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2011 (5) Supreme 382
SUPREME COURT OF INDIA
R. V. Raveendran and A. K. Patnaik, JJ.
Ranjana Prakash & Ors. — Appellants
versus
Divisional Manager & Anr. — Respondents
Civil Appeal No. 6110 of 2011
[Arising out of SLP (C) No.2057 /2011]
Decided on : 29-7-2011
Motor Accident claim- Death of deceased aged 46 years, in a motor accident -At the time of his death deceased working as a Bank Manager, State Bank of India and his monthly salary was Rs.23,134/-. Tribunal, awarded a compensation of Rs.24,12,936/- with interest at 9% per annum- On appeal by insurer, High Court, while upholding findings in regard to income and calculation of compensation, held that Tribunal ought to have deducted 30% of annual income towards income tax- High Court deducted 30% and reduced the compensation to Rs.16,89,055/- with interest at 9% per annum- Appeal thereagainst on plea that High Court committed an error in reducing compensation from Rs.24,12,936 to Rs.16,89,055 - In case of Sarla Verma, Apex Court held that where the deceased had a permanent job with a regular salary with provisions for periodic increases, 30% of the current income could be added towards future prospects if the deceased was aged between 40 to 50 years- In Sarla Verma, this Court also stated that income tax paid should be deducted from the annual income to arrive at the ‘income’ which would form the basis for calculating compensation-Tribunal did neither of these two things- If both are done, result would be that there would be no change in the income arrived by Tribunal for calculating the compensation- The 30% increase on account of future prospects and the 30% deduction on account of income tax would cancel each other, resulting in the ‘income’ remaining unchanged- As a result, compensation awarded by Tribunal also would remain unaltered-In view of facts and circumstances of case impugned order of High Court set aside and that of Tribunal restored (Paras 9, 10)
Compensation-Appeal challenging quantum of -Where an appeal is filed challenging the quantum of compensation, irrespective of who files the appeal, appropriate course for the High Court is to examine the facts and by applying the relevant principles, determine the just compensation- If the compensation determined by it is higher than compensation awarded by Tribunal, High Court would allow the appeal, if it is by the claimants and dismiss the appeal, if it is by owner/insurer- Similarly, if the compensation determined by High Court is lesser than compensation awarded by Tribunal, High Court would dismiss any appeal by claimants for enhancement, but allow any appeal by owner/insurer for reduction- High Court cannot obviously increase the compensation in an appeal by owner/insurer for reducing the compensation, nor can it reduce the compensation in an appeal by the claimants seeking enhancement of compensation (Para 8)
Facts of the Case :
Death of deceased aged 46 years, in a motor accident herein in the instant case. At the time of his death deceased was working as a Bank Manager, State Bank of India and his monthly salary was Rs.23,134/-. Tribunal, awarded a compensation of Rs.24,12,936/- with interest at 9% per annum. On appeal by insurer, High Court, while upholding findings in regard to income and calculation of compensation, held that Tribunal ought to have deducted 30% of annual income towards income tax. High Court deducted 30% and reduced the compensation to Rs.16,89,055/- with interest at 9% per Annum.
2. Present Appeal has been filed on plea that High Court committed an error in reducing compensation from Rs.24,12,936 to Rs.16,89,055.
Findings of the Court :
In case of Sarla Verma, Apex Court held that where the deceased had a permanent job with a regular salary with provisions for periodic increases, 30% of the current income could be added towards future prospects if the deceased was aged between 40 to 50 years. In Sarla Verma, this Court also stated that income tax paid should be deducted from the annual income to arrive at the ‘income’ which would form the basis for calculating compensation. Tribunal did neither of these two things. If both are done, result would be that there would be no change in the income arrived by Tribunal for calculating the compensation. The 30% increase on account of future prospects and the 30% deduction on account of income tax would cancel each other, resulting in the ‘income’ remaining unchanged. As a result, compensation awarded by Tribunal also would remain unaltered. In view of facts and circumstances of case impugned order of High Court was set aside and that of Tribunal was restored.
ORDER
R. V. Raveendran, J.
Leave granted. Heard.
2. The claimants are the widow, two sons and mother of one Arun Prakash, aged 46 years, who died in a motor accident on 3.11.2003. At the time of his death he was working as a Bank Manager, State Bank of India and his monthly salary was Rs.23,134/-. The Motor Accident Claims Tribunal, Muzaffarnagar by its award dated 28.8.2006 awarded a compensation of Rs.24,12,936/- with interest at 9% per annum. On appeal by the insurer, the High Court, by the impugned Judgment dated 9.9.2010, while upholding the findings in regard to income and calculation of compensation, held that the Tribunal ought to have deducted 30% of the annual income towards income tax. Consequently, the High Court deducted 30% and reduced the compensation to Rs.16,89,055/- with interest at 9% per annum. The said order is challenged by the claimants in this appeal by special leave. The appellants contend that the High Court committed an error in reducing compensation from Rs.24,12,936 to Rs.16,89,055 and seek restoration of the compensation as awarded by the Tribunal.
3. Before the High Court, the insurer, relying upon the decisions of this Court in Sarla Verma vs. Delhi Transport Corporation -1 2009 (6) SCC 121 and Shyamwati Sharma vs. Karam Singh -2 2010 (12) SCC 378, contended that where the annual income of the deceased was in taxable range, the annual income for the purpose of computation of compensation should be the annual income less income tax; and that in the absence of any evidence as to the actual income tax paid, the Tribunal ought to have deducted 30% from the income towards income tax and calculated the loss of dependency with reference to the ‘net’ income.
4. The claimants, on the other hand, contended before the High Court that as the deceased was holding a permanent job under a statutory body, with assured increments and career progression and was aged between 40 to 50 years, as per the decision in Sarla Verma (supra), the income ought to have been increased by 30% keeping the future prospects in view. They further contended that if the income had been increased by 30% by taking note of the future prospects and if 30% had been deducted towards income tax, that would virtually leave the income assessed by the Tribunal undisturbed and therefore, computation of compensation by the Tribunal by taking the monthly income as Rs.23,134/- without any deductions, did not call for any interference.
5. The High Court noticed both the contentions. It held that 30% of the annual income should be deducted towards income tax as the income of the deceased was in the taxable bracket, in the absence of any evidence about the actual amount paid as income tax. It however did not take cognizance of the contention of the claimants (respondents before the High Court) that 30% should have been added to the income towards future prospects, apparently on the ground that the claimants had not challenged the award of the Tribunal on that ground, and therefore they cannot find fault with it. As a consequence, the High Court ignored the error in the award of the tribunal pointed out by the claimants but only took note of the error pointed out by the insurer and reduced the compensation by 30%.
6. We are of the view that High Court committed an error in ignoring the contention of the claimants. It is true that the claimants had not challenged the award of the Tribunal on the ground that the Tribunal had failed to take note of future prospects and add 30% to the annual income of the deceased. But the claimants were not aggrieved by Rs.23,134/- being taken as the monthly income. There was therefore no need for them to challenge the award of the Tribunal. But where in an appeal filed by the owner/insurer, if the High Court proposes to reduce the compensation awarded by the Tribunal, the claimants can certainly defend the quantum of compensation awarded by the Tribunal, by pointing out other errors or omissions in the award, whic
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