The Motor Vehicles Act does not provide for any method of determination of the compensation. In Section 110-B it is provided that the Tribunal is to determine the just compensation. The language leaves no room for doubt that the phrase ‘appears to be just’ is wide and comprehensive in its scope. As has been held in the Division Bench decision of this Court reported in Oriental Fire and General Insurance Co. Ltd. Vs. Mrs. Kamal Kamini Das and Others, the determination of just compensation would be guided by the principles in the Law of Torts since the claim for compensation on account of negligence in respect of motor vehicle is a branch of that Law. This has been accepted by another Division Bench of this Court reported in Hemalata Devi Vs. Sk. Lokman and Others, .
The basic principle for measure of damages in Tort is that there should be restitutio in integrum as has been observed at pages 775-776 in the Seventh Edition of Winfield on Tort by J.A. Jolowicz and T. Ellis Lewis. It has been further observed that in cases of compensating injuries by damages, one is to get at the sum of money which will put the party who has been injured or who has suffered in the same position as he would have been if he had not sustained the wrong for which he is to get the compensation for reparation. This principle is applied by adopting various methods of determination of the compensation which appear to be just.
All the decisions of the Supreme Court and for the various High Courts have been rendered in line with the aforesaid principles.
Compensation is claimed under the Act for pecuniary loss and non-pecuniary loss. Amount actually loss on account of medical expenses and other expenses are pecuniary loss. The loss of future pecuniary benefit is also pecuniary loss. Loss on account of mental and physical pain, longevity and of similar type are non-pecuniary loss. So far as non-pecuniary loss, a reasonable guesswork is the only method. While making reasonable guesswork respect of pecuniary loss, it is to be divided into two categories. Amounts actually spent or lost on account of medical and other expenses and amount of loss on account of damage of the property is one category and loss of future pecuniary benefit is another.
The compensation to be paid on account of non-pecuniary loss and actual expenses and loss of property is to be paid as such. So far as the loss of future pecuniary benefits, the annual loss is to be first determined. In some cases the annual loss is multiplied to the period of its continuance and from the total amount a percentage is deducted on account of the benefit obtained for lump sum payment and taking into consideration the future uncertainties. In some cases the principle of suitable multiplier is applied. The annual pecuniary loss is multiplied by years of purchase. The years of purchase are fixed depending on the length of continuance of the loss. Supreme Court and other Courts have applied fifteen years or twenty years’ purchase depending on the facts and circumstances of the case. The third method of determination of compensation is to fix an amount which would be sufficient to earn the annual loss. The annual loss is made equal to the interest receivable on the available bank rate of interest and the amount which would be sufficient for earning that, interest is determined as the compensation. The basic principle being restitution in integrum, one of the method is applied to the facts and circumstances of each individual case.
A Division Bench of Orissa High Court in the decisions reported in 47 (1979) CLT 368 (Orissa Road Transport Company Limited v. Sibananda Patnaik) did not adopt the third basis on the following finding :
“…Rate of interest varies and there is no provision under the Motor Vehicles Act to obtain review of the compensation once awarded on the basis of variance of the rate of interest. That apart, the persons entitled to compensation should have the control over the compensation amount and there can be no justification to keep it out of their reach and make an annuity available to them. We are, therefore, not prepared to accept the proposition as a general rule in the matter of award of compensation under the Motor Vehicles Act…….”