Insurance laws – accident claims – future prospects – (iii) While determining the income, an addition of 50% of actual salary to the income of the deceased towards future prospects, where the deceased had a permanent job and was below the age of 40 years, should be made. The addition should be 30%, if the age of the deceased was 48 between 40 to 50 years. In case the deceased was between the age of 50 to 60 years, the addition should be 15%. Actual salary should be read as actual salary less tax. (iv) In case the deceased was self­employed or on a fixed salary, an addition of 40% of the established income should be the warrant where the deceased was below the age of 40 years. An addition of 25% where the deceased was between the age of 40 to 50 years and 10% where the deceased was between the age of 50 to 60 years should be regarded as the necessary method of computation. The established income means the income minus the tax component.” = whether the appellants seek further enhancement of compensation amount on the ground that the High Court has not provided for future prospects, while computing the compensation amount. = The compensation awarded by the High Court is enhanced from Rs.5,01,500/­ to Rs.6,74,300/­ [Rupees six lakh seventy four thousand three hundred only]. The respondent Transport Corporation is directed to deposit the entire award amount as indicated above with interest at 9% (nine percent) per annum less the amount already deposited if any, within a period of eight weeks from the date of receipt of a copy of this judgment and the appellants shall be entitled to the compensation in the proportion specified by the Tribunal.

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REPORTABLE

 

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO.1754 OF 2018

(Arising out of SLP (Civil) No.12416 of 2016)

Munusamy & Ors. ….   Appellants

 

Versus

The Managing Director, Tamil Nadu State  ….Respondent

Transport Corporation (Villupuram) Ltd.

J U D G M E N T

A.M. Khanwilkar, J.

1. This   appeal   emanates   from   the   judgment   and   order

passed   by   the   High   Court   of   Judicature   at   Madras   dated

16.04.2013   in   C.M.A.   No.2819   of   2012.   The   High   Court

allowed   the   prayer   for   grant   of   enhanced   compensation

amount   in   favour   of   the   appellants.   The   appellants   seek

further enhancement of compensation amount on the ground

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that the High Court has not provided for future prospects,

while computing the compensation amount. The appellants

rely upon the recent decision of the Constitution Bench of this

Court in the case of National Insurance Company Ltd. Vs.

Pranay Sethi and Ors.1

, to buttress their submission.

2. Before we deal with the grievance of the appellants, it is

apposite to reproduce the relevant extract of the impugned

judgment which reads thus:

“7. We have heard the learned counsel for the respondent

on the above submission.

8. In the absence of specific proof of employment, the

Tribunal rightly has taken the earning of the deceased at

Rs.4,000/­ per month and deducted 50% towards personal

expenses since the deceased were bachelors. However, the

proper multiplier to be adopted in the case must be 18, since

the deceased were 21 and 20 years respectively. A sum of

Rs.20,000/­ to each of the claimants towards loss of love

and   affection   and   a   further   sum   of   Rs.5,000/­   towards

transport expenses were granted.

9. Accordingly, in C.M.A. No.2819 of 2012 compensation

payable would be as follows:

(a) Loss of Dependency  Rs.4,32,000/­

(Rs.4,000/­×12×18)

(b) Loss of love and affection  Rs.   60,000/­

(c) Transport Rs.  5,000/­

(d) Funeral Rs.  2,000/­

1 AIR 2017 SC 5157

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(e) Loss of estate Rs.  2,500/­

Total = Rs.5,01,500/­”

3. On perusal of the judgment under appeal, it is evident

that the High Court has not provided for future prospects

while computing the compensation amount under the head

‘loss of dependency’. The necessity to provide future prospects

has been expounded by the Constitution Bench of this Court

in  National   Insurance   Company   Ltd.  (supra).   It   will   be

useful to reproduce paragraph No.59 of the said judgment,

which reads thus: 

“59. Having bestowed our anxious consideration, we are

disposed   to   think   when   we   accept   the   principle   of

standardization, there is really no rationale not to apply

the said principle to the self­employed or a person who is

on a fixed 44 salary. To follow the doctrine of actual

income at the time of death and not to add any amount

with   regard   to   future   prospects   to   the   income   for   the

purpose   of   determination   of   multiplicand   would   be

unjust.   The   determination   of   income   while   computing

compensation has to include future prospects so that the

method will come within the ambit and sweep of just

compensation as postulated under Section 168 of the Act.

In case of a deceased who had held a permanent job

with   inbuilt   grant   of   annual   increment,   there   is   an

acceptable   certainty.   But   to   state   that   the   legal

representatives of a deceased who was on a fixed salary

would not be entitled to the benefit of future prospects for

the purpose of computation of compensation would be

inapposite.   It   is   because   the   criterion   of   distinction

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between the two in that event would be certainty on the

one hand and staticness on the other. One may perceive

that  the  comparative   measure  is  certainty   on  the   one

hand and uncertainty on the other but such a perception

is fallacious. It is because the price rise does affect a selfemployed

person;   and   that   apart   there   is   always   an

incessant effort to enhance one’s income for sustenance.

The   purchasing   capacity   of   a   salaried   person   on

permanent   job   when   increases   because   of   grant   of

increments and pay revision or for some other change in

service   conditions,   there   is   always   a   45   competing

attitude in the private sector to enhance the salary to get

better efficiency from the employees. Similarly, a person

who is self­employed is bound to garner his resources

and raise his charges/fees so that he can live with same

facilities.   To   have   the   perception   that   he   is   likely   to

remain   static   and   his   income   to   remain   stagnant   is

contrary to the fundamental concept of human attitude

which always intends to live with dynamism and move

and   change   with   the   time.   Though   it   may   seem

appropriate that there cannot be certainty in addition of

future prospects to the existing income unlike in the case

of   a   person   having   a   permanent   job,   yet   the   said

perception does not really deserve acceptance. We are

inclined   to   think   that   there   can   be   some   degree   of

difference as regards the percentage that is meant for or

applied  to in respect  of  the legal representatives  who

claim on behalf of the deceased who had a permanent

job than a person who is self­employed or on a fixed

salary. But not to apply the principle of standardization

on the foundation of perceived lack of certainty would

tantamount   to   remaining   oblivious   to   the   marrows   of

ground reality. And, therefore, degree­test is imperative.

Unless the degree­test is applied and left to the parties to

adduce   evidence   to   establish,   it   would   be   unfair   and

inequitable.   The   degree­test   has   to   have   the   inbuilt

concept of 46 percentage. Taking into consideration the

cumulative   factors,   namely,   passage   of   time,   the

changing society, escalation of price, the change in price

index, the human attitude to follow a particular pattern of

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life, etc., an addition of 40% of the established income of

the deceased towards future prospects and where the

deceased was below 40 years an addition of 25% where

the deceased was between the age of 40 to 50 years

would be reasonable.”

Again, in the concluding paragraph No.61 the Court observed

thus:

“61. In view of the aforesaid analysis, we proceed to

record our conclusions:­

* * *

(iii) While determining the income, an addition of 50% of

actual   salary   to   the   income   of   the   deceased   towards

future prospects, where the deceased had a permanent

job and was below the age of 40 years, should be made.

The addition should be 30%, if the age of the deceased

was 48 between 40 to 50 years. In case the deceased

was between the age of 50 to 60 years, the addition

should be 15%. Actual salary should be read as actual

salary less tax. 

(iv) In case the deceased was self­employed or on a fixed

salary,   an  addition   of   40%   of   the   established   income

should be the warrant where the deceased was below

the   age   of   40   years.   An   addition   of   25%   where   the

deceased was between the age of 40 to 50 years and

10% where the deceased was between the age of 50 to

60 years should be regarded as the necessary method of

computation. The established income means the income

minus the tax component.” 

4. On   03.03.2007,   the   deceased   (Palani),   who   was   only

around 21 years of age at the time, was riding a motorcycle

bearing Registration No. TN­22 AP 5092 along with his friend,

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one   Haridass   as   a   pillion   rider,   from   Tambaram   to

Chengalpattu   on   GST   Road,   Maraimalai   Nagar,   opposite

Vikram   Hotel,   when   they   collided   with   a   bus   bearing

Registration No. TN­21 N 0943 belonging to the respondent

Transport   Corporation,   which   was   driven   in   a   rash   and

negligent manner. The deceased was unmarried and working

as   a   contract   worker   in   Hyundai   Car   Company,

Sriperumbudur.   Applying   the   dictum   of   the   Constitution

Bench   referred   to   above,   the   appellants   are   justified   in

insisting for grant of future prospects at the rate of 40% of the

established income. The High Court has held that the earning

of   the   deceased   at   the   relevant   time   can   be   taken   as

Rs.4,000/­ per month. The High Court did not provide 40%

towards future prospects on the established income of the

deceased. Thus, the monthly loss of dependency, in the facts

of the present case would be Rs.4,000 + 1,600 = Rs.5,600/­.

5. In other words, instead of amount awarded by the High

Court towards loss of dependency in the sum of Rs.4,32,000/­,

the same will stand modified to Rs.6,04,800/­ (Rupees six

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lakh four thousand eight hundred only) along with interest at

the   rate   of   9%   (nine   percent)   per   annum.   We   are   not

disturbing the other directions given by the High Court in

respect of other heads.

6. Accordingly, the respondent Transport Corporation must

deposit   the   additional   amount   of   compensation   of

Rs.1,72,800/­  (Rupees one lakh seventy two thousand eight

hundred only) along with interest, as awarded in the preceding

paragraph, within a period of eight weeks from the date of

receipt of the copy of this judgment in the Court of Additional

District   &   Sessions   Judge,   Fast   Track   Court­IV,   Chennai

(Motor Accident Claims Tribunal, Chennai).

7. In   other   words,   the   compensation   payable   to   the

appellants would be as follows:

(a) Loss of Dependency  Rs.6,04,800/­

[Rs.5,600 – 50% of 5600)×12×18]

(b) Loss of love and affection  Rs.   60,000/­

(c) Transport Rs.   5,000/­

(d) Funeral Rs.   2,000/­

(e) Loss of estate Rs.   2,500/­

Total = Rs.6,74,300/­

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8. As a result, the Appeal stands allowed. The compensation

awarded by the High Court is enhanced from Rs.5,01,500/­ to

Rs.6,74,300/­ [Rupees six lakh seventy four thousand three

hundred   only].   The   respondent   Transport   Corporation   is

directed to deposit the entire award amount as indicated above

with interest at 9% (nine percent) per annum less the amount

already deposited if any, within a period of eight weeks from

the   date   of   receipt   of   a   copy   of   this   judgment   and   the

appellants   shall   be   entitled   to   the   compensation   in   the

proportion   specified  by   the   Tribunal.   The   first   and   second

appellants   are   entitled   to   withdraw   the   amount   deposited

upon verification of due application and the share of the third

appellant (minor) shall be deposited in any of the nationalised

banks   till   she   attains   majority   and   the   second

claimant/mother is entitled to withdraw interest thereon once

in three months towards meeting the needs of the minor. Upon

turning 18, the minor appellant is entitled to withdraw her

respective share. 

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9.      Accordingly,   the   appeal   is   allowed   in   the

aforementioned terms with no order as to costs.

.………………………….CJI.

(Dipak Misra)

…………………………..….J.

(A.M. Khanwilkar)

…………………………..….J.

(Dr. D.Y. Chandrachud)

New Delhi;

February 09, 2018.