MV Act | Narrow Or Technical Interpretation Of “Income” Defeats Objective Of Providing Just Compensation To Victims, Dependents: J&K High Court

Highlighting the balancing act that a Motor Accident Claims Tribunal(MACT) has to undertake while deciding the competition aspect of a claim Justice Mohammad Yousuf Wani observed,

“A Claims Tribunal which is supposed to take a view in between conservative and liberal approach and accordingly not to be exclusively guided by the aspect of windfall or pittance, shall, however, at the same time bear in mind that, it (MACT) has to measure the balance of convenience in between the legal representatives of the deceased victim/insured and the financially sound insurer”

Citing Section 168 of the Motor Vehicles Act, 1988 the court accentuated that the Act provides that the claims Tribunal shall make an award to determine the amount of compensation which appears to be “just”.

Background:

These observations came while hearing appeals arising from two separate petitions decided by the Motor Accident Claims Tribunal (MACT), Ramban, related to an accident. The accident occurred when a passenger vehicle, driven recklessly, fell off the highway, resulting in multiple casualties, including two victims, Rafeeq Ahmad and Khalid Hussain. Both victims were employed as Rehbar-e-Taleem (ReT) teachers on an honorarium of ₹2,000 per month.

The MACT awarded a total compensation of ₹27.25 lakhs to the dependents of the deceased, significantly exceeding the ₹10 lakhs initially claimed. Aggrieved by the award, the insurance company appealed, arguing that the Tribunal incorrectly calculated the victims' income as ₹20,000 per month instead of their actual honorarium of ₹2,000.

The United India Insurance Company contended that the MACT violated established guidelines by inflating the deceased's income to ₹20,000. The appellant argued that only the deceased's actual earnings on the accident date should be considered for computing compensation. The insurer also challenged the Tribunal's finding that the vehicle's driver was validly licensed, asserting that the company should not bear liability for policy violations.

In response, the legal heirs submitted that the deceased teachers were on the brink of regularization and would have soon earned a monthly salary of at least ₹20,000.

They further contended that the dependents could not be expected to precisely calculate their losses at the time of filing the claim and that the law mandates just and reasonable compensation, irrespective of the claimed amount.

Court's Observations:

Justice Wani, after examining the evidence and rival submissions, upheld the MACT's award, emphasizing the role of a Claims Tribunal in balancing the interests of the victims' families and the financially sound insurer. The Court stressed,

“..Giving any narrow-minded and technical interpretation and meaning to the term 'income' determination of which is the first and important factor in making the calculation to reach an Award of just compensation—defeats the very object of the said legislation. A Claims Tribunal...shall bear in mind that it has to measure the balance of convenience in between the legal representatives of the deceased victim/insured and the financially sound insurer.”

On calculation of income the court acknowledged that although the deceased were receiving ₹2,000 per month under the Rehbar-e-Taleem scheme, evidence indicated that regularization as General Line Teachers was imminent. The tribunal had rightly taken their prospective income as ₹20,000 per month based on the testimony of the ZEO.

Justice Wani highlighted,

"It is imperative for a Claims Tribunal to consider future income prospects where there is certainty, as failure to do so would result in unjust compensation. The deceased teachers were performing the same duties as regular teachers and were merely awaiting regularization. Courts must consider such circumstances while calculating loss of dependency."

Citing National Insurance Co Ltd Vs Pranay Sethi 2017, the court reiterated that compensation must reflect a balance between fairness and practicality, considering the deceased's future earning potential.

Remarking on the societal role of teachers, the court noted,

“The fixing of income of the deceased being the nation builders in their capacity as teachers, at the rate of two thousand rupees (₹2,000) per month appears to be totally illogical. Even a skilled laborer under the minimum wage regime earns far more.”

Additionally, Justice Wani observed:

“The legal heirs of a deceased RTA victim are supposed to be calculating their sufferings/worries and not meticulously working out compensation amount, being valueless for them. The illiteracy of the legal heirs/dependants or the incompetence of legal assistants approached cannot be allowed to further aggravate the sufferings.”

Dismissing the insurer's claim regarding driver license validity, the court said that the violation of the Policy conditions does not appear to be tenable because the appellant-Company has failed to prove any such assertion.

Finding no illegality or perversity in the MACT's award the court dismissed the appeals by United India Insurance as meritless, affirming the compensation awarded. The court directed immediate disbursement of the compensation to the claimants, along with accrued interest, if not already paid.

Case Title: United Insurance Co Ltd Vs Fatima Begum

Citation: 2024 LiveLaw (JKL) 289

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