Posted on 20 November 2012 by Apurba Ghosh

Court

Supreme Court of India

Brief

These appeals have raised the question about the procedure that is being followed by Calcutta High Court in consideration of the applications under Section 11 of the Arbitration and Conciliation Act, 1996 (for short, '1996 Act'). When the special leave petition filed by M/s. Choudhury Construction came up for consideration before the Bench, the learned counsel for the petitioner submitted that the procedure adopted by the Designate Judge while hearing petition under Section 11 of 1996 Act was unknown in law and not sanctioned by Section 11 inasmuch as although the Designate Judge has held that there are live disputes between the parties which have to be resolved through arbitration, yet the matter has been ordered to be placed before the Chief Justice for appointment of the arbitrator. In light of the submission made by the learned counsel, Registrar General, Calcutta High Court was ordered to be impleaded as party respondent.

Citation

Hindustan Copper Ltd. …… Appellant Vs.Monarch Gold Mining Co. Ltd. …… Respondent

Judgement

REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO . 7449 OF 2012

(Arising out of SLP(C) No. 28213 of 2011)

Hindustan Copper Ltd. …… Appellant

Vs.

Monarch Gold Mining Co. Ltd. …… Respondent

WITH

CIVIL APPEAL NO . 7450 OF 2012

(Arising out of SLP(C) No. 32255 of 2011)

JUDGMENT

R.M . LODHA , J.

Leave granted in both matters.

2. These appeals have raised the question about the procedure that is being followed by Calcutta High Court in consideration of the applications under Section 11 of the Arbitration and Conciliation Act, 1996 (for short, '1996 Act').

3. When the special leave petition filed by M/s. Choudhury Construction came up for consideration before the Bench, the learned counsel for the petitioner submitted that the procedure adopted by the Designate Judge while hearing petition under Section 11 of 1996 Act was unknown in law and not sanctioned by Section 11 inasmuch as although the Designate Judge has held that there are live disputes between the parties which have to be resolved through arbitration, yet the matter has been ordered to be placed before the Chief Justice for appointment of the arbitrator. In light of the submission made by the learned counsel, Registrar General, Calcutta High Court was ordered to be impleaded as party respondent.

4. In the matter of Hindustan Copper Limited, by an order dated 18.7.2012 this Court felt that the views of the Registrar General, Calcutta High Court were necessary as the issue involved was whether an application under Section 11(6) of the 1996 Act for appointment of an arbitrator could be considered in piecemeal by two Designate Judges.

5. In the matter of Hindustan Copper Limited, one Designate Judge first passed the order on 9.6.2011 holding that the request for appointment of the arbitrator was proper and then ordered that the application should be referred to Hon'ble Delegate of the Chief Justice for appointment of an arbitrator. The relevant part of the order dated 9.6.2011 reads as under :

"Therefore, the request for appointment of arbitrator was proper. There is an arbitral dispute between the parties, as held above.

I also notice that the petitioner have not appointed their arbitrator, which they ought to have done by this time. Therefore, in the circumstances, I think this application should be referred to the Hon'ble delegate of the Hon'ble the Chief Justice for appointment of an arbitrator/arbitrators to adjudicate the disputes between the parties as mentioned in the letter of the petitioner dated 28th December, 2009. I order accordingly."

6. In pursuance of the order dated 9.6.2011, the matter came up before another Designate Judge and he appointed the arbitrator by an order dated 8.7.2011. The following order reads as under:

"It appears from the order dated 9th June, 2011 passed by a learned Judge of this Court that His Lordship has already found that there exists an arbitration agreement between the parties and the dispute involved herein is covered by the said agreement.

In view of such fact, I, in exercise of power conferred under section 11(6) of the Arbitration & Conciliation Act, 1996 appoint Sri Rudrendra Nath Banerjee, a retired Judge of this Court as the Arbitrator on the fees of Rs. 15,000/- for each sitting."

7. In the appeal of M/s. Choudhury Construction, the Designate Judge on 6.9.2011 passed the following order:

"The State does not dispute the existence of the arbitration agreement but says that matters specifically excepted by the agreement cannot be made the subject matter of any arbitral reference. If there is any excepted matter which is raised by the petitioner as claimant, it will be open to the State to object thereto, inter alia, under Section 16 of the Arbitration and Conciliation Act, 1996. Since it appears that there are live disputes to go to arbitration and the parties have failed to agree in the composition of the arbitral tribunal, AP No. 394 of 2009 is directed to be placed before the Hon'ble Designate of the Hon'ble The Chief Justice for constitution of an arbitral tribunal in accordance with the agreement between the parties to adjudicate upon the disputes covered thereby. There will be no order as to costs.

8. We have heard Mr. Gourab Banerji, learned senior counsel for the appellant – Hindustan Copper Limited, Mr. Soumya Chakraborty, learned counsel for the appellant – M/s. Choudhury Construction, Mr. Amit Kumar, learned counsel for Respondent No. 1– Monarch Gold Mining Co. Ltd., Mr. Anip Sachthey, learned counsel for the State of West Bengal and Mr. Jaideep Gupta, learned senior counsel for the Registrar General, Calcutta High Court.

9. Mr. Jaideep Gupta, learned senior counsel for the Registrar\ General, High Court, would submit that Section 11 of the 1996 Act did not put any embargo for piecemeal consideration of the matter. According to him, it is permissible that the Designate Judge considers the general power of the court to determine whether the pre-conditions for the exercise of that power have been fulfilled leaving the power of naming the arbitrator under Section 11 to the exclusive jurisdiction of the Chief Justice. He submits that this is in conformity with the Division Bench decision of the Calcutta High Court in Modi Korea Telecommunication Ltd. v. Appcon Consultants Pvt. Ltd.1.

10. Section 11 of 1996 Act provides for the appointment of arbitrators. It reads as under:

"S. 11. Appointment of arbitrators.—

(1) A person of any nationality may be an arbitrator, unless otherwise agreed by the parties.

(2) Subject to sub-section (6), the parties are free to agree on a procedure for appointing the arbitrator or arbitrators.

(3) Failing any agreement referred to in sub-section (2), in an arbitration with three arbitrators, each party shall appoint one arbitrator, and the two appointed arbitrators, shall appoint the third arbitrator who shall act as the presiding arbitrator.

(4) If the appointment procedure in sub-section (3) applies and—

(a) a party fails to appoint an arbitrator within thirty days from the receipt of a request to do so from the other party; or

(b) the two appointed arbitrators fail to agree on the third arbitrator within thirty days from the date of their appointment, the appointment shall be made, upon request of a party, by the Chief Justice or any person or institution designated by him.

(5) Failing any agreement referred to in sub-section (2), in an arbitration with a sole arbitrator, if the parties fail to agree on the arbitrator within thirty days from receipt of a request by one party from the other party to so agree the appointment shall be made, upon request of a party, by the Chief Justice or any person or institution designated by him.

(6) Where, under an appointment procedure agreed upon by the parties, –

(a) a party fails to act as required under that procedure; or

(b) the parties, or the two appointed arbitrators, fail to reach an agreement expected of them under that procedure; or

(c) a person, including an institution, fails to perform any function entrusted to him or it under that procedure, a party may request the Chief Justice or any person or institution designated by him to take the necessary measure, unless the agreement on the appointment procedure provides other means for securing the appointment.

(7) A decision on a matter entrusted by sub-section (4) or sub-section (5) or sub section (6) to the Chief Justice or the person or institution designated by him is final.

(8) The Chief' Justice or the person or institution designated by him, in appointing an arbitrator, shall have due regard to –

(a) any qualifications required of the arbitrator by the agreement of the parties; and

(b) other considerations as are likely to secure the appointment of an independent and impartial arbitrator.

(9) In the case of appointment of sole or third arbitrator in an international commercial arbitration, the Chief Justice of India or the person or institution designated by him may appoint an arbitrator of a nationality other than the nationalities of the parties where the parties belong to different nationalities.

(10) The Chief Justice may make such scheme as he may deem appropriate for dealing with matters entrusted by sub-section (4) or sub-section (5) or sub-section (6) to him.

(11) Where more than one request has been made under sub-section (4) or sub-section (5) or sub-section (6) to the Chief Justices of different High Courts or their designates, the Chief Justice or his designate to whom the request has been first made under the relevant sub-section shall alone be competent to decide on the request.

(12) (a) Where the matters referred to in sub-sections (4), (5), (6), (7), (8) and (10) arise in an international commercial arbitration, the reference to "Chief Justice" in those sub-sections shall he construed as a reference to the "Chief Justice of India."

(b) Where the matters referred to in sub-sections (4), (5), (6), (7), (8), and (10) arise in any other arbitration, the reference to "Chief Justice" in those sub-sections shall be construed as a reference to the Chief Justice of the High Court within whose local limits the principal Civil Court referred to in clause (e) of sub-section (1) of section 2 is situate and, where the High Court itself is the Court referred to in that clause, to the Chief Justice of that High Court."

11. The Division Bench of the Calcutta High Court in Modi Korea Telecommunication Ltd.1 was concerned with the question of the jurisdiction of a Single Judge who has been given the power for determination to entertain, hear and dispose of arbitration matters under Section 11 of the 1996 Act. The Division Bench dealt with the scheme of the 1996 Act, particularly, with reference to Sections 5,8,11,16 and 37(1). In the opinion of the Division Bench, Section 11 makes a distinction between the procedure for appointment of arbitrator and the actual appointment of the arbitrator. Keeping that distinction in mind, the Division Bench proceeded to consider the matter thus:

"48. …..Under section 11(2) parties can agree on the procedure for appointing the arbitrator. If there is no such agreement on the procedure section 11(3) prescribes the procedure to be followed. When the arbitration is to be of three arbitrators, section 11(3) provides that "each party shall appoint one arbitrator and the two appointed arbitrators shall appoint a third arbitrator who shall act as the presiding arbitrator". If a party fails to appoint an arbitrator within 30 days from the receipt of request to do so from the other party or the two appointed arbitrators fail to agree on the third arbitrator within 30 days from the date of their appointment, the appointment shall be made, upon request of a party, by the Chief Justice or any person or institute designated by him under sub-section (4) of section 11.

49. Section 11(5) similarly provides that in the case of the arbitration with a sole arbitrator if the parties fail to agree on the arbitrator within 30 days from the receipt of the request by one party from the other to do so, the appointment shall be made, upon request of a party by the Chief Justice or any person or institute designated by him. Section 11(6) deals with a situation where the appointment procedure has been agreed upon but there is non compliance of the agreed procedure. In this case also any party may request "the Chief Justice or any person or institute designated by him" to take the necessary measures unless the agreement on the appointment provides other means for securing the appointment.

50. A decision on the matter entrusted by sub-sections (4), (5) and (6) to the Chief Justice or any person or institute designated by him is final by virtue of section 11(7). Section 11(8) provides for considerations to which regard should be had before such power of appointment is exercised. Section 11(9) deals with International Commercial Arbitrations where the Chief Justice of India or any person or institute designated by him is given the powers of appointment.

Section 11(11) deals with a situation where several requests are made to the Chief Justices of different High Courts or their designates. Section 11(12)(a) extends the operation of sub-sections (4), (5), (6), (7), (8) and (10) to International Commercial Arbitrations giving power of appointment to the Chief Justice of India in place of Chief Justice of the High Court. Section 11(12)(b) clarifies that the reference to Chief Justice means the Chief Justice of the appropriate High Court.

51. What does "appointment" mean—is it only limited to naming or does it include the adjudicatory process as to whether appointment should be made?

52. It is clear from a reading of section 11 that the word "appoint" has been used in section 11 to mean nomination or designation. Thus parties may appoint or name their arbitrator under Section 11(2), (3) and (4). The parties do not, in appointing an arbitrator, do more than name or designate him.

53. The power which has been conferred exclusively under section 11 on the Chief Justice is the power of appointment or the power to name an arbitrator. The Chief Justice may, if he so chooses, designate some other person or institute to exercise this power.

54. This power is to be distinguished from the general power of a court to determine whether the pre-conditions for the exercise of that power have been fulfilled. This is a judicial act. The bifurcation between the two powers has been recognized in the unreported decision of Harihar Yadav v. Durgapur Projects Ltd. (supra) when it was said:

"Undoubtedly the appointment of an arbitrator, on an application made by one of the parties involves a decision making process comprising the twin vital components and elements of consideration with regard to the points in issue, or the points of controversy between the parties and the actual act of appointment of the arbitrator. The act of actual appointment of an arbitrator has always to be preceded by a consideration as to whether in the facts and circumstances of the case the arbitrator in fact is required to be appointed or not. It is not only after this issue is resolved that the question of appointment of an arbitrator arises."

55. Given the definition of the word 'appointment', in our view, section 11 does not say that the Chief Justice could alone exercise the general power of judicially determining whether the pre-conditions for such appointment have been fulfilled. To hold otherwise would, not only be contrary to the express language of the section, but it would also mean that the Chief Justice could by designation clothe any person or institution with the power to discharge judicial functions.

56. Besides the legislature could not have intended to burden either the Chief Justice of India (in connection with all international arbitrations) or the Chief Justice of a High Court (in connection with all domestic arbitrations) to be saddled with the impracticable task of determining the existence of the preconditions for appointment of an arbitrator/arbitrators in all cases nor to empower the Chief Justice with the power to clothe any person or authority of his choice with the discharge of judicial functions exercisable by Courts. In facts section 11 does not say anything on the matter.

57. In our view such judicial determination is to be exercised only by a Court. A Court has been defined in section 2(e) of the Act as:

"(e) 'Court' means the principal Civil Court of original jurisdiction in a district, and includes the High Court in exercise of its ordinary Civil Jurisdiction, having jurisdiction to decide the question forming the subject matter of the reference if the same had been the subject matter of a suit, but does not include any Civil Court of a grade inferior to such principal Civil Court, or any Court of Small Causes."

12. The Division Bench then considered Section 14 of the High Court Act, 1861, Clause 36 of the Letters Patent, Chapter V Rule 1 of the Original Side Rules and Article 225 of the Constitution of India and in paragraph 64 of the Report concluded as under :

"64. Pursuant to this power the Chief Justice has allocated the business of hearing matters pertaining to arbitrations to a Learned Single Judge. It is for that Learned Single Judge to exercise the general power referred to earlier, leaving the power of naming the arbitrator under section 11 to the exclusive jurisdiction of the Chief Justice."

13. We find merit in the submission of Mr. Gourab Banerji, learned senior counsel for one of the appellants that the view taken by the Division Bench of Calcutta High Court in Modi Korea Telecommunication Ltd.1 is completely knocked out by a majority decision of this Court in SBP & Co. v. Patel Engineering Ltd. and another2.

14. In SBP & Co.2, a seven-Judge Bench of this Court was concerned with the question in relation to the nature of function of Chief Justice or his designate under Section 11 of the 1996 Act. The necessity to consider the said question arose as a three-Judge Bench of this Court in Konkan Railway Corporation Limited & Ors. v. Mehul Construction Company3, as approved by a five-Judge Bench of this Court in Konkan Railway Corporation Limited & Anr. v. Rani Construction (P) Ltd.,4 had taken the view that the function of the Chief Justice or his Designate under Section 11 was purely an administrative function; it was neither judicial nor quasi judicial and the Chief Justice or his nominee performing the function under Section 11(6) cannot decide any contentious issues between the parties.

15. The majority in SBP & Co.2 held that looking at the scheme of the 1996 Act as a whole and the object with which it was enacted, it seemed proper to view the conferment of power on the chief justice as a conferment of judicial power to decide on the existence of the conditions justifying the constitution of an arbitral tribunal. In the majority judgment, it was also observed that the power had been conferred under Section 11(6) on the highest judicial authority in their capacities as Chief Justices to pass an order contemplated under Section 11 of the Act. In paragraphs 42 to 44 of the Report (pg. 662-663), the majority in SBP & Co.2 held as under:

"42. In our dispensation of justice, especially in respect of matters entrusted to the ordinary hierarchy of courts or judicial authorities, the duty would normally be performed by a judicial authority according to the normal procedure of that court or of that authority. When the Chief Justice of the High Court is entrusted with the power, he would be entitled to designate another Judge of the High Court for exercising that power. Similarly, the Chief Justice of India would be in a position to designate another Judge of the Supreme Court to exercise the power under Section 11(6) of the Act. When so entrusted with the right to exercise such a power, the Judge of the High Court and the Judge of the Supreme Court would be exercising the power vested in the Chief Justice of the High Court or in the Chief Justice of India. Therefore, we clarify that the Chief Justice of a High Court can delegate the function under Section 11(6) of the Act to a Judge of that Court and he would actually exercise the power of the Chief Justice conferred under Section 11(6) of the Act. The position would be the same when the Chief Justice of India delegates the power to another Judge of the Supreme Court and he exercises that power as designated by the Chief Justice of India.

43. In this context, it has also to be noticed that there is an ocean of difference between an institution which has no judicial functions and an authority or person who is already exercising judicial power in his capacity as a judicial authority. Therefore, only a Judge of the Supreme Court or a Judge of the High Court could respectively be equated with the Chief Justice of India or the Chief Justice of the High Court while exercising power under Section 11(6) of the Act as designated by the Chief Justice. A non-judicial body or institution cannot be equated with a Judge of the High Court or a Judge of the Supreme Court and it has to be held that the designation contemplated by Section 11(6) of the Act is not a designation to an institution that is incompetent to perform judicial functions. Under our dispensation a nonjudicial authority cannot exercise judicial powers.

44. Once we arrive at the conclusion that the proceeding before the Chief Justice while entertaining an application under Section 11(6) of the Act is adjudicatory, then obviously, the outcome of that adjudication is a judicial order. Once it is a judicial order, the same, as far as the High Court is concerned would be final and the only avenue open to an party feeling aggrieved by the order of the Chief Justice would be to approach the Supreme Court under Article 136 of the Constitution. If it were an order by the Chief Justice of India, the party will not have any further remedy in respect of the matters covered by the order of the Chief Justice of India or the Judge of the Supreme Court designated by him and he will have to participate in the arbitration before the Tribunal only on the merits of the claim. Obviously, the dispensation in our country, does not contemplate any further appeal from the decision of the Supreme Court and there appears to be nothing objectionable in taking the view that the order of the Chief Justice of India would be final on the matters which are within his purview, while called upon to exercise his jurisdiction under Section 11 of the Act. It is also necessary to notice in this context that this conclusion of ours would really be in aid of quick disposal of arbitration claims and would avoid considerable delay in the process, an object that is sought to be achieved by the Act."

16. In paragraph 47 (pg. 663) of the Report, this Court in SBP & Co.2 summed up its conclusions. To the extent they are relevant, the conclusions read as under :

"47. (i) The power exercised by the Chief Justice of the High Court or the Chief Justice of India under Section 11(6) of the Act is not an administrative power. It is a judicial power.

(ii) The power under Section 11(6) of the Act, in its entirety, could be delegated, by the Chief Justice of the High Court only to another Judge of that Court and by the Chief Justice of India to another Judge of the Supreme Court.

(iii) In case of designation of a Judge of the High Court or of the Supreme Court, the power that is exercised by the designated Judge would be that of the Chief Justice as conferred by the statute.

(iv) The Chief Justice or the designated Judge will have the right to decide the preliminary aspects as indicated in the earlier part of this judgment. These will be his own jurisdiction to entertain the request, the existence of a valid arbitration agreement, the existence or otherwise of a live claim, the existence of the condition for the exercise of his power and on the qualifications of the arbitrator or arbitrators. The Chief Justice or the designated Judge would be entitled to seek the opinion of an institution in the matter of nominating an arbitrator qualified in terms of Section 11(8) of the Act if the need arises but the order appointing the arbitrator could only be that of the Chief Justice or the designated Judge."

17. The exposition of law by a seven-Judge Bench of this Court in SBP & Co.2 , leaves no manner of doubt that the procedure that is being followed by the Calcutta High Court with regard to the consideration of the applications under Section 11 of the 1996 Act is legally impermissible. The piecemeal consideration of the application under Section 11 by the Designate Judge and another Designate Judge or the Chief Justice, as the case may be, is not contemplated by Section 11. The function of the Chief Justice or Designate Judge in consideration of the application under Section 11 is judicial and such application has to be dealt with in its entirety by either Chief Justice himself or the Designate Judge and not by both by making it a two-tier procedure as held in Modi Korea Telecommunications Ltd.1. The distinction drawn by the Division Bench of Calcutta High Court in Modi Korea Telecommunications Ltd.1 between the procedure for appointment of arbitrator and the actual appointment of the arbitrator is not at all well founded. Modi Korea Telecommunications Ltd.1 to the extent it is inconsistent with SBP & Co.2 stands overruled.

18. In view of the above, the impugned orders are set aside. The arbitration petitions are restored to the file of the High Court for appropriate consideration, as noted above. The appeals are allowed to the above extent. No order as to costs.

19. It is, however, clarified that orders passed by the Chief Justice or the Designate Judge under Section 11 of the 1996 Act which have attained finality and the awards pursuant to such orders shall remain unaffected insofar as the above aspect is concerned.

…………………….J.

(R.M. Lodha)

…………………….J.

(Anil R. Dave)

Compensation to a victim in accident granted under two head pain and suffering and loss of amenities of life

Posted on 20 November 2012 by Apurba Ghosh

Court

Supreme Court of India

Brief

Despite many a pronouncement in the field, it still remains a challenging situation warranting sensitive as well as dispassionate exercise how to determine the incalculable sum in calculable terms of money in cases of personal injuries. In such assessment neither sentiments nor emotions have any role. It has been stated in Davies v. Powell Duffryn Associate Collieries Ltd.1 that it is a matter of Pounds, Shillings and Pence. There cannot be actual compensation for anguish of the heart or for mental tribulations. The quintessentiality lies in the pragmatic computation of the loss sustained which has to be in the realm of realistic approximation. Therefore, Section 168 of the Motor Vehicles Act, 1988 (for brevity 'the Act') stipulates that there should be grant of "just compensation". Thus, it becomes a challenge for a court of law to determine "just compensation" which is neither a bonanza nor a windfall, and simultaneously, should not be a pittance.

Citation

K. Suresh ….. Appellant Versus New India Assurance Co. Ltd. and another .… Respondents

Judgement

Reportable

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL No . 7603 2012

(Arising out of SLP (C) No. 3487 of 2011)

K. Suresh ….. Appellant

Versus

New India Assurance Co. Ltd. and another .… Respondents

J U D G M E N T

Dipak Misra , J

Leave granted.

2. Despite many a pronouncement in the field, it still remains a challenging situation warranting sensitive as well as dispassionate exercise how to determine the incalculable sum in calculable terms of money in cases of personal injuries. In such assessment neither sentiments nor emotions have any role. It has been stated in Davies v. Powell Duffryn Associate Collieries Ltd.1 that it is a matter of Pounds, Shillings and Pence. There cannot be actual compensation for anguish of the heart or for mental tribulations. The quintessentiality lies in the pragmatic computation of the loss sustained which has to be in the realm of realistic approximation. Therefore, Section 168 of the Motor Vehicles Act, 1988 (for brevity 'the Act') stipulates that there should be grant of "just compensation". Thus, it becomes a challenge for a court of law to determine "just compensation" which is neither a bonanza nor a windfall, and simultaneously, should not be a pittance.

3. In Jai Bhagwan v. Laxman Singh and others2, a three- Judge Bench of this Court, while considering the assessment of damages in personal-injury-actions, reproduced the following passage from the decision by the House of Lords in H.West & Son, Ltd. v. Shephard3:-

"My Lords, the damages which are to be awarded for a tort are those which 'so far as money can

compensate, will give the injured party reparation for the wrongful act and for all the natural and

direct consequences of the wrongful act' [Admiralty Comrs. v. Susquehanna (Owners), The Susquehanna4]. The words 'so far as money can compensate' point to the impossibility of equating money with human suffering or personal deprivations. A money award can be calculated so as to make good a financial loss. Money may be awarded so that something tangible may be procured to replace something else of like nature which has been destroyed or lost. But money cannot renew a physical frame that has been battered and shattered. All that judges and courts can do is to award sums which must be regarded as giving reasonable compensation. In the process there must be the endeavour to secure some uniformity in the general method of approach. By common assent awards must be reasonable and must be assessed with moderation. Furthermore, it is eminently desirable that so far as possible comparable injuries should be compensated by comparable awards. When all this is said it still must be that amounts which are awarded are to a considerable extent conventional."

In the said case reference was made to a passage from Clerk and Lindsell on Torts (16th Edn.) which is apposite to reproduce as it relates to the awards for non-pecuniary losses: -

"In all but a few exceptional cases the victim of personal injury suffers two distinct kinds of damage which may be classed respectively as pecuniary and non-pecuniary. By pecuniary damage is meant that which is susceptible of direct translation into money terms and includes such matters as loss of earnings, actual and prospective, and out-of-pocket expenses, while non-pecuniary damage includes such immeasurable elements as pain and suffering and loss of amenity or enjoyment of life. In respect of the former, it is submitted, the court should and usually does seek to achieve restitutio in integrum in the sense described above, while for the latter it seeks to award 'fair compensation'. This distinction between pecuniary and non-pecuniary damage by no means corresponds to the traditional pleading distinction between 'special' and 'general' damages, for while the former is necessarily concerned solely with pecuniary losses — notably accrued loss of earnings and out-of-pocket expenses — the latter comprises not only nonpecuniary losses but also prospective loss of earnings and other future pecuniary damage."

4. In this regard, we may refer with profit the decision of this Court in Nagappa v. Gurudayal Singh and others5 wherein the observations of Lord Denning M.R. in Lim Poh Choo v. Camden and Islington Area Health Authority6 were quoted with approval. They read thus: -

"The practice is now established and cannot be gainsaid that, in personal injury cases, the award of damages is assessed under four main heads: first, special damages in the shape of money actually expended; second, cost of future nursing and attendance and medical expenses; third, pain and suffering and loss of amenities; fourth, loss of future earnings."

5. While having respect for the conventional determination there has been evolution of a pattern and the same, from time to time, has been kept in accord with the changes in the value of money. Therefore, in the case of Ward v. James7 it has been expressed thus: -

"Although you cannot give a man so gravely injured much for his 'lost years', you can, however, compensate him for his loss during his shortened span, that is, during his expected 'years of survival'. You can compensate him for his loss of earnings during that time, and for the cost of treatment, nursing and attendance. But how can you compensate him for being rendered a helpless invalid? He may, owing to brain injury, be rendered unconscious for the rest of his days, or, owing to a back injury, be unable to rise from his bed. He has lost everything that makes life worthwhile. Money is no good to him. Yet judges and juries have to do the best they can and give him what they think is fair. No wonder they find it well nigh insoluble. They are being asked to calculate the incalculable. The figure is bound to be for the most part a conventional sum. The judges have worked out a pattern, and they keep it in line with the changes in the value of money."

6. While assessing the damages there is a command to exclude considerations which are in the realm of speculation or fancy though some guess work or some conjecture to a limited extent is inevitable. That is what has been stated in C.K. Subramania Iyer v. T. Kunhikuttan Nair8. Thus, some guess work, some hypothetical considerations and some sympathy come into play but, a significant one, the ultimate determination is to be viewed with some objective standards. To elaborate, neither the tribunal nor a court can take a flight in fancy and award an exorbitant sum, for the concept of conventional sum, fall of money value and reasonableness are to be kept in view. Ergo, in conceptual eventuality "just compensation" plays a dominant role.

7. The conception of "just compensation" is fundamentally concretized on certain well established principles and accepted legal parameters as well as principles of equity and good conscience. In Yadav Kumar v. Divisional Manager, National Insurance Company Limited and another9, a two-Judge Bench, while dealing with the facet of "just compensation", has stated thus: -

"It goes without saying that in matters of determination of compensation both the tribunal and the court are statutorily charged with a responsibility of fixing a "just compensation". It is obviously true that determination of just compensation cannot be equated to a bonanza. At the same time the concept of "just compensation" obviously suggests application of fair and equitable principles and a reasonable approach on the part of the tribunals and the courts. This reasonableness on the part of the tribunal and the court must be on a large peripheral field."

8. In Concord of India Insurance Co. Ltd. v. Nirmala Devi10 this Court has expressed thus: -

"The determination of the quantum must be liberal, not niggardly since the law values life and limb in free country in generous scales."

9. In Mrs. Helen C. Rebello and others v. Maharashtra State Road Transport Corpn. and another11, while dealing with concept of "just compensation", it has been ruled that the word 'just', as its nomenclature, denotes equitability, fairness and reasonableness having large peripheral field. The largeness is, of course, not arbitrary; it is restricted by the conscience which is fair, reasonable and equitable, if it exceeds; it is termed as unfair, unreasonable, unequitable, not just. The field of wider discretion of the tribunal has to be within the said limitations. It is required to make an award determining the amount of compensation which in turn appears to be "just and reasonable", for compensation for loss of limbs or life can hardly be weighed in golden scales as has been stated in "State of Haryana and another v. Jasbir Kaur and others"12.

10. It is noteworthy to state that an adjudicating authority, while determining quantum of compensation, has to keep in view the sufferings of the injured person which would include his inability to lead a full life, his incapacity to enjoy the normal amenities which he would have enjoyed but for the injuries and his ability to earn as much as he used to earn or could have earned. Hence, while computing compensation the approach of the tribunal or a court has to be broad based. Needless to say, it would involve some guesswork as there cannot be any mathematical exactitude or a precise formula to determine the quantum of compensation. In determination of compensation the fundamental criterion of "just compensation" should be inhered.

11. Keeping in view the aforesaid aspects we shall proceed to state the factual score. The factual matrix as unfurled, exposits that on 11.3.2002 about 4.00 p.m. the claimant-appellant (hereinafter referred to as 'the claimant) was hit from the behind by an auto bearing registration number TN-9 C 7755 which was driven in a rash and negligent manner and in the accident he sustained triple fracture in spinal cord, fracture in left leg neck of femur, fracture in right hand shoulder, deep cut and degloving injury over right left thigh bone and multiple injuries all over the body.

12. After the accident the claimant was admitted in M.R. Hospital where he availed treatment. After the treatment, the dislocation of the bones got reduced, pedical screws were inserted into pedicles of D11 vertebra and pedicle screws were passed into pedicles of L1 vertebra. Two screws on left thigh were fixed using a rod each. That apart, decompression of D12 vertebra was done and bone chips were placed in the intertransverse area on both sides. He was hospitalized for 28 days. The victim had numbness below the knee joint and was facing difficulty to stand and sit comfortably. As the evidence on record would reveal he has been constantly availing physiotherapy treatment facing difficulty in carrying out his normal activities. A disability certificate contained as Ex.P4 was filed before the tribunal which showed permanent disability at 75%.

13. The tribunal, as it appears from the award, had also assessed the permanent disability at 75% as fixed by PW-4, Dr. Thiagarajan. It had awarded Rs.25,00,000/- under various heads, namely, transport charges, extra nourishment, medical expenses, additional medical expenses, pain and sufferings suffered by family members of the claimant, mental agony, additional transport charges, inability of the appellant to participate in public functions, loss of marital life, pain and suffering, permanent disability and loss of earning capacity.

14. Before the High Court as serious objections were raised pertaining to percentage of disability, the claimant was referred to the Medical Board and it was found that he had compression fracture which had healed with persistence of pain in the back with root involvement causing grade IV power in left lower limb and, accordingly, the Board fixed the permanent disability at 40%. The High Court adverted to the concept of "just compensation" and opined that the quantum of damages fixed should be in proportionate to the injuries caused. It referred to certain authorities and opined that Rs.2,00,000/- towards medical expenses, Rs.5,000/- each for transport charges and extra nourishment, Rs.2,50,000/- towards pain and suffering, Rs.50,000/- for medical expenses and Rs.4,68,000/- towards loss of earning capacity would be the just amount of compensation. Thus, the total amount as determined by the High Court came to Rs.9,78,000/-. The High Court reduced the interest to 7.5% from 9% as granted by the tribunal. Be it noted, the said judgment and order dated 27.1.2010 passed by the High Court of Judicature at Madras in Civil Miscellaneous Appeal No. 1989 of 2005 whereby the High Court has reduced the compensation granted by the Motor Accident Claims Tribunal (II Small Causes Court), Chennai, on an application being moved under Section 166 of the Act is the subject-matter of challenge herein.

15. Mr. Vipin Nair, learned counsel appearing for the appellant, has contended that the High Court has erroneously held that there cannot be grant of compensation under two heads, namely,

"permanent disability" and "loss of earning power". It is urged by him that the tribunal had correctly appreciated the evidence on record and fixed certain sum under various heads but the High Court on unacceptable reasons has deleted the same. It is also canvassed by him that the High Court without ascribing any cogent reasons has reduced the expenses for continuous treatment from Rs.2,00,000/- to Rs.50,000/- as a result of which the amount had been substantially reduced and the concept of "just compensation" has lost its real characteristics.

16. Ms. Aishwarya Bhati, learned counsel appearing for the respondent No. 1, supported the order passed by the High Court contending, inter alia, that the analysis made by the learned single Judge is absolutely flawless and the interference in the quantum cannot be faulted inasmuch as the tribunal has awarded a large sum on certain heads which are totally impermissible in law. It is also urged by her that certain sums had been allowed by the tribunal without any material on record and, therefore, the High Court has correctly interfered with the award.

17. The seminal issues that really emanate for consideration are whether the analysis made by the High Court in not granting compensation under certain heads and further reduing the amount on certain scores, are justified. Regard being had to the fundamental essence of "just compensation", we shall presently deal with the manner in which the High Court has dwelled upon various heads in respect of which the tribunal had granted certain sums towards compensation. On a perusal of the order passed by the High Court, it is manifest that the High Court relying on certain authorities of the said court has expressed the view that once a particular amount has been awarded towards `permanent disability', no further amount can be awarded relating to `loss of earning capacity'. The learned counsel for the appellant has commended us to the pronouncement of this Court in B. Kothandapani v. Tamil Nadu State Transport Corporation Ltd.13, wherein the High Court had placed reliance on the Full Bench decision in Cholan Roadways Corporation Ltd. v. Ahmed Thambi14. This Court referred to the pronouncement in Ramesh Chandra v. Randhir Singh15, wherein it has been stated thus:-

"With regard to ground 19 covering the question that the sum awarded for pain, suffering and loss of enjoyment of life, etc. termed as general damages should be taken to be covered by damages granted for loss of earnings is concerned that too is misplaced and without any basis. The pain and suffering and loss of enjoyment of life which is a resultant and permanent fact occasioned by the nature of injuries received by the claimant and the ordeal he had to undergo."

18. In Ramesh Chandra (supra) the learned Judges proceeded to address the issue of difficulty or incapacity to earn and how it stands on a different footing than pain and suffering affecting enjoyment of life and stated as under: -

"The inability to earn livelihood on the basis of incapacity or disability which is quite different. The incapacity or disability to earn a livelihood would have to be viewed not only in praesenti but in futuro on reasonable expectancies and taking into account deprival of earnings of a conceivable period. This head being totally different cannot in our view overlap the grant of compensation under the head of pain, suffering and loss of enjoyment of life. One head relates to the impairment of person's capacity to earn, the other relates to the pain and suffering and loss of enjoyment of life by the person himself."

19. After referring to the said passage, the Bench proceeded to state that it is true that compensation for loss of earning power/capacity has to be determined based on various aspects including permanent injury/disability, but at the same time, it cannot be construed that that compensation cannot be granted for permanent disability of any nature. It has been mentioned by

way of an example that in a case of a non-earning member of a family who has been injured in an accident and sustained permanent disability due to amputation of leg or hand, it cannot be construed that no amount needs to be granted for permanent disability. It cannot be disputed that apart from the fact that the permanent disability affects the earning capacity of the person concerned, undoubtedly, one has to forego other personal comforts and even for normal avocation they have to depend on others.

20. In view of the aforesaid enunciation of law, the view of the High Court that no compensation can be granted towards permanent disability once compensation is computed for the loss of earning capacity and loss of future earnings is unsustainable. As is perceivable, the High Court has computed the loss of earning power at Rs.4,68,000/- instead of Rs.5,00,000/- as determined by the tribunal and deleted sum of Rs.3,00,000/- that was awarded by the tribunal towards permanent disability. In our considered opinion, total deletion is absolutely unjustified and, in fact, runs counter to the principles laid down by this Court in Ramesh Chandra (supra) and B. Kothandapani (supra).

21. At this juncture, we think it seemly to state that it is a case where the victim has suffered serious injuries. As far as the injuries are concerned, there is concurrence of opinion by the tribunal as well as by the High Court. The High Court has only reduced the percentage of permanent disability on the basis of assessment made by the Medical Board as there was a serious cavil with regard to the said percentage. While determining compensation payable to a victim of an accident the parameters which are to be kept in view have been succinctly stated in R.D. Hattangadi v. Pest Control (India) Pvt. Ltd. and others16: -

"9. Broadly speaking while fixing an amount of compensation payable to a victim of an accident,

the damages have to be assessed separately as pecuniary damages and special damages. Pecuniary damages are those which the victim has actually incurred and which are capable of being calculated in terms of money; whereas nonpecuniary damages are those which are incapable of being assessed by arithmetical calculations. In order to appreciate two concepts pecuniary damages may include expenses incurred by the claimant: (i) medical attendance; (ii) loss of earning of profit up to the date of trial; (iii) other material loss. So far non-pecuniary damages are concerned, they may include (i) damages for mental and physical shock, pain and suffering, already suffered or likely to be suffered in future; (ii) damages to compensate for the loss of amenities of life which may include a variety of matters i.e. on account of injury the claimant may not be able to walk, run or sit; (iii) damages for the loss of expectation of life, i.e., on account of injury the normal longevity of the person concerned is shortened; (iv) inconvenience, hardship, discomfort, disappointment, frustration and mental stress in life."

22. In Arvind Kumar Mishra v. New India Assurance Company Limited and another17 a two-Judge Bench referred to the authority in Kerala SRTC v. Susamma Thomas18 and applied the principle of multiplier for future earnings in a case of permanent disability. We have referred to this decision solely for the purpose that multiplier principle has been made applicable to an application preferred under Section 166 of the Act.

23. In this context it is useful to refer to Raj Kumar v. Ajay Kumar and Another19, wherein a two-Judge Bench after referring to the award of compensation in personal injury cases reiterated the concepts of pecuniary damages (special damages) and non-pecuniary damages (general damages). The Bench referred to the decisions in C.K. Subramania Iyer (supra), R.D. Hattangadi (supra) and Baker v. Willoughby20 and expressed the view that it is obligatory on the part of the court or the tribunal to assess the damages objectively and exclude from consideration any speculation or fancy, though some conjecture with reference to the nature of disability and its consequences, is inevitable. A person is not only to be compensated for the physical injury, but also for the loss which he suffered as a result of such injury. He is to be compensated for his inability to lead a full life, his inability to enjoy those normal amenities which he would have enjoyed but for the injuries, and his inability to earn as much as he used to earn or could have earned.

24. It is worthy noting that the Bench referred to the pecuniary damages and non-pecuniary damages and opined thus: -

"Pecuniary damages (Special damages)

(i) Expenses relating to treatment, hospitalisation, medicines, transportation, nourishing food, and miscellaneous expenditure.

(ii) Loss of earnings (and other gains) which the injured would have made had he not been injured, comprising:

(a) Loss of earning during the period of treatment;

(b) Loss of future earnings on account of permanent disability.

(iii) Future medical expenses.

Non-pecuniary damages (General damages)

(iv) Damages for pain, suffering and trauma as a consequence of the injuries.

(v) Loss of amenities (and/or loss of prospects of marriage).

(vi) Loss of expectation of life (shortening of normal longevity)."

25. After so stating the Bench proceeded to opine that assessment of pecuniary damages under Item (i) and under Item (ii)(a) do not pose much difficulty as they involve reimbursement of actuals and are easily ascertainable from the evidence. Award under the head of future medical expenses—Item (iii)—depends upon specific medical evidence regarding need for further treatment and cost thereof. Assessment of non-pecuniary damages—Items (iv), (v) and (vi)—involves determination of lump sum amounts with reference to circumstances such as age, nature of injury/deprivation/disability suffered by the claimant and the effect thereof on the future life of the claimant. It has been observed therein that what usually poses some difficulty is the assessment of the loss of future earnings on account of permanent disability—Item (ii)(a). Thereafter, the Bench adverted to the features which are necessary while assessing the loss of future earnings on account of permanent disability. In the said case it has been opined that permanent disability can be either partial or total and the assessment of compensation under the heads of loss of future earnings would depend upon the factum and impact of such permanent disability on his earning capacity. It has been laid down that the tribunal should not mechanically

apply the percentage of permanent disability as the percentage of economic loss or loss of earning capacity. It has been further observed that in most of the cases, the percentage of economic loss, i.e., the percentage of loss of earning capacity, arising from a permanent disability will be different from the percentage of permanent disability. However, in some cases on appreciation of evidence and assessment the percentage of loss of earning capacity as a result of the permanent disability would be approximately the same as the percentage of permanent disability in which case, of course, the court or tribunal would adopt the said percentage for determination of compensation. To arrive at the said conclusion reliance was placed on Arvind Kumar Mishra (supra) and Yadav Kumar (supra).

26. In the case at hand the High Court has determined the loss of earning capacity on the base of multiplier method and reduced the quantum awarded by the tribunal from Rs.5,00,000/- to Rs.4,68,000/-. Applying the ratio in Yadav Kumar (supra) and Arvind Kumar Mishra (supra) and also Raj Kumar (supra) and regard being had to the serious nature of injury we do not find any error in the said method of calculation and, accordingly, we uphold the method of computation as well as the quantum.

27. Presently to the grant of compensation on other scores. It is noticeable that the High Court has reduced the additional medical expenses from Rs.2,00,000/- to Rs.50,000/-. In our considered opinion, the same is not correct as there is ample evidence on record as regards the necessity for treatment in future. It is demonstrable that pedicle screws were passed into pedicles of D11 vertebra; pedicle screws were passed into pedicles of L1 vertebra; and two screws on left thigh were connected using a rod each. That may be required to be removed or scanned from time to time depending upon other aspects. That apart, there is persistent pain and as medically advised physiotherapy is necessary and hence, continuous treatment has to be availed of. Thus, the High Court was not justified in reducing the said amount.

28. The High Court has maintained the award in respect of transport charges, extra nourishment, medical expenses and, accordingly, they are maintained. It has enhanced the award from Rs.2,00,000/- to Rs.2,50,000 on the head of pain and suffering, but has deleted the amount awarded on permanent disability from the total compensation awarded by the tribunal by relying on the decision in Cholan Roadways Corporation Ltd. (supra). As has been stated earlier, the said decision has been considered in B. Kothandapani (supra) and is not accepted, and this Court has expressed the view that grant of compensation towards permanent disability is permissible. Regard been had to the totality of the facts and circumstances, we are inclined to think that compensation of Rs.2,50,000/- should be granted towards permanent disability and Rs.2,00,000/- towards pain and suffering. We have so held as the injury is of serious nature and under the heading of nonpecuniary damages compensation is awardable under the headings of pain and suffering and damages for loss of amenities of life on account of injury. In the case of R.D. Hattangadi (supra) this Court has granted compensation under two heads, namely, "pain and suffering" and "loss of amenities of life". Quite apart from that compensation was granted towards future earnings. In Laxman v. Divisional Manager, Oriental Insurance Co. Ltd. and another21 it has been ruled thus: -

"The ratio of the above noted judgments is that if the victim of an accident suffers permanent or temporary disability, then efforts should always be made to award adequate compensation not only for the physical injury and treatment, but also for the pain, suffering and trauma caused due to accident, loss of earnings and victim's inability to lead a normal life and enjoy amenities, which he would have enjoyed but for the disability caused due to the accident."

Thus, the deletion by the High Court was not justified. However, we have restricted to the amount as stated hereinbefore.

29. The High Court has deleted the additional transport charges. We are disposed to think that while availing treatment the said expenses would be imperative. Hence, there was no justification to reduce the same and, accordingly, we restore it.

30. It is perceptible that the High Court has deleted the amount awarded under the head of pain and suffering by family members of the claimant and the amount granted towards loss of marital life. There is no iota of evidence with regard to loss of marital life, hence, we do not find any error in the said deletion. As far as grant of compensation on the score of pain and suffering suffered by the family members of claimant is concerned, the same is not permissible and, accordingly, we hold that that has been correctly deleted.

31. The High Court has deleted an amount of Rs.3,00,000/- and a sum of Rs.2,00,000/- towards mental agony and inability on the part of the claimant to participate in public functions respectively. We have already determined Rs.2,00,000/- under the heading of pain and suffering already suffered and to be suffered and Rs.2,50,000/- under the heading of permanent disability and hence, no different sum need be awarded under the heading of mental agony. As far as participation in public functions is concerned, there is no evidence in that regard and, therefore, we are disposed to think that the finding of the High Court on that score is totally justified and does not call for any interference.

32. Calculated on the aforesaid base, the compensation would be payable on the headings, namely, transport charges, extranourishment, medical expenses, additional medical expenses, additional transport charges, pain and suffering, loss of earning capacity and permanent disability and the amount on the aforesaid scores would be, in toto, Rs.13,48,000/-. The said amount shall carry interest at the rate of 7.5% from the date of application till the date of payment. The same shall be deposited before the tribunal within a period of two months and the tribunal shall disburse 50% of the amount in favour of the claimant and the rest of the amount shall be deposited in a nationalized bank for a period of three years. Be it clarified if the earlier awarded sum has been deposited, the differential sum shall be deposited within the stipulated time as mentioned hereinabove and the disbursement shall take place accordingly.

33. Consequently, the appeal is allowed in part leaving the parties to bear their respective costs.

……………………………….J.

[K. S. Radhakrishnan]

……………………………….J.

[Dipak Misra]

As per section 11(2) parties can agree the appointing of arbitrator and in the absence of such agreement section 11(3) to be followed