Madras High Court
United Insurance Co Ltd vs Minor M. Prunuti (A) Bala Mahalakshmi on 11 November, 2011
Bench: K. Mohan Ram, G.M. Akbar Ali
IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 11.11.2011 CORAM :
THE HONOURABLE Mr.JUSTICE K. MOHAN RAM and THE HONOURABLE Mr.JUSTICE G.M. AKBAR ALI C.M.A. No.2403 of 2005 and Cross Objection No.63 of 2005 and C.M.P. No.18962 of 2005 United Insurance Co Ltd ... Appellant vs
1. Minor M. Prunuti (a) Bala Mahalakshmi rep by next friend and grandfather R.P. Sarathy (declared as Major as per order of this court dated 23.9.2011 in CMP No.650 of 2011)
2. V. Chandrasekaran ... Respondents Cross Objection No.63 of 2005 Minor M. Prunuti @ Bala Mahalakshmi rep by next friend & grandfather R.P. Sarathy ... Cross Objector vs
1. United India Insurance Co Ltd, Salem
2. V. Chandrasekaran ... Respondents Appeal filed under Sec.173 of Motor Vehicles Act 1988 and Cross Objection filed under Sec.22 of Civil Procedure Code against the award and decree dated 2.7.2004 made in MCOP No.17 of 1994 on the file of the Motor Accidents Claims Tribunal, Additional District Judge, Dharmapuri.
For appellant in : Mr.S. Arunkumar C.M.A.No.2403/05 and the respondent in Cross Objn.No.63/05 For R.1 in CMA No. : Mrs.Pushpa Satyanarayana 2403/05 and the Cross Objector in 63/05 G.M. AKBAR ALI,J., Appeal filed under Sec.173 of Motor Vehicles Act 1988 and Cross Objection filed under Sec.22 of Civil Procedure Code against the award and decree dated 2.7.2004 made in MCOP No.17 of 1994 on the file of the Motor Accidents Claims Tribunal, Additional District Judge, Dharmapuri.
2. The Insurance Company is the appellant. The 1st respondent minor M. M. Prunuti @ Bala Mahalakshmi represented by her next friend and grand father R.P. Sarathy, is the claimant in MCOP No.17 of 1994 on the file of the Motor Claims Tribunal, Additional District Judge, Dharmapuri. Her father P. Muralikrishnan, aged about 27 years and her mother Tmt. Kila died in a motor accident on 28.6.1993. She was 3 years old at the time of the occurrence.
3. The unfortunate incident which took place is stated to be as follows:
On 28.6.1993 at about 10.00 a.m., the said Muralikirshnan, his wife Kila and another person named Vasantha were returning from Tirupathi and were proceeding towards Salem in the Bangalore-Salem National Highway in a Car bearing Registration No.TAN 1800 driven by one Chandrasekaran. He was driving the said Car with care and caution and was observing the traffic rules. On nearing Karimangalam, a lorry bearing Regn. No TAN 4233 owned by the 2nd respondent and insured with the appellant came in a high speed on the opposite direction and hit against the car. On account of this, in fact, the car was smashed into pieces. Except Muralikrishnan, the three others died on the spot. He was immediately taken to Manipal Hospital at Bangalore and inspite of best treatment, he died on 5.7.1993. The accident was due to the rash and negligent act of the driver of the lorry.
4. The claim petition was filed stating that the said Muralikrishnan was a partner of Narasus Coffee Company, Salem and he was also partner in four other companies. He was a dynamic personality in business and a successful industrialist. He was also an agriculturist and was earning not less than Rs.35 lakhs per year. He died at the young age and the minor 1st respondent is the sole surviving member of the family who lost her parents at the age of 3 years.
5. The loss sutained by the 1st respondent is immeasurable, which cannot be compensated by money. However, considering the pecuniary loss and loss of love and affection, there was a claim of Rs.2 crores.
6. The claim petition was resisted by the Insurance Company. The owner remained ex-parte. Though the factum of accident was admitted, the manner of accident was denied. It was stated that the driver of the car bearing Registration No.TAN 1800 drove in a rash and negligent manner and the accident took place in a curve near a village called Kattusingalahalli, where, the road divided into two, one leading to Kariamanagalam and another leading to bye-pass of a National Highway. It was narrated in the counter that the driver of the car drove in a great speed, turned the car towards south-east in the middle of the road and hit against the oncoming lorry.
7. The rough plain of the scene of occurrence prepared by the police would reveal that the accident had taken place in the middle of the road and it is false to state that the driver of the car was observing the traffic rules.
8. As far as the claim of compensation is concerned, it was stated that all the alleged earnings has to be strictly proved by documentary evidence and in any event, the total compensation claimed is highly excessive.
9. With the above pleadings, the parties went for a trial before Motor Accidents Claim Tribunal, the learned Additional District Judge, Dharmapuri. There were five witnesses on the side of the claimants and 68 documents were marked to substantiate their claim. The appellant examined one witness and marked the rough sketch relating to the accident.
10. On the basis of the eyewitnesses and also on the basis of the first information report, charge sheet, the judgment delivered in the criminal case in C.C.No.212 of 1994, the Tribunal found that the accident had occurred due to the rash and negligent act of the driver of the lorry bearing Registration No.TAN 4233. Having found the negligence on the part of the driver of the lorry, the Tribunal has fastened the statutory liability on the appellant.
11. As far as the claim of compensation is concerned, the Tribunal had discussed the various income tax returns filed by the claimant and also the various account books for the various companies and partnership firms which the deceased was assocaited with.
12. On the basis of the income tax returns of the year 1992-1993 and also the advance tax paid by the deceased, the Tribunal found that the deceased Muralikrishnan was earning a sum of Rs.10,00,000/-per year. Considering the age of the deceased as 27 years, the Tribunal applied multiplier 18 and found that he would have earned a sum of Rs.1,80,00,000/- and deducted 1/3 towards personal expenses and arrived at the pecuniary loss at Rs.1,20,00,000/-. The tribunal had also granted a sum of Rs.25,000/- towards loss of love and affection and Rs.5,000/- towards funeral expenses and has granted a sum of Rs.1,20,30,000/- as total compensation. Aggrieved by the award passed by the Tribunal, the Insurance Company has preferred the present appeal, challenging on various grounds.
13. The quantum is challenged. The main contention of the appellant is that the quantum of the compensation is highly excessive and the claimant has conveniently boosted the income of the deceased and filed income tax returns after the demise of the Muralikrishnan and the salestax turn over has also been purposefully increased within a span of 90 days.
14. Mr.Arun Kumar, learned counsel appearing for the Insurance Company challenged the quantum, by pointing out the various income tax returns and sales tax returns filed by the claimant. He pointed out that under Ex.A.38, Auditor's statement for the year 1991-1992, the total income of the deceased was shown as 15,67,494/-. But the income tax returns for the year 1991-92 under Ex.A.58 would show a total income of only Rs.1,68,151/-. This includes the various income of the deceased. He emphasised the point that if the total income as per the income tax return was only Rs.1,68,151/- then the Auditor's report that the income of the deceased was Rs.15,67,494/- cannot be true.
15. The learned counsel would further state that for the year 1992-1993, total income of Rs.8,16,220/- was shown as taxable income under Ex.A.59. But for the period from 1.4.1993 to 5.7.1993 suddenly the income was boosted to Rs.20,93,900/-. The learned counsel pointed out that M/s Narasus Coffee is a family business and P.W.1, Mr.A.P. Sarathy, the father of the deceased was the founder who was instrumental for the income of the Company and therefore, the income of the deceased cannot be inflated to Rs.50,00,000/- per year.
16. The learned counsel further asserted that the Tribunal had wrongly fixed the annual income at Rs.10,00,000/- on the basis of payment of advance taxes for the year 1992-1993. He also pointed out that the income tax returns filed for the years 1994-95 to 2003-2004 in respect of the family business, need not be taken into account as the capital of the deceased continued to earn the profit which is available for the claimant,
17. According to him, there is no income loss to the minor claimant as the assets of the deceased being the share in various firms and companies continued to fetch the same income. The learned counsel pointed out that as per Ex.A-67 Narasu's Coffee Company owes to the first respondent Principal sum of Rs.2,02,00,728 and Rs.79,72,200 towards interest. Hence the capital is still with the company and there cannot be any loss to the first respondent by way of profit. The learned counsel further pointed out that the first respondent has not marked the Income-tax returns of Narasu's Spinning Mills to verify how the income written back by the Auditor in Ex.A-38 is declared to the income-tax department in the subsequent years. He also relied on the following decisions:
(a) AIR 1962 SC 1 (Gorald Motor Service vs Veluswami)
(b)2003 AIR SCW 4198 (State of Haryana and another vs Jasbir Kaur and others) ) 2008 ACJ 2372 (Bhakra Beas Management Board vs Kanta Aggarwal and others) = AIR 2008 SC 3118
(d) 2009 ACJ 1605 Rani Gupta and others vs United India Insurance Co Ltd and others
(e)Unreported Judgment in CMA Nos.1447, 1448 and 879 and 880 of 2010
18. On the contrary, Mrs. Pushpa Satyanarayana, the learned counsel for the 1st respondent, would submit that the deceased was a shareholder in M/s Narasus Coffee Company, whose annual turnover runs into crores. The learned counsel pointed out that the share of the deceased was 15%. She further pointed out that the deceased was also a share holder in Shanmugam Company and also a share holder in Narasus Spinning Mills. He was also holding Coffee Estate and there was an agricultural income of Rs.4,52,285/-per year.
19. She stated that the claimants have produced more than 60 documents which contains the income tax returns, ledgers and audited accounts to prove that he was earning more than Rs.50,00,000/-per year. She also pointed out that the Tribunal, taking into consideration of Ex.A.38, the report of the Auditor and the certificate of the Deputy Commissioner of Income tax had rightly assessed the income at Rs.10,00,000/-per year and had also deducted 1/3 for the personal expenses and had arrived at just and reasonable compensation which need not be interefered with. She relied on the following cased laws:
Vol 274 ITR 110 (Assistant Commissioner of Income Tax vs A.R. Enterprises) 2010 (10) SCC 341 (Vadava Kumar vs Divisional Manager, National Insurance Co Ltd
20. We have carefully considered the rival contentions put forth on either side and perused the materials available on record.
21. The facts relating to the manner of the accident are admitted. In an unfortunate accident which occurred on 28.6.1993, the father of the 1st respondent minor lost his life at the age of 27 years. It is equally pathetic to note the mother also died in the same accident. In the present appeal, we are concerned about the quantum of compenstion for which the minor 1st respondent is entitled to.
22. Admittedly, the deceased was an agriculturist as well as a partner/share holder in some of the Companies and Firms. M/s Narasus Coffee Company is a joint family business. M/s Narasus Spinning Mills is also a joint family business. The deceased was also a share holder in Shanmugam and Co. Apart from this, he was running a business under the name and style 'Mahalakshmi Traders' which was dealing with coffee beans.
23. More than 60 documents were produced to prove the income of the deceased through the above said various companies and firms. Since the accident had occurred on 28.6.1993 the income of the relevant period which would be looked into are assessment years 1991-1992 and 1992-1993. However, the contention of the Insurance Company is that the business being the family business still being continued, the capital investment is still available for the benefit of the minor which earns the same income and therefore, there is no pecuniary loss to the 1st respondent.
24. In AIR 1962 SC 1 (Gorald Motor Service vs Veluswami) the Hon'ble Supreme Court has held thus:
`Therefore, the actual extent of the pecuniary loss to the respondents may depend upon data which cannot be ascertained accurately, but must necessarily be an estimate, or even partly a conjecture. Shortly stated, the general principle is that the pecuniary loss can be ascertained only by balancing on the one hand the loss to the claimants of the future pecuniary benefit and on the other any pecuniary advantage which from whatever source is the balance of loss and gain to a dependant by the death must be ascertained.
25. In 2009 ACJ 1605 Rani Gupta and others vs United India Insurance Co Ltd and others, the Apex Court held thus:
`24. In this case, however, the deceased was a businessman. What was the actual loss of dependency to the family was his contribution to run the business. The assets of the business remained. The amount of compensation, therefore, was required to be determined keeping in view that facts in mind.
26. In 2003 AIR SCW 4198 (State of Haryana and another vs Jasbir Kaur and others), the Apex Court held as follows:
`8. ... The land possessed by the deceased still remains with the claimants as his legal heirs. There is however a possibility that the claimants may be required to engage persons to look after agriculture. Therefore, the normal rule about th deprivation of income tax is not strictly applicable to cases wher agricultural income is the source. Attendant circumstances have to be considered.
27. In the unreported judgment in CMA Nos.1447, 1448 and 879 and 880 of 2010 dated 8.6.2011 where one of us K.M.J., was a party. The appeal releates to compensation to the widow who got an appointment on compassionate ground. This Court referred the decisions reported in 2008 ACJ 2372 (Bhakra Beas Management Board vs Kanta Aggarwal and others)and AIR 1962 SC 1 (Gorald Motor Service vs Veluswami) and further held thus:
`11. Further, it has to be pointed out that in the decision reported in AIR 1962 SC 1 (Gorald Motor Service vs Veluswami), the decision of the House of Lords in Davies' case has been referred to and relied upon wherein the House of Lords has laid down as follows:
`The general rule which has always prevailed in regard to the assessment of damages under the Fatal Accidents Acts is well settled, namely, that any benefit accruing to a dependent by reason of the relevant death must be taken into account. Under those Acts the balance of loss and gain to a dependent by the death must be ascertained, the position of each dependent being considered separately:-
A perusal of the aforesaid passage makes it clear that the balance of loss and gain to the dependant by the death must be ascertained and the position of each dependent should be considered separately. Therefore, the claims of the dependants in this case, namely, wife, minor daugher aged about 6 months and the mother aged about 54 years have to be independently considered.
28. It is well settled that the actual pecuniary loss of an individual can be ascertained only by balancing, on the one hand, the loss to him or her of the future pecuniary benefit and on the other hand, any pecuniary advantage which from whatever sources comes to him or her by reason of death of the person on whom he or she is dependant.
29. It is also well settled that any benefit accruing to a dependent by reason of the relevant death must be taken into account.
30. This Court in CMA Nos.1447, 1448 and 879 and 880 of 2010 dated 8.6.2011 by its order dated 8.6.2011 followed the ratio reported in 2008 ACJ 2372 (Bhakra Beas Management Board vs Kanta Aggarwal and others) = AIR 2008 SC 3118 and held as follows:
`10. Thus , it is clear that the Apex Court as well as the Division Bench of this Court have not totally denied the compensation to the claimants on the ground that the wife of the deceased was given compassionate appointment and the business of the deceased in the case before the Division Bench was being carried on by his sons. Therefore, we are unable to accept the contention of the learned counsel for the appellant.
31. Therefore, the pecuniary loss to the 1st respondent minor child cannot be totally denied on the ground that the business of the deceased was being carried on and the capital investment was still earning certain profits and interest.
32. The general rule is that any benefit accruing to a dependent by reason of relevant death must be taken into account and the balance of loss and gain to the dependent must be ascertained.
33. No doubt, the deceased P.Muralikrishnan was having sufficient income from (1) Narasus Coffee Company, Salem (2) Shanmugam and Company, Coimbatore (3) Narasus Spinning Mills, Salem,(4) Mahalakshmi Traders, Salem and (5) agricultural income from the Coffee Estate.
34. He has filed a return for the year 1991-1992 under Ex.A.58. An income of Rs.9,96,330/- from Narsus Coffee Company, Salem and has shown a loss of Rs.8,91,174/- for the Narasus Spinning Mills, Salem and therefore a taxable income of Rs.1,68,151/-. Apart from this, had shown Rs.4,52,285/-as agricultural income.
35. Under Ex.A.38, the auditor who was examined as P.W.2 had given the following share of income:
`INDIVIDUAL (Per Income Tax Return) Share of income from
1) Narasu's Coffee Company, Salem ... Rs. 9,96,330.00
2) Shanmughan & Co ... Rs. 5,945.00
3)Money lending Interest ... Rs. 41,884.00
4)Dividend etc., ... Rs. 20,110.00
5)Agricultural income .... Rs.4,52,286.00 ____________ Rs.15.16,555.00 Less.Narasu's Spinning Mills .. Rs.8,92,182.00 Less:Depreciation written back next year.Rs.7,88,042.00 _______________ Rs. 1,04,140.00 ____________ Rs.14,12,415.00 H.U.F own business Per income tax return Rs. 1,55,079.00 ______________ Total Rs.15,67,494.00 ______________
36. The loss of Narasus Spinning Mills is shown to be appropriated for a depreciation for a sum of Rs.7,88,042/- and therefore, the loss was deducted only at Rs.1,04,140/- as against Rs.8.91,174/-.
37. Ex.A.61 relates to the income tax for the year 1992-1993. Ex.A.59 relates to the income tax return for the year 1993-1994. Under this document, a sum of Rs.8,16,220/- was shown as taxable income. However, the income from M/s Narasus Coffee Company showed 4.49,969/- in the form of interest as his capital investment has earned only an interest and not a profit.
38. The subsequent returns filed by the Company would also show only an income of interest from the investment and not a share in the profit.
39. Mr. S. Arun Kumar, the learned counsel for the appellant submitted that P.W.1 the grand father of the minor claimant had kept this amount in such a manner, only to show that the capital earns only an interest and not a profit and in normal course, the legal representatives of the deceased ought to have been made as a partner to receive the continuous income from the profit.
40. The contention of the learned counsel for the appellant cannot be accepted since as per the account, the capital earns only an interest and not the profit. However, such an income through interest should also be taken into consideration while balancing the loss and gain due to death.
41. The Tribunal had arrived at Rs.10,00,000/- as income. In Paragraph-56 (page 42) it is held as follows:
VERNACULAR (TAMIL) PORTION DELETED
42. Fixing of income on the basis of advance tax payable is not sustainable. Comparing the income for the year 1991-92 and 1992-93 and also taking into consideration the capital income which earns interest, we are of the considered view that out of the total income of Rs.15,57,494/-, 8,16,224/- plus agricultural income of Rs.2,80,000/- (as per Ex.A.59),amounting to total of 10,16,224/- has to be deducted. Therefore, the pecuniary loss will be Rs. 5,41,270/- to the 1st respondent minor per year, which is to be rounded off to Rs.5,50,000/-
43. When Rs.5,50,000/- is multiplied with multiplier 18, it comes to Rs.99,00,000/-. This will be the pecuniary loss. The Tribunal granted Rs.1,20,00,000- as pecuinary loss on the basis of income of Rs.10,00,000/-per year and after deduction of 1/3 towards personal expenses.
44. In our considered view, it is not sustainable. The actual pecuniary loss, taking into consideration the gain due to death and on balancing the future pecuniary loss, the compensation due to death would be Rs.99,00,000/-.
45. The Tribunal had awarded a sum of Rs.25,000/- towards loss of love and affection, which is enhanced to Rs.75,000/-. Funeral expenses Rs.5,000/- awarded by the Tribunal is enhanced to Rs.10,000/- and Rs.15,000/- is awarded towards Transportation expenses, thus totalling to Rs.1,00,00,000/-.
46. The modified compensation is as follows;
(a) pecuniray loss .... Rs.99,00,000.00 (b) Loss of love and affection ... Rs. 75,000.00 ) Funeral expenses .... Rs. 10,000.00 (d) Transportation expenses .... Rs. 15,000.00 ______________ Total ..... Rs.1,00,00,000.00 ________________
47. The claimant has filed Cross objection No. 63 of 2005 for enhancement of the award passed by the Tribunal. The learned counsel for the claimant pointed out that they have proved the income of the deceased at Rs.50,00,000/-per year through various documents. Therefore, they are entitled for enhancement.
48. However, for the reasons stated above, we are of the considered view that the income of the deceased is to be fixed only at Rs.5,50,000/- per year and accordingly, the compensation is reduced to Rs.1,00,00,000/- as enumerated above. Therefore, the cross objection is dismissed.
49. In the result, the appeal is allowed and the compensation awarded by the Motor Accidents Claims Tribunal, Additional District Judge, Dharmapuri in MCOP No.17 of 1994 dated 2.7.2004 is hereby reduced to Rs.1,00,00,000/- along with the interst. No costs.
50. It is found that this Court, by an order dated 4.8.2005 in CMP No.12804 of 2005 directed the appellant/Insurance Company to pay a sum ofRs.15,000/-every month to the guardian of the minor claimant and also by subsequent order dated 12.12.2005 directed the appellant Insurance Companay to pay a sum of Rs.1,00,000/-towards accrued interest apart from continuing the payment of Rs.15,000/-every month .
51. Therefore, the appellant/Insurance Company is at liberty to adjust the amount already disbursed to the claimant from the compensation and interest awarded by this court in the present appeal.
sr To Motor Accidents Claims Tribunal, Additional District Judge, Dharmapuri