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Liberal approach should be adopted in awarding compensation for motor accident cases where there is severe disability, SC [Read Judgement]

"... courts or the tribunals assessing the compensation in a case of 100% disability, especially where there is mental disability also, should take a liberal view of the matter when awarding compensation", the Supreme Court observed.

Sanya Talwar

The Supreme Court on Wednesday emphasized that a liberal approach should be adopted in awarding compensation in motor accident claim petitions involving severe disability, more so when the victim is a minor.

Justices N Nageswara Rao and Deepak Gupta further observed that according to the principles laid out in the Motor Vehicles Act, 1988, the Court has a duty to ensure that fair and just compensation is paid to the claimant.

In line with this principle, the Court may also award compensation higher than the amount claimed, depending on the facts of the case. Commenting on the role of Courts in this area, the Bench observed,

“It is impossible to equate human suffering and personal deprivation with money. However, this is what the Act enjoins upon the courts to do. The court has to make a judicious attempt to award damages, so as to compensate the claimant for the loss suffered by the victim. On the one hand, the compensation should not be assessed very conservatively, but on the other hand, compensation should also not be assessed in so liberal a fashion so as to make it a bounty to the claimant.”

Factual Matrix

The appellant was a twelve year old at the time of the accident. On 18th October, 2007, while she was travelling on a tractor with her parents, the tractor was hit by a truck which was driven rashly. In the said accident, the appellant suffered serious injuries resulting in damage to her brain. Her disability was assessed as 100%. A claim was made on behalf of the minor child by her father before the Motor Accident Claims Tribunal, which awarded her Rs. 11,08,501/- as compensation.

The High Court further enhanced the compensation amount to Rs. 25,78,501/-. Aggrieved, the appellant approached the Supreme Court by way of Civil Appeal.

What the Supreme Court held

The Court ultimately enhanced the compensation amount payable to Rs. 62,27,000/- along with an interest @7.5% p.a. from the date of filing of the claim petition till payment/deposit of the amount.

While doing so, the Court relied on numerous international cases where the principles for grant of compensation were enunciated such as Phillips v. Western Railway Co., Mediana, H. West Son Ltd. v. Shephard among others. It was held that,

“The assessment of damages in personal injury cases raises great difficulties. It is not easy to convert the physical and mental loss into monetary terms. There has to be a measure of calculated guess-work and conjecture. An assessment, as best as can, in the circumstances, should be made.”

Among the factors taken into account for the enhancement of the compensation awarded were the following:

  • Expenses relating to treatment, hospitalization, medicines, transportation etc. cannot be reduced on the basis of absence of bills.

  • Loss of earnings cannot be computed only on the basis of the present age of the child.

  • Interest must be paid from the date of filing the petition.

  • Multiplier system must be followed while determining lump sum compensation.

Liberal approach should be adopted where disability is severe

In the course of assessing the amount payable to the claimant on account of her pain and suffering, the Court has made some pertinent remarks on the approach to be adopted in assessing the compensation payable. The Bench remarked,

“One factor which must be kept in mind while assessing the compensation in a case like the present one is that the claim can be awarded only once. The claimant cannot come back to court for enhancement of award at a later stage praying that something extra has been spent."

Therefore, the courts or the tribunals assessing the compensation in a case of 100% disability, especially where there is mental disability also, should take a liberal view of the matter when awarding compensation.
Supreme Court

Before parting with the matter, the court also explained how the compensation payable should be invested where minor claimants are involved, to avoid the diversion of funds by others.

Relying on guidelines laid down in General Manager, Kerala State Road Transport Corporation, Trivandrum v. Susamma Thomas & Ors. , the Court held that the compensation must be invested in nationalized banks with a good rate of interest so that the claimants are not deprived of the sum by unscrupulous elements.

The Court added,

In special cases, for reasons to be given in writing, the MACT or the trial court may release such amount as is required. We reiterate these guidelines and direct that they should be followed by all the tribunals and High Courts to ensure that the money of the victims is not frittered away.

[Read the Judgment]

Supreme Court - Motor Accident Judgment - Feb 5, 2020.pdf
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