2021 Supreme(SC) 6

SUPREME COURT OF INDIA
N.V. RAMANA, S. ABDUL NAZEER, SURYA KANT, JJ.
Kirti and Another – Appellants
Versus
Oriental Insurance Company Ltd. – Respondent
Civil Appeal No. 19-20 of 2021, Special Leave Petition (C) Nos. 18728-18729 of 2018
Decided On : 05-01-2021

IMPORTANT POINTS
(1) Preserving existing standard of living of a deceased’s family is a fundamental endeavour of motor accident compensation law.
(2) Various methods can be employed by Court to fix notional income of a homemaker, depending on facts and circumstances of case. Granting of future prospects on notional income calculated in such cases, is a component of just compensation.
(3) Claims and legal liabilities crystallise at the time of accident itself and changes post thereto ought not to ordinarily affect pending proceedings.
(4) Any compensation awarded by a Court ought to be just, reasonable and consequently must be guided by principles of fairness, equity, and good conscience.

Headnote:

Per Surya Kant, J.

(A) Motor Vehicles Act, 1988 – Section 168 – Death of couple in vehicular accident – Award of just compensation – Reduced compensation of Rs. 22 Lakhs awarded by High Court – At the time of death, there in fact were four dependents of deceased and not three – Subsequent death of deceased’s dependent mother ought not to be a reason for reduction of motor accident compensation – Claims and legal liabilities crystallise at the time of accident itself and changes post thereto ought not to ordinarily affect pending proceedings – Just like how appellant-claimants cannot rely upon subsequent increases in minimum wages, respondent-insurer too cannot seek benefit of subsequent death of a dependent during pendency of legal proceedings – Similarly, any concession in law made in this regard by either counsel would not bind parties, as it is legally settled that Advocates cannot throwaway legal rights or enter into arrangements contrary to law – Any compensation awarded by a Court ought to be just, reasonable and consequently must be guided by principles of fairness, equity, and good conscience – Not only did family of deceased consist of septuagenarian parents, but there were also two toddler girls, each of whom requires exceptional care and expenditure till they reach stage of self-dependency – In addition to married couple, negligence of driver also extinguished life of family’s third child who was a foetus in woman’s womb at the time of accident – Appropriate deduction for personal expenses for both victims ought to be 1/4th only, and not 1/3rd as applied by Tribunal and High Court, more so when there were four family members dependent on deceased. (Paras 10 and 11)

(B) Motor Vehicles Act, 1988 – Section 168 – Death of couple in vehicular accident – Award of just compensation – Reduced compensation of Rs. 22 Lakhs awarded by High Court – Assessment of monthly income and addition of future prospects – Although claimants have been unable to produce any document evidencing income of deceased nor have they established his employment as a teacher but that doesn’t justify adoption of lowest tier of minimum wage while computing his income – From statement of witnesses, documentary evidenceon record and circumstances of accident, it is apparent that deceased was comparatively more educationally qualified and skilled – He maintained a reasonable standard of living for his family – Preserving existing standard of living of a deceased’s family is a fundamental endeavour of motor accident compensation law – At the very least, minimum wage of Rs 6197 as applicable to skilled workers during April 2014 in State of Haryana ought to be applied in his case – Given how both deceased were below 40 years and how they have not been established to be permanent employees, future prospects to the tune of 40% must be paid – No infirmity with High Court’s adoption of 17 as age multiplier, award of 9% interest, calculation of notional income of deceased woman or division of total compensation in ratio of 1:2:2 between grandfather and two girls – Total motor accident compensation of Rs 22 lakhs awarded by High Court to claimant-appellants increased by Rs 11.20 lakhs to reach a new total of Rs 33.20 lakhs – Enhanced amount of compensation shall be paid within two months along with 9% interest. (Paras 12, 14, 15 and 16)

Per N. V. Ramana, J. (Separate Assenting View)

(A) Motor Vehicles Act, 1988 – Section 168 – Death in vehicular accident – Award of just compensation – Notional income of a housewife and applicability of future prospects – There are two distinct categories of situations wherein Court usually determines notional income of a victim – First category of cases relates to those wherein victim was employed, but claimants are not able to prove her actual income, before Court – In such a situation, Court guesses income of victim on the basis of evidence on record, like quality of life being led by victim and her family, general earning of an individual employed in that field, qualifications of victim, and other considerations – Second category of cases relates to those situations wherein Court is called upon to determine income of a non-earning victim, such as a child, a student or a homemaker – Compensation in such cases is extremely difficult to quantify – Court often follows different principles for determining compensation towards a non-earning victim in order to arrive at an amount which would be just in facts and circumstances of case – Some of these involve determination of notional income – Whenever notional income is determined in such cases, different considerations and factors are taken into account. (Paras 2, 3 and 4)

(B) Motor Vehicles Act, 1988 – Section 168 – Death in vehicular accident – Award of just compensation – Notional income of a housewife – Issue of fixing notional income for a homemaker serves extremely important functions – It is a recognition of multitude of women who are engaged in this activity, whether by choice or as a result of social/cultural norms – It signals to society at large that law and Courts of land believe in value of labour, services and sacrifices of homemakers – It is an acceptance of idea that these activities contribute in a very real way to economic condition of family and economy of nation, regardless of fact that it may have been traditionally excluded from economic analyses – It is a reflection of changing attitudes and mindsets and of our international law obligations – Most importantly, it is a step towards constitutional vision of social equality and ensuring dignity of life to all individuals – Question of how such notional income of a homemaker is to be calculated, there can be no fixed approach – Courts must keep in mind idea of awarding just compensation in such cases, looking to facts and circumstances – There can be no exact calculation or formula that can magically ascertain true value provided by an individual gratuitously for those that they are near and dear to – Attempt of Court in such matters should be towards determining, in the best manner possible, truest approximation of value added by a homemaker for the purpose of granting monetary compensation – Whichever method a Court ultimately chooses to value activities of a homemaker, would ultimately depend on facts and circumstances of case. (Paras 15, 16, 19 and 20)

(C) Motor Vehicles Act, 1988 – Section 168 – Death in vehicular accident – Award of just compensation – Notional income of a housewife – Awarding of future prospects is now a part of duty of Court to grant just compensation, taking into account the realities of life, particularly of inflation, quest of individuals to better their circumstances and those of their loved ones, rising wage rates and impact of experience on quality of work – Once victim has been proved to be employed at some venture, necessary corollary is that they would be earning an income – No rational distinction can be drawn with respect to granting of future prospects merely on the basis that their income was not proved, particularly when Court has determined their notional income – When it comes to second category of cases, relating to notional income for non-earning victims, above principle applies with equal vigour, particularly with respect to homemakers – Once notional income is determined, effects of inflation would equally apply – No one would ever say that improvements in skills that come with experience do not take place in domain of work within household – Various methods can be employed by Court to fix notional income of a homemaker, depending on facts and circumstances of case – Court should ensure while choosing method and fixing notional income, that same is just in facts and circumstances of a particular case, neither assessing compensation too conservatively, nor too liberally – Granting of future prospects on notional income calculated in such cases, is a component of just compensation. (Paras 23, 24, 25 and 26)

Facts of the Case:

Deceased couple, while commuting on a motorcycle were hit at an intersection by a Car. Impact immediately incapacitated both deceased and they soon passed away from cranio-cerebral damage and haemorrhagic shock caused by accident’s blunt force trauma. Instant civil appeals

have been filed by three surviving dependents (who are two minor daughters and father) of two deceased, impugning judgment dated 17.07.2017 of the High Court of Delhi through which motor accident compensation of Rs 40.71 lakhs awarded by Motor Accident Claims Tribunal, Rohini under Section 168 of the Motor Vehicle Act, 1988 was reduced to Rs 22 lakhs.

Findings of Court:

Given how both deceased were below 40 years and how they have not been established to be permanent employees, future prospects to the tune of 40% must be paid. The argument that no such future prospects ought to be allowed for those with notional income, is both incorrect in law and without merit considering constant inflation induced increase in wages.

Result : Appeals allowed in part.