NATIONAL INSURANCE COMPANY LTD. vs. URMILABEN ASHOKBHA PATEL

C/FA/2163/2014 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD FIRST APPEAL NO. 2163 of 2014 With CIVIL APPLICATION NO. 8099 of 2014 In FIRST APPEAL NO. 2163 of 2014 With CROSS OBJECTION NO. 96 of 2014 In FIRST APPEAL NO. 2163 of 2014

FOR APPROVAL AND SIGNATURE:

HONOURABLE MR.JUSTICE AKIL KURESHI and HONOURABLE MR.JUSTICE VIPUL M. PANCHOLI

================================================================ 1 Whether Reporters of Local Papers may be allowed to see the judgment ? 2 To be referred to the Reporter or not ? 3 Whether their Lordships wish to see the fair copy of the judgment ? 4 Whether this case involves a substantial question of law as to the interpretation of the Constitution of India, 1950 or any order made thereunder ? 5 Whether it is to be circulated to the civil judge ? ================================================================ NATIONAL INSURANCE COMPANY LTD.....Appellant(s) Versus URMILABEN ASHOKBHA PATEL & 4....Defendant(s) Page 1 of 9

C/FA/2163/2014 JUDGMENT ================================================================ Appearance: MR MAULIK J SHELAT, ADVOCATE for the Appellant No. 1 MR SANDIP C SHAH, ADVOCATE for the respondents No. 1 - 3 NOTICE SERVED for the Defendant(s) No. 5 ================================================================ CORAM: HONOURABLE MR.JUSTICE AKIL KURESHI and HONOURABLE MR.JUSTICE VIPUL M. PANCHOLI

Date : 10/10/2014

ORAL JUDGMENT (PER : HONOURABLE MR.JUSTICE AKIL KURESHI) Learned counsel Mr.Maulik Shelat for the Insurance Company waived notice in the Cross-Objections filed by the respondents, original claimants. The First Appeal is filed by the Insurance Company challenging the judgment and award of the Motor Accident Claims Tribunal, Ahmedabad dated 21.3.2014 passed in Motor Accident Claims Petition No.75/05. Brief facts are that on 15.11.2004 one Ashokbhai Sendhabhai Patel while crossing a road was hit by a motor car which was insured by the appellant Insurance Company. The accident proved fatal. The claimants i.e. widow and two children of the deceased filed the above noted claim petition seeking compensation of Rs.30 lacs from the driver, the owner and the Insurance Company of the vehicle. The Tribunal in the impugned judgment and award allowed compensation of Rs.13,07,790/- to be recovered with proportionate costs and interest at the rate of 9 per cent per annum from the date of the petition till realization. The Tribunal Page 2 of 9

C/FA/2163/2014 JUDGMENT was of the opinion that the accident had occurred due to the sole negligence of the driver of the motor vehicle. The Tribunal thus held the owner and the Insurance Company vicariously liable for the payment of such compensation. It is this award which the Insurance Company has challenged confining it only to the quantum of compensation. In other words, with respect to the negligence in causing the accident as well as the liability of the Insurance Company to cover the compensation payable, there is no dispute. We have, therefore, focused our attention solely on the appropriate compensation that should have been awarded to the claimants. In response to the notice of final disposal issued, the claimants appeared and also filed cross-objections. They claim enhancement in compensation. It has come on record by way of reliable and almost undisputed evidence that the deceased was engaged in the business of running a dining hall, Kinjal Dining Hall by name, near the Civil Hospital, Ahmedabad. He was aged about 42 years at the time of the accident. Three income tax returns for the assessment years 2002-03, 2003-04 and 2004-05 were produced before the Tribunal. On the basis of such evidence, the Tribunal in the impugned award came to the conclusion that the average annual income of the deceased for the last three years was Rs.1,03,664/-. The Tribunal permitted 30% increase for future prospects of earning. The Tribunal apportioned one-third of the income of the deceased for his personal expenditure. The Tribunal granted multiplier of 14 and worked out the compensation towards future loss of income at Rs.12,57,790/-. To such amount, the Tribunal added a sum of Page 3 of 9

C/FA/2163/2014 JUDGMENT Rs.10,000/- by way of loss of affection, Rs.10,000/- towards consortium, Rs.10,000/- for funeral expenses and Rs.20,000/- towards loss of estate, thus working out a total compensation of Rs.13,07,790/-. Shri Maulik Shelat for the Insurance Company raised the following contentions: (1) As per the cross-examination of the widow of the deceased, she had continued the business of running the dining hall. The Tribunal, therefore, ought to have compensated the claimants for the loss of supervisory service rendered by the claimant and not the entire possible earning out of such business. In support of this contention, he relied on a decision of the Supreme Court in the case of New India Assurance Co. Ltd v. Yogesh Devi, (2012) 3 SCC 613. (2) The Tribunal committed an error in granting 30% increase for future prospects. He submitted that the deceased was engaged in private business. By virtue of the judgment of the Supreme Court in the case of Sarla Verma v. DTC, (2009) 6 SCC 121, the Tribunal could not have granted future rise in income. (3) The Tribunal considered the income tax returns and adopted the total income of the deceased which included even the interest on the fixed deposits. Such interest on fixed deposits would remain unchanged even after his death. To that extent, the assessment of income of the deceased was defective. Learned counsel Shri Sandip Shah for the claimants, however, submitted that the deceased was earning sizable amount from his Page 4 of 9

C/FA/2163/2014 JUDGMENT business. The income tax returns would show that the income was increasing steadily. The Tribunal, therefore, ought to have granted higher increase for the future prospects. Deducting one-third for personal expenditure of the deceased was also on the higher side. Having thus heard the learned counsel for the parties and having perused the documents on record, it emerges that: (1) The deceased was aged 42 years on the date of the accident. The widow of the deceased Urmilaben Ashokbhai was examined at Ex.27. In her deposition, she stated that the date of birth of the deceased was 9.8.1962. Though she did produce the school leaving certificate of HBK High School, Ahmedabad showing such date of birth of the deceased, the same was not accepted. However, her testimony that date of birth of the deceased was 9.8.62 was virtually unchallenged. In that view of the matter, the age of the deceased was correctly accepted as 42 years at the time of the accident. (2) The deceased was engaged in the business of running a dining hall near the Civil Hospital, Ahmedabad. The three income tax returns filed by the deceased for the assessment years 2002-03 to 2004-05 were all filed before the date of the accident. In the first income tax return, the deceased had declared a profit of Rs.92,081/- from his business of running a dining hall. This, of course, included about Rs.16,000/- of interest from the fixed deposit. In the return filed for the assessment year 2003-04, he had declared business income of Rs.92,633/- which included interest from FDRs of approximately Rs.6,000/-. In the third year, i.e. assessment year 2004-05, covering the period from 1.4.03 to 31.3.04, he showed the net profit of Rs.1,34,552/- which included interest income of Page 5 of 9

C/FA/2163/2014 JUDGMENT approximately Rs.4500/-. (3) On the basis of such returns, the Tribunal took the average yearly income of the deceased at Rs.1,03,664/-. On such income, the Tribunal granted 30% increase for the future prospect. (4) The Tribunal, looking to the age of the deceased applied the multiplier of 14 and worked out the compensation after deducting one- third of the income for the personal expenditure of the deceased. In our opinion, the Tribunal committed no error. As can be seen from the record, the deceased was not only engaged in the business of running a dining hall, his income from such business steadily increased over a period of time. For the assessment year 2002-03, his total income of Rs.92,081/- included interest amount of Rs.16,000/- on the fixed deposit. In the next year, though his total income remained very similar at Rs.92,633/-, this included only about Rs.6,000/- by way of interest on fixed deposit. In the third year, income jumped to Rs.1,34,552./- which included interest on fixed deposit of only Rs.4500/-. It can thus be seen that there was considerable increase in the span of barely 3 years in the business income of the deceased. The Tribunal, therefore, committed no error in adopting a sum of Rs.1,03,664/- as the average income of the deceased at the time of his death. The dining hall of the deceased was situated very close to one of the biggest hospitals in the State. It would be obviously frequented by large number of patients and relatives every day year around. The business thus had an excellent potential. If the Tribunal therefore granted 30% increase for the future rise in income, again we do not find any Page 6 of 9

C/FA/2163/2014 JUDGMENT error. It is true that in the case of Sarla Verma (supra) the Supreme Court did discuss the issue of future rise in income and provided that such rise should be ordinarily confined to the salaried class of persons employed in public employment. However, such observations did not lay down any rigid principle that such rise in income can never be recognized in any other case. In the case of Santosh Devi v. National Insurance Company Ltd. (2012) 6 SCC 421, the Supreme Court observed as under: “18. Therefore, we do not think that while making the observations in the last three lines of paragraph 24 of Sarla Verma's judgment, the Court had intended to lay down an absolute rule that there will be no addition in the income of a person who is self-employed or who is paid fixed wages. Rather, it would be reasonable to say that a person who is self-employed or is engaged on fixed wages will also get 30 per cent increase in his total income over a period of time and if he/she becomes victim of accident then the same formula deserves to be applied for calculating the amount of compensation.” The action of the Tribunal in granting 30% increase for the future rise in income was thus in consonance with the decision of the Supreme Court in the case of Santosh Devi (supra). The multiplier of 14 granted by the Tribunal was in line with the prescription provided by the Supreme Court in the case of Sarla Verma (supra) as also one-third deduction for personal expenditure of the deceased looking to the total number of dependents of three. The contention that the claimants should have been compensated only to the extent of loss of supervision cannot be accepted in the facts of the present case. This is so for several reasons. By very nature of things, business of running a dining hall cannot be managed by paid managers. Page 7 of 9

C/FA/2163/2014 JUDGMENT The deceased himself was singularly looking after the business and after his death, it would be extremely difficult to run the business of this nature. It is not unknown that in business of eateries, be it restaurant or dining hall or any such similar outlets would greatly depend on the efficiency of running the business. It can if run properly earn handsome profit. On the other hand, if the operator does not have the necessary skills may also lead to considerable losses. The deposition of the widow of the deceased that she was running the dining hall after his death must not be seen in isolation. Her entire deposition on the point when seen would clearly reveal that the business had virtually come to a standstill. She stated that the dining hall was closed down. She clarified that she was running the same on and off condition. Since there were no other partners, she was managing the dining hall. Thus, even as per her deposition, the dining hall was not running properly. When run intermittently, business of this nature is unlikely to be a profitable activity. There was no evidence of the income that she may be making out of such activity. There was no further question asked in the cross- examination whether she was actually earning any income at all and if so, what amount? The Insurance Company did not ask her to produce any documents or income tax returns. In absence of any attempt on the part of the Insurance Company to probe the issue further, we must accept the version of the widow of the deceased that even though she did try to run the business, the experiment remained largely unsuccessful. There may have been some misdescription of different amounts on sundry heads awarded by the Tribunal. However, in the total computation, from the current standard adopted by this Court, there is no major deviation. We are of the opinion that in the ultimate analysis, in total award of compensation, the Tribunal committed absolutely no error. Page 8 of 9

C/FA/2163/2014 JUDGMENT In the result, the First Appeal, the Civil Application and the Cross Objections are dismissed. The Tribunal may proceed to invest and disburse the amount as per the award. R & P to be transmitted to the Trial Court. (AKIL KURESHI, J.) (VIPUL M. PANCHOLI, J.) (vjn) Page 9 of 9