Section 163 A unavailable to income exceeding Rs.40,000/- per annum

The Kerala High Court on July 19, 2011 in National Insurance Vs. Lathika, 2011 (3) KLT 412 : 2011 (3) KLJ 523 : ILR 2011 (3) Ker. 601 : 2011 (3) KHC 393 held that “the benefit under Section 163 A of the Motor Vehicles Act is unavailable to persons earning income exceeding Rs.40,000/- per annum.

A bench comprising of Justice R. Basant and Justice N.K. Balakrishnan allowed the appeal filed by the insurer and setting aside the impugned Order.

# Section 163 A of the Motor Vehicles Act

The Tribunal is directed to dispose the petition afresh in accordance with law reckoning the same as one under Section 166 of the Motor Vehicles Act. The Tribunal obviously, it appears, felt that such permission could be given to limit the claim on the annual income of Rs.40,000/-.

The learned counsel for the insurer places reliance on the decision of the 3 Judge Bench of the Supreme Court in Deepal Girishbhai Soni v. United India Insurance Co.Ltd. [2004 (2) KLT 395 (SC)] . Reliance is particularly placed on the final conclusion of the Bench which appears in para.67, which extracted below:

“67: We, therefore, are of the opinion that Oriental Insurance Co. Ltd. V. Hansrajbhai Kodala & Ors [2001 (2) KLT 235(SC)] has correctly been decided. However, we do not agree with the findings in Kodala (supra) that if a person invokes provisions of Section 163 A, the annual income of Rs.40,000/- per annual shall be treated as a cap. In our opinion, the proceedings under Section 163 A being a social security provision, providing for a distinct scheme, only those whose annual income is upto Rs.40,000/- can take the benefit thereof. All other claims are required to be determined in terms of Chapter XII of the Act.”

The counsel for the claimants Sri. R.T.Pradeep contends that nothing in Section 163 A prescribes that for persons whose annual income exceeds Rs.40,000/-, the benefit of Section 163 A is not available. He relies on the language of Section 163 A to contend that such a limitation is not decipherable from the statutory provision.

He further submits that it is easily possible to ascertain the rationale underlying the specification of the amounts in different columns of the table/chart in the Second Schedule as explained by this Court in National Insurance Company v. Muneer [2003 (1) KLT 137].

Adopting the same rationale, compensation payable for persons having annual income exceeding Rs.40,000/- can be easily ascertained. In these circumstances, there is no reason to limit the benefit of Section 163 A to persons having annual income of Rs.40,000/- and less, contends the learned counsel.

The claimants in this context further relies on the following paragraph in the decision in Sarla Verma v. Delhi Transport Corporation [(2009) 6 SCC 121], which reads as follows:

“The Motor Vehicles Act, 1988 was amended by Act 54 of 1994, inter alia, inserting Section 163 A and the Second Schedule with effect from 14.11.1994. Section 163 A of the MV Act contains a special provision as to payment of compensation on structured formula basis, as indicated in the Second Schedule to the Act. The Second Schedule contains a table prescribing the compensation to be awarded with reference to the age and income of the deceased. It specifies the amount of compensation to be awarded with reference to the annual income range of Rs.3000 to Rs.40,000. It does not specify the quantum of compensation in case the annual income of the deceased is more than Rs.40,000. But it provides the multiplier to be applied with reference to the age of the deceased. The table starts with a multiplier of 15, goes up to 18, and then steadily comes down to 5. It also provides the standard deduction as one-third on account of personal living expenses of the deceased. Therefore, where the application is under Section 163 A of the Act, it is possible to calculate the compensation on the structured formula basis, even where the compensation is not specified with reference to the annual income of the deceased, or is more than Rs.40,000/-, by applying the formula: (2/3 X AI X M), that is two-thirds of the annual income multiplied by the multiplier applicable to the age of the deceased would be the compensation.”

The counsel for the claimants in addition submits that it would be unjust to deny benefits of Section 163 A to persons earning annual income above Rs.40,000/- now. The table was prescribed in 1994. There has been subsequently no upward modification of the table. In these circumstances, the counsel contends that a reasonable and just interpretation of Section 163 A must certainly be taken making the benefits under the section available for persons earning above Rs.40,000/- per annum at least now, since there has been no revision of the Second Schedule after 1994.

“The arguments of the learned counsel for the respondents do sound to be very impressive. We have no hesitation to agree that if we had an option, we would have agreed with the learned counsel also. But bound as we are by the unambiguous statement of the law in para.67 of the Deepal Girishbhai Soni (supra) extracted above, we are unable to accept the argument of the learned counsel.” the Court said.

The observations in Sarla Verma (supra), which is a decision rendered by a later two Judge Bench cannot obviously nullify the effect or impact of the specific observations in para.67 of Deepal Girishbhai Soni (Supra). Moreover, the Court noteed that the observations in Sarla Verma (supra), were incidental and the said Bench had not taken into consideration the dictum of the larger Bench in Deepal Girishbhai Soni (supra).

Following the dictum in Deepal Girishbhai Soni (supra), the Court viewed that the challenge in this appeal is sustainable. The same view has been taken by earlier Benches of the Court also.

# Facts of the Case

Claimants are the dependents/legal heirs of a deceased person. They claimed compensation under Sections 166 and 163 A of the Motor Vehicles Act without specifying the precise nature of the claim in the claim petition. The deceased was admittedly earning an income of Rs.6,200/- per mensem.

When the matter reached the stage of trial, the claimants specified that they are staking the claim under Section 163 A of the Motor Vehicles Act and that they are limiting the claim to what would be payable if the deceased were a person getting an annual income of Rs.40,000/-.

The Tribunal accepted the request and computed compensation payable under Section 163 A of the Motor Vehicles Act reckoning the deceased to be a person having an annual income of Rs.40,000/-.

The learned counsel for the appellant/insurer submits that the court below could not have considered the claim under Section 163 A even assuming that the claimant had agreed to limit its claim to compensation that would be payable if the deceased were getting an annual income of Rs.40,000/- only.

Senior Advocate Mathews Jacob and advocate P. Jacob Mathew appeared for the petitioner and advocate R.T. Pradeep for the respondent.