Case BriefsHigh Courts

Patna High Court: Ahsanuddin Amanullah, J, disposed the petition directing the respondents to pay the simple interest at the rate 9% per annum as provided under the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 for three years delay in the amount being paid to the petitioner.

The facts of the case are that a person whose land has been taken in the year 2011, receives the full compensation only in the year 2020, wherein the additional demand of Rs 19,30,03,159 was raised before the respondents on 12-09-2015. However, the said amount was sanctioned by the Ministry of Home Affairs on 09-08-2018 and thereafter sent on 16-08-2018. There was no justification for the non-release of funds for a full three years.

The Court observed that the part of the delay can be understood in a way that a new Act came into force and thereafter things were re-worked. However, once the amount was quantified and demands rose by the District authorities on 12-09-2015, thereafter, the late sanctioning and sending the money after three years cannot be said to be bona fide. The Court, thus, opined that the petitioner is entitled to simple interest at 9% per annum, as has been provided in the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 itself, for three years delay in the amount being paid to the petitioner. [Surendra Das v. State of Bihar, Civil Writ Jurisdiction Case No. 24143 of 2019, decided on 22-01-2020]

Case BriefsHigh Courts

Jammu & Kashmir High Court: Sanjeev Kumar, J., closed a contempt petition seeking to initiate proceedings against respondents for non-compliance with the orders of the Court.

The present petition has been filed seeking initiation of contempt proceedings against the respondents for willful disobedience and non-compliance. The previous Bench had stated that the petitioner had chosen the wrong forum to adjudicate the matter and directed that due “…to the nature of controversy the writ petition was taken up for final disposal at its threshold and is disposed of by providing that writ petitioner shall approach the concerned authority with a representation which shall be considered and decided by the said Authority within a period of one month”

 The Senior Additional Advocate General representing the respondent, N. H. Shah had filed a response to the contempt petition and took the stand that the representation filed by the petitioner had been considered and the petitioner had not been found entitled to any compensation on the ground that house damaged is a non-residential house which is not covered by the policy.

The advocate representing the petitioner, G. Murtaza Dar, contended that the issue of whether the compensation is payable for the non-residential house had already been decided in affirmative by the Division Bench of the present court and since the respondents had not abided by the stated order of the Division Bench, they are in contempt.

The Court upon perusal of the facts and records stated that respondents had fully complied with the order of the Division Bench. The Court also observed the view of the Division Bench and stated that the writ court had not given any finding with regard to the entitlement of compensation to the petitioner and had categorically stated that the petitioner had chosen a wrong forum for adjudication. [Farooq Ahmad Bhat v. Syed Abid Rashid Shah, 2020 SCC OnLine J&K 122, decided on 19-02-2020]

Case BriefsHigh Courts

Tripura High Court: Akil Kureshi, CJ., dismissed an appeal filed aggrieved by the order of the Motor Accident Claims Tribunal by the insurance company.

The original claimant had been travelling on a motorcycle as a pillion rider when the vehicle collided with a four-wheeler of TATA ACE make coming from the opposite direction and the claimant suffered serious bodily injuries. The doctors had opined that he had suffered permanent partial disability of 45% of the body as a whole and he would be seriously restricted in his movement and work. The Claims Tribunal had awarded total compensation of Rs 25,55,520 under various heads including the pain, shock and suffering, medical treatment, etc considering the fact that he was a private doorstep banking officer drawing a salary of Rs 12,592. The insurance company had mainly contested the computation of compensation for future loss of income and questioned him about the employment in the said bank. The Member Secretary-cum Locomotor Specialist at the District Disability Medical Board certified that claimant was suffering from locomotor disability in the right leg resulting into permanent disability of 45% and it was a non-progressive injury which meant that the patient would not be able to perform any physical activity standing up without any exterior support for the rest of his life.

The Court while dismissing the appeal and agreed with the view of the Tribunal that such disability had resulted into at least 50% reduction in the earning capacity of the claimant and his job was private one and did not have any security and his potential for reemployment had also come down thus the Tribunal had rightly applied the formula for future rise and multiplier as suggested by the Supreme Court the in case of Sarla Verma v. DTC, (2009) 6 SCC 121. [National Insurance Company Ltd. v. Chittu Das, 2020 SCC OnLine Tri 93, decided on 14-02-2020]

Case BriefsTribunals/Commissions/Regulatory Bodies

National Consumer Redressal Commission (NCDRC): Dinesh Singh (Presiding Member) while dismissing the revision petition filed by ICIC Bank Ltd. upheld the decision of District Forum and State Commission with regard to compensation and reconstruction of lost/misplaced original sales deed of the ‘Complainants’.

The pertinent facts of the case were that the complainants had taken a home loan from the Bank and deposited the original sale-deed of their flat with the Bank. Later, the bank informed the complainants that the originally registered sale deed of their flat was misplaced/lost by them.

On being aware of the above circumstances, complainants filed a complaint at the District Forum alleging ‘deficiency of service’ on the bank’s part.

District Forum allowed the Complaint and directed the OPs — to reconstruct the sale deed by registering a complaint in the Police Station concerned regarding eth original sale deed. The same should be published in a National Newspaper, Daily Newspaper of Rajasthan and Alwar and procure a certified copy of the sale deed and notify in the copy itself that the Original Document lost due to fault of the OPs. On preparing such documents, they should be handed over to the complainant and the copy of the same should be included in the records of the OPs, which will be equivalent to the original document.

Further, Bank filed an appeal under Section 15 of the Act before the State Commission, but was dismissed.

State Commission while dismissing the appeal stated that,

According to the settled principles of the National Commission, the non-returning of original documents depicts deficiency of services and is an unfair trade practice.

 Commission’s Decision

The Bench stated that the two forums had returned concurrent findings. No palpable or crucial error in appreciating the evidence by the two foras was visible.

In the given specificities and fact of the matter, the order made by the District Forum was just and equitable.

Commission also noted that, an original registered sale deed is an important document, its loss adversely affects the property. Even if the document is reconstructed, a question still obtains on the property, and continues in perpetuity.

Bank’s position cannot be appreciated.

“When, by its own admission, it lost/misplaced the original document of the Complainants, it should have, on its own, in the normal won’t of its functioning, got the document reconstructed, handed over the reconstructed document to the Complainants, with courtesy and apology, as also conducted an internal inquiry to fix responsibility as well as undertaken systemic improvements for future.”

Thus, the revision petition being patently ill-conceived and totally bereft of merit, was dismissed with stern advice of caution to the Bank and direction with regard to timely compliance of the order was given. [ICICI Bank Ltd. v. Rajesh Khandelwal, 2020 SCC OnLine NCDRC 12, decided on 12-02-2020]

Case BriefsSupreme Court

Supreme Court: In a case involving an accident that left a bright young girl with 100% disability i.e. a very low I.Q. and severe weakness in all her four limbs, severe hysteria and severe urinary incontinence, the bench of L. Nageswara Rao and Deepak Gupta, JJ awarded a compensation of around Rs. 63, 00, 000 but showed dismay over the life that lies ahead for the girl and said,

“How does one assess compensation in such a case? No amount of money can compensate this child for the injuries suffered by her. She can never be put back in the same position.”

The girl was travelling on a tractor with her parents and the tractor was hit by a truck which was driven rashly. As per the assessment, the accident has left her with an I.Q. less than 20% of a child of her age and her social age is only of a 9-month-old child. This means that she, while lying on the bed will grow up to be an adult with all the physical and biological attributes which a woman would get on attaining adulthood, including menstruation etc., but her mind will remain of a 9-month-old child. Basically, she will not understand what is happening all around her.

The Court said that the amount awarded by it was more than the amount claimed, however, in motor accident claim petitions, the Court must award just compensation and, in case, the just compensation is more than the amount claimed, that must be awarded especially where the claimant is a minor.

“We must remember that this little girl is severely suffering from incontinence meaning that she does not have control over her bodily functions like passing urine and faeces. As she grows older, she will not be able to handle her periods. She requires an attendant virtually 24 hours a day. She requires an attendant who though may not be medically trained but must be capable of handling a child who is bed ridden. She would require an attendant who would ensure that she does not suffer from bed sores.”

Another factor that the Court took note of was that 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.

The Court noticed,

“This girl will miss out playing with her friends. She cannot communicate; she cannot enjoy the pleasures of life; she cannot even be amused by watching cartoons or films; she will miss out the fun of childhood, the excitement of youth; the pleasures of a marital life; she cannot have children who she can love let alone grandchildren. She will have no pleasure. Her’s is a vegetable existence.”

The Court, hence, directed that

  • the insurance company shall deposit the enhanced amount before the MACT in terms of the judgment after deducting the amount already paid by the insurance company within a period of 3 months.
  • The MACT shall keep the entire amount in a fixed deposit in a nationalised bank, for a period of 5 years, giving highest rate of interest. The interest payable on this amount shall be released on quarterly basis to the father of the child.This amount shall be spent for paying the attendants and for the care of the child alone.
  • Even after 5 years since this child for all intents and purpose shall remain a person under a disability, the MACT shall keep renewing the amount on these terms.
  • In case the parents or the guardian moves an application for release of some amount to meet some special medical expenses, then MACT may consider release of the same.

[Kajal v. Jagdish Chand, 2020 SCC OnLine SC 127, decided on 05.02.2020]

Case BriefsForeign Courts

Court of Appeal of the Democratic Socialist Republic of Sri Lanka: A Division Bench of Yasantha Kodagoda and Arjuna Obeyesekere, JJ., dismissed an appeal which was filed after being dissatisfied with the decision of the Board.

The Petitioner owned one half of land in extent of 2.25P situated in Mahabuthgamuwa and that he had been carrying on a business of manufacturing rubber bushes, beadings and packing under the name of ‘Sarath Rubber Industries’ at the said premises. The petitioner also stated that proceedings in terms of the Land Acquisition Act to acquire the said land for the purpose of road expansion and development work had commenced in 2012 and that the Minister had made an Order to take over immediate possession of the said land, the petitioner did not have any objection to the said acquisition even though he had to relocate his business premises. The Petitioner had accordingly submitted a claim for compensation. The Petitioner stated that the Acquiring Officer had published his award but failed to take into consideration his loss of earnings from his business and consequently had filed an appeal with the Board of Review which is pending and the instant appeal had been filed in terms of Section 28 as legislature has provided a person dissatisfied with the decision of the Board of Review with a further right of appeal on a question of law. 

The Counsel for the Respondents, Avanti Weerakoon, submitted that the land of the Petitioner with several other lands, was required for the Ambathale Road widening Project, which was funded by the Organisation of Petrol Exporting Countries (OPEC) and further submitted that other lands were acquired and only petitioner’s land remained for the takeover and the project was due to be completed by December end thus it was required urgently.

The Court while dismissing the appeal held that the Respondent was entitled to take possession of the Petitioner’s land; any time after an Order is made in terms of proviso (a) of Section 38 and directed the respondents to compensate the petitioner within a period of eight weeks. [Wanniarachchi Kankanamge Sarath v. Road Development Authority, CA (Writ) Application No: 401 of 2019, decided on 13-01-2020]

Case BriefsTribunals/Commissions/Regulatory Bodies

National Consumer Disputes Redressal Commission (NCDRC): R.K. Agrawal (President) while deciding the present consumer case held that,

“Wherever the Builder commits a particular date or time frame for completion of the construction and offering possession to the Buyer, they must necessarily honour the commitment made by them.”

In the present matter, Consumer Complaints, under Section 21 read with Section 12(1)(a) of the Consumer Protection Act, 1986  have been filed by the Complainants, the Allottees of Residential Flats/Apartments in a Project, namely, “Mahagun Mezzaria” to be developed and constructed by the Opposite Party, seeking possession of their respective booked Flats or refund of the amount paid with interest and compensation for the losses suffered by them on account of Unfair and Restrictive Trade Practices adopted and the deficient services rendered by the Opposite Party in not handing over the possession of the allotted Flats/Apartments within the stipulated time.

Complainant stated that despite paying the entire sale consideration for the booked flat, the possession of the same, which was to be delivered has not materialized till date, penalty promised in the Allotment Letter for the delay in construction has also not been paid, layout plan of the project has been got amended twice making various changes to the Project including addition of commercial shops open to general public raising various concerns including safety and security, that the Complainants have to pay enhanced Samp duty due to delay in handing over of possession and that the OP has levied the maintenance charges that would be enhanced @15% annually.

Analysis & Decision

Counsel for OP’s contention that Complainants are not ‘Consumers’ and have booked the Flat for earning high speculative gains is not supported by any documentary evidence. Court also noted that Complainants are ‘Consumer’ as defined under Section 2(1) (d) of the Consumer Protection Act, 1986.

Tribunal further stated that the only question for consideration in the present case is, as to whether the Complainants are entitled to any compensation for the delay on the part of the OP in offering possession to them and if so, what should be the quantum of compensation that OP needs to pay to them.

With respect to delay in completion of the construction, the tribunal stated that unless prevented by reasons beyond it control, the OP was under a contractual obligation to complete the construction and handover possession of the apartments within 38 months from the date of completion of raft or on or before 31-12-2012.

The reasons for the delay as stated by the Developer amounted to demonetization and implementation of GST, which ultimately resulted to cause delay on account of the shortage of cash for payment to the labour, shortage of labour and material, no documents were placed on record by the OP. Therefore the said contention cannot be accepted.

OP is ready and willing to hand over possession of the allotted flats with compensation to the Complainants, but some Complainants are not interested in the same due to delay of more than 4 years in delivering the possession change in layout plan and there being no committed date in the near future of completion of the Project. Therefore, they have sought a refund of the amount along with interest and compensation.

Tribunal in view of the stated that, Complainants cannot be made to wait indefinitely for the delivery of the possession when they had already paid almost entire consideration. In such circumstances, it is well within the Complainant’s right to seek for refund of the principal amount with interest and compensation.

In the present case, Tribunal in favour of the Complainants also stated that, Complainants cannot be made to wait indefinitely as the possession of the Unit has not been handed over to them so far and the Opposite Party is enjoying the benefits of their hard-earning money deposited with it.

“If the Builder fails to comply with the contractual obligation and at the same time, is unable to show that the delay in completion of the Flat and offering its possession to the Consumer is on account of circumstances beyond his control, this would constitute deficiency on the part of the Builder/Service Provider in rendering services to the Consumer.”

Hence, Complainants cannot be made to wait for such a long period, they are entitled to refund of the deposited amount along with compensation @12%. [Anil Kumar Jain v. Nexgen Infracon (P) Ltd., 2019 SCC OnLine NCDRC 716, decided on 23-12-2019]

Case BriefsHigh Courts

Karnataka High Court: Krishna S. Dixit, J. allowed a writ petition praying for quashing of a circular whereby overtime dues were denied to employees of the respondent.

The petitioner herein was not granted an allowance for the overtime job done by him, and aggrieved thereby he filed the present writ petition under Articles 226 and 227 of the Constitution of India praying to quash the impugned circular.

The respondent resisted the writ petition banking upon the impugned circular.

The Court opined that the impugned circular contained a strange reason for variability for denying the overtime allowance. Thus, it did not have the force of law, nor justification. It was held that a legal claim of an employee cannot be negated by quoting such a circular.

The Court further opined that withholding the amount payable amounted to acquiring property sans compensation, therefore, the same is violative of Article 300-A of the Constitution of India.

Reliance was placed on the case of State of Gujarat v. High Court of Gujarat, (1998) 7 SCC 392, where the right of sentence serving prisoners to wages for the work done in prison was recognized and denial of overtime allowance was held to be an infringement of Article 23 of the Constitution of India.

In view of the above, the writ petition was allowed and the impugned circular was quashed; holding that the amount payable for the overtime is ascertainable and variability spoken of by the circular offends law, reason and logic.

The Court directed the respondent to consider and grant the allowance to the petitioner within a period of eight weeks and held that any delay in payment of the allowance would amount to an additional payment of Rs 20,000 by the respondent to the petitioner.[G.M. Poovaiah v. KSRTC, WP No. 2463 of 2015, decided on 28-11-2019]

Case BriefsHigh Courts

Allahabad High Court: A Division Bench of Pradeep Singh Baghel and Piyush Agarwal, JJ. was hearing a PIL inviting the attention of the court to the casual approach of State functionaries with the menace of dengue fever.

The petitioner, who was also the counsel, in this case, wrote a letter and requested the court to be treated as Public Interest Litigation. Petitioner’s son was bought to Swaroop Rani (S.R.N) Medical College, Allahabad where he was diagnosed with viral fever. The diagnosis was made after doing a medical test which clearly showed the symptoms of dengue fever. Without studying the medical report treatment of patient began. This clearly showed the gross medical negligence from the side of doctors. When the condition of patient became critical he was shifted to S.G.P.G.I Lucknow where unfortunately the patient died and the cause of death was dengue.

In enquiry report, it was mentioned that the patient was hemodynamically unstable but from the medical report, it was shown that the wrong diagnosis was made on the part of local doctor and from S.R.N Medical College. 

The Court, in this case, considered medical negligence was on part of doctor of S.R.N Medical College and the circumstances in which the petitioner lost his young son. Petitioner was compensated with 25 lakhs from District Magistrate. In the same manner, the Court also ordered the State Government to release sufficient funds for Government Hospitals to provide sufficient dialysis units. Apart from this court ordered strict implementation of the Uttar Pradesh Preventive and Control of Malaria, Dengue, Kala-azar and Vector Borne Disease Regulations, 2016 and also separate blood units to be set for dengue patients. The Chief Medical Officer was directed to ensure the implementation of directions issued by court.

With this direction, public interest litigation is disposed of. [B.P Mishra v. State of U.P, PIL No 53904 of 2016, decided on 14-11-2019]

Case BriefsForeign Courts

Supreme Court of United Kingdom: Full Bench of Lady Hale (President), Lord Reed (Deputy President), Lord Hodge, Lady Black and Lord Kitchin, JJ., examined the considerations to be taken into account when deciding whether it is appropriate to award compensation to an employee for an invention made during employment. The instant appeal was filed by Professor Ian Shank (appellant) for compensation under Section 40 of Patents Act, 1977 for an invention made by him in 1982 that was granted patent and which provided benefit to his employer Unilever UK Central Resource Ltd. (3rd respondent/ CRL).

Appellant was the inventor of technology used in glucose testing for diabetics while he was employed at CRL, a wholly-owned subsidiary of Unilever Plc. In October 1982, Shank built the first prototype and was known as ECFD. Appellant accepted that right of his invention belonged to CRL from Section 39(1) of Patents Act, 1977 later these rights were given to Universal Plc. Universal Plc filed for the patents application for both ECFD and FCFD technologies. Since Universal was not interested in developing business so they did little to develop ECFD. Appellant left Unilever in October 1986.

The appellant represented by Patrick Green submitted that court didn’t consider that CRL was appellant employer and the entire Unilever Group can’t be considered as CRL undertaking. The argument was made it is impossible for an employee to establish benefits from the patent of a business and it will also be unjust to employ employee inventors.

The respondent represented by Daniel Alexander submitted that CRL should not be considered as undertaking because it never generated any material revenue and was neither the beneficiary of royalties in question. It was merely a service company for Unilever Group.

The exact amount of the compensation is to be determined in accordance with Section 41 of the Patents Act, which requires that the employee is awarded a “fair share” of the benefit which the employer has derived (or may reasonably be expected to derive) from the invention and/or the patent. To determine what constitutes a “fair share”, Section 41(4) of the Act provides a number of matters that must be taken into account, including the nature of the employee’s duties and remuneration, the effort and skill which the employee has devoted to making the invention, the contribution of other employees (be they joint inventors or not) and the contribution of the employer to the making, developing and working of the invention by the provision of advice, facilities and other assistance, opportunities, and managerial and commercial skill.

The Court analysed overall profit and turnover of Unilever Group and found there was an extreme disparity in numerical terms between the amount that Unilever received and the salary that the appellant was paid. It opined that the correct approach is to determine the part played by the size and success of the employer’s business as a whole in securing the benefit from the invention. Shank patent had produced a very high rate of return and Unilever made a small effort to commercialise it. Unilever had generated benefits from Shank’s patent.

The appeal of Professor Shank was allowed and it was held that Universal and CRL had an outstanding benefit from the patents of Shank and fair share was not given to appellant. Professor Shanks was awarded £2m compensation, roughly a 5 per cent share of the £24m benefit derived by Unilever from the invention, uplifted from 1999 at an average inflation rate of 2.8 per cent. [Shanks v. Unilever Plc, [2019] 1 WLR 5997, decided on 23-10-2019]

Case BriefsHigh Courts

Karnataka High Court: The Division Bench of Alok Aradhe and P.G.M. Patil, JJ. while allowing the appeal set aside the award of the Commissioner as he committed an error of law in applying the provisions of the Act, which was already repealed.

In the instant case, the appeal under Section 30 of the Workmen’s Compensation Act, 2009 was filed to assail the validity of the award of the Commissioner for Workmen’s Compensation. The commissioner had allowed the claim in part and awarded compensation to the tune of Rs 8,61,120.

Prashant (deceased) was working as an Assistant Manager in a factory when at on 02.08.2011 he fell inside the water pit and sustained injuries and thereafter died of it in the hospital. The deceased was 26 and was drawing a salary of Rs 41,062 per month.

Counsel for the appellant, Sangram S. Kulkarni submitted that the Commissioner erred in assessing the compensation as per the provisions of Workmen’s Compensation Act, which was already repealed.

The substantial question of law before the Court was that whether Commissioner committed an error of law in deciding the claim of the appellant in view of the fact that the provisions of Employee’s Compensation Act, 1923, came into force with effect from 18.01.2010 and the accident took place on 02.08.2011.

The Court after considering the facts and circumstances of the case observed that provisions of Employees Compensation Act, 1923, came into force with effect from 18.01.2010 and the accident took place on 02.08.2011. Therefore, the computation of compensation has to be made under the Employee’s Compensation Act, 1923 not under Workmen’s Compensation Act, which was already repealed.

Taking half of the net salary payable to the deceased which comes to Rs 16, 463 and after applying the factor of 215.28, the amount of compensation comes to Rs 35,44,154. The enhanced amount shall carry interest at the rate of 12% per annum from the date of death, till its realization. [B. Basappa v. J.S.W. Steel Ltd., 2019 SCC OnLine Kar 2185, decided on 06-11-2019]

Case BriefsHigh Courts

Karnataka High Court: H.T. Narendra Prasad, J. while allowing the appeal in part and condoning the delay ordered that the claimant was not entitled to the interest for the delayed period of 358 days.

This Miscellaneous First Appeal was filed under Section 173(1) of Motor Vehicles Act, 1988 seeking enhancement of compensation as the Motor Accident Claim Tribunal granted the compensation of Rs 80, 340 with interest of 6% interest and fastened liability on the owner of the vehicle.

The claimants were on a two-wheeler motorcycle, in one moment a tempo driven in a rash and negligent manner coming from opposite side dashed against the motorcycle. Due to this, the claimant suffered grievous injuries.

Counsel for the appellant, Harish S. Maigur, referred a case of Rani v. National Insurance Company Limited, (2018) 8 SCC 492 in which was held that the insurance company has to pay award amount to the owner of the vehicle. After then, they can recover the same from the owner. The Counsel submitted in the light of this judgment that the Tribunal did not pay heed to this particular observation of the Supreme Court.

Counsel for Respondent 2-Insurance Company, G.N. Raichur, submitted that the permit of the Respondent 1 was not valid on the date of the accident. Hence, the Tribunal rightly passed the liability on the owner of the vehicle.

The Court agreed with the submissions of the parties but cited the aforesaid Judgment in which it was also held that even though the offending vehicle did not possess a valid permit to operate in the State concerned, the Insurance Company has to satisfy the award first. Thereafter, it can recover the same from the offending vehicle.

In view of the above, the Court modified the judgment and award of the Tribunal and directed the Insurance Company to pay the compensation with interest instead of the owner. Once, that is paid it can recover that amount from the owner of the vehicle. [Manjunath v. Mrityunjaya, 2019 SCC OnLine Kar 2098, decided on 16-10-2019]

Case BriefsHigh Courts

Himachal Pradesh High Court: Sandeep Sharma, J., allowed an appeal which questioned the legality of the Order passed by the Motor Accident Claims Tribunal, H.P. where they dismissed the application of the appellants stating that it was not maintainable as they had failed to demonstrate that the income of the deceased Kishan Singh was not less than the maximum limit of Rs 40,000 per annum.

The issue placed before the Tribunal was, “Whether the petitioners (successors-in-interest of deceased who was employed by the respondent) were entitled to claim compensation in the sum of Rs 15,00,000 along with interest from the respondents jointly and/or severally on account of the death of the deceased in the accident in question as alleged?” The Tribunal held that since the income of the deceased was exceeding the maximum limit of Rs 40,000 per annum which is a maximum limit to maintain a petition under Section 163-A of MV Act, the petition so filed by the petitioners in view of the ration was not maintainable.

The appellants argued that de hors the fact as to whether the income of the deceased is Rs 40,000 or more per annum, once the claim petition has been filed by the claimant, maybe under Section 163-A of the Motor Vehicles Act, the same has to be decided by the Tribunal on merit and the claim petition cannot be thrown out on flimsy grounds of income.

Division Bench of Himachal Pradesh High Court in Oriental Insurance Co. Ltd. v. Sihnu Ram, 2016 SCC OnLine HP 2224 held that once the jurisdiction of the Claims Tribunal has been invoked and during trial evidence has come to the effect that the accident was outcome of rash and negligent act and income of the victim was more than Rs 40,000, the petition under Section 163-A of the Motor Vehicles Act cannot be dismissed. They further held that the mandate of Section 163-A of the Motor Vehicles Act is to provide compensation ‘On Structured formula Basis’ and was not an interim measure. Once it is granted, the victims cannot file a claim petition under Section 166 of the MV Act for grant of enhanced compensation. But, in case the Claims Tribunal comes to the conclusion that the income of the victim is more than Rs 40,000 per annum, it is not supposed to dismiss the claim petition. If the claim petition is dismissed on this ground then the aim, purpose and object of Sections 158(6), 163-A and 166(4) of the Motor Vehicles Act would be defeated.

The High Court concurred with the decision and allowed the appeal of the appellants. They quashed and set aside the award passed by the Motor Accident Claims Tribunal and remanded the matter back to them directing them to decide the claim petition afresh on merit, on the basis of evidence on record, after affording the parties reasonable opportunity(s) to put forth their respective contentions. [Neema v. Sohan Singh, 2019 SCC OnLine HP 1805, decided on 31-10-2019]

Legislation UpdatesNotifications

Guidelines on Compensation of Whole Time Directors/ Chief Executive Officers/ Material Risk Takers and Control Function staff

The compensation practices, especially of large financial institutions, were one of the important factors which contributed to the global financial crisis in 2008. Employees were often rewarded for increasing short-term profit without adequate recognition of the risks and long-term consequences that their activities posed to the organisations. These perverse incentives amplified excessive risk taking that severely threatened the global financial system. The compensation issue has, therefore, been at the centre stage of regulatory reforms.

2. In the wake of financial crisis, in order to address the issues in a coordinated manner across jurisdictions, the Financial Stability Forum (later the Financial Stability Board i.e. FSB) brought out a set of Principles (FSF Principles for Sound Compensation Practices, dated April 02, 2009) and Implementation Standards (FSB Principles for Sound Compensation Practices – Implementation Standards, dated September 25, 2009) on sound compensation practices. The Principles are intended to reduce incentives towards excessive risk taking that may arise from the structure of compensation schemes. The Principles call for effective governance of compensation, alignment of compensation with prudent risk taking, effective supervisory oversight and stakeholder engagement. The Principles have been endorsed by the G-20 countries and the Basel Committee on Banking Supervision (BCBS). The Implementation Standards are specific norms, prioritizing the areas that should be addressed by firms and supervisors to achieve effective global implementation of the Principles.

3. The BCBS published in May 2011 the final report on ‘Range of Methodologies for Risk and Performance Alignment of Remuneration’. The main objectives of the report are (a) to present certain remuneration practices and methodologies that support sound incentives; and (b) the elements influencing the effectiveness of risk alignment that should be considered by banks when developing their methodologies as well as by supervisors, when reviewing and assessing banks’ practices. In July 2011, the BCBS in consultation with the FSB has also published Pillar 3 disclosure requirements for remuneration.

4. Taking into account the stipulations in these documents, Reserve Bank had issued the Guidelines on compensation vide Circular DBOD No.BC.72/29.67.001/2011-12 dated January 13, 2012, applicable to Whole Time Directors / Chief Executive Officers / Risk Takers and Control Function Staff, etc. for implementation by private sector and foreign banks from the financial year 2012-13.

5. These Guidelines have since been reviewed based on experience gained and evolving international best practices. The objective has also been to better align these Guidelines with FSB Principles and Implementation Standards for Sound Compensation Practices and the Supplementary Guidance issued by FSB in March 2018 on the use of compensation tools to address misconduct risk. Consequently, a Discussion Paper on the proposed Guidelines was published on the RBI website and comments were invited from banks and other interested parties by March 31, 2019.

6. The final Guidelines, taking into consideration the responses received, are given in the Annex.

7. These Guidelines will be applicable for pay cycles beginning from/after April 01, 2020. All applications for approval of appointment/re-appointment or approval of remuneration/revision in remuneration of Whole Time Directors (WTDs)/ Chief Executive Officers (CEOs) shall be submitted with full details as prescribed in Appendix 1.

8. Private sector banks, foreign banks operating under the Wholly Owned Subsidiary mode (WOS), and foreign banks operating in India under the branch mode are required to obtain regulatory approval for grant of remuneration (i.e. compensation) to WTDs/ CEOs in terms of Section 35B of the Banking Regulation Act, 1949 (B.R. Act, 1949). The approval process will involve, inter alia, an assessment of whether the bank’s compensation policies and practices are in accordance with the Guidelines set out in the Annex, and the BCBS Methodologies detailed in Appendix 2.

9. In view of above, the instructions issued vide the circular DBOD No.BC.72/29.67.001/2011-12 dated January 13, 2012 stand superseded with effect from April 01, 2020.


Reserve Bank of India

[Press Release dt. 04-11-2019]

Case BriefsHigh Courts

Jharkhand High Court: Deepak Roshan, J., modified the sentence of the trial court to the extent in lieu of compensation which should be paid to the victim-wife.

In the pertinent case, the petitioner moved to this Court against the judgment passed by the Additional Sessions Judge-I, whereby the appeal preferred by the petitioners was dismissed and the judgment of conviction and order of sentence whereby the petitioners were found guilty for offence punishable under Section 498-A of Penal Code, 1860 and they were convicted and sentenced to undergo RI for 18 months and fine of Rs 1000 each has been affirmed.

The counsel for the petitioners, J.P. Pandey, submitted that there are contradictions in prosecution witnesses and the allegations made in the FIR does not corroborate with the evidence of the informant hence, the petitioners deserve to be acquitted. Further, the petitioners have remained in custody for about one month as such some leniency may be granted by this Court.

The Court held that it cannot interfere with the findings of the courts below due to the limited scope of the revisional jurisdiction, therefore, the conviction against the petitioners are confirmed. With respect to the sentence, the Court observed that the incident is of the year 2004 and 15 years have elapsed and the petitioners have suffered the rigors of litigation for the last 15 years and also remained in custody for 36 days. The court was of the view that it may not be proper for this Court to send the accused persons back to prison and found that it is expedient in the interest of justice that the sentence should be modified in lieu of compensation which should be paid to the victim-wife. Hence, the Court modified the impugned order to the extent that the petitioners are sentenced to undergo for the period already undergone subject to the payment of fine of Rs 5000 each failing which they shall serve the rest of the sentence as directed by the trial court. [Santosh Mandal v. State of Jharkhand, 2019 SCC OnLine Jhar 1453, decided on 18-10-2019]

Case BriefsHigh Courts

Punjab and Haryana High Court: Dr Ravi Ranjan, J. allowed the appeal filed by legal heirs of a person who died in a ‘railway untoward accident’, under Section 16 of the Railway Claims Tribunal Act, 1987.

The claimants herein were the sons of the deceased person who died in an accident during his railway journey. The claimants filed a case seeking compensation from the railway authority. However, the case was dismissed by the Railway Claims Tribunal on the ground that the deceased was not a bona fide passenger as no journey ticket was found with the dead body. Also, the train was a reserved one with no general class compartments and the deceased had no reservation. So the accident would not be included under the ‘railway untoward incident’. Aggrieved thereby, this appeal was preferred by the claimants.

The Court relied on Union of India v. Rina Devi, (2019) 3 SCC 572 where it was held that the mere absence of ticket cannot be proof that the deceased was not a passenger. Further, placing reliance on the judgment in Union of India v. Rani Devi, 2016 SCC OnLine Pat 777 the Court held that the fact the claimant was not traveling in the assigned class, does not deprive the claimants of the compensation. It was opined that the fact that the deceased was in the precinct of the railway is presumed proof that he had a valid ticket.

Hence, the appeal was allowed granting just and proper compensation. [Rakesh Kumar v. Union of India, 2019 SCC OnLine P&H 2083, decided on 20-08-2019]

Case BriefsHigh Courts

Allahabad High Court: Rajnish Kumar, J. while allowing the instant appeal ordered for enhanced compensation to the appellant/claimant.

In the instant case, the appellant/claimant filed a claim petition after his son died in a motor accident.

The Motor Accident Claims Tribunal/Additional District Judge allowed the above claim petition and awarded Rs 55,000 as compensation along with interest at the rate of 8% per annum, out of which Rs 27,500 for the appellant/claimant and Rs 27,500 to his wife, i.e., the mother of the deceased.

Aggrieved by the compensation, this instant first appeal was filed.

Counsel for the appellant, M. Saeed submitted that the deceased was young and studied in Class VIII l. He was a bright student. There are six dependants in the family. If he would have been alive, he would have earned a lot and helped the appellant in maintaining all. But, the Tribunal wrongly and illegally assessed the notional income of the deceased as Rs 15,000 which should have been higher in view of Kishan Gopal v. Lala, (2014) 1 SCC 244. He further submitted that the multiplier of 5 should have been applied to the age of the father, instead, it should be applied to the age of the deceased. Lesser amount was awarded towards conventional heads, namely loss of estate, loss of consortium and loss of funeral expenses, which are also liable to be enhanced.

He also relied on the judgment of the Supreme Court i.e., Reshma Kumari v. Madan Mohan, (2013) 9 SCC 65 by which a multiplier of 15 is liable to be applied in the present case.

Counsel for the respondent, R.C. Sharma submitted that the deceased was aged about 14 years, as such, he was minor at the time of death. Therefore, the notional income of Rs 15,000 has rightly been assessed and the multiplier has rightly been applied to the age of the father. Moreover, relied on two cases i.e., Khalil Ahmad v. Jitendra Bhushen Pandey, F.A.F.O. No.377 of 2001 and Om Prakash Verma v. Krishna Goel, F.A.F.O. No.285 of 2009 and submitted that the appellant is entitled only for a fixed compensation of Rs 1,50,000.

After analyzing the facts and submissions of the parties, the Court observed that the notional income of Rs 15,000 was assessed by the Tribunal as no evidence was adduced as to the income of the deceased. The case of Kishan Gopal was not applicable to the facts and circumstances of the present case because in that case the deceased was assisting the appellants in their agricultural occupation. While citing two judgments of the Supreme Court – National Insurance Co. Ltd. v. Pranay Sethi, (2017) 16 SCC 680, in paragraph 59.7 and Royal Sundaram Alliance Insurance Co. Ltd. v. Mandala Yadagiri Goud, (2019) 5 SCC 554, the Court came to a conclusion that the multiplier should be applied on the age of the deceased.

But, observed one factor that in the case of Sarla Verma v. DTC, (2009) 6 SCC 121, the multiplier was provided from the age of 15. The Supreme Court in Reshma Kumar held that in cases where the age of the deceased is up to 15 years, irrespective of Section 166 or Section 163-A under which the claim for compensation has been made, a multiplier of 15 should be followed.

In view of the above, this Court held that a multiplier of 15 should be applied in the present case in place of 5. Furthermore, the court held that the appellants are entitled to Rs 15,000, Rs 40,000 and Rs 15,000 under the conventional heads in view of National Insurance Company in place of Rs 2000 and Rs 3,000. [Gaya Prasad v. K. Trivedi, 2019 SCC OnLine All 3670, decided on 01-10-2019]

Case BriefsHigh Courts

Patna High Court: S. Kumar, J. dismissed the appeal filed by the insurance company on the grounds that the parties were liable severally as well as jointly. Although the company had the right to recover such compensation paid from the other party involved in the accident for which insurance was being claimed.

A miscellaneous appeal was filed under Section 173 of Motor Vehicle Act by the appellant against the Judgment and Award passed by the 1st Additional District Judge-cum-Motor Accident Claim Tribunal, Saran at Chapra in Claim Case No. 22 of 2002, by which the learned Claims Tribunal directed the appellant to pay a sum of Rs 3,50,000 to the claimant with interest @ 6 % per annum from the date of claim case till its realization.

The claimant was the husband of one Parwati Devi who died in a motor accident while travelling on a Commander Jeep which collided with another Commander Jeep on 19-09-2001 at about 10:00 PM The deceased was seriously injured and while she was being taken to hospital she succumbed to the injuries. An FIR was instituted under Sections 279, 338 and 304-A of the Penal Code against the drivers of both the vehicles and after investigation the police found the case to be true against drivers of both vehicles.

The appellant had appeared and had filed their written statement in which they denied the claim of claimants. The tribunal, after having examined the material brought on as evidence, held that the deceased died due to rash and negligent driving by the drivers of both vehicles and there was composite negligence on part of both the drivers. The Tribunal had further held that it was a case of composite negligence and the claimant was entitled to claim the compensation amount from either the owner or the insurer of the vehicle and had directed the appellant who was the insurer, to pay compensation.

High Court did not find any error or infirmity in the order passed by the tribunal and as such present appeal was dismissed as a liability to pay the compensation was joint and as well as several. However, since there was a specific finding of the tribunal that there was composite negligence on part of drivers of both the vehicles as such the appellant was entitled to recover 50% of the compensation amount paid to the claimant from the owner /insurer of the other offending vehicle.

In view of the above noted facts, the instant appeal was dismissed with the directions that the insurance company had to pay the balance claim amount with interest @ 6% from the date of presentation of claim till its realization within one month from the receipt of a copy of order passed by the court with a right of recovery of 50% of the compensation amount so paid from the owner /insurer of the other offending vehicle.[New India Assurance Co. Ltd v. Kanchan Bhagat, 2019 SCC OnLine Pat 1737, decided on 02-09-2019]

Case BriefsHigh Courts

Himachal Pradesh High Court: Tarlok Singh Chauhan, J. partly allowed the appeal of filed by an employer challenging the compensation granted to a deceased employee’s wife under the Employees Compensation Act, 1923 on the ground that before passing a penalty order against the employer, a reasonable opportunity must have been given to him to justify himself.

Appellant herein was the employer of the respondent’s husband (deceased employee) who was employed as a driver by the appellant and died in an accident. Respondent’s wife filed a petition against the appellant seeking payment of compensation along with interest and penalty against the appellant and other respondents towards their joint and severe liability under the Employees Compensation Act, 1923. The appellant in his reply denied the salary as claimed and requested the recovery of the insurance amount. However, the Employee’s Compensation Commissioner-II awarded the respondent with compensation and interest along with a penalty. Aggrieved by this award, the appellant filed the present appeal.

Navlesh Verma learned counsel for the appellant, contended that there was no employer-employee relationship between the appellant and the deceased employee; and secondly that no show-cause notice was issued on the appellant-employer before passing an adverse award against him.

The Court held that the records proved that there was a relationship of employer and employee between the appellant and the deceased.

With respect to the second contention, it was held that as per the judgment in Ved Prakash Garg v. Premi Devi, (1997) 8 SCC 1 penalty under Section 4-A(3)(b) of the Act can only be imposed when the employer is given a prior notice and an opportunity to defend himself against the same which was certainly not given to the appellant herein.

Hence, the court allowed the appeal and set aside the penalty imposed on the appellant. [Amandeep Singh v. Shaheena Parveen, 2019 SCC OnLine HP 1416, decided on 30-08-2019]

Case BriefsHigh Courts

Delhi High Court: Najmi Waziri, J. dismissed an appeal filed by the insurer against the award of compensation made by the Motor Accident Claims Tribunal, and also rejected insurer’s claim to recover the amount so awarded from the owner of the offending vehicle.

The insurer, represented by Hetu Arora Sethi, Advocate impugned the award of compensation on the ground, inter alia, that the deceased (a minor) was not holding a valid driving license at the time of the accident and was liable for contributory negligence.

Perusing the record and noting the arguments on the issue, dealt with by the Tribunal, the High Court observed: “Non-possession of the driving license by itself would not be a reason for not granting the award of compensation, if it is proven that the accident was on account of rash and negligent driving of the offending vehicle.” The High Court was of the opinion that the rashness and negligence of the offending vehicle had been duly established in terms of the facts and reasoning of the impugned order.

Relying on Sudhir Kumar v. Surinder Singh, (2008) 12 SCC 436, the Court reached the conclusion that the rationale of the impugned order could not be faulted because the negligence of the offending vehicle was evidently much larger than that of the deceased motorcyclist. The offending vehicle was imprudently being driven, i.e. in a rash and negligent manner, as stated by the eyewitness — the pillion rider. Accordingly, the argument regarding apportionment of liability too was rejected.

The insurer lastly contended that the right of recovery was not granted to them although the driver was not holding a valid driving license for the insured vehicle which was a goods-carrier/ transport vehicle; the driver possessed a license only for a Light Motor Vehicle and motorcycle. It was noted that this issue has been referred to a 3-Judge Bench by the Supreme Court in Bajaj Allianz General Insurance Co. Ltd. v. Rambha Devi, 2018 SCC OnLine SC 3325. However, the High Court held that till the disposal of the said matter, the issue is governed by Mukund Dewangan v. Oriental Insurance Co. Ltd., (2017) 14 SCC 663, which held that “there is no requirement to obtain separate endorsement to drive transport vehicle, and if a driver is holding license to drive light motor vehicle, he can drive transport vehicle of such class without any endorsement to that effect.”

Resultantly, the appeal was dismissed.[National Insurance Co. Ltd. v. Sushila, 2019 SCC OnLine Del 10045, decided on 21-08-2019]