1. Motor accident claim — Compensation for death — Dispute over calculation of loss of dependency and inclusion of allowances for future prospects. (Para 3 )
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2024 Supreme(SC) 632
SUPREME COURT OF INDIA
HIMA KOHLI, SANDEEP MEHTA, JJ.
Meenakshi – Appellants
VERSUS
The Oriental Insurance Co. Ltd – Respondents
Civil Appeal No(s). of 2024 (Arising out of Petition for Special Leave to Appeal (Civil) Diary No. 39746 of 2018)
Decided On : 23-07-2024
Advocates appeared:
For the Petitioner(s): Mr. Yatendra Sharma, Adv. Ms. Apoorva Sharma, Adv. Mr. Dhawesh Pahuja, AOR
For the Respondent(s): Mr. Azmat Hayat Amanullah, AOR Ms. Rebecca Mishra, Adv. Ms. Neha Buttan, Adv. Ms. Tanvi Gupta, Adv. Ms. Khushboo Takyar, Adv. Mr. Neeraj, Adv. Mr. Angad Singh, Adv. Mr. Ravish Kumar Sinha, Adv. Ms. Yukta Garg, Adv. Mr. Ashish Kumar Patel, Adv. Mr. Siddharth Bhardwaj, Adv.
For the Petitioner(s): Mr. Yatendra Sharma, Adv. Ms. Apoorva Sharma, Adv. Mr. Dhawesh Pahuja, AOR
For the Respondent(s): Mr. Azmat Hayat Amanullah, AOR Ms. Rebecca Mishra, Adv. Ms. Neha Buttan, Adv. Ms. Tanvi Gupta, Adv. Ms. Khushboo Takyar, Adv. Mr. Neeraj, Adv. Mr. Angad Singh, Adv. Mr. Ravish Kumar Sinha, Adv. Ms. Yukta Garg, Adv. Mr. Ashish Kumar Patel, Adv. Mr. Siddharth Bhardwaj, Adv.
Allowances must be included in salary calculations for compensation assessments to reflect true earning potential and future income prospects.
Headnote:
Compensation - Road Accident - MV Act Section List - The court emphasized the inclusion of allowances in calculating compensation for loss of dependency, correcting the High Court's exclusion of certain perquisites and affirming the need for a comprehensive assessment of future income prospects.
Fact of the Case:
The appeal arises from a High Court judgment reducing compensation awarded to a claimant for the death of her son in a road accident. The Accident Claims Tribunal initially awarded Rs. 1,04,01,000, which the High Court reduced to Rs. 49,57,035, citing errors in income assessment.
Finding of the Court:
The court found that the High Court erred in excluding allowances from the deceased's salary when calculating future income prospects. It held that these allowances should be included to accurately reflect the deceased's earning potential.
Issues: Whether the High Court correctly assessed the deceased's income by excluding certain allowances when calculating compensation for loss of dependency.
Ratio Decidendi: The court established that allowances such as house rent and provident fund contributions must be included in the salary for calculating future income prospects, as they are integral to the deceased's overall compensation.
Result: The High Court's judgment was reversed, and the appeal was partly allowed, restoring a higher compensation amount.
Legal Category Hierarchy
Table of Contents
2. Whether perquisites and allowances such as house rent and provident fund contributions should be excluded from gross income when calculating future prospects. (Para 4 , 5 )
3. Allowances and perquisites are generally proportionate to basic salary and increase with service; excluding them from future prospects calculations is unjustified. (Para 6 , 7 , 10 )
4. Perquisites and allowances admissible to a salaried employee must be included in the salary before applying the percentage increase for future prospects. (Para 7 , 10 )
5. High Court judgment reversed and appeal partly allowed, with compensation re-assessed to include allowances but deduct income tax. (Para 13 , 14 , 15 )
6. Should allowances like house rent and provident fund be included when calculating future prospects for a deceased employee?
Yes. Such perquisites and allowances are not static and generally increase proportionately with the basic salary and length of service. Therefore, they must be added to the basic salary before applying the percentage rise for future prospects. (Para 6 , 7 , 10 )
7. How does the court treat income tax in the calculation of compensation for loss of dependency?
Income tax must be deducted from the gross salary of the deceased to arrive at the actual income for calculating the dependency factor. (Para 13 , 14 )
8. What is the legal status of house rent allowance (HRA) in determining the income of a deceased person for compensation?
HRA is considered part of the income as it is paid for the benefit of family members and not just the employee, and should be included for determining compensation. (Para 8 )
ORDER
1. Delay condoned.
2. Leave granted.
3. This appeal arises from the judgment dated 2nd August, 2017 rendered by the learned Division Bench of the High Court of Karnataka, Kalaburagi Bench in M.F.A. No. 200311/2016 (MV) whereby, while partly accepting the appeal preferred by the respondent No. 1- Insurance Company1[Respondent no. 2 was deleted vide order dated 28th August, 2023 by the Hon’ble Judge-in-Chamber], the High Court reduced the compensation awarded to the claimant i.e., Appellant herein vide award dated 25th November, 2015 passed by the Principal Senior Civil Judge and MACT2[hereinafter being referred to as ‘The Accident Claims Tribunal’] at Kalaburagi in a claim petition3[MVC No. 887 of 2013] filed by the appellant herein. The Accident Claims Tribunal had awarded compensation to the tune of Rs. 1,04,01,000/- with interest @ 6% per annum to the claimant i.e., the appellant herein being the mother of Shri Suryakanth who expired in a road accident on 29th August, 2013. The Accident Claims Tribunal, assessed and quantified the compensation in the following manner:-
“16. Loss of Dependency: The petitioner is the mother of deceased Suryakanth. Admittedly, the age of the deceased is shown as 26 years in the post mortem report as per Exh.P13, that is taken into account. Regarding the income of the deceased, PW.1 has stated that the deceased Suryakanth was doing as service consultant and drawing monthly gross salary of Rs.56,935/- per month and to prove the said fact she has produced Exh.P15 to Exh.P25 which are appointment letter, Salary review letter, Salary certificates, certificate issued by CISCO, PAN Card, Diploma Certificate, Income Tax Returns and Form No.16 respectively, but as per Exh.P17 Salary Certificate which is of the August 2013 of the deceased which shows the total earning of the deceased is Rs. 50,942/-, so the said fact is taken into consideration for awarding compensation amount, because as per the income tax returns which are produced by the petitioner it is seen the deceased was PAN cardholder and he was paying income tax which shown that he was capable of earning the amount which is shown in the Exh.P17 and even though the deceased was working in a private limited Company, the said salary amount is to be considered because he is Diploma Certificate Holder and basing on his efficiency the Company was paying the said amount to him. So for salary of Rs. 50,942/- Professional Tax of Rs. 200/- is deducted which comes to Rs. 50,742/- per month. Therefore, in my opinion, it is feasible to consider the income of the deceased @ 50,742/- and annual income comes to Rs.6,08,904/-. As the deceased was unmarried person, 50% of the said amount is to be deducted, it comes to Rs.3,04,452/-. As per the recent decision of the Hon'ble Apex Court reported in 2015 (3) TAC.1 (SC) and case law reported in Sarla Varma and others V/s Delhi Transport Corporation and another and Rajesh and others, the deceased is also entitled for loss of future prospects at 50% of his income. So, if 50% of the said Income is added Rs.3,04,452/- It would be Rs.6,08,904/- (3,04,452 + 3,04,452) per annum. Regarding the age of the deceased, In the post mortem report as per Exh.P13 the age of the deceased is shown as 26 years. So, the same is taken into consideration for applying multiplier as per the case law reported in Sarla Verma and others V/s Delhi Transport Corporation and another is "17". The calculation of the total loss of dependency is as under: Rs.6,08,904 x 17 multiplier = Rs.1,03,51,368/-. The petitioner is entitled for loss of dependency Rs.1,03,51,368/-.
Therefore, the petitioner is entitled for total compensation under different heads as follows:
| 1. Loss of Love and Affection | Rs. 25,000-00 |
| 2. Funeral Expenses | Rs. 25,000-00 |
| 3. Loss of Dependency | Rs. 1,03,51,368-00 |
| Total Compensation Rounded off | Rs. 1,04,01,368-00 Rs. 1,04,01,000-00 |
Therefore, the petitioner is e
