Gujarat High Court
Shriram General Insurance Company Ltd vs Shanabhai Govindbhai Tadvi on 17 July, 2018
Author: Akil Kureshi
Bench: Akil Kureshi, B.N. Karia
C/FA/2372/2014 JUDGMENT
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/FIRST APPEAL NO. 2372 of 2014
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR.JUSTICE AKIL KURESHI
and
HONOURABLE MR.JUSTICE B.N. KARIA
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1 Whether Reporters of Local Papers may be allowed to
see the judgment ?
2 To be referred to the Reporter or not ?
3 Whether their Lordships wish to see the fair copy of the
judgment ?
4 Whether this case involves a substantial question of law
as to the interpretation of the Constitution of India or any
order made thereunder ?
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SHRIRAM GENERAL INSURANCE COMPANY LTD
Versus
SHANABHAI GOVINDBHAI TADVI
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Appearance:
MR VIBHUTI NANAVATI(513) for the PETITIONER(s) No. 1
MR MTM HAKIM(1190) for the RESPONDENT(s) No. 3.1,3.2,3.3,3.4
RULE UNSERVED(68) for the RESPONDENT(s) No. 1,2
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CORAM: HONOURABLE MR.JUSTICE AKIL KURESHI
and
HONOURABLE MR.JUSTICE B.N. KARIA
Date : 17/07/2018
ORAL JUDGMENT
(PER : HONOURABLE MR.JUSTICE AKIL KURESHI)
1. This appeal is filed by the Insurance Company challenging judgement and award dated 21.02.2014 passed by the Motor Page 1 of 9 C/FA/2372/2014 JUDGMENT Accident Claims Tribunal, Narmada at Rajpipla in MACP No. 157 of 2011.
2. Briefly stated the facts are as under:
One Tarasing Tadavi aged about 48 years was travelling in a jeep car on 30.04.2011 when the vehicle met with the accident causing his death. Tarasing was a Constable in the police department. His dependents i.e. his widow, son and aged parents filed the claim petition seeking compensation of Rs. 50 lacs from the driver, owner and insurer of the vehicle involved in the accident. The Claims Tribunal held the driver solely negligent in causing the accident and awarded the compensation of Rs. 32,25,000/- to the claimants. This was on the basis that the last drawn salary of the deceased was Rs.17,700/- per month. The Tribunal granted 50% rise in income, setting apart 1/4th for the personal expenditure of the deceased and applied a multiplier of 13. The Tribunal also in the process, adopted 10% by way of income tax liability. To the total Rs. 30,00,000/- worked out by the Tribunal towards dependency benefits, Rs. 1,50,000/- was added for loss of estate, Rs. 50,000/- towards loss of consortium and Rs. 25000/- for funeral charges, thereby granted total compensation of Rs. 32,25,000/-.
3. This award is challenged by the Insurance company on the ground of computation of compensation. We therefore focus Page 2 of 9 C/FA/2372/2014 JUDGMENT on this aspect. Counsel for the appellant submitted that the Tribunal ought to have granted only 30% for the future income looking to the age of the deceased appliying the judgement of the Supreme Court in case of National Insurance Company Ltd. vs. Pranay Shethi and ors reported in 2017(3) GLH 536. He also contended that the total amount of Rs. 2,25,000/- towards different conventional head should be revised to Rs. 70,000/- as provided by the Supreme Court in case of Pranay Shethi and ors (supra).
4. On the other hand, learned counsel Mr Hakim for the claimants opposed the appeal contending that the claimants had produced at Exh 42 computation of the income of the deceased, had he not met with the accident and worked till the age of superannuation i.e. till July 2021. On the date of superannuation retirement, his gross pay would have been Rs. 29,340/-. This would be ignoring even the successive implementation of Pay Commission recommendations. He relied on the judgement of Supreme Court in case of Hem Raj vs. Oriental Insurance Co. Ltd and ors reported in 2018 ACJ 5 and in case of Sureshchandra Bagmal Doshi and anr vs. New India Assurance Company Limited and ors reported in AIR 2018 SC 2088 to contend that when there is reliable evidence on record, future rise in income over and above prescribed by the Supreme Court in case of Pranay Shethi and ors(supra) can also be granted.
Page 3 of 9C/FA/2372/2014 JUDGMENT
5. We would first consider the question of granting future rise of income. As is well known, the two Judge Bench of Supreme Court in case of Sarla Verma (Smt) and ors vs. Delhi Transport Corporation and anr reported in (2009) 6 SCC 121 attempted to standardize number of issues revolving around computation of compensation in accident cases, fatal as well as injury. These issues included the choice of multiplier, future rise in income and deduction for the personal expenditure of the deceased in case of death. Even after this judgement, the issues did not reach total uniformity. There were Supreme Court judgements either departing from or explaining and at times questioning the ratio of the judgement in case of Sarla Verma (Smt) and ors (supra). On a reference, the three Judge bench of the Supreme Court in case of Reshma Kumari and ors vs. Madan Mohan and anr reported in (2013) 9 SCC 62 substantially confirmed what was said in case of Sarla Verma (Smt) and ors (supra). The issues still refused to die down. On a further reference Constitution Bench in case of Pranay Shethi and ors(supra) once again took up all such contentious issues and substantially confirmed the directives in case of Sarla Verma (Smt) and ors (supra) however, making minor modifications. The conclusions of the Constitution Bench were as under:
"61. In view of the aforesaid analysis, we proceed to record our conclusions:-Page 4 of 9
C/FA/2372/2014 JUDGMENT
(i) The two-Judge Bench in Santosh Devi should have been well advised to refer the matter to a larger Bench as it was taking a different view than what has been stated in Sarla Verma, a judgment by a coordinate Bench. It is because a coordinate Bench of the same strength cannot take a contrary view than what has been held by another coordinate Bench.
(ii) As Rajesh has not taken note of the decision in Reshma Kumari, which was delivered at earlier point of time, the decision in Rajesh is not a binding precedent.
(iii) While determining the income, an addition of 50% of actual salary to the income of the deceased towards future prospects, where the deceased had a permanent job and was below the age of 40 years, should be made. The addition should be 30%, if the age of the deceased was between 40 to 50 years. In case the deceased was between the age of 50 to 60 years, the addition should be 15%. Actual salary should be read as actual salary less tax.
(iv) In case the deceased was self-employed or on a fixed salary, an addition of 40% of the established income should be the warrant where the deceased was below the age of 40 years.
An addition of 25% where the deceased was between the age of 40 to 50 years and 10% where the deceased was between the age of 50 to 60 years should be regarded as the necessary method of computation. The established income means the income minus the tax component.
(v) For determination of the multiplicand, the deduction for personal and living expenses, the tribunals and the courts shall be guided by paragraphs 30 to 32 of Sarla Verma which we have reproduced hereinbefore.
(vi) The selection of multiplier shall be as indicated in the Table in Sarla Verma read with paragraph 42 of that judgment.
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(vii) The age of the deceased should be the basis for applying the multiplier.
(viii) Reasonable figures on conventional heads, namely, loss of estate, loss of consortium and funeral expenses should be Rs. 15,000/-, Rs. 40,000/- and Rs. 15,000/- respectively. The aforesaid amounts should be enhanced at the rate of 10% in every three years."
6. By virtue of this judgement thus, the question of granting increase for future rise in income has been substantially standardized. One set of cases envisaged are where the deceased had a permanent job (contrary to what is often projected as permanent job is not synonymus with a Government job) and the other set of cases would be where the deceased is self employed or is on a fixed salary. Depending on which group the deceased belongs and his age, the future rise in income is prescribed. As laid down by the Supreme Court it becomes the law of the land. The Courts would therefore be expected to follow this trend.
7. We are conscious that in later judgements, two Judge Benches of the Supreme Court have made a minor departure. First in point of time is case of Hem Raj (supra), where the Supreme Court upheld the contention that if the evidence on record so warrants, rise in income, over and above what was suggested in case of Pranay Shethi and ors(supra), can be granted. The later in point of time was in case of Sureshchandra Bagmal Doshi and anr (supra) where the Supreme Court, noticed that Page 6 of 9 C/FA/2372/2014 JUDGMENT the deceased was 25 years of age at the time of accident. He was working as a Sales Engineer in a private company. The Supreme Court approved the decision of the Tribunal granting 100% rise in salary for future.
8. From the above, it can be seen that the rise in income for future increase as provided by the Supreme Court in case of Pranay Shethi and ors(supra) has to be a norm, granting further increase an exception. In exceptional cases, where it is shown that the deceased was a young person, had exceptional academic qualification, had shown early potential of higher earning or where the last few years of income of the deceased shows a trend or steep rise, the departure may be permitted. However, merely showing the projected salary of a Government servant over a long period of time, showing steady rise with passage, would not be one such exceptional circumstance. As is well known, the salary structure of permanent Government employees is well defined. Two principal sources of rise in income are, periodic increments and rise in Dearness Allowance. Whereas Dearness Allowance takes care of the inflation ensuring that the pay package of the employee keeps pace with the rising prices, yearly increments are more in the nature of reward for long service and a recognition that with passage of time and seniority, the contribution of the employee would be higher. The claimants cannot produce projected salary over number of years after accidental death of the Government servant to argue that being Page 7 of 9 C/FA/2372/2014 JUDGMENT an exceptional case the rise in income for future should be in deviation to judgement of Supreme Court in case of Pranay Shethi and ors(supra). In the conclusion, we adhere to prescription of 30% rise in income looking to the age of the deceased.
9. We may now undertake the computation of loss of dependency benefits. As recorded, the last salary of the deceased was Rs. 17,700/-. The Income Tax ready reckoner would show that for the year under consideration the threshold limit for tax exemption was Rs. 1,80,000/-. In other words, till the yearly income of Rs. 1,80,000/- of a person, there would be no tax liability. We can also take judicial notice of the fact that the Income Tax Act makes provision for deductions in connection with certain investments that may be made by the assessee such as PF and PPF schemes. Considering the monthly salary of the deceased at Rs. 17,700/- yearly salary would be Rs. 2,12,400/-. When the basic tax exempt limit itself is Rs. 1,80,000/-, taking into account the permissible deductions assuming even some investment by the deceased in such tax saving schemes he would have no tax liability for the said year. On the net salary of Rs. 2,12,400/- we make 30% rise for future and therefore arrive at Rs. 23,720/- per month i.e. Rs. 2,76,120/- per year by way of prospective income. 1/4th thereof or Rs. 69,030/- would be reduced for the personal expenditure of the deceased leaving a net of Rs. 2,07,090/- which is rounded off to Rs. 2,07,100/- which would be the loss Page 8 of 9 C/FA/2372/2014 JUDGMENT of dependency benefit for the family per annum. Multiplier of 13 would bring loss of dependency at Rs. 26,92,300/-. To this, we may add a total of Rs. 70,000/- under different conventional heads to work out net compensation payable at Rs. 27,62,300/-. The Tribunal having awarded Rs. 32,25,000/- therefore reduction of Rs. 4,62,700/-. Appeal of the Insurance company succeeds to this extent. Out of the amount which remained invested with the Claims Tribunal such amount shall be reduced. The rest may be released in favour of the claimants.
First Appeal is disposed of. R & P to be sent back.
(AKIL KURESHI, J) (B.N. KARIA, J) JYOTI V. JANI Page 9 of 9