Motor Accident Claim

Section 168 of the Motor Vehicles Act

In an ordinary civil suit the burden to prove a fact lies on a party, who would fail, if no evidence at all is given by the either side. In a Claim Petition filed u/s 166 of the Act the Claims Tribunal, trained in law, which is manned by a Senior Judicial Officer is to hold an inquiry u/s 168 of the Act to award just compensation. Thus, even if a Claimant failed to adduce any evidence, the Claims Tribunal is expected to summon all relevant materials to form an opinion and award a fair and proper compensation. In Sh. Kuldeep Singh Bawa and Others Vs. Tika Ram and Others, J.R. Midha, J. held as under:-

Section 168 of the Motor Vehicles Act provides that the learned Tribunal shall conduct an inquiry into the claim petition. Section 169 of the Motor Vehicles Act provides that the learned Tribunal shall follow such summary procedure as it deem fit to conduct such an inquiry. The inquiry stipulated in Section 168 of the Motor Vehicles Act is different from the civil trial. Section 168 of the Motor Vehicles Act casts a duty on the learned Tribunal to conduct an inquiry in a meaningful manner. The object of the legislature behind making this provision is that the victims of road accident are not left at their own mercy………

Difficulty arises where a Claims Tribunal is unable to find any evidence to assess the loss of dependency. What should be taken as income to arrive at the loss suffered by the LRs of the deceased or the victim himself in the case of injury in a motor accident? In all such cases, a Claims Tribunal sometimes has to make some guess work objectively considering the facts and circumstances of each case.

In Ningamma and Another Vs. United India Insurance Co. Ltd., , the Supreme Court held as under:-

  1. Undoubtedly, Section 166 of the MVA deals with “just compensation” and even if in the pleadings no specific claim was made u/s 166 of the MVA, in our considered opinion a party should not be deprived from getting “just compensation” in case the claimant is able to make out a case under any provision of law. Needless to say, the MVA is beneficial and welfare legislation. In fact, the court is duty-bound and entitled to award “just compensation” irrespective of the fact whether any plea in that behalf was raised by the claimant or not.

Section 168 of the Act enjoins upon Claims Tribunal to award “just compensation” and even if in the pleadings no specific claim is made, a party cannot be deprived of from getting just compensation in case the claimant is able to make out a case. It was held that Motor Vehicles Act is a beneficial and welfare legislation and the Court is duty bound to award “just compensation”, whether any plea in that regard was raised by the Claimants or not.

Section 168 of the Motor Vehicles Act (the Act) enjoins the Claims Tribunal to make an award determining the amount of compensation which appears to it to be just. However, the objective factors, which may constitute the basis of compensation appearing as just, have not been indicated in the Act. Thus, the expression “which appears to be just” vests a wide discretion in the Tribunal in the matter of determination of the compensation. Nevertheless, the wide amplitude of such power does not empower the Tribunal to determine the compensation arbitrarily, or to ignore settled principles relating to determination of compensation. Although the Act is a beneficial legislation, it can neither be allowed to be used as a source of profit, nor as a windfall to the persons affected, nor should it be punitive to the person(s) liable to pay compensation. The determination of compensation must be based on certain data, establishing reasonable nexus between the loss incurred by the dependents of the deceased and the compensation to be awarded to them. In nutshell, the amount of compensation determined to be payable to the claimant(s) has to be fair and reasonable, by accepted legal standards.

In General Manager, Kerala State Road Transport Corporation, Trivandrum Vs. Mrs. Susamma Thomas and others, , M.N. Venkatachaliah, J. observed that the determination of the quantum must answer what contemporary society “would deem to be a fair sum such as would allow the wrongdoer to hold up his head among his neighbours and say with their approval that he has done the fair thing”. The amount awarded must not be niggardly since the “law values life and limb in a free society in generous scales?” At the same time, a misplaced sympathy, generosity and benevolence cannot be the guiding factor for determining the compensation. The object of providing compensation is to place the claimant(s), to the extent possible, in almost the same financial position, as they were in, before the accident and not to make a fortune out of misfortune that has befallen them.

In calculating the pecuniary loss to the dependants many imponderables enter into the calculation. Therefore, the actual extent of the pecuniary loss to the dependants may depend upon data which cannot be ascertained accurately, but must necessarily be an estimate, or even partly a conjecture. Shortly, stated, the general principle is that the pecuniary loss can be ascertained only by balancing on the one hand the loss to the claimants of the future pecuniary benefit and on the other any pecuniary advantage which from whatever source comes to them by reason of the death, that is, the balance of loss and gain to a dependant by the death must be ascertained.

Thus, in the realm of determination of damages in a motor accident claim case some speculation and guess work is permissible to award just compensation.

There were two methods adopted to determine and for calculation of compensation in fatal accident actions. The first multiplier method was mentioned in Davies v. Powell Duffryn Associated Collieries Ltd. (supra) and the second in Nance v. British Columbia Electric Railway Company Ltd. (supra).

“13. The multiplier method involves the ascertainment of the loss of dependency or the multiplicand having regard to the circumstances of the case and capitalising the multiplicand by an appropriate multiplier. The choice of the multiplier is determined by the age of the deceased (or that of the claimants, whichever is higher) and by the calculation as to what capital sum, if invested at a rate of interest appropriate to a stable economy, would yield the multiplicand by way of annual interest. In ascertaining this, regard should also be had to the fact that ultimately the capital sum should also be consumed up over the period for which the dependency is expected to last.

The considerations generally relevant in the selection of multiplicand and multiplier were adverted to by Lord Diplock in his speech in Mallet v. McMonagle (supra) where the deceased was aged 25 and left behind his widow of about the same age and three minor children. On the question of selection of multiplicand Lord Diplock observed:

The starting point in any estimate of the amount of the “dependency” is the annual value of the material benefits provided for the dependants out of the earnings of the deceased at the date of his death. But … there are many factors which might have led to variations up or down in the future. His earnings might have increased and with them the amount provided by him for his dependants. They might have diminished with a recession in trade or he might have had spells of unemployment. As his children grew up and became independent the proportion of his earnings spent on his dependants would have been likely to fall. But in considering the effect to be given in the award of damages to possible variations in the dependency there are two factors to be borne in mind. The first is that the more remote in the future is the anticipated change the less confidence there can be in the chances of its occurring and the smaller the allowance to be made for it in the assessment. The second is that as a matter of the arithmetic of the calculation of present value, the later the change takes place the less will be its effect upon the total award of damages. Thus at interest rates of 41/2 per cent the present value of an annuity for 20 years, of which the first ten years are at 100 per annum and the second ten years at 200 per annum, is about 12 years? purchase of the arithmetical average annuity of 150 per annum, whereas if the first ten years are at 200 per annum and the second ten years at 100 per annum the present value is about 14 years’ purchase of the arithmetical mean of 150 per annum. If therefore the chances of variations in the “dependency” are to be reflected in the multiplicand of which the years’ purchase is the multiplier, variations in the dependency which are not expected to take place until after ten years should have only a relatively small effect in increasing or diminishing the “dependency” used for the purpose of assessing the damages.

In regard to the choice of the multiplicand, Halsbury’s Laws of England in Vol. 34, Para 98 states the principle thus:

  1. Assessment of damages under the Fatal Accidents Act, 1976.-The courts have evolved a method for calculating the amount of pecuniary benefit that dependants could reasonably expect to have received from the deceased in the future. First the annual value to the dependants of those benefits (the multiplicand) is assessed. In the ordinary case of the death of a wage-earner that figure is arrived at by deducting from the wages the estimated amount of his own personal and living expenses.

The assessment is split into two parts. The first part comprises damages for the period between death and trial. The multiplicand is multiplied by the number of years which have elapsed between those two dates. Interest at one-half the short-term investment rate is also awarded on that multiplicand. The second part is damages for the period from the trial onwards. For that period, the number of years which have elapsed between the death and the trial is deducted from a multiplier based on the number of years that the expectancy would probably have lasted; central to that calculation is the probable length of the deceased’s working life at the date of death.

As to the multiplier, Halsbury states:-

However, the multiplier is a figure considerably less than the number of years taken as the duration of the expectancy. Since the dependants can invest their damages, the lump sum award in respect of future loss must be discounted to reflect their receipt of interest on invested funds, the intention being that the dependants will each year draw interest and some capital (the interest element decreasing and the capital drawings increasing with the passage of years), so that they are compensated each year for their annual loss, and the fund will be exhausted at the age which the court assesses to be the correct age, having regard to all contingencies. The contingencies of life such as illness, disability and unemployment have to be taken into account. Actuarial evidence is admissible, but the courts do not encourage such evidence. The calculation depends on selecting an assumed rate of interest. In practice about 4 or 5 per cent is selected, and inflation is disregarded. It is assumed that the return on fixed interest bearing securities is so much higher than 4 to 5 per cent that rough and ready allowance for inflation is thereby made. The multiplier may be increased where the plaintiff is a high tax payer. The multiplicand is based on the rate of wages at the date of trial. No interest is allowed on the total figure.