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Hirjee Veerjee and Co. Vs. Smt. Saroja Narayan Shetty and Others - Court Judgment

LegalCrystal Citation
SubjectCivil;Company
CourtMumbai High Court
Decided On
Case NumberFirst Appeal No. 78 of 1974
Judge
Reported in(1982)84BOMLR312; [1984]55CompCas595(Bom); 1982MhLJ885
Acts Fatal Accidents (Damages) Act, 1908 - Sections 1 and 22; Fatal Accidents Act, 1855 - Sections 1A, 2, 110B and 110C; Code of Civil Procedure (CPC) - Order 41; Code of Civil Procedure (CPC) - Rule 27; Motor Vested Act - Sections 95 and 96; Law Reform (Personal Injuries) Act, 1948; National Insurance Acts, 1946; Fatal Accidents Act, 1846; Fatal Accidents Act, 1959 - Sections 2; English Act of 1959 - Sections 2
AppellantHirjee Veerjee and Co.
RespondentSmt. Saroja Narayan Shetty and Others
Excerpt:
fatal accidents act (xiii of 1855), sections 1a, 2 - claim for compensation by dependants of deceased -- claimants receiving insurance amount under life policies taken by deceased -- whether entire amount of insurance is liable to be deducted or only benefit of acceleration of payment of insurance moneys -- mode for calculation of benefit of acceleration -- distinction between claim for damages for personal injury and claim for compensation under fatal accidents act -- need to amend on lines of section 2 of english fatal accidents act, 1959 stressed -- tort.;where the claimants in a claim for compensation under the fatal accidents act, 1855 are in receipt of an amount of insurance in respect of life policies taken out by the deceased, the entire amount of insurance is not liable to be.....chandurkar, j.1. this appeal by defendant no. 1 against the judgment and decree of the civil judge, senior division, thane, awarding compensation of rs. 1,49,400 under the fatal accidents act, has been referred to the full bench by the division bench consisting of dharmadhikari and s. j. deshpande jj. as they felt that the decision of another division bench of this court in jaikumar chhaganlal patni v. mary jerome d'souza, : air1978bom239 , in so far as it took the view that the amount received from a life insurance policy on the death of the deceased was liable to be deducted from the compensation to which the plaintiffs were entitled, required reconsideration.2. since the whole appeal has been referred to the full bench, it becomes necessary to briefly state the facts leading to the.....
Judgment:

Chandurkar, J.

1. This appeal by defendant No. 1 against the judgment and decree of the Civil Judge, Senior Division, Thane, awarding compensation of Rs. 1,49,400 under the Fatal Accidents Act, has been referred to the Full Bench by the Division Bench consisting of Dharmadhikari and S. J. Deshpande JJ. as they felt that the decision of another Division Bench of this court in Jaikumar Chhaganlal Patni v. Mary Jerome D'Souza, : AIR1978Bom239 , in so far as it took the view that the amount received from a life insurance policy on the death of the deceased was liable to be deducted from the compensation to which the plaintiffs were entitled, required reconsideration.

2. Since the whole appeal has been referred to the Full Bench, it becomes necessary to briefly state the facts leading to the present appeal.

3. Original plaintiffs Nos. 1 to 5 are the legal representatives of deceased, Narayan Shetty. Plaintiff No. 1 is the widow of deceased Narayan. Plaintiff No. 2, who was then a minor, is his son. Plaintiffs Nos. 3 and 4 are his daughters and plaintiff No. 5 is the mother of the deceased. It is not now in dispute that on December 7, 1969, at about 10 a.m., when the deceased was driving his motor vehicle No. MRC 3011 and was proceeding from Thane on Agra Road towards Bhiwandi side, there was a collision with a motor lorry of the appellants which was driven by the driver, Damodar, from the opposite direction. The motor car was heavily damaged. Narayan Shetty sustained serious injuries and he succumbed to these injuries on the same day at 1.30 p.m. in the Civil Hospital at Thane. Narayan Shetty was about 45 years of age at the time of his death. He had taken technical education in Germany in 1965 and in 1966, had started his own industry called Rubber Products Pvt. Ltd. of which he was a managing director and was drawing a salary of Rs. 2,500 per month. In addition, he was earning commission on sales.

4. In the suit filed by the plaintiffs for compensation under the Fatal Accidents Act, the plaintiffs claimed Rs. 2,50,000 as damages under different heads specified in Sch. A to the plaint, with which we are not concerned at this stage. Out of the amount of Rs. 2,50,000, the pecuniary loss to the estate of the deceased was estimated at Rs. 2,30,000 and Rs. 20,000 was claimed on account of pain and suffering prior to the death and shortening the expectation of life.

5. The defendants, namely, the present appellant, and defendant No. 2, M/s. South India Insurance Co. Ltd., Bombay, contested the claim of the plaintiffs that the accident was a result of rash and negligent driving by the driver of the lorry of defendant No. 1 and their case was that the accident occurred due to the negligence of the deceased himself and the appellant-company in fact claimed to be entitled to Rs. 5,199.41 as damages caused to their lorry by the car of the deceased. Defendant No. 2, the insurance company, pleaded that it was not liable to pay anything to the plaintiffs in excess of Rs. 20,000, which was the statutory limit.

6. On evidence given before the trial court, it was found that defendant No. 1's driver, Damodar, had driven the lorry rashly and negligently and thereby knocked the car which was driven by the deceased, Narayan. The plea of contributory negligence of the deceased was negatived. While dealing with the question of determination of quantum of compensation, the trial court found that if the deceased was alive, the net gain of the members of the family would have been Rs. 1,000 per month of Rs. 12,000 per year. Holding that the deceased, Narayan, would have led an active earning life till 60 years and on the finding that the age of the deceased, Narayan, at the time of death was 45 years and that he was a healthy man with a robust constitution, the trial court found that the deceased's family had lost the benefits of the financial contribution by the deceased for 15 years and the total loss was thus estimated at Rs. 1,80,000. In so far as the claim under s. 2 of the Fatal Accidents Act, 1855, was concerned, the trial court took the view that the claim of Rs. 20,000 was excessive though the plaintiffs were entitled to be granted some amount under that head. Finding that the deceased, Narayan, had died within two hours of the accident and was unconscious and had never regained consciousness, the trial court granted Rs. 1,000 as damages for pain and suffering of the deceased and Rs. 9,000 for loss of expectancy of life. The total amount of compensation payable to the plaintiffs was thus computed at Rs. 1,90,000.

7. After the death of the deceased, Narayan, the company of which the deceased was the managing director had paid to plaintiff No. 1 a sum of Rs. 1,000 per month for two years in pursuance of a resolution of the company which stated that the amount was being paid in consideration of the meritorious services rendered and sacrifices made by the deceased, Narayan, in building up the company and raising it to its unique position. Holding that the said amount of Rs. 24,000 was received by plaintiff No. 1 because of the death of Narayan Shetty and further holding that though the amount was in consideration of meritorious services, it would not have been paid but for the death of Narayan, the trial court took the view that the amount of Rs. 24,000 should be deducted from the amount of Rs. 1,90,000. Thus, the amount of compensation payable to the plaintiffs came to Rs. 1,66,000.

8. A further deduction of 10% was made as the plaintiffs got the compensation amount in a lump sum. The amount of deduction came to Rs. 16,600 and finally the plaintiffs were entitled to recover in lump sum Rs. 1,49,400 as pecuniary loss caused to them by the death of Narayan. Defendant No. 1's claim for a set off Rs. 5,199.41 on account of damages caused to the lorry of defendant No. 1 was negatived.

9. In so far as the liability of defendant No. 2, insurance company, was concerned, it was held that the liability should be limited to Rs. 15,000.

10. The amount of damages was apportioned between the several plaintiffs as follows :-

Rs.Plaintiff No. 1, Smt. Saroja 50,000Plaintiff No. 2, Master Shantaram 50,000Plaintiff No. 3, Smt. Sarala 15,000Plaintiff No. 4, Smt. Savita 15,000Plaintiff No. 5, Smt. Kusu Lokayya Shetty 19,400

11. Interest was awarded at 6% p.a. from the date of suit till recovery. The plaintiffs were granted proportionate costs of the suit on Rs. 1,49,000, subject to the limit that the costs to be recovered from defendant No. 2 should not exceed the costs on Rs. 15,000. This judgment and decree is now challenged only by defendant No. 1.

12. When the appeal came up for hearing before the Division Bench, the Division Bench confirmed the finding that defendant No. 1's driver, Damodar, had driven the lorry rashly and negligently. With regard to the quantum of damages, it was contended on behalf of the appellant before the Division Bench that in view of the decision of the Division Bench of this court in Jaikumar's case, : AIR1978Bom239 , if the amount received by the widow of Narayan Shetty, the first plaintiff, from the life insurance policies was deducted, then no decree for compensation could be passed in the present case. The Division Bench found that the decision in Jaikumar's case, : AIR1978Bom239 , supported the contention of the appellant. But, according to the Division Bench, that decision required reconsideration. The Division Bench took the view that there was a clear distinction between the benefit received on account of death and those that were merely payable on the death of a person. It was said that the former arose out of death and would not have been available without it, while the latter were benefits which were available independently of death but were payable on death. A passage from Munkman on Damages for Personal Injuries and Death, 6th edition, page 77, was quoted extensively. We shall refer to this passage later. It is at this stage sufficient to point out that the passage quoted was under the heading 'Accident insurance' wherein it was stated on the authority of the decision in Bradburn v. Great Western Rly. Co. [1875] LR 10 Exch. 1, that money received under an accident insurance policy is not deducted or taken into account in any way in assessing damages for personal injuries. A passage from 'The Quantum of Damages' by Kemp and Kemp, volume I, page 221, dealing with acceleration, in which the learned authors have stated that where a sum has been paid to a dependant solely by reason of death, the sum is to be taken into account, but if the payment or part thereof is likely to be made to some dependant at some future date, in any event, the dependent's benefit as a result of the death is not the whole amount of such payment but the value of the acceleration of that payment plus the certainty of its receipt, was also referred.

13. Before the Division Bench an application for leading additional evidence under O.41, r. 27 of the CPC was also filed by the respondents-plaintiffs in order to show that although the major portion of the amount received by the plaintiffs was under policies covered under the Women's Property Act and became payable after the death of Narayan Shetty, it could not be said that the first plaintiff became entitled to receive the amount by reason of Narayan Shetty's death alone. The Division Bench, however, did not feel inclined to deal with the argument that the amounts covered by these policies could not be deducted having regard to the nature of the policies since the Division Bench felt inclined to refer the appeal to a larger Bench. One of the reasons which seems to have weighed with the Division Bench while making the reference was that, in the present case, the total compensation awarded was less than Rs. 1,50,000 and the widow-plaintiff No. 1 had received an amount of Rs. 1,50,000 towards the insurance policies and, therefore, she would not be entitled to get a single pie as compensation. As a natural consequence, according to the Division Bench, even the insurance company would be absolved from its statutory liability under ss. 95 and 96 of the M.V. Act. 'This will have a startling result', said the Division Bench. Finally the Division Bench expressed a sentimental view that compensation payable under the M.V. Act or the Fatal Accidents Act was not full reimbursement for the life lost and that a precious life cannot be valued on the basis of an artificial mathematical formula. The Division Bench felt that the benefit from the savings of a prudent man, meant for his benefit as well as for the benefit of his family under a contract, should not go to the tortfeasor or wrongdoer, who by his negligent act has caused the death of a person. Finally, pointing out that the benefit under the insurance policy is available independently of death but is payable only on death, the Division Bench found that the view taken by this court in Jaikumar's case, : AIR1978Bom239 , required reconsideration. That is how this appeal has now come up before this Full Bench.

14. The arguments before us both on behalf of the appellant and on behalf of the respondents have mainly been restricted, and, in our opinion rightly so, to the question as to whether the amount of insurance policy taken out by the deceased and payable on his death is liable to be deducted either wholly or partially from the amount of compensation which payable to the legal representatives of the deceased in a claim under the Fatal Accidents Act.

15. It may be mentioned that the present appeal arises out of a suit filed in a civil court to enforce a claim for compensation specifically made under ss. 1A and 2 of the Fatal Accidents Act, 1855. Therefore, though at one stage the learned counsel for the claimants also wanted to canvass before us the scope of the provision relating to compensation payable under s. 110B of the M.V. Act, 1939, and as to the scope of the words 'the amount of compensation which appears to it to be just', we have declined to hear the learned counsel for the plaintiffs on that aspect as such a controversy was not relevant for the purpose of deciding the appeal before us.

16. Since the correctness of the view taken by the Division Bench in Jaikumar's case, : AIR1978Bom239 , was doubted by the Division Bench which made the reference, it would be advisable at the outset to analyse that decision and ascertain what was the view of the Division Bench in so far as the deductibility of the amount of insurance in respect of policies taken out by the deceased payable on his death and in fact received by his legal representatives was concerned. It is, therefore, necessary to deal with that decision in some detail. The Division Bench was dealing with an appeal against a judgment of the Motor Accidents Claims Tribunal for Greater Bombay, by which the Tribunal had awarded a sum of Rs. 40,000 with interest at 6% p.a. from the date of the claim by way of compensation to the widow and two sons of the deceased, Jerome D'Souza. The deceased was at the material time a taxi driver and was knocked down by a car belonging to the respondent resulting in his instantaneous death. The owners of the car did not contest the claim and the claim was contested only by the insurance company after securing permission under s. 110C of the M.V. Act. The Division Bench quoted the principles laid down by the Supreme Court in Gobald Motor Services Ltd. v. R. M. K. Veluswami : [1962]1SCR929 , as follows AIR 1962 SC 6 :

'Only by balancing on the one hand the loss to the claimants of the future pecuniary benefit and on the other any pecuniary advantage which from whatever source comes to them by reason of the death, that is, the balance of loss and gain to a dependent by the death must be ascertained ...'

17. With regard to the manner in which these principles have to be worked out, the Division Bench observed as follows (at p. 241 of AIR 1978 Bom).

'To work this out, one has to find out amongst other things (1) the net annual income of the deceased earned by dint of his labour, manual or of head and heart, (2) as to how much out of it was spent by him for himself and how much for his dependants, which is otherwise referred to as their 'dependancy', (3) as to how long each dependant would have been required to depend on the same, the widow being assumed to be so required during her whole of lifetime in the absence of any evidence to the contrary, and (4) how long the deceased could have supported, each one of them, depending on the estimate of expectancy of his future span of life. The age of the deceased on the date of the accident, his health and estimate of the years during which he would continue to earn, also are equally important and relevant factors.'

18. After referring to the decision of the Supreme Court in Sheikhupura Transport Co. Ltd. v. Northern India Transporters' Insurance Co. Ltd., : AIR1971SC1624 , the Division Bench pointed out that even for a determination of the compensation under s. 110B of the M.V. Act, the essential principles of the decided cases under the Fatal Accidents Act still hold the field and pecuniary benefits coming to the claimants by reason of the death of the deceased are still liable to be balanced against the claimants' pecuniary losses. The Division Bench then went on to consider the question as to what were the claimants' pecuniary losses and whether there were any pecuniary benefits coming to the claimants by reason of the death of deceased. Holding that the dependants of the deceased were receiving a net amount of Rs. 200 per month and taking the average longevity at 65 and the fact that the deceased was 42 years of age at the time of the accident, the life expectancy was fixed at 23 years and the compensation on this data by recourse to the accepted formula was computed at Rs. 200 x 12 x 23 = Rs. 55,200. The widow, in that case, had received Rs. 15,000 towards the life insurance policy and the contention on behalf of the defendant was that this amount of Rs. 15,000 was liable to be deducted from the amount of Rs. 55,200, being a pecuniary advantage received by the claimants by reason of death in terms of the ratio of Gobald Motor's case : [1962]1SCR929 . The Division Bench noticed the fact that judicial opinion was sharply divided on the question whether the life policy amount could be said to have come to the claimants by reason of the death of the deceased to justify its deduction from the amount of compensation payable to the claimants towards their pecuniary loss. Decisions cited before the Division Bench in support of the view that insurance policy amount cannot be said to have come to the claimants by reason of death of the deceased and, therefore, is not deductible from the compensation were : (1) LIC of India v. Smt. Kasturben Naranbhai Vadhia, : AIR1973Guj216 ; (2) Sood and Co. v. Surjit Kaur [1973] ACJ 414 ; (3) Bhagwanti Devi v. Ish Kamar [1975] ACJ 56. The judgments taking the opposite view relied upon by the defendants were : (1) Union of India v. Supriya Ghosh, : AIR1973Pat129 ; (2) Smt. Sushila Devi v. Ibrahim, : AIR1974MP181 , (3) Sabita Pati v. Rameshwar Singh [1973] ACJ 319 Automobiles Transport (Rajasthan) P. Ltd. v. Dewalal, . The Division Bench took the view that the receipt of insurance amounts amounted to a pecuniary advantage, but the genuine question was whether this could be said to be a pecuniary advantage that comes to the claimants by reason of the death of the deceased. Observing that a reading of the decided cases went to show how this very question can arise under a variety of circumstances giving rise to different considerations pregnant with equally different legal implications, and that it was by no means easy to lay down any inflexible rule as to which pecuniary benefit can be said to have been received 'by reason of the death', the Division Bench said at p. 243 of AIR 1978 (Bom.) :

'It is pertinent to note that in the absence of any provision to the contrary, such policy amounts form part of the estate of the deceased and come to his heirs or dependants by way of inheritance, unless it is sought to be disposed of by the deceased otherwise. Nominee mentioned therein is not necessarily the beneficiary but invariably happens to be merely an authorised collector thereof for the benefit of all heirs. We are unable to see any difference between this amount, and any other income yielding estate, that comes to the dependants either by way of inheritance or pursuant to any will or settlement. The causal connection between receipt of such amounts, and death, is too apparent and both really stand on the same footing legally.'

19. The Division Bench distinguished the nature of the payments received by way of donations by the charitable trusts or provisions for such dependants by some public-spirited institutions or gifts or contribution by relatives or sympathisers as they stood on different footing and could never be treated as advantages or benefits having been received by reason of the death of the bread-winner, though the death may furnish an occasion for such receipts. It was then observed as follows (at p. 243 of AIR 1978 Bom.) :

'We are ourselves unable to see how and why the policy amount or other amounts from income-yielding assets, such as bank balances, or interests thereon, or on fixed deposits, or dividends from shares and securities, left or settled by the decreased on the dependants, cannot be said to have come to the claimants by 'reason of the death' of the deceased and why it should not be balanced against the pecuniary losses caused by the death of the bread winner in terms of Gobald Motor's case : [1962]1SCR929 .'

20. The Division Bench thus took the view that insurance amounts received by the legal representatives of the deceased stand on the some footing as other estate left behind by the deceased and the justification for this view was found in the observations of the Supreme Court in Gobald Motor's case : [1962]1SCR929 , in which the Supreme Court had laid down that the source of the pecuniary advantage received by the legal representatives was irrelevant. The Division Bench disagreed with the view taken by the High Courts of Gujarat, Punjab and Haryana and Delhi which have treated receipt of insurance amounts as collateral benefit coming to the dependants not so much by reason of death of the deceased as by reason of the contract that the deceased had entered into with the life insurance company and, according to the Division Bench, this view was open to grave doubt. The Division Bench noticed the fact that this view was based on the decisions in Bradburn's case [1975] LR 10 Exch 1 and in the case of Parry v. Cleaver [1969] 1 All ER 555 , which were cases of compensation for personal injury. According to the Division Bench, insurance amount received from the insurance company in the case of personal injury stood on a different footing from the life policy amounts payable to the dependants of the insured on the death of the insured and principles governing awards of damages in these two events cannot be identical. The Division Bench then considered in para. 13 a decision of the Delhi High Court and the Orissa High Court where, according to the Division Bench, justification was found for deducting some portion of such policy amounts and the Division Bench found that the claimants could have the benefit of policy amounts even if the deceased had died otherwise than in the accident or would have shared the benefit thereof had the policy matured during his lifetime and death in fatal accidents only accelerates its receipt by the dependants, according to this view, and interest chargeable for the estimated accelerated years alone represents the deductible portion of such benefit. The Division Bench expressly referred to the decision of the Delhi High Court in Amarjit Kaur v. Vanguard Insurance Co. Ltd. [1969] ACJ 286, in which Deshpande J. of the Delhi High Court drew support for his view from the decision in Grand Trunk Railway Co. of Canada v. Jennings [1888] 13 AC 800. It is necessary to reproduce a little extensively the observations of the Division Bench in para, 14 which, it appears to us, indicate that the principle of acceleration seems to have been accepted by the Division Bench. In para. 14, the Division Bench observed as follows AIR 1978 Bom. 245 :

'It is true that liquid assets possessed and owned by the deceased in certain cases are open to the enjoyment of all such dependants during the lifetime of the deceased and they can claim certainty of inheriting or receiving it otherwise in the ordinary course. Accidental death in such cases can be said to have only accelerated the process of their ownership, pecuniary benefit to the dependants is bound to be far lesser than in cases where such certainty of enjoyment, actual receipt, in any manner whatsoever, is absent or slender. Cases of the former type are bound to be far and few. The amount of the life policy standing in the name of the deceased is exposed to more uncertainties in majority of the cases, there being no guarantee even of continuation thereof.'

21. The observations quoted above and those underlined by us would thus indicate that in the case of receipt of insurance amount, the Division Bench recognised the fact that the benefit received by the claimants on the death of the deceased was merely an acceleration and that in such cases, the pecuniary benefit was bound to be far less than in cases where there was no such expectation or certainty of enjoyment at all. In the same paragraph, the Division Bench referred to the decision of the Privy Council in Jennings' case [1888] 13 AC 800, in which the deceased had subscribed to the policy expressly for the benefit of the wife and the wife was bound to receive the benefits thereof irrespective of death of the husband and of the accident. But the Division Bench took the view that this could not be true of all policies which would indicate that at least in certain kinds of policies the Division Bench was inclined to take the view that when insurance amount is received on death, the only benefit arising as a result of death of the deceased was in the nature of an accelerated succession. Having thus dealt with the decisions which take the view that death merely accelerates the receipt of the insurance amount by the dependants, the Division Bench seems to have found that so far as the case before it was concerned, this was not material and, on the facts of that case, the entire policy amount would have to be deducted. This would be clear from para. 15 of the judgment which reads as follows (at p. 245 of AIR 1978 Bom.) :

'Had the deceased not met with accident, policy amount would have gone to the husband on maturity, and there was no guarantee that the amount would have been spent for the benefit of the dependants, along in this case. Deceased is not shown to have been possessed of other property. Instability and insecurity to which a driver's life is exposed, introduces high degree of uncertainty of the dependants having been ever benefited.'

22. The net result of the decision of the Division Bench was that the entire amount of insurance received by the widow of the deceased came to be deducted as a pecuniary benefit, arising from death, from the compensation to which the widow of the deceased was found to be entitled.

23. The decision in Jaikumar's case, : AIR1978Bom239 , cannot, however, be read as laying down the law that, in each case, the entire amount of insurance must be deducted as a matter of course because the Division Bench had clearly approved of the principle of acceleration in para. 14 of the judgment. Indeed the observations in para. 14 indicate to the contrary because the Division Bench having referred to the facts of the Privy Council decision in Jennings' case [1888] 13 AC 800, has clearly stated that the ratio of Jennings' case [1888] 13 AC 800, cannot be applicable to all the policies and 'no inflexible rule, therefore, can be laid down in this behalf as is suggested by the Delhi High Court'. It may be pointed out that in Amarjit Kaur's case [1969] ACJ 286, to which reference was made by the Division Bench in Jaikumar's case, : AIR1978Bom239 , in para. 14, the Delhi High Court in para. 15 [1969] ACJ 286, had taken the view that 'the best way to estimate the benefit of acceleration is to calculate the 'interest on the money during the period of acceleration' as observed by Lord Watson at page 805 of the Grand Trunk Rly. Co.'s case (Jennings' case) [1888] 13 AC 800'. With respect, therefore, it is necessary to point out that if the Division Bench, which made this reference, has understood the decision in Jaikumar's case, : AIR1978Bom239 , as laying down a principle that in all cases the insurance amount received by the claimants in respect of policies taken out by the deceased should be deducted from the compensation to which the claimants are found entitled, that would not be the correct reading of the decision in Jaikumar's case, : AIR1978Bom239 . As a matter of fact though the passage from 'The Quantum of Damages' by Kemp and Kemp dealing with acceleration has been quoted in the reference order, it appears that before the Division Bench, which made the reference, the argument that the value of the accelerated benefit alone should be deducted does not seem to have been advanced.

24. As a matter of fact if the reference would have been restricted merely to the question as to whether in a case where the claimants are in receipt of an amount of insurance in respect of the life policies taken out by the deceased, the entire amount was liable to be deducted or only the value of the acceleration of the benefit should be deducted, we would not have been required to deal with the matter further. However, the entire appeal has been referred to us and it, therefore, becomes necessary to deal with the contentions advanced both on behalf of the appellants and the respondents which have essentially turned again on the question, namely, whether any insurance amount received by plaintiff No. 1 was liable to be deducted.

25. Since the reference appeared to have been made at the instance of the claimants, the arguments were opened by Mr. Tijoriwala, appearing for them, and once again the same argument was advanced before us, as was advanced before the Division Bench in Jaikumar's case, : AIR1978Bom239 . Mr. Tijoriwala has argued that since the insurance amount has been received by plaintiff No. 1 because of a contract between the deceased and the insurance company, the payment cannot be said to arise out of the death of the deceased and, therefore, no amount was liable to be deducted from the amount of compensation and the further argument advanced is that permitting the insurance amount to be deducted out of the compensation amount would mean that the tortfeasor would get the benefit of the premium which is paid by the deceased. As a matter of fact, both the arguments are founded on the view which have been taken in the decisions relied upon on behalf of the claimants in Jaikumar's case, : AIR1978Bom239 .

26. According to Mr. Shah, appearing on behalf of the appellants, if the mode of determination of compensation is to make out a balance-sheet between the pecuniary loss and the pecuniary benefit, then the receipt of insurance amount is clearly a benefit and the entire amount of insurance was, therefore, liable to be deducted. The learned counsel contended that the view taken by the Division Bench in Jaikumar's case, : AIR1978Bom239 , is a view which is in accord with the decision in Gobald Motor's case : [1962]1SCR929 and, therefore, there was no need to reconsider that decision. This argument was obviously founded on the footing that Jaikumar's case, : AIR1978Bom239 , decides as a principle of law that in each case the value of the insurance amount was liable to be deducted from the amount of compensation to which the claimants are found entitled.

27. In the case before us, we are concerned only with the moneys received from insurance policies on the life of the deceased because the case has proceeded on that footing in view of the admission of plaintiff No. 3 that 'My father had taken several insurance policies on his life'. We shall later refer to the decisions on which reliance has been placed by Mr. Tijoriwala, but it does not require much argument to see that when it is contended that the insurance amount is received by the heirs of the deceased as a result of the contract with the insurance company, the argument is obviously based on certain decisions of courts in England where it has always been the common law that in the case of computation of damages for personal injury, the amount of insurance received by the injured person should not be deducted. It is that principle which is now sought to be extended even in the case where the damages are claimed not by the deceased himself but by the heirs of the deceased in exercise of a right which is newly conferred under the Fatal Accidents Act. In so far as the position in English law is concerned, till a statutory provision was made in 1908 for the first time, insurance moneys received by the claimants on policies taken out by the deceased were always deducted from the amount of compensation.

28. The basis of the proposition that in the case of personal injuries, moneys received on account of accident insurance should not be deducted from the amount of compensation claimed is the decision in Bradburn v. Great Western Railway Co. [1875] LR 10 Exch. 1, in which it was held that in an action for injuries caused by the defendant's negligence, a sum received by the plaintiff on an accidental insurance policy cannot be taken into account in deduction of damages. Two passages from the judgment in Bradburn's case [1875] LR 10 Exch. 1, contains the ratio of that case. In that case Bramwell B. said (at p. 2) :

'In Dalby v. India and London Life Assurance Co. [1854] 15 CB 365, it was decided that one who pays premiums for the purpose of insuring himself, pays on the footing that his right to be compensated when the event insured against happens is an equivalent for the premiums he has paid; it is a quid pro quo, larger if he gets it, on the chance that he will never get it at all. That decision is an authority bearing on the present case, for the principle laid down in it applies, and shows that the plaintiff is entitled to retain the benefit which he has paid for in addition to the damages which he recovers on account of the defendants' negligence'.

29. In the same case, Pigott B. said (at p. 3) :

'The plaintiff is entitled to recover the damages caused to him by the negligence of the defendants, and there is no reason or justice in setting off what the plaintiff has entitled himself to under a contract with third persons, by which he has bargained for the payment of a sum of money in the event of an accident happening to him. He does not receive that sum of money because of the accident, but because he has made a contract providing for the contingency; an accident must occur to entitle him to it, but it is not the accident, but his contract, which is the cause of his receiving it'.

30. It may be pointed out at this stage that a reading of some of the decisions of English Courts, which have been relied upon on behalf of the plaintiffs before us, shows that the English courts have laid down a principle that in the case of personal injury, the insurance amount is a quid pro quo for the premiums paid in the case of insurance for personal injury. It is on the basis of that principle that an argument has been advanced in India that in the case of a claim for compensation under the Fatal Accidents Act, the insurance amount should not be deducted from the amount of compensation.

31. The decision in Bradburn's case [1875] LR 10 Exch. 1, in so far as the non-deductibility of accident insurance from the damages claimed for personal injury is concerned, has stood in the field even now and has been expressly approved by the House of Lords in Parry v. Cleaver [1969] 1 All ER 555: [1969] ACJ 363. Pointing out the real reason as to why such amounts are excluded from deduction in the case of a personal injury, Lord Reid in para. 7 of the judgment observed as follows (at p. 558 of All ER) :

'As regards moneys coming to the plaintiff under a contract of insurance, I think that the real and substantial reason for disregarding them is that the plaintiff has bought them and that it would be unjust and unreasonable to hold that the money which he prudently spent on premiums and the benefit from it should ensure to the benefit of the tortfeasor. Here again I think that the explanation that this is too remote is artificial and unreal. Why should the plaintiff be left worse off than if he had never insured In that case he would have got the benefit of the premium money; if he had not spent it he would have had it in his possession at the time of the accident grossed up at compound interest. I need not quote from the well-known case of Bradburn v. Great Western Rly. Co. [1875] LR 10 Exch. 1 : [1874] All ER 195, but I may refer to an old Scottish Case, Forgie v. Henderson [1818] 1 Murr. 413, where the pursuer was assaulted by the defender. During part of his resulting illness he received an allowance from a friendly society, and Lord Chief Commissioner Adam said in charging the jury : 'I do not think you can deduct the allowance from the Society, as that is of the nature of an insurance, and is a return of money paid'.'

32. The question which, therefore, requires to be determined is whether a similar position must obtain in so far as claims by heirs of the deceased for compensation under the Fatal Accidents Act, 1855, is concerned.

33. The Fatal Accidents Act of 1855 is in substance a reproduction of the English Fatal Accidents Acts 9 and 10 Vict., Ch. 93, known as Lord Campbell's Acts and the scope of the provisions corresponding to s. 1A of the Fatal Accidents Act in the English Fatal Accidents Acts has been discussed by the House of Lords in Davies v. Powell Duffryn Associated Collieries Ltd. [1942] AC 601 ; [1942] 1 All ER 657, and by the Privy Council in the decision in Nance v. British Columbia Electric Railway Co. Ltd. [1951] AC 601 : [1951] 2 All ER 448, which has been accepted by the Supreme Court in Gobald Motor's case : [1962]1SCR929 , to be laying down the correct principle for determining the questions relating to the determination of compensation under the Fatal Accidents Act. As we have already pointed out, though an insurance amount received by the insured in pursuance of a contract of insurance for personal injury was not deducted while determining claims for compensation for personal injury, when a question as to the compensation payable in respect of a fatal accident for the death of the deceased victim of an accident arose, under the common law, insurance moneys received by the heirs were always deducted from the amount of compensation till a statutory provision to the contrary was made for the first time in 1908. The reason for this lies in the fact that the basis of the two claims, that is, claim for damages for personal injury and claim for compensation under the Fatal Accidents Act is wholly different. A claim for damages for personal injury is a claim for damages in tort under the common law. Under the common law there was no right in the heirs of the deceased victim of a fatal accident to claim any compensation till for the first time such right was created in them by the Fatal Accidents Act. The right of the heirs of the victim of a fatal accident to claim compensation is, therefore, a statutory right and the claim for such compensation has to be determined in accordance with the relevant statutory provisions. The relevant statutory provision dealing with the power of the court to give damages is contained in the third part of s. 1A of the Fatal Accidents Act, 1855, which reads as follows :

'... and in every such action, the court may give such damages as it may think proportioned to the loss resulting from such death to the parties respectively, for whom and for whose benefit such action shall be brought; and the amount so recovered, after deducting all costs and expenses, including the costs not recovered from the defendant, shall be divided amongst the before-mentioned parties, or any of them, in such shares as the court by its judgment or decree shall direct.'

34. It will suffice for the present to state that the measure of damage is the loss resulting from the death of the deceased and certain principles have now been evolved and well established as to how the loss resulting from the death of the deceased has to be estimated.

35. The difference in the nature of the two claims, that is, damages for personal injury and compensation under the Fatal Accidents Act is highlighted in the following observations of Singleton L.J., from the judgment of the Court of Appeal in Payne v. Railway Executive [1951] 2 All ER 910, where, after reproducing the classic observations of Bramwell B. and Pigott B., in Bradburn's case [1875] LR 10 Exch. 1, it was observed as follows [1951] 2 All ER 914 :

'Under the Fatal Accidents Act, 1846, the damages awarded represent the pecuniary loss to the widow or dependants arising from the death of the deceased. In an action for damages for personal injuries different considerations arise, as Bramwell, B. pointed out. In such a case the damages assessed cover pain and suffering, loss of amenities of life, and loss of earnings, past and prospective.'

36. We may refer to the decision of the Court of Appeal in Baker v. Dalgieish Steam Shipping Co. [1922] 1 KB 361, in which dealing with the nature of the right created under the Fatal Accidents Act known as Lord Campbell's Act, the learned judge observed as follows at page 371 :

'The claim is a new right given by Lord Campbell's Act on new principles, not the transfer of any existing right of dead man. The claimant is entitled to damages proportioned to the injury resulting to her from the death, and that injury must be pecuniary injury. She is not entitled to money compensation for mental suffering resulting from the death or for loss of the deceased's society. She is entitled to claim on the one hand any pecuniary benefit which it is reasonably probable she would have received if the deceased has remained alive; per Erle C.J. in Pym v. Great Northern Ry. Co. (4B & S. 396).'

37. In the same case, Younger L.J., dealing with the nature of the loss for which the compensation is to be computed, pointed out that the right to recover damages is restricted to the actual pecuniary loss sustained by each individual and said at page 381 :

'If that same accident and death has produced from some other quarter a sum which would not otherwise have been received, the recoverable pecuniary loss is pro tanto reduced, and with it the wrongdoer's liability to that extent.'

38. The legal position with regard to deduction of collateral benefits such as amounts paid in pursuance of a policy of insurance while determining compensation has been succinctly stated in McGregor on Damages, 13th edition, para. 1237, where the learned author observes as follows :

'The path taken by the collateral benefits issue in fatal accident claims has been curiously different from the path it has followed in the field of personal injury. Whereas there was for long general acceptance of the rule that the damages in a personal injury claim were not to be reduced because benefits had been conferred upon the plaintiff by third parties which mitigated his loss, the general rule was the exact opposite where the claim was in respect of a fatal injury, and it became accepted, without any real dispute, that only the net pecuniary benefit accruing to the dependants is recoverable as damages. This undoubted general rule finds its clearest and most authoritative expression in the speeches of their Lord-ships in Davies v. Powell Duffryn Associated Collieries Ltd. [1942] AC 601 : [1942] 1 All ER 657 , Lord Macmillan put it thus : 'Except where there is express statutory direction to the contrary, the damages to be awarded to a dependant of a deceased person under the Fatal Accidents Acts must take into account any pecuniary benefit accruing to that dependant in consequence of the death of the deceased. It is the net loss on balance which constitutes the measure of damages.''

39. The learned author points out that serious inroads were made by statute upon this rule of deduction of collateral benefits and referring to these inroads he observes :

'The first statutory inroad came with the Fatal Accidents (Damages) Act, 1908, which provided by section 1 that, in assessing the damages, insurance moneys should no longer be taken into account. Next followed, by section 22 of the Widow's, Orphans' and Old Age Contributory Pensions Act, 1929, a provision that such pensions were not to be taken into account, and this was later replaced by the larger provisions of the Law Reform (Personal Injuries) Act, 1948, which added to the items not to be taken into account any right to benefit under the National Insurance Acts, 1946.'

40. After the enactment of the Fatal Accidents Act, 1959, the net result was that in England, in view of the provisions of s. 2 of the 1959 Act, in assessing the damages, any insurance moneys, benefits under the National Insurance Acts, pension or gratuity paid or to be paid as a result of the death were not to be taken into account.

41. Thus, having regard to the basic difference in the nature of claim for damages in the case of personal injury and claim for compensation in the case of a fatal accident made under the statute, namely, the Fatal Accidents Act, it would be difficult to accept the argument that because in cases of damages for personal injury, the accident insurance is treated as quid pro quo, and, therefore, was not deducted from the compensation for personal injury, the entire amount of life insurance must also be excluded from computation of the compensation claimed under the Fatal Accidents Act.

42. Here we must refer to the well established principles on which compensation in such cases is to be determined. It is not necessary to go back to the English decisions, namely, the decision of the House of Lords in Davies v. Powell Duffryn Associated Collieries Ltd. [1942] AC 601 : [1942] 1 All ER 657, and to the decision of Judicial Committee in Nance v. British Columbia Electric Rly. Co. Ltd. [1951] AC 601 : [1951] 2 All ER 448, in detail because the Supreme Court in Gobald Motor's case : [1962]1SCR929 , has adopted these principles laid down in those decisions. The principle is that in calculating the pecuniary loss to the dependants has to be determined and this can be ascertained only by balancing on the one hand the loss to the claimants of the future pecuniary benefit and on the other any pecuniary advantage which, from whatever source, comes to them by reason of the death, that is, the balance of the loss and gain to a dependant by the death, must be ascertained. The Supreme Court reproduced the following passage from the decision of Viscount Simon in Nance v. British Columbia Electric Rly. Co. Ltd. [1951] AC 601 : [1951] 2 All ER 448 , which referred to the two heads of damages. The passage reads as follows AIR 1962 SC 5 :

'The claim for damages in the present case falls under two separate heads. First, if the deceased had not been killed, but had eked out the full span of life to which in the absence of the accident he could reasonably have looked forward, what sums during that period would be probably have applied out of his income to the maintenance of his wife and family.'

43. Then summarising the decision of Viscount Simon as to the mode of estimating the damages under the first head, the Supreme Court observed as follows (at p. 5) :

'Viscount Simon then proceeded to lay down the mode of estimating the damages under the first head. According to him, at first the deceased man's expectation of life has to be estimated having regard to his age, bodily health and the possibility of premature determination of his life by later accidents; secondly, the amount required for the future provision of his wife shall be estimated having regard to the amounts he used to spend on her during his lifetime, and other circumstances; thirdly, the estimated annual sum is multiplied by the number of years of the man's estimated span of life, and the said amount must be discounted so as to arrive at the equivalent in the form of a lamp sum payable on his death; fourthly, further deductions must be made for the benefit accruing to the widow from the acceleration of her interest in his estate; and, fifthly, further amounts have to be deducted for the possibility of the wife dying earlier if the husband had lived the full span of life; and it should also be taken into account that there is the possibility of the widow remarrying much to the improvement of her financial position. It would be seen from the said mode of estimation that many imponderables enter into the calculation. Therefore, the actual extent of the pecuniary loss to the respondents may depend upon data which cannot be ascertained accurately, but must necessarily be an estimate, or even partly a conjecture. Shortly stated, the general principle is that the pecuniary loss can be ascertained only by balancing on the one hand the loss to the claimants of the future pecuniary benefit and on the other any pecuniary advantage which from whatever source comes to them by reason of the death, that is, the balance of loss and gain to a dependant by the death must be ascertained.'

44. These are then the principles, and, in effect, a computation, according to these principles, must bring into being what in substance is, as Windeyer J. of the High Court of Australia in National Insurance Company of New Zealand Ltd. v. Espagne 105 CLR 569 calls, a balance-sheet. We are in the present case concerned with the deduction under category 'fourthly' in the above quoted principles laid down by the Supreme Court, as we shall presently point out.

45. Now, if the true requirement of the mode of estimating damages is to find out the pecuniary advantage from whatever source it comes to the heirs by reason of the death, the question is, can the life insurance amount be said to be such a pecuniary advantage that the whole of it must be deducted from the amount of compensation or does the pecuniary benefit lie merely in the fact that there is an acceleration in getting the benefit of the amount of insurance which on the death of the deceased becomes a part of the estate of the deceased ?. Now, if the deceased had lived his full length of life, the policies would have matured, they would have become a part of his estate and, as it appears from the facts of the present case, the deceased was a well to do man having a large amount of insurance, a large business and property, the possibility of the insurance amount being frittered away or spent away for maintenance would almost be negligible. It would, therefore, be reasonable to assume that if the deceased had lived a full span of life, the insurance amount would have become a part of his estate to which in normal course the present plaintiffs would have succeeded as heirs of the deceased after his natural death. The insurance amount as a part of his estate would have sooner or later come to them by inheritance. All that happens on the unnatural or accidental death of the deceased is that the pecuniary benefit in the form of insurance amount which would have come to the heirs by inheritance as a part of the estate of the deceased after the natural death of the deceased now comes to them much earlier in point of time, though as a result of the unfortunate circumstances of the death of the deceased. Properly looked at, therefore, the benefit to the claimants truly lies only in the fact of acceleration in the succession to the estate of the deceased including the insurance amount and not in the fact that the entire estate has come to them, which in any case would have come by way of inheritance.

46. The manner in which life insurance amount should be taken into account in cases where the heirs of the deceased have received the insurance amount in respect of a policy of life insurance taken out by the deceased has been the subject of decisions by courts and it now seems to have been well established at least for over a century that in the case of life insurance amount the benefit to the heirs lies only in the acceleration of insurance moneys and only the value of such acceleration has to be taken into account. The value of such benefit cannot be the entire amount of insurance received by the heirs. We may once again refer to McGregor on Damages, 13th edition, where the law has been summarised in paragraph 1248. Referring to the law in England prior to the intervention of the statute which made insurance moneys wholly excludible from deduction, the learned author has observed as follows :

'However, the earlier law assists the conclusion that no account should be taken of the cesser of premium in assessing the damages. In Hicks v. Newport, Abergavenny and Hereford Ry. [1857] 4 B & S 403, and Grand Trunk Ry. of Canada v. Jennings [1888] 13 AC 800 , the nineteenth century decisions which established that a common law the acceleration of the insurance moneys must be taken into account in assessing the damages, it was suggested that the benefit of the acceleration of the insurance moneys might be arrived at by deducting future premiums. The future premiums were, however, not to be deducted qua premiums; they merely provided one method of calculating the benefit of the acceleration, and statute now requires that this benefit is not to be taken into account. Further, the saving of the future premiums is not a saving which necessarily follows from the death, since the deceased might not have continued to maintain the insurance policy.'

47. On the basis of the Hicks' case [1857] 4 B &S; 403 and the Jennings' case [1888] 13 AC 800 (PC), Munkman in his Treatise on Damages for Personal Injuries and Death, sixth edition, at page 130, has observed as follows :

'A deduction must certainly be made for benefits which would not have arisen at all but for the death, such as accident policies (until the law was amended to prohibit a deduction) : Hicks v. Newport, Abergavenny and Hereford Rly. Co. [1857] 4 B & S 403. But even in the case of an insurance policy, there was no obligation to deduct the exact sum, pound for pound : if it was a life policy, as distinct from an accident policy, the benefit to be taken into account was the acceleration of the payment of the policy, rather that its full value : Grand Trunk Rly. Co. of Canada v. Jennings [1888] 13 App Cas 800. After 1908, deductions for insurance were forbidden by statute.'

48. We may at this stage point out that the passage in Munkman's Treatise, which is quoted by the Division Bench which made the reference, was under the heading 'Accident insurance' and dealt with damages for personal injuries and was not, therefore, very relevant in so far as cases under the Fatal Accidents Act are concerned.

49. The same position is reiterated by Kemp and Kemp in 'The Quantum of Damages' in the paragraph which we have reproduced earlier.

50. Jennings' case [1888] 13 AC 800 is, in our view, clearly an authority for the proposition that in the case of receipt of insurance amount by the heirs of the deceased after the death of the deceased, the benefit to be taken into account is merely the benefit of acceleration. In Jennings' case [1888] 13 AC 800 , the decision in Hicks' case [1875] 4 B &S; 403 was approved and Lord Watson observed as follows at page 804 (of [1888] AC) :

'The pecuniary benefit which accrued to the respondent from his premature death, consisted in the accelerated receipt of a sum of money, the consideration for which had already been paid by him, out of his earnings. In such a case, the extent of the benefit may fairly be taken to be represented by the use or interest of the money during the period of acceleration; and it was upon that footing that Lord Campbell in Hicks v. Newport A. & H. Railway Co. (4 B & S 403n.) suggested to the jury that, in estimating the widow's loss, the benefit which she derived from acceleration might be compensated by deducting from their estimate of the future earnings of the deceased the amount of the premiums which, if he had lived, he would have had to pay out of his earnings for the maintenance of the policy.'

51. The following observations of Lord Porter in Davies' case [1942] AC 601; [1942] 1 All ER 657 , are instructive : [1942] AC 618 :

'Under Lord Campbell's Act the question for decision is what damage is proportioned to the injury resulting from the death to the parties respectively for whom and for whose benefit the action is brought. The wording itself is sufficient to show that each individual must be considered separately, and Pym v. Great Northern Railway Co. (4 B & S 396), so decides. In calculating the damage proportioned to the injury it is an accepted view that all factors, benefits as well as injuries, must be taken into account so as to ascertain on a balance of losses and gains what (if any) compensation is to be awarded. Pym's case (4 B & S 396) illustrates this proposition. Accordingly, up till 1908, it was necessary to have regard to any insurance effected by the deceased on his life. If the subject-matter of that insurance was accidental death and the insured man was accidentally killed, the full sum recoverable, being a gain resulting wholly from the death, was generally regarded as a gain which, to the extent to which any dependant benefited from it, would diminish the sum to be awarded to that dependant. But not every sum paid under an insurance policy was so regarded. Life insurance, inasmuch as its receipt was not solely brought about by the death but was merely accelerated by it, was, it is true, to be taken into account, but only to the extent of the benefit arising from its acceleration.'

52. The Judicial Committee in Nance's case [1951] AC 601 : [1951] 2 All ER 448 (PC), has also taken a similar view. That was a case in which the widow of the deceased had come into possession of one-third of the estate and the deceased had a policy of dollars 1,000 on his life. Referring to the nature of deduction, Viscount Simon observed as follows :

'Then a deduction must further be made for the benefit accruing to the widow from the acceleration of her interest in his estate on his death intestate in 1949 (she came into Dollars 6,500, one-third of his estate, years sooner than she would otherwise have done) and of her interest in sums payable on a policy of Dollars 1,000 on his life.'

53. Though it is contended on behalf of the appellants that the entire amount of life insurance was liable to be deducted, it is difficult to accept that contention because the position is well established that the only benefit which has to be valued in terms of money, which accrues to the heirs in the case of a policy of insurance on the life of the decease is the benefit of acceleration. Such benefit may fairly be taken to be represented by the interest on the life insurance moneys received for the period of acceleration which would be the difference between the age up to which the deceased would normally be expected to have lived and the age at which he died as a result of the fatal accident. The rate of interest will, of course, depend on the relevant facts in each case.

54. We are, therefore, of the view that in the instant case, what was liable to be deducted from the amount of compensation determined by the trial court at Rs. 1,90,000 was only the value of acceleration in respect of the total insurance amount of Rs. 1,49,400. In view of the settled position of law, it would, in our view, be a futile exercise to deal with the several cases which are cited before us on behalf of the respondents in support of the proposition that the whole of the amount of insurance is liable to be excluded. As we have already pointed out earlier, those cases are mainly based on the analogy of non-deductibility of insurance amount in the case of personal injuries on the ground that in the case of accident insurance amount, the receipt is in the nature of a quid pro quo. The decision in Life Insurance Corporation v. Smt. Kasturben Naranbhai Vadhia, : AIR1973Guj216 , is expressly based on the ratio of the decision in Parry v. Cleaver [1969] 1 All ER 555 , which was a case dealing with personal injury. Damayanti Devi v. Sita Devi [1972] ACJ 334, which is a decision of the Punjab and Haryana High Court, follows the decision in Bradburn's case [1875] LR 10 Exch. 1, which again was a case of personal injury. With reference to this decision, however, we may like to point out that the Punjab and Haryana High Court has gone to the extent of holding that the accelerated succession to the assets does not bring an additional benefit to the heirs which may be liable to be set off against the loss occasioned by the death. With respect, it is not possible for us to agree with this view because on the very fact that in the case of a death by a fatal accident, the heirs succeed to the estate much earlier than when they would have otherwise succeeded, the benefit is implicit and it is this benefit of accelerated succession which, authorities have decided, must be taken into account while making a balance-sheet of the pecuniary loss and the pecuniary gain. In Bhagwanti Devi v. Ish Kamar [1975] ACJ 56, again, the Delhi High Court has applied the ratio of cases dealing with personal injury because in para. 44 it has expressly been held that insurance benefits are in the nature of quid pro quo and have relation to the savings effected by the deceased, a line of reasoning from which we respectfully dissent. The Himachal Pradesh High Court in H. P. Road Transport Corporation v. Pandit Jai Ram , has again treated the insurance amount as an advantage not as a result of death but as a result of contract. In Smt. Amarjit Kaur v. Vanguard Insurance Co., , again, the insurance amount is held not to be deductible on the ground that it is a quid pro quo.

55. We may in passing, however, point out that the principle that the benefit of acceleration must be taken into account has been accepted by the Delhi and Karnataka High Courts. A learned single judge of the Delhi High Court in Pushpa Rani Chopra v. Anokha Singh [1975] ACJ 396, has taken the view that what has to be deducted on account of insurance is the acceleration of the payment of the claim and not the whole claim and, on the facts of that case, this deduction was worked out at Rs. 250 while the entire amount of insurance of Rs. 2,500 received on a life insurance policy of the deceased was deducted by the trial court. In Parvatamma v. Syed Ahmed [1977] ACJ 72, a Division Bench of the Karnataka High Court has accepted the principle of acceleration following the decision in Jennings' case [1888] 13 AC 800 and one-third of the life insurance amount was allowed to be deducted.

56. Mr. Tijoriwala, appearing on behalf of the respondents, at one stage wanted to contend, firstly, that the amount of Rs. 24,000, which has been deducted by the trial court and which was really in the nature of an ex gratia amount paid by the company, should not have been deducted and that in the appeal filed by defendant No. 1, that part of the decision should be set aside. We are unable to entertain this contention. The effect of deleting the deduction of Rs. 24,000 would be to enhance the amount of compensation decreed which would be wholly impermissible in the appeal filed by defendant No. 1.

57. It is necessary to make a mention in passing about the two reasons which are given by the Division Bench while making the reference in support of their view that the insurance amount should not be excluded from the amount of compensation. The Division Bench seems to have felt that if this was the correct view, there would no occasion for any liability to be enforced against the insurance company under s. 95 of the M.V. Act. It does not appear from the reference order that the provisions of the M.V. Act were dealt with in any detail by the Division Bench, but we merely wish to point out that the liability of the insurer under s. 96 of the M.V. Act is merely to satisfy the judgment against a person insured in respect of third party risk and if the liability is to satisfy the judgment in respect of any liability which is determined, then the occasion to enforce the liability against the insurance company will arise only after the amount of compensation is correctly determined according to law. The insurance company will thus come into picture only at the stage subsequent to the determination of the liability. If the liability has to be determined by striking a balance between the pecuniary loss and the pecuniary benefit, then the mere fact that in a given case at the foot of such a balance-sheet the amount is zero or less than the insured amount, will not in any way affect the merits of the question as to whether the insurance amount, in law, is liable to be deducted in whole or in part at all.

58. Similarly, the second ground which seems to have weighed with the Division Bench is that the benefit of the insurance must not go to a wrongdoer. Now, the nature of compensation which is made payable under the Fatal Accidents Act is not punitive. The damages are really of a compensatory nature and if in arriving at such compensation the necessary factors which have now been crystallised by the decisions have to be taken into account, then the mere fact that, in a given case, the liability of the wrongdoer is reduced, will not be very relevant.

59. We have made these observations since the referring order has given these two reasons as indicative of the mind of the Division Bench when it found that the decision in Jaikumar's case, : AIR1978Bom239 , required reconsideration.

60. In support of the application under O. 41, r. 27 of the CPC, which has been filed before the Division Bench, the learned counsel appearing on behalf of the respondents-plaintiffs has contended that even though the benefit of acceleration should be evaluated in terms of money, the policies, the details of which were given in the application, were such that payment in respect of a large number of those policies could be taken into account at all for the purpose of deduction on the principle of acceleration. The main argument was in respect of a policy for a lakh of rupees, which was under the Married Women's Property Act, and it was sought to be contended that the benefit of this policy would not have gone to the estate of the deceased and that plaintiff No. 1 was along entitled to the insurance amount on maturity. There was one policy which was taken out for marriage expenses of the minor and there was another policy which was taken out for the education of one of the children. Thus, according to the learned counsel, at the most, only those polices which are endowment policies should be taken into account. It is not necessary for us to consider these arguments, firstly because the details of these policies are not available or record and the defendants have relied on an admission made by plaintiff No. 1 that an amount of Rs. 1,50,000 has been received as insurance amount in respect of life insurance policies of the deceased, and secondly, because the parties have now arrived at a settlement as to the amount of compensation which the plaintiffs will be entitled to receive and defendant No. 1 will be liable to pay, thus again relieving us of the task of computing the value of the benefit of acceleration. The amount now agreed to be paid by defendant No. 1 is a sum of Rs. 1,00,000 (Rupees one lakh only) in accordance with the consent terms signed by the counsel for the parties and handed over to us.

61. The result, therefore, is that the decree of the trial court will stand modified as per consent terms. The decree of the trial court will now be substituted by a decree in terms of the consent terms. We have been informed that the assets of the appellant-company are in the hands of a receiver appointed in two suits for dissolution of partnership between the same parties. Since Rs. 40,000 have already been deposited in the trial court, the balance of the decretal amount will now be payable by the receiver in accordance with the consent terms arrived at and filed in the court between the parties. Since the consent terms have been filed and the decree of the trial court is now substituted, it will be open to the trial court to pay the moneys which are lying in deposit with it on production of a certified copy of the consent terms. The receiver also is to pay the amount as per the consent terms on production of the certified copy of the consent terms.

62. Before parting with this case, we would like to highlight the hardship that may be caused to the heirs of a victim of a fatal accident if the benefit in the form of insurance moneys is reduced by making a deduction by way of accelerated succession. It is, therefore, worthwhile considering whether insurance moneys should be wholly excluded from the compensation determined as payable to the heirs of the deceased as has been done in England in the new enactment of 1959. Section 2 of the English Act of 1959 provides that in assessing damages, any insurance moneys, benefits under the National Insurance Act or pensions and gratuities to be paid as a result of death are not to be taken into account. Section 2 of the said Act of 1959 reads as follows :

'2. Exclusion of certain benefits in assessment of damages.

(1) In assessing damages in respect of a person's death in any action under the Fatal Accidents Act, 1846 ..... there shall not be taken into account any insurance money, benefit, pension or gratuity which has been or will or may be paid as a result of the death.

(2) In this section -

'benefit' means benefit under the National Insurance Acts, 1946 (as amended by any subsequent enactment, whether passed before or after the commencement of this Act), or any corresponding enactment of the Parliament of Northern Ireland and any payment by a friendly society or trade union for the relief or maintenance of a member's dependants : 'insurance money' includes a return of premiums; and 'pension' includes a return of contributions and any payment of a lump sum in respect of a person's employment.'

63. We are of the opinion that it would be in the fitness of things if the question as to whether the Fatal Accidents Act of 1855 deserves to be amended on similar lines, is gone into. With a view to facilitate such a consideration a copy of the judgment should be sent to the Law Department of the Government of India.


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