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Compensation – There is distinction between “right to apply for compensation” and “entitlement

National Insurance Company Limited vs. Birender and ors., Civil Appeal Nos. 242-243of 2020, Arising out of SLP (Civil) Nos. 976 – 977of 2020, with Civil Appeal No. 244 of 202, Arising out of SLP (Civil) No. 978 of 2020- January 13, 2020.

The Supreme Court Bench comprising of Justice A.M. Khanwilkar and Justice Dinesh Maheswari pronounced the judgment

The Court held that; it  must necessarily follow that even the major married and earning sons of the deceased being legal representatives have a right to apply for compensation and it would be the bounden duty of the Tribunal to consider the application irrespective of the fact whether the concerned legal representative was fully dependant on the deceased and not to limit the claim towards conventional heads only.

The major issues in the present case are

Whether the major sons of a deceased who are gainfully employed and married are entitled to get compensation from the insurer under the Motor Vehicles Act, 1988?
Whether legal representatives are entitled for compensation only under the conventional heads?
Whether the amount receivable by the legal representatives of the deceased under the 2006 rules is required to be deducted as a whole or only a portion thereof?

The background facts of the cases are as follows; the respondents 1 and 2 are the legal heirs of the deceased. The deceased was a government employee (Peon to Tahsildar) and died in a motor vehicle accident while going to the office. The offending vehicle(dumper) was rash and negligent and hit the vehicle of the deceased. The deceased died because of fatal injuries. The respondents claimed Rs. 50,00,000 along with an annual interest of 12% per annum on the assertion that the deceased earned Rs. 28,000 and pension of her husband Rs. 7,000 as she was the sold bread winner of the family. The appellant disputed that it was not the fault of the offending vehicle, the driver did not have a valid and effective driving license and the vehicle in question was plied in contravention to the terms and conditions of the insurance policy and stated that they were not liable to pay the compensation. After analyzing the records, the Tribunal stated that the appellants were rash and negligent and did not prove that the vehicle was against the insurance policy and the driver had a valid license. It also further stated that the legal heirs even being majors are liable to get the compensation as it is a pecuniary benefit for their family and that cannot be denied. The Tribunal determined Rs. 17,15,532/- as the payment for compensation by computing the income and other offers for the deceased and in addition to this, funeral expenses of Rs. 25,000 was also given. Therefore, the total compensation is Rs. 17,40,532/- along with the interest of 9% per annum from the date of institution of the petition. The driver, owner and the insurer were jointly and severely held liable.

Appeals were made by both the parties. The respondents made an appeal stating that the Tribunal has made a wrong computation of the award as they have not considered the widow pension received by the deceased and has taken into account the take-home salary and not the drawn salary. The appellants stated that the respondents are major and earning and are not entitled for compensation. The respondents contended that being major does not regard them as ineligible.  The High Court by considering the monthly salary and other benefits calculated the compensation to be Rs. 33,29,712/-. It further noted from the financial assistance rules of 2006 and deducted 50% of the compensation. The High Court gave liberty to recover the amount of Rs. 4,84,716/- if it is already paid.

The Supreme Court observed that the fact that under Rule 5(2) of the 2006 Rules, the family pension receivable by the family would be payable, however, only after the period, during which the financial assistance is received, is completed.

According to the Act, any person who is legal representative of the deceased is entitled for compensation when a proper application is made. The court further made analysis based on the Pranay Sethi (supra) and decided the conventional heads.

The Court stated that the High Court committed manifest error in assuming that the respondent Nos. 1 and 2 would be eligible to receive financial assistance under the 2006 Rules. The eligibility to receive such financial assistance has been spelt out in Rule 3 of the 2006 Rules read with the provision of Pension/Family Pension Scheme, 1964.  It appears that major sons and married daughters are not included in the definition.

Therefore, the respondents are entitled to get compensation on the basis of loss of dependency, loss of gross salary, and future prospects and deduction of only 1/3 amount towards personal expenses of the deceased. The total compensation calculated in this basis is Rs. 31,96,230/- is payable to the claimants. However, along with this amount interest rate of 9% per annum from the date of petition is payable. Hence, the Court partly allowed the appeals and disposed of the interlocutory applications.

–  Vydurya Selvi Baskaran



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