* IN THE HIGH COURT OF DELHI AT NEW DELHI
Date of Reserve: 20th April, 2010
Date of Order: 26th May, 2010
+ FAO No. 188/1990
% 26.5.2010
Sahana Siddique & Ors. ... Appellants
Through: Mr. Navneet Goyal, Advocate
Versus
Dharm Vir & Ors. ... Respondents
Through: Mr. S.H.Paul, Advocate for R-3
JUSTICE SHIV NARAYAN DHINGRA
1. Whether reporters of local papers may be allowed to see the judgment?
2. To be referred to the reporter or not?
3. Whether judgment should be reported in Digest?
JUDGMENT
The present appeal has been filed by the claimants assailing award
dated 26th March, 1990 passed by the learned Tribunal awarding a compensation of
Rs.4,80,000/- to the claimants. The award is assailed on the ground of the
inadequacy of the compensation as well as on the issue decided by the Tribunal that
the liability of the Insurance Company was only limited to the tune of Rs.50,000/-.
2. Undisputed facts are that the deceased was aged 38 years at the time
of accident. He was working with Saudi Airlines as a supervisor and drawing a salary
of Rs.3894/- p.m. He was receiving Rs.250/- as HRA and meal allowance of Rs.20/-
per day. At the time of death he left behind a wife, two sons, one daughter and aged
mother, dependent on him. The Tribunal considered the income tax payable by the
deceased and looking into his post of supervisory cadre observed that he would have
to maintain a reasonable standard of living so dependency of the claimants would be
FAO No. 188/1990 Page 1 of 6
around Rs.2500/-. The Tribunal applied a multiplier of 16 and awarded
compensation of Rs.4,80,000/- [2500 X 12 X 16].
3. The insurance policy of the offending vehicle i.e. taxi was placed on
record. The insurance company took a stand that its liability was limited only to
Rs.50,000/-. This stand was accepted by the Tribunal since the owner failed to prove
original policy of insurance on record. The insurance company placed on record the
carbon copy showing that premium paid by owner towards third party liability was
Rs.120/-. The Tribunal held that the liability of the Insurance Company was limited to
the extent of Rs.50,000/-. Thus, the learned Tribunal ordered that out of the amount
awarded, the insurance company would be liable to pay only Rs.50,000/- and rest of
the amount shall be payable by respondents no. 1 & 2 i.e. owner & driver jointly and
severally.
4. It is submitted by the Counsel for the appellant that the Tribunal did
not apply correct parameters for calculating compensation. The Tribunal had not
taken into account future prospects of the deceased. The deceased was a promising
young man employed in airlines and had a very bright future. The Tribunal also
wrongly deducted Rs.1,000/- out of income towards personal expenses since the
number of dependents in this case were five. The deduction of 1/3rd amount was too
high. It is also submitted that the Tribunal wrongly applied multiplier of 16 and a
higher multiplier should have been applied. Reliance is placed on Sarla Verma &
Ors. v. Delhi Transport Corporation & Anr. 2009 ACJ 1298. Regarding liability of the
Insurance Company, it is submitted that the premium in this case paid by the owner
did not show that the liability of the company was limited. It is submitted that
premium of Rs.120/- covered entire third party liability. The premium for ‘Act Only’
liability was Rs.100/- and not Rs.120/- and therefore, the Tribunal went wrong in
holding that the liability of the Insurance Company was limited to Rs.50,000/-
FAO No. 188/1990 Page 2 of 6
5. The Counsel for the respondent/Insurance Company has supported
the order of the Tribunal on both counts and stated that the Tribunal rightly calculated
the compensation and rightly held that the liability of the Insurance Company was
limited to Rs.50,000/-.
6. In Sarla Verma’s case (supra), the Supreme Court had considered
various judgments being followed by Tribunals and High Courts and laid down that
the compensation should be calculated uniformly by all the Tribunals and uniform
parameters should be applied. It should not be that different parameters are applied
by the different Tribunals resulting into award of different compensations under same
circumstances by different Tribunals in the country.
7. As per parameters laid down in Sarla Verma’s case (supra), the
deduction in this case should have been 1/4th and the multiplier should have been 15.
The salary to be taken into consideration has to be the gross salary of the deceased
less income tax. The gross salary of the deceased was Rs.3894/-. If HRA of
Rs.250/- is added, his salary would be Rs.4144/-. A sum of Rs.725/- p.m. was being
deducted as tax at source, so his salary after income tax would come to Rs.3419/-
say Rs.3420/-. I consider the meal amounts were personal to the deceased and
could not be considered as part of his income. Since the deceased was working in
airlines his timings would have to varying with the flight timings and in case of flights
getting delayed he had to put more time and had to take meals at the airport itself.
Thus, the salary for the purpose of compensation has to be taken as Rs.3420/- If
1/4th of the salary is deducted as personal expenses in terms of Sarla Verma’s case
(supra), the dependency would be Rs.2565/-. As the deceased was below 40 years
of age at the time of his death, 50% of the monthly dependency has to be added
towards future prospects. Thus, by adding Rs.1282/- to Rs.2565/- the monthly
income for the purpose of computing compensation comes to Rs.3847/-. By applying
a multiplier of 15, the compensation payable to the dependents would be
Rs.6.92,460/ [3847 X 12 X 15]. I think that the appellants would also be entitled for
FAO No. 188/1990 Page 3 of 6
non-pecuniary damages and Rs.2,000/- for funeral expenses, Rs.5000 each for loss
of consortium and loss of estate should also be added. Thus, the total compensation
payable to the deceased would be Rs.704,460/- plus interest. I think 8% p.a. simple
interest would be just and reasonable.
7. The other issue which arises is whether the liability of Insurance
Company was limited to Rs.50,000/- or it was unlimited. This issue has been
considered by this Court at length in Neeta Trehan & Ors. v. Gopal Krishan & Ors.
FAO No. 257/1991 decided on 17.5.2010 and this Court observed as under:
14. The issue arises whether this insurance cover obtained by
the insured was limited to a liability of Rs.1,50,000/- being the
minimum liability for which a vehicle was required to be insured by
the owner or this premium covered wider liability. Counsel for the
appellants has drawn my attention to the judgment in Veena
Pruthi’s case (supra) given by the Division Bench of this court
where the Division Bench of this court held that if the premium
was Rs.125/-, the liability would be limited to Rs.1,50,000/- and
not unlimited. On the same logic it is stated that if the premium
was Rs.240/- for class A(2) vehicle, the liability of insurance
company would be limited to Rs.1,50,000/-.
15. Where obtaining of an insurance cover is made mandatory
by statute, the contract is to be interpreted in the light of statutory
provisions. In case of motor vehicles, obtaining of an insurance
cover by the owners of vehicles is a statutory requirement. Thus,
an insurance policy has to be interpreted keeping in view the
statutory provisions and the rules of tariff as framed by the
Advisory Board. Under the tariff rules, two separate tariffs are
provided for ‘Act Only Liability’ and for ‘Public Risk’. It cannot be
said that the Advisory Board provided tariff for ‘Act Only Liability’
as a superfluous phenomenon. The Advisory Board was having in
mind that where the owner wants to take an insurance policy
covering the minimum liability under Section 95 of the Act, then
the premium should be different. If the owner wants wider liability
then the premium should be different and that is the reason that
for ‘Act Only Liability’, a premium of Rs.200/- was provided and for
‘Public Risk’, a premium of Rs.240/- was provided. Public risk is a
wider term and takes into account the entire risk faced by the
owner for bringing vehicle on road. If there had been no
compulsion under the Act to obtain an insurance policy, the only
insurance cover which owner could have obtained from an
insurance company for covering public risk would have been this
that he would pay Rs.240/- and get the public risk covered. If the
Act would have not prescribed any limit, the public risk would
naturally have been unlimited. The Act prescribed that every
owner of vehicle should get insurance cover covering a minimumFAO No. 188/1990 Page 4 of 6
amount. Beyond that, the Act did not provide anything. It is under
these circumstances that the Tariff Advisory Committee
prescribed separate premium for ‘Act Only Policy’ and separate
premium for a ‘Public Risk Policy’. I, therefore, consider that the
‘Public Risk’ premium would cover unlimited amount of risk and
would not cover a limited amount of risk.
x x x x x x
17. It is urged by the counsel for the insurance company that
for covering unlimited liability, an additional premium of Rs.100/-
was to be paid for class A(2) vehicles as is given in paragraph 11
of the tariffs Ex. RW 1/6. A perusal of Ex. RW 1/6 would show
that while prescribing additional premium for each kind of vehicle,
the additional premium is payable for property damage and not
for personal injury. The personal injury has been written as
unlimited. It is only quantum of property damage which keeps on
rising with the increase in premium and additional premium of
Rs.100/- is to be paid when additional risk for property damage to
be covered. Thus, Rs.100/-, additional premium, has nothing to
do with the risk to life of third parties.
18. There is another aspect to be kept in mind. When an
owner approaches insurance agent for insurance, he is told what
would be the tariff payable by him and on payment of tariff, an
insurance certificate or cover note is issued. The contract of
insurance, thus, stands concluded on receipt of tariff/premium in
terms of the tariff schedule as laid down by Advisory Board.
Insurance policy is subsequently mailed to owner by insurance
company. If insurance company unilaterally inserts a clause in
the policy which is contrary to tariff regulations, such a clause is
not binding. All insurance policies are in the shape of one
standard performa used for different kinds of coverage. If while
sending insurance policy to owner the company official does not
score off non-applicable clauses or inserts a limited liability
clause which is contrary to the tariff charged from owner, such a
clause is not binding.
19. I, therefore, consider that the liability of insurance
company in this case was unlimited and not limited since the
insured had paid tariff/premium of Rs.240/- for liability to ‘Public
Risk’ and not Rs.200/- for ‘Act Only Liability’.
8. In my opinion, the liability of the Insurance Company has to be seen
from the premium charged, in the light of the tariff prescribed by the Advisory Board.
FAO No. 188/1990 Page 5 of 6
The tariff provisions in case of vehicles carrying passengers for hire, specially taxis or
private cars are provided in Class B(2). The tariff provisions for public risks as under:
Own Damage Liability to the Act Only
Pubic Risks Liability
————————————————————————————-
Rs.2.75 plus 0.75% Rs.120/- Rs.100/-
On I.E.V.
9. A perusal of carbon copy of the policy placed by Insurance Company
on record would show that the Insurance Company had charged Rs.120/- for third
party insurance. Under tariff provisions, the premium for the ‘Act Only’ liability was
Rs.100/- and not Rs.120/-. Rs.120/- was premium for liability to the public risks and
no limit is provided under the tariff provisions for this risk. The limits are there only
where ‘Act Only’ liability is covered. I therefore, consider that in this case Tribunal
wrongly came to the conclusion that since the premium of Rs.120/- was charged, the
liability of the insurance company would be limited to Rs.50,000/- which is the main
liability for which an insurance cover is to be obtained under the Motor Vehicles Act.
The liability of the Insurance Company would have been limited to Rs.50,000/- if and
only if, the Insurance Company had charged premium of Rs.100/- under the tariff
provisions. Since the Insurance Company had not charged Rs.100/- but had
charged premium of Rs.120/-, the plea of Insurance Company that its liability was
limited to Rs.50,000/- does not stand. I, therefore, hold that liability of the Insurance
Company was unlimited and the entire compensation is payable by the Insurance
Company.
The appeal is allowed in above terms.
May 26, 2010 SHIV NARAYAN DHINGRA, J.
vn
FAO No. 188/1990 Page 6 of 6