Madras High Court
M/S.Royal Sundaram General Insurance ... vs Veeralakshmi on 1 August, 2024
Author: V.Bhavani Subbaroyan
Bench: V.Bhavani Subbaroyan
C.M.A(MD)No.411 of 2019
BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT
DATED: 01.08.2024
CORAM
THE HONOURABLE MRS.JUSTICE V.BHAVANI SUBBAROYAN
AND
THE HONOURABLE MR.JUSTICE K.K.RAMAKRISHNAN
C.M.A(MD)No.411 of 2019
and
C.M.P.(MD).No.4911 of 2019
M/s.Royal Sundaram General Insurance Co.Ltd.,
Door No.2/319, Visranthi Melaram Towers,
Rajiv Gandhi Road (OMR),
Karapakkam,
Chennai
Rep, by its Branch Manager ... Appellant /Respondent No.3
Vs.
1.Veeralakshmi
2.Minor.A.Jenifer
3.Minor.A.Aaron Raj
4.Gomathi
5.Aarokkiyasamy ...Respondents
(2nd and 3rd respondents represented through their Mother and the next
guardian the 1st respondent herein)
1/23
https://www.mhc.tn.gov.in/judis
C.M.A(MD)No.411 of 2019
PRAYER:- Civil Miscellaneous Appeal filed under Section 173 of the
Motor Vehicles Act, 1988, to set aside the fair and decreetal order dated
26.02.2018 made in M.C.O.P.No.852 of 2016, on the file of the Motor
Vehicles Accident Claims Tribunal, Subordinate Judge, Tirunelveli and
allow this Appeal.
For Appellant : Mr.M.E.Ilango
For Respondents : Mr.M.P.Senthil,
for R1, R2 & R3
JUDGMENT
[Judgment of the Court was made by K.K. RAMAKRISHNAN .J.]
The Insurance company filed this appeal challenging the quantum
of the award passed in M.C.O.P.No.852 of 2016, dated 26.02.2018, by
the Motor Accident Claims Tribunal Judge/Subordinate Judge of
Tirunelveli.
2.Facts of the case:
On 09.08.2018 at about 03.15.pm., the deceased was travelling in a
Maruthi Swift Car bearing Registration No.TN-01-AJ-7476 belonging to
the first respondent insured with the second respondent. When the car
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reached near Saveriyarpuram on Trichy-Dindigul National Highway,
as its driver drove the same in a rash and negligent manner, the rear side
tyre burst and the vehicle lost its control and gone to the right side and
dashed against an Indica Car bearing Registration No.TN-01-AK-6773.
As a result, the deceased along with other inmates in the Maruthi Car
sustained injuries and the deceased sustained serious injuries and
immediately, he was taken to Sugam Hospital at Manaparai, where he
succumbed to his injuries. The deceased was working as a Executive
Services in Venus Home Appliances at Chennai and earned a salary of
Rs.32,000/- and hence the defendants filed a petition in MCOP No.852 of
2016 before the the Motor Accident Claims Tribunal Judge/Subordinate
Judge, Tirunelveli. The insurance company filed the counter denying the
allegation and also liability. They also disputed the income of the
deceased.
3.To prove the case, on the side of the claimant, P.Ws.1 to 3 were
examined and Ex.P1 to P17 were marked.
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4.The learned tribunal judge after considering the evidence fixed
the negligence upon the appellant insured vehicle and granted
compensation of Rs. 54,54,730/- with the interest of 7.5% from the date
of filing the petition. Challenging the same, the insurance company filed
the present appeal.
5.The learned counsel for the appellant confined his argument only
relating to the inclusion of the travel allowance in the monthly income of
the deceased while calculating the compensation. The Learned counsel
for the insurance Company submitted that the salary of the deceased as
per the salary certificate is Rs.32,000/-. The salary certificate is marked
as Ex.P12. In the salary certificate, the gross salary of the deceased is
mentioned including the “transport allowance”. The transport allowance
comes around Rs.800. According to the learned counsel for Insurance
Company, the transport allowance can not be taken into consideration,
while calculating the income of the deceased. For which, he relied the
judgment of Division Bench of this court reported in 2001 (1) LLN 943,
2004 (1) LLN 630 and C.M.A.(MD)No.169 of 2019. He also submitted
that the learned Tribunal Judge failed to deduct the income tax.
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Therefore, he seeks for the reduction of the amount.
6.The learned counsel for the claimants submitted that the said
judgment of the Division Bench of this Court reported in 2001 (1) LLN
943, 2004 (1) LLN 630 and C.M.A.(MD)No.169 of 2019 is arising out
the interpretation of the meaning of the salary under the ESI Act, to
disburse the compensation under the ESI Act. Therefore, the said
principle is not applicable to the present case. The learned counsel for
respondents submitted that the transport allowance forms part of the
salary of the deceased. Hence, the same could not be deducted. The
learned counsel further submitted that the judgment relied by the counsel
is against the law laid down by the the Honourable Supreme Court
judgment in the case of National Insurance Co.Ltd vs. Indira
Srivastava and others reported in (2008) 2 SCC 763. Hence, he pleads
that the “income” includes the “transport allowance”. Further, the
reduction of income tax is concerned, he stated that the deceased salary
does not come under the purview of the income tax slab and hence, there
is no need to reduce the income tax. Further, he stated that the
compensation amount granted by the Court below is not liable to be
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deducted. It is a well-settled principle that the compensation awarded
under motor vehicle accident, including interest, will not cover under
Income Tax Act. The income tax Act is not applicable in the case of
compensation and it is not treated as a revenue receipt on the part of the
deceased. He also relied the judgment of the Hon'ble Supreme Court
reported in 2008 (2) SCC 763 and submitted that the travelling allowance
has to be included. He further submitted that as per the Pranay Sethi
Case, the claimants 2 to 5 are entitled to loss of love and affection at the
rate of Rs.40,000/- each and the same was not awarded and hence, he
seeks to confirm the award and also enhance the award amount.
7. This Court considered the rival submissions made by the learned
counsel appearing on either side and perused the materials available on
record.
8.In this appeal, the following points for determination are needed
to be addressed.
1.Whether the transport allowance forms
part of the income of the deceased to be
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calculated for the compensation under Section
166 of the Motor Vehicles Act?
9.The transport allowance, according to the learned counsel for the
insurance company, does not form part of the salary. For which he relied
the Hon'ble Division Bench judgment of this Court reported in 2001 (1)
LLN 943, 2004 (1) LLN 630 and C.M.A.(MD)No.169 of 2019. The first
judgment of this Court was reported in 2001 (1) LLN 943. The Hon'ble
Division Bench of this Court considered the relevant provision of the
Employee State Insurance Act, 1948 (herein after called as ESI Act) and
has held that conveyance allowance does not form part of wages and
declined ESI compensation with conveyance allowance. Now it is to be
decided whether the conveyance allowance is to be included in
determining the income of the deceased in the Motor Accident Claims
case and it is relevant to extract the definition of “wages” stated in the
ESI Act . The definition in the Employee State Insurance Act is as
follows:-
Definitions In this Act, unless there is
anything repugnant in the subject or context,-
(22) "wages" means all remuneration paid
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or payable, in cash to an employee, if the terms of
the contract of employment, express or implied,
were fulfilled and includes 11[any payment to an
employee in respect of any period of authorised
leave, lock-out, strike which is not illegal or lay
-off and] other additional remuneration, if any,
22[paid at intervals not exceeding two months],
but does not include- (a) any contribution paid by
the employer to any pension fund or provident
fund, or under this Act; (b) any travelling
allowance or the value of any travelling
concession; (c) any sum paid to the person
employed to defray special expenses entailed on
him by the nature of his employment; or (d) any
gratuity payable on discharge.
10.On perusal of the said definition, there is a statutory prohibition
to include the travel allowance. From the scheme of the Act, the Hon'ble
Division Bench of this Court held that in the Employee State Insurance
Act, the Travel Allowance can not be included. The said judgment is
relating to the interpretation of the Employee State Insurance Act, 1948,
in which, there is a specific provision for the determination of the
“wages”. The wages does not include the travel allowance. The said
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scheme of the Act is relating to receiving the contribution from the
employers and employee and from that contribution the benefit is given
to the employees or his defendants. In the said circumstances, there was
no determination of the compensation under the employee scheme. They
only determined the benefits under the scheme, on the basis of the
recovered contribution from the each individual employee and employer.
So, the said scheme is entirely different from the determination of the
compensation under the Motor Vehicles Act. The same was not brought
to the consideration of the subsequent Division Bench of this Court in
C.M.A(MD).No.169 of 2019 and C.M.A.No.1228 of 2017. The
subsequent development of law in determining the compensation also
was not brought to the deep consideration of the subsequent Division
Bench. After the Division Bench judgment reported in 2001 (1) LLN
943, the Hon'ble Supreme Court in the case of National Insurance
Co.Ltd vs. Indira Srivastava and others reported in (2008) 2 SCC 763
has applied the principle of purposive interpretation to the term income
by giving elastic meaning.
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11.There is no definition for income incorporated in the Motor
Vehicle Act, 1988. Therefore, to determine income of the deceased or
injured claimant, the Hon'ble Supreme Court has repeatedly guided the
Courts to make some guesswork and determine the just compensation. In
the said circumstances, the Court would have to cumulatively consider
the definition of the income in various types of cases. In the Prevention
of Corruption Act, the Hon'ble Supreme Court has given the meaning for
income with limited inclusion of the lawful source, in the case of
State of M.P. v. Awadh Kishore Gupta, reported in (2004) 1 SCC 691 at
page 697
6. ... The term “income” by itself, is elastic and has
a wide connotation. Whatever comes in or is received,
is income. But, however wide the import and
connotation of the term “income”, it is incapable of
being understood as meaning receipt having no nexus
to one's labour, or expertise, or property, or investment,
and having further a source which may or may not
yield a regular revenue...
12. The Income Tax Act, provides an elastic term of “income” to
include the income from whatever source.
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12.1. Section 2(24)(iiib) of the Income Tax Act, 1961
defines “income”
any allowance granted to assessee either
to meet his personal expenditure at the place
where the duties of his office or employment of
profit are ordinarily performed by him or at a
place where he ordinarily resides or to
compensate him for the increased cost of
living.
------
The above provision of the Income Tax Act, clearly demonstrated that the
travelling allowance also come under the purview of income.
13. Upon reading the relevant provision of the Income Tax Act and
the interpretation given to the word income in the Prevention of
Corruption Act, it is clear that each Act, travels on its own way.
Therefore, the Hon'ble Supreme Court in the case of National Insurance
Co. Ltd. v. Indira Srivastava, reported in (2008) 2 SCC 763 at page 767
has given elastic meaning to the income by applying purposive
interpretation in the following terms:
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9. The term “income” has different
connotations for different purposes. A court of law,
having regard to the change in societal conditions
must consider the question not only having regard to
pay-packet the employee carries home at the end of
the month but also other perks which are beneficial
to the members of the entire family. Loss caused to
the family on a death of a near and dear one can
hardly be compensated on monetary terms.
10. Section 168 of the Act uses the word “just
compensation” which, in our opinion, should be
assigned a broad meaning. We cannot, in
determining the issue involved in the matter, lose
sight of the fact that the private sector companies in
place of introducing a pension scheme take recourse
to payment of contributory provident fund, gratuity
and other perks to attract the people who are
efficient and hard-working. Different offers made to
an officer by the employer, same may be either for
the benefit of the employee himself or for the benefit
of the entire family. If some facilities are being
provided whereby the entire family stands to benefit,
the same, in our opinion, must be held to be relevant
for the purpose of computation of total income on the
basis whereof the amount of compensation payable
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for the death of the kith and kin of the applicants is
required to be determined. For the aforementioned
purpose, we may notice the elements of pay, paid to
the deceased:
14. Nowadays, every servant either in the Government Service or
in the Private Sector would travel through some mode of transportation
to reach their office. In some nature of the jobs like Medical
representatives, marketing executives, supervising duties have been
incurring major transport expenditure. In the private sectors, for some
nature of the job, the transport allowances has been provided to the
extent of more than ¼ of the salary. Therefore, the travelling allowance
becomes part of the income. Without the transport allowance, they would
not have discharged their duties. Every worker has to reach their work
place and attend their duties by mode of some transportation.
14.1. In the case of Krishna Kumar Asthana v. Satish Kumar,
reported in 2014 SCC OnLine All 11860 at page 712
6.... As per the provisions of the Motor Vehicles
Act, the Total Income has to be taken into
consideration for awarding the Compensation and
no such deduction like Conveyance Expenses
should have been deducted.
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14.2. In the case of New India Insurance Co. Ltd. v. Munian,
reported in (2010) 2 TN MAC 410 at page 414
13. Section 168 of the Motor Vehicles Act used the
word “just compensation”, which in our opinion,
should be assigned a broad meaning so as to
compensate the Claimants. The deductions towards
G.P.F., G.P.F. Loan Refund, Family Benefit Fund and
other deductions cannot be taken as the deductions.
Giving a liberal interpretation of “income”, we are
of the view that the gross salary of the deceased
ought to be taken and not his take home salary.
14. Holding that income is not confined to pay-
packet only in National Insurance Company
Limited v. Indira Srivatsava and others, 2008 (1) TN
MAC 166 (SC) : 2008 (2) SCC 763, Supreme Court
has held as under:
“9. The term “income” has different connotations
for different purposes. A Court of law, having regard
to the change in societal conditions must consider
the question not only having regard to pay-packet
the employee carries home at the end of the month
but also other perks which are beneficial to the
members of the entire family. Loss caused to the
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family on a death of a near and dear one can hardly
be compensated on monetary terms.
10. Section 168 of the Act uses the word “just
compensation” which, in our opinion, should be
assigned a broad meaning. We cannot, in
determining the issue involved in the matter, lose
sight of the fact that the private sector companies in
place of introducing a pension scheme take recourse
to payment of contributory provident fund, gratuity
and other perks to attract the people who are
efficient and hard-working. Different offers made to
an officer by the employer, same may be either for
the benefit of the employee himself or for the benefit
of the entire family. If some facilities are being
provided whereby the entire family stands to benefit,
the same, in our opinion, must be held to be relevant
for the purpose of computation of total income on
the basis whereof the amount of compensation
payable for the death of the kith and kin of the
applicants is required to be determined. ….
19. The amounts, therefore, which were required to
be paid to the deceased by his employer by way of
perks, should be included for computation of his
monthly income as that would have been added to
his monthly income by way of contribution to the
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family as contra distinguished to the ones which
were for his benefit. We may, however, hasten to add
that from the said amount of income, the statutory
amount of tax payable thereupon must be deducted.”
14.3. In the case of Managing Director, Tamil Nadu State
Transport Corporation Ltd., Kumbakonam v. Kunjunjamma Mathew,
reported in (2010) 2 TN MAC 518 at page 521
9.. It is fairly well settled that while calculating the
multiplicand, the Courts and Tribunal should take into
account only the gross salary and not the net salary...
14.4. In the case of National Insurance Co. Ltd. v. Abhaysing
Pratapsing Waghela, reported in (2008) 9 SCC 133 at page 138
18. It is in the aforementioned situation, we
are of the opinion, that the judgment of the
High Court cannot be faulted. No doubt, a
contract of insurance is to be governed by the
terms thereof, but a distinction must be borne in
mind between a contract of insurance which
has been entered into for the purpose of giving
effect to the object and purport of the statute
and one which provides for reimbursement of
the liability of the owner of the vehicle strictly
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in terms thereof. In that limited sense, a
contract of insurance entered into for the
purpose of covering a third-party risk would
not be purely contractual. We may place on
record that an ordinary contract of insurance
does not have a statutory flavour. The Act
merely imposes an obligation on the part of the
insurance company to reimburse the claimant
both in terms of the Act as also the contract. So
far as the liability of the insurance company
which comes within the purview of Sections 146
and 147 is concerned, the same subserves a
constitutional goal, namely, social justice. A
contract of insurance covering the third-party
risk must, therefore, be viewed differently vis-à-
vis a contract of insurance qua contract.
15. While determining the compensation in the case of the Motor
Vehicle Accident, there must be a deduction for the personal expenditure
of the deceased to arrive at the total compensation. Similar deduction is
not made in the course of the determination of the amount under the
Employee State Insurance Act. Therefore, the scheme of the both Acts is
entirely different. In view of the personal deduction made under the
Motor Vehicles Act under the head of the personal expenditure of the
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deceased, strict interpretation of the income is not permissible. During
the course of determination of the compensation, the Courts usually
make the deduction for his personal expenditure and thereafter, the
monthly income is calculated with the remaining amount. Therefore, in
the considered opinion of this Court, if any travelling allowance is
deducted, it amounts to double deduction, which is not permissible or
when already personal expenditure is deducted. In view of above two
situation, the interpretation which is beneficial to the claimant is to be
taken into consideration to calculate the monthly income of the deceased
under the Motor Vehicle Act for the purpose of the determination of the
compensation of the deceased with the inclusion of the travel allowance
in income.
16. Without the travelling allowance, he cannot earn the main part
of the income. Apart from that, the travelling allowance forms part of the
gross salary. Therefore, the same cannot be deducted on the principle that
the Tribunal should take into account only the gross salary and not the
net salary. The deceased was working as a Assistant Manager Service in
the Venus Home Appliances at Chennai. To prove his monthly salary
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Exs.P.12, 13 and 15 are marked. In Ex.P.13, it is noted that he had
received Rs.4,620/- as a travel allowance and the total salary comes
around Rs.33,000/-. Since he had been discharging the duty of the
service manager, by applying the above principle, this Court inclines to
hold that the travelling allowance of Rs.4,620/- is form part of the
monthly income of the deceased. Hence, in all aspects, the question
framed is answered against the appellant and therefore, the compensation
granted by the Court below is sustained.
17.The learned counsel appearing for the claimants rightly
submitted that the respondent Nos.2 to 5 are entitled to the compensation
under the head of love and affection as per the law laid down by the
Hon'ble Supreme Court in Pranay Sethi case followed by the Hon'ble
Supreme Court 2018 (18) SCC 130. Even though they did not file any
cross appeal to enhance the compensation, this Court is exercising the
power under order 41 Rule 3 CPC to grant the statutory compensation
and in the interest of justice and to reach goal just compensation under
the head of love and affection in the absence of the appeal and hold that
the respondent Nos.2 to 5 are entitled each Rs.40,000/- under the head of
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love and affection.
18.Accordingly, this Civil Miscellaneous Appeal filed by the
insurance company is dismissed and the judgment and award passed by
the Motor Accident Claims Tribunal Judge/Subordinate Judge,
Tirunelveli, in M.C.O.P.No.852 of 2016, dated 26.02.2018 is hereby
enhanced from Rs.54,54,730/- to Rs.56,14,730/- with the following
breakup details:
S. Description Amount Amount Award
No awarded by Awarded by Confirmed
the Tribunal this Court or enhanced
(Rs) (Rs) or granted
1 Loss of Income 53,84,730/- 53,84,730/- Confirmed
2 For Funeral 15,000/- 15,000/- Confirmed
Charges
3 Loss of Estate 15,000/- 15,000/- Confirmed
4 Loss of 40,000/- 40,000/- Confirmed
Consortium
5 Loss of Love and
Affection -------- 1,60,000/- Granted
(Respondent Nos.
2 to 5 each) [4 X
40,000/-]
Total 54,54,730/- 56,15,000/- Enhanced
Which was
rounded of as
54,55,000/-
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The appellant/Insurance Company is directed to deposit the award
amount with proportionate accrued interest and costs, deducting the
amount if already deposited, within a period of eight weeks from the date
of receipt of a copy of this order. The claimants are entitled to receive the
following compensation amount:
Sl. Claimants Amount in Rs.
No.
1 Veeralakshmi/ Wife of the deceased 20,00,000/-
2 Minor.A.Jenifer/Daughter of the deceased 15,40,000/-
3 Minor.A.Aaron Raj/Son of the deceased 15,40,000/-
4 Gomathi/Mother of the deceased 2,95,000/-
5 Aarokkiyasamy/Father of the deceased 2,40,000/-
There shall be no order as to costs. Consequently, connected
miscellaneous petition is closed.
(V.B.S.J.,) (K.K.R.K.J.,)
01.08.2024
NCC : Yes/No
Index : Yes/No
sbn
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To
1.The Sub Court,
Motor Accident Claims Tribunal,
Tirunelveli.
2.The Record Keeper,
Vernacular Section,
Madurai Bench of Madras High Court,
Madurai.
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V.BHAVANI SUBBAROYAN.J.,
and
K.K.RAMAKRISHNAN.J.,
sbn
and
01.08.2024
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