Important Judgments on Compensation in Motor Vehicle Accident Cases

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April 23, 2018

Award of Compensation shall be reasonable and just

Case name: K.Suresh v. New India Assurance Company Limited and Another, [(2012) 12 SCC 274]

In this case, the Supreme Court observed:

  • That while assessing the quantum of compensation some guess work, some hypothetical considerations and some sympathy come into play but, a significant one, the ultimate determination is to be viewed with some objective standards.
  • That neither the Tribunal nor a court can take a flight in fancy and award an exorbitant sum. In conceptual eventuality “just compensation” plays a dominant role.
  • That an adjudicating authority, while determining the quantum of compensation, has to keep in view the sufferings of the injured person which would include his inability to lead a full life, his incapacity to enjoy the normal amenities which he would have enjoyed but for the injuries and his ability to earn as much as he used to earn or could have earned.

Compensation under the head disability to earn livelihood in future distinct from compensation under the head suffering and loss of enjoyment of life

Case name: Ramesh Chandra v. Randhir singh and others [(1990) 3 SCC 723]

In this case, the Supreme Court, while considering the disability to earn livelihood in future, held that the amounts under that head can be awarded notwithstanding the grant of compensation under the head pain and suffering and loss of enjoyment of life. The Apex Court opined that:

  • That the sum awarded for pain, suffering and loss of enjoyment of life etc. termed as general damages should be taken to be covered by damages granted for loss of earnings is concerned that too is misplaced and without any basis.
  • The pain and suffering and loss of enjoyment of life which is a resultant and permanent fact occasioned by the nature of injuries received by the claimant and the ordeal he had to undergo.
  • Money solace is the answer discovered by the Law of Torts. No substitute has yet been found to replace the element of money. This, on the face of it appeals to us as a distinct head, quite apart from the inability to earn livelihood on the basis of incapacity or disability which is quite different.
  • The incapacity or disability to earn a livelihood would have to be viewed not only in praesenti but in futuro on reasonable expectancies and taking into account deprival of earnings of a conceivable period. This head being totally different cannot in our view overlap the grant of compensation under the head of pain, suffering and loss of enjoyment of life.
  • One head relates to the impairment of person’s capacity to earn, the other relates to the pain and suffering and loss of enjoyment of life by the person himself.

Compensation for permanent disability cannot exclude compensation under other heads

Case name: B. Kothandapani v. Tamil Nadu State Transport Corporation Limited [(2011) 6 SCC 420]

The Supreme Court made the following observations in the case:

  • That the compensation for loss of earning power/capacity has to be determined based on various aspects including permanent injury/disability. At the same time, it cannot be construed that compensation cannot be granted for permanent disability of any nature.
  • It cannot be disputed that apart from the fact that the permanent disability affects the earning capacity of the person concerned, undoubtedly, one has to forego other personal comforts and even for normal avocation they have to depend on others.

Courts to adequately compensate the victim for not only physical injury but also for leading a normal life

Case name: Kavitha v. Deepak and Others [(2012) 8 SCC 604]

In this case, the Supreme Court stated that:

  • The Courts while determining the quantum of compensation, either for permanently or temporarily disabled persons, must make effort to adequately compensate them not merely for physical injury and treatment but also for loss of earning, inability to lead a normal life and to enjoy life’s amenities.
  • That in determining the quantum of compensation payable to the victims of accident, who are disabled either permanently or temporarily, efforts should always be made to award adequate compensation not only for the physical injury and treatment, but also for the loss of earning and inability to lead a normal life and enjoy amenities, which would have been enjoyed but for the disability caused due to the accident.
  • The amount awarded under the head of loss of earning capacity are distinct and do not overlap with the amount awarded for pain, suffering and loss of enjoyment of life or the amount awarded for medical expenses.

Compensation can be granted towards permanent-disability as well as loss of future earnings

Case name: Subulaxmi v. Managing Director, Tamil Nadu State Transport Corporation and Another [(2012) 10 SCC 177]

In this case, the seminal issue that cropped up before the Apex Court was whether the High Court was justified in awarding compensation on a singular head relating to permanent disability and loss of future earning?

In the aforesaid context, the Apex Court made the following observations:

  • The Court in the case held that compensation can be granted towards permanent-disability as well as loss of future earnings, for one head relates to the impairment of person’s capacity and the other relates to the sphere of pain and suffering and loss of enjoyment of life by the person himself.
  • If the victim of an accident suffers permanent or temporary disability, then efforts should always be made to award adequate compensation not only for the physical injury and treatment, but also for the pain, suffering and trauma caused due to the accident, loss of earning and the victim’s inability to lead a normal life and enjoy amenities, which he would have enjoyed but for the disability caused due to the accident.

Fair Compensation to be awarded for non-pecuniary losses

Case name: Jai Bhagwan v. Laxman Singh and Others [(1994) 5 SCC 5]

In this case, the Supreme Court made reference to In Clerk and Lindsell on Torts (16th Edn.), wherein while referring to damages for personal injuries, it was stated that

“In all but a few exceptional cases the victim of personal injury suffers two distinct kinds of damage which may be classed respectively as pecuniary and non-pecuniary. Bu pecuniary damage is meant that which is susceptible of direct translation into money terms and includes such matters as loss of earnings, actual and prospective, and out-of-pocket expenses, while non-pecuniary damage includes such immeasurable elements as pain and suffering and loss of amenity or enjoyment of life. In respect of the former, it is submitted, the court should and usually does seek to achieve restitutio in integrum in the sense described above, while for the latter it seeks to award ‘fair compensation’. This distinction between pecuniary and non-pecuniary between ‘special’ and ‘general’ damages, for while the former is necessarily concerned solely with pecuniary losses – notably accrued loss of earnings and out-of-pocket expenses – the latter comprises not only non-pecuniary losses but also prospective loss of earnings and other future pecuniary damage.”

  • In view of the aforesaid, the Court reiterated that non-pecuniary losses are different from pecuniary losses in that the restitutio in integrum objective cannot be applied liberally to them – damages cannot restore a lost limb or happiness.
  • That the practice of the courts is not to subdivide non-pecuniary damages under specific heads, nevertheless proper consideration cannot be given to the plaintiff’s claim without taking into account the various types of loss he has s

Compensation in case where Victim is a Child

Case name: Master Mallikarjun v. Divisional Manager, The National Insurance Company Limited & Anr. [2013 (3) KLJ 815]

In this case, the Supreme Court considered the issue of fair compensation to be awarded to a child, who suffered a disability in a motor accident.

The Apex Court in the case declared that the minimum compensation in such cases should be Rs.3,00,000/, if the child suffers whole-body disability between 10% to 30%, Rs.4,00,000/- for disability up to 60%, Rs.5,00,000/- for disability up to 90% and Rs.6,00,000/-, if the disability is above 90%.

However, in the case, the Supreme Court did not fix the aforesaid parameters as an inviolable standard and declared that in exceptional circumstances, the Tribunals and courts would be empowered to grant more as per the factual requirements to be assessed from case to case.

  • Other observation made by the Court in the case was that the main elements of damage in the case of child victims are the pain, shock, frustration, deprivation of ordinary pleasures and enjoyment associated with healthy and mobile limbs. The compensation awarded should enable the child to acquire something or to develop a lifestyle which will offset to some extent the inconvenience or discomfort arising out of the disability.
  • That appropriate compensation for disability should take care of all the non-pecuniary damages. In other words, apart from this head, there shall only be the claim for the actual expenditure for treatment, attendant, transportation, etc.

Case name: Kumari Kiran through Her Father Harinarayan v. Sajjan Singh and Others [(2015) 1 SCC 539]

In this case, the Apex Court took note of the agony of the parents wherein in the disability is suffered by a minor child.

The Court while determining fair compensation the agony of the parent should also be one of the factors, since their sorrow will continue for the whole life seeing their child in a vegetative state on account of the negligence of the hospital authorities.

Compensation on the grounds of Sympathy

Case name: Nizam’s Institute of Medical Sciences v. Prasanth S. Dhananka and Ors[(2009) 6 SCC 1]

The Supreme Court in the case opined that while determining quantum of compensation in such cases the court has to strike a balance between the inflated and unreasonable demands of a victim and the equally untenable claim of the opposite party saying that nothing is payable.

That Sympathy for the victim does not, and should not, come in the way of making a correct assessment, but if a case is made out, and the court must not be chary of awarding adequate compensation.

That the “adequate compensation” that we speak of must to some extent, be a rule of thumb measure, and as a balance has to be a struck, it would be difficult to satisfy all the parties concerned.

Child was not Earning Money doesn’t Disentitle Parents from Claiming Full Benefits u/Fatal Accidents Act

Case name: R. Ayyavu and Anr. v. Gopinathan Nair and Anr. (AIR 1991 ACJ 718)

In the case, the Supreme Court held:

  • That the mere fact that the children were not earning any money or money’s worth would not disentitle their parents from claiming the full benefits under the Fatal Accidents Act.
  • That in the absence of statutory guidelines, the court has to make an estimate of the pecuniary loss suffered by the members of the family of the deceased. Greater value is attributed to life while the purchasing power of the Rupee has considerably diminished.
  • That sentiments indeed have no place, but the court has to evaluate the pecuniary loss resulting from death on the basis of a proper appreciation of the relevant circumstances and hard realities.
  • In doing so, the court has to take into account all reasonable probabilities of future benefits, but exclude, from its consideration all fancied or bare possibilities or speculative conjectures.
  • Thus, damages are to be based on the reasonable expectation of pecuniary benefit and on other non-pecuniary benefit.

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