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Calling for a "fundamental re-think" on how insurance companies deal with claims of families of victims of motor accidents as litigation continues to be a stratagem and source of harassment and torture, the Supreme Court has questioned, while hearing a case, "When will a high and mighty state owned insurance company realize its social conscience?"

While hearing an appeal filed by the parents of a 24-year old workman who died in 2004, the Court observed,

"After the Commissioner awarded compensation, the parents of the deceased workman had to initially defend the proceedings brought by the insurer before the High Court and thereafter pursue their own challenge to the judgment of the High Court before this Court."

"Our conscience has been deeply disturbed by the manner in which a farmer and his spouse have been left to the mercies of legal procedure. Should the insurer have dragged the parents to the High Court over the award of Rs 2.64 lakhs for the death of their wage earning son?", added a bench of Justices DY Chandrachud and AS Bopanna.

In the case before Court, a workman, the son of the appellants, was working as a helper in a truck. On October 30, 2004, the driver of the truck lost control and dashed into the helper who struck against a tree on the side of the road. The workman succumbed to his injuries on November 1, 2004.

An application was then filed before the Court of Commissioner claiming a compensation of Rs. 3,00,000 under the provisions of the Workmen’s Compensation Act, 1923. The Court had then directed the insurance company to pay a compensation of Rs. 2,64,895/- along with interest at 12% p.a. from the date of accident till realization.

The High Court while hearing an appeal in 2018, modified the award by reducing the compensation to Rs 1,98,807.70 and the interest from 12% to 8% from the date of the award till realization.

The High Court while reducing the claim for compensation, proceeded on the basis that there was no material on record to indicate that the salary of the deceased at the time of death was Rs 2,400 per month and consequently proceeded on the basis of a minimum wage of Rs. 910.

On the point of interest, the High Court held that there is no provision in the Act of 1923 to grant interest on the compensation from the date of the accident.

Subsequently, the payment of interest was reduced from 12% to 8% from the date of award till realization. The review filed against the judgment was dismissed by an order dated February 1, 2019.

Noting that the appeals before it indicated the manner in which the litigation process can drag on for years, the Court remarked,

"... a poor farming family is lost in a long drawn out battle to secure a paltry compensation of Rs. 2,64,895 awarded by the Commissioner of Labour under the Act, for the death of their son for an accident which took place in 2004."

It was further noted that when the claim which was on the basis that the deceased was earning an amount of Rs 2,400 per month was not disputed by the employer, the High Court had absolutely no basis to reduce the award on the ground that there was no material to establish the salary of the deceased.

"There was no ground to proceed on the basis of the minimum wage, particularly when there was nothing untoward or exaggerated in the claim for compensation based on the salary which was earned by the deceased......The deceased was an informal worker, who was working as a helper in a transport business..... Such employees are not provided receipts on the payment of wages, nor can it be reasonably assumed that the employer would maintain receipts for the payment of wages to his employees...."

The Court further held that there was no justification for the insurer to take a matter involving such a paltry sum of compensation based on the facts of the case to the High Court and to allow a poor farmer and his wife who have already lost the solace of an earning member of the family, into a long drawn out litigation.

With this view, the bench went on to set aside the order of the High Court and directed that the total compensation to be paid was Rs. 2,62,164 along with an interest of 12% from the date of accident till it is realised.

"The Commissioner shall personally ensure that the amount is paid over to the appellants. In addition, the appellants shall be entitled to costs quantified at Rs 1 lakh for meeting their costs and expenses of the proceedings which have been conducted in the Courts below", the bench ordered.

Cause Title: Shantilata Sethy and Another v. M/s Divisional Manager, The New India Assurance Company Limited and Anr.