Date of judgment: 25/06/2020
Court: High Court of Jammu & Kashmir at Srinagar
On the 2nd of April, 2007, Umar Ghulam Zargar (respondent), a young boy aged 15, met with a motor vehicle accident that caused serious injuries. Due to the grievous nature of his injuries, he slipped into comatose and was declared to be 100% permanently disabled. He was discharged after 2 months, with no hope for recovery and was unable to eat by himself, required a special diet, special bed, special transportation, and constant supervision.
A Motor Accident Claims Tribunal at Srinagar passed a verdict in favor of the respondent and ordered the insurance company (appellant) to pay Rs. 18,30,000 and asked the driver of the vehicle to pay Rs. 25,000 to the respondent’s father. The order also directed the insurance company to pay an interest rate of 6% from the date on which the claim petition was raised and the entire sum had to be paid within 2 months, failing which an interest rate of 9% from the date of default would be imposed. The present matter is an appeal by the insurance company challenging the quantum of compensation alleging it was formed without any basis and that the penal rate of interest could not be effectuated.
Whether the compensatory award ordered by the Motor Accident Claims Tribunal (hereinafter referred to as Tribunal) is unreasonable and exorbitant
Whether the Tribunal could impose an additional penal rate of interest for default
The Tribunal issued an overhead break-up for the total sum to be compensated by the appellants to the respondent. The break-up included Rs. 4,00,000 for medical expenses and the same was questioned by the Insurance company as the medical bills up to the date of discharge came to Rs. 98,510.88. The Hon’ble High Court justified the sum as there was proof that the boy had been re-admitted on later dates and that the state of the respondent was such that he would require treatment throughout his life. The judgment established that ordering compensation merely on the basis of bills for someone who would require prolonged treatment would not be reasonable. The Tribunal’s move of awarding a sum greater than that of the medical bills produced was also upheld as the Court categorically held on humanitarian principles that one could not expect the parent of a child in such a state to maintain a record of all his medical bills.
The appellants further challenged the awarding of Rs. 2,00,000 for transportation that allegedly lacked basis. The Hon’ble judges yet again relied on the present condition of the respondent as the need for special transportation for treatment throughout his life, was an incontrovertible expenditure. The mental state of the guardians was viewed to be one whereby restoration and well-being of the boy would be their number one priority and not the collecting and producing of various bills. Expecting a guardian to produce bills for every single expense was held to be unnecessary and irrational. The sum of Rs. 2,00,000 was upheld to be formed on the grounds of the frequency of visits and the multiplier applicable to the age group and thus justified.
Another overhead challenged by the appellants was that of attendant charges amounting to Rs. 2,70,000 and loss of income to the respondent’s father, totalling to an additional 90,000 Rupees. It was recognized that the father had given up on the job that earned Rs. 150 per day to take care of his son and be available for him round the clock. The appellants contested that there was no need for a hefty sum in the name of attendant charges as his father was taking the case. Nevertheless, the court rightly dismissed it on the ground that attendant charges would include future charges as well, and taking care of the boy by the father was not a ground to deny that overhead.
The sum of Rs. 2,70,000 was found to have been formed by calculating the attendant charges for 15 years by the Tribunal which in the opinion of the Court was on a lower level. Reliance was placed on the multiplier system by the Supreme Court in Gobald Service Motor Service Limited v. R.M.K. Veluswami & Ors. (1962). The correct and most reasonable multiplier was held to be founded on factors such as inflation rate, rate of interest payable on a lump sum, the life expectancy of claimants, and uncertainties of life. The Hon’ble 2 judge bench acknowledged that the multiplier system was the best suited to award compensation for the purposes of the Motor Vehicles Act, 1988.
It was identified that the multiplier ought to have been 18 instead of 15 as used by the Tribunal. Despite this, the court decided to not interfere and modify the award for attendant charges awarded by the Tribunal as the quantum of merit was not challenged by the respondent. A similar view was adopted with regard to the compensation for a feeding tube, special diet, and bed as the Tribunal had provided only for the initial purchase and hadn’t considered the need to change them over the years. Yet, the quantum of compensation was left unaltered as the Court merely stuck to the contention raised by the appellants i.e., formed without any basis.
In the case of Master Mallikarjun v. Divisional Manager, National Insurance Company Ltd. & Anr. (2013), it was established by the Apex Court that, compensation for pain and suffering as well as a loss of amenities should exceed Rs. 6,00,000 if the disability is more than 90%. Nonetheless, despite suffering from 100% disability, the Tribunal had awarded a sum total of Rs. 5,50,000 and the same was not modified by the Court merely on the grounds that the respondents had not sought greater compensation and were content with the Tribunal’s award. The Court even recognized that the Tribunal had failed to consider the lost future income by the respondent boy but yet again decided not to alter the compensation as the claimants had not challenged the quantum of merit.
The appellants then brought to the notice of the Court that the respondent passed away during the pendency of the appeal and used it as a basis to further seek the striking down of various overhead expenses due to the lack of need for the same. The Court directed that the death of the respondent would not make a difference to the overheads as the date of passing the award was relevant while assessing compensation and not the events that followed it.
Finally, with regard to the penal rate of interest at 9&, the appellants emphasized the decision of the Supreme Court in National Insurance Company Ltd. v. Keshav Bahadur (2004). The decision entails that a penal rate of interest cannot be imposed after a Tribunal has decided to impose simple imprisonment with particulars. In light of the same, the High Court struck down the imposition of a 9% rate of interest while holding the rest of the impugned award by the Tribunal to be valid.
The verdict was penned by a single judge bench at Srinagar. The validity of the award by the Tribunal was upheld by the Court as they found it was formed on just and reasonable grounds and not exorbitantly. The Hon’ble Court had recognized that the award by the Tribunal was towards the lower side and failed to include the essential overhead of loss of future income for the respondent who eventually lost his life during the pendency of the proceedings. Nonetheless, despite bringing it to the notice of the parties, no step was taken to increase the quantum of punishment merely because the respondent seemed content with the award of the Tribunal. It is also pertinent to mention that the compensation for the hardships faced by the respondent by suffering from 100% disability was still lower than the standard set by the Supreme Court. Despite adopting a magnanimous approach initially with regard to the sum of compensation for bills produced, by restricting only to the claims of the parties, the respondents were not awarded the higher sum of damages they were entitled to. In a recent case in Dubai, a 5-year-old boy who suffered from 100% permanent disability due to rash and reckless driving, was awarded a compensation of 2 million Dirhams (approx. Rs. 4 crore), showing the stark contrast in motor accident claims. 
 Ismail Sebugwaawo, Dh2 million compensation for the family of boy injured in Al Ain crash, Khaleej Times (28 Oct. 2020),https://www.khaleejtimes.com/news/crime-and-courts/dh2-million-compensation-for-family-of-boy-injured-in-al-ain-crash.