1996 Supreme(SC) 585

1996(3) Supreme 721
SUPREME COURT OF INDIA
A.M. Ahmadi, C.J.I. and N.P. Singh, J.
Lilaben Udesing Gohel etc. etc. -Appellant
versus
Oriental Insurance Co. Ltd. & Ors. -Respondents
Civil Appeal Nos. 4466-67 of 1996
(Arising out of SLP (C) Nos. 16530-31 of 1993)
with
Civil Appeal No. 4468 of 1996
(Arising out of SLP (C) No. 14022 of 1993)
with
Civil Appeal No. 4469 of 1996
with
Civil Appeal No. 4470 of 1996
(Arising out of SLP (C) No. 14784 of 1993)
with
Civil Appeal No. 4471 of 1996
(Arising out of SLP (C) No. 14785 of 1993)
with
Civil Appeal Nos. 4472-73 of 1996
(Arising out of SLP (C) Nos. 14160-61 of 1993)
with
Writ Petition (Civil) No. 716 of 1993
with
Civil Appeal No. 4474 of 1996
(Arising out of SLP (C) No. 15273 of 1993)
All Decided on 15-3-1996

IMPORTANT POINTS
1. Guidelines laid down by the Supreme Court in Union Carbide case regarding disbursement of compensation awarded in Motor Accident cases have to be followed by all the Motor Accident Claims Tribunals.
2. In all cases in which compensation is awarded for injury caused in a motor accident, whether by adjudication or agreement between the parties, the Court/Tribunal must apply guidelines laid down in Muljibhai s case which have been approved and applied by the Supreme Court.
3. When the amount of compensation awarded in a motor accident is invested in a fixed deposit, the bank should invariably be directed to affix a note on the FDR that no loan or advance should be granted on the strength of that receipt without the express permission of the Court/Tribunal which ordered the deposit.

Headnote:Motor Vehicles Act, 1988-Mode of disbursement of compensation awarded-Judgment in Kamlaben s case, 1993(1) Gujarat Law Reporter 779 (FB)-Challenged-Supreme Court in Union Carbide s case, (1991) 4 SCC 584 referred to guidelines laid down in Muljibhai s case, (1982) 23 (1) Guj. LR 756, in laying down guidelines-Conflict in guidelines laid down by Supreme Court and those laid down by Gujarat High Court in Kamlaben s case noticed by larger Bench-Position in law as it stood before decision rendered by three-Judge Bench in Kamlaben s case restored-Scheme framed in Kamlaben s case may throw up operational difficulties case may throw up operational difficulties-Insurance Companies also expressed their inability to operate the scheme.

       Held : One can easily notice the major shift in ideas in the impugned judgment. The thrust in the impugned judgment is on the concept of annuity so as to ensure periodic payment of a fixed amount and to prevent the awarded sum in lump sum falling into the hands of the claimant as long as possible. In order to ensure the periodic payment, which according to the judgment should be quarterly interest calculated at the rate of 15 on the total compensation amount, the insurance company itself has been made liable to make the necessary investment either in its own business or in the business of the General Insurance Corporation or that of the Life Insurance Corporation. The impugned judgment has shown further caution for minors who should wait till they are at least 21 and in any case for 10 years from the date of the award. It can be seen that the periodic payment is insisted upon for all claimants irrespective of their capacity to take care of large sums of money. Further, the arrangement described above was insisted upon also for payment of the small amount that is generally available on no-fault liability primarily to meet the immediate needs of the victims/heirs. (Para 6)

       Further held : Both the General Insurance Corporation and the Life Insurance Corporation expressed their inability to work out and operate the annuity scheme proposed by the three-Judge Bench of the High Court and further expressed their inability to grant the proposed interest rate as it may conflict with Reserve Bank of India directives that may ensue from time to time. They too, therefore, expressed their inability to operate the scheme. Counsel for the Life Insurance Corporation clarified that when its counsel gave the consent before the three-Judge Bench, it did not visualise the various operational difficulties likely to arise in the implementation of the scheme proposed by the three-Judge Bench of the High Court. Thus, both the General Insurance Corporation and the Life Insurance Corporation feel that the said scheme is unworkable and fraught with several insurmountable difficulties. We too are of the view that the scheme may throw up many operational difficulties. However, now that the larger Bench of the High Court has restored the original position, nothing more is required to be done. If any loopholes appear in the implementation of the guidelines laid down in Muljibhai s case, they can always be plugged consistently with the guidelines. (Para 10)

       (ii) Motor Accident Claims-Compensation-Guidelines laid down for disbursement of compensation amount-In all cases in which compensation is awarded for injury, whether by adjudication or agreement, Court/Tribunal must apply these guidelines-When amount invested in fixed deposit, bank should affix a note that no loan should be granted on strength of said FDR without permission of Court/Tribunal.

       Held that even though the guidelines laid down in Muljibhai s case have been approved and applied by this Court in the aforementioned two cases, many Motor Accidents Claims Tribunals and even some of the High Courts in other parts of the country do not follow them. We are also told that in claims that are settled in or outside the Court or Tribunal, including Lok-Adalats or Lok Nyayalayas, these guidelines are overlooked. We would like to make it absolutely clear that in all cases in which compensation is awarded for injury caused in a motor accident, whether by way of adjudication or agreement between the parties, the Court/Tribunal must apply these guidelines. We must add one further guideline to the effect that when the amount is invested in a fixed deposit, the bank should invariably be directed to affix a note on the fixed Deposit Receipt that no loan or advance should be granted on the strength of the said FDR without the express permission of the Court/Tribunal which ordered the deposit. This will eliminate the practise of taking loans which may be upto 80 of the amount invested and thereby defeating the very purpose of the order. We do hope that the Courts/Tribunals in the country will not succumb to the temptation of permitting huge withdrawals in the hope of disposing of the claim. We are sure that the Courts/Tribunals will realise their duty towards the victims of the accident so that a large part of the compensation amount is not lost to them. The very purpose of laying down the guidelines was to ensure the safety of the amount so that the claimants do not become victims of unscrupulous persons and unethical agreements or arrangements. We do hope our anxiety to protect the claimants from exploitation by such elements will be equally shared by the Courts/Tribunals. (Para 11)