New India Assurance Co. Ltd. vs Sushila & Ors.
2011 Latest Caselaw 812 Del

                                                      REPORTED

*    IN THE HIGH COURT OF DELHI AT NEW DELHI

+        MAC.APP. 6/2011 and CM No.95/2011 (stay)

NEW INDIA ASSURANCE CO LTD ..... Appellant
             Through: Mr. K.L. Nandwani, Advocate

             versus

SUSHILA & ORS                           ..... Respondents
                      Through:   Mr. Bhupesh Narula and Mr. Yogesh
                                 Narula, Advocates for the
                                 respondents No.1 to 6

%                          Date of Decision : February 10, 2011

CORAM:
HON'BLE MS. JUSTICE REVA KHETRAPAL
1. Whether reporters of local papers may be allowed
   to see the judgment?
2. To be referred to the Reporter or not?
3. Whether judgment should be reported in Digest?

                           ORDER (Oral)

: REVA KHETRAPAL, J.

1. This appeal filed by the appellant - Insurance Company seeks

to assail the judgment dated 28th August, 2010 passed by the learned

Motor Accident Claims Tribunal, Dwarka, New Delhi, in M.A.C. Pet.

No.164/2008 titled as "Sushila and Ors. vs. Uttam Kumar & Ors.",

whereby and whereunder an award in the sum of ` 26,56,000/- with

interest @ 9 % per annum from the date of the filing of the petition

till the date of its realization was passed against the appellant and in

favour of the respondents No. 1 to 6.

2. In a nutshell, the facts leading to the filing of the present appeal

are that on 30.12.2006, one Banwari Lal (hereinafter referred to as

"the deceased") was hit by a truck No.RJ-06-GA-1820 from behind

while he was going on motorcycle near the Petrol Pump, Nangli

Dairy, Delhi. As a result of the accident, the deceased received fatal

injuries. A claim petition was filed by the widow of the deceased,

their four children and the father of the deceased, being respondents

No.1 to 6 herein.

3. For the purpose of computation of the loss of dependency of

the respondents No.1 to 6, the income of the deceased was assessed

by the Tribunal on the basis of the salary certificate placed on record

before it by the respondent No.1/wife of the deceased, where his

annual income is shown as ` 1,82,708/-. The Tribunal noted that after

deduction of tax, i.e., ` 1,370/-, his net income came to ` 1,81,338/-

per annum. The Tribunal made further increase of 30% towards future

prospects as the deceased was a permanent employee of M/s Veenu

Bhai Enterprises Private Ltd, in accordance with the law laid down by

the Supreme Court in the case of Smt. Sarla Verma & Ors. vs. Delhi

Transport Corporation & Anr., (2009) 6 SCC 121. From this figure,

1/4th was deducted towards personal expenses as there are six

dependants, and thereafter the multiplier of „14‟ was applied in order

to ascertain the total loss of dependency of the claimants which came

to ` 24,75,270/-, rounded off to ` 24,76,000/-. The Tribunal relying

upon the judgment of this court in Kailash Kaur & Anr. vs. New

India Assurance Company, MAC. APP. No.318/2008 decided on

24.3.2009 awarded ` 25,000/- to each of the claimants towards loss of

love and affection, i.e., in all ` 1,50,000/- (i.e., ` 25,000/- x 6), and

further awarded a sum of ` 10,000/- each under the heads of loss of

consortium, funeral expenses and loss of estate. In all a sum of `

26,56,000/- was awarded as total compensation along with interest at

the rate of 9 % per annum.

4. Mr. Nandwani, the learned counsel for the appellant challenged

the award on three counts:

(i) The further increase of 30% on account of future

prospects was not justified as per Sarla Verma's case

(supra),

(ii) The amount of compensation awarded towards "loss of

love and affection", i.e., ` 1,50,000/- was on the higher

side, and

(iii) The rate of interest awarded should have been 7.5 % per

annum instead of 9% per annum.

5. Regarding the first count, it is evident from the record that the

deceased was a matriculate and aged 41 years at the time of the

accident. He was working as a Supervisor with M/s Veenu Bhai

Enterprises Private Ltd, his appointment letter and salary records are

Ex.PW2/A to Ex.PW2/F. It is on record that he was initially

appointed on a salary of ` 12,000/- per month, which, in due course

of time, was increased to ` 15,000/- per month. As regards the TDS,

which used to be deducted on his salary, Form No.16 had been issued

from the Company for the Assessment Year 2006-07, which was

proved on record as Ex.PW1/3. The Manager (Administration),

namely, Mr. Madan Mohan of the above said company was

summoned as witness, who appeared as PW2 and deposed as under:

"Deceased Banwari Lal was working with our company as Supervisor. Copy of his appointment letter is Ex.PW.2/A. His joining report is Ex.PW.2/B and his application for employment is Ex.PW.2/C. As per the pay drawn by Banwari Lal for April, 2005, a certificate dated 06.05.2005 was issued, which is Ex.PW.2/D. The last pay drawn by Banwari Lal is Ex.PW.2/E. His salary slip is Ex.PW.2/F as mentioned in the register of payment of wages. TDS used to be deducted on the salary paid to Banwari Lal and we had been issuing Form-16 on regular basis to Banwari Lal. Copy of Form-16 issued by our company to Banwari is already Ex.PW.1/3. Shri Banwari Lal was initially appointed at a salary of ` 12,000/- per month. He used to get yearly increment according to the performance ranging from ` 1500/- to ` 2000/-. Retirement age of an employee of our company is 60 years. On the basis of the increments and experience in the service, salary of Banwari Lal would have been doubled had he reached the age of superannuation."

6. The aforesaid testimony of PW2 remained unshaken in cross

examination and, as a matter of fact, the witness in cross-examination

emphatically stated that the deceased had been working in their

Company on a permanent basis.

7. The contention of Mr. Nandwani, the learned counsel for the

appellant, placing his reliance upon Salra Verma's case ( supra), is

that the future prospects of the deceased could not have been

considered as he was in a private job and the same does not fall in the

category of "permanent job". The relevant part of the judgment in the

case of Sarla Verma (supra) upon which reliance was placed by Mr.

Nandwani is reproduced hereunder:

"10. Generally the actual income of the deceased less income tax should be the starting point for calculating the compensation. The question is whether actual income at the time of death should be taken as the income or whether any addition should be made by taking note of future prospects. In Susamma Thomas, this Court held that the future prospects of advancement in life and career should also be sounded in terms of money to augment the multiplicand (annual contribution to the

dependants); and that where the deceased had a stable job, the court can take note of the prospects of the future and it will be unreasonable to estimate the loss of dependency on the actual income of the deceased at the time of death. In that case, the salary of the deceased, aged 39 years at the time of death, was Rs. 1032/- per month. Having regard to the evidence in regard to future prospects, this Court was of the view that the higher estimate of monthly income could be made at Rs. 2000/- as gross income before deducting the personal living expenses. The decision in Susamma Thomas was followed in Sarla Dixit v. Balwant Yadav (1993) II LLJ 664 SC, where the deceased was getting a gross salary of Rs. 1543/- per month. Having regard to the future prospects of promotions and increases, this Court assumed that by the time he retired, his earning would have nearly doubled, say Rs. 3000/-. This Court took the average of the actual income at the time of death and the projected income if he had lived a normal life period, and determined the monthly income as Rs. 2200/- per month. In Abati Bezbaruah v. Dy. Director General, Geological Survey of India [2003] 1 SCR 1229, as against the actual salary income of Rs. 42,000/- per annum, (Rs. 3500/- per month) at the time of accident, this Court assumed the income as Rs. 45,000/- per annum, having regard to the future prospects

and career advancement of the deceased who was 40 years of age.

11. In Susamma Thomas, this Court increased the income by nearly 100%, in Sarla Dixit, the income was increased only by 50% and in AbatiBezbaruah the income was increased by a mere 7%. In view of imponderables and uncertainties, we are in favour of adopting as a rule of thumb, an addition of 50% of actual salary to the actual salary income of the deceased towards future prospects, where the deceased had a permanent job and was below 40 years. [Where the annual income is in the taxable range, the words `actual salary' should be read as `actual salary less tax']. The addition should be only 30% if the age of the deceased was 40 to 50 years. There should be no addition, where the age of deceased is more than 50 years. Though the evidence may indicate a different percentage of increase, it is necessary to standardize the addition to avoid different yardsticks being applied or different methods of calculations being adopted. Where the deceased was self- employed or was on a fixed salary (without provision for annual increments etc.), the courts will usually take only the actual income at the time of death. A departure therefrom should be made only in rare and exceptional cases involving special circumstances."

8. Mr. Bhupesh Narula, the learned counsel for the respondents

No.1 to 6, on the other hand, placed reliance upon the recent decision

of the Supreme Court in Shakti Devi vs. New India Insurance Co.

Ltd. & Anr., 2011 ACJ 15. In the said case, after referring to the

judgment rendered by it in the case of Smt. Sarla Verma (supra), the

Supreme Court observed as follows:

"In Sarla Verma, this Court stated that where the deceased was self-employed, the Court shall usually take only the actual income at the time of death; a departure from there should be made only in rare and exceptional cases involving special circumstances. Does the present case involve special circumstances? In our view, it does. The evidence has come that the deceased was to get employment in the forest department after the retirement of his father. Obviously the evidence is based on the government policy. The deceased, thus, had a reasonable expectation of the government employment in near future. In the circumstances, the actual income at the time of deceased's death needs to be revised and taking into consideration the special circumstances of the case, in our view, the monthly income of the deceased deserves to be fixed at ` 2,000/- ......................."

9. On the basis of the aforesaid, it was urged by Mr. Bhupesh

Narula, the learned counsel for the respondents No.1 to 6, that in each

case the question which the Tribunal or the Court concerned must

pose to itself while computing the income of the deceased for the

purpose of assessing the loss of dependency of his legal

representatives is:

             "Does the present        case   involve   special
             circumstances?"

10. Mr. Narula contended that the evidence on record in the instant

case clearly showed that the deceased was an employee of a private

limited company. PW2 Mr. Madan Mohan, the Manager

(Administration) of the said company had categorically testified that

on the basis of the increments and experience in the service, the salary

of the deceased would have doubled had he reached the age of

superannuation, which in the case of their Company was 60 years.

He also testified that every employee used to get yearly increments in

their Company and that the deceased Banwari Lal had been working

in their Company on a permanent basis. The aforesaid facts, Mr.

Narula contended, must be regarded as special circumstances.

11. It is clear from the decision in the case of Sarla Verma (supra)

that a distinction was made between the case of a self-employed

person and that of a person with a permanent job. The Supreme

Court in its subsequent decision rendered in the case of Shakti Devi

(supra) clarified that where the deceased is self-employed but has a

reasonable expectation of a permanent job, this must be considered to

be a special circumstance. In the said case, the deceased was running

a general store from his house and earning about ` 1,000/- per month

from the business, but since he had a reasonable expectation of

Government employment in the near future according to a

Government Policy, it was held that the actual income of the deceased

at the time of his death was required to be revised by taking into

consideration the aforesaid special circumstance, and the monthly

income of the deceased was thus fixed at ` 2,000/- per month. The

present case, in my opinion, stands on a better footing. The deceased

is not self-employed but had a permanent job in a private limited

company where every employee was getting yearly increments.

There is also evidence on record that at the time of his

superannuation, the salary of the deceased would have most certainly

doubled. In view of the aforesaid facts, in my view, the learned

Tribunal cannot be faulted for adding 30% of the salary which the

deceased was drawing at the time of his death to his last drawn salary

towards "future prospects" for the purpose of calculation of "loss of

dependency".

12. It also deserves to be highlighted that the Supreme Court while

dealing with the aspect of future prospects in Sarla Verma's case

(supra) has drawn no distinction between a private job, corporate job

or Government job, though a distinction was made for obvious

reasons between a temporary job and permanent employment. All

that the Supreme Court emphasized in the aforesaid case was that

while assessing the future prospects of the deceased, the permanency

or otherwise of his job be taken into account and the future prospects

of the deceased be adjudged accordingly. No hard and fast rule was

laid down as is clear from the fact that the Court held that in special

circumstances of the case a different approach may be warranted.

13. As regards the grievance of the appellant that the amount of

compensation awarded towards loss of love and affection is on the

higher side, I am not inclined to agree with the contention of Mr.

Nandwani that the same should be scaled down, keeping in view the

fact that the respondents No.1 to 6 lost their bread earner at a

comparatively young age.

14. On the aspect of interest awarded by the learned Tribunal

however I find some substance in the contention of Mr. Nandwani

that interest should have been awarded by the learned Tribunal at the

rate of 7.5% per annum instead of 9% per annum, keeping in view the

prevalent rate of interest on the date of the accident. The award is

accordingly modified to the extent that the appellant is held liable to

pay interest @ 7.5% per annum from the date of the institution of the

petition till the date of realisation. The rest of the award is upheld.

MAC.APP. 6/2011 and CM No.95/2011 stand disposed of

accordingly.

REVA KHETRAPAL (JUDGE) February 10, 2011 km