Abstract

Good intentions cannot justify bad delivery.

Despite the fact that putting monetary value on human life is ethically unacceptable, there is a great deal of debate and discussion in assessing the direct and indirect cost of pain and suffering, injuries and damages, death and disabilities to the road accident victims caused by ‘motor vehicle’ a monster invented and accepted as a necessary evil by the modern society.

However, “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 often so many imponderables. In every case it is the overall picture that matters.”

While few die out of indigestion many die out of starvation

Case No. 1 :

Mr. Suresh K Mahajan, an American Citizen, aged around 47-48 years, during his visit to India, on 03/02/1995, met with an accident and died. Ultimately, on 08/07/2002, the Supreme Court of India quantified the total amount of compensation payable to his legal heirs, at more than Rs.11 Crore. (Patricia Jean Mahajan and others vs. United India Insurance Company, AIR 2002 SC 2607)

Case No. 2 :

Few months later, on 10/09/1995, Mr. Dama Patra an Indian Citizen aged around 55 years met with a similar accident and died. After 11 years of litigation, the Motor Accident Claims Tribunal, Keonjhar, Orissa, in MAC Case No. 255/1995, awarded Rs.34,000/- as compensation to his dependent legal heirs, though the law prescribes a minimum compensation of Rs. 50,000/- in such cases u/s 140 M. V. Act, 1988.

Case No. 3 :

In another incident, a German tourist, Ms. Gonda Neuber, aged about 42 years while traveling from Udaipur to Mount Abu, met with an accident and lost her arm. The Claims Tribunal awarded Rs.53 Lakhs to her as compensation (Refer ‘Mumbai Mirror’, dated 27/08/2007).

Case No. 4 :

Few years thereafter, on 30/05/1999, in similar circumstances, Ms. Shrutika Kadam, an Indian Citizen, aged around 6 years old while traveling from Mumbai to Goa met with an accident and lost her left arm. In the year 2007 the Claims Tribunal awarded Rs.2.5 lakhs as compensation. (Refer ‘Hindustan Times’, Mumbai Edition, dated 09/07/2007 at page-5)

Case No. 5 :

On 10/12/2009, the Supreme Court of India has to intervene to deliver justice by way of increasing the quantum of compensation from Rs. 84,000/- as awarded by the High Court, to Rs.2,88,000/- for amputation of the right hand above the elbow joint of Ms. Arshad Banu, 34 years old lady, and a tailor by profession. The whole pity is that initially she was awarded only Rs.34,000/- by the Claims Tribunal. (Civil Appeal No. 8196 of 2009)

These are some of the few instances for illustration purpose.

Comparative Study

Assuming, if the death and or disablement would have been caused by a vehicle, identity of which was not traceable (otherwise known as hit and run cases), then all the victims would have been received comparatively same amount of compensation u/s 161 M. V. Act, 1988.

Assuming further, if the death would have been caused not by motor vehicle but by way of an accident involving Indian railways or domestic airways, then both the dependent legal heirs of late Suresh K. Mahajan and Dama Patra would have received the same amount of compensation, i.e. Rs.4 lakhs and Rs. 7.5 lakhs respectively. Similarly for loss of arm, all the victims would have received equal amount of compensation.

Taking the assumption to another level, if the death and or injury would have been caused under similar circumstances in any of our neighboring Islamic Countries, which are governed by the Sahria (Islamic Law), then all of them would have been entitled for ‘blood money’ known as “diya”. As per the scheme, rate of compensation is not universal but based on factors like ‘religion and gender’.

Accordingly, Muslim male are provided with 100% compensation, Muslim women receive 50% of the same. While rate of compensation for Christian/Jews male and female are 50% and 25% respectively, for others, it is 6.6% and 3.3%. Applying the above yardstick the legal heirs of the deceased Mr. Suresh Mahajan and Mr. Dama Patra would have received 6.6% of the ‘diya’ and Ms. Gunda Neudor would have received 25% whereas Arshad Banu would have received 50% and Ms. Shrutika Kadam would have ended with receiving only 3.3% as compensation despite suffering loss by the same cause and in the same manner.

Inference

Only because the injury or death had been caused not by an accident involving an unknown vehicle or train or aircraft but by motor vehicle that to not in any Islamic countries, the legal heirs of late Suresh Mahajan received Rs.11 Crore, which is about 3235 times more than what the dependent legal heirs to Late Dama Patra had received. Similarly, Gunda Neuber received compensation, which is 21 times more than what Shrutika Kadam and Arhsad Bano had been awarded, for similar injury.

One thing that is common to all the accidents mentioned hereinabove is that the same is caused by and/or arisen out of the use of Motor vehicle. But what is most uncommon is that, despite suffering death/injury by the same cause and similar circumstances, the victims received varied compensation, which is apparently huge and beyond comparison.

This could not have possible except under the existing M. V. Act, 1988, which provides unlimited compensation to the vehicular victims based on economic factor.

Issues

Accordingly issue that emerge for consideration and need to be addressed, is that, whether it is justified for providing unlimited compensation based on economic factor to the road accident victims that enables the rich to be richer and poor to be poorer?

Background:

Earlier, Motor Third Party Insurance in India was governed under the provisions of the M. V. Act, 1939, wherein, the TP Insurance was compulsory, but the liability of the Insurance Company was very much limited against third party and passengers based on various factors such as the type, make, and carrying capacity of the vehicle.

Amount of compensation also vary for the third party and passengers. But with effect from 1st July 1989 the Government of India replaced the M. V. Act, 1939 with MV Act, 1988, which provided unlimited compensation based on economic criteria for the road accident victims.

Therefore, the alleged anomaly or discrepancies in payment of compensation to the vehicular victims can be attributed to the existing M. V. Act, 1988. Having said so, now the issue before us is whether the changes effected in M. V. Act, 1988 justify provisions for payment of unlimited compensation based on economic factor to the road accident victims that enables the rich to be richer and poor to be poorer?

‘Statement of object and reason’ for the M. V. Act, 1988′

‘Statement of object and reason’ for the M. V. Act, 1988′ inter alia provides that;

“The Supreme Court in M.K. Kunhimohammed vs P.A. Ahmed kutty,  A.I.R. 1937 S.C. page 2158 has made certain suggestions to raise the limit of compensation payable as a result of motor accidents in respect of death and permanent disablement in the event of there being no proof of fault on the part of the person involved in the accident and also in hit and run motor accident and to remove certain disparities in the liability of the insurer to pay compensation depending upon the class or type of vehicles involved in the accident.  The above suggestions made by the Supreme Court have been incorporate in the Act.

Observation on ‘Statement of object and reason’ for the M. V. Act, 1988′ : A bare perusal of the above  clearly shows that there is  no mention about conversion of insurer’s liability from limited to unlimited sum. Absolutely there exist neither any reasoning nor any justification, for converting insurer’s liability from limited one to unlimited one.

Absence of objective to achieve in ‘Statement of object and reason’ for the M. V. Act, 1988′, lead to believe that the conversion of insurer’s liability was without any basis, purpose and objective purported to be achieved by the new Act.

However, since the Statement of object and reason’ for the M. V. Act, 1988′ refers to the M.K. Kunhimohammed’s (supra) case, as the guiding factor for increasing insurer’s liability from a limited to unlimited sum, it is essential to peruse the same to ascertain whether the same have any reasoning or recommendation whatsoever, which justify the conversion of insurer’s liability from limited to unlimited sum.

Much before the Kunhimohammed’s case (supra), in a series of decisions High Court of Kerala and Supreme Court of India, had shown great concern for the paltry sum of compensation available to the road accident victims and urged the Government for its redressal by suitable legislation which cited with approval and formed the very basis of the Kunhimohammed’s case (supra).  Notable amongst the judgments are :

1. Kerala High Court in P. B. Kader & Ors v. Thatchamma & Ors, (AIR 1970 Kerala 241).
2. Manjushri Raha vs. B.L.Gupta (1977 TAC 297)
3. Motor Owners Insurance Company vs. Jadavji Keshavji Modi AIR 1981 SC 2059

Thus before advent in to the findings in Kunhimohammed’s case (supra), let’s examine the case laws referred herein above to ensure that the changes in the new M. V. Act, 1988, are in conformity with the observation and recommendations made by the Court’ and the same had not been diluted in any manner by the legislature.

Kerala High Court in P. B. Kader and others v. Thatchamma and others

Findings : In this case a Division Bench of the Kerala High Court, while dwelling on an appeal observed as follows:  “It is said that an Indian life should be so devalued by an Indian law as to cost only Rs. 2,000/- apart from the fact that the value of the Indian rupee has been eroded and Indian life has become dearer since the time the statute was enacted, and the consciousness of the comforts and amenities of life in the Indian community has arisen, it would have been quite appropriate to revised this fossil figure of Rs. 2,000/- per individual, involved in an accident, to make it more realistic and humane, but that is a matter for the legislature; and the observation that I have made is calculated to remind the law-makers that humanism is the basis of law and justice.”

The Supreme Court of India, in the Kunnimohammad’s case (supra), not only find itself in complete agreement with the above view of the Kerala High Court but also reminded the law-makers, that the time has come to take a more humane and practical view of the things while passing statutes like Motor Vehicle Act in regulating compensation payable by Insurance Companies to victims of motor accidents.

Observation : Undisputedly, offering an amount of Rs.2,000/- as compensation for the death of a person even in seventies, appears to be a national shame and unacceptable to any civilized society, which had been rightly highlighted by the Court with recommendation for its upward revision.

Point to be noted here is that, the Court had shown concern for devaluing Indian life by Indian law, which limit the compensation for death of an Indian at Rs.2,000/- and recommended for its revision to make it more realistic and humane. But, in turn our legislature enacted a piece of legislation that guarantee higher compensation to foreigners over Indians, thereby devaluing Indian life even further, more particularly, before foreigners.  Assuming, if the, M. V. Act would not have been changed, then, all of the victims would have ended with receiving same amount of compensation and the devaluation of Indian life by Indian Law before foreigners would not have been arisen at all.

Secondly, what the Court had recommended is for revision of the fossil figure to make the compensation amount more realistic and humane. Instead the legislature opted to get rid of the figure altogether and introduced the concept of unlimited compensation assuming the same to be the panacea for all the evils, which itself become counter productive, while proving divine for few proved to be inhuman for many.

In the given context : Considering the difference in the amount of compensation paid to the victims/legal heirs illustrated in case no. 1 to 5 at the beginning of this article, the change in the concept of compensation from limited to unlimited appears to be more unrealistic and more inhuman.

Had the legislature would have been revised the fossil figure of Rs.2,000/- to a specified higher amount than the legal heirs of Dama Patra from Orissa or Krutika Desai from Maharastra or Arshad Banu from Karnataka would have received the same amount of compensation paid to the Mahajan’s from USA or Neubar’s from Germany. But in their over anxiety to give shape to the recommendations of the Apex Court, the legislature let down their fellow citizens and countryman before foreigners, in general and the Courts recommendation for upward revision in particular.

Supreme Court of India in Manjushri Raha vs. B.L.Gupta

Findings : In this case, the Apex Court highlighted the trail of economic disaster followed by road accident and called for special attention in providing heavy and adequate compensation particularly through Insurance Company to those victims as the need of the hour. To emphasise the point the Court draw a comparison between the compensation payable to a passenger traveling in a plane and a motor vehicle and denounced the lesser amount of compensation paid to the passenger of a motor vehicle and posed the question (Which is further cited with approval in the case of Motor Owners Insurance Company vs. Jadavji Keshavji Modi and others (supra).

“Does it indicate that the life of a passenger becomes more precious merely because he has chosen a particular conveyance and the value of his life is considerably reduced if he happens to choose a conveyance of a lesser value like motor vehicle?”

The Court replied the above question in the following words;

“Such an invidious distinction is absolutely shocking to any judicial or social conscience, yet Section 95(2)(d) of the MV Act seem to suggest such a distinction”.

Accordingly, recommended for change in law “to pay adequate compensation by properly evaluating the precious life of a citizen in its perspective rather than devaluing human lives on the basis of an artificial mathematical formula.

Observation in the given context: But today, when you apply the same logic, it is other way round. Only because the injury or death had been caused not by an accident involving train or aircraft but by motor vehicle the legal heirs of late Mahajan received Rs.11 Crore, and Gonda Neuber received Rs.53 Lakhs as compensation, otherwise they would have been ended with receiving a fixed paltry sum of compensation and not 3235 times more than the Patras of Orissa or 21 times more than the Kadams from Maharastra.

By that way they would have treated at par with the Patra of Orissa, Kadam from Maharastra and Bano from Karnataka. Does such invidious distinction in amount of compensation payable to the Indians by Indian Law only because they happens to be traveling in Motor vehicle shocking any body’s judicial or social conscience, more particularly of the legislature?

It is further manifest from the Judgment cited above that the intention of the Court is to pay adequate compensation by properly evaluating the precious life of a citizen in its perspective rather than devaluing human lives on the basis of an artificial mathematical formula. Still the legislature proceeded in enacting a piece of legislation that provides compensation solely based on artificial mathematical formula, which further devalued the life of its fellow citizens over outsiders.

Supreme Court of India in Motor Owners Insurance Company  vs. Jadavji Keshavji Modi

Findings : In the case of  Motor Owners Insurance Company’s case the Supreme Court of India held that :

We cannot part with this case without impressing upon the Government, once again, the urgent need to provide by law for the payment of reasonable amounts of compensation, without contest, to victims of road accidents.

We find that road accidents involving passengers traveling by rail or public buses are usually followed by an official announcement of payment of ex gratia sums to victims, varying between five hundred and two thousand rupees or so. That is a niggardly recognisation of the State’s obligation to its people, particularly so when the frequency of accidents involving the public transport system has increased beyond believable limits.

These observations are still languishing in the cold storage of pious wishes. With the emergence of the General Insurance Corporation which has taken over general insurance business of all kinds, including motor vehicle insurance it should be easy to give statutory recognisation to the State’s obligation to compensate victims of road accidents promptly, adequately, and without contest.”

Observation : Thus, in this case what the Court has emphasized is about State’s obligation to compensate victims of road accidents promptly, adequately and without contest. Do we have to add that adequate compensation nevertheless mean that unlimited amount of compensation based on a mathematical formula, which benefits the rich to be richer but not the pedestrian or footpath-dweller.

Supreme Court of India in M. K. Kunhimohammed vs. P. A. Ahmedkutty

Findings : The suggestions of the Apex Court in the case of M. K. Kunni Mohammad (supra), which subsequently formed the basis of change in the M V Act, 1988 are as under:

“In the end we propose to make a few suggestions to the Central Government in respect of certain provisions in Chapter X, XI and XII of the Motor Vehicles Bill No. 56 of 1987 now pending before Parliament which relates to the liability without fault in certain cases, insurance of motor vehicles against third party risks and Claims Tribunals.

Having regard to the inflationary pressures and the consequent loss of purchasing power of the rupee we feel that the amount of Rs.15,000/- and the amount of Rs.7,500/- in the above provisions appear to have become unrealistic.

We, therefore, suggest that the limits of compensation in respect of death and in respect of permanent disablement, payable in the event of there being no proof of fault, should be raised adequately to meet the current situation.  We also do not find any justification for continuing the distinction between the liability of the insurer to pay compensation to passengers and the liability of the insurer to pay compensation to other third parties under the said provisions.

Even among the public service vehicles a distinction is made in the said provisions between vehicles used as goods carriage and vehicles used for the purpose of carrying passengers. The Central Government may consider whether the limits of liability of the insurer now incorporated in Section 147 of the Bill should not be altered suitably.

The society and the State which are responsible for such large number of motor vehicles being put on road should carry also the responsibility of protecting the interests of the innocent victims of hit and run motor accidents. A sum of Rs.5,000/- and a sum of Rs.1,000/- provided as compensation in respect of death or grievous hurt respectively appear to be highly inadequate. The Government may consider whether these figures should not be increased in an appropriate manner.

The expression ‘legal representatives’ has not been defined in the Act and it has led to serious doubt in the course of judicial proceedings. The Government may consider whether it would not be advisable to define the expression ‘legal representative’ for purpose of making claims before Claims Tribunal where death has resulted from a motor vehicle accident in the same way in which the English Law has been amended.

Since the Bill is on the anvil of Parliament we feel that this is the appropriate time for the Central Government to reconsider the above issues. A copy of this Order may be sent to the Secretary to the Government of India, Ministry of Transport for information.”

Observation : From the above it is apparent that nowhere the Court had recommended for a provision to pay unlimited compensation to the road accident victims. Nor even the statement of basic object and reason to M. V. Act, 1988 provides any reasoning or any objective, which the legislature intended to achieve by way of providing unlimited compensation to the road accident victims. On the contrary what it intended to achieve payment of compensation by the insurer to the extent of actual liability to the victims of motor accidents irrespective of the class of vehicles

Answer to the Issue:

In view of what is stated in the “Statement of object and reason for the M. V. Act, 1988 and the observations made in the case of Kunni Mohammed (supra) and other case laws which have been cited with approval, there exist no material on record whatsoever which justify conversion of insurer’s liability from limited to unlimited sum towards victims of vehicular accidents.

On the contrary, it appears that the legislature in its over anxiety to bring out reforms for motor accident victims enacted a law, neither desired nor intended. In the process the legislature diluted the basic objective of the pious recommendations made by the Apex Court, leaving us to ponder on the followings:

1. What is the justification for providing the ‘economic factor’ as the sole criteria for quantification of compensation, that enables the rich to be richer and poor to be poorer?
2. Corollary to the above, another pertinent question emerge for deliberation is that, whether the legislature justified in binding the Insurer to undertake unlimited liability, though registered to be a Company limited by its share capital and what is its effect?
3. Above all, whether the existing system any way facilitate in achieving the desired goal intended to achieve?

After thought :

M. V. Act” so far as the same relates to protecting the interest of vehicular accident victims, is suffering, not from its laudable intention but in its clogged delivery. It appears that the desire to be legally correct has overtaken the imperative to be legally sensible. In this country, the fellow countryman is crucified and the foreigners are very much rewarded. Thanks perhaps to the legislature.

Yesterday it was chaos, today it is a crisis, let’s ensure that tomorrow it should not be a catastrophe.

By: M. K. DAS, Former Advocate, Law Officer, New India Assurance Company Ltd., Mumbai, Published in The Insurance Times, March, 2012