Kamlesh Mittal & Ors vs Oriental Insurance Co Ltd & Ors
2014 Latest Caselaw 4134 Del

$~A-6.
*    IN THE HIGH COURT OF DELHI AT NEW DELHI

                                             Date of decision: 03.09.2014

+     MAC.APP. 283/2010

      KAMLESH MITTAL & ORS                    ..... Appellants
              Through  Mr. Navneet Goyal, Advocate

                   versus

      ORIENTAL INSURANCE CO LTD & ORS        ..... Respondents
               Through  Ms. Manjusha Wadhwa, Advocate
      CORAM:
      HON'BLE MR. JUSTICE JAYANT NATH

JAYANT NATH, J. (ORAL)

1. The present appeal is filed by the appellants for enhancement of compensation vide Award dated 14.12.2009 passed by the tribunal in the claim petition filed by them under Section 166/140 of MV Act.

2. Brief facts giving rise to the present appeal are that on 29.11.2003 late Shri Mahavir Prasad Mittal was travelling in his car driven by respondent No.6. He was driving towards Mumbai from the factory of respondent No.5 in District Raigarh. A truck driven rashly and negligently by respondent No.3 came from the opposite side and hit the car from the front side of the truck. The car was extensively damaged. Shri Mahavir Prasad and the other occupants of the car Shri Meghraj Jasraj Sakariya sustained fatal injuries.

3. The tribunal awarded following compensation to the claimants/appellants:

         Loss of financial dependency          Rs.12,37,500/-
        Loss of love and affection            Rs.10,000/-
        Loss of Consortium                    Rs.10,000/-
        Funeral Expenses                      Rs.5,000/-
        Loss to Estate                        Rs.10,000/-
        Total                                 Rs.12,72,500/-

4. Learned counsel for the appellant has stated that the compensation is miserably inadequate. He firstly submits that the deceased Shri Mahavir Prasad Mittal was a highly qualified individual. He was a B.E. and an M.B.A. He further submits that as per the salary certificate Ex. PW1/3 of his employer, he was drawing a monthly salary of Rs.52,366/- which comes to annual salary of Rs.6,28,392/-. He submits that the tribunal has erroneously ignored the salary certificate and has taken into account the income tax return to take the salary of the deceased as Rs.2,25,000/-. He submits that this is a completely erroneous computation and the annual salary of the deceased should have been taken as Rs.4,50,000/- and not based on the Income Tax Returns and balance payment could not be ignored. He further submits that the tribunal wrongly deducted 50% of the amount calculated as expenditure on self for computing loss of dependency. The tribunal noted that the daughter of the deceased was married and his son was in a job. Based on that, the tribunal concluded that the deceased had only one dependent his widow and deducted 50% of the earning towards his personal expenses. Using a multiplier of 11, loss of dependency was calculated as Rs.12,37,500/-. Counsel submits that this was entirely erroneous as 50% of earnings towards personal expenses as is being deducted in case of a

bachelor only who has a tendency to spend more of the income on himself. He submits that a person with one married daughter and elder son would not have spent 50% of earning on himself. He would have accumulated his excess income and added to the assets of the family which would have ultimately been inherited by the children.

5. I will first deal with the submission of the appellant pertaining to the income accepted by the tribunal.

6. A perusal of the Award shows that the tribunal noted that the deceased was a Group General Manager in Maharashtra Seamless Limited, a company of Jindal Group at an annual salary of Rs.8,00,000/-. The tribunal noted the salary certificate of the deceased Ex. PW1/2. However, the tribunal was inclined to accept the income as declared by the deceased in his income tax returns Ex. P17 to Ex. P19. Ex. P17, income tax return for the year 2002-03 shows a total net income of Rs.2,03,260; for 2003-04 the same is 2,28,852/-; and for 2004-05 it is 1,77,833/-. The tribunal took an average of the same and accepted an income of Rs.2,25,000/- per annum.

7. Sh. Shri Bhagwan Sharma, an executive of the said Maharashtra Seamless Ltd, appeared as PW1. He has exhibited the salary certificate which is Ex. PW1/2. He was cross examined on two different dates. He on the next date, brought a gross salary certificate which is exhibited as Ex.PW1/3. He states that his basic salary is Rs.16,660/- plus allowances like medical allowance etc.

8. The salary certificate shows the annual income of Rs.6,28,000/- which is at complete variance with the income as shown in the IT Returns. There is no explanation forthcoming as to why there is such a huge difference in the two computations. Learned counsel for the appellant was asked to explain

from the record as to why there is such a big difference in the incomes as stated in the salary certificate and in the IT Returns. He, at this stage, submitted that this Court may confine itself to the IT returns for the assessment year 2004-05 which would be last IT Return filed on behalf of the deceased as it is for the income of financial year 2003-04. The deceased died on 29.11.2003. He submits that even as per this IT returns which is Ex. P19, the income from the salary is shown as Rs.,244,095/- for nine months which comes to Rs.3,25,460/- per year. He submits that this was the last IT Return filed on behalf of the deceased; this would be the latest salary of the deceased at the time of his death.

9. I find merit in the last submission of the counsel for the appellant. It cannot be ignored that the appellant was a highly qualified person. He was a B.E. and M.B.A. from the University of Delhi. Salaries in the corporate sector are usually subject to upward revision periodically. Hence, in my view, it would be appropriate to accept the last IT Return filed on behalf of the deceased for the purpose of assessing the income of the deceased in the facts and circumstances of this case. This would be his salary at the time of his death and would in the facts and circumstances of this case be the relevant salary for computing loss of dependency. Hence, the income of deceased is increased from what was assessed by the tribunal i.e. Rs.2,25,000/- to Rs.3,25,000/-.

10. Now, coming to the second and last contention of the appellant regarding deduction of 50% earning towards personal expenses to assess the loss of dependency. The tribunal noted that appellant No.2 is a major son and appellant No.3 is a married daughter of the deceased and not financially dependent. Hence, based on the judgment of the Supreme Court in the case

of Sarla Verma and Ors v. DTC and Anr., MANU/SC/0606/2009; AIR 2009 SC 3104 the tribunal took 50% deduction in the earning towards personal expenses.

11. To appreciate the submission of the learned counsel for the appellant, reference may be had to some of the relevant paragraphs of the judgment of the Supreme Court in the case of Sarla Verma v. DTC (supra). Relevant portion of paragraph 7 reads as under:

"7. .... The matter of arriving at the damages is to ascertain the net income of the deceased available for the support of himself and his dependants, and to deduct therefrom such part of his income as the deceased was accustomed to spend upon himself, as regards both self-maintenance and pleasure, and to ascertain what part of his net income the deceased was accustomed to spend for the benefit of the dependants. Then that should be capitalized by multiplying it by a figure representing the proper number of year's purchase."

12. In para 12, the Supreme Court held as follows:-

"12. We have already noticed that the personal and living expenses of the deceased should be deducted from the income, to arrive at the contribution to the dependents. No evidence need be led to show the actual expenses of the deceased. In fact, any evidence in that behalf will be wholly unverifiable and likely to be unreliable. Claimants will obviously tend to claim that the deceased was very frugal and did not have any expensive habits and was spending virtually the entire income on the family. In some cases, it may be so. No claimant would admit that the deceased was a spendthrift, even if he was one. It is also very difficult for the respondents in a claim petition to produce evidence to show that the deceased was spending a considerable part of the income on himself or that he was contributing only a small part of the income on his family. Therefore, it became necessary to standardize the deductions to be made under the head of personal and living expenses of the deceased. This lead

to the practice of deducting towards personal and living expenses of the deceased, one-third of the income if the deceased was married, and one-half (50%) of the income if the deceased was a bachelor. This practice was evolved out of experience, logic and convenience. In fact one-third deduction, got statutory recognition under Second Schedule to the Act, in respect of claims under Section 163A of the Motor Vehicles Act, 1988 ('MV Act' for short)."

13. The conclusion on the issue of deduction towards personal and living expenses is given in para 14 and para 15 which read as follows:-

"14. Though in some cases the deduction to be made towards personal and living expenses is calculated on the basis of units indicated in Trilok Chandra, the general practice is to apply standardized deductions. Having considered several subsequent decisions of this Court, we are of the view that where the deceased was married, the deduction towards personal and living expenses of the deceased, should be one-third (1/3rd) where the number of dependent family members is 2 to 3, one-fourth (1/4th) where the number of dependant family members is 4 to 6, and one-fifth (1/5th) where the number of dependant family members exceed six.

15. Where the deceased was a bachelor and the claimants are the parents, the deduction follows a different principle. In regard to bachelors, normally, 50% is deducted as personal and living expenses, because it is assumed that a bachelor would tend to spend more on himself. Even otherwise, there is also the possibility of his getting married in a short time, in which event the contribution to the parent/s and siblings is likely to be cut drastically."

14. Hence, the Supreme Court has laid down a standard formula/guideline to ensure consistency in the Awards of various tribunals. However, a perusal of the guidelines laid down shows that a situation like this has not been dealt

with namely, where the deceased is married and has children who are all settled and the widow is the only person who could be considered as dependent. I may, however, note that the Supreme Court noted that in case of a bachelor where deduction of 50% was stated, the Court noted that this was because it was assumed that a bachelor would tend to spend more on himself. Further there is a possibility of his getting married in a short time in which event the contribution to the parents/siblings was likely to be cut drastically.

15. In my opinion, in a situation like the present one, the situation of the deceased cannot be treated at par with a bachelor. There is merit in the said submission of learned counsel for the appellant that a man of 54 years of age who is professionally well qualified with two settled children and a wife would not be spending 50% of his wages for personal living expenses. He would be inclined to accumulate wealth for his old age days and also for the benefit of his wife and children. One cannot also ignore that being a father of a married daughter and a son, who is likely to get married he would have spent on the marriage of the son, on his grand children after they were born. These are expenses which a man who has grown to that age and who is well settled would normally be incurring. These expenses cannot be ignored. Keeping in view these facts and circumstances in my opinion, the appropriate deduction to be made from the income of the deceased in the facts and circumstances of this case was 1/3rd and not 50% as done by the tribunal. Hence, 1/3rd is only to be deducted from personal expenses.

16. The loss of dependency would now be Rs.23,83,337 [(325000- 1/3)x11]

17. The compensation now payable to the appellant would come to

Rs.24,18,337/-.

18. The respondent/insurer may deposit the enhanced compensation amount along with 6% per annum pendente lite interest from the date of filing of the claim petition till deposit in the Court within four weeks from today with the Registrar General of this High Court. The Registrar General may release the amount to the appellant No.1-widow of the deceased.

19. The appeal is disposed of.

SEPTEMBER 03, 2014/'raj'                           JAYANT NATH, J