Overloading is no escape for the insurer: Himachal High Court decides 110 appeals from one bus disaster
Justice Virender Singh disposes of 110 appeals arising from the 2012 Chamba bus accident in a 505-page judgment, holding that carrying 93 passengers did not void the policy.
On the morning of 11 August 2012, a passenger bus licensed to carry forty-four people, including its driver and conductor, went off the road at Magazine Mor in Chamba district with ninety-three on board, fell into a gorge 250 to 300 feet deep and broke into pieces, killing people inside it and on the road outside. Fifty-three died. Fourteen years later, the Himachal Pradesh High Court has disposed of every appeal arising from that accident in one judgment running to 505 pages and 1,216 paragraphs. Justice Virender Singh held that carrying more passengers than the permitted capacity is not a fundamental breach of the insurance policy, enhanced compensation across the board, and directed the insurer to pay in every case with liberty to recover from the owner beyond the forty-two highest awards.
Ninety-three on a forty-four-seat bus
The appeals were segregated into three categories: 79 preferred by the Oriental Insurance Company Limited against awards of the Motor Accidents Claims Tribunal (II), Chamba, which had fastened liability on it; 30 preferred by the owner against the awards insofar as they fastened liability on him; and one filed by a claimant for enhancement. The Court took one insurer's appeal as the lead case.
In that case the Tribunal had allowed a claim petition and awarded Rs 11,02,600 with interest at 7.5 per cent per annum from the date of the petition. The issues framed on 24 August 2013 covered whether the deceased died in an accident caused by the rash or negligent driving of a driver who himself perished, whether the vehicle was being plied according to the terms of the policy and permit, whether it had a valid registration certificate, route permit and fitness certificate, and whether it was overloaded against a permissible limit of 44 including the driver and conductor. An application by the insurer under Section 170 of the Motor Vehicles Act had been allowed on 24 May 2013.
That permission under Section 170 matters to how the appeals were fought. The provision allows a Tribunal, where it is satisfied of collusion between claimant and owner or that the owner is not contesting, to implead the insurer and permit it to contest the claim on all the grounds available to the person against whom the claim is made — which is why the insurer here was able to litigate negligence and quantum, and not merely the limited statutory defences, through 79 appeals.
The evidence established that the vehicle was authorised to carry 42 passengers plus two, and that it held a valid route permit issued for that capacity, effective from 2 July 2009 and valid until 29 March 2014. It also established that far more than forty-four people were aboard. The inquiry report relied upon by the insurer itself recorded that 53 persons had died, 21 were seriously injured and 19 sustained minor injuries, and gave the cause of the accident as overloading of passengers. The Sub-Divisional Magistrate who conducted the inquiry deposed to that conclusion. An eyewitness examined by the owner described reaching the Magazine curve to find people walking towards Chamba, having come from the Minjar fair, when the bus went over the edge and broke apart, so that men, women and children on the road were struck by the vehicle and by its fragments.
The insurer's defence, and why it failed
Senior counsel for the insurance company argued that the company should be exonerated altogether, because the owner had permitted the vehicle to be plied in violation of the terms and conditions of the policy by allowing it to be overloaded, and that the compensation should in any event be reduced. Senior counsel for the owner argued that there was no violation on his part and that he should be exonerated. Counsel for the claimants supported the award but asked for enhancement, on the ground that the Tribunal had given no addition for the deceased's future prospects.
The Court rejected the insurer's case on the authority of Lakhmi Chand v. Reliance General Insurance Company Limited, in which the Supreme Court held that the mere fact of carrying more passengers than the permitted seating capacity does not amount to a fundamental breach of the terms and conditions of the policy. That decision had faulted the forum below for overlooking B.V. Nagaraju v. Oriental Insurance Co. Ltd., where the same plea was rejected in these terms: if the workmen the policy did permit are assumed not to have increased the insurer's risk, it is hard to see how the added persons contributed to causing the accident; and taking on a person or two more, without the owner's knowledge, is an irregular use of the vehicle but not a breach so fundamental as to end the contract, unless the added factors themselves contributed to causing the accident.
On that reasoning the Tribunal had rightly fastened liability on the insurance company. The practical consequence appears in the Court's final directions: the insurer must deposit the compensation in all the cases, with liberty to recover from the owner in those that fall beyond the forty-two highest awards — so the claimants are paid first and the apportionment between insurer and owner is worked out afterwards.
How the compensation was recalculated
Having settled liability, the Court went through the awards individually, and a consistent set of corrections emerges from the exercise.
The first was future prospects. Applying the Constitution Bench decision in National Insurance Co. Ltd. v. Pranay Sethi, the Court added 40 per cent to the assessed income of deceased persons where the Tribunal had given nothing under that head. The second was the multiplier, which the Court checked against the age of each deceased, applying 13, 15, 16 or 17 as the case required and correcting the Tribunal where it had chosen wrongly.
The third was consortium. Relying on Magma General Insurance Company Limited v. Nanu Ram, the Court recorded that each claimant is separately entitled to compensation under that head, which in legal parlance covers spousal, parental and filial consortium — the company, care, help, comfort, guidance, solace and affection of the deceased. Spousal consortium compensates a surviving spouse for the loss of the company, society, cooperation, affection and aid of the other in every conjugal relation. Parental consortium is granted to a child on the premature death of a parent, for the loss of parental aid, protection, affection, society, discipline, guidance and training. Filial consortium is the parents' right where a child dies, and the authority the Court applied recognises that the greatest agony for a parent is to lose a child in their own lifetime, that children are valued for their love, affection and companionship and their place in the family unit, and that the value of a child's consortium far exceeds the economic value of what is usually awarded. Funeral expenses were allowed at Rs 15,000.
The fourth, and the most consequential for the families of women who died, was the valuation of unpaid household work. The Court applied the Supreme Court's recent direction creating a distinct head of “loss of domestic care”, under which a composite sum of Rs 30,000 is to be added where three elements are made out — the homemaker's contribution to the running of the household, the loss of maternal support for children, and the loss of spousal support or of the care of an adult child for the parents of the deceased — with that figure to be revised by 10 per cent cumulatively every three years. The Supreme Court had reasoned that notional income for homemakers has usually been fixed conservatively, on guesswork, so that the true worth of the homemaker is missed, and that the role is neither entirely economic nor entirely non-economic but blends economic with emotional and managerial contributions, which loss of consortium does not capture.
The Court carried that reasoning into its own figures. Where the Tribunal had taken the income of a man who died in the same accident at Rs 5,400 a month on the basis of wages paid to workers under the rural employment guarantee scheme, the Court held that the contribution of a woman who died in it should be taken at Rs 10,000 a month — the male figure plus an addition for the multifarious activities a woman performs in the household round the clock for her family — reasoning that her contribution cannot be treated as less than a man's.
On interest, the Court upheld the Tribunal's rate of 7.5 per cent per annum in the lead case as consistent with the rates then being paid by nationalised banks on fixed deposits. Where a Tribunal had allowed 9 per cent, the Court applied the same measure in the opposite direction and brought the rate down to 7.5 per cent, treating the bank fixed-deposit rate of the time as the benchmark either way.
The effect on individual awards was substantial and ran almost entirely in the claimants' favour. In one appeal the compensation went from Rs 8,33,461 to Rs 13,14,413, and the insurer's appeal was dismissed with the award modified upwards. In another the figure rose from Rs 7,33,200 to Rs 10,06,480, the appeal being partly allowed only because the interest rate was reduced to 7.5 per cent. The injury cases moved on the same pattern from much smaller bases — one award of Rs 38,854 became Rs 1,05,800, and several awards of Rs 14,500 to Rs 22,000 for minor injuries were enhanced. In each instance the Tribunal's award was modified rather than set aside, so that the appeals brought by the insurer largely produced increases in the sums it must pay.
Two safeguards, and an instruction to the Registry
The Court added a direction to prevent double recovery. Any amount already received by the claimants from the Government in any of the cases is to be deducted from the total compensation awarded, failing which the result would be double enrichment, which it held impermissible in law.
It also made provision for the sheer bulk of what it had written. Keeping in view the voluminous nature of the judgment, the Registry was directed to place paragraphs 1 to 40 — the common portion dealing with the accident, the liability of the insurer and the principles of assessment — in each file, and thereafter to extract and place on each connected file only the excerpts pertaining to that particular appeal.
Order
All the appeals arising out of the accident of 11 August 2012 were disposed of by the common judgment. The insurance company's appeals in the first category were decided on the finding that overloading was no fundamental breach, with awards enhanced where future prospects, multipliers, consortium or domestic care had been wrongly assessed. The appeals in the second category, filed by the owner, were disposed of in the same terms, with no order as to costs. The single appeal in the third category, filed for enhancement, was allowed in terms of the findings recorded in the connected insurer's appeal in which the compensation had been enhanced.
The insurance company was directed to deposit the amount of compensation in all the cases, with liberty to recover it from the owner in those beyond the forty-two highest awards. Amounts already received from the Government are to be deducted. Parties were left to bear their own costs, a memo of costs was directed to be prepared, and the records were ordered to be sent back.