Second Schedule does not apply to applications made under Section 166 of the 1988 Motor Vehicles Act

Asmita Kuvalekar | Government Law College, Mumbai | 25^th April 2020. 

ARVIND KUMAR MISHRA VS. NEW INDIA ASSURANCE CO LTD AND ANR (CIVIL APPEAL NO 5510 OF 2005) 

FACTS OF THE CASE: 

Suffering a serious motor accident at just 25 years of age, the appellant was rendered 70% permanently disabled. He sued the truck driver and his insurance company to the extent of 22 lakh rupees. The Tribunal awarded 2, 50,000 while the High Court increased the amount to 3, 50,000. Dissatisfied with the compensation, the appellant approached the Apex Court for final settlement of the matter. 

This case assumes importance as the Supreme Court succinctly explains the guidelines governing compensation in motor vehicle accidents. It also postulates the correct application of the Second Schedule of the 1988 Motor Vehicles Act. 

ISSUE: 

1. What is the correct computation of compensation to victims of motor accidents? 

JUDGEMENT: 

First and foremost, the Apex Court clarified that the guilt of the truck driver was not disputed in the present appeal. The sole question that the appellant raised was on the quantum of compensation given to him. 

The Court deemed fit to look at the matter with a holistic perspective. It recognized the lifetime of hardship and mental agony caused to the young appellant because of the gruesome consequences of the motor accident. The accident caused haemorrhage requiring several surgical interventions, amputation of the right arm, paralysis and substantial loss of vision. The youngster was an exceptional final year student in an esteemed Engineering institute namely Birla Institute of Technology (BIT), Mesra, and not only missed his classes post the accident, but lay in a coma for two months. 

The resultant 70% disablement led to a loss of independence whereby the young man would require assistance and caretaking for the rest of his life. Beyond that, the unquantifiable psychological anguish was also acknowledged by the Court. Referring to the poignant decision in General Manager Kerala State Road Transport Corporation, Trivandrum v Susamma Thomas (Mrs) and ors¹, the judges took into consideration the reasonably foreseeable future of the final year student that was rendered impossible because of the accident. The appellant being a bright student, it was held that it could reasonably be assumed that he would’ve secured a well-paying job in the private sector. By his own admission, the appellant had been offered a position by Tata and Reliance through campus placement procedure with a salary of 3, 50,000 per annum. But even if the private sector is not taken into consideration for want of evidence of the same, it is impossible to overlook the fact that the victim could have been easily selected as Assistant Engineer in a public office with a salary of 60,000 per annum. 

In line with the guidelines given in Susamma Thomas (above), the judges reinforced the principle behind compensation. They explained that the idea behind a monetary award in such matters is to put the victim in the same position as before, as far as possible. To that effect, it is undeniable that a “perfect compensation” is impossible but it should atleast be fair. Each case has to be examined on its own merits. Accordingly, some may require compensation for loss of earnings for a lifetime while others may only need reimbursement of loss of partial earnings. In its own words, “The conventional basis of assessing compensation in personal injury cases…is taking an appropriate multiplier of an appropriate multiplicand”. The age of the victim, expected duration of dependency coupled with reasonably foreseeable earning capacity form the triad of important factors that should influence and ultimately shape the decision of the Court in such cases.

Thus the decision of the Tribunal as well as that of the High Court was declared to be erroneous on grounds of ignoring the appellant’s personal situation and his potential to flourish financially if the accident had not happened. On that count, the young appellant’s future annual income was assessed at 60,000. The same was reduced by 30% with regard to his disabled state, bringing the estimated annual salary to 42,000. Following the Susamma judgement, the multiplier was taken to be 18, increasing the total damages to 7, 56,000. Adding the Tribunal’s medical expense award of 1, 50,000, the final damages to be given to the appellant were fixed at 9, 06,000. 

Lastly, the Court singled out the counsel for insurer’s submission that the appellant is entitled to compensation only in accordance with the Second Schedule of the 1988 Act. It pointed out that the victim had claimed monetary relief under Section 166 and not 163A of the Act. The Second Schedule was thereby held to not apply to claims made under Section 166 of the 1988 Act. In doing so, the Court effectively answered the query raised in an earlier case where the judges had requested the matter to be taken up by a larger Bench. Without constituting one, this judgement put the confusion to rest. 

1. (1994) 2 SCC 176