CASE NO.: Appeal (civil) 2606-2607 of 2001 PETITIONER: <NAME> RESPONDENT: Commissioner of Income Tax, Madurai & Anr. DATE OF JUDGMENT: 27/01/2003 BENCH: <NAME> & <NAME>. JUDGMENT:

J U D G M E N T RUMA PAL, J.

The question to be decided in these appeals is whether the word 'assets' in Section 46(2) of the Income Tax Act, 1961 (referred to hereafter as the 'Act') must be understood and construed according to the definition of the word 'capital assets' in Section 2(14) of the Act.

The issue arises in respect of the assessment year 1970-71. The appellants in the two appeals which are disposed of by this judgment are sisters. They were share holders in <ORG>, Nagercoil (referred to hereafter as the 'Company'). The Company went into liquidation in 1964. Pursuant to a compromise decree dated 22nd December 1969 in litigation between the assessees and their brother (who was also a share holder in the company), and the company represented by the liquidator, the assets of the company which included agricultural lands were distributed to the appellants and eight others. The compromise decree stated:

"This Court doth further order and decree that as far as liabilities of <ORG> is concerned, the immovable properties be and hereby are distributed as indicated in Schedule 'A' of the Compromise. The respondents 1 to 5 and respondents 9 to 11 do get leased portions as shown in the plans, signed by liquidator Mr. <NAME> and handed over to the appellant this day."

The appellants thereby received 479.89 acres of the agricultural lands prior to the end of the relevant accounting year that was 31.3.70 . The assessment in respect of the year 1970-71 had been completed on 27.2.71. The Income Tax Officer reopened the assessments under Section 148 of the Act. The appellants filed their returns in respect of the two notices under Section 148 . The contention of the appellants that in terms of the definition of 'assets' in Section 2(14) , agricultural lands were entitled to be excluded while computing capital gains on assets received by the shareholder from a company in liquidation under Section 46(2) was not accepted. According to the assessing officer, Section 46(2) refers only to money received on liquidation or the market value of the assets on the date of distribution and it was immaterial whether the asset was agricultural lands or otherwise. The value of the share of agricultural lands transferred to each appellant was, therefore, included as income subject to capital gains and subjected to tax. The assessees' appeals before the Commissioner of Income Tax (Appeals) were allowed by holding that the scope of Section 46(2) would have to be read in the light of the definition of the word 'capital asset' in Section 2(14) and that "having exempted agricultural lands from capital gains under the general provision, it was difficult to interpret Section 46(2) as including agricultural land". The action of the Income Tax Officer in charging the income of the distribution of agricultural lands as capital gains under Section 46(2) of the Act was accordingly set aside.

The <ORG> appealed before the <ORG>. The <ORG> dismissing the <ORG>'s appeal held: "On a combined reading of Section 45 , 46(2) and 48 it will be clear, according to our opinion, that assets mentioned in Section 46(2) would mean capital assets. In as much as Section 47 (viii) exempts transfer of agricultural lands from capital gain tax under Section 45 , we agree with the Commissioner of Income Tax (Appeals) in coming to the conclusion that it is difficult to interpret Section 46(2) as including agricultural lands which is outside the scope of the Income Tax."

Of the two questions referred to <ORG> by the <ORG> under Section 256(1) at the instance of the <ORG> only one survives for our decision. The second question was not pressed before <ORG>. The first question which was:

" Whether on the facts and in the circumstances of the case, <ORG> is right in law in holding that the assets mentioned in section 46(2) would mean 'capital asset' as defined in section 2(14) and that consequently, the value of agricultural lands received by the assessee on the liquidation of <ORG> cannot be charged to tax under section 46(2) of the Income Tax Act, 1961?"

was answered by <ORG> against the assessees and in favour of the <ORG>. <ORG> construed the provisions of Section 46(2) and held, reversing the decision of the CIT(A) and the <ORG>, that the definition of 'capital assets' under Section 2(14) of the Act is not of any relevance for the purpose of construing Section 46(2) of the Act, and the fact that agricultural lands to the extent provided in Section 2(14)(c) of the Act are excluded from the definition did not have any impact on the taxability of the market value of the agricultural lands received by the assessee on the distribution of the assets of a company in liquidation.

Before considering the correctness of the decision of <ORG> the context in which Section 46(2) came to be part of the Act needs to be considered. Section 12-B of the Income Tax Act, 1922 provided for payment of tax under capital gains 'in respect of any profits or gains whatsoever from the sale, exchange, relinquishment or transfer of a capital asset effected after 31st day of March 1956, and such profits and gains shall be deemed to be income of the previous year in which the sale, exchange, relinquishment or transfer took place". Construing Section 12- B of the Income Tax Act, 1922 this Court in <CITATION> . 1973 (89) ITR 45 had held that when a shareholder receives money representing his share on distribution of the net assets of the company in liquidation, he receives that money in satisfaction of the right which belonged to him by virtue of his holding the shares and not by operation of any transaction which amounts to sale, exchange, relinquishment or transfer within the meaning of Section 12-B of the Act.

Section 45(1) of the 1961 Act which substantially corresponds with Section 12-B of the 1922 Act continues to provide that:

"Any profits or gains arising from the transfer of a capital asset effected in the previous year shall, save as the otherwise provided in Sections 54 , 54B , 54D , 54E , 54EA , 54EB , 54F , 54G and 54H be chargeable to income tax under the head 'Capital gains', and shall be deemed to be the income of the previous year in which the transfer took place."

The words 'capital assets' has been defined in Section 2(14) of the Act which as it stood at the relevant time, that is prior to its amendment in 1972, provided: "2. In this Act, unless the context otherwise requires (14) 'Capital assets' means property of any kind held by an assessee, whether or not connected with his business or profession, but does not include

(i)..

(iii) agricultural land in India It has been held by this Court that the principle of <ORG> that a distribution of assets of a company in liquidation does not amount to a transfer continues to apply to the 1961 Act. ( <CITATION> : 1977 (1) SCC 691, 696.) The view in <ORG> Co. Ltd. (supra) has also been statutorily affirmed in Section 46(1) which provides:

46. (1) Notwithstanding anything contained in section 45 , where the assets of a company are distributed to its shareholders on its liquidation, such distribution shall not be regarded as a transfer by the company for the purposes of section 45 .

In other words a distinction is drawn between a "transfer" of assets and a distribution of assets of the company on liquidation. Where there is 'transfer' of assets and not a 'distribution' on liquidation then having regard to Section 47(viii) which provides that "Nothing contained in Section 45 shall apply to the following transfers:

(viii) any transfer of agricultural land in India effected before the 1st day of March 1970"

it may have been argued at least on behalf of the Company that the 'transfer' having been concluded in 1969 was exempt from capital gains. This argument, however, is not available to the shareholders who receive assets from the company on distribution consequent upon liquidation because of Section 46(2) which was introduced to make the receipts of assets from a company liquidation by its share holders a taxable event for the first time . Section 46 (2) provides: "46(2) where a shareholder on the liquidation of a company receives any money or other assets from the company, he shall be chargeable to income tax under the head 'Capital gains' in respect of the money so received or the market value of the other assets on the date of distribution, as reduced by the amount assessed as dividend within the meaning of sub-

clause (c) of clause (22) of section 2 and the sum so arrived at shall be deemed to be the full value of the consideration for the purposes of section 48 ."

The question is does the words 'assets' in Section 46(2) mean 'capital assets' as defined in Section 2(14) of the Act? If it does then, it is conceded by the <ORG>, there is no question of subjecting the agricultural lands received by the assessees from the company in liquidation to capital gains. Indisputably, the object in introducing Section 46(2) was to overcome the reasoning in <ORG> by broadening the base of the incidence of capital gains and expressly providing for receipt of assets of a company in liquidation by a shareholder as a taxable event.

Section 46(2) is in terms an independent charging Section. It also provides for a distinct method of calculation of capital gains. As said in <CITATION> (supra): "The aforesaid section, in our view, was enacted both with a view to make shareholders liable for payment of tax on capital gains as well as to prescribe the mode of calculating the capital gains to the shareholders on the distribution of assets by a company in liquidation. But for that sub-section as already mentioned, it would have been difficult to levy tax on capital gains to the shareholders on distribution of assets by a company in liquidation."

The Section does not make any reference to capital assets either in connection with the imposition of capital gains tax nor its computation.

Having referred to 'capital asset' in Section 45(1) , 47 and 48 , <ORG> appears to have deliberately chosen to use the word 'asset' in Section 46(1) and (2), the ostensible intention being to bring assets of all kinds within the scope of the charge. It is not necessary to refer to a dictionary to hold that capital assets are a species of the genus 'assets'. If the words 'capital assets' and 'assets' as used in Sections 45(1) and 46 respectively did not overlap then there was no need to provide for a non obstante clause in Section 46(1) with reference to Section 45 . As correctly held by <ORG>, agricultural land would have been a 'capital asset' but for the exclusion from the definition of 'capital asset' and what is not a capital asset may yet be an asset for the purposes of S.46(2). Therefore, to the extent that a shareholder assessee receives assets whether capital or any other from the company in liquidation, the assessee is liable to pay tax on the market value of the assets as on the date of the distribution as provided under Section 46(2) . That appears to be the plain meaning of the section and we see no reason to construe it in any other fashion. The invocation of Section 2(14) of the Act which defines "Capital asset" is as such unnecessary for the purpose of construing Section 46(2) . We accordingly dismiss the appeals without any order as to costs.


JUDGMENT <NAME>, J.

1. This is an appeal against the order of the learned District Judge of Trichinopoly, who on appeal from the order of the Subordinate Judge allowed the plaintiff's application for removal of obstruction by the appellant in this civil miscellaneous second appeal and delivery of possession.

2. The property in dispute and other properties belonged to one <NAME> who died on 17th December, 1912. After his death, there was a partition on the 15th January, 1916, between the two sons of <NAME>, i.e., <NAME> and <NAME> and in that partition <NAME> got for his share the suit property. On the 23rd June, 1921, <NAME> settled the property now in dispute on his wife <NAME>. On the nth September, 1922, <NAME> mortgaged the property to one <NAME>, the father pf the present appellant. In the year 1924, a suit for partition was filed by the two -daughters of <NAME> impleading the other sharers as defendants and <NAME> was impleaded as the sixth defendant. There was a preliminary decree in that suit on the 15th August, 1929, which was confirmed on appeal on the 4th April, 1934, and a final decree was passed on the 6th January, 1937. While these partition proceedings were going on, <NAME>, the mortgagee, instituted the suit (O.S. No. 135 of 1929) on foot of his mortgage to which he impleaded as parties the original mortgagor and also the heirs of <NAME> who were subsequently given up as they claimed the suit property by a title paramount. There was a decree, however, against the mortgagor and ultimately after a final decree, the property was sold and was purchased on the 2nd November, 1932, by the decree-holder, the mortgagee, and the property was duly delivered to him through <ORG> on the 14th October, 1933.

3. After all this, the person to whose share the property now in dispute fell in the partition in pursuance of the final decree in O.S. No. 26 of 1925, applied in E.P. No. 414 of 1944 for delivery of possession. It may be mentioned that in the partition in pursuance of the final decree in the present suit, the property was not allotted to <NAME> but to some other sharer. When this Execution Petition No. 414 of 1944 was filed and the petitioner went to obtain delivery of possession of the property, there was obstruction by the present appellant to the delivery with the result the respondent filed an application in <ORG> for removing the obstruction and for delivery of possession of the property freed from the obstruction of the appellant. The petition was filed under Section 47, Civil Procedure Code. The present appellant, who was the respondent in the counter-statement filed by him raised various contentions the chief of which was that the application was not maintainable under Section 47, Civil Procedure Code, as he was not a party to the suit O.S. No. 26 of 1925, in which a partition decree was passed. This objection was upheld by the learned Subordinate Judge and the application was dismissed. On appeal the learned District Judge reversed the decision of the Subordinate Judge and allowed the petition. Hence this second appeal.

4. The only question that has to be considered in this civil miscellaneous second appeal is whether the application of the respondent under Section 47, Civil Procedure Code, is maintainable or not. The mortgage in favour of the appellant was long prior to the partition suit and he was not impleaded as a party to the partition suit. <NAME> alone was impleaded as the sixth defendant in that sure and the purchase by the appellant in pursuance of his mortgage decree was no doubt during the pendency of the partition proceedings. It was contended on behalf of the respondent here and also in the courts below that the purchase by the appellant is affected by the doctrine of lis pendens and that therefore he is not entitled to resist the application of the respondent for delivery of possession. If the mortgage in favour of <NAME> was during the pendency of the partition suit and the <ORG> sale was also during the pendency of that suit, no doubt, the principle of the decision of <ORG> in <CITATION> (1937) 2 M.L.J. 359 (P.C.) would apply and the appellant would not be permitted to rely upon the rights which he had acquired under the <ORG> sale. This <ORG> has consistently taken the view that the doctrine of lis pendens should not be extended to cover an involuntary alienation in execution of a mortgage decree where the mortgage was prior to the suit relied on as operating to affect the rights of the parties under the provisions of Section 52 of the Transfer of Property Act. It is needless to refer to all the cases on the point as they have been considered in <CITATION> (1944) 2 M.L.J. 374 : I.L.R. 1945 Mad. 578 The effect of this line of decisions, in my opinion, is really to date back the rights of the purchaser in execution of the mortgage decree to the date of the mortgage. The foundation of the decision of our <ORG> in <CITATION> (1932) 63 M.L.J. 394 : I.L.R. 56 Mad.115 is the decision of the Calcutta High <ORG> in <NAME> v. Dal Marian Singh (1905) I.L.R. 32 Cal. 891 At page 905 the principle is stated thus:

Much argument has been spent on the doctrine of lis pendens, the plaintiff's contention being that the defendants having purchased the property under a decree in a suit instituted subsequent to the suit by his assignor and during the pendency of the suit, are bound by its result. It seems to me, however, the argument has not much force. The defendants are not purchasers in ordinary execution. They purchased under a decree for sale on their own mortgage. They took the property in the same condition as it stood at the date of the mortgage to them. Their title, therefore, dated back. <NAME> v. <NAME> (1875) 23 W.R. 187. So did the plaintiff's title as regards the mortgage to his assignor. The title of each relates back to the date of the mortgage under which the claim is made.

If this is the correct principle on which the decisions of our <ORG> are based, I find it very difficult to conclude that the auction-purchaser is really a representative of <NAME>, the original mortgagor, and that this application falls within Section 47 , Civil Procedure Code. In my opinion, the view taken by the learned Subordinate Judge on this question is correct though he was not justified in dismissing the application altogether. He ought to have given permission to the petitioner to convert the application into a suit and should have proceeded with the trial of the suit.

5. The result is, the appeal should be allowed, the orders of the Courts below should be set aside and the application remanded to <ORG> with a liberty to the respondent in this appeal to pay the court-fee payable on this application treating it as a plaint and for converting it into a plaint within one month after the date of the receipt of the records by the lower Court. The appellant is entitled to his costs throughout. No leave.


JUDGMENT <NAME>, J.

1. This appeal has been preferred against the decision of <ORG> (hereinafter called "the <ORG>") against its decision awarding a sum of Rs. 25,000 as compensation payable to one <NAME>, the respondent in this appeal and the claimant before the <ORG> in M.O.P. No. 3 of 1968 on its file. <NAME>'s only son <NAME>, aged about 12 years, met with, his death as a result of a bus accident in the Bazaar Road, Ambattur, opposite to <ORG> on 18th October, 1967 at about 3-45 P.M. M.A. Rahim, the 1st respondent in the petition, is the owner of the bus MSW 2471 involved in the fatal accident and <ORG>, is the 2nd respondent. <NAME>, the mother of the unfortunate boy, made the claim for compensation under Section 110-A of the Motor Vehicles Act (hereinafter referred to as the Act). She claimed compensation of Rs. 70,000 and Rs. 5,000 for expenses, pain and suffering. The <ORG> awarded a sum of Rs. 25,000 In support of her case, the father of the boy and one <NAME>, a a retired teacher of the school, were examined as witnesses, while on the other side the bus driver, the conductor and the Joint Regional Transport Officer were examined. <NAME>, the teacher, has given evidence that he was standing opposite to <ORG> at about 4 p.m. on 18th October, 1967, that school children were coming out of the school, that the bus was going fast from south to north towards the bus stand and the boy was run over by the bus. There is no effective cross-examination and nothing is suggested to him that the accident happened in any other manner, that the boy was run over on account of the boy's negligence and no theory is suggested to this witness to make out that the driver of the bus was not negligent and that the accident occurred on account of the negligence of the boy suddenly running across the bus or at the rear side of the bus. In the counter of the bus owner it was stated that the accident occurred because the boy suddenly darted across the road and got himself involved in the accident and that the accident was due to the negligence of the boy. Virtually the 2nd respondent adopted the counter of the 1st respondent. In the course of the evidence, the driver and the conductor developed a new theory that while the bus was being driven at a slow speed, the boys were chasing the deceased and in that process the deceased ran and dashed himself at the rear end of the bus, sustained injuries and, as a result thereof, died. The post mortem certificate Exhibit A-2 shows that the boy had sustained 19 injuries, of which injuries Nos. 13 to 16 were fractures of the thigh bone, ribs, etc. The Judge has adverted to the discrepancy between the evidence of R.W. 1 and R.W. 2 as well as the discrepancy revealed in the evidence of R.W. 2 who gave evidence in the criminal case in which the bus driver was prosecuted. From the evidence it is clear that the driver was clearly guilty of gross negligence and rashness in driving the bus. The area is a school zone and just the time the boys were coming out of the school and therefore the bus driver should have been extremely cautious and careful and mere regulation of speed by itself even if true would not avail. <NAME>, the teacher, has given clear evidence. The evidence of R.Ws. 1 and 2 shows that they did not even see the boy at the time of the accident and in the cross-examination it is established that they were unable to explain how the accident occurred. It is some theory which they developed in the course of the evidence. Admittedly, there was no-passenger in the bus and it is clear that the driver has driving the bus in a rash and negligent manner in a fast speed and without any care and caution, which resulted in the death of the boy. We have perused the evidence of the bus driver and the conductor and we have no> hesitation to say that their evidence is unreliable. The inspection report of the Motor Vehicles Inspector, which contains a plan attached also tends to the same inference that death was not due to the boy's dashing against the rear portion of the bus, but it was a clear case of the bus running over the boy. If the accident occurred in the manner claimed by me driver and the conductor, it would have been mentioned so in the forefront in the counter. But, as already observed, in the counter, the case is, the child suddenly darted across the road and got involved, in the accident. This evidence is given especially when the criminal prosecution was pending against the driver at that time. We have not the slightest hesitation in accepting the finding of the <ORG> that the death was due to the rash and negligent driving of the bus by the driver without taking any care or caution in the matter.

2. On the question of the quantum of compensation, the learned Counsel for both sides invited our attention to several decisions. Learned Counsel addressed a arguments based upon a comparative statement as revealed in the several decisions cited with reference to the Victim's age at the time of his death, the age of the claimant, if the victim had been in employment, what salary or remuneration he was earning, the prospect in the increase of his emoluments if he had led a normal life up to the end of his career the contributions likely to be made to the claimant out of the victim's earning, the affluence or the wealth of, the claimant and the damages awarded in the individual cases. A study of the decisions reveals how wide is the variation between the judgments of various <ORG> in assessing under comparable circumstances a suitable figure as compensation which, after all should appear "to be just" to the tribunal exercising jurisdiction under Section 110-B of the Motor Vehicles Act, newly introduced. Section 110-B does not lay down any condition as to the manner of the exercise of jurisdiction by the tribunal and all that it states is that it has to hold an enquiry into the claim and make an award determining the amount of compensation which appears to it to be just. The use of the expression 'just' which is Very wide and comprehensive in its import is of vital importance while adjudicating upon a claim under Section 110-B . Sections 110 to 110-F were introduced into the provisions of the Motor Vehicles Act by Act (C of 1956). Prior thereto several decisions in India and in England had been rendered in claims arising out of motor Vehicles accidents in which the compensation was determined by applying the provisions of the Fatal Accidents Act of 1855 and the general law of torts. Under Sections 110 to 110-F a self-contained machinery has been provided for the adjudication of claims for compensation in respect of claims arising out of motor vehicles accidents. Special claims tribunals have been constituted and a special procedure has been laid down in the Act for the adjudication of such claims. Section 110-F bars the jurisdiction of the civil <ORG> to entertain any question relating to any claim for compensation arising out of motor vehicles accidents for which special provision has been made in the Act. When this special procedure was introduced in 1958, a wealth of case law has grown with regard to adjudication of such claims and the various decisions pronounced by the <ORG> in the solution of the problem in varying context in all of which the question was discussed mainly with reference to the Fatal Accidents Act and the general law of torts, whether in India or in England. If we may say so, the <ORG> must have been aware of the fact that eminent Judges have observed that the problem is by no means of easy solution, and has been mainly coloured or influenced by certain technical rules and principles evolved from a long course of decisions and is beset with Various difficulties, doubts, contingencies and uncertainties and to a large extent the determination of compensation is a work of estimate, balancing the relative weight of several elements which enter into the computation. The precedents while enunciating that the <ORG> has ample latitude in the matter have at the same time laid down certain technical rules in the form of guidelines which to some extent detract from the amplitude of the discretion of the <ORG>. It is in this environment that the new set of provisions were introduced into the Motor Vehicles Act constituting a self-contained machinery. The new provisions do not either impliedly or expressly incorporate the provisions of the Fatal Accidents Act but deliberately leave the jurisdiction, powers and discretion of the <ORG> unfettered by imposing the only condition that the tribunal should enquire into the claim and determine the amount of compensation which should be "just". Our attention was drawn to certain decisions arising out of the claims under the Motor Vehicles Act as amended in 1958 revealing a divergence of view on the question whether the newly introduced provisions of the Motor Vehicles Act are self-contained and constitute an exhaustive machinery or whether the ultimate liability should be determined only in accordance with the provisions of the Fatal Accidents Act and the principles enunciated by decisions rendered under that Act. In a recent decision of the Supreme <ORG> reported in <CITATION> 1971 A.C.J. 206, the Supreme <ORG> while observing that the powers given to the tribunal in the matter of fixing compensation under Section 110-B are very wide, has left open the question whether the compensation has to be fixed on the same basis, as is required to be done under the provisions of the Fatal Accidents Act .

3. We may refer to the recent Bench decision of <ORG> to Madhya Pradesh reported in <CITATION> 1970 A.C.J. 310, in which it was held that Sections 110 to 110-F of the Motor Vehicles Act do not deal with the liability at all, that they only provide a new mode of enforcement of liability in respect of accidents, that so far as the liability is concerned, the provisions of the Fatal Accidents Act and the law of torts would still apply and that the provisions in Section 110-B that the compensation amount must appear to be just do not create any new basis for assessing compensation and that the basis for the determination of the liability is the substantive law already in force. The decision has differed from the view taken in the earlier decisions in <CITATION> , <NAME> v. <ORG> 1967 A.C.J. 297, and <CITATION> 1968 A.C.J. 141, that the words "which appears to it (tribunal) to be just" are wider in scope than the words used in the provisions of the Fatal Accidents Act and the tribunal is not bound by the technical rules and the limitations evolved in the case-law in the interpretation and the application of the provisions of the Fatal Accidents Act . The reasoning of the Bench is that the provisions in Sections 110 to 110-F do not enter into the field of the law of liability which would still continue to be governed by the provisions of the Fatal Accidents Act and the law of torts and the new provisions are in no way intended to give a go by to the limits and the basis of the liability which will have to be determined under the provisions of the Fatal Accidents Act s and that Sections 110-A to 110-F provide merely a cheap and expeditious remedy for the ascertainment of that liability.

4. In a later decision of the same Court reported in <CITATION> 1971 A.C.J. 214, a different view was taken to the effect that the tribunal has to award such compensation as may be "just" and that the tribunal need not strictly follow the decisions under the Fatal Accidents Act . The attention of the Bench was not drawn to the earlier decision. The Bench observed that the expression 'just' in Section 110-B is wide in ambit than the words used in Sections 1-A and 2 of the Fatal Accidents Act and that the tribunal has to only consider what appears to it to be just compensation and it need not strictly follow and apply the basis of the assessment of compensation indicated in the various decisions under the Fatal Accidents Act , Indian or English, though they may be merely of general guidance. The Bench also observed that the decisions in India and England arising under the Fatal Accidents Act may be applicable only in so far as "they promote interests-of justice" under the facts and circumstances of each particular case to help the tribunal towards compensation which is just.

5. We may at this stage refer to the Bench decision of this Court consisting of <NAME>, <NAME> and <NAME>, <NAME> reported in <CITATION> , in which the Bench observed that Sections 110 to 110F of the Motor Vehicles Act are self-contained Code providing for compensation and the machinery of adjudication in cases of Motor Accident and that the provision in the Act has no connection with the Fatal Accidents Act and it cannot be contended that a claim under the Motor Vehicles Act should be governed by the provisions of the Fatal Accidents Act .

The Bench emphasised:

It is noteworthy that Sections 110 to 110-F that We have referred to make no mention of any kind concerning any of the provisions of the Fatal Accidents Act , and do not incorporate any such provision even by the most oblique reference.

It is true that this Bench decision had not to deal with the principles to be applied in the matter of assessment of the compensation but had only to deal with the class of persons who would be entitled to make the claim, i.e. whether the class of persons covered by Sections 110-A to 110-F is the same as the provisions of the Fatal Accidents Act . The question which the Bench had to decide was whether the expression 'representative' in the Fatal Accidents Act means the same thing as the same word used in Section 110-A of the Motor Vehicles Act and the Bench held that the expression legal representatives' in the Motor Vehicles Act is used in the general sense and not in the restricted sense as in the Fatal Accidents Act . The principle of this Bench decision was followed and applied by a Bench of <ORG> in ' <CITATION> , even with regard to the basis for the determination of the just compensation, in the view that the provisions of Sections 110 to 110-F of the Motor Vehicles Act constitute a special law and would therefore prevail over the general law embodied in the provisions of the Fatal Accidents Act . The relevant discussion is to be found in paragraph 40 (pages 189 and 190). With respect, we agree with the view taken in the decision of <ORG>. The provisions newly introduced, Sections 110 to 110-F purport to consolidate and amend the law relating to claims arising out of the motor accidents and are intended to provide a quicker and speedier remedy by way of application before <ORG>. These provisions are self-contained and exhaustive. Further, as already observed, the case law rendered under the general law of torts and in the interpretation and application of the provisions of the Fatal Accidents Act has developed considerably for over a century and for ever three or four decades motor accidents fatal or otherwise, have increased beyond all proportion. The classical statement of <ORG> in <NAME> v. <NAME> (1937) A.C. 826. In the <NAME>'s case (1941) A.C. 157, in the oft quoted case <NAME> v. <ORG> (1942) A.C. 601, will show the many imponderables and difficult problems which the <ORG> have solved in assessing the compensation in each case. <NAME> on Tort, Eighth Edition at page 627, in the paragraph under the caption 'Criticism of the existing law' has observed that the law is still not entirely satisfactory and that the <ORG> must discharge a solemn duty (go through the solemn farce of putting a value on such an incalculable thing). It is because of this reason that <ORG> did not want to incorporate the provisions of the Fatal Accidents Act into the Motoi Vehicles Act and defined the powers and jurisdiction of the tribunal in a wide and comprehensive term and that what the <ORG> decides must be a just compensation on the facts of each particular case. As observed by the Supreme <ORG> in some other context, it is neither feasible nor advisable "to encase a discretionary power within the strait jacket of an inflexible formula." The term 'just' is derived from the Latin word Justus. It has various meanings and its meaning is often governed by the context. 'Just' may apply in nearly all of its senses, either to ethics or law, denoting something which is morally right and fair and sometimes that which is right and fair according to positive law. It connotes reasonableness and something conforming to rectitude and justice, something equitable, fair, (vide : page 1100 of Volume 50 Corpus Juris Secundum). At page 436 of words and Phrases, edited by <ORG> (Volume 23), the true meaning of the word 'just' is in these terms:

The word 'just' is derived from the Latin Justus, which is from the Latin jus, which means a right and more technically a legal right at law. Thus 'jus decree' was to pronounce the judgment; to give the legal decision. The word 'just' is defined by <ORG> as right in law or ethics and in Standard Dictionary as conforming to the requirements of right or of positive law, and in <ORG> as probable, reasonable. <ORG> defines 'just' as fair, adequate, reasonable, probable; and just a causa as a just cause, a lawful' ground. Vide : <NAME> v. <NAME> 81 N.Y.S. 1072, 1073 : 83 App. Div. 1.

Again at page 437 of the same book, it is stated:

Instruction that plaintiff in action for personal injury had burden of proving by preponderance of the evidence that his claim is just, and that he is entitled to recover, was erroneous, as a just claim is not always a legal claim that may be compensated for in damages, and as ' just' may apply in nearly all its senses to either ethics or law, denoting something which is normally right and fair, and sometimes that which is right and fair according to positive law. <NAME> and <ORG> v. <NAME> 81 So. 512 : 77 Fia. 333.

There is no need to refer to other Dictionaries or cases in which the word 'just', in conjunction with other words like 'just and reasonable', 'just and fair' and 'just and expedient' has been explained by the <ORG>, because the word 'just' will take its colour from the main purpose and object of the enactment. Further, as observed by <NAME>, G.J. in V.G. Row v. State of Madras , "Even ideas of what is just differ From age to age. What may seem to be just to one man in one age may appear to another man in another age totally differently." It is enough to hold that the word 'just' in Section 110-B of the Motor Vehicles Act has been used in a very wide and comprehensive sense.

6. We are therefore of the view that there is no warrant for literally importing the provisions of the Fatal Accidents Act into Section 110-B of the Motor Vehicles Act so as to read both the provisions as part and parcel of the provision. By this we should not be understood as saying that the <ORG> can adopt any method which is arbitrary or capricious or in disregard of well-established principles. The decisions rendered under the general law of torts and under the Fatal Accidents Act will undoubtedly be relevant and constitute broad guidelines, but they would not be binding upon the <ORG> in the sense that the method of approach should be the same and identical as in the cases arising under the Fatal Accidents Act .

7. In the instant case, on the question of compensation, there is the evidence of P.W. 1, the father of the victim, which has been accepted by the <ORG>. There is no contra rebutting evidence. The evidence of P.W. 1 shows that the family of the victim is respectable and, fairly affluent, and the members of the family are long-lived. The children of the brother of P.W. 1 are well educated, one is a doctor and another is an advocate, both having good practice. The Victim was the only son born to the parents rather late in their life. Naturally, they were deeply affectionate and attached to the boy. They were taking all interest in the boy and in building up his career; they had put him in a <ORG> school giving him the best education even to start with. The boy was a healthy boy and was first in rank in school. <NAME>-lending business. There can be no doubt what ever that the boy would have a predominantly happy life if this tragedy had not occurred. There is nothing in the family environment to detract, in any manner, from the full prospects of a predominantly happy life. He would have had no problems or difficulties to worry him. One can easily visualise the feelings and the shock and the sufferings of the parents when their only child met with his death under such tragic circumstances. The question is whether the compensation awarded by the <ORG> is otherwise than just, i.e. so excessive and vitiated by any error of law or principles, so as to call for interference. It is settled law that the appellate <ORG> should be very slow in differing from the verdict of the <ORG> in the matter of the award of just compensation. If the <ORG> had taken all the relevant aspects and if it had not taken into consideration any irrelevant or extraneous matter, and no error of law or principle had been committed by the <ORG>, the appellate <ORG> will not interfere merely because it may differ on the question of the quantum. It is obvious, there is no exact uniform rule for measuring the value of the human life and the measure of damages cannot be arrived at in precise mathematical calculation, but the amount recoverable depends on the particular facts and circumstances of each case. To a considerable extent the amount of compensation fixed is based upon an estimate, though conjecture, to some extent, is inevitable. The only limitation is, the <ORG> must exclude all considerations of matter which rest in the realm of speculation or fancy or mere sentiment or emotion. The amount fixed ultimately depends upon an objective estimate of what kind of future on earth the victim might have enjoyed, the loss of benefit to the parents or the dependants; in the nature of things, no guidelines in the abstract can be laid down.

8. As regards the measure of liability in the case of motor accidents, the decisions of <ORG> reported in <CITATION> ( have (after a discussion of all the leading decisions in England) laid down the main principles. Both the decisions did not have to consider the measure of liability under Section 110-B of the Motor Vehicles Act. We may now take it as settled law that under the Fatal Accidents Act the liability under Section 1 and Section 2 are distinct, different and independent. Under Section 1 , damages are recoverable for the benefit of persons mentioned therein as loss sustained by them, while, under Section 2 , damages are awarded for the recoupment of the pecuniary loss to the estate of the deceased as a result of the accident. The two claims are based upon different causes of action and the claimants would be entitled to recover compensation separately under both the heads. If however, the person who takes benefit under Section 1 happens to be the same person as is entitled to compensation under Section 2 , there cannot be duplication of the same claim and the compensation awarded under Section 2 for the loss to the estate of the deceased will be taken into account in the calculation of the compensation payable to the claimants under Section 1 . In both the decisions of <ORG>, the statement of the law by <NAME> L.J. in <ORG> v. <NAME> (1913) A.C. 1, had been referred to with approval and followed. In <ORG> v. <NAME> (1913) A.C. 1, it was held that it is not a condition precedent to the maintenance of an action under the Fatal Accidents Act that the deceased should have been actually earning money or money's worth or contributing to the support of the plaintiff at or before the date of the death provided that the plaintiff had a reasonable expectation of pecuniary benefit from the continuance of the life. Reference may be made to the following classical statement of the law by Lord <NAME> at page 7 in <ORG> v. <NAME> (1913) A.C. 1., referred to in the decisions of <ORG>:

In <ORG> v. <NAME> (1913) A.C. 1, <ORG> observed that it is not a condition precedent to the maintenance of an action under the Fatal Accidents Act , 1846, that the deceased should have been actually earning money or money's worth or contributing to the support of the plaintiff at or before the date of the death provided that the plaintiff had a reasonable expectation of pecuniary benefit from the continuance of the life.

Therein Lord <NAME> stated the law thus:

I think it has been well established by authority that all that is necessary is that a reasonable expectation of pecuniary benefit should be entertained by the person who sues. It is quite true that the existence of this expectation is an inference of fact - there must be a basis of fact from which the inference can reasonably be drawn; but I wish to express my emphatic dissent from the proposition that it is necessary that two of the facts without which the inference cannot be drawn are, first, that the deceased earned money in the past, and second, that he or she contributed to the support of the plaintiff. These are, no doubt, pregnant pieces of evidence, but they are only pieces of evidence; and the necessary inference can, I think be drawn from circumstances other than and different from them.

<ORG> summed up the law in these terms at pages 380 and 381:

The law on the point arising for decision can be summed up thus : Compulsory damages under Section 1-A of the Act for wrongful death must be limited strictly to the pecuniary loss to the beneficiaries and that under Section 2 , the measure of damages is the economic loss sustained by the estate. There can be no exact uniform rule for measuring the value of the human life and the measure of damages cannot be arrived at by precise mathematical calculations but the amount recoverable depends on the particular facts and circumstances of each case. The life expectancy of the deceased or of the beneficiaries whichever is shorter is an important factor. Since the elements which go to make up the value of the life of the deceased to the designated beneficiaries are necessarily personal to each case, in the very nature of things, there can be no exact or uniform rule for measuring the value of human life. In assessing damages, the <ORG> must exclude all considerations of matter which rest in speculation or fancy though conjecture to some extent is inevitable. As a general rule parents are entitled to recover the present cash value of the prospective service of the deceased minor child. In addition they may receive compensation for loss of pecuniary benefits reasonably to be expected after the child attains majority. In the matter of ascertainment of damages, the appellate <ORG> should be slow in disturbing the findings reached by the <ORG>s below, if they have taken all the relevant facts into consideration.

Now applying the above rules to the facts of the present case, it is seen that the deceased child was only 8 years old at the time of his death. How he would have turned out in life later is at best a guess. But there was a reasonable probability of his becoming a successful man in life as he was a bright boy in the school and his parents could have afforded him a good education. It is not likely that he would have given any financial assistance to his parents till he was at least 20 years old. As seen from the evidence on record, his father was a substantial person. He was in business and his business was a prosperous one. As things stood he needed no assistance from his son. There is no material on record to find out as to how old were the parents of the deceased at the time of his death. Nor is there any evidence about their state of health....

In <ORG> v. <ORG> 1971 A.C.J. 206 even though the case arose out of a claim under Section 110-A of the Motor Vehicles Act, <ORG> discussed the problem with reference to the provisions of the Fatal Accidents Act , leaving open the question whether the power conferred upon the <ORG> under Section 110-B of the Act is wider.

It is unnecessary to refer to the several cases cited by Counsel on both sides as the determination of compensation turns upon the particular facts of each case. The result of the case law is (1) The thing to be valued is not merely the prospect of the length of life, but the prospect of a predominantly happy life of the deceased. This undoubtedly, would vary from case to case, depending upon the family environment, the members of the family, the health and age of the victim, his outlook in life, the interest which his parents were taking in the boy, and the totality of circumstances tending to show whether the victim would have a predominantly happy life or a life of misery or a life of despondence or an insipid life. Even though it depends upon very many uncertain factors, the <ORG> has to take an overall picture and form its estimate though, to some extent, it must be based upon speculation. (2) The pecuniary loss sustained by the persons entitled to claim compensation as a result of the accident : In determining the pecuniary loss, say, the age of the boy at the time of his death, the age of the parents and the prospects of the boy contributing his earnings to the parents will have to be taken note of. In the case of a father and an only son, it is difficult to formulate a uniform rule that, because the father himself is carrying on business with affluence, there will not be any contribution by the deceased if he had not met with the accident. It cannot be said to be arbitrary or capricious to Visualise that both the father and the son would have together pooled up their resources and income and augmented their wealth. The pecuniary loss will have to be evaluated with reference to several considerations and the pecuniary loss to the family will be the pecuniary loss to the mother herself on the facts of this particular case, when the family consists only of the father, the mother and the son. In some of the decisions, it is seen that the Courts have taken rather a pessimistic view of the future prospects of the young boy who met with the accident, on tire ground that no one can be certain about the child's future or correctly estimate his future pecuniary prospects in the view that the boy would have to pass through several risks and uncertainities in his childhood and young age, and on that account, a moderate sum has been awarded as damages. In some other cases, Courts have taken a more liberal view and have awarded damages under both the headings on the basis of predominantly happy life which the victim would have lived but for the accident, taken along with the fact that the boy was a bright boy and that the parents evinced great interest in shaping the career of the boy and in his prospects. If the value is to be ascertained with reference to the bright prospect of a predominantly happy life, it, will at once be realised that that does not necessarily depend upon the wealth on status of the family alone. As <NAME>, L.J. pointed out in <NAME> v. <NAME> (1962) 1 All. E.R. 257, 264, 'wealth and fine physique clearly do not ensure happiness, nor do poverty or disablement necessarily entail unhappiness,' In <NAME> v. <ORG> (1943) 2 All E.R. 477, 485, Lord <NAME>, J. emphasizing that 'life is our most precious asset' observed as follows:

There, then is the guidance; but one cannot forget that life is deemed by the law to be our most precious asset. The severest punishment that the law knows is that of depriving a man of his life; it is considered of greater value than liberty and to be a more severe punishment than depriving a man of his liberty for the rest of his natural life, which usually means at the outside, I suppose something under twenty years.

In <NAME> v. <NAME> (1961) 3 All. E.R. 323, affirming the decision reported in, <NAME> v. <NAME> (1960) 3 All. E.R. 677 a boy aged 20 months sustained serious brain injuries as a result of motor accident and he became mentally unable to talk or to understand what was said to him. In the special circumstances of the case, the award of £11,000 was confirmed by the appellate Court. In that case it was observed that the victim was entitled to compensation for loss of the amenities of life like the loss of opportunity to marry, earn a livelihood and to enjoy life. The fact that the father of the infant was an executive earning £1,250 per year was also taken into account. <NAME>, C.J., who tried the action and awarded £11,0000 as damages, observed as follows, at page 679:

The infant plaintiff is, I think, entitled to something for what he has lost, whether he knows he has lost it or not, albeit that the amount may well be less than in the case of a person who has enjoyed life and amenities and knows that he has lost them. The trouble, however, is to put that into money. There are so many imponderabless, especially in the case of such a young child. As far as loss of earnings is concerned, the considerations involved again cannot easily be put into pounds, shillings and pence. Here again, there are imponderables. What education would the parents have been able to give the child? If not, how far would the child succeed? What trade or profession would he take up and what would he have earned? There is no conceivable clue to that. The only guide, if it be any guide at all - and I do not think it is - is that his father is working in an executive capacity making, lam told, £1,250 a year. In addition, there are questions of taxation and other matters, but whatever view one takes as to eventual earnings, the figure must, in the case of such a young child, he heavily discounted... Doing the best I can in all the circumstances, I would award to this child a sum of £ 11,000....

In the appeal from that decision, reported in, <NAME> v. <NAME> (1961) 3 All E.R. 323, Holroyd Pearce, L.J. while adverting to the difficult task in assessing the value the loss of expectation of a predominantly happy life, observed that the assessment of such a claim involves an investigation in detail of the temperament and health of the victim, his expectation of life and his expectation of material prosperity. After referring to some of the decisions in England, the learned Lord Justice emphasized that the circumstances of that case moist lead to the inference that the victim had been deprived of a positive measure of happiness the test being the bright prospect of a predominantly happy life. At pages 332 and 333, while pointing out the proper approach of an appellate <ORG> in dealing with the award of damages, it was observed as follows:

The appeal is more difficult. The ingredients that go to make the final figure have been scrupulously weighed in the judgment. We can only alter it if we are satisfied that it is a wholly erroneous estimate of the damage, if we are satisfied that, broadly speaking, there is only one reasonable answer to the problem and that the learned Judge has failed to give it. One cannot seek for precision or certainty in many cases which are tried by the <ORG> in their anxious talk of weighing imponderables. Often, there is a norm, whether established by common sense or reason or the convention of the <ORG>. Then one can decide how great a departure from it justifies the description 'wholly erroneous'. Here there is no such norm. Both counsel of great experience describe the case as unique. They can cite no comparable case among the many strange and unhappy injuries that have come before the <ORG>....

... But one must award such a sum as represents, artificially, the gravity of the loss. It is hard to give cogent reasons for this figure or for that. One can merely assert.

I myself would feel inclined towards a larger figure, but the learned Lord Chief Justice and my brethren all think otherwise. I can give no adequate reason to support a higher figure or to show that one figure is more right than the other. There is no norm by which one can say that this figure is right and the other wrong. To say in <NAME>'s words, 'I cannot argue I can only feel' may be permitted in a juryman but it is rarely a sound foundation for a judgment. Here, the Lord Cheif Justice has impeccably balanced all the relevant matters with sympathy and anxious consideration and arrived at a conclusion. One certainly cannot say that it was wholly erroneous. I would therefore somewhat respectfully "agree with my brethren's view that the appeal must be dismissed".

With respect, these observations apply to the instant case "which is unique" and we ourselves cannot give any cogent reasons for saying that some other figure would be more right then the figure awarded by the <ORG>. It is unnecessary to discuss the matter further; the appellate Court would be slow to interfere with the Verdict of the <ORG>, as it is inevitable that in assessing the damages, elements of estimate and to some extent, conjecture and a balancing of chances and chances of fortune enter into the computation of the quantum. The appellate Court would interefere only if it is satisfied that the result reached was out of all proportion to the circumstances of the case and clearly capricious and arbitrary. In <NAME> v. <ORG> (1968) 1 All E.R. 518, while adverting to the difficult and invidious task of the Judge in ascertaining the damages, <NAME>, L.J., at page 523, observed:

The task is frequently perplexing, and its performance cannot be regarded as affording one of the most impressive examples of the exercise of the judicial function. Certainly it is one of the most difficult.

A reference to the discussion in the recent decision of <ORG> reported in <ORG> v. <NAME> (1963) 2 W.L.R. 1359 : (1963) 2 All E.R. 625, in which the decision in <NAME> v. <NAME> (1962) 1 All E.R. 257, was approved, will show that the trend of later decisions is to limit the scope of the principle enunciated in Benham v. Gambling (1941) A.C. 157, and that the award of damages is essentially a matter of opinion and experience and the <ORG> can pay due regard to "the range and limits of the current thought". In Salmond on Torts (Fourteenth Edition) at pages 752 and 753, the learned author discusses the limits on the functions of an appellate <ORG> in the matter of award of damages and has summed up by saying that the <ORG> would interfere if it said to itself (as observed by Lord <NAME> in <NAME> v. <ORG> (1951) 2 T.L.R. 1226, "Good gracious me - as high as that". Taking an overall picture of all the aspects of the case and also bearing in mind that under Section 110-B of the Motor Vehicles Act, the jurisdiction of the <ORG> to award "just compensation" is Very wide and comprehensive, we cannot say that this situation envisaged by <NAME>, L.J., has arisen in this case. Amongst other considerations, the <ORG> has awarded damages on the basis that the victim is likely to contribute a sum of Rs. 100 per mensem for about 45 years. It may be that one can take a view that the likely monthly contribution may be more and the period may be less, but it is not possible to be dogmatic in such matters. If an award of £11,000 in the case of a child of 20 months has been upheld by the <ORG> of Appeal in England, we cannot say that the award of Rs. 25,000 in the case of a boy of 12 years is so excessive as not to be just within the meaning of Section 110B of the Motor Vehicles Act. For all these reasons, we confirm the decision of the <ORG> and dismiss the appeal with costs.


PETITIONER: J.K. JAIN & ORS. Vs. RESPONDENT: DELHI DEVELOPMENT AUTHORITY & ORS. DATE OF JUDGMENT26/09/1995 BENCH: SINGH N.P. (J) BENCH: SINGH N.P. (J) FAIZAN UDDIN (J) CITATION: 1996 AIR 318 1995 SCC (6) 571 JT 1995 (7) 409 1995 SCALE (5)625 ACT: HEADNOTE: JUDGMENT:

J U D G M E N T N.P. SINGH. J Leave granted.

The appellants have questioned the validity of the order, passed by <ORG>, rejecting the claim of the appellants that there was no agreement between the appellants and the respondent - <ORG>, (hereinafter referred to as `the respondent') to refer the dispute between them to an Arbitrator.

The appellant No.4-M/s <ORG> Mills is a registered partnership firm and the appellant No.1 (hereinafter referred to as `the appellant') is the Managing Partner. The respondent issued a notice inviting tenders for supply of steel bars of various diametres to the extent of 20,000 Mt. Tonnes. The appellant obtained a tender form from the said respondent on 16.11.1982. The tender was submitted alongwith a covering letter dated 18.11.1982. After negotiations, the tender was accepted only for supply of 10.000 Mt. Tonnes of steel bars of various diametres. A formal agreement was executed. Thereafter some dispute arose between the parties and it appears that the respondent vide its letter dated 23.10.1984 rescinded and annulled the contract for the balance quantity of 3512.285 tonnes. The Engineer Member of the authority in purported exercise of the powers under clause 14 of the agreement, appointed an Arbitrator to make an Award relating to the disputes between the appellant and the respondent. An Original Miscellaneous Petition was filed before <ORG> on behalf of the appellants challenging the appointment of an Arbitrator on the ground that appellants were not party to any Arbitration Agreement. That petition was dismissed by a learned single Judge. On appeal being filed <ORG> came to the conclusion that in view of Clause 14 of the agreement any dispute between the parties had to be referred to an Arbitrator to be appointed by the respondent. In the agreement which was entered into between the appellants and the respondent it was stated:-

"WHEREAS the Contractor has submitted tender for the work "Supplying and stocking of Cold Twisted deformed Steel Bars Conforming to IS: 1786-1979 of various dias at any D.D.A. Stores in Delhi/New Delhi" and the same has been acepted by the <ORG> on the terms and condition contained in the tender forms and conditions attached herewith in the letter of acceptance dated the 27.12.82.

NOW THIS DEED WITNESS AS UNDER: That the terms and conditions contained in the tender form and conditions of the contract attached to this deed, and also the letter of <ORG> dated the 27.12.82 shall be binding between the parties."

To that very agreement, the tender form with the heading `Tender and Contract for supply of materials' was enclosed. The tender form has an endorsement "issued to <ORG>", signed by the Executive Engineer, <ORG>, on 16.11.1982. Appellant has signed the agreement aforesaid and the different pages of the tender form on behalf of appellant No.4, the firm. The Executive Engineer has signed on behalf of the respondent. Paragraph 14 of the said tender form contains the arbitration clause, saying that 'except where otherwise provided in the contract all question and disputes relating to the meaning of the specifications, designs, drawings and instructions, hereinbefore mentioned and as to the quality of workmanship or materials used on the work or to any other question, claim, right matter or thing whatsoever, in any way arising out of or relating to the contract, designs drawings specifiation, estimates instruction orders or these conditions or otherwise concerning the works or the executions on failure to execute the same whether arising during the progress of the work or after the completion or abandonment thereof shall be referred to the sole arbitration of the person appointed by the Engineer Member, DDA at the time of dispute....' The stand of the appellants is that the said clause shall not be deemed to be a part of the agreement, inasmuch as it is only part of the tender form which is issued to every contractor intending to supply materials to the respondent. It is just general rules for the guidance of the contractors. It may be pointed out that the notice inviting tenders clearly stated 'Contract documents consisting of the detailed plans, complete specifications, the schedule of quantities of the various classes of work to be done and the set of conditions of contract to be complied with the person whose tenders may be accepted will also be found printed in the form of tenders, can be seen/purchased at the Divisional office between the hours of 11 A.M. and 4 P.M. every day, except on Sundays and Public Holidays' (emphasis supplied). From the notice inviting tenders it is apparent, that to whomsoever the contract was to be allotted, the conditions in the printed form of tender had to be complied with. It appears because of the aforesaid condition mentioned in the notice inviting tenders, at the time of the execution of the agreement, the appellant, the Managing Partner, on behalf of the firm signed each page of the said form of tender including the last page. On behalf of the respondent, it has been signed by the Executive Engineer and the form of tender has been attached to the agreement referred to above. In the agreement it has been clearly stated that the terms and conditions contained in the tender form and the conditions of the contract attached to the said deed and also the letter of acceptance dated 27.12.1982 shall be binding between the parties. The effect of the aforesaid agreement shall be that the tender form and conditions of the contract attached to the said deed to agreement including the letter of acceptance dated 27.12.1982 shall be deemed to be the part of the agreement between the appellants and the respondent including that in event of dispute in respect of any claim, right or matter or thing whatsoever in any way arising out of or relating to the contract shall be referred to the sole arbitration of the person appointed by the Engineer Member of the respondent.

The learned counsel appearing for the appellants submitted that the expression 'Tender Form' mentioned in the agreement does not refer to the aforesaid form relating to 'tender and contract for supply of materials' in which there is an arbitration clause, rather it refers to form No.9 which had been filled up by the appellants saying that they had submitted their tender for supply to the respondent, materials described therein within time specified 'subject to the conditions of the contract'. Towards the end of that form under heading 'Specification and Additional Conditions' details of the steel bars to be supplied and that <ORG> test certificate in original to be given along with each consignment etc. have been mentioned.

On the direction being given by <ORG> the original agreement alongwith all documents attached thereto were produced on behalf of the respondent. The form of tender in which clause 14 contains condition regarding referring the disputes to the arbitration, as well as the form No.9 on which reliance has been placed on behalf of the appellants are attached to the agreement and as such both shall be deemed to be the part of the agreement. These documents have been signed on behalf of the appellants and the respondent. In the agreement, a clear and specific statement has been made that the terms and conditions contained in the tender form shall be binding between the parties, which shall include the condition in clause 14 thereof, to refer any dispute to an Arbitrator to be appointed by the Engineer Member of the respondent.

It is true that there must be an arbitration agreement, to confer jurisdiction on the Arbitrator to hear and decide the dispute. Where there is no such agreement there is an initial want of jurisdiction. That is why it has been impressed by <ORG> that one of the essential ingredients of submission to arbitration is that the parties should agree that the dispute should be determined by an Arbitrator. Where there is an arbitration clause in a contract, it amounts to two contracts into one, one relating to the execution of the work entrusted in the manner prescribed and the other how to resolve the dispute in event any such dispute arises in respect of the said contract. Whenever one party to the dispute asserts that there is an arbitration agreement by which the parties had agreed to refer the dispute to an Arbitrator which is disputed and challenged by the other party to the agreement, it has to be examined and determined. To constitute "an arbitration agreement" it is not necessary that there should be a formal agreement or that the terms should all be contained in one document. All that is necessary that from documents it must appear that parties had agreed to submit present or future differences to arbitration.

Section 2(a) of the Arbitration Act defines 'arbitration agreement' to mean a written agreement to submit present or future differences to arbitration, whether an arbitrator is named therein or not. But when Section 2(a) while defining 'arbitration agreement' speaks about a written agreement to submit present or future differences to the arbitration, it is not necessary that it should also be signed by the parties like any formal agreement relating to a contract. In the case of <CITATION> , AIR 1955 SC 812 = 1955 (2) SCR 857, it was said:

"But it is settled law that to constitute an arbitration agreement in writing it is not necessary that it should be signed by the parties, and that it is sufficient if the terms, are reduced to writing and the agreement of the parties thereto is established."

It was said in the case of <CITATION> , AIR 1963 SC 1417 = 1963 (2) SCR 760:

"It may be pointed out that the arbitration clause in the agreement was enforceable if agreed to, even without the signature of the appellant as it is a settled law that to constitute an arbitration agreement in writing it is not necesary that it should be signed by the parties and it is sufficient if the terms are reduced to writing and the agreement of the parties thereto is established."

In the case of <CITATION> , AIR 1963 SC 1685 = 1964 (3) SCR 164, it was said:

"A writing incorporating a valid agreement to submit differences to arbitration is therefore requisite: it is however not a condition of an effective arbitration agreement that it must be incorporated in a formal agreement executed by both the parties thereto, nor is it required to be signed by the parties. There must be an agreement to submit present or future differences to arbitration, this agreement must be in writing, and must be accepted by the parties."

In Commercial Arbitration by Mustill & Boyd, second edition at page 105, it has been stated:

"...the parties need not set out the terms of their arbitration agreement in the contract itself. It is sufficient for the clause to be incorporated by reference either to a standard form of clause or to a set of trade terms which themselves include provisions requiring disputes to be submitted to arbitration. Nor need the contract itself be contained in a single document."

As already pointed out above, so far the present case is concerned, the arbitration clause has not been included in the agreement itself. But it shall be deemed to be part of the agreement because the agreement specifically says that the terms and conditions contained in the tender form shall be binding between the parties which obviously will include clause 14 of the tender form, which admittedly requires any dispute between the parties to be referred to an arbitration. The other special feature of the present case is that each page of the tender form which forms part of the agreement has been signed by the appellant, on behalf of the firm and the Executive Engineer on behalf of the respondent. A mere denial of the existence of the contract of arbitration by one party does not denude the arbitrator of jurisdiction. The Arbitrator gets jurisdiction to decide the disputes on basis of the agreement to refer such disputes and not by its acceptance or denial. The objection on behalf of the appellants, that there was no condition in the main agreement to refer the disputes to arbitration can be accepted only if it is held that the different terms and conditions mentioned in the tender form are not binding on the parties, because parties never agreed to those terms and conditions, while entering into a contract. But the fact about which there is no dispute, is that both the parties had signed the tender form in token of having accepted the terms and conditions mentioned therein including about reference of disputes, if any, to an Arbitrator. They had also agreed in the main agreement,that the terms and conditions contained in the tender form shall be binding between the parties. In this background, it is difficult for us to comprehend as to how it can be held that the appellants had never agreed to refer any dispute arising between the parties to an Arbitrator in terms of Clause 14 of the tender form.

In the result, the appeal fails and is dismissed. There shall be no order as to costs.


CASE NO.: Appeal (crl.) 775 of 2005 PETITIONER: <NAME> RESPONDENT: State of Kerala DATE OF JUDGMENT: 21/06/2007 BENCH: Dr. <NAME> & D.K. JAIN JUDGMENT:

J U D G M E N T Dr. <NAME>, J.

1. Challenge in this appeal is to the order passed by the learned Single Judge of <ORG>. By the impugned order the appellant was found guilty of the offence punishable under Section 304 Part II of the Indian Penal Code, 1860 (in short ' IPC '). Learned Sessions Judge, <NAME>, had convicted the appellant for the offence punishable under Section 304 Part II . <ORG> found the same to be in order. Custodial sentence of five years was confirmed.

2. The background facts in a nutshell are as follows:

A boy aged 10 years residing in a hostel of <ORG>, while he was a student of 4th standard in a nearby school, was run over by a bus driven by the appellant in the middle of the road. The investigation by the police revealed that there was evidence to the effect that even the passengers in the bus were alarmed of the enormous speed in which it was being driven and had cautioned the driver to stop even crying, as they had seen the school children crossing the road in a queue. The investigation also revealed that even the children crossing the road had raised both hands for stopping the vehicle. The passengers and pedestrians were of the view that the bus was being driven at a high speed and that they had cried aloud to stop the bus. It was, in spite of all these, that the bus ran over the said student on his head and the bus could be stopped only 15 to 20 feet ahead of the spot of occurrence. In the light of the said evidence, the investigating officer felt that there was real intention on the part of the appellant/driver of the bus to cause death of persons to whom harm may be caused by reason of hitting the bus and he was charged with offence punishable under Section 302 . The court below found that no intention had been proved in the case. But, at the same time, the accused acted with the knowledge that it was likely to cause death. So, the act committed by the appellant was culpable homicide not amounting to murder punishable under Section 304 Part II . Convicting him for the said offence, he was sentenced to undergo rigorous imprisonment for five years and to pay a fine of Rs.15,000/- with a default sentence of imprisonment for three years. This was assailed in appeal.

3. <ORG> did not find any substance in the plea of the appellant that the accused had not caused death either with the intention of causing death or with the intention to cause such bodily injury as is likely to cause death or with the knowledge that he is likely to cause such act to cause the death. It was submitted that case is covered under Section 304A . Same was not accepted. So, it was held that this is a case of culpable homicide. It accepted the stand of the respondent-State that conviction is to be made for culpable homicide.

4. The respective stand taken before <ORG> was re- iterated in this appeal.

5. Section 304A speaks of causing death by negligence. This section applies to rash and negligence acts and does not apply to cases where death has been voluntarily caused. This section obviously does not apply to cases where there is an intention to cause death or knowledge that the act will in all probability cause death. It only applies to cases in which without any such intention or knowledge death is caused by what is described as a rash and negligent act. A negligent act is an act done without doing something which a reasonable man guided upon those considerations which ordinarily regulate the conduct of human affairs would do or act which a prudent or reasonable man would not do in the circumstances attending it. A rash act is a negligent act done precipitately. Negligence is the genes, of which rashness is the species. It has sometimes been observed that in rashness the action is done precipitately that the mischievous or illegal consequences may fall, but with a hope that they will not. Lord <NAME> in <NAME> v. Director of Public Prosecutions (1937) AC 576 at p.583 = 2 All E.R. 552) observed as under:

"Simple lack of care such as will constitute civil liability is not enough. For purposes of the criminal law there are degrees of negligence; and a very high degree of negligence is required to be proved before the felony is established. Probably of all the epithets that can be applied 'recklessness' most nearly covers the case. It is difficult to visualize a case of death caused by reckless driving in the connotation of that term in ordinary speech which would not justify a conviction for manslaughter; but it is probably not all embracing, for 'recklessness' suggests an indifference to risk whereas the accused may have appreciated the risk and intended to avoid it, and yet shown in the means adopted to avoid the risk such a high degree of negligence as would justify a conviction."

6. Section 304-A applies to cases where there is no intention to cause death and no knowledge that the act done in all probability will cause death. The provision is directed at offences outside the range of Sections 299 and 300 . The provision applies only to such acts which are rash and negligent and are directly cause of death of another person. Negligence and rashness are essential elements under Section 304-A . Culpable negligence lies in the failure to exercise reasonable and proper care and the extent of its reasonableness will always depend upon the circumstances of each case. Rashness means doing an act with the consciousness of a risk that evil consequences will follow but with the hope that it will not. Negligence is a breach of duty imposed by law. In criminal cases, the amount and degree of negligence are determining factors. A question whether the accused's conduct amounted to culpable rashness or negligence depends directly on the question as to what is the amount of care and circumspection which a prudent and reasonable man would consider to be sufficient considering all the circumstances of the case. Criminal rashness means hazarding a dangerous or wanton act with the knowledge that it is dangerous or wanton and the further knowledge that it may cause injury but done without any intention to cause injury or knowledge that it would probably be caused.

7. As noted above, "Rashness" consists in hazarding a dangerous or wanton act with the knowledge that it is so, and that it may cause injury. The criminality lies in such a case in running the risk of doing such an act with recklessness or indifference as to the consequences. Criminal negligence on the other hand, is the gross and culpable neglect or failure to exercise that reasonable and proper care and precaution to guard against injury either to the public generally or to an individual in particular, which, having regard to all the circumstances out of which the charge has arisen it was the imperative duty of the accused person to have adopted.

8. The distinction has been very aptly pointed out by <NAME> in these words:

''Culpable rashness is acting with the consciousness that the mischievous and illegal consequences may follow, but with the hope that they will not, and often with the belief that the actor has taken sufficient precautions to prevent their happening. The imputability arises from acting despite the consciousness. Culpable negligence is acting without the consciousness that the illegal and mischievous effect will follow, but In circumstances which show that the actor has not exercised the caution incumbent upon him and that if he had, he would have had the consciousness. The imputability arises from the negligence of the civic duty of circumspection." (See In re: <NAME> 7 Mad. H.C.R. 119)

9. Vehicular accidents resulting in deaths and injuries are spiraling.

10. The Editorial under the heading "Road Traffic Injuries & fatalities in India  a modern epidemic" in <ORG>, January 2006 contains some interesting observations. The relevant portions read as follows:

"<ORG> adopted a resolution on road safety on October 26, 2005 which invites Member States to implement the recommendations of the World Report on Road Traffic Injury Prevention; to participate in the first United Nations Global Road Safety Week; and to recognize the third Sunday in November of every year as the World Day of Remembrance for Road Traffic Victims'. This resolution follows the publication of The World Report on Road Traffic Injury Prevention by <ORG> in 2004. This report highlights the fact that all over the world working age people are more likely to suffer hospitalization, permanent disability and death due to road traffic injuries than most other diseases. The situation in India is not very different.

About 82,000 persons were killed on Indian roads in 2002. Official statistics regarding serious injuries are not reliable as they underestimate the actual number, but it is estimated that the number of people hospitalized may be 15-20 times the number killed. In a do-nothing scenario, it is possible that India will have 1,20,000 - 1,30,000 road traffic fatalities in the year 2008 and possibly 1,50,000 - 1,75,000 in 2015. Our vision should aim at reducing the fatalities to less than 1,00,000 in the short term (2008) and less than 70,000 in the long term (2015). xxx xxx xxx Safety measures for the near future xxx xxx xxx Motor vehicle occupants: (i) Enforcement of seatbelt use laws countrywide; (ii) restricting travel in front seat of cars by children has the potential of reducing injuries dramatically; and (iii) bus and truck occupant injuries, fatalities, and injuries caused to other road users can be reduced significantly by enforcing strict observance of speed limit regulations on highways. Ensuring that bus timetables and truck movement schedules make it possible for drivers to observe speed limits with ease. Random speed checking on highways would help ensure such measures.

xxx xxx xxx Road safety strategies - Long term Traffic calming and speed control: (i) Aim at implementing speed control and traffic calming measures in all urban areas and at appropriate locations on rural highways by altering road design, vehicle monitoring through intelligent transport systems, and vehicle design by the year 2015. This measure is likely to give us the maximum savings in terms of lives and serious injuries; and (ii) segregated lanes for vulnerable road users and buses in urban areas. Non-motorized transport and buses must be provided segregated lanes on all major arterial roads in urban areas. India specific designs need to be developed and phase wise implementation plans drawn up for all cities.

xxx xxx xxx Vehicle safely: (i) All vehicles sold in India should meet international crashworthiness standards by 2010; (ii) all buses and trucks should meet pedestrian impact standards by 2010; (iii) all urban buses to have low floors and automatic closing doors; (iv) crashworthiness standards must be developed for all indigenous vehicles by 2010 and implemented by 2012; (v) installation of Intelligent Transport Systems (ITS) and other modern safety devices for assisting and controlling drivers; and (vi) driving under the influence of alcohol and other drugs. A long term strategy to reduce drinking and driving incidence to less than 10 per cent of all crashes needs to be drawn up for the next 10 yr. Sensitization of the public to the extent of the problem. Institution of random roadblocks and checking on urban roads and rural highways. Ignition interlock on cars."

11. In "Global Road Safety" certain revealing data have also been provided. They read as follows:-

"THE COMING PLAGUE OF ROAD TRAFFIC INJURIES: A PREVENTABLE BURDEN FOR RICH AND POOR COUNTRIES".

12. Almost 1.2 million people are killed each year and 20-50 million are injured or disabled, most people are unaware that road traffic injuries are a leading cause of death and disability.

13. In developing countries, death rates from vehicle crashes are rising, and disproportionately high in relation to the number of crashes. According to a report published in 2000  Developing and transitional countries cumulatively represent over 85 percent of all road traffic deaths  Kenya has nearly 2,000 fatalities per 10,000 crashes. Vietnam has over 3,000 fatalities per 10,000 crashes.  44% of all road traffic deaths occur in the Asia/Pacific area, which only has 16 % of the total number of motor vehicles.

At 71,495 and 59,927 total deaths, China and India, respectively, had the highest number of road fatalities in the world in 1995.-

Pedestrian deaths represent 62 % of all traffic fatalities in Lebanon. In most developing countries vulnerable road users, including pedestrians, bicycle and motor cycle riders, account for the majority of all fatalities.  Eastern European countries represent 6% of motor vehicles, but 11% of crash fatalities worldwide.  The Latin America/Caribbean region has the second highest crash costs behind Asia.

14. As vehicle use in developing countries are increasing, road traffic injuries are expected to become the third leading cause of death and disability worldwide by 2020. In developing countries, each vehicle is much more lethal than the vehicles in developed countries, because it most frequently takes the lives not of vehicle occupants, but of vulnerable road users: pedestrians, cyclists. Many developing countries are increasing the rate of motorized vehicle use at up to 18% per year. In India, for example, there has been a 23% increase in the number of vehicles from 1990-1999 and a 60-fold increase is predicted by 2050.

15. The human toll in such accidents is tragic. Survivors and family members are affected not only by an immediate death or disability, but also lifetime psychological and physical suffering. Crashes often result in orphans, and some victims, as young as infants, spend the rest of their lives with medical facilities.

ECONOMIC IMPACT

16. In addition to the devastating human toll, the economic impact of road crashes is also enormous. Many of those injured or killed are wage earners, leaving families destitute and without means of support. Loss of wages, property damage, and other factors affected by road traffic crashes represented 4.6% of the gross national product of the United States in 1994. In developing countries, road traffic crashes represent 3-5% of the GNP. 'The estimated annual cost of road traffic crashes in developing countries exceeds $100 billion (US). This amounts to nearly double the total combined development assistance these countries receive every year from bilateral and multi-lateral government organizations. Globally, the estimated annual costs of road crashes are 500 billion (US).

THIS PROBLEM IS PREVENTABLE

17. We have the tools needed to combat this epidemic. In the developed nations, proven methods such as enforcement of laws regarding driving under the influence of alcohol or drugs, reducing speed limits, and requiring seat belts and restraints have shown significant reduction in traffic fatalities. Road design and road environment, vehicle design, and road safety standards are also strategies that successfully address traffic safety. For maximum impact of RTI's, a systems approach with multiple, scientifically proven prevention techniques must be employed. Education alone has been shown to be less effective, and often ineffective.

18. Proven interventions for developed countries require research, modification, and testing for developing countries. For example, developing countries face poorly designed and maintained roadways, unsafe vehicles, drivers under the influence of drugs or alcohol, lack of national policies, and inadequate enforcement. Success will require significant new resources supported by sustained political commitment.

19. When the factual scenario of the present case is analysed, it is crystal clear that the appropriate conviction would be under Section 304 A  and not Section 304 Part II . Conviction is accordingly altered. The maximum sentence which can be imposed for offence punishable under Section 304A is two years with fine or with both. The custodial sentence, therefore, is reduced to the maximum i.e. two years.

20. It is contended by the learned counsel for the <ORG> that in a case of this nature two years sentence is grossly inadequate. There is substance in this submission considering the increasing number of vehicular accidents resulting in death of large number of innocent persons. It is for the legislature to provide for an appropriate sentence. But the statute presently provides for a maximum sentence of two years.

21. The appeal is allowed to the aforesaid extent.