SC to Centre: Consider cost of living before fixing accident compensations

 The Supreme Court has directed the Centre to amend the Motor Vehicles Act in order to revise a structured formula of determining compensation to road mishap victims by including the rising cost of living.

The apex court passed the direction while awarding
Rs 23.48 lakh with 12 per cent annual interest to family members of Deccan Herald employee Ramadas, 48, who was killed after being hit by a speeding tanker on his return from office in July 1999.

Noticing anomaly in the law, a bench of justices G S Singhvi (since retired) and S J Mukhopadhaya said 19 years had passed since the second schedule was inserted in the Motor Vehicles Act, envisioning a structured formula to provide compensation to road mishap victims.

“We hold that the second schedule enacted in 1994 has now become redundant, irrational and unworkable, due to changed scenario including the present cost of living and current rate of inflation and increased life expectancy,” the bench said.

“A minimum amount of compensation of Rs 50,000 was fixed under the second schedule in 1994. In addition, general damages in lieu of funeral expenses, loss of consortium (if beneficiary is the spouse), medical expenses, pain and suffering, grievous injuries, non-grievous injuries etc are also provided for.

But no revision was made to these amounts in these 19 years. In spite of assurance by the Central Government to the court, no change is brought in the second schedule keeping in view the cost of living,” the bench said in the recent verdict.

The court was dealing with an appeal filed by family members of Ramadas challenging the Karnataka High Court’s 2009 order. The high court had enhanced the compensation from Rs 9.03 lakh to Rs 11.25 lakh.

The Motor Accident Claims Tribunal had taken into consideration several factors including the deceased’s monthly salary of Rs 13, 331 for computing the amount.

Among others, the family members of the victim challenged the second schedule of the act, urging the court to direct the government to amend it as the cost of living had increased. They wanted Rs 30 lakh as compensation. Under the act, the insurance company has to pay the compensation in accident cases.

During the hearing, the amicus curiae, senior advocate
P P Malhotra, informed the court that the Motor Vehicles (Amendment) Bill, 2012, with an aim to amend Section 163A of the Motor Vehicles Act, 1988, was passed by the Rajya Sabha in 2012 but it was still pending before the Lok Sabha.

The bill proposes to substitute Section 163A(3) of the act by empowering the Centre to revise the amount or the multiplier specified in the second schedule after every three years.

Taking into consideration the proposed amendments, the court directed the government to implement immediately a provision that mandates for children up to the age of five years a fixed compensation of Rs 1 lakh and Rs 1.5 lakh for victims over five.