Advocates Cannot Throwaway Legal Rights Of Parties By Entering Into Arrangements Contrary To Law: SC

In a latest, learned, laudable and landmark judgment titled Kirti & Anr. Etc. vs Oriental Insurance Company Limited in Civil Appeal Nos. 19-20 of 2021 [Arising out of Special Leave Petition (C) Nos. 18728-29 of 2018] delivered as recently as on January 5, 2021, a three Judge Bench of the Apex Court comprising of Justice NV Ramana, Justice S Abdul Nazeer and Justice Surya Kant minced just no words to say elegantly, effectively and eloquently that advocates cannot throw away legal rights or enter into arrangements contrary to law.  It was also made clear that any concession in law made in this regard by either counsel would not bind the parties. Very rightly so!

To start with, this notable judgment authored by Justice Surya Kant for himself, Justice NV Ramana and Justice S Abdul Nazeer sets the ball rolling by first and foremost observing in para 2 that, “These civil appeals, which have been heard through video conferencing, have been filed by three surviving dependents (who are two minor daughters and father) of the two deceased, impugning the judgment dated 17.07.2017 of the High Court of Delhi through which the motor accident compensation of Rs 40.71 lakhs awarded by the Motor Accident Claims Tribunal, Rohini (hereinafter, “Tribunal”) on 24.12.2016 under Section 168 of the Motor Vehicle Act, 1988 (“MV Act”), was reduced to Rs 22 lakhs.”

While elaborating on the factual matrix, the Bench then observes in para 3 that, “The deceased couple, Vinod and Poonam, while commuting on a motorcycle in Delhi at around 7 AM on 12.04.2014 were hit at an intersection by a Santro Car bearing registration ‘DL 7CA 1053’. The impact immediately incapacitated both the deceased and they soon passed away from cranio-cerebral damage and haemorrhagic shock caused by the accident’s bluntforce trauma.”

While continuing in a similar vein, the Bench then lays down in para 4 that, “An FIR was registered under Sections 279 and 304 of the Indian Penal Code, 1860 (hereinafter, “IPC”) against the driver, and the statement of an independent eyewitness (Constable Vishnu Dutt) was recorded, which evidenced rash driving and negligence on part of the car driver. Subsequently, a claim petition was filed under Section 166 of the MV Act by the two toddler daughters and septuagenarian parents of the deceased. This was contested by the driver and owner claiming that the deceased were themselves driving negligently and the accident was as a result of their very own actions. Two witnesses were examined by the appellant-claimants and none by the respondents. The insurance company (Respondent No. 1) offered as settlement a compensation of Rs 6.47 lakhs for the death of Poonam and Rs 10.71 lakhs for Vinod.”

As a corollary, what then follows is stated in para 5 that, “The Tribunal took note of the chargesheet filed against the driver in the criminal case and also his failure to step into the witness box. Relying on the strong testimony of the independent witness, it was concluded that the car driver was indeed driving rashly and thus liability ought to be fastened on the respondent-insurer. Regarding the quantum of compensation, the Tribunal began by determining the ages of Poonam and Vinod as being 26 and 29 years respectively. Consequently, an age multiplier of 17 was adopted. Although the deceased’s father took a plea that Vinod was earning Rs 14,000 every month as a teacher at the Pratap Public School in Delhi, but he was unable to substantiate his claim with any documentary evidence. Thus, minimum wage in Delhi was adopted for computation of loss of dependency. An additional 25% income was accounted for future prospects of Poonam, and 1/3rd of Vinod’s salary was deducted towards personal expenses. Rs 2.50 lakhs was given for each deceased as compensation for loss of love and affection, estate and funeral charges. Thus, the Tribunal awarded a total sum of Rs 40.71 lakhs for both deceased to the claimants.”

What next follows is then stated in para 6 that, “The computation was challenged by the respondent-insurer before the High Court, on grounds that the Tribunal had erroneously relied upon the minimum wage as notified by Government of Delhi as there was no proof that the deceased were employed in Delhi. Instead given their established residence in Haryana, the minimum wage notified for that State ought to be the basis for calculation of loss of dependency. Simultaneously, addition of future prospects as well as non-deduction of personal expenses for Poonam was prayed to be reversed. Further, compensation was sought to be halved on grounds of contributory negligence. A categorical submission was made highlighting the then divergent law on the issue of payment of ‘future prospects’ to non-permanent employees, pending resolution of which, it was prayed that no such addition be granted to the claimants.”

While proceeding ahead, the Bench then observes in para 7 that, “The High Court concurred with these contentions and consequently reduced the notional income for both deceased by adopting the lowest minimum wage applicable for unskilled workers in Haryana instead of Delhi. Similarly, 1/3rd of Poonam’s income was deducted towards personal expenses and future prospects were denied to both deceased. However, given the totality of circumstances and Poonam’s contribution to her household, 25% additional gratuitous income was added to her salary. The High Court thus brought down the total compensation payable to the claimants to Rs 22 lakhs.”

On the one hand, the Bench brings out in para 8 that, “This reduction has been assailed before us by learned counsel for the claimants. Re-computation is sought of compensation for loss of dependency consequent to the decision of the Constitutional Bench of this Court in National Insurance Co Ltd v. Pranay Sethi (2017) 16 SCC 680, which authoritatively settles the law on future prospects for non permanent employees as well. Furthermore, the anomaly between the gratuitous increase of income between Vinod and Poonam, and the usage of unskilled minimum wage for Vinod have been brought to our notice.”

On the other hand, the Bench then further brings out in para 9 that, “Learned Counsel for the respondent-insurer, on the other hand, has sought to forestall any increase in compensation, including under the ground of future prospects. It is claimed that the High Court’s decision was a consent order, and that the counsel for the appellants had conceded to a lower computation under the head of loss of dependency, which thus cannot be challenged before this Court.”

After a thorough analysis, the Bench then points out in para 10 that, “We have thoughtfully considered the rival submissions. It cannot be disputed that at the time of death, there in fact were four dependents of the deceased and not three. The subsequent death of the deceased’s dependent mother ought not to be a reason for reduction of motor accident compensation. Claims and legal liabilities crystallise at the time of the accident itself, and changes post thereto ought not to ordinarily affect pending proceedings. Just like how appellant-claimants cannot rely upon subsequent increases in minimum wages, the respondent-insurer too cannot seek benefit of the subsequent death of a dependent during the pendency of legal proceedings. Similarly, any concession in law made in this regard by either counsel would not bind the parties, as it is legally settled that advocates cannot throw away legal rights or enter into arrangements contrary to law [Director of Elementary Education v. Pramod Kumar Sahoo, (2019) 10 SCC 674, ¶ 11].”

Be it noted, the Bench then envisages in para 11 that, “Any compensation awarded by a Court ought to be just, reasonable and consequently must undoubtedly be guided by principles of fairness, equity and good conscience (See, Helen C Rebello v. Maharashtra State Road Transport Corp, (1999) 1 SCC 90, ¶ 28). Not only did the family of the deceased consist of septuagenarian parents, but there were also two toddler girls, aged merely 3 and 4 years; each of whom requires exceptional care and expenditure till they reach the stage of self-dependency. Tragically, in addition to the married couple, the negligence of the driver also extinguished the life of the family’s third child who was a foetus in Poonam’s womb at the time of the accident. Thus, the appropriate deduction for personal expenses for both Vinod and Poonam ought to be 1/4th only, and not 1/3rd as applied by the Tribunal and the High Court, more so when there were four family members dependent on the deceased.”

Now regarding the assessment of monthly income, the Bench then observes in para 12 that, “Second, although it is correct that the claimants have been unable to produce any document evidencing Vinod’s income, nor have they established his employment as a teacher; but that doesn’t justify adoption of the lowest-tier of minimum wage while computing his income. From the statement of witnesses, documentary evidence on record and circumstances of the accident, it is apparent that Vinod was comparatively more educationally qualified and skilled. Further, he maintained a reasonable standard of living for his family as evidenced by his use of a motorcycle for commuting. Preserving the existing standard of living of a deceased’s family is a fundamental endeavour of motor accident compensation law (See, RK Malik v. Kiran Pal, (2019) 14 SCC 1, ¶ 9). Thus, at the very least, the minimum wage of Rs 6197 as applicable to skilled workers during April 2014 in the State of Haryana ought to be applied in his case.”

It is worth noting that it is then stated in para 13 pertaining to addition of future prospects that, “Third and most importantly, it is unfair on part of the respondent-insurer to contest grant of future prospects considering their submission before the High Court that such compensation ought not to be paid pending outcome of the Pranay Sethi (supra) reference. Nevertheless, the law on this point is no longer res integra, and stands crystallized, as is clear from the following extract of the afore-cited Constitutional Bench judgment [National Insurance Co Ltd v. Pranay Sethi, (2017) 16 SCC 680, ¶ 59.4]:

“59.4. In case the deceased was self-employed or on a fixed salary, an addition of 40% of the established income should be the warrant where the deceased was below the age of 40 years. An addition of 25% where the deceased was between the age of 40 to 50 years and 10% where the deceased was between the age of 50 to 60 years should be regarded as the necessary method of computation. The established income means the income minus the tax component.””

Of course, the Bench then rightly holds in para 14 that, “Given how both deceased were below 40 years and how they have not been established to be permanent employees, future prospects to the tune of 40% must be paid. The argument that no such future prospects ought to be allowed for those with notional income, is both incorrect in law (Sunita Tokas v. New India Insurance Co Ltd, 2019 SCC OnLine SC 1045) and without merit considering the constant inflation induced increase in wages. It would be sufficient to quote the observations of this Court in Hem Raj v. Oriental Insurance Co. Ltd. [(2018) 15 SCC 654], as it puts at rest any argument concerning non-payment of future prospects to the deceased in the present case:

“7. We are of the view that there cannot be distinction where there is positive evidence of income and where minimum income is determined on guesswork in the facts and circumstances of a case. Both the situations stand at the same footing. Accordingly, in the present case, addition of 40% to the income assessed by the Tribunal is required to be made..””

Finally, the Bench then concludes by holding in the last para 16 that, “For the reasons afore-stated, the appeals are allowed in part. The total motor accident compensation of Rs 22 lakhs awarded by the High Court to the claimant-appellants is increased by Rs 11.20 lakhs to reach a new total of Rs 33.20 lakhs. The enhanced amount of compensation shall be paid within two months along with interest @ 9% p.a. from the date of filing of the Detailed Accident Report i.e. 23.05.2014, and shall be apportioned as per the terms laid down by the Tribunal.”

No doubt, it is a brilliant, blunt, balanced and bold judgment which must be appreciated in no uncertain terms. Justice NV Ramana also wrote a separate concurring judgment in which he made some general but most important observations regarding the issue of calculation of notional income for homemakers and the grant of future prospects with respect to them, for the purpose of grant of compensation in para 26. It is imperative to briefly mention here as stated in para 26 which can be summarized as follows:

a. Grant of compensation, on a pecuniary basis, with respect to a homemaker, is a settled proposition of law.

b.  Taking into account the gendered nature of housework, with an overwhelming percentage of women being engaged in the same as compared to men, the fixing of notional income of a homemaker attains special significance. It becomes a recognition of the work, labour and sacrifices of homemakers and a reflection of changing attitudes. It is also in furtherance of our nation’s international law obligations and our constitutional vision of social equality and ensuring dignity to all.

c.   Various methods can be employed by the Court to fix the notional income of a homemaker, depending on the facts and circumstances of the case.

d. The Court should ensure while choosing the method, and fixing the notional income, that the same is just in the facts and circumstances of the particular case, neither assessing the compensation too conservatively, nor too liberally.

e.  The granting of future prospects, on the notional income calculated in such cases, is a component of just compensation.

Having said this which it was obligatory to state as it underscores the work, labour and immense sacrifice rendered by the women in her role as homemaker which is immeasurable, it must be also said that this noteworthy judgment leaves no room for doubt that advocates cannot throwaway legal rights of parties by entering into arrangements contrary to law. In other words, any concessions in law made in this regard by either counsel would not bind the parties as was observed by the Apex Court also. All the advocates and so also must all the litigants and Judges always keep this in mind what has been held by the 3 Judge Bench of the Apex Court in this leading cases so outspokenly. There can certainly be no denying it!

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