SMT. ANJALI & ORS versus LOKENDRA RATHOD & ORS.

[2022] 16 S.C.R. 661

SMT. ANJALI & ORS.

LOKENDRA RATHOD & ORS.(Civil Appeal No. 009014 of 2022)

DECEMBER 06, 2022

[KRISHNA MURARI AND BELA M. TRIVEDI, JJ.]

Motor Vehicles Act, 1988: s.168 – Fatal accident – Just andFair Compensation – Claimants (the heirs and legal representativeof the victim-deceased) sought compensation of Rs.20 Lakhs –Tribunal estimated the deceased’s monthly income at Rs. 4000 andallowed the claim of Rs. 6,24,000 with interest – High Courtincreased monthly income of deceased to Rs. 5000 and awardedcompensation of Rs. 11,41,000 with interest – Hence instant appeal– Held: The Tribunal and the High Court both committed graveerror while estimating the deceased’s income by disregarding theIncome Tax Return (ITR) of the deceased – The ITR of deceasedreflected his annual income to be Rs.1,18,261/-, approx. Rs.9,855/- per month – Since the deceased is survived by the sevendependents, the appropriate deduction for personal expenses fordeceased ought to be 1/5[th] only and not 1/4[th] as applied by theTribunal and High Court – Further, Tribunal erred by not makingany additions to future prospects of the deceased, whereas HighCourt by placing reliance on Sarla Verma and Pranay Sethi held thatsince the deceased was under 40 years of age and was self-employed, he is entitled to addition of future prospects of 40% ofhis established income – There is no error in High Court’s reasoningfor adding 40% of the deceased’s income towards future prospects– Further, Tribunal awarded meagre sums of Rs.10,000/- andRs.2,000/- towards conventional heads and funeral expenses,respectively, whereas High Court while placing reliance on PranaySethi awarded Rs.70,000/- under conventional heads and Rs.10,000/- towards funeral expenses of the deceased – Although, High Courtwas correct in placing reliance on Pranay Sethi, High Court erredby not granting an increment of 10% on the conventional heads inevery three years as directed in the Pranay Sethi – three-JudgeBench of this Court in United India Insurance Co. Ltd. vs. SatinderKaur after considering Pranay Sethi awarded spousal consortium at

Athe rate of Rs.40,000/ and towards loss of parental consortium to–each child at the rate of Rs.40,000/- The compensation underthese heads also needs to be increased by 10% – Thus, the spousalconsortium is awarded at Rs.44,000/ and towards parentalconsortium at the rate of Rs.44,000/ each is awarded to the threechildren – Thus the total compensation payable to the Appellants isBRs.25,91,388/- with interest at 9% per annum from the date of filingof the application till the date of payment of the compensation tothe appellants.Motor Vehicles Act, 1988 – Beneficial Legislation – The MotorVehicles Act, 1988 is beneficial legislation which has been framedCwith the object of providing relief to the victims or their families –s.168 of the MV Act deals with the concept of ‘just compensation’which ought to be determined on the foundation of fairness,reasonableness and equitability.

Allowing the appeal, the Court

HELD: 1. The Tribunal and the High Court both committedgrave error while estimating the deceased’s income bydisregarding the Income Tax Return of the Deceased. Theappellants had filed the Income Tax Return (2009- 2010) of thedeceased, which reflects the deceased’s annual income to beERs.1,18,261/-, approx. Rs.9,855/- per month. The deceased’sannual income be fixed at Rs.1,18,261/-, approx. Rs.9,855/- permonth keeping in mind the deceased’s Income Tax Return forthe year 2009-2010. [Para 9][667-D-E, G]

2. The provisions of the Motor Vehicles Act, 1988 givesFparamount importance to the concept of ‘just and fair’compensation. It is beneficial legislation which has been framedwith the object of providing relief to the victims or their families.Section 168 of the MV Act deals with the concept of ‘justcompensation’ which ought to be determined on the foundationGof fairness, reasonableness and equitability. Although suchdetermination can never be arithmetically exact or perfect, anendeavor should be made by the Court to award just and faircompensation irrespective of the amount claimed by theapplicant/s. [Para 10][667-G-H; 668-A-B]

3. Since the deceased is survived by the seven dependents,the appropriate deduction for personal expenses for deceasedought to be 1/5[th] only and not 1/4[th] as applied by the Tribunal andHigh Court. The Tribunal erred by not making any additions tofuture prospects of the deceased, whereas the High Court byplacing reliance on Sarla Verma and Pranay Sethi held that sincethe deceased was under 40 years of age and was self-employed,he be entitled to addition of future prospects of 40% of hisestablished income. Therefore there is no error in the HighCourt’s reasoning for adding 40% of the deceased’s incometowards future prospects. [Paras 12 and 15][668-E-F; 669-E-F]

4. The Tribunal awarded meagre sums of Rs.10,000/- andRs.2,000/- towards conventional heads and funeral expenses,respectively, whereas the High Court while placing reliance onPranay Sethi awarded Rs.70,000/- under conventional heads andRs.10,000/- towards funeral expenses of the deceased. Althoughthe High Court was correct in placing reliance on Pranay Sethi,the High Court erred by not granting an increment of 10% onthe conventional heads in every three years as directed in thePranay Sethi. Hence the High Court ought to have added theincrement of 10% to the conventional heads as per the dictum inPranay Sethi. [Para 16][669-F-G]

5. three-Judge Bench of this Court in United IndiaInsurance Co. Ltd. vs. Satinder Kaur after considering Pranay Sethihas awarded spousal consortium at the rate of Rs.40,000/ andtowards loss of parental consortium to each child at the rate ofRs.40,000/-. The compensation under these heads also needs tobe increased by 10%. Thus, the spousal consortium is awardedat Rs.44,000/ (Forty-four thousand only), and towards parentalconsortium at the rate of Rs.44,000/ each (Total Rs.1,32,000/) isawarded to the three children. Thus the total compensationpayable to the Appellants is Rs.25,91,388/- with interest at 9%per annum from the date of filing of the application till the date ofpayment of the compensation to the Appellants. [Paras 17 and18][670-F-G; 671-E-F]

AMalarvizhi & Ors. v. United India Insurance CO. Ltd.& Ors.(2020) 4 SCC 228 : [2019] 16 SCR 1086; SarlaVerma & Ors. v. Delhi Transport Corporation & Anr.(2009) 6 SCC 121 : [2009] 5 SCR 1098;NationalInsurance Co. Ltd. v. Pranay Sethi & Ors. (2017) 16SCC 680 : [2017] 13 SCR 100; United India InsuranceBCo. Ltd. v. Satinder Kaur @ Satwinder Kaur and Ors.(2021) 11 SCC 780 – relied on.

Laxmi Devi & Ors. v. Mohammad Tabbar & Anr.(2008)12 SCC 165 : [2008] 5 SCR 436 – referred to.

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 9014of 2022.

From the Judgment and Order dated 16.08.2018 of the High Courtof Madhya Pradesh, Bench at Indore in M.A. No. 2592 of 2013.

N. K. Mody, Sr. Adv., Prabuddha Singh Gour, Ms. Ishita M.Puranik, Sukhamrit Singh, Suresh Kumar Bhan, Praveen Swarup, Advs.Ffor the Appellants.

Ms. Meenakshi Midha, Ms. Pritika Juneja, Chander Shekhar Ashri,Advs. for the Respondents.

The Judgment of the Court was delivered by

GKRISHNA MURARI, J.

Leave Granted

2. The present appeal arises from judgment of the MadhyaPradesh High Court dated 16[th] August, 2018in First Appeal from thedecision of the Motor Accident Claims Tribunal, Indore.H

3. The Appellants are the heirs and legal representatives of Rajesh(deceased) who died as result of motor accident on 15[th] August2010. He was traveling in Maruti Alto Car bearing Registration No.MP-09-HE-3322, on reaching Badwah Road, bus bearing RegistrationNo. MP-09-FA-3169 being driven by Respondent No.2 in rash andnegligent manner crashed into the Rajesh’s car, resulting in Rajesh(deceased) receiving grievous injuries on various body parts, he latersuccumbed to the injuries during treatment. He is survived by his twowives, three children and his parents, who are the appellants before thisCourt.

4. The claimants/appellants filed Claim Petition under Section166 of the Motor Vehicles Act, 1988 before the Tribunal, seekingcompensation in the amount of Rs.20 Lakhs. By its award dated 12[th]July, 2013, the Tribunal estimated the deceased’s income at Rs.4000/-per month and allowed the claim in the amount of Rs.6,24,000/- togetherwith interest at the rate of 6% per annum from the date of filing theClaim Petition till the date of full realization of the decreed amount.The appellants filed First Appeal before the High Court of MadhyaPradesh, Indore Bench, wherein vide impugned judgment dated 16[th]August, 2018 the High Court increased the deceased’s estimatedincome to Rs. 5000/- per month and awarded compensation of Rs.11,41,000/- with interest at the rate of 6% per annum from the date offiling the Claim Petition till the date of full realization of the decreedamount. Aggrieved by the judgment of the High Court, the claimantsare in appeal before this Court.

5. There is no dispute as to the occurrence of the accident andthe liability of the respondent- insurer to pay the compensation. In viewof this admitted position, it is unnecessary to narrate the factual aspectsof the accident.

6. The deceased was aged 28 years at the time of the accident,and he used to run business of scrap and earned Rs. 15,000/- permonth as claimed by the appellants, in support the appellants had filedthe deceased’s Income Tax Return for financial year 2009-2010 beforethe Tribunal which showed the total income of deceased to beRs.1,18,261/-, approx. Rs.9855/- per month. The MACT disregardedthe deceased’s Income Tax Return on the ground that neither any ITRprior to 2009-2010 nor any other document with regard to the deceased’sincome was filed before the Tribunal. The MACT while relying on this

CDE

ACourt’s judgment in Laxmi Devi & Ors. Vs. Mohammad Tabbar &Anr.[1], held the deceased to be skilled labour and fixed his income atRs.4000/- per month i.e., Rs.48,000/- per annum. The Tribunal applied amultiplier of ‘17’ and deducted one-fourth (1/4th) of the income towardshis personal expenses for the purpose of calculation of the compensationunder the head of loss of dependency. total sum of Rs.6,12,000/- wasBawarded towards loss of dependency, to this Rs.10,000/- was added forloss of pain & suffering and Rs.2,000/- for funeral expenses. The MACTawarded total sum of Rs.6,24,000/- (Rupees Six Lakh Twenty-FourThousand only) towards compensation with interest @ 6% per annumfrom the date of the Claim Petition till date of realization.C7. However, the High Court held that the Tribunal was unjustifiedin estimating the deceased’s income as Rs.4,000/- per month, consideringthat the deceased was the sole bread earner of the family, the HighCourt estimated the deceased’s income as Rs.5,000/- per month.Furthermore, the High Court observed that the Tribunal failed to passDany award under the head of ‘future prospects’, hence the High Courtheld that since the deceased was 28 years of age and self-employed,he was entitled to future prospects of 40%. The High Court fixed themonthly income of the deceased to Rs.5,000/- per month, added 40%(Rs.2,000/-) of the deceased’s income towards future prospects andEdeducted one-fourth (1/4th) of the income towards personal expenses,which totaled to Rs.63,000/-. It applied multiplier ‘17’ for calculatingthe dependency and awarded Rs.70,000/- under conventional head.Accordingly, the High Court awarded compensation of Rs.11,41,000/-(Rupees Eleven Lakh Forty-One Thousand Only) with interest @ 6%per annum from the date of the claim petition till date of realization.F

8. Assailing the High Court’s impugned order dated 16[th] August,2018, the learned Counsel appearing on behalf of the Appellants hascontended:-

a.The High Court and the Tribunal failed to consider theGdeceased’s Income Tax Return filed on 28.05.2010 forthe year 2009-2010, the HC rejected the ITR on the groundthat earlier returns were not filed while the Income TaxInspector was examined.

[KRISHNA MURARI, J.]

b.The High Court and Tribunal failed to observe that sincethe number of dependents exceeded 6 members, thededuction made towards personal expenses ought to be one-fifth (1/5[th]). In the present case there are 7 dependents ofthe deceased.

c.The Tribunal failed to award any amount under theConventional Heads and the High Court awarded sum ofRs.70,000/- in lumpsum under the Conventional Heads,whereas the same ought to have been Rs.1,20,000/- as perthe Supreme Court’s judgment in Malarvizhi & Ors. Vs.United India Insurance CO. Ltd. & Ors.[2]

d.Both the Tribunal and High Court awarded interest at therate of 6% per annum from the date of application while itought to have been 9% as held in Malarvizhi & Ors. Vs.United India Insurance Co. Ltd. & Ors. (Supra).

9. The Tribunal and the High Court both committed grave errorwhile estimating the deceased’s income by disregarding the Income TaxReturn of the Deceased. The appellants had filed the Income Tax Return(2009-2010) of the deceased, which reflects the deceased’s annual incometo be Rs.1,18,261/-, approx. Rs.9,855/- per month. This Court inMalarvizhi & Ors. (Supra) has reaffirmed that the Income Tax Returnis statutory document on which reliance be placed, where available,for computation of annual income. In Malarvizhi (Supra), this Courthas laid as under:

“10. …We are in agreement with the High Court that thedetermination must proceed on the basis of the income taxreturn, where available. The income tax return is statutorydocument on which reliance may be placed to determine theannual income of the deceased.”

Hence, this Court is of the opinion that the deceased’s annualincome be fixed at Rs.1,18,261/-, approx. Rs.9,855/- per month keepingin mind the deceased’s Income Tax Return for the year 2009-2010.

10. The provisions of the Motor Vehicles Act, 1988 (for short,“MV Act”) gives paramount importance to the concept of ‘just andfair’ compensation. It is beneficial legislation which has been framed

2 (2020) 4 SCC 228

Awith the object of providing relief to the victims or their families. Section168 of the MV Act deals with the concept of ‘just compensation’ whichought to be determined on the foundation of fairness, reasonablenessand equitability. Although such determination can never be arithmeticallyexact or perfect, an endeavor should be made by the Court to award justand fair compensation irrespective of the amount claimed by the applicant/Bs. In Sarla Verma & Ors. Vs. Delhi Transport Corporation & Anr.[3],this Court has laid down as under:“16. ...”Just compensation” is adequate compensation whichis fair and equitable, on the facts and circumstances of thecase, to make good the loss suffered as result of the wrong,Cas far as money can do so, by applying the well settledprinciples relating to award of compensation. It is not intendedto be bonanza, largesse or source of profit.”

11. In Sarla Verma (Supra), it was further held that where thedeceased was married, the deduction towards personal and livingDexpenses of the deceased should be one-third (1/3rd) where the numberof dependent family members is between 2 and 3, one-fourth (1/4th)where the number of dependent family members is between 4 and 6,and one-fifth (1/5th) where the number of dependent family membersexceeds six. The same has been affirmed by the Constitution Bench ofEthis Court in National Insurance Co. Ltd. Vs. Pranay Sethi & Ors.[4]

12.In the instant case the deceased is survived by seven (7)dependents, hence in view of the Sarla Verma (Supra) judgment andthe Constitution bench judgment of this Court in Pranay Sethi (Supra)the appropriate deduction for personal expenses for deceased ought toFbe 1/5[th] only and not 1/4[th] as applied by the Tribunal and High Court.

13. Regarding the additions to be made for future prospects ofthe deceased, in Sarla Verma (Supra), this Court has held that whilecalculating the compensation, the courts should take into considerationnot only the actual income at the time of the death but should also makeGadditions by taking note of future prospects. It was further held thatthough the evidence may indicate different percentage of increase, itis necessary to standardize the addition to avoid disparate yardsticksbeing applied or disparate methods of calculation being adopted.

3 (2009) 6 SCC 121H4 (2017) 16 SCC 680

14. In Pranay Sethi (Supra), this Court has not only approvedthe aforesaid observations made in Sarla Verma (Supra), but also heldas under:

“59.3. While determining the income, an addition of 50% ofactual salary to the income of the deceased towards futureprospects, where the deceased had permanent job and wasbelow the age of 40 years, should be made. The additionshould be 30%, if the age of the deceased was between 40 to50 years. In case the deceased was between the age of 50 to60 years, the addition should be 15%. Actual salary shouldbe read as actual salary less tax.

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 thenecessary method of computation. The established incomemeans the income minus the tax component.”

15. The Tribunal erred by not making any additions to futureprospects of the deceased, whereas the High Court by placing relianceon Sarla Verma (Supra) and Pranay Sethi (Supra) held that since thedeceased was under 40 years of age and was self-employed, he beentitled to addition of future prospects of 40% of his established income.We find no error in the High Court’s reasoning for adding 40% of thedeceased’s income towards future prospects.

16. The Tribunal awarded meagre sums of Rs.10,000/- andRs.2,000/- towards conventional heads and funeral expenses, respectively,whereas the High Court while placing reliance on Pranay Sethi (Supra)awarded Rs.70,000/- under conventional heads and Rs.10,000/- towardsfuneral expenses of the deceased. Although the High Court was correctin placing reliance on Pranay Sethi (Supra), the High Court erred bynot granting an increment of 10% on the conventional heads in everythree years as directed in the Pranay Sethi (Supra), it may be relevantto extract the following observations :-

‘52…..The conventional and traditional heads, needless tosay, cannot be determined on percentage basis because that

Awould not be an acceptable criterion. Unlike determinationof income, the said heads have to be quantified. Anyquantification must have reasonable foundation. There canbe no dispute over the fact that price index, fall in bankinterest, escalation of rates in many field have to be noticed.The court cannot remain oblivious to the same. There has beenBa thumb rule in this aspect. Otherwise, there will be extremedifficulty in determination of the same and unless the thumbrule is applied, there will be immense variation lacking anykind of consistency as consequence of which, the orderspassed by the tribunals and courts are likely to be unguided.CTherefore, we think it seemly to fix reasonable sums. It seemsto us that reasonable figures on conventional heads, namely,loss of estate, loss of consortium and funeral expenses shouldbe Rs 15,000, Rs.40,000 and Rs.15,000 respectively. Theprinciple of revisiting the said heads is an acceptableprinciple. But the revisit should not be fact-centric or quantum-Dcentric. We think that it would be condign that the amountthat we have quantified should be enhanced on percentagebasis in every three years and the enhancement should be atthe rate of 10% in span of three years. We are disposed tohold so because that will bring in consistency in respect ofEthose heads.”

Hence, we are of the opinion that the High Court ought to haveadded the increment of 10% to the conventional heads as per the dictumin Pranay Sethi (Supra).

17. three-Judge Bench of this Court in United India InsuranceFCo. Ltd. vs. Satinder Kaur @ Satwinder Kaur and Ors.[5]afterconsidering Pranay Sethi (Supra), has awarded spousal consortium atthe rate of Rs.40,000/- (Rupees forty thousand only) and towards lossof parental consortium to each child at the rate of Rs.40,000/- (Rupeesforty thousand only). The compensation under these heads also needs toGbe increased by 10%. Thus, the spousal consortium is awarded atRs.44,000/- (Forty-four thousand only), and towards parental consortiumat the rate of Rs.44,000/- each (Total Rs.1,32,000/-) is awarded to thethree children.

[KRISHNA MURARI, J.]

18. In light of the above mentioned discussion, the Appellants areentitled to the following amounts:

Thus the total compensation payable to the Appellants isRs.25,91,388/- with interest at 9% per annum from the date of filing ofthe application till the date of payment of the compensation to theAppellants.

19. The appeal is allowed to the extent indicated above.

Devika Gujral(Assisted by : Mahendra Yadav, LCRA)

Appeal allowed.