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Assessing Loss of Future Income- M.R. Krishna Murthi v. New India Assurance Co. Ltd

[THIS POST IS THE 2nd RUNNER-UP OF THE 1ST CASE NOTE COMPETITION, HELD IN JUNE 2020 BY LEGAL ARMOR]

Case Comment:

M.R. Krishna Murthi V. New India Assurance Co. Ltd.


Factual Background:

  1. In a serious road mishap, the appellant got his left leg completely crushed and other injuries were sustained. The victim required two months of extensive hospitalization while the total treatment went on for 6 years including three major surgeries.

  2. The appellant was granted a 40 % permanent disability certificate from the government hospital and consequently filed a case before the Motor Accidents Claims Tribunal(MCAT) in Patiala house. The tribunal, after perusing through the records of the case, awarded the claimant with Rs. 8,48,000.

  3. The appellant filed an appeal against the order in the High Court and the stance of the court established 18 as the reference for basing calculation of compensation, being the current age of the appellant at the time of the accident. The High Court further rewarded an amount of Rs. 50,000 keeping in mind other difficulties that were to be faced by the appellant.

  4. Consequently, a review petition was filed by the appellant and the High Court finding error based on the multiplier chosen by the MACT, which was to be 18 and not 17 and awarded a further amount of Rs.24,000 along with the interest in its order. The judgment rendered by the High Court and the consequent order formed the subject matter in front of the Supreme Court.


The reasoning of the Court:

The Court decided the following issues:

  1. Compensation Assessment: To determine the loss of future earnings, the court after looking back judicial precedents, established the applicable principles:

  • In cases where the student is the injured victim while calculating the loss of future earning career prospects and it's likely earning has to be kept in mind.

  • After ascertaining the likely earnings, the nature of the injuries and their impact on the functional disability has to be kept in mind.

  1. Tackling of cases and speedy disposal: In this matter, S.C, accepted mediation as a way of tacking cases by accepting Motor Accidents Mediation Authority(MAMA) as a suitable form of procedure that could be followed while dealing with motor accidents and issued directions for the same

  2. Receival of compensation to the victims or their kin: The apex court accepted the Modified version of the Claims Agreement tribunal as laid out in Jaiprakash V. National Insurance Company. There was the assistance provided by 21 banks in establishing the Motor Accidents Compensation Annuity Deposit Scheme(MCADS), which emerged from the aforementioned case, to provide direct compensation to the victims or their kin.

Disposition:

The Apex court awarded the appellant with Rs. 10,80,000 in addition to a sum of Rs. 6,54,000 along with the interest @7% for a period of 10 years. The court further issued directions:

  • For the government, to consider the creation of MAMA by making changes in the Motor Vehicles Act

  • Directed NALSA for the Implementation of MAMA or give it to the MCPC under the aegis of the S.C and its implementation within two months. Furthermore, the applicability of the MACAD scheme on a pan Indian basis to be supervised by it immediately

Critical Analysis:

The judgement followed the established law on assessing the compensation of cases arising out of motor injuries, but while reviewing previous judicial decisions, the court's analysis of the highlighted cases in the judgement pointed towards redundancy rather than the efficient establishment of principles. This can be said while referencing to Oriental Insurance Company Limited V. Deo Patadi, United India Insurance Co. Ltd. V. Patricia Jean Mahajan, New Limited Assurance Co. V Ganga Devi, all these cases talk and raise an issue where the main calculation for compensation is done for the loss of dependency, as all the victims in the case succumbed to their injuries. The author finds the judicial principles applied in the case to be adequate however emphasis should have been laid upon cases having relevance to the appeal at the hands of the court namely, Yadava Kumar vs. The Divisional Manager, National Insurance Co. Ltd., and Ors, where the court opined “that the concept of just compensation demands an application of fair and equitable principles and a reasonable approach on the part of the Tribunals and Courts. This reasonableness must have a broader peripheral field.

Similarly in, Syed Nisar Ahmed V The Managing Director, Metropolitan Transport Corporation, where the court laid out that the compensation awarded by the court is intended to compensate both personal loss and economic loss. Under the head of personal loss, damages for pain and suffering, loss of amenities, personal inconvenience and discomfiture, social discomfiture, as the case may be, having regard to the facts of individual cases, have to be included. Lastly, in Ward v. James, the court expressed that while awarding compensation, be it for the pain, suffering, etc, The whole circumstance of the issue has to be taken in regard even if the non-pecuniary loss is undeterminable, the award should show that all the relevant factors have been taken into consideration.

The remaining critique of otherwise a judgement which stands good in law would be the non-adjustment of all other courts to the establishment of MAMA thus thereby implying that mediation should be the first basis of dispute resolution before resorting to judicial means.

ABOUT THE AUTHORS:

Vibhu Krishnatm Choubey is currently studying Law at NALSAR University of Law, Hyderabad.

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