KIRTI & ANR. ETC. versus ORIENTAL INSURANCE COMPANY LTD.

[2021] 1 S.C.R. 989

KIRTI & ANR. ETC.

ORIENTAL INSURANCE COMPANY LTD.

(Civil Appeal Nos.19-20 of 2021)

JANUARY 05, 2021

[N.V. RAMANA, S. ABDUL NAZEER

AND SURYA KANT, JJ.]

Motor Vehicles Act, 1988: Claims and legal liabilitiescrystallise at the time of accident itself – Any changes post thereto,ought not to ordinarily affect pending proceedings – Just like howclaimants cannot rely upon subsequent increases in minimum wages,the insurer too cannot seek benefit of the subsequent death of adependent during the pendency of legal proceedings – Similarly,any concession in law made in this regard by either counsel wouldnot bind the parties.

Concession in law: Permissibility, extent of – Held: Advocatescannot throw away legal rights or enter into arrangements contraryto law – Motor Vehicles Act, 1988.

Motor Vehicles Act, 1988: Assessment of income in the absenceof evidence – Held: In the instant case, although it is correct thatthe claimants were unable to produce any document evidencingvictim-husband’s income, nor they established his employment as ateacher; but that would not justify adoption of the lowest-tier ofminimum wage while computing his income – From the statement ofwitnesses, documentary evidence-on-record and circumstances ofthe accident, it is apparent that victim was comparatively moreeducationally qualified and skilled – Further, he maintained areasonable standard of living for his family as evidenced by his useof motorcycle for commuting – Preserving theexisting standard ofliving of deceased’s family is fundamental endeavour of motoraccident compensation law – Thus, the minimum wage of Rs 6197as applicable to skilled workers applied in his case.

Motor Vehicles Act, 1988: Future prospects – In case thedeceased was self-employed or on fixed salary, an addition of40% of the established income should be the warrant where the

Adeceased was below the age of 40 years – An addition of 25%where the deceased was between the age of 40 to 50 years and10% where the deceased was between the age of 50 to 60 yearsshould be regarded as the necessary method of computation – Theestablished income means the income minus the tax component –The argument that no future prospects ought to be allowed for thoseBwith notional income, is both incorrect in law and without meritconsidering the constant inflation-induced increase in wages.

Motor Vehicles Act, 1988: Calculation of notional income forhomemakers and the grant of future prospects with respect to them,for the purposes of grant of compensation – Determining factors,Cdiscussed. (Per N.V. Ramana, J – Supplementing)

Partly allowing the appeals, the Court

HELD:

Per SURYA KANT, J.:D

1. It cannot be disputed that at the time of death, there infact were four dependents of the deceased and not three. Thesubsequent death of the deceased’s dependent mother ought notto be reason for reduction of motor accident compensation.Claims and legal liabilities crystallise at the time of the accidentEitself, and changes post thereto ought not to ordinarily affectpending proceedings. Just like how appellant-claimants cannotrely upon subsequent increases in minimum wages, therespondent-insurer too cannot seek benefit of the subsequentdeath of dependent during the pendency of legal proceedings.FSimilarly, any concession in law made in this regard by eithercounsel would not bind the parties, as it is legally settled thatadvocates cannot throw-away legal rights or enter intoarrangements contrary to law. [Para 10][998-G; 999-A-B]

2.1 Any compensation awarded by Court ought to be just,reasonable and consequently must undoubtedly be guided byGprinciples of fairness, equity, and good conscience. Not only didthe family of the deceased consist of septuagenarian parents, butthere were also two toddler-girls, aged merely 3 and 4 years;each of whom requires exceptional care and expenditure till theyreach the stage of self-dependency. Tragically, in addition to theH

married couple, the negligence of the driver also extinguishedthe life of the family’s third child who was foetus in victim-lady’swomb at the time of the accident. Thus, the appropriate deductionfor personal expenses for both victims (couple) ought to be 1/4[th]only, and not 1/3[rd] as applied by the Tribunal and the High Court,more so when there were four family members dependent on thedeceased. [Para 11][999-C-E]

Director of Elementary Education v. Pramod KumarSahoo (2019) 10 SCC 674 Helen Rebello v.Maharashtra State Road Transport Corp, (1999) 1 SCC90 – relied on

2.2 Second, although it is correct that the claimants havebeen unable to produce any document evidencing victim-husband’s income, nor have they established his employment asa teacher; but that doesn’t justify adoption of the lowest-tier ofminimum wage while computing his income. From the statementof witnesses, documentary evidence-on-record and circumstancesof the accident, it is apparent that victim was comparatively moreeducationally qualified and skilled. Further, he maintained areasonable standard of living for his family as evidenced by hisuse of motorcycle for commuting. Preserving theexistingstandard of living of deceased’s family is fundamental endeavourof motor accident compensation law. Thus, at the very least, theminimum wage of Rs 6197 as applicable to skilled workers duringApril 2014 in the State of Haryana ought to be applied in his case.[Para 12][999-E-G; 1000-A]

RK Malik v. Kiran Pal (2019) 14 SCC 1 - relied on

2.3 Third and most importantly, it is unfair on part of therespondent-insurer to contest grant of future prospectsconsidering their submission before the High Court that suchcompensation ought not to be paid pending outcome of the PranaySethi reference. Nevertheless, the law on this point is no longerres integra, and stands crystalised, as it was held therein that incase the deceased was self-employed or on fixed salary, anaddition of 40% of the established income should be the warrantwhere the deceased was below the age of 40 years. An additionof 25% where the deceased was between the age of 40 to 50

Ayears and 10% where the deceased was between the age of 50 to60 years should be regarded as the necessary method ofcomputation. The established income means the income minusthe tax component. [Para 13][1000-B-D]

National Insurance Co Ltd v. Pranay Sethi (2017) 16BSCC 680 – followed

3. Given how both deceased were below 40 years and howthey have not been established to be permanent employees, futureprospects to the tune of 40% must be paid. The argument thatno such future prospects ought to be allowed for those withCnotional income, is both incorrect in law and without meritconsidering the constant inflation-induced increase in wages. Itwas held in Hem Raj v. Oriental Insurance Co. Ltd. that therecannot be distinction where there is positive evidence of incomeand where minimum income is determined on guesswork in thefacts and circumstances of case. Both the situations stand atDthe same footing. Accordingly, in the present case, addition of40% to the income assessed by the Tribunal is required to bemade..” [Para 14][1000-E-G]

Sunita Tokas v. New India Insurance Co Ltd 2019 SCCOnLine SC 1045; Hem Raj v. Oriental Insurance Co.ELtd. (2018) 15 SCC 654 – relied on

Per N.V. RAMANA, J. (Supplementing):

1. There are two distinct categories of situations whereinthe Court usually determines notional income of victim. TheFfirst category of cases relates to those wherein the victim wasemployed, but the claimants are not able to prove her actualincome, before the Court. In such situation, the Court “guesses”the income of the victim on the basis of the evidence on record,like the quality of life being led by the victim and her family, thegeneral earning of an individual employed in that field, theGqualifications of the victim, and other considerations. The secondcategory of cases relates to those situations wherein the Courtis called upon to determine the income of non-earning victim,such as child, student or homemaker. Needless to say,compensation in such cases is extremely difficult to quantify.[Paras 2, 3][1002-B-D]H

2. The Court often follows different principles fordetermining the compensation towards non-earning victim inorder to arrive at an amount which would be just in the facts andcircumstances of the case. Some of these involve thedetermination of notional income. One category of non-earningvictims that Courts are often called upon to calculate thecompensation for are homemakers. housemaker often preparesfood for the entire family, manages the procurement of groceriesand other household shopping needs, cleans and manages thehouse and its surroundings, undertakes decoration, repairs andmaintenance work, looks after the needs of the children and anyaged member of the household, manages budgets and so muchmore. In rural households, they often also assist in the sowing,harvesting and transplanting activities in the field, apart fromtending cattle. However, despite all the above, the conceptionthat housemakers do not “work” or that they do not add economicvalue to the household is problematic idea that haspersisted for many years and must be overcome. [Paras 4, 5,10][1002-D-E, F; 1005-D-F]

3. On considering the growing awareness around this issue,the United Nations Committee on the Elimination ofDiscrimination against Women adopted General RecommendationNo. 17 on the “Measurement and quantification of theunremunerated domestic activities of women and their recognitionin the gross national product” in 1991. The GeneralRecommendation affirmed that “the measurement andquantification of the unremunerated domestic activities of women,which contribute to development in each country, will help to revealthe de facto economic role of women”. It is worth noting that theabove General Recommendation is passed in furtherance of Article11 of the Convention on the Elimination of All Forms ofDiscrimination against Women which relates to endingdiscrimination against women in the field of employment,a Convention that India has ratified. [Paras 13, 14][1006-F-G;1007-A]

4. The issue of fixing notional income for homemaker,therefore, serves extremely important functions. It is arecognition of the multitude of women who are engaged in thisactivity, whether by choice or as result of social/cultural norms.

ABC

AIt signals to society at large that the law and the Courts of theland believe in the value of the labour, services and sacrifices ofhomemakers. It is an acceptance of the idea that these activitiescontribute in very real way to the economic condition of thefamily, and the economy of the nation, regardless of the fact thatit may have been traditionally excluded from economic analyses.BIt is reflection of changing attitudes and mindsets and of ourinternational law obligations. And, most importantly, it is steptowards the constitutional vision of social equality and ensuringdignity of life to all individuals. Returning to the question of howsuch notional income of homemaker is to be calculated, thereCcan be no fixed approach. It is to be understood that in suchcases the attempt by the Court is to fix an approximate economicvalue for all the work that homemaker does, impossible thoughthat task may be. Courts must keep in mind the idea of awardingjust compensation in such cases, looking to the facts andcircumstances. [Para 15, 16][1007-B-E]DR.K. Malik v. Kiran Pal (2009) 14 SCC 1;M.R.Krishna Murthi v. New India Assurance Co. Ltd. 2019SCC OnLine SC 315; Lata Wadhwa v. State of Bihar(2001) 8 SCC 197 : [2001] 1 Suppl. SCR 578;Arun Kumar Agrawal v. National Insurance Co. Ltd.E(2010) 9 SCC 218 : [2010] 9 SCR 303; Rajendra Singhv. National Insurance Co. Ltd. 2020 SCC OnLine SC521; National Insurance Co. Ltd. v. Minor Deepika rep.by guardian and next friend, Ranganathan 2009 SCCOnLine Mad 828; Kajal v. Jagdish Chand (2020) 4FSCC 413; General Manager, Kerala State RoadTransport Corporation, Trivandrum v. Susamma Thomas(Mrs), (1994) 2 SCC 176; Sarla Dixit (Smt)v. Balwant Yadav (1996) 3 SCC 179 : [1996] 3 SCR30; Sarla Verma (Smt) v. Delhi Transport Corporation(2009) 6 SCC 121: [2009] 5 SCR 1098 – relied on.G5. The rationale behind the awarding of future prospects istherefore no longer merely about the type of profession, whetherpermanent or otherwise, although the percentage awarded is stilldependent on the same. The awarding of future prospects is nowa part of the duty of the Court to grant just compensation, takingHinto account the realities of life, particularly of inflation, the quest

of individuals to better their circumstances and those of theirloved ones, rising wage rates and the impact of experience onthe quality of work. [Para 23][1010-H; 1011-A-B]

National Insurance Company Limited v. PranaySethi (2017) 16 SCC 680 : [2017] 13 SCR 100– followed.

6. Taking the above rationale into account, the situation isquite clear with respect to notional income determined by Courtin the first category of cases outlined earlier, those where thevictim is proved to be employed but claimants are unable to provethe income before the Court. Once the victim has been provedto be employed at some venture, the necessary corollary is thatthey would be earning an income. It is clear that no rationaldistinction can be drawn with respect to the granting of futureprospects merely on the basis that their income was not proved,particularly when the Court has determined their notional income.When it comes to the second category of cases, relating to notionalincome for non-earning victims, the above principle applies withequal vigor, particularly with respect to homemakers. Oncenotional income is determined, the effects of inflation wouldequally apply. Further, no one would ever say that theimprovements in skills that come with experience do not takeplace in the domain of work within the household. [Paras 24,25][1011-B-E]

Hem Raj v. Oriental Insurance Company Limited (2018)15 SCC 654; Sunita Tokas v. New India Insurance Co.Ltd. (2019) 20 SCC 688 – relied on.

Case Law Reference

From the Judgment and Order dated 17.07.2017 by the High CourtDof Delhi at New Delhi in MAC. APP. Nos. 336 of 2017 and 375 of2017.

Mritunjay Kumar Sinha, S.N. Parasar, Ranjan Kumar Pandey, K.K. Bhat for the appearing parties.

The Judgment of the Court was delivered byE

SURYA KANT, J.

Leave Granted.

2. These civil appeals, which have been heard through videoconferencing, have been filed by three surviving dependents (who areFtwo minor daughters and father) of the two deceased, impugning thejudgment dated 17.07.2017 of the High Court of Delhi through whichthe motor accident compensation of Rs 40.71 lakhs awarded by theMotor Accident Claims Tribunal, Rohini (hereinafter, “Tribunal”) on24.12.2016 under Section 168 of the Motor Vehicle Act, 1988 (“MVAct”), was reduced to Rs 22 lakhs.G

FACTUAL MATRIX

3. The deceased couple, Vinod and Poonam, while commuting ona motorcycle in Delhi at around 7AM on 12.04.2014 were hit at anintersection by Santro Car bearing registration ‘DL 7CA 1053’. TheHimpact immediately incapacitated both the deceased and they soon passed

away from cranio-cerebral damage and haemorrhagic shock caused bythe accident’s blunt-force trauma.

4. An FIR was registered under Sections 279 and 304 of the IndianPenal Code, 1860 (hereinafter, “IPC”) against the driver, and thestatement of an independent eyewitness (Constable Vishnu Dutt) wasrecorded, which evidenced rash driving and negligence on part of thecar-driver. Subsequently, claim petition was filed under Section 166 ofthe MV Act by the two toddler-daughters and septuagenarian-parentsof the deceased. This was contested by the driver and owner claimingthat the deceased were themselves driving negligently and the accidentwas as result of their very own actions. Two witnesses were examinedby the appellant-claimants and none by the respondents. The insurancecompany (Respondent No. 1) offered as settlement compensation ofRs 6.47 lakhs for the death of Poonam and Rs 10.71 lakhs for Vinod.

5. The Tribunal took note of the chargesheet filed against thedriver in the criminal case and also his failure to step-into the witnessbox. Relying on the strong testimony of the independent witness, it wasconcluded that the car-driver was indeed driving rashly and thus liabilityought to be fastened on the respondent-insurer. Regarding the quantumof compensation, the Tribunal began by determining the ages of Poonamand Vinod as being 26 and 29 years respectively. Consequently, an age-multiplier of 17 was adopted. Although the deceased’s father took pleathat Vinod was earning Rs 14,000 every month as teacher at the PratapPublic School in Delhi, but he was unable to substantiate his claim withany documentary evidence. Thus, minimum wage in Delhi was adoptedfor computation of loss of dependency. An additional 25% income wasaccounted for future prospects of Poonam, and 1/3[rd] of Vinod’s salarywas deducted towards personal expenses. Rs 2.50 lakhs was given foreach deceased as compensation for loss of love and affection, estate,and funeral charges. Thus, the Tribunal awarded total sum of Rs 40.71lakhs for both deceased to the claimants.

6. This computation was challenged by the respondent-insurerbefore the High Court, on grounds that the Tribunal had erroneouslyrelied upon the minimum wage as notified by Government of Delhi asthere was no proof that the deceased were employed in Delhi. Instead,given their established residence in Haryana, the minimum wage notifiedfor that State ought to be the basis for calculation of loss of dependency.Simultaneously, addition of future prospects as well as non-deduction of

Apersonal expenses for Poonam was prayed to be reversed. Further,compensation was sought to be halved on grounds of contributorynegligence. categorical submission was made highlighting the thendivergent law on the issue of payment of ‘future prospects’ to non-permanent employees, pending resolution of which, it was prayed thatno such addition be granted to the claimants.B

7. The High Court concurred with these contentions andconsequently reduced the notional income for both deceased by adoptingthe lowest minimum wage applicable for unskilled workers in Haryana,instead of Delhi. Similarly, 1/3[rd] of Poonam’s income was deductedtowards personal expenses and future prospects were denied to bothCdeceased. However, given the totality of circumstances and Poonam’scontribution to her household, 25% additional gratuitous income was addedto her salary. The High Court thus brought down the total compensationpayable to the claimants to Rs 22 lakhs.CONTENTIONS OF PARTIESD

8. This reduction has been assailed before us by learned counselfor the claimants. Re-computation is sought of compensation for loss ofdependency consequent to the decision of the Constitutional Bench ofthis Court in National Insurance Co Ltd v. Pranay Sethi[1], whichauthoritatively settles the law on future prospects for non-permanentEemployees as well. Furthermore, the anomaly between the gratuitousincrease of income between Vinod and Poonam, and the usage of unskilledminimum wage for Vinod have been brought to our notice.

9. Learned Counsel for the respondent-insurer, on the other hand,has sought to forestall any increase in compensation, including under theFground of future prospects. It is claimed that the High Court’s decisionwas consent order, and that the counsel for the appellants had concededto lower computation under the head of loss of dependency, whichthus cannot be challenged before this Court.

ANALYSISG

I.Deduction for Personal Expenses

10. We have thoughtfully considered the rival submissions. It cannotbe disputed that at the time of death, there in fact were four dependentsof the deceased and not three. The subsequent death of the deceased’s

H1(2017) 16 SCC 680.

dependent mother ought not to be reason for reduction of motor accidentcompensation. Claims and legal liabilities crystallise at the time of theaccident itself, and changes post thereto ought not to ordinarily affectpending proceedings. Just like how appellant-claimants cannot rely uponsubsequent increases in minimum wages, the respondent-insurer toocannot seek benefit of the subsequent death of dependent during thependency of legal proceedings. Similarly, any concession in law made inthis regard by either counsel would not bind the parties, as it is legallysettled that advocates cannot throw-away legal rights or enter intoarrangements contrary to law.[2]11. Any compensation awarded by Court ought to be just,reasonable and consequently must undoubtedly be guided by principlesof fairness, equity, and good conscience.[3] Not only did the family of thedeceased consist of septuagenarian parents, but there were also twotoddler-girls, aged merely 3 and 4 years; each of whom requiresexceptional care and expenditure till they reach the stage of self-dependency. Tragically, in addition to the married couple, the negligenceof the driver also extinguished the life of the family’s third child who wasa foetus in Poonam’s womb at the time of the accident. Thus, theappropriate deduction for personal expenses for both Vinod and Poonamought to be 1/4[th] only, and not 1/3[rd] as applied by the Tribunal and theHigh Court, more so when there were four family members dependenton the deceased.

II. Assessment of monthly income

12. Second, although it is correct that the claimants have beenunable to produce any document evidencing Vinod’s income, nor havethey established his employment as teacher; but that doesn’t justifyadoption of the lowest-tier of minimum wage while computing his income.From the statement of witnesses, documentary evidence-on-record andcircumstances of the accident, it is apparent that Vinod was comparativelymore educationally qualified and skilled. Further, he maintained areasonable standard of living for his family as evidenced by his use of amotorcycle for commuting. Preserving theexisting standard of living ofa deceased’s family is fundamental endeavour of motor accidentcompensation law.[4] Thus, at the very least, the minimum wage of Rs

2 Director of Elementary Education v. Pramod Kumar Sahoo, (2019) 10 SCC 674, ¶ 11.

3 See, Helen Rebello v. Maharashtra State Road Transport Corp, (1999) 1 SCC 90, ¶28.

4 See, RK Malik v. Kiran Pal, (2019) 14 SCC 1, ¶ 9.

A6197 as applicable to skilled workers during April 2014 in the State ofHaryana ought to be applied in his case.

III. Addition of Future Prospects

13. Third and most importantly, it is unfair on part of the respondent-insurer to contest grant of future prospects considering their submissionBbefore the High Court that such compensation ought not to be paid pendingoutcome of the Pranay Sethi (supra) reference. Nevertheless, the lawon this point is no longer res integra, and stands crystalised, as is clearfrom the following extract of the afore-cited Constitutional Benchjudgment[5]:

C“59.4. In case the deceased was self-employed or on fixedsalary, an addition of 40% of the established income shouldbe the warrant where the deceased was below the age of 40years. An addition of 25% where the deceased was betweenthe age of 40 to 50 years and 10% where the deceased wasbetween the age of 50 to 60 years should be regarded as theDnecessary method of computation. The established incomemeans the income minus the tax component.”

[Emphasis supplied]14. Given how both deceased were below 40 years and how theyhave not been established to be permanent employees, future prospectsEto the tune of 40% must be paid. The argument that no such futureprospects ought to be allowed for those with notional income, is bothincorrect in law[6] and without merit considering the constant inflation-induced increase in wages. It would be sufficient to quote the observationsof this Court in Hem Raj v. Oriental Insurance Co. Ltd.[7], as it puts atrest any argument concerning non-payment of future prospects to theFdeceased in the present case:

“7. We are of the view that there cannot be distinction wherethere is positive evidence of income and where minimumincome is determined on guesswork in the facts andcircumstances of case. Both the situations stand at the sameGfooting. Accordingly, in the present case, addition of 40% tothe income assessed by the Tribunal is required to be made..”

[Emphasis supplied]

5 National Insurance Co Ltd v. Pranay Sethi, (2017) 16 SCC 680, ¶ 59.4.

6 Sunita Tokas v. New India Insurance Co Ltd, 2019 SCC OnLine SC 1045.

H7 (2018) 15 SCC 654.

IV. Other heads and division of compensation

15. Finally, given the lack of arguments on the other heads offuneral charges, loss of estate, love, and affection; there arises no causeof alteration. We similarly see no infirmity with the High Court’s adoptionof 17 as the age-multiplier, award of 9% interest, calculation of Poonam’snotional income or the division of total compensation in the ratio of 1:2:2between the grandfather and the two girls. For ready reference, acomparative table of revised compensation after suitable increases wouldthus be as follows:

CONCLUSION

16. For the reasons afore-stated, the appeals are allowed in-part.The total motor accident compensation of Rs 22 lakhs awarded by theHigh Court to the claimant-appellants is increased by Rs 11.20 lakhs toreach new total of Rs 33.20 lakhs. The enhanced amount ofcompensation shall be paid within two months along with interest @ 9%p.a. from the date of filing of the Detailed Accident Report i.e. 23.05.2014,Gand shall be apportioned per the terms laid down by the Tribunal.

N. V. RAMANA, J.

1. I have had the advantage of perusing the judgment prepared bymy learned brother, Surya Kant, J., and am in complete agreement with

Ahim. However, I thought to supplement the reasoning in his judgment,with respect to the question of notional income of housewife andwhether future prospects should apply to the same or not.

2. There are two distinct categories of situations wherein the Courtusually determines notional income of victim. The first category ofBcases relates to those wherein the victim was employed, but the claimantsare not able to prove her actual income, before the Court. In such asituation, the Court “guesses” the income of the victim on the basis ofthe evidence on record, like the quality of life being led by the victim andher family, the general earning of an individual employed in that field, thequalifications of the victim, and other considerations.C

3. The second category of cases relates to those situations whereinthe Court is called upon to determine the income of non-earning victim,such as child, student or homemaker. Needless to say, compensationin such cases is extremely difficult to quantify.

D4. The Court often follows different principles for determining thecompensation towards non-earning victim in order to arrive at an amountwhich would be just in the facts and circumstances of the case. Some ofthese involve the determination of notional income. Whenever notionalincome is determined in such cases, different considerations and factorsare taken into account. For instance, for students, the Court oftenEconsiders the course that they are studying, their academic proficiency,the family background, etc., to determine and fix what they could earn inthe future. [See M. R. Krishna Murthi v. New India Assurance Co.Ltd., 2019 SCC OnLine SC 315]

5. One category of non-earning victims that Courts are often calledFupon to calculate the compensation for are homemakers. The grantingof compensation for homemakers on pecuniary basis, as in the presentcase, has been considered by this Court earlier on numerous occasions.A three-Judge Bench of this Court in Lata Wadhwa v. State of Bihar,(2001) 8 SCC 197, while dealing with compensation for the victims ofGa fire during function, granted compensation to housewives on thebasis of the services rendered by them in the house, and their age. ThisCourt, in that case, held as follows:

“10. So far as the deceased housewives are concerned, inthe absence of any data and as the housewives were notearning any income, attempt has been made to determineH

the compensation on the basis of services rendered by themto the house. On the basis of the age group of the housewives,appropriate multiplier has been applied, but the estimation of thevalue of services rendered to the house by the housewives, whichhas been arrived at Rs 12,000 per annum in cases of some and Rs10,000 for others, appears to us to be grossly low. It is true thatthe claimants, who ought to have given data for determination ofcompensation, did not assist in any manner by providing the datafor estimating the value of services rendered by such housewives.But even in the absence of such data and taking intoconsideration the multifarious services rendered by thehousewives for managing the entire family, even on amodest estimation, should be Rs 3000 per month and Rs36,000 per annum…”

(emphasis supplied)

6. In Arun Kumar Agrawal v. National Insurance Co. Ltd.,(2010) 9 SCC 218, this Court, while dealing with the grant ofcompensation for the death of housewife due to motor vehicleaccident, held as follows:

“26. In India the courts have recognised that thecontribution made by the wife to the house is invaluableand cannot be computed in terms of money. The gratuitousservices rendered by the wife with true love and affectionto the children and her husband and managing the householdaffairs cannot be equated with the services rendered byothers. wife/mother does not work by the clock. She is in theconstant attendance of the family throughout the day and nightunless she is employed and is required to attend the employer’swork for particular hours. She takes care of all the requirementsof the husband and children including cooking of food, washing ofclothes, etc. She teaches small children and provides invaluableguidance to them for their future life. housekeeper or maidservantcan do the household work, such as cooking food, washing clothesand utensils, keeping the house clean, etc., but she can never be asubstitute for wife/mother who renders selfless service to herhusband and children.

27. It is not possible to quantify any amount in lieu of theservices rendered by the wife/mother to the family i.e. the

DEFG

Ahusband and children.However, for the purpose of awardof compensation to the dependants, some pecuniaryestimate has to be made of the services of the housewife/mother. In that context, the term “services” is required to begiven broad meaning and must be construed by taking into accountthe loss of personal care and attention given by the deceased toBher children as mother and to her husband as wife. They areentitled to adequate compensation in lieu of the loss of gratuitousservices rendered by the deceased. The amount payable to thedependants cannot be diminished on the ground that some closerelation like grandmother may volunteer to render some of theCservices to the family which the deceased was giving earlier.”

(emphasis supplied)

The above pronouncement has been followed by this Court in itsrecent judgment in Rajendra Singh v. National Insurance Co. Ltd.,2020 SCC OnLine SC 521, wherein the notional income of deceasedDhousewife was calculated for the purposes of granting compensation ina motor accident case.

7. Before discussing this topic further, it is necessary to commenton its gendered nature. In India, according to the 2011 Census, nearly159.85 million women stated that “household work” was their mainEoccupation, as compared to only 5.79 million men.

8. In fact, the recently released Report of the National StatisticalOffice of the Ministry of Statistics & Programme Implementation,Government of India called “Time Use in India- 2019”, which is thefirst Time Use Survey in the country and collates information fromF1,38,799 households for the period January, 2019 to December, 2019,reflects the same gender disparity.[1] The key findings of the survey suggestthat, on an average, women spend nearly 299 minutes day on unpaiddomestic services for household members versus 97 minutes spent bymen on average.[2] Similarly, in day, women on average spend 134 minutesGon unpaid caregiving services for household members as compared tothe 76 minutes spent by men on average.[3] The total time spent on theseactivities per day makes the picture in India even more clear- women onaveragespent 16.9 and 2.6percent of their dayon unpaiddomestic1 National Statistical Office, Time Use in India- 2019 (September, 2020).2 Id, at 56.H3 Id, at 54.

services and unpaid caregiving services for household membersrespectively, while men spent 1.7 and 0.8 percent.[4]

9. It is curious to note that this is not just phenomenon unique toIndia, but is prevalent all over the world. 2009 Report by Commissionset up by the French Government, analyzing data from six countries, viz.Germany, Italy, United Kingdom, France, Finland and the United Statesof America, highlighted similar findings:

“117. Gender differences in time use are significant. In each ofthe countries under consideration,men spend more time in paidwork than women and the converse is true for unpaid work.Men also spend more time on leisure than women. Theimplication is that women provide household services butother members of the household benefit…”[5]

(emphasis supplied)

10. The sheer amount of time and effort that is dedicated tohousehold work by individuals, who are more likely to be women thanmen, is not surprising when one considers the plethora of activities ahousemaker undertakes. housemaker often prepares food for the entirefamily, manages the procurement of groceries and other householdshopping needs, cleans and manages the house and its surroundings,undertakes decoration, repairs and maintenance work, looks after theneeds of the children and any aged member of the household, managesbudgets and so much more. In rural households, they often also assist inthe sowing, harvesting and transplanting activities in the field, apart fromtending cattle [See Arun Kumar Agrawal (supra); National InsuranceCo. Ltd. v. Minor Deepika rep. by her guardian and next friend,Ranganathan, 2009 SCC OnLine Mad 828]. However, despite allthe above, the conception that housemakers do not “work” or that theydo not add economic value to the household is problematic idea thathas persisted for many years and must be overcome.

11. The concurring opinion in the Arun Kumar Agrawal judgment(supra), has highlighted this bias:

“44. This bias is shockingly prevalent in the work of census. Inthe Census of 2001 it appears that those who are doing household

4 Id, at x.

5 Stiglitz et al. , Report of the Commission on the Measurement of EconomicPerformance and Social Progress, 117 (2009).

Aduties like cooking, cleaning of utensils, looking after children,fetching water, collecting firewood have been categorised as non-workers and equated with beggars, prostitutes and prisoners who,according to the census, are not engaged in economicallyproductive work. As result of such categorisation about 36 crores(367 million) women in India have been classified in the CensusBof India, 2001 as non-workers and placed in the category ofbeggars, prostitutes and prisoners. This entire exercise of censusoperations is done under an Act of Parliament.”12. In fact, this unfortunate silence when it comes to the value ofhousework has been problem which was identified as far back as inC1920, when the economist Pigou noted the oddity and contradictionswhen it came to the calculation of the contribution of women in thenational income, by stating that:

“…the services rendered by women enter into the dividend whenthey are rendered in exchange for wages, whether in the factoryDor in the home, but do not enter into it when they are rendered bymothers and wives gratuitously to their own families. Thus, if aman marries his housekeeper or his cook, the national dividend isdiminished”.[6]

This issue was further focused on by those in the field of feminismeconomics in the 1970s and 1980s, who criticized the traditional labourEstatistics which did not consider unpaid domestic work and thereforeundervalued women’s role in the economy.[7]

13. On considering the growing awareness around this issue, theUnited Nations Committee on the Elimination of Discrimination againstWomen adopted General Recommendation No. 17 on the “MeasurementFand quantification of the unremunerated domestic activities of womenand their recognition in the gross national product” in 1991. TheGeneral Recommendation affirmed that “the measurement andquantification of the unremunerated domestic activities of women,which contribute to development in each country, will help to revealGthe de facto economic role of women”.

14. It is worth noting that the above General Recommendation ispassed in furtherance of Article 11 of the Convention on the Elimination

6 Cecil Pigou, The Economics of Welfare, 44 (1920).

7 United Nations Economic Commission for Europe, Guide on Valuing UnpaidHHousehold Service Work, 2 (2017).

of All Forms of Discrimination against Women which relates to endingdiscrimination against women in the field of employment, Conventionthat India has ratified.

15. The issue of fixing notional income for homemaker, therefore,serves extremely important functions. It is recognition of the multitudeof women who are engaged in this activity, whether by choice or as aresult of social/cultural norms. It signals to society at large that the lawand the Courts of the land believe in the value of the labour, services andsacrifices of homemakers. It is an acceptance of the idea that theseactivities contribute in very real way to the economic condition of thefamily, and the economy of the nation, regardless of the fact that it mayhave been traditionally excluded from economic analyses. It is reflectionof changing attitudes and mindsets and of our international law obligations.And, most importantly, it is step towards the constitutional vision ofsocial equality and ensuring dignity of life to all individuals.

16. Returning to the question of how such notional income of ahomemaker is to be calculated, there can be no fixed approach. It is tobe understood that in such cases the attempt by the Court is to fix anapproximate economic value for all the work that homemaker does,impossible though that task may be. Courts must keep in mind the ideaof awarding just compensation in such cases, looking to the facts andcircumstances [See R.K. Malik v. Kiran Pal, (2009) 14 SCC 1].

17. One method of computing the notional income of homemakeris by using the formula provided in the Second Schedule to the MotorVehicles Act, 1988, which has now been omitted by the Motor Vehicle(Amendment) Act, 2019. The Second Schedule provided that the incomeof spouse could be calculated as one-third of the income of the earningsurviving spouse. This was the method ultimately adopted by the Courtin the Arun Kumar Agrawal (supra) case. However, rationale behindfixing the ratio as one-third is not very clear. [See Arun Kumar Agrawal(supra)]

18. Apart from the above, scholarship around this issue couldprovide some guidance as to other methods to determine the notionalincome for homemaker.[8] Some of these methods were highlighted by

8 See Ann Chadeau, What is Households’ Non-Market Production Worth, OECDECONOMIC STUDIES NO. 18 (1992); Also see United Nations Economic Commission forEurope, supra note 7.

Aa Division Bench of the Madras High Court in the case of MinorDeepika(supra)whichheld as follows:

“10. The Second Schedule to the Motor Vehicles Act gives avalue to the compensation payable in respect of those who had noincome prior to the accident and for spouse, it says that one-Bthird of the income of the earning surviving spouse should be thevalue. Exploration on the internet shows that there have beenefforts to understand the value of homemaker’s unpaid labourby different methods. One is, the opportunity cost whichevaluates her wages by assessing what she would haveearned had she not remained at home, viz., the opportunityClost. The second is, the partnership method which assumesthat marriage is an equal economic partnership and inthis method, the homemaker’s salary is valued at half herhusband’s salary. Yet another method is to evaluatehomemaking by determining how much it would cost toDreplace the homemaker with paid workers. This is called”the Replacement Method.

(emphasis supplied)

19. However, it must be remembered that all the above methodsare merely suggestions. There can be no exact calculation or formulaEthat can magically ascertain the true value provided by an individualgratuitously for those that they are near and dear to. The attempt of theCourt in such matters should therefore be towards determining, in thebest manner possible, the truest approximation of the value added by ahomemaker for the purpose of granting monetary compensation.F

20. Whichever method Court ultimately chooses to value theactivities of homemaker, would ultimately depend on the facts andcircumstances of the case. The Court needs to keep in mind its duty toaward just compensation, neither assessing the same conservatively, norso liberally as to make it bounty to claimants [National InsuranceGCompany Limited v. Pranay Sethi, (2017) 16 SCC 680; Kajal v.Jagdish Chand, (2020) 4 SCC 413].

21. Once notional income has been determined, the questionremains as to whether escalation for future prospects should be grantedwith regard to it. Initially, the awarding of future prospects by this Courtwas related to the stability of the job held by the victim [See GeneralH

Manager, Kerala State Road Transport Corporation, Trivandrumv. Susamma Thomas (Mrs), (1994) 2 SCC 176; Sarla Dixit (Smt) v.Balwant Yadav, (1996) 3 SCC 179]. This focus on the stability of thejob of the victim, while awarding future prospects, was continued in thejudgment of this Court in Sarla Verma (Smt) v. Delhi TransportCorporation, (2009) 6 SCC 121 wherein the Court held as follows:

“24. In Susamma Thomas [(1994) 2 SCC 176] this Courtincreased the income by nearly 100%, in Sarla Dixit [(1996) 3SCC 179] the income was increased only by 50% and in AbatiBezbaruah [(2003) 3 SCC 148] the income was increased by amere 7%. In view of the imponderables and uncertainties, we arein favour of adopting as rule of thumb, an addition of 50% ofactual salary to the actual salary income of the deceasedtowards future prospects, where the deceased had apermanent job and was below 40 years. (Where the annualincome is in the taxable range, the words “actual salary” shouldbe read as “actual salary less tax”). The addition should be only30% if the age of the deceased was 40 to 50 years. There shouldbe no addition, where the age of the deceased is more than 50years. Though the evidence may indicate different percentageof increase, it is necessary to standardise the addition to avoiddifferent yardsticks being applied or different methods ofcalculation being adopted. Where the deceased was self-employed or was on fixed salary (without provision forannual increments, etc.), the courts will usually take onlythe actual income at the time of death. departuretherefrom should be made only in rare and exceptional”cases involving special circumstances.

(emphasis supplied)

22. However, there was shift in jurisprudence regarding futureprospects with the five-Judge Bench decision of this Court in PranaySethi (supra). This Court extended the benefit regarding future prospectsto even self-employed persons, or those on fixed salary. The Courtheld as follows:

“57. Having bestowed our anxious consideration, we are disposedto think when we accept the principle of standardisation,there isreally no rationale not to apply the said principle to the

Aself-employed or person who is on fixed salary. To followthe doctrine of actual income at the time of death and notto add any amount with regard to future prospects to theincome for the purpose of determination of multiplicandwould be unjust. The determination of income whilecomputing compensation has to include future prospectsBso that the method will come within the ambit and sweep ofjust compensation as postulated under Section 168 of theAct. In case of deceased who had held permanent job withinbuilt grant of annual increment, there is an acceptable certainty.But to state that the legal representatives of deceased who wasCon fixed salary would not be entitled to the benefit of futureprospects for the purpose of computation of compensation wouldbe inapposite. It is because the criterion of distinction betweenthe two in that event would be certainty on the one hand andstaticness on the other. One may perceive that the comparativemeasure is certainty on the one hand and uncertainty on the otherDbut such perception is fallacious. It is because the price risedoes affect self-employed person; and that apart there isalways an incessant effort to enhance one’s income forsustenance. The purchasing capacity of salaried personon permanent job when increases because of grant ofEincrements and pay revision or for some other change inservice conditions, there is always competing attitude inthe private sector to enhance the salary to get betterefficiency from the employees. Similarly, person who isself-employed is bound to garner his resources and raisehis charges/fees so that he can live with sameFfacilities.…Taking into consideration the cumulative factors,namely, passage of time, the changing society, escalationof price, the change in price index, the human attitude tofollow particular pattern of life, etc., an addition of 40% ofthe established income of the deceased towards future prospectsGand where the deceased was below 40 years an addition of 25%where the deceased was between the age of 40 to 50 years wouldbe reasonable.”

(emphasis supplied)

23. The rationale behind the awarding of future prospects isHtherefore no longer merely about the type of profession, whether

permanent or otherwise, although the percentage awarded is stilldependent on the same. The awarding of future prospects is now partof the duty of the Court to grant just compensation, taking into accountthe realities of life, particularly of inflation, the quest of individuals tobetter their circumstances and those of their loved ones, rising wagerates and the impact of experience on the quality of work.

24. Taking the above rationale into account, the situation is quiteclear with respect to notional income determined by Court in the firstcategory of cases outlined earlier, those where the victim is proved to beemployed but claimants are unable to prove the income before the Court.Once the victim has been proved to be employed at some venture, thenecessary corollary is that they would be earning an income. It is clearthat no rational distinction can be drawn with respect to the granting offuture prospects merely on the basis that their income was not proved,particularly when the Court has determined their notional income.25. When it comes to the second category of cases, relating tonotional income for non-earning victims, it is my opinion that the aboveprinciple applies with equal vigor, particularly with respect to homemakers.Once notional income is determined, the effects of inflation would equallyapply. Further, no one would ever say that the improvements in skillsthat come with experience do not take place in the domain of workwithin the household. It is worth noting that, although not extensivelydiscussed, this Court has been granting future prospects even in casespertaining to notional income, as has been highlighted by my learnedbrother, Surya Kant, J., in his opinion [Hem Raj v. Oriental InsuranceCompany Limited, (2018) 15 SCC 654; Sunita Tokas v. New IndiaInsurance Co. Ltd., (2019) 20 SCC 688].

26. Therefore, on the basis of the above, certain generalobservations can be made regarding the issue of calculation of notionalincome for homemakers and the grant of future prospects with respectto them, for the purposes of grant of compensation which can besummarized as follows:

a.Grant of compensation, on pecuniary basis, with respectto homemaker, is settled proposition of law.

b.Taking into account the gendered nature of housework, withan overwhelming percentage of women being engaged inthe same as compared to men, the fixing of notional income

Aof homemaker attains special significance. It becomes arecognition of the work, labour and sacrifices ofhomemakers and reflection of changing attitudes. It isalso in furtherance of our nation’s international lawobligations and our constitutional vision of social equalityand ensuring dignity to all.

c.Various methods can be employed by the Court to fix thenotional income of homemaker, depending on the factsand circumstances of the case.

d.The Court should ensure while choosing the method, andCfixing the notional income, that the same is just in the factsand circumstances of the particular case, neither assessingthe compensation too conservatively, nor too liberally.

e.The granting of future prospects, on the notional incomecalculated in such cases, is component of justDcompensation.

27. With the above observations, I concur with the opinion of mylearned brother.

Devika Gujral

Appeals partly allowed.