Sihor Nagar Palika Bureau Vs. Bhabhlubhai Virabhai & Co.
EmailAppeal: Civil Appeal No. 2799-2800 of 2005
(Arising out of SLP (C) Nos.1446-1447 of 2004)
(From the Judgment and Order dated 4.11.2003 of the Gujarat High Court in C.Application No. 7726/2003 in C.Application No. 6599/2003 and C.Application No. 6599/2003 in F.A.No. 1751 of 2003)
(Arising out of SLP (C) Nos.1446-1447 of 2004)
(From the Judgment and Order dated 4.11.2003 of the Gujarat High Court in C.Application No. 7726/2003 in C.Application No. 6599/2003 and C.Application No. 6599/2003 in F.A.No. 1751 of 2003)
Petitioner: Sihor Nagar Palika Bureau
Respondent: Bhabhlubhai Virabhai & Co.
Apeal: Civil Appeal No. 2799-2800 of 2005
(Arising out of SLP (C) Nos.1446-1447 of 2004)
(From the Judgment and Order dated 4.11.2003 of the Gujarat High Court in C.Application No. 7726/2003 in C.Application No. 6599/2003 and C.Application No. 6599/2003 in F.A.No. 1751 of 2003)
(Arising out of SLP (C) Nos.1446-1447 of 2004)
(From the Judgment and Order dated 4.11.2003 of the Gujarat High Court in C.Application No. 7726/2003 in C.Application No. 6599/2003 and C.Application No. 6599/2003 in F.A.No. 1751 of 2003)
Judges: R.C. LAHOTI, CJI & G.P. MATHUR, J.
Date of Judgment: Apr 21, 2005
Appearances:
Mr. Sunil Gupta, Senior Advocate, Mr. Jatin Zaveri and Mr. Pratap Kalra, Advocates with him for the Appellant.
Mr. Huzefa Ahmadi, Mr. Ejaz Maqbool, Mr. Nakul Dewan and Ms. Saloni Sinha, Advocates for the Respondent.
Mr. Huzefa Ahmadi, Mr. Ejaz Maqbool, Mr. Nakul Dewan and Ms. Saloni Sinha, Advocates for the Respondent.
Head Note:
CIVIL LAWS
Civil Procedure Code, 1908
Order XVI Rules 1(3) and 5(5) – Scope – Stay of execution – Money decree – Condition precedent for stay. Held that decree can be stayed on a deposit or furnishing security. Case for stay made out.
Civil Procedure Code, 1908
Order XVI Rules 1(3) and 5(5) – Scope – Stay of execution – Money decree – Condition precedent for stay. Held that decree can be stayed on a deposit or furnishing security. Case for stay made out.
Held:
Order XLI Rule 1(3) of the CPC provides that in an appeal against a decree for payment of amount the appellant shall, within the time permitted by the Appellate Court, deposit the amount disputed in the appeal or furnish such security in respect thereof as the Court may think fit. Under Order XLI Rule 5(5) a deposit or security, as abovesaid, is a condition precedent for an order by the Appellate Court staying the execution of the decree. A bare reading of the two provisions referred to hereinabove, shows a discretion having been conferred on the Appellate Court to direct either deposit of the amount disputed in the appeal or to permit such security in respect thereof being furnished as the Appellate Court may think fit. Needless to say that the discretion is to be exercised judicially and not arbitrarily depending on the facts and circumstances of a given case. Ordinarily, execution of a money decree is not stayed inasmuch as satisfaction of money decree does not amount to irreparable injury and in the event of the appeal being allowed, the remedy of restitution is always available to the successful party. Still the power is there, of course, a discretionary power and is meant to be exercised in appropriate cases. (Para 6)
JUDGEMENT:
R.C. LAHOTI, CJI.
1. Leave granted.
2. The appellant is a statutory body constituted under and governed by the provisions of the Gujarat Municipality Act, 1963. It discharges several public utility functions. In the years 1993-94, the respondent was given a contract for collection of octroi on behalf of the appellant on the terms and conditions set out in the contract. The contract was terminated by the appellant. The respondent filed a civil suit alleging wrongful termination/breach of contract by the appellant and seeking inter alia a decree for recovery of damages. The suit ended in a money decree being passed in favour of the respondent and against the appellant.
3. The appellant preferred a first appeal which is pending in the High Court of Gujarat. Therein, the appellant moved an application under Order XLI Rule 5 of the Code of Civil Procedure seeking stay on the execution of the decree. On 19.9.2003, the High Court admitted the appeal for hearing both the parties on merits and granted a stay subject to the condition that the appellant shall deposit in the court an amount of Rs.8,78,925/- with 8 per cent interest on or before 4.11.2003.
4. The appellant moved an application seeking variation of the order dated 19.9.2003. In a detailed application filed by the appellant, it was pointed out that the appellant was facing financial difficulty on account of abolition of octroi and was badly in need of money for carrying out its multifarious public utility services and activities. The appellant offered to furnish security to the satisfaction of the Trial Court and appealed to the Court to suitably modify its earlier order so as to dispense with the requirement as to deposit of the amount and instead permit solvent security being furnished. By order dated 4.11.2003, the Court declined the appellant’s prayer but at the same time extended the time for making deposit by eight weeks from the date of the order and further allowed liberty to the respondent to withdraw the amount deposited by the appellant, subject to its furnishing a security to the satisfaction of the Trial Court. Feeling aggrieved, the appellant has filed this appeal by special leave.
5. On 3.1.2004 while issuing notice to the respondent this Court directed the execution of decree against the appellant to remain stayed subject to the appellant furnishing security of immovable property to the satisfaction of the Trial Court in place of depositing the decretal amount in cash as directed by the High Court. During the course of hearing, it was pointed out by the learned counsel for the appellant that the order dated 30.1.2004 has been complied with by the appellant and statement in that regard has been made on affidavit in this Court.
6. Order XLI Rule 1(3) of the CPC provides that in an appeal against a decree for payment of amount the appellant shall, within the time permitted by the Appellate Court, deposit the amount disputed in the appeal or furnish such security in respect thereof as the Court may think fit. Under Order XLI Rule 5(5) a deposit or security, as abovesaid, is a condition precedent for an order by the Appellate Court staying the execution of the decree. A bare reading of the two provisions referred to hereinabove, shows a discretion having been conferred on the Appellate Court to direct either deposit of the amount disputed in the appeal or to permit such security in respect thereof being furnished as the Appellate Court may think fit. Needless to say that the discretion is to be exercised judicially and not arbitrarily depending on the facts and circumstances of a given case. Ordinarily, execution of a money decree is not stayed inasmuch as satisfaction of money decree does not amount to irreparable injury and in the event of the appeal being allowed, the remedy of restitution is always available to the successful party. Still the power is there, of course, a discretionary power and is meant to be exercised in appropriate cases.
7. In the memo of appeal filed by the appellant in the High Court, very many pleas have been raised. One of the grounds taken is that the decree has been passed by the Trial Court without availability of any legal evidence amounting to proof in favour of the respondent and hence the decree is ex-facie erroneous. The grounds urged in favour of the prayer for stay set out for the consideration of the High Court as an Appellate Court have been briefly noticed hereinabove. We do not propose to deal with the merits of the pleas so urged lest it should prejudice the hearing of the appeal in the High Court. Suffice it to observe that a case for grant of stay was made out even in the opinion of the High Court and the dispute which survived lay in a narrow compass : Whether to insist on deposit in cash or permit a security being furnished?
8. In the facts and circumstances of the present case and having taken into consideration the respective submissions made by the learned counsel for the parties in very many details, we are satisfied to hold that the High Court ought to have permitted furnishing of security instead of insisting on deposit in cash of the amount as directed by the High Court. It is not the case of the respondent that in the event of the appeal being dismissed the decretal amount may not be recovered from the appellant. On the other hand, the appellant has made out a prima facie strong case for the hearing of the appeal on its merits and further a case that public interest would be better served by the amount being retained by the appellant during the pendency of the appeal. While making these observations, we should not be understood as having made any observation touching the merits of the case amounting to pre-judging any of the issues arising for decision in the appeal and ex abundanti cautela we clarify that the appeal shall be heard by the High Court on its own merits uninfluenced by anything said in this order. The appellant has already furnished security of immovable property to the satisfaction of the Trial Court pursuant to the order dated 31.2.2004 passed by this Court.
9. The appeals are allowed. The impugned orders of the High Court are set aside and instead the interim order dated 30.1.2004 passed by this Court is substituted in place thereof. No order as to the costs.
***********
JT 2005 (4) SC 531
Tamil Nadu State Transport Corporation Ltd. v. S. Rajapriya and two others
Civil Appeal No. 2765 of 2005
(Arising out of SLP(C) No.6144 of 2004)
(From the Judgment and Order dated 18.9.2003 of the Madras High Court in C.M.A.No. 2351 of 2003)
ARIJIT PASAYAT & S.H. KAPADIA, JJ.
Dt. 20.04.2005
Appearances
Mr. Subramonium Prasad, Advocate for the Appellant.
Accident Claims/Motor Vehicles Insurance
Motor Vehicles Act, 1988
Motor vehicles accident – Compensation for loss of life – Determination of – Multiplier to be applied and deductions to be made – Death of a 38 year old male earning Rs. 4688 per month in a bus accident – Bus belonging to the appellant State Corporation – Accident alleged to be on account of rash and negligent driving of the vehicle – Widow and minor son of deceased making a claim for compensation of Rs. 20 lacs – Tribunal awarding a compensation of Rs. 6,09,552 arrived at by applying a multiplier of 16 and deducting one third salary towards personal expenses – High Court dismissing the appeal of the Corporation. Partly allowing the appeal held that correct multiplier to be applied is 12 and not 16 and therefore compensation quantified at Rs. 4,50,000. Directions given for payment of 10 per cent of the compensation in cash and the rest to be invested in fixed deposits.
HELD
The manner of arriving at the damages is to ascertain the net income of the deceased available for the support of himself and his dependants, and to deduct therefrom such part of his income as the deceased was accustomed to spend upon himself, as regards both self-maintenance and pleasure, and to ascertain what part of his net income the deceased was accustomed to spend for the benefit of the dependants. Then that should be capitalized by multiplying it by a figure representing the proper number of year’s purchase. (Para 9)
Much of the calculation necessarily remains in the realm of hypothesis “and in that region arithmetic is a good servant but a bad master” since there are so often many imponderables. In every case “it is the overall picture that matters”, and the court must try to assess as best as it can the loss suffered. (Para 10)
The multiplier method involves the ascertainment of the loss of dependency or the multiplicand having regard to the circumstances of the case and capitalizing the multiplicand by an appropriate multiplier. The choice of the multiplier is determined by the age of the deceased (or that of the claimants whichever is higher) and by the calculation as to what capital sum, if invested at a rate of interest appropriate to a stable economy, would yield the multiplicand by way of annual interest. In ascertaining this, regard should also be had to the fact that ultimately the capital sum should also be consumed-up over the period for which the dependency is expected to last. (Para 12)
Considering the age of the deceased and the principles indicated above, the appropriate multiplier would be 12 and not 16 as adopted by the Tribunal and affirmed by the High Court. By applying multiplier 12, amount of compensation is fixed at Rs.4,50,000/- (in round figures). The Tribunal has fixed interest @ 9% per annum from the date of the claim petition. Taking note of the prevailing rate of interest in bank deposits, the same is fixed at 7.5% per annum. It is stated that a sum of Rs.4,00,000/- has been deposited pursuant to the order dated 22.3.2004. The balance amount shall be deposited with the Tribunal within four weeks from today. Out of the total deposit 90% of the amount shall be kept in fixed deposit in the name of widow (respondent no.1), minor child (respondent no.2) and the mother (respondent no.3) in the proportion of 35%, 40% and 15% respectively. Rest 10% shall be paid in cash equally to the widow and the mother. Fixed deposits shall be made initially for a period of five years and no withdrawal permitted and only monthly interest will be paid, so far as the fixed deposits in the names of the widow and the mother are concerned. So far as the minor child is concerned, fixed deposit shall be made initially for a period of five years and shall be renewed till the child attains majority. The monthly interest on the deposit shall also be released to the mother as the guardian of the minor. (Para 18)
Cases Referred:
1. U.P. State Road Transport Corporation and Ors. v. Trilok Chandra and Ors. (JT 1996 (5) SC 356) (Para 4)
2. General Manager, Kerala State Road Transport Corporation, Trivandrum v. Susamma Thomas (Mrs.) and Ors. ((1994 (2) SCC 176) (Para 4)
3. Municipal Corporation of Delhi v. Subhagwanti (1966 (3) SCR 649) (Para 5)
4. Gobald Motor Service Ltd. v. R.M.K. Veluswami (1962 (1) SCR 929) (Para 7)
5. Davies v. Powell Duffregn Associated Collieries Ltd. (1942 AC 601) (Para 5)
Foreign Cases Referred:
1. Baker v. Bolton (1979 (1) All ER 774) (Para 6)
2. Lord Diplock in his speech in Mallett v. Mc Mongle (1969 (2) All ER 178) (Para 13)
3. Nance v. British Columbia Electric Railway Co. Ltd. (1951 (2) All ER 448) (Para 11)
ARIJIT PASAYAT, J.
1. Leave granted.
2. Tamil Nadu State Transport Corporation Ltd. (hereinafter referred to as the ‘Corporation’) calls in question legality of the judgment rendered by a Division Bench of the Madras High Court dismissing the appeal filed by the Corporation. By the impugned order the Division Bench confirmed the compensation awarded to the respondents by the Motor Vehicle Accident Compensation Claim Tribunal, Principal District Judge, Thanjur (in short the ‘Tribunal’).
3. Background facts in a nutshell are as follows:
3.1. On 30.8.2001 one Sathyamurthy (hereinafter referred to as the ‘deceased’) lost his life in an automobile accident. His widow (respondent no.1) and minor son (respondent no.2) filed petition claiming compensation under the Motor Vehicles Act, 1988 (in short the ‘Act’). Deceased’s mother was impleaded as respondent no.2 in the claim petition, while the Corporation was impleaded as respondent no.1. It was stated in the claim petition that the accident occurred due to rash and negligent driving of the Corporation’s driver. Claim of Rs.20 lacs was made. Tribunal noted that the deceased was about 38 years of age and was getting monthly salary of Rs.4688/- (annually Rs.56,208/-) from the Corporation. After deductions one-third for personal expenses contribution of the deceased was fixed at Rs.37,472/- per annum. As the deceased was about 38 years of age, multiplier of 16 was applied. Accordingly, the compensation was worked out at Rs.6,09,552/-. The award was questioned in appeal before the Madras High Court and the Division Bench as noted above, dismissed the same.
4. In support of the appeal, learned counsel for the appellant submitted that quantum as arrived at by applying multiplier of 16 is high. There is no appearance on behalf of the respondents in spite of the notice. While issuing notice on 22.3.2004 the dispute was restricted to the appropriate multiplier to be adopted. The question regarding appropriate multiplier has been considered by this Court in General Manager, Kerala State Road Transport Corporation, Trivandrum v. Susamma Thomas (Mrs.) and Ors.1 and U.P. State Road Transport Corporation and Ors. v. Trilok Chandra and Ors.1 .
5. Certain principles were highlighted by this Court in the case of Municipal Corporation of Delhi v. Subhagwanti2 in the matter of fixing the appropriate multiplier and computation of compensation. In a fatal accident action, the accepted measure of damages awarded to the dependants is the pecuniary loss suffered by them as a result of the death. “How much has the widow and family lost by the father’s death?” The answer to this lies in the oft quoted passage from the opinion of Lord Wright in Davies v. Powell Duffregn Associated Collieries Ltd.3 which says:
“The starting point is the amount of wages which the deceased was earning, the ascertainment of which to some extent may depend on the regularity of his employment. Then there is an estimate of how much was required or expended for his own personal and living expenses. The balance will give a datum or basic figure which will generally be turned into a lump sum by taking a certain number of years’ purchase. That sum, however, has to be taxed down by having due regard to uncertainties, for instance, that the widow might have again married and thus ceased to be dependent, and other like matters of speculation and doubt.”
6. The rule in common law in Baker v. Bolton4 enunciated by Lord Ellenborough was that “in a Civil Court, the death of a human being could not be complained of as a injury,”. Indeed, the maxim action personalis moritur cum persona, had the effect that all actions in tort, with very few exceptions, also became extinguished with that person. Great changes were brought about by the Fatal Accidents Act, 1846 (now Fatal Accidents Act, 1976) and the Law Reforms (Miscellaneous Provisions) Act, 1934. Under the statute, as indeed under the Indian Statute as well, there are two separate and distinct cause of action, which are maintainable in consequence of a person’s death. There were the dependant’s claim for the financial loss suffered and acclaim for injury, loss or damage, which the deceased would have had, had he lived, and which survives for the benefit of his estate.
7. The measure of damage is the pecuniary loss suffered and is likely to be suffered by each dependant. Thus “except where there is express statutory direction to the contrary, the damages to be awarded to a dependant of a deceased person under the Fatal Accidents Acts must take into account any pecuniary benefit accruing to that dependant in consequence of the death of the deceased. It is the net loss on balance which constitutes the measure of damages.” Lord Wright in the Davies’s case (supra) said, “The actual pecuniary loss of each individual entitled to sue can only be ascertained by balancing on the one hand the loss to him of the future pecuniary benefit, and on the other any pecuniary advantage which from whatever sources comes to him by reason of the death.” These words of Lord Wright were adopted as the principle applicable also under the Indian Act in Gobald Motor Service Ltd. v. R.M.K. Veluswami1 where this Court stated that the general principle is that the actual pecuniary loss can be ascertained only by balancing on the one hand the loss to the claimant of the future pecuniary benefit and on the other any pecuniary advantage which from whatever sources comes to them by reason of the death, that is, the balance of loss and gain to a dependant by the death, must be ascertained.
8. The assessment of damages to compensate the dependants is beset with difficulties because from the nature of things, it has to take into account many imponderables, e.g., the life expectancy of the deceased and the dependants, the amount that the deceased would have earned during the remainder of his life, the amount that he would have contributed to the dependants during that period, the chances that the deceased may not have lived or the dependants may not live up to the estimated remaining period of their life expectancy, the chances that the deceased might have got better employment or income or might have lost his employment or income together.
9. The manner of arriving at the damages is to ascertain the net income of the deceased available for the support of himself and his dependants, and to deduct therefrom such part of his income as the deceased was accustomed to spend upon himself, as regards both self-maintenance and pleasure, and to ascertain what part of his net income the deceased was accustomed to spend for the benefit of the dependants. Then that should be capitalized by multiplying it by a figure representing the proper number of year’s purchase.
10. Much of the calculation necessarily remains in the realm of hypothesis “and in that region arithmetic is a good servant but a bad master” since there are so often many imponderables. In every case “it is the overall picture that matters”, and the court must try to assess as best as it can the loss suffered.
11. There were two methods adopted to determine and for calculation of compensation in fatal accident actions, the first the multiplier mentioned in Davies case (supra) and the second in Nance v. British Columbia Electric Railway Co. Ltd.2 .
12. The multiplier method involves the ascertainment of the loss of dependency or the multiplicand having regard to the circumstances of the case and capitalizing the multiplicand by an appropriate multiplier. The choice of the multiplier is determined by the age of the deceased (or that of the claimants whichever is higher) and by the calculation as to what capital sum, if invested at a rate of interest appropriate to a stable economy, would yield the multiplicand by way of annual interest. In ascertaining this, regard should also be had to the fact that ultimately the capital sum should also be consumed-up over the period for which the dependency is expected to last.
13. The considerations generally relevant in the selection of multiplicand and multiplier were adverted to by Lord Diplock in his speech in Mallett v. Mc Mongle1 where the deceased was aged 25 and left behind his widow of about the same age and three minor children. On the question of selection of multiplicand Lord Diplock observed:
“The starting point in any estimate of the amount of the ‘dependency’ is the annual value of the material benefits provided for the dependants out of the earnings of the deceased at the date of his death. But….there are many factors which might have led to variations up or down in the future. His earnings might have increased and with them the amount provided by him for his dependants. They might have diminished with a recession in trade or he might have had spells of unemployment. As his children grew up and became independent the proportion of his earnings spent on his dependants would have been likely to fall. But in considering the effect to be given in the award of damages to possible variations in the dependency there are two factors to be borne in mind. The first is that the more remote in the future is the anticipated change the less confidence there can be in the chances of its occurring and the smaller the allowance to be made for it in the assessment. The second is that as a matter of the arithmetic of the calculation of present value, the later the change takes place the less will be its effect upon the total award of damages. Thus at interest rates of 4- 1/2% the present value of an annuity for 20 years of which the first ten years are at $ 100 per annum and the second ten years at $ 200 per annum, is about 12 years’ purchase of the arithmetical average annuity of $ 150 per annum, whereas if the first ten years are at $200 per annum and the second ten years at $ 100 per annum the present value is about 14 years’ purchase of the arithmetical mean of $ 150 per annum. If therefore the chances of variations in the ‘dependency’ are to be reflected in the multiplicand of which the years’ purchase is the multiplier, variations in the dependency which are not expected to take place until after ten years should have only a relatively small effect in increasing or diminishing the ‘dependency’ used for the purpose of assessing the damages.”
14. In regard to the choice of the multiplicand the Halsbury’s Laws of England in vol. 34, para 98 states the principle thus:
“98. Assessment of damages under the Fatal Accident Act, 1976 The courts have evolved a method for calculating the amount of pecuniary benefit that dependants could reasonably expect to have received from the deceased in the future. First the annual value to the dependants of those benefits (the multiplicand) is assessed. In the ordinary case of the death of a wage-earner that figure is arrived at by deducting from the wages the estimated amount of his own personal and living expenses.
The assessment is split into two parts. The first part comprises damages for the period between death and trial. The multiplicand is multiplied by the number of years which have elapsed between those two dates. Interest at one-half the short-term investment rate is also awarded on that multiplicand. The second part is damages for the period from the trial onwards. For that period, the number of years which have based on the number of years that the expectancy would probably have lasted; central to that calculation is the probable length of the deceased’s working life at the date of death.”
15. As to the multiplier, Halsbury states:
“However, the multiplier is a figure considerably less than the number of years taken as the duration of the expectancy. Since the dependants can invest their damages, the lump sum award in respect of future loss must be discounted to reflect their receipt of interest on invested funds, the intention being that the dependants will each year draw interest and some capital (the interest element decreasing and the capital drawings increasing with the passage of years), so that they are compensated each year for their annual loss, and the fund will be exhausted at the age which the court assesses to be the correct age, having regard to all contingencies. The contingencies of life such as illness, disability and unemployment have to be taken into account. Actuarial evidence is admissible, but the courts do not encourage such evidence. The calculation depends on selecting an assumed rate of interest. In practice about 4 or 5 per cent is selected, and inflation is disregarded. It is assumed that the return on fixed interest bearing securities is so much higher than 4 to 5 per cent that rough and ready allowance for inflation is thereby made. The multiplier may be increased where the plaintiff is a high tax payer. The multiplicand is based on the rate of wages at the date of trial. No interest is allowed on the total figure.”
16. In both Susamma Thomas and Trilok Chand’s cases (supra) the multiplier appears to have been adopted taking note of the prevalent banking rate of interest.
17. In Susamma Thomas’s case (supra) it was noted that the normal rate of interest was about 10% and accordingly the multiplier was worked out. As the interest rate is on the decline, the multiplier has to consequentially be raised. Therefore, instead of 16 the multiplier of 18 as was adopted in Trilok Chandra’s case (supra) appears to be appropriate. In fact in Trilok Chand’s case (supra), after reference to Second Schedule to the Act, it was noticed that the same suffers from many defects. It was pointed out that the same is to serve as a guide, but cannot be said to be invariable ready reckoner. However, the appropriate highest multiplier was held to be 18. The highest multiplier has to be for the age group of 21 years to 25 years when an ordinary Indian Citizen starts independently earning and the lowest would be in respect of a person in the age group of 60 to 70, which is the normal retirement age.
18. Considering the age of the deceased and the principles indicated above, the appropriate multiplier would be 12 and not 16 as adopted by the Tribunal and affirmed by the High Court. By applying multiplier 12, amount of compensation is fixed at Rs.4,50,000/- (in round figures). The Tribunal has fixed interest @ 9% per annum from the date of the claim petition. Taking note of the prevailing rate of interest in bank deposits, the same is fixed at 7.5% per annum. It is stated that a sum of Rs.4,00,000/- has been deposited pursuant to the order dated 22.3.2004. The balance amount shall be deposited with the Tribunal within four weeks from today. Out of the total deposit 90% of the amount shall be kept in fixed deposit in the name of widow (respondent no.1), minor child (respondent no.2) and the mother (respondent no.3) in the proportion of 35%, 40% and 15% respectively. Rest 10% shall be paid in cash equally to the widow and the mother. Fixed deposits shall be made initially for a period of five years and no withdrawal permitted and only monthly interest will be paid, so far as the fixed deposits in the names of the widow and the mother are concerned. So far as the minor child is concerned, fixed deposit shall be made initially for a period of five years and shall be renewed till the child attains majority. The monthly interest on the deposit shall also be released to the mother as the guardian of the minor.
19. No loan advance of any kind and/or pre-mature encashment shall be permitted in respect of the fixed deposits. However, on an application being made to the Tribunal and it being satisfied about the urgency of any need and absence of financial resources to meet any urgent financial need may permit loan or advance or pre-mature encashment by a reasoned order.
20. Appeal is allowed to the extent indicated. No costs.
1. Leave granted.
2. The appellant is a statutory body constituted under and governed by the provisions of the Gujarat Municipality Act, 1963. It discharges several public utility functions. In the years 1993-94, the respondent was given a contract for collection of octroi on behalf of the appellant on the terms and conditions set out in the contract. The contract was terminated by the appellant. The respondent filed a civil suit alleging wrongful termination/breach of contract by the appellant and seeking inter alia a decree for recovery of damages. The suit ended in a money decree being passed in favour of the respondent and against the appellant.
3. The appellant preferred a first appeal which is pending in the High Court of Gujarat. Therein, the appellant moved an application under Order XLI Rule 5 of the Code of Civil Procedure seeking stay on the execution of the decree. On 19.9.2003, the High Court admitted the appeal for hearing both the parties on merits and granted a stay subject to the condition that the appellant shall deposit in the court an amount of Rs.8,78,925/- with 8 per cent interest on or before 4.11.2003.
4. The appellant moved an application seeking variation of the order dated 19.9.2003. In a detailed application filed by the appellant, it was pointed out that the appellant was facing financial difficulty on account of abolition of octroi and was badly in need of money for carrying out its multifarious public utility services and activities. The appellant offered to furnish security to the satisfaction of the Trial Court and appealed to the Court to suitably modify its earlier order so as to dispense with the requirement as to deposit of the amount and instead permit solvent security being furnished. By order dated 4.11.2003, the Court declined the appellant’s prayer but at the same time extended the time for making deposit by eight weeks from the date of the order and further allowed liberty to the respondent to withdraw the amount deposited by the appellant, subject to its furnishing a security to the satisfaction of the Trial Court. Feeling aggrieved, the appellant has filed this appeal by special leave.
5. On 3.1.2004 while issuing notice to the respondent this Court directed the execution of decree against the appellant to remain stayed subject to the appellant furnishing security of immovable property to the satisfaction of the Trial Court in place of depositing the decretal amount in cash as directed by the High Court. During the course of hearing, it was pointed out by the learned counsel for the appellant that the order dated 30.1.2004 has been complied with by the appellant and statement in that regard has been made on affidavit in this Court.
6. Order XLI Rule 1(3) of the CPC provides that in an appeal against a decree for payment of amount the appellant shall, within the time permitted by the Appellate Court, deposit the amount disputed in the appeal or furnish such security in respect thereof as the Court may think fit. Under Order XLI Rule 5(5) a deposit or security, as abovesaid, is a condition precedent for an order by the Appellate Court staying the execution of the decree. A bare reading of the two provisions referred to hereinabove, shows a discretion having been conferred on the Appellate Court to direct either deposit of the amount disputed in the appeal or to permit such security in respect thereof being furnished as the Appellate Court may think fit. Needless to say that the discretion is to be exercised judicially and not arbitrarily depending on the facts and circumstances of a given case. Ordinarily, execution of a money decree is not stayed inasmuch as satisfaction of money decree does not amount to irreparable injury and in the event of the appeal being allowed, the remedy of restitution is always available to the successful party. Still the power is there, of course, a discretionary power and is meant to be exercised in appropriate cases.
7. In the memo of appeal filed by the appellant in the High Court, very many pleas have been raised. One of the grounds taken is that the decree has been passed by the Trial Court without availability of any legal evidence amounting to proof in favour of the respondent and hence the decree is ex-facie erroneous. The grounds urged in favour of the prayer for stay set out for the consideration of the High Court as an Appellate Court have been briefly noticed hereinabove. We do not propose to deal with the merits of the pleas so urged lest it should prejudice the hearing of the appeal in the High Court. Suffice it to observe that a case for grant of stay was made out even in the opinion of the High Court and the dispute which survived lay in a narrow compass : Whether to insist on deposit in cash or permit a security being furnished?
8. In the facts and circumstances of the present case and having taken into consideration the respective submissions made by the learned counsel for the parties in very many details, we are satisfied to hold that the High Court ought to have permitted furnishing of security instead of insisting on deposit in cash of the amount as directed by the High Court. It is not the case of the respondent that in the event of the appeal being dismissed the decretal amount may not be recovered from the appellant. On the other hand, the appellant has made out a prima facie strong case for the hearing of the appeal on its merits and further a case that public interest would be better served by the amount being retained by the appellant during the pendency of the appeal. While making these observations, we should not be understood as having made any observation touching the merits of the case amounting to pre-judging any of the issues arising for decision in the appeal and ex abundanti cautela we clarify that the appeal shall be heard by the High Court on its own merits uninfluenced by anything said in this order. The appellant has already furnished security of immovable property to the satisfaction of the Trial Court pursuant to the order dated 31.2.2004 passed by this Court.
9. The appeals are allowed. The impugned orders of the High Court are set aside and instead the interim order dated 30.1.2004 passed by this Court is substituted in place thereof. No order as to the costs.
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JT 2005 (4) SC 531
Tamil Nadu State Transport Corporation Ltd. v. S. Rajapriya and two others
Civil Appeal No. 2765 of 2005
(Arising out of SLP(C) No.6144 of 2004)
(From the Judgment and Order dated 18.9.2003 of the Madras High Court in C.M.A.No. 2351 of 2003)
ARIJIT PASAYAT & S.H. KAPADIA, JJ.
Dt. 20.04.2005
Appearances
Mr. Subramonium Prasad, Advocate for the Appellant.
Accident Claims/Motor Vehicles Insurance
Motor Vehicles Act, 1988
Motor vehicles accident – Compensation for loss of life – Determination of – Multiplier to be applied and deductions to be made – Death of a 38 year old male earning Rs. 4688 per month in a bus accident – Bus belonging to the appellant State Corporation – Accident alleged to be on account of rash and negligent driving of the vehicle – Widow and minor son of deceased making a claim for compensation of Rs. 20 lacs – Tribunal awarding a compensation of Rs. 6,09,552 arrived at by applying a multiplier of 16 and deducting one third salary towards personal expenses – High Court dismissing the appeal of the Corporation. Partly allowing the appeal held that correct multiplier to be applied is 12 and not 16 and therefore compensation quantified at Rs. 4,50,000. Directions given for payment of 10 per cent of the compensation in cash and the rest to be invested in fixed deposits.
HELD
The manner of arriving at the damages is to ascertain the net income of the deceased available for the support of himself and his dependants, and to deduct therefrom such part of his income as the deceased was accustomed to spend upon himself, as regards both self-maintenance and pleasure, and to ascertain what part of his net income the deceased was accustomed to spend for the benefit of the dependants. Then that should be capitalized by multiplying it by a figure representing the proper number of year’s purchase. (Para 9)
Much of the calculation necessarily remains in the realm of hypothesis “and in that region arithmetic is a good servant but a bad master” since there are so often many imponderables. In every case “it is the overall picture that matters”, and the court must try to assess as best as it can the loss suffered. (Para 10)
The multiplier method involves the ascertainment of the loss of dependency or the multiplicand having regard to the circumstances of the case and capitalizing the multiplicand by an appropriate multiplier. The choice of the multiplier is determined by the age of the deceased (or that of the claimants whichever is higher) and by the calculation as to what capital sum, if invested at a rate of interest appropriate to a stable economy, would yield the multiplicand by way of annual interest. In ascertaining this, regard should also be had to the fact that ultimately the capital sum should also be consumed-up over the period for which the dependency is expected to last. (Para 12)
Considering the age of the deceased and the principles indicated above, the appropriate multiplier would be 12 and not 16 as adopted by the Tribunal and affirmed by the High Court. By applying multiplier 12, amount of compensation is fixed at Rs.4,50,000/- (in round figures). The Tribunal has fixed interest @ 9% per annum from the date of the claim petition. Taking note of the prevailing rate of interest in bank deposits, the same is fixed at 7.5% per annum. It is stated that a sum of Rs.4,00,000/- has been deposited pursuant to the order dated 22.3.2004. The balance amount shall be deposited with the Tribunal within four weeks from today. Out of the total deposit 90% of the amount shall be kept in fixed deposit in the name of widow (respondent no.1), minor child (respondent no.2) and the mother (respondent no.3) in the proportion of 35%, 40% and 15% respectively. Rest 10% shall be paid in cash equally to the widow and the mother. Fixed deposits shall be made initially for a period of five years and no withdrawal permitted and only monthly interest will be paid, so far as the fixed deposits in the names of the widow and the mother are concerned. So far as the minor child is concerned, fixed deposit shall be made initially for a period of five years and shall be renewed till the child attains majority. The monthly interest on the deposit shall also be released to the mother as the guardian of the minor. (Para 18)
Cases Referred:
1. U.P. State Road Transport Corporation and Ors. v. Trilok Chandra and Ors. (JT 1996 (5) SC 356) (Para 4)
2. General Manager, Kerala State Road Transport Corporation, Trivandrum v. Susamma Thomas (Mrs.) and Ors. ((1994 (2) SCC 176) (Para 4)
3. Municipal Corporation of Delhi v. Subhagwanti (1966 (3) SCR 649) (Para 5)
4. Gobald Motor Service Ltd. v. R.M.K. Veluswami (1962 (1) SCR 929) (Para 7)
5. Davies v. Powell Duffregn Associated Collieries Ltd. (1942 AC 601) (Para 5)
Foreign Cases Referred:
1. Baker v. Bolton (1979 (1) All ER 774) (Para 6)
2. Lord Diplock in his speech in Mallett v. Mc Mongle (1969 (2) All ER 178) (Para 13)
3. Nance v. British Columbia Electric Railway Co. Ltd. (1951 (2) All ER 448) (Para 11)
ARIJIT PASAYAT, J.
1. Leave granted.
2. Tamil Nadu State Transport Corporation Ltd. (hereinafter referred to as the ‘Corporation’) calls in question legality of the judgment rendered by a Division Bench of the Madras High Court dismissing the appeal filed by the Corporation. By the impugned order the Division Bench confirmed the compensation awarded to the respondents by the Motor Vehicle Accident Compensation Claim Tribunal, Principal District Judge, Thanjur (in short the ‘Tribunal’).
3. Background facts in a nutshell are as follows:
3.1. On 30.8.2001 one Sathyamurthy (hereinafter referred to as the ‘deceased’) lost his life in an automobile accident. His widow (respondent no.1) and minor son (respondent no.2) filed petition claiming compensation under the Motor Vehicles Act, 1988 (in short the ‘Act’). Deceased’s mother was impleaded as respondent no.2 in the claim petition, while the Corporation was impleaded as respondent no.1. It was stated in the claim petition that the accident occurred due to rash and negligent driving of the Corporation’s driver. Claim of Rs.20 lacs was made. Tribunal noted that the deceased was about 38 years of age and was getting monthly salary of Rs.4688/- (annually Rs.56,208/-) from the Corporation. After deductions one-third for personal expenses contribution of the deceased was fixed at Rs.37,472/- per annum. As the deceased was about 38 years of age, multiplier of 16 was applied. Accordingly, the compensation was worked out at Rs.6,09,552/-. The award was questioned in appeal before the Madras High Court and the Division Bench as noted above, dismissed the same.
4. In support of the appeal, learned counsel for the appellant submitted that quantum as arrived at by applying multiplier of 16 is high. There is no appearance on behalf of the respondents in spite of the notice. While issuing notice on 22.3.2004 the dispute was restricted to the appropriate multiplier to be adopted. The question regarding appropriate multiplier has been considered by this Court in General Manager, Kerala State Road Transport Corporation, Trivandrum v. Susamma Thomas (Mrs.) and Ors.1 and U.P. State Road Transport Corporation and Ors. v. Trilok Chandra and Ors.1 .
5. Certain principles were highlighted by this Court in the case of Municipal Corporation of Delhi v. Subhagwanti2 in the matter of fixing the appropriate multiplier and computation of compensation. In a fatal accident action, the accepted measure of damages awarded to the dependants is the pecuniary loss suffered by them as a result of the death. “How much has the widow and family lost by the father’s death?” The answer to this lies in the oft quoted passage from the opinion of Lord Wright in Davies v. Powell Duffregn Associated Collieries Ltd.3 which says:
“The starting point is the amount of wages which the deceased was earning, the ascertainment of which to some extent may depend on the regularity of his employment. Then there is an estimate of how much was required or expended for his own personal and living expenses. The balance will give a datum or basic figure which will generally be turned into a lump sum by taking a certain number of years’ purchase. That sum, however, has to be taxed down by having due regard to uncertainties, for instance, that the widow might have again married and thus ceased to be dependent, and other like matters of speculation and doubt.”
6. The rule in common law in Baker v. Bolton4 enunciated by Lord Ellenborough was that “in a Civil Court, the death of a human being could not be complained of as a injury,”. Indeed, the maxim action personalis moritur cum persona, had the effect that all actions in tort, with very few exceptions, also became extinguished with that person. Great changes were brought about by the Fatal Accidents Act, 1846 (now Fatal Accidents Act, 1976) and the Law Reforms (Miscellaneous Provisions) Act, 1934. Under the statute, as indeed under the Indian Statute as well, there are two separate and distinct cause of action, which are maintainable in consequence of a person’s death. There were the dependant’s claim for the financial loss suffered and acclaim for injury, loss or damage, which the deceased would have had, had he lived, and which survives for the benefit of his estate.
7. The measure of damage is the pecuniary loss suffered and is likely to be suffered by each dependant. Thus “except where there is express statutory direction to the contrary, the damages to be awarded to a dependant of a deceased person under the Fatal Accidents Acts must take into account any pecuniary benefit accruing to that dependant in consequence of the death of the deceased. It is the net loss on balance which constitutes the measure of damages.” Lord Wright in the Davies’s case (supra) said, “The actual pecuniary loss of each individual entitled to sue can only be ascertained by balancing on the one hand the loss to him of the future pecuniary benefit, and on the other any pecuniary advantage which from whatever sources comes to him by reason of the death.” These words of Lord Wright were adopted as the principle applicable also under the Indian Act in Gobald Motor Service Ltd. v. R.M.K. Veluswami1 where this Court stated that the general principle is that the actual pecuniary loss can be ascertained only by balancing on the one hand the loss to the claimant of the future pecuniary benefit and on the other any pecuniary advantage which from whatever sources comes to them by reason of the death, that is, the balance of loss and gain to a dependant by the death, must be ascertained.
8. The assessment of damages to compensate the dependants is beset with difficulties because from the nature of things, it has to take into account many imponderables, e.g., the life expectancy of the deceased and the dependants, the amount that the deceased would have earned during the remainder of his life, the amount that he would have contributed to the dependants during that period, the chances that the deceased may not have lived or the dependants may not live up to the estimated remaining period of their life expectancy, the chances that the deceased might have got better employment or income or might have lost his employment or income together.
9. The manner of arriving at the damages is to ascertain the net income of the deceased available for the support of himself and his dependants, and to deduct therefrom such part of his income as the deceased was accustomed to spend upon himself, as regards both self-maintenance and pleasure, and to ascertain what part of his net income the deceased was accustomed to spend for the benefit of the dependants. Then that should be capitalized by multiplying it by a figure representing the proper number of year’s purchase.
10. Much of the calculation necessarily remains in the realm of hypothesis “and in that region arithmetic is a good servant but a bad master” since there are so often many imponderables. In every case “it is the overall picture that matters”, and the court must try to assess as best as it can the loss suffered.
11. There were two methods adopted to determine and for calculation of compensation in fatal accident actions, the first the multiplier mentioned in Davies case (supra) and the second in Nance v. British Columbia Electric Railway Co. Ltd.2 .
12. The multiplier method involves the ascertainment of the loss of dependency or the multiplicand having regard to the circumstances of the case and capitalizing the multiplicand by an appropriate multiplier. The choice of the multiplier is determined by the age of the deceased (or that of the claimants whichever is higher) and by the calculation as to what capital sum, if invested at a rate of interest appropriate to a stable economy, would yield the multiplicand by way of annual interest. In ascertaining this, regard should also be had to the fact that ultimately the capital sum should also be consumed-up over the period for which the dependency is expected to last.
13. The considerations generally relevant in the selection of multiplicand and multiplier were adverted to by Lord Diplock in his speech in Mallett v. Mc Mongle1 where the deceased was aged 25 and left behind his widow of about the same age and three minor children. On the question of selection of multiplicand Lord Diplock observed:
“The starting point in any estimate of the amount of the ‘dependency’ is the annual value of the material benefits provided for the dependants out of the earnings of the deceased at the date of his death. But….there are many factors which might have led to variations up or down in the future. His earnings might have increased and with them the amount provided by him for his dependants. They might have diminished with a recession in trade or he might have had spells of unemployment. As his children grew up and became independent the proportion of his earnings spent on his dependants would have been likely to fall. But in considering the effect to be given in the award of damages to possible variations in the dependency there are two factors to be borne in mind. The first is that the more remote in the future is the anticipated change the less confidence there can be in the chances of its occurring and the smaller the allowance to be made for it in the assessment. The second is that as a matter of the arithmetic of the calculation of present value, the later the change takes place the less will be its effect upon the total award of damages. Thus at interest rates of 4- 1/2% the present value of an annuity for 20 years of which the first ten years are at $ 100 per annum and the second ten years at $ 200 per annum, is about 12 years’ purchase of the arithmetical average annuity of $ 150 per annum, whereas if the first ten years are at $200 per annum and the second ten years at $ 100 per annum the present value is about 14 years’ purchase of the arithmetical mean of $ 150 per annum. If therefore the chances of variations in the ‘dependency’ are to be reflected in the multiplicand of which the years’ purchase is the multiplier, variations in the dependency which are not expected to take place until after ten years should have only a relatively small effect in increasing or diminishing the ‘dependency’ used for the purpose of assessing the damages.”
14. In regard to the choice of the multiplicand the Halsbury’s Laws of England in vol. 34, para 98 states the principle thus:
“98. Assessment of damages under the Fatal Accident Act, 1976 The courts have evolved a method for calculating the amount of pecuniary benefit that dependants could reasonably expect to have received from the deceased in the future. First the annual value to the dependants of those benefits (the multiplicand) is assessed. In the ordinary case of the death of a wage-earner that figure is arrived at by deducting from the wages the estimated amount of his own personal and living expenses.
The assessment is split into two parts. The first part comprises damages for the period between death and trial. The multiplicand is multiplied by the number of years which have elapsed between those two dates. Interest at one-half the short-term investment rate is also awarded on that multiplicand. The second part is damages for the period from the trial onwards. For that period, the number of years which have based on the number of years that the expectancy would probably have lasted; central to that calculation is the probable length of the deceased’s working life at the date of death.”
15. As to the multiplier, Halsbury states:
“However, the multiplier is a figure considerably less than the number of years taken as the duration of the expectancy. Since the dependants can invest their damages, the lump sum award in respect of future loss must be discounted to reflect their receipt of interest on invested funds, the intention being that the dependants will each year draw interest and some capital (the interest element decreasing and the capital drawings increasing with the passage of years), so that they are compensated each year for their annual loss, and the fund will be exhausted at the age which the court assesses to be the correct age, having regard to all contingencies. The contingencies of life such as illness, disability and unemployment have to be taken into account. Actuarial evidence is admissible, but the courts do not encourage such evidence. The calculation depends on selecting an assumed rate of interest. In practice about 4 or 5 per cent is selected, and inflation is disregarded. It is assumed that the return on fixed interest bearing securities is so much higher than 4 to 5 per cent that rough and ready allowance for inflation is thereby made. The multiplier may be increased where the plaintiff is a high tax payer. The multiplicand is based on the rate of wages at the date of trial. No interest is allowed on the total figure.”
16. In both Susamma Thomas and Trilok Chand’s cases (supra) the multiplier appears to have been adopted taking note of the prevalent banking rate of interest.
17. In Susamma Thomas’s case (supra) it was noted that the normal rate of interest was about 10% and accordingly the multiplier was worked out. As the interest rate is on the decline, the multiplier has to consequentially be raised. Therefore, instead of 16 the multiplier of 18 as was adopted in Trilok Chandra’s case (supra) appears to be appropriate. In fact in Trilok Chand’s case (supra), after reference to Second Schedule to the Act, it was noticed that the same suffers from many defects. It was pointed out that the same is to serve as a guide, but cannot be said to be invariable ready reckoner. However, the appropriate highest multiplier was held to be 18. The highest multiplier has to be for the age group of 21 years to 25 years when an ordinary Indian Citizen starts independently earning and the lowest would be in respect of a person in the age group of 60 to 70, which is the normal retirement age.
18. Considering the age of the deceased and the principles indicated above, the appropriate multiplier would be 12 and not 16 as adopted by the Tribunal and affirmed by the High Court. By applying multiplier 12, amount of compensation is fixed at Rs.4,50,000/- (in round figures). The Tribunal has fixed interest @ 9% per annum from the date of the claim petition. Taking note of the prevailing rate of interest in bank deposits, the same is fixed at 7.5% per annum. It is stated that a sum of Rs.4,00,000/- has been deposited pursuant to the order dated 22.3.2004. The balance amount shall be deposited with the Tribunal within four weeks from today. Out of the total deposit 90% of the amount shall be kept in fixed deposit in the name of widow (respondent no.1), minor child (respondent no.2) and the mother (respondent no.3) in the proportion of 35%, 40% and 15% respectively. Rest 10% shall be paid in cash equally to the widow and the mother. Fixed deposits shall be made initially for a period of five years and no withdrawal permitted and only monthly interest will be paid, so far as the fixed deposits in the names of the widow and the mother are concerned. So far as the minor child is concerned, fixed deposit shall be made initially for a period of five years and shall be renewed till the child attains majority. The monthly interest on the deposit shall also be released to the mother as the guardian of the minor.
19. No loan advance of any kind and/or pre-mature encashment shall be permitted in respect of the fixed deposits. However, on an application being made to the Tribunal and it being satisfied about the urgency of any need and absence of financial resources to meet any urgent financial need may permit loan or advance or pre-mature encashment by a reasoned order.
20. Appeal is allowed to the extent indicated. No costs.
