HDFC ERGO GENERAL INSURANCE CO. LTD. versus MUKESH KUMAR & ORS. on 3 August 2021

[2021] 5 S.C.R. 927

HDFC ERGO GENERAL INSURANCE CO. LTD.

v.

MUKESH KUMAR & ORS.

(Civil Appeal No.4576/2021)

AUGUST 03, 2021

[SANJAY KISHAN KAUL AND HRISHIKESH ROY, JJ.]

Motor Vehicles Act, 1988 – Compensation under – Forpermanent disability – Whether while determining compensation,whether directions can be passed in the manner of a direction inperpetuity for continued maintenance of a prosthetic limb for theinjured claimant – Held: Determination of such compensation cannotbe by a continuing mandamus – The determination must take placeat one go – However, there must be a provision for maintenance/replacement of the prosthetic limb, while fixing a lump sum amount– Claimant is directed to file an affidavit setting forth the cost ofpurchased prosthetic limb and showing what kind of maintenance/replacement would be required – Quantum of compensation to bedetermined thereafter.

Motor Vehicles Act, 1988 – Compensation – For permanentdisability – In motor accident case while determining compensation,Court below directed the insurance company to keep Rs.60 lakhsin an interest bearing deposit from which Rs.50 thousand would begenerated as interest to meet the expenses of two semi-skilledattendants for the rest of claimant’s life – Court’s direction toGovernment to examine whether there could be a Government policywith regard to assistance to be provided to permanently disabledadolescents whose parents are not economically well off – Held: Incases where degree of disability is high, there is mental disability, itis case of a young person etc. without it being possible to anticipateall possibilites, applying of multiplier method in Kajal case*, wouldbe the appropriate course – In the facts of the present case,appropriate course would be to follow method in Kajal case* –High Court is directed to determine appropriate lump sum amountbased on multiplier method as set out in Kajal case* – Addressingsuch larger issue, in a motor accident claim proceeding, amounts tobeing beyond jurisdiction of the Court – It has taken the colour of

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Aa Public Interest Litigation – Therefore, this aspect sought to beexamined by a Bench of High Court dealing with Public InterestLitigation determining the issue in general and not restricting to thepresent case.

*Kajal v. Jagdish Chand & Ors. (2020) 4 SCC 413 :B[2020] 3 SCR 622 – relied on.Nagappa v. Gurudayal Singh & Others, (2003) 2 SCC274 : [2002] 4 Suppl.SCR 499; Sapna v. United India Insurance Co. Ltd. & Anr. (2008)7 SCC 613 : [2008]8 SCR 791; Nagappa v. GurudayalCSingh & Ors. (2003) 2 SCC 274 : [2002] 4 Suppl. SCR499; Sapna v. United India Insurance Company Ltd. &Anr. (2008) 7 SCC 613 : [2008] 8 SCR 791; Lalan D.@ Lal & Another v. Oriental Insurance CompanyLimited, (2020) 9 SCC 805 : [2019] 8 SCR 986;DParminder Singh v. New India Assurance CompanyLimited & Others, (2019) 7 SCC 217 : [2019] 8 SCR986; Mallikarjun v. Divisional Manager, NationalInsurance Company Limited & Another, (2014) 14 SCC396 : [2013] 8 SCR 268 – referred to.

Case Law ReferenceE

From the Judgment and Order dated 04.11.2020 of the High Courtof Delhi at New Delhi in MAC. APP No.218 of 2020.H

With

Civil Appeal No.4577 Of 2021

V. Giri, Sr. Adv., Ms. Archana Pathak Dave, Ms. Vanya Gupta,Kumar Prashant, Karan Lahiri, Pallav Mongia, Shailender Reddy, Ms.Ankita Gupta, Advs. for the Appellant.

Jayesh K. Unnikrishnan, Ms. Sasmita Tripathy, Dilawar Singh,Ms. Gitanjali Tripathy, Ms. Gautami Budhapriya, Vivekanand Singh,Manish Maini, Ms. Manjeet Chawla, Ms. Ritu Rastogi, B. S. Chowdhary,Ms. Adira A. Nair, Sanjay Kumar Visen, Durga Dut, Ms. SamtaPushkarna Mishra, Amar Singh, Neeraj Goswami, R. D. Singh, M/sVibhu Shanker Mishra and Co., Advs. for the Respondents.

The Order of the Court was passed by

SANJAY KISHAN KAUL, J.

CIVIL APPEAL No.4576/2021

Leave granted.

The sole question which arises for determination in this appealfiled by the Insurance Company is whether directions can be passed bythe Court while determining compensation under the Motor Vehicle Act,1988 (hereinafter referred to as “the said Act”) in the manner of adirection in perpetuity for continued maintenance of a prosthetic limb forthe injured claimant.

The respondent No.1 viz. Mukesh Kumar, was 19 years of agewhen he met with an accident on 25.8.2017 which resulted in permanentdisability of his right lower limb, which was treated as a 100% disability.An amputation had to take place below the knee of that limb. In theassessment made by the Motor Accident Claims Tribunal (MACT), anamount of Rs.2 Lakhs was quantified towards loss of amenities, life anddisfigurement which would include the expenses towards his prostheticlimb. On examination in appeal, the learned judge of the High Court bythe impugned order dated 04.11.2020 has passed directions in the followingterms:

“7. With consent, the impugned award dated 22.01.2020 passedby the learned MACT in Petition No.129/2018, is modified to theextent that the claimant/R-1 shall be supplied a prosthetic limb ofgood quality which is suitable and comfortable to him. It shall A

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Acarry a lifetime warranty. Should it be required to be replaced/repaired at any stage, the insurance company will do so. Theinsurer will enquire from the victim, at least twice a year, as to theworking condition of the prosthetic limb, through his e-mail addressand telephone number, as well as through his counsel’s e-mailaddress and telephone number. The details are as under:-B

8. In case of any difficulty apropos the prosthetic limb, the claimantCmay intimate the insurer through e-mail addresses and/ ortelephone numbers of three officers of the insurer, as supplied tohim. These details shall be provided to the claimant within 2 weeksfrom today.

9. It will be open to the claimant to communicate the quotation orDestimate for a suitable prosthetic limb to the insurance companyat the e-mail addresses and telephone numbers provided by thelearned counsel for the insurer. The impugned order is modifiedto this extent.”

(details redacted)

ELearned counsel for the appellant submitted that the consent whichwas given was for modification of the impugned award and not for theprosthetic limb to carry a lifetime warranty, as there is no such thing asa lifetime warranty for a prosthetic limb. Not only that, the impugneddirections require that if any, repair or replacement has to be done, theFsame should be done by the Insurance Company and the insurer wasrequired to inquire from the victim at least twice a year as to the workingcondition of the prosthetic limb with an email address and telephonenumber specified. Thus, what has been directed by the High Court is acontinuing maintenance of the prosthetic limb to be monitored by theInsurance Company. We may note that the aforesaid is the only issueGwhich is called upon by us to be examined.

We had stayed the operation of the aforesaid paragraphs by theinterim directions issued vide order dated 15.2.2021.

We are of the view, that the aspect discussed in the aforesaidparagraphs could be made only a part of compensation, and not in theH

nature of continuing directions. In this behalf, we have noticed a viewtaken by this Court vide order dated 06.8.2020 in SLP(C) No.8631/2020where the same learned judge has taken a similar view and that aspectof the order was deleted at the motion stage without notice by the Benchand thus we considered it appropriate to issue notice to other side.

Learned counsel for the appellant has referred two judgments ofthis Court before us in Nagappa v. Gurudayal Singh & Others, (2003)2 SCC 274 and Sapna V. United India Insurance Co. Ltd. & Anr.(2008) 7 SCC 613 opining that while determining compensation underthe said Act there is no provision providing for passing of a further awardonce the final award is passed. The future eventualities are to be takeninto consideration at that time. It was observed that:

“23…. Future medical expenses required to be incurred can bedetermined only on the basis of fair guesswork after taking intoaccount increase in the cost of medical treatment.”

In our view, the process of determination of such compensationcannot be by a continuing mandamus, in a colloquial sense, and thedetermination must take place at one go.

The aforesaid principle is not even disagreed to or contested bythe respondents but what is submitted is that there must be a provisionmade fixing a lump sum amount for maintenance/ replacement of theprosthetic limb, if necessary. We agree with the submission and in alarger canvas consider it appropriate to direct that in such kind of casesof providing facility of prosthetic limb, appropriate amount may bequantified towards such maintenance.

We, thus, allow the appeal to the extent aforesaid and set asidethe paragraph Nos.7,8 & 9 to be substituted by the determination formaintenance/replacement of the prosthetic limb while a quantificationof the amount for compensation is being made.

The question which remains is whether we should remit this caseto the High Court to determine the amount afresh having laid down theprinciples, or we should determine it ourselves. In the given facts of thecase, we do not consider it appropriate to remit the case for freshdetermination and instead take on the burden ourselves to do completejustice.

In order to facilitate determination of the lump sum amount, wecall upon the learned counsel for respondent No.1 to file an affidavit A

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Asetting forth the cost of the prosthetic limb purchased by him along withsupporting documents. He should also file supporting documents of thecompany from which he purchased the prosthetic limb, to show whatkind of maintenance/replacement would be required. On these documentsbeing filed, we would determine the amount.

BOn the other aspects the appeal stands disposed of.

Let the affidavit be filed within four weeks, as prayed for. Replyto the same be filed within two weeks, thereafter.

List after six weeks.

CIVIL APPEAL No.4577/2021C

Leave granted.

The grievance of the Insurance Company arises from the directionspassed in the impugned order, more specifically in paragraph Nos.8 to10, opining that assistance of two semi-skilled workers on the basis ofDminimum wages is to be provided to the respondent from the date of theaccident for the rest of the appellant’s life. In order to sub-serve the saiddirection, inter alia, sum of Rs.60 Lakhs is required to be kept by theInsurance Company in an interest bearing deposit, from which aboutRs.50,000/- per month would be generated as interest to meet theexpenses of the assistants. The directions are contained in the followingEterms:

8. Presently, the appellant may have the benefit of his caringparents but they cannot be expected to be present with him at alltimes, as they may be engaged in other activities and/or beemployed to make provisions for the family’s needs. In theFcircumstances, the appellant shall be paid compensation towardsthe procurement of the assistance of two semi-skilled worker onthe basis of minimum wages, from the date of the accident andfor the rest of the appellant’s life.

9. The arrears towards the same shall be paid by the insurer, onGthe basis of notified minimum wage rates applicable to a semi-skilled worker. The arrears shall be deposited directly into thebank account of the appellant, jointly operated by his parents, in amonth’s time, along with interest accrued thereon @ 9% p.a.Payments apropos ‘attendant charges’ in the future shall also beHensured by the insurer. The current minimum wage rate of a semi- HDFC ERGO GENERAL INSURANCE CO. LTD. v. MUKESHKUMAR & ORS. [SANJAY KISHAN KAUL, J.]

skilled workman is approximately Rs.18,000/-. Accordingly,Rs.36,000/- per month would be required to be paid to the appellant.These rates are revised twice a year. Therefore, prudently provisionshould be made for automatic crediting of the current and futurewages into the appellant’s bank account. Logically, the insurancecompany should assure about Rs.50,000/- per month as DFRinterest. According to the current FDR rates, a deposit Rs.60lakhs is likely to fetch about Rs.50,000/- per month as interest.Let Rs.60 lakhs be kept in an interest bearing FDR by the insurerin its own bank. The interest earned therefrom, shall be creditedinto the appellants’ account by the 10[th] day of each Gregoriancalendar month, on the basis of notified minimum wages for twoattendants.

10. Should the minimum wages be subsequently enhanced to aquantum which does not meet the interest generated from theFDR, the insurer shall augment the deposit to meet the shortfall.The insurer shall have a lien on the deposit, which it shall encashon the demise of the claimant.

We have heard learned counsel for the parties and are of theview that these directions are unsustainable.

The reason for the same is that they are contrary to the judicialview adopted by this court in Nagappa v. Gurudayal Singh & Ors.-(2003) 2 SCC 274, Sapna v. United India Insurance Company Ltd. &Anr. (2008) 7 SCC 613 & The Oriental Insurance Co. Ltd. v. ZakirHussain & Ors. [SLP (C) No.12210/2020 dated 13.10.2020]. In thesecases, this Court has opined that while determining the compensationunder the said Act there is no provision for providing for passing offurther award once the final award is made. The future eventualities areto be taken into consideration at that time it has been observed that; “However, it is to be clearly understood that the MV Act does notprovide for passing of further award after the final award ispassed. Therefore, in a case where injury to a victim requiresperiodical medical expenses, fresh award cannot be passed orprevious award cannot be reviewed when the medical expensesare incurred after finalisation of the compensation proceedings.Hence, the only alternative is that at the time of passing of finalaward, the Tribunal/court should consider such eventuality and AB

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fix compensation accordingly. No one can suggest that it is improperto take into account expenditure genuinely and reasonablyrequired to be incurred for future medical expenses. Future medicalexpenses required to be incurred can be determined only on thebasis of fair guesswork after taking into account increase in thecost of medical treatment.”

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The aforesaid aspect has been considered by us today in anotherappeal filed by the same Insurance Company in SLP (C) No.16077/2020 dealing with the aspects of provisions for prosthetic limb. Theprinciples which we have appreciated in the current case are slightlydifferent as though it may not be strictly in the nature of a continuingCdirection; but premised on the basis of a continuing requirement, a lumpsum amount has been directed to be deposited the returns from whichare to be utilised. We are of the view that this is not the appropriatecourse to follow.

Learned counsel for the appellant has taken us through variousDjudicial pronouncements which show that the approach which has beenadopted by different courts is of giving a lump sum amount. The mootpoint however remains as to how the lump sum amount is to be calculated.

We find that in case of extreme injuries affecting the mental andphysical abilities of a person, a similar approach has been adopted byEthis Court in Kajal V. Jagdish Chand & Ors. (2020) 4 SCC 413.

No doubt the factual matrix in that case painted a very grim pictureof young girl who suffered an accident and as result thereof whilephysically she would age, her mental state would remain under one yearof age. In that scenario, a methodology was suggested to apply theFmultiplier method while determining the attendant charges. We considerit useful to reproduce the observations as under:- Attendant Charges

22. The attendant charges have been awarded by the High Court@Rs.2,500/- per month for 44 years, which works out toGRs.13,20,000/-.Unfortunately, this system is not a proper system.Multiplier system is used to balance out various factors. Whencompensation is awarded in lump sum, various factors are takeninto consideration. When compensation is paid in lump sum, thisCourt has always followed the multiplier system. The multiplierHsystem should be followed not only for determining the HDFC ERGO GENERAL INSURANCE CO. LTD. v. MUKESHKUMAR & ORS. [SANJAY KISHAN KAUL, J.]

compensation on account of loss of income but also for determiningthe attendant charges etc. This system was recognised by thisCourt in Gobald Motor Service Ltd. v. R.M.K. Veluswami (AIR1962 SC 1).The multiplier system factors in the inflation rate, therate of interest payable on the lump sum award, the longevity ofthe claimant, and also other issues such as the uncertainties oflife. Out of all the various alternative methods, the multiplier methodhas been recognised as the most realistic and reasonable method.It ensures better justice between the parties and thus results inaward of ‘just compensation’ within the meaning of the Act.

23. It would be apposite at this stage to refer to the observation ofLord Reid in Taylor v. O’Connor (1971 AC 115):

“Damages to make good the loss of dependency over a periodof years must be awarded as a lump sum and that sum isgenerally calculated by applying a multiplier to the amount ofone year’s dependency. That is a perfectly good method in theordinary case but it conceals the fact that there are two quiteseparate matters involved, the present value of the series offuture payments, and the discounting of that present value toallow for the fact that for one reason or another the personreceiving the damages might never have enjoyed the whole ofthe benefit of the dependency. It is quite unnecessary in theordinary case to deal with these matters separately. Judgesand counsel have a wealth of experience which is an adequateguide to the selection of the multiplier and any expert evidenceis rightly discouraged. But in a case where the facts are special,I think, that these matters must have separate consideration ifeven rough justice is to be done and expert evidence may bevaluable or even almost essential. The special factor in thepresent case is the incidence of Income Tax and, it may be,surtax.”

24. This Court has reaffirmed the multiplier method in variouscases like Municipal Corporation of Delhi v. Subhagwati (1966ACJ 57), U.P. State Road Transport Corporation and Ors. v. TrilokChandra and Ors. [(1996) 4 SCC 362], Sandeep Khanduja v. AtulDande and Ors. [(2017) 3 SCC 351]. This Court has alsorecognised that Schedule II of the Act can be used as a guide forthe multiplier to be applied in each case. Keeping the claimant’s AB

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Aage in mind, the multiplier in this case should be 18 as opposed to44 taken by the High Court.

25. Having held so, we are clearly of the view that the basicamount taken for determining attendant charges is very much onthe lower side. We must remember that this little girl is severelyBsuffering from incontinence meaning that she does not have controlover her bodily functions like passing urine and faeces. As shegrows older, she will not be able to handle her periods. She requiresan attendant virtually 24 hours a day. She requires an attendantwho though may not be medically trained but must be capable ofhandling a child who is bed ridden. She would require an attendantCwho would ensure that she does not suffer from bed sores. Theclaimant has placed before us a notification of the State of Haryanaof the year 2010 wherein the wages for skilled labourer is Rs.4846/- per month. We, therefore, assess the cost of one attendant atRs.5,000/- and she will require two attendants which works out toDRs.10,000/- per month, which comes to Rs.1,20,000/- per annum,and using the multiplier of 18 it works out to Rs.21,60,000/-forattendant charges for her entire life. This takes care of all thepecuniary damages.”

Learned counsel for the appellant did seek to persuade us thatEthis is not the only methodology available and it should not be adopted.We are of the view that in cases where the degree of disability is high,there is mental disability, it is a case of a young person etc. without itbeing possible to anticipate all possibilities, the course followed aforesaidwould be the appropriate course. We are not saying that the aforesaidcan be the only course, and in a different scenario, lump sum amountFcan be assessed as has been as done in Lalan D. @ Lal & Another v.Oriental Insurance Company Limited, (2020) 9 SCC 805 andParminder Singh v. New India Assurance Company Limited & Others,(2019) 7 SCC 217.

Learned Senior Counsel for the appellant also sought to point outGanother course followed in Mallikarjun v. Divisional Manager,National Insurance Company Limited & Another, (2014) 14 SCC396, wherein cases of children suffering disability on account of motorvehicle accident, a broad principle was sought to be laid down in thefollowing terms:- H

“12. Though it is difficult to have an accurate assessment of thecompensation in the case of children suffering disability on accountof a motor vehicle accident, having regard to the relevant factors,precedents and the approach of various High Courts, we are ofthe view that the appropriate compensation on all other heads inaddition to the actual expenditure for treatment, attendant, etc.,should be, if the disability is above 10% and upto 30% to thewhole body, Rs.3 lakhs; upto 60%, Rs.4 lakhs; upto 90%, Rs.5lakhs and above 90%, it should be Rs.6 lakhs. For permanentdisability upto 10%, it should be Re.1 lakh, unless there areexceptional circumstances to take different yardstick. In the instantcase, the disability is to the tune of 18%. Appellant had a longerperiod of hospitalization for about two months causing alsoinconvenience and loss of earning to the parents.”

The aforesaid only shows that there is more than one optionavailable i.e, there may be a lump sum amount specified on generalprinciples as enunciated aforesaid; or in cases where the factual scenariorequires, same multiplier method can be followed as in the case of Kajal(supra).

Now turning to the facts of the present case, the child was 11years of age when he suffered functional disability which has beenassessed at 70% by the medical board and the tribunal, and which theHigh Court determined as 100% functional disability. It is in thesecircumstances that the direction has been passed for attendants with amethodology of accessing the minimum wages payable for two skilledworkers. In the given factual scenario, we are of the view that the appositecourse to follow is set out in Kajal’s case (supra).

On having reached that conclusion, the issue would be what wouldbe the lump sum amount to be determined to be paid on those parameters.

We find that in terms of the impugned order dated 08.12.2020, thelearned judge has since kept the matter pending by issuing the notice tothe GNCTD to examine whether there could be a Government policy inregard to assistance to be provided to permanently disabled adolescentswhose parents are not economically well off. We are of the view that inpursuance to this conclusion, it is the High Court which ought to examineas to what would be the appropriate lump sum amount to be determinedbased on the multiplier basis as set out in Kajal’s case (supra)

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AWe, thus, set aside the directions contained in the impugned orderin paragraph Nos.8 to 10.

We also find that while seeking to examine the larger issues, thelearned judge has ventured into the aspect of Government policy to beframed in that behalf. This really amounts to beyond the jurisdiction overBdetermination of the amount, in the Motor Accident Claim proceeding,but on a larger canvas taking the colour of a Public Interest Litigation.We, thus, consider it appropriate that this aspect ought to be examinedby the Bench dealing with the Public Interest Litigation, as a larger canvaswould have to be determined rather than something restricted to thecase of the respondent before us.

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The civil appeal is allowed in the aforesaid terms leaving partiesto bear their own costs.

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Ankit Gyan

Appeal allowed.

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