach is in tune with the judgment in
Nagappa v. Gurudayal Singh, (2003) 2 SCC 274. In that
case, the Court considered a similar issue, referred to the
judgments of the Bombay High Court in Municipal
Corporation of Greater Bombay v. Kisan Gangaram Hire,
1987 ACJ 311(Bombay), Orissa High Court in Mulla
Mod. Abdul Wahid v. Abdul Rahim,1994 ACJ 348
(Orissa) and Punjab and Haryana High Court in Devki
Nandan Bangur v. State of Haryana, 1995 ACJ 1288 (P &
H).”
19.In New India Assurance Co. Ltd. v. Gopali & Ors., Civil
Appeal No.5179 of 2012 (arising out of SLP (C) No.11345 of
2007) decided by the Supreme Court on 05.07.2012, the New
India Assurance Co. Ltd. challenged an award of compensation
of ` 6,45,300/-. The compensation was, however, enhanced to
` 10,63,040/- by the Supreme Court.”

10. As per section 166 (4) of the Motor Vehicles Act, 1988 (the M.V.
Act), it is not mandatory for a victim to file a Claim Petition and the
MAC. APP. 498/2013 Page 16 of 18


Court can consider Accident Information Report forwarded under
Section 158(6) of the M.V. Act as a petition for award of
compensation.
11. In view of this, the impugned judgment cannot be faulted on the
ground that compensation more than claimed was awarded.
12. I notice that Respondent no.1 has suffered multiple rib fractures B/L,
cut hemopneumothorax B/L cut B/L SVP and pubic rami fracture and
fracture both bones right leg resulting into 62% disability in respect of
left lower limb.
13. In view of this, the loss of earning capacity comes to Rs.5,40,000/-
(6,000/- x 12 x 1/2 x 15). The compensation thus, re-computed as
under:-

MAC. APP. 498/2013 Page 17 of 18

14. The overall compensation thus, comes to Rs.8,26,806/-. The overall
compensation is reduced from Rs.16,90,806/- to Rs.8,26,806/-.
15. The excess compensation of Rs.8,64,000/- along with proportionate
interest shall be refunded to the Appellant Insurance Company.
16. The compensation awarded shall be released/held in fixed deposit in
favour of Respondents no.1 as directed by the Claims Tribunal.
`
17. The statutory amount of 25,000/- shall also be refunded to the
Appellant Insurance Company.
18. The appeal is allowed in above terms.
19. Pending applications also stand disposed of.


(G.P. MITTAL)
JUDGE
JANUARY 16, 2015
vk
MAC. APP. 498/2013 Page 18 of 18