Uttarakhand High Court
Jagadish Chandra Pathak & Others. ... vs Kundan Singh Pangty & Others on 3 June, 2024
Author: Manoj Kumar Tiwari
Bench: Manoj Kumar Tiwari
ORDER
IN THE HIGH COURT OF UTTARAKHAND
AT NAINITAL
HON'BLE SRI JUSTICE MANOJ KUMAR TIWARI
AND
HON'BLE SRI JUSTICE PANKAJ PUROHIT
APPEAL FROM ORDER NO.95 OF 2018
Jagadish Chandra Pathak & others. .....Appellants
Vs.
Kundan Singh Pangty & others. ....Respondents
Counsel for the appellants : Mr. Tarun Pandey, Advocate.
Counsel for the respondent no.3 : Mr. V.K. Kohli, Senior Advocate, assisted
by Mr. Kanti Ram Sharma, Advocate
Reserved on :16.05.2024
Delivered on :03.06.2024
ORDER :(per Sri Manoj Kumar Tiwari, J.) In this Appeal filed by claimants for enhancement of compensation, learned Single Judge of this Court referred the following question for determination by a Larger Bench:
"(i) Whether the principle of future prospects would be applicable in case of non-earning victims, whose income is fixed notionally for the purpose of computation of compensation under the Motor Vehicles Act, 1988?"
2. Thus, the matter has come before this Court by order passed by Hon'ble the Chief Justice. In the reference order, learned Single Judge has relied on a judgment rendered in Appeal from Order No.106 of 2018 (The New India Assurance Company Limited Vs. Smt. Vimla Devi and others), wherein another learned Single Judge of this Court had expressed "disagreement with the findings given of paragraph no.14 of the judgment of the 1 Hon'ble Apex Court" in the case of Kirti and another Vs. Oriental Insurance Company Limited, reported in (2021) 2 SCC 166. Paragraph no.10 of the judgment rendered in Appeal from Order No.106 of 2018 is reproduced below:
"10. In fact, this Court is of the view that in order to answer the argument extended by the learned Counsel for the respondent, this Court, with all humility at its command is in disagreement with the findings of paragraph No.14, of the judgment of the Hon'ble Apex Court for the reason being that three Judges Bench judgment of the Hon'ble Apex Court, where it has dealt with the impact of Pranay Sethi 4 judgment, and has carved out a distinction in the light of the findings recorded in paragraph No.59.4, will not be a ratio in rem to be applied invariably in all the cases, particularly when the field stood covered by the ratio descents of the Constitution Bench judgment of the Hon'ble Apex Court in Pranay Sethi case. Hence, for the reasons aforesaid, the same would not apply in the instant case."
3. It is now well settled that, in fatal road accidents, even if the dependents of the deceased are not able to prove the income of the deceased, then also the compensation is awarded to them based on notional income of the deceased. In cases where deceased was either self-employed or employed in unorganized sector and his income could not be proved for want of evidence, then his income has to be determined notionally to ensure that compensation paid to his dependents is fair and just. Thus, element of guesswork is involved in the process of determining notional income.
4. In the case of Kubrabibi & others. Vs. Oriental Insurance Company Ltd. & others, reported in 2023 SCC Online SC 1855, Hon'ble Supreme Court has held that in the absence of definite proof of income, the social status of the deceased is to be kept in perspective, where such person is employed in unorganized sector. Relevant paragraphs of the said judgment are reproduced below:-
2"6. It is unfortunate that in a case of the present nature, the High Court while assessing the evidence available on record, has sought to seek strict evidence with regard to the income of the deceased. When the wife and children of the deceased were before the Court, they would not be in a position to secure all evidence when the deceased earning member was not in secure job. Despite the same we note that in the instant case, a perusal of the judgment and award passed by the MACT, would indicate that an effort was made to examine the owner of the two wheeler repair shop where the deceased was said to be working. The High Court has discarded the same on the ground that no documents, to indicate that he is the owner of the shop and he had employed three persons, has been produced.
7. In a matter of the present nature where the compensation is sought and even in the absence of definite proof of the income, the social status of the deceased is to be kept in perspective where such persons are employed in unorganized sector and the notional income in any event is required to be taken into consideration. The fact that the deceased had three dependents to be cared for and had claimed that he was working as a mechanic, the amount payable to an unskilled labour, cannot be the basis and in that circumstance when he was a skilled person, the daily income at Rs. 200/- per day in any event could have been taken even if the income from jeep transport business was discarded for want of documents."
5. While dealing with a case involving death of a homemaker, who does not have a regular income, Hon'ble Supreme Court in the case of Arun Kumar Agrawal and another Vs. National Insurance Company Limited and others, reported in (2010) 9 SCC 218, held that the approach adopted by High Court to compute the compensation payable to homemaker by relying upon the minimum wage payable to a skilled worker is not correct, because it is most unrealistic to compare the gratuitous services of the housewife/mother with the work of skilled worker. Relevant extract of the said judgment are extracted below:
"35. In our view, it is highly unfair, unjust and inappropriate to compute the compensation payable to 3 the dependants of a deceased wife/mother, who does not have a regular income, by comparing her services with that of a housekeeper or a servant or an employee, who works for a fixed period. The gratuitous services rendered by the wife/mother to the husband and children cannot be equated with the services of an employee and no evidence or data can possibly be produced for estimating the value of such services. It is virtually impossible to measure in terms of money the loss of personal care and attention suffered by the husband and children on the demise of the housewife. In its wisdom, the legislature had, as early as in 1994, fixed the notional income of a non- earning person at Rs. 15,000 per annum and in case of a spouse, 1/3rd income of the earning/surviving spouse for the purpose of computing the compensation.
36. Though Section 163-A does not, in terms apply to the cases in which claim for compensation is filed under Section 166 of the Act, in the absence of any other definite criteria for determination of compensation payable to the dependants of a non- earning housewife/mother, it would be reasonable to rely upon the criteria specified in Clause 6 of the Second Schedule and then apply an appropriate multiplier keeping in view the judgments of this Court in Kerala SRTC v. Susamma Thomas2, U.P. SRTC v. Trilok Chandra3, Sarla Verma v. DTC5 and also take guidance from the judgment in Lata Wadhwa case1. The approach adopted by different Benches of the Delhi High Court to compute the compensation by relying upon the minimum wages payable to a skilled worker does not commend our approval because it is most unrealistic to compare the gratuitous services of the housewife/mother with the work of a skilled worker."
6. In a recent judgment rendered by Hon'ble Supreme Court in the case of Arvind Kumar Pandey and others Vs. Girish Pandey and others, reported in 2024 SCC Online SC 1027, it is held that role of a homemaker is as important as that of a family member whose income is tangible as a source of livelihood for the family. Paragraph nos.7 & 8 of the said judgment are extracted below:
"7. Assuming that the deceased was not employed, it cannot be disputed that she was a homemaker. Her direct and indirect monthly income, in no circumstances, could be less than the wages Minimum 4 Wages Act.
8. It goes without saying that the role of a homemaker is as important as that of a family member whose income is tangible as a source of livelihood for the family. The activities performed by a home-maker, if counted one by one, there will hardly be any doubt that the contribution of a home-maker is of a high order and invaluable. In fact, it is difficult to assess such a contribution in monetary terms."
7. In a case involving death of a B.Tech. student aged about 25 years, Hon'ble Supreme Court assessed the notional income of the deceased to be ₹20,000/- per month. Relevant extract of the said judgment rendered in the case of Basanti Devi and another Vs. Divisional Manager, The New India Assurance Company Ltd. and others (Civil Appeal Nos.7435-7436 of 2021), decided on 06.12.2021, is reproduced below:
"5. Having heard the learned counsel appearing for the respective sides and considering the fact that the deceased at the time of death/accident was aged 25 years of age and was a Bachelor of Engineering in Computer Technology, we are of the opinion that the Tribunal rightly considered the income of the deceased at the time of death at least @ 20,000/- p.m. The same was not required to be interfered with by the High Court. The submission on behalf of the respondent - Insurance Company that as no documentary evidence was produced and/or laid in support of the documentary evidence produced on record that the deceased was earning Rs.20,000/- per month and therefore the Tribunal ought not to have assessed the income of the deceased at Rs.20,000/- per month is concerned, assuming that there was no supporting evidence laid, in that case also considering the potentiality to earn, as the deceased was a Bachelor of Engineering in Computer Technology, his income can safely be assessed at-least at Rs.20,000/- per month. As such we are in complete agreement with the view taken by the Tribunal. The High Court has committed a grave error in reducing the compensation from Rs.30,54,000/- (Rs.30,04,000/-) to Rs.15,82,000/-."
8. Thus, the question, which falls for our consideration, is whether compensation for future prospects can be awarded in cases where for want of 5 proof of income, income is fixed notionally for the purpose of computation of compensation.
9. In the case of National Insurance Company Limited Vs. Pranay Sethi and others, reported in (2017) 16 SCC 680, a Constitution Bench of Hon'ble Supreme Court considered the question whether compensation for future prospect can be awarded when there is no proof of income. Relevant extract of the said judgment is reproduced below:
"53. Presently, we come to the issue of addition of future prospects to determine the multiplicand.
54. In Santosh Devi [Santosh Devi v. National Insurance Co. Ltd., (2012) 6 SCC 421 : (2012) 3 SCC (Civ) 726 : (2012) 3 SCC (Cri) 160 : (2012) 2 SCC (L&S) 167] the Court has not accepted as a principle that a self-employed person remains on a fixed salary throughout his life. It has taken note of the rise in the cost of living which affects everyone without making any distinction between the rich and the poor.
Emphasis has been laid on the extra efforts made by this category of persons to generate additional income. That apart, judicial notice has been taken of the fact that the salaries of those who are employed in private sectors also with the passage of time increase manifold. In Rajesh case [Sarla Verma v. DTC, (2009) 6 SCC 121 : (2009) 2 SCC (Civ) 770 : (2009) 2 SCC (Cri) 1002] , the Court had added 15% in the case where the victim is between the age group of 15 to 60 years so as to make the compensation just, equitable, fair and reasonable. This addition has been made in respect of self-employed or engaged on fixed wages.
55. Section 168 of the Act deals with the concept of "just compensation" and the same has to be determined on the foundation of fairness, reasonableness and equitability on acceptable legal standard because such determination can never be in arithmetical exactitude. It can never be perfect. The aim is to achieve an acceptable degree of proximity to arithmetical precision on the basis of materials brought on record in an individual case. The conception of "just compensation" has to be viewed through the prism of fairness, reasonableness and non-violation of the principle of equitability. In a case of death, the legal heirs of the claimants cannot expect a windfall. Simultaneously, the compensation 6 granted cannot be an apology for compensation. It cannot be a pittance. Though the discretion vested in the tribunal is quite wide, yet it is obligatory on the part of the tribunal to be guided by the expression, that is, "just compensation". The determination has to be on the foundation of evidence brought on record as regards the age and income of the deceased and thereafter the apposite multiplier to be applied. The formula relating to multiplier has been clearly stated in Sarla Verma [Sarla Verma v. DTC, (2009) 6 SCC 121 : (2009) 2 SCC (Civ) 770 : (2009) 2 SCC (Cri) 1002] and it has been approved in Reshma Kumari [Reshma Kumari v. Madan Mohan, (2013) 9 SCC 65 : (2013) 4 SCC (Civ) 191 : (2013) 3 SCC (Cri) 826] . The age and income, as stated earlier, have to be established by adducing evidence. The tribunal and the courts have to bear in mind that the basic principle lies in pragmatic computation which is in proximity to reality. It is a well-accepted norm that money cannot substitute a life lost but an effort has to be made for grant of just compensation having uniformity of approach. There has to be a balance between the two extremes, that is, a windfall and the pittance, a bonanza and the modicum. In such an adjudication, the duty of the tribunal and the courts is difficult and hence, an endeavour has been made by this Court for standardisation which in its ambit includes addition of future prospects on the proven income at present. As far as future prospects are concerned, there has been standardisation keeping in view the principle of certainty, stability and consistency. We approve the principle of "standardisation" so that a specific and certain multiplicand is determined for applying the multiplier on the basis of age.
56. The seminal issue is the fixation of future prospects in cases of deceased who are self-employed or on a fixed salary. Sarla Verma [Sarla Verma v. DTC, (2009) 6 SCC 121 : (2009) 2 SCC (Civ) 770 : (2009) 2 SCC (Cri) 1002] has carved out an exception permitting the claimants to bring materials on record to get the benefit of addition of future prospects. It has not, per se, allowed any future prospects in respect of the said category.
57. Having bestowed our anxious consideration, we are disposed to think when we accept the principle of standardisation, there is really no rationale not to apply the said principle to the self-employed or a person who is on a fixed salary. To follow the doctrine of actual income at the time of death and not to add any amount with regard to future prospects to the income for the purpose of determination of multiplicand would be unjust. The determination of income while computing compensation has to include future prospects so that the method will come within 7 the ambit and sweep of just compensation as postulated under Section 168 of the Act. In case of a deceased who had held a permanent job with inbuilt grant of annual increment, there is an acceptable certainty. But to state that the legal representatives of a deceased who was on a fixed salary would not be entitled to the benefit of future prospects for the purpose of computation of compensation would be inapposite. It is because the criterion of distinction between the two in that event would be certainty on the one hand and staticness on the other. One may perceive that the comparative measure is certainty on the one hand and uncertainty on the other but such a perception is fallacious. It is because the price rise does affect a self-employed person; and that apart there is always an incessant effort to enhance one's income for sustenance. The purchasing capacity of a salaried person on permanent job when increases because of grant of increments and pay revision or for some other change in service conditions, there is always a competing attitude in the private sector to enhance the salary to get better efficiency from the employees. Similarly, a person who is self-employed is bound to garner his resources and raise his charges/fees so that he can live with same facilities. To have the perception that he is likely to remain static and his income to remain stagnant is contrary to the fundamental concept of human attitude which always intends to live with dynamism and move and change with the time. Though it may seem appropriate that there cannot be certainty in addition of future prospects to the existing income unlike in the case of a person having a permanent job, yet the said perception does not really deserve acceptance. We are inclined to think that there can be some degree of difference as regards the percentage that is meant for or applied to in respect of the legal representatives who claim on behalf of the deceased who had a permanent job than a person who is self-employed or on a fixed salary. But not to apply the principle of standardisation on the foundation of perceived lack of certainty would tantamount to remaining oblivious to the marrows of ground reality. And, therefore, degree- test is imperative. Unless the degree-test is applied and left to the parties to adduce evidence to establish, it would be unfair and inequitable. The degree-test has to have the inbuilt concept of percentage. Taking into consideration the cumulative factors, namely, passage of time, the changing society, escalation of price, the change in price index, the human attitude to follow a particular pattern of life, etc., an addition of 40% of the established income of the deceased towards future prospects and where the deceased was below 40 years an addition of 25% where the deceased was between the age of 40 to 50 years would be reasonable.
58. The controversy does not end here. The question 8 still remains whether there should be no addition where the age of the deceased is more than 50 years. Sarla Verma [Sarla Verma v. DTC, (2009) 6 SCC 121 : (2009) 2 SCC (Civ) 770 : (2009) 2 SCC (Cri) 1002] thinks it appropriate not to add any amount and the same has been approved in Reshma Kumari [Reshma Kumari v. Madan Mohan, (2013) 9 SCC 65 : (2013) 4 SCC (Civ) 191 : (2013) 3 SCC (Cri) 826] . Judicial notice can be taken of the fact that salary does not remain the same. When a person is in a permanent job, there is always an enhancement due to one reason or the other. To lay down as a thumb rule that there will be no addition after 50 years will be an unacceptable concept. We are disposed to think, there should be an addition of 15% if the deceased is between the age of 50 to 60 years and there should be no addition thereafter. Similarly, in case of self- employed or person on fixed salary, the addition should be 10% between the age of 50 to 60 years. The aforesaid yardstick has been fixed so that there can be consistency in the approach by the tribunals and the courts.
59.3. 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.
59.4. 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.
10. From perusal of above extracted paragraphs of the judgment rendered in the case of Pranay Sethi (Supra), it is apparent that the Court did not accept as principle that a self-employed person remains on a fixed salary throughout his life. Reference has been made to the judgment rendered in the case of Santosh Devi Vs. National Insurance Co. Ltd., reported in (2012) 6 SCC 421, in which Hon'ble Supreme Court had taken note 9 of the rise in the cost of living due to inflation, which affects everyone without making any distinction between the rich and the poor and emphasis was laid on the extra efforts made by self-employed persons to generate additional income. Hon'ble Supreme Court has also dealt with the concept of just compensation and it was held that while deciding what would be the just compensation in a given case, the duty of the tribunal and the courts is difficult and hence, an endeavour was made by Hon'ble Supreme Court for standardization, which in its ambit includes addition of future prospects on the proven income at present.
11. In paragraph no.56 of the judgment rendered in the case of Pranay Sethi (Supra), Hon'ble Supreme Court has formulated the question of fixation of future prospects in case of deceased who are self-employed or on a fixed salary and, thereafter, in paragraph no.57 of the said judgment, it has been held that there is no rationale not to apply the principle of standardization to the self-employed or a person who is on a fixed salary. It has been held that to follow the doctrine of actual income with regard to future prospects to the income for the purpose of determination of multiplicand would be unjust and further that determination of income while computing compensation has to include future prospects so that the method will come within the ambit and sweep of just compensation as postulated under Section 168 of the Act. It is further held that denial of future prospects to the legal representatives of a deceased on a fixed salary for the purpose of computation of compensation would be inapposite. Hon'ble Supreme Court has enunciated law on the subject in paragraph no.57 of the judgment in the 10 following words:
"But to state that the legal representatives of a deceased who was on a fixed salary would not be entitled to the benefit of future prospects for the purpose of computation of compensation would be inapposite. It is because the criterion of distinction between the two in that event would be certainty on the one hand and staticness on the other. One may perceive that the comparative measure is certainty on the one hand and uncertainty on the other but such a perception is fallacious. It is because the price rise does affect a self-employed person; and that apart there is always an incessant effort to enhance one's income for sustenance. The purchasing capacity of a salaried person on permanent job when increases because of grant of increments and pay revision or for some other change in service conditions, there is always a competing attitude in the private sector to enhance the salary to get better efficiency from the employees. Similarly, a person who is self-employed is bound to garner his resources and raise his charges/fees so that he can live with same facilities. To have the perception that he is likely to remain static and his income to remain stagnant is contrary to the fundamental concept of human attitude which always intends to live with dynamism and move and change with the time. Though it may seem appropriate that there cannot be certainty in addition of future prospects to the existing income unlike in the case of a person having a permanent job, yet the said perception does not really deserve acceptance. We are inclined to think that there can be some degree of difference as regards the percentage that is meant for or applied to in respect of the legal representatives who claim on behalf of the deceased who had a permanent job than a person who is self-employed or on a fixed salary. But not to apply the principle of standardisation on the foundation of perceived lack of certainty would tantamount to remaining oblivious to the marrows of ground reality. And, therefore, degree- test is imperative. Unless the degree-test is applied and left to the parties to adduce evidence to establish, it would be unfair and inequitable. The degree-test has to have the inbuilt concept of percentage. Taking into consideration the cumulative factors, namely, passage of time, the changing society, escalation of price, the change in price index, the human attitude to follow a particular pattern of life, etc., an addition of 40% of the established income of the deceased towards future prospects and where the deceased was below 40 years an addition of 25% where the deceased was between the age of 40 to 50 years would be reasonable."
12. In the case of Pranay Sethi (Supra), Hon'ble Supreme Court has summarized the law on future 11 prospects in paragraph nos.59.3 and 59.4. Paragraph no.59.3 deals with cases where there is proof of income of the deceased and paragraph no.59.4 deals with cases where deceased was self-employed or on a fixed salary. Thus, cases where there is no proof of income would be covered by the principle laid down in paragraph no.59.4 of the judgment rendered in the case of Pranay Sethi (Supra).
13. In the judgment rendered in Appeal from Order No.106 of 2018, learned Single Judge appears to have overlooked the principle summarized in paragraph no.59.4 of the judgment rendered in the case of Pranay Sethi (Supra). In our humble opinion, in the judgment rendered in the case of Pranay Sethi (Supra), there is nothing to indicate that the law declared by Constitution Bench will not apply to cases where income of the deceased could not be proved.
14. In all the judgments rendered by Hon'ble Supreme Court after Pranay Sethi, the view taken was that compensation for future prospects can be given to dependents of a deceased, whose income could not be proved. Some of those judgments are discussed below.
15. In the case of Hem Raj Vs. Oriental Insurance Company Limited and others, reported in (2018) 15 SCC 654, question which fell for consideration was whether in the absence of proof of income, the principle of adding on account of future prospects can be applied. The said question was answered in the affirmative and it was held that no distinction can be made between cases where there is proof of income and those where minimum 12 income is determined on guesswork. Relevant extract of the judgment is reproduced below:
"7. We are of the view that there cannot be distinction where there is positive evidence of income and where minimum income is determined on guesswork in the facts and circumstances of a case. Both the situations stand at the same footing. Accordingly, in the present case, addition of 40% to the income assessed by the Tribunal is required to be made. The Tribunal made addition of 50% while the High Court has deleted the same."
16. In the case of Magma General Insurance Company Limited Vs. Nanu Ram Alias Chuhru Ram and others, reported in (2018) 18 SCC 130, Hon'ble Supreme Court awarded compensation for future prospects to dependants of a person whose income could not be proved, by relying upon the Constitution Bench judgment in the case of Pranay Sethi (Supra). Paragraph no.15 of the said judgment is extracted below:
"15. With respect to the issue of future prospects, a Constitution Bench of this Court in Pranay Sethi [National Insurance Co. Ltd. v. Pranay Sethi, (2017) 16 SCC 680 : (2018) 3 SCC (Civ) 248 : (2018) 2 SCC (Cri) 205] has held that in case the deceased was self-employed or on a fixed salary, and was below 40 years of age, an addition of 40% of the established income should be granted towards future prospects. Future prospects are to be awarded on the basis of:
(i) the nature of the deceased's employment; and
(ii) the age of the deceased.
In the present case, it is claimed by the family of the deceased that he was engaged in making namkeen, and was earning a monthly income of about Rs 15,000 per month. However, no evidence was brought on record to establish the same. MACT as well as the High Court assessed the income of the deceased on the basis of the minimum wage of an unskilled worker. The nature of his employment being taken as a self- employed person. The deceased was 24 years old at the time of the accident. Hence, future prospects ought to have been awarded at 40% of the actual income of the deceased, instead of 50% as awarded by the High Court. Hence, the judgment [Nannu Ram v. Mayank Goel, 2017 SCC OnLine P&H 4973] of 13 the High Court on this issue is modified to that extent."
17. In the case of Kajal Vs. Jagdish Chand and others, reported in (2020) 4 SCC 413, a young child of 12 years was found to have suffered permanent disability, Hon'ble Supreme Court added 40% for the future prospects on the notional income, which the claimant would have earned upon attaining majority. Paragraph no.20 of the said judgment is reproduced below:
"20. Both the courts below have held that since the girl was a young child of 12 years only notional income of Rs 15,000 p.a. can be taken into consideration. We do not think this is a proper way of assessing the future loss of income. This young girl after studying could have worked and would have earned much more than Rs 15,000 p.a. Each case has to be decided on its own evidence but taking notional income to be Rs 15,000 p.a. is not at all justified. The appellant has placed before us material to show that the minimum wages payable to a skilled workman is Rs 4846 per month. In our opinion, this would be the minimum amount which she would have earned on becoming a major. Adding 40% for the future prospects, it works to be Rs 6784.40 per month i.e. 81,412.80 p.a. Applying the multiplier of 18, it works out to Rs 14,65,430.40, which is rounded off to Rs 14,66,000."
18. In the case of Kirti and another Vs. Oriental Insurance Company Limited, reported in (2021) 2 SCC 166, a Three Judges Bench of Hon'ble Supreme Court relied upon the judgment rendered in the case of Pranay Sethi (Supra) for holding that compensation for future prospects cannot be denied to those with notional income. Paragraph nos.12, 13, 38, 39 & 40 of the judgment are extracted below:
"12.Third and most importantly, it is unfair on part of the respondent insurer to contest grant of future prospects considering their submission before the High Court that such compensation ought not to be paid pending outcome of Pranay Sethi [National Insurance Co. Ltd. v. Pranay Sethi, (2017) 16 SCC 680 : (2018) 14 3 SCC (Civ) 248 : (2018) 2 SCC (Cri) 205] reference. Nevertheless, the law on this point is no longer res integra, and stands crystallised, as is clear from the following extract of the aforecited Constitutional Bench judgment [National Insurance Co. Ltd. v. Pranay Sethi, (2017) 16 SCC 680 : (2018) 3 SCC (Civ) 248 :
(2018) 2 SCC (Cri) 205] : (SCC p. 714, para 59) "59.4. 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."
13. Given how both deceased were below 40 years and how they have not been established to be permanent employees, future prospects to the tune of 40% must be paid. The argument that no such future prospects ought to be allowed for those with notional income, is both incorrect in law [Sunita Tokas v. New India Insurance Co. Ltd., (2019) 20 SCC 688 : (2020) 4 SCC (Cri) 436] and without merit considering the constant inflation-induced increase in wages. It would be sufficient to quote the observations of this Court in Hem Raj v. Oriental Insurance Co. Ltd. [Hem Raj v. Oriental Insurance Co. Ltd., (2018) 15 SCC 654 : (2019) 1 SCC (Civ) 293 : (2019) 2 SCC (Cri) 864] , as it puts at rest any argument concerning non- payment of future prospects to the deceased in the present case: (Hem Raj case [Hem Raj v. Oriental Insurance Co. Ltd., (2018) 15 SCC 654 : (2019) 1 SCC (Civ) 293 : (2019) 2 SCC (Cri) 864] , SCC p. 656, para 7) "7. We are of the view that there cannot be distinction where there is positive evidence of income and where minimum income is determined on guesswork in the facts and circumstances of a case. Both the situations stand at the same footing. Accordingly, in the present case, addition of 40% to the income assessed by the Tribunal is required to be made."
(emphasis supplied)
38. The rationale behind the awarding of future prospects is therefore no longer merely about the type of profession, whether permanent or otherwise, although the percentage awarded is still dependent on the same. The awarding of future prospects is now a part of the duty of the court to grant just compensation, taking into account the realities of life, particularly of inflation, the quest of individuals to 15 better their circumstances and those of their loved ones, rising wage rates and the impact of experience on the quality of work.
39. Taking the above rationale into account, the situation is quite clear with respect to notional income determined by a court in the first category of cases outlined earlier, those where the victim is proved to be employed but claimants are unable to prove the income before the court. Once the victim has been proved to be employed at some venture, the necessary corollary is that they would be earning an income. It is clear that no rational distinction can be drawn with respect to the granting of future prospects merely on the basis that their income was not proved, particularly when the court has determined their notional income.
40. When it comes to the second category of cases, relating to notional income for non-earning victims, it is my opinion that the above principle applies with equal vigour, particularly with respect to homemakers. Once notional income is determined, the effects of inflation would equally apply. Further, no one would ever say that the improvements in skills that come with experience do not take place in the domain of work within the household. It is worth noting that, although not extensively discussed, this Court has been granting future prospects even in cases pertaining to notional income, as has been highlighted by my learned Brother, Surya Kant, J., in his opinion (Hem Raj v. Oriental Insurance Co. Ltd. [Hem Raj v. Oriental Insurance Co. Ltd., (2018) 15 SCC 654 : (2019) 1 SCC (Civ) 293 : (2019) 2 SCC (Cri) 864] ; Sunita Tokas v. New India Insurance Co. Ltd. [Sunita Tokas v. New India Insurance Co. Ltd., (2019) 20 SCC 688 : (2020) 4 SCC (Cri) 436] )."
19. In Meena Pawaia and others Vs. Ashraf Ali and others, reported in (2021) 17 SCC 148, a young boy, who was studying in third year in Bachelor of Engineering Course, died in a road accident. Owner of the vehicle (Union of India) contended that as the deceased was not earning at the time of his death, therefore, nothing further is to be added towards the future prospect/future rise in income. Hon'ble Supreme Court relied upon the law declared in the case of Pranay Sethi (Supra) and held as follows:
16"13. We see no reason why the aforesaid principle may not be applied, which apply to the salaried person and/or deceased self-employed and/or a fixed salaried deceased, to the deceased who was not serving and/or was not having any income at the time of accident/death. In case of a deceased, who was not earning and/or not doing any job and/or self- employed at the time of accident/death, as observed herein above his income is to be determined on the guesswork looking to the circumstances narrated hereinabove. Once such an amount is arrived at he shall be entitled to the addition over the future prospect/future rise in income. It cannot be disputed that the rise in cost of living would also affect such a person.
14. As observed by this Court in Pranay Sethi [National Insurance Co. Ltd. v. Pranay Sethi, (2017) 16 SCC 680 : (2018) 3 SCC (Civ) 248 : (2018) 2 SCC (Cri) 205] , the determination of income while computing compensation has to include future prospects so that the method will come within the ambit and sweep of just compensation as postulated under Section 168 of the Motor Vehicles Act. In case of a deceased who had held a permanent job with inbuilt grant of annual increment and/or in case of a deceased who was on a fixed salary and/or self-
employed would only get the benefit of future prospects and the legal representatives of the deceased who was not serving at the relevant time as he died at a young age and was studying, could not be entitled to the benefit of the future prospects for the purpose of computation of compensation would be inapposite. Because the price rise does affect them also and there is always an incessant effort to enhance one's income for sustenance.
15. It is not expected that the deceased who was not serving at all, his income is likely to remain static and his income would remain stagnant. As observed in Pranay Sethi [National Insurance Co. Ltd. v. Pranay Sethi, (2017) 16 SCC 680 : (2018) 3 SCC (Civ) 248 :
(2018) 2 SCC (Cri) 205] to have the perception that he is likely to remain static and his income to remain stagnant is contrary to the fundamental concept of human attitude which always intends to live with dynamism and move and change with the time.
Therefore we are of the opinion that even in case of a deceased who was not serving at the time of death and had no income at the time of death, their legal heirs shall also be entitled to future prospects by adding future rise in income as held by this Court in Pranay Sethi [National Insurance Co. Ltd. v. Pranay Sethi, (2017) 16 SCC 680 : (2018) 3 SCC (Civ) 248 :
(2018) 2 SCC (Cri) 205] i.e. addition of 40% of the income determined on guesswork considering the educational qualification, family background, etc. 17 where the deceased was below the age of 40 years."
20. In the case of Sarup Singh Vs. HDFC Ergo General Insurance Co. Ltd. and others, reported in (2023) 1 SCC 159, Hon'ble Supreme Court interfered with the judgment renderd by the High Court and granted compensation towards further prospects to the extent of 40% on the notional income of ₹6,500/- per month. Relevant extract of the said judgment is extracted below:
"4. Having heard the learned counsel appearing on behalf of the respective parties and having gone through the impugned judgment and order [HDFC ERGO General Insurance Co. Ltd. v. Jasbir Kaur, 2017 SCC OnLine P&H 5739] passed by the High Court, we are of the opinion that the amount awarded by the High Court can be said to be on lower side. While awarding the loss of dependency, the High Court has not awarded/considered the future prospects at all. As per the decision of this Court in National Insurance Co. Ltd. v. Pranay Sethi [National Insurance Co. Ltd. v. Pranay Sethi, (2017) 16 SCC 680 : (2018) 3 SCC (Civ) 248 : (2018) 2 SCC (Cri) 205] , there shall be 40% rise towards future prospects. Therefore, even if we consider the notional income @ Rs 6500 per month as determined by the High Court and adding 40% towards future prospects and deducting 1/3rd towards personal expense of the deceased and by applying the multiple of 17, the claimant shall be entitled to Rs 12,37,790 under the head loss of dependency."
21. From the aforesaid discussion, it is apparent that Hon'ble Supreme Court in the case of National Insurance Company Limited Vs. Pranay Sethi and others (Supra) has not made any distinction between cases where there is positive evidence of income vis-a-vis cases where minimum income is determined on guesswork. Notional income has to be determined in case of homemakers, children and young men who are not gainfully employed or cases, where the deceased was employed in unorganized sector and his dependents are not able to prove his income or cases where the 18 Tribunal discards the evidence led by the claimant regarding income of the deceased. The duty of the Tribunal/Court is to determine the amount payable as compensation, which is just and equitable. In the case of Pranay Sethi (Supra) and other subsequent judgments, Hon'ble Supreme Court has considered and discussed the concept of just compensation and held that compensation for future prospects has to be given not only in cases where income of the deceased is proved, but also in cases where the income of the deceased is notionally determined.
22. Thus, we have no hesitation in holding that principle of future prospects would be applicable in case of non-earning victims, whose income is fixed notionally for the purpose of computation of compensation under the Motor Vehicle Act, 1988.
23. Let the matter be placed before appropriate Bench.
___________________ MANOJ KUMAR TIWARI, J.
______________ PANKAJ PUROHIT, J.
Arpan 19