Oriental Insurance Co. Ltd. vs Kamla Devi And Ors.
2007 Latest Caselaw 971 Del

JUDGMENT

Pradeep Nandrajog, J.

1. Deceased, Lal Singh, aged 46 years sustained fatal injuries in a road accident on 19.9.2002. He died on 24.9.2002.

2. Vide award dated 13.1.2004, learned Tribunal awarded compensation in sum of Rs. 37,54,600 to the dependants, i.e., the widow, two daughters, a minor son and parents of the deceased.

3. The insurance company which was granted permission by the Tribunal under Section 170 (b) of the Motor Vehicles Act, 1988, to contest the case on merits has filed the present appeal challenging the award on the issue of quantum of compensation.

4. Since the issue raised in the appeal relates to quantum of compensation, I shall be noting only such relevant facts which are necessary for adjudication of said issue.

5. Deceased was aged 46 years as on the date of the accident.

Deceased has left behind his wife, aged 40 years; 2 daughters aged 20 years and 19 years; a minor son aged 16 years and parents aged 64 years and 60 years respectively.

6. To establish the earnings of the deceased at the time of the accident, S.K. Dhingra, L.D.C., E.I.L., stepped into the witness-box as PW 2. He placed on record salary certificate, Exh. PW2/A, issued by the employer of the deceased. In addition to the said salary certificate, an individual earning card, Exh. PW2/DA, showing the earnings of the deceased in the year 2002 was also placed on record.

7. Afore-noted salary certificate, Exh. PW2/A, records that the gross salary of the deceased at the time of the accident was Rs. 31,080 per month.

8. According to the said salary certificate, the basic pay of the deceased was Rs. 14,310 per month. Other benefits and the perks which the deceased was getting totalled to Rs. 16,770 per month. The Tribunal has assessed loss of dependence by treating current income as Rs. 31,080 per month and has granted benefit of future increase by doubling the same. The mean average of Rs. 31,080 + Rs. 62,160, i.e., Rs. 46,420 per month has been treated as the basis to recompense the family.

9. A contention was advanced by the appellant insurance company before the Tribunal that while determining quantum of the compensation, benefits and other perks which the deceased was getting cannot be taken into consideration for the reason that same were for the personal use of the deceased and thus, loss of such amount cannot be taken as loss to the family of the deceased.

10. Rejecting the above contention, the learned Tribunal observed as follows:

(19) The plea of the learned Counsel for the respondent that certain ingredients of the gross salary of the deceased cannot be taken into consideration for determining the compensation to my mind is not plausible. There are reasons for it. First and the foremost one-third amount is generally deducted from the income of the deceased on account of the personal running expenses. It has also been held in various cases that no deduction can be made on account of payment of even income tax in addition to the above said deduction. It considered that if deductions as asked by the insurance company is allowed in addition to the one-third deduction it would prejudice the interest of the claimant. Secondly, it is a matter of common knowledge that in the private sector and public sector undertakings always a package is offered to the employee, and this package includes different amount of money under different heads. Normally this is called C.T.C. (cost to the company). Salary is divided amongst different heads in order to reduce the tax liability of the employee. Such division of salary amongst different heads cannot be used against the employee in case of an unfortunate incident. It is also a settled proposition that Tribunal is required to adopt a view which is favorable to the claimant and it cannot have a microscopic look and that too with an attitude of reducing the compensation. The gross salary of an employee is a benefit to the entire family. The perks are also service benefits and in no way the same can be deducted while determining the quantum of compensation.

11. Thus, the Tribunal has taken salary (Rs. 31,080 p.m.) reflected in the salary certificate as the salary of the deceased at the time of the accident.

12. Salary/earnings of the deceased at the time of the accident as determined by the Tribunal is faulty on two counts. One, Tribunal has incorrectly appreciated salary certificate, Exh. PW2/A. Two, Tribunal ought to have appreciated the salary certificate, Exh. PW2/A in the light of the individual earning card, Exh. PW2/DA.

13. I note that according to the salary certificate, Exh. PW2/A, gross salary of the deceased consisted of following components:

  _____________________________________________________
   Sl.  Components                       Amount
   No.                                 (per month)
_____________________________________________________
    1.  Basic Pay                      Rs. 14,310
    2.  Dearness allowance             Rs.  4,994
    3.  City compensatory
        Allowance                      Rs.    300
    4.  House rent allowance           Rs.  5,900
    5.  Conveyance allowance           Rs.    740
    6.  Canteen subsidy                Rs.    740
    7.  Children education
        Allowance                      Rs.    300
    8.  Uniform allowance              Rs.    583
    9.  Ex-gratia bonus                Rs.    500
   10.  Reimbursement of
        professional journals          Rs.     50
   11.  Minor repair allowance         Rs.    983
   12.  Performance linked
        Reward                         Rs.  1,679
                                      ____________
                           Total       Rs. 31,080
                                      ____________
 

14. The canteen subsidy amounting to Rs. 740 per month cannot be deducted from the salary of the deceased for the reason deceased would have spent some amount on his food expenses if he was not getting said allowance. But Tribunal has erred in including amount which the deceased was getting for conveyance allowance (Rs. 740 p.m.), uniform allowance (Rs. 583 p.m.) and reimbursement towards professional journals (Rs. 50 p.m.) in the salary of the deceased. These benefits are personal to the deceased and cannot be taken as loss to the family of the deceased. Thus, the Tribunal ought to have taken salary of the deceased as Rs. 29,707 per month [Rs. 31,080 - (Rs. 740 + Rs. 583 + Rs. 50)].

15. Be that as it may, salary certificate, Exh. PW2/A further records that besides benefits noted in para 14 above, deceased was also entitled to get certain other benefits such as L.T.C., leave encashment, etc. These benefits need to be included in the salary of the deceased. But money value of these benefits is not specified. Considering that the deceased would have got some amount on account of these benefits, I consider it reasonable not to deduct the amount which the deceased was getting as conveyance allowance, uniform allowance and reimbursement of professional journals from the salary of the deceased.

16. At this juncture, I note individual earning card, Exh. PW2/DA, showing the earnings of the deceased in the year 2002. A perusal of the said card shows that the deceased was also earning an amount as overtime allowance. Overtime allowance earned by the deceased in the year 2002 is as follows:

_____________________________________ Sl. Month Amount No. (Year: 2002) _____________________________________

1. April Rs. 4,465.20

2. May Rs. 3,564.48

3. June Rs. 2,673.36

4. July Rs. 3,564.48

5. August Rs. 2,685.12

6. September Rs. 24,725.28 _____________________________________

17. It is thus established that apart from basic pay and other benefits as noted in the salary certificate, Exh. PW2/A, deceased was also earning an amount as overtime allowance. Taking mean of the amounts as noted in para 17 above, average overtime allowance earned by the deceased comes to Rs. 3,390 per month. (While computing the monthly overtime allowance, I am not considering overtime allowance earned by the deceased in the month of September as it appears that some previous arrears in the overtime allowance were paid to deceased in the said month).

Thus, total salary of the deceased at the time of accident comes to Rs. 34,470 per month (i.e., Rs. 31,080 + Rs. 3,390 = Rs. 34,470).

18. However, this total salary amount of Rs. 34,470 cannot be taken as carry-home salary of the deceased. A further perusal of individual earning card, Exh. PW2/DA, shows that the deceased was paying an amount towards income tax. Therefore, it is necessary to deduct the amount which the deceased was paying as income tax from the salary of the deceased.

19. In the month of September 2002, an amount of Rs. 6,110 has been paid by the deceased as income tax. But, earnings of the deceased in the month of September were quite high as the deceased had earned an excess overtime allowance. Noting the earnings of the deceased in the preceding months and the income tax paid thereon, I assess income tax payable by the deceased as Rs. 3,500 per month.

Thus, the carry-home salary of the deceased comes to Rs. 30,970 per month.

20. While determining prospects of future increase in the income of the deceased, relying on the ratio laid down in the decision reported as General Manager, Kerala State Road Transport Corporation v. Susamma Thomas , Tribunal has assumed that salary of the deceased would have doubled in the next 10 years. Thus, doubling the salary of deceased and taking mean average, average loss of dependence has been determined by the Tribunal as Rs. 46,620 per month [(Rs. 31,080 + Rs. 62,160) + 2 = Rs. 46,620].

21. Tribunal has acted mechanically in applying the law as laid down in Susamma Thomas case and thus assuming that the salary of the deceased would have doubled in the next 10 years.

22. At the time of the accident, deceased was in the pay scale of Rs. 7,400-14,750. His basic pay as on the date of the accident was Rs. 14,310 per month. Thus, at the time of the accident, deceased was almost getting the highest salary in his pay scale.

23. The Tribunal failed to realise that the salary of the deceased would have increased substantially in future only if the deceased would have been promoted to the next higher post. A perusal of the record of the Tribunal shows that no evidence has been led to show the promotional prospects of the deceased. In absence of any evidence showing the promotional prospects of the deceased, Tribunal has committed a fallacy in assuming that the salary of the deceased would have doubled in next 10 years.

24. In the interest of justice, I permitted the dependants/respondents to place on record the evidence showing the promotional prospects of the deceased.

25. A letter issued by Mr. A. Bhoumik, Manager (HR), E.I. Ltd. has been placed on the record. Said letter records that if promoted, deceased would have been in the pay scale of Rs. 12,000-17,500 as on 1.1.2008 and that on further promotion, he would have been in the pay scale of Rs. 13,750-18,700 at the time of his superannuation in the year 2016.

26. Thus, had the deceased been alive and got his usual promotions, his basic pay would have been Rs. 18,700 at the time of his superannuation.

27. Basic pay of the deceased at the time of the accident was Rs. 14,310 per month and as per the letter issued by the employer of the deceased, had the deceased been alive his basic pay would have been Rs. 18,700 per month at the time of his superannuation. This means that there would have been an increase of 30 per cent in basic pay of the deceased in 14 years, i.e., from 2002 to 2016.

28. I have assessed the total earnings/salary of the deceased at the time of the accident as Rs. 34,470 per month (see para 19 above). Noting that basic pay of the deceased would have risen by 30 per cent in next 14 years, I assume that his total earnings would have also increased by 30 per cent in next 14 years. Thus, had the deceased been alive, his total salary at the time of his superannuation in year 2016 would be Rs. 44,811 per month.

29. At the time of the accident, income tax payable by the deceased was nearly 10 per cent of his total salary. Thus, income tax payable by him in the year 2016 would be Rs. 4,481 per month.

Thus, net salary of the deceased at the time of his superannuation in the year 2016 comes to Rs. 40,330 per month.

30. Taking the mean average of the net earnings of the deceased at the time of the accident and his net earnings at the time of his superannuation, mean average income (net) comes to Rs. 35,650 [(Rs. 30,970 + Rs. 40,330) + 2 = Rs. 35,650].

31. Notwithstanding the extended family of the deceased, I consider deduction of 1/3rd towards personal spending of the deceased as fair and reasonable for the reason his daughters were major and his son was also nearing majority at the time of the accident. Thus, loss of dependence to the family comes to Rs. 23,767 per month.

32. I adopt the multiplier of 10 as applied by the Claims Tribunal. Thus, total loss of dependence comes to Rs. 28,52,040 (Rs. 23,767 × 12 × 10).

33. Tribunal has awarded compensation ill sum of Rs. 37,29,600 under the head 'loss of dependence'. Thus, compensation under this head is reduced by a sum of Rs. 8,77,560.

34. Appeal is accordingly allowed to the extent that compensation awarded vide award dated 13.1.2004 is reduced by a sum of Rs. 8,77,560. No costs. L.C.R. be returned.