Sri Vidya vs M/S.Leal Enterprise on 18 December, 2018

[Cites 7, Cited by 1]

Madras High Court

Sri Vidya vs M/S.Leal Enterprise on 18 December, 2018

These Civil Miscellaneous Appeals are filed against the against the judgment and decree, dated 18.12.2018, made in M.C.O.P.No.325 of 2014, on the file of the Motor Accident Claims Tribunal, Kulithalai, Karur. https://www.mhc.tn.gov.in/judis 2/11 C.M.A.(MD)Nos.549 and 347 of 2019

2. Rajarathinam, Chartered Accountant at Coimbatore, met with an accident on 05.10.2013 while he was travelling in Toyota Car, bearing Registration No.TN-37-AM-3600 from Kothagiri to Coimbatore. In the said accident, the car driver, by name, Venkateswaran lost control and hit the road margin. Rajarathinam, who was travelling in the car, sustained severe injuries and was taken to Mettupalayam Government Hospital, then, to Coimbatore Government Hospital, for further treatment. However, he died on the same day. At the time of death, he was 45 years old, earning substantially through his profession and in the share trading. Claim Petition was filed by his wife and his mother, claiming compensation of Rs.1 Crore. Later, the claim was amended to Rs.1,65,70,720/-.

3. The second respondent/Insurance Company, who is the insurer of the vehicle, contested the claim petition on the ground that the deceased Rajarathinam was a gratuitous passenger and therefore, the insurance policy does not cover his loss. It was also contended that the driver of the vehicle Venkateswaran had no valid driving licence and therefore, there is a breach of insurance condition. The claim of loss of income made in the petition was also disputed.

4. The Tribunal framed points for determination and examined witnesses on either side.

https://www.mhc.tn.gov.in/judis 3/11 C.M.A.(MD)Nos.549 and 347 of 2019

5. The claimants examined three witnesses and marked 38 exhibits. On behalf of the Insurance Company, one witness by name, Ajith was examined. After considering the evidence, the Tribunal, relying upon the judgment of the Hon'ble Supreme Court and the High Court regarding ascertaining the loss of income taking into account the income tax return submitted under Form – 26AS for the years 2012-2013 and 2013-2014 and the other bank transactions, fixed the annual income of the deceased as Rs.6,60,000/-, by adding 25% to it towards future prospects, applying the multiplier 14 based on his age and applying the guidelines laid by the Hon'ble Supreme Court in National Insurance Co. Ltd., vs. Pranay Sethi and others reported in (2017) 16 SCC 680, has awarded a sum of Rs.77,00,000/- towards loss of income. Further, the Tribunal has awarded Rs.40,000/- towards loss of consortium, Rs.15,000/- towards funeral expenses and Rs.15,000/- towards loss of articles. Thus, the Tribunal has awarded a total sum of Rs.77,70,000/- as compensation with interest at the rate of 7.5% p.a. from the date of claim petition till the date of realisation.

6. Being aggrieved by the quantum fixed by the Tribunal, the claimants have preferred C.M.A.(MD)No.549 of 2019 for enhancement of compensation. Whereas the Insurance Company has filed C.M.A.(MD)No.347 of 2019 for reduction of compensation.

https://www.mhc.tn.gov.in/judis 4/11 C.M.A.(MD)Nos.549 and 347 of 2019

7. Heard the learned counsels on either side.

8. It is contended by the learned counsel appearing for the claimants, who are the appellants in C.M.A.(MD)No.549 of 2019, that apart from the income shown in the income tax return, the deceased had income through his part time job as resource person in a Chartered Accountant Institute and income from his investment in the shares. Further, he was a partner in an Auditor Firm and the income from the Firm not been reflected in his income tax return. Though these factors were placed by way of documents, the Tribunal has ignored it on the ground that the Firm is jointly managed by the deceased and his wife, who is one of the claimants and there is no loss of income as such to the Firm. Therefore, the learned counsel submitted that the compensation has to be enhanced after adding income from the Partnership Firm and other sources from Rs.77,70,000/- to Rs.1,65,70,720/-.

9. As far as the Insurance Company is concerned, which is the appellant in C.M.A.(MD)No.347 of 2019, it is contended that the Tribunal taking into account the income tax return and the income from other source, has fixed the annual income at the rate of Rs.6,60,000/-, but in case of Partnership Firm, the death of one of the partners per se will not lead to loss of income, since the other Partners will be effectively running the Partnership Firm. Further, while taking note of the Income Tax Return to fix the loss of income, 20% of the income is liable to be paid as tax https://www.mhc.tn.gov.in/judis 5/11 C.M.A.(MD)Nos.549 and 347 of 2019 and the said amount ought to have been deducted from the compensation amount, the Tribunal has failed to deduct 20% towards the income tax. It is also contended that towards personal expenses from his earnings, only 1/3rd deducted. The deceased had only two dependants namely, his wife and mother, therefore, ½ of the income towards personal expenditure ought to have been reduced.

10. Considering the above said rival submissions made by the claimants and the Insurance Company, in the light of material evidence available, we find that the deceased Rajarathinam is a Chartered Accountant by profession. He had income through his profession and other source. He was an income tax assessee. Rs.5,78,730/- has been disclosed as six months income for the year 2013-2014 under Ex.P.17 and a sum of Rs.54,246/- [Rs.47,118 + Rs.7,218 (interest)] has been paid as income tax. The income tax return has been filed subsequent to the accident as rightly pointed out by the learned counsel appearing for the Insurance Company. Therefore, the return filed subsequent to the death, is to be considered very carefully. Ex.P.28 and Ex.P.29 are Form-26AS submitted to the Income Tax Department for the Assessment Years 2012-2013 and 2013-2014. They are not indicative of his annual income, but only indicates the TDS deducted by persons, who has paid money to the deceased for his professional service.

11. Considering the dictum of the Hon'ble Supreme Court laid in Smt.Anjali and others vs. Lokendra Rathod and others reported in 2022 SCC https://www.mhc.tn.gov.in/judis 6/11 C.M.A.(MD)Nos.549 and 347 of 2019 Online SC 1683, wherein fixing the loss of income based on the income tax return filed subsequent to the death and failure to file the returns of the previous years found fault by the Hon'ble Supreme Court. In the present case also, there is every reason to interfere with the quantum of loss of income fixed based on the income tax return filed subsequent to the death. However, this Court on perusing the award, finds that the Tribunal though taken Ex.P.17 as a guiding factor to assess the loss of income, has not accepted it in toto. Though the income tax return indicates his income for six months is Rs.5,78,730/-, taking into consideration the return filed subsequent to the death and it is only for six months, the Tribunal has restricted his estimated income to Rs.6,60,000/- with 25% future prospects, after deducting 1/3 rd towards personal expenses, since he had two dependants, has applied multiplier 14 taking into consideration the age of the deceased at the time of accident. Since the Tribunal has not wholly accepted the income tax return Ex.P.17 filed for the death of the victim, the assessment of estimated loss at Rs.6,60,000/- per annum with 25% of future prospects stands unaltered. However, 20% of the tax liable to be paid not been deducted by the Tribunal, which is mandatory when the income of the deceased falls under the taxable bracket.

12. This point has been settled by the Hon'ble Supreme Court in Vimal Kanwar and others vs. Kishore Dan and others reported in 2013 (7) SCC 476. The relevant portion of the judgment reads as under:-

https://www.mhc.tn.gov.in/judis 7/11 C.M.A.(MD)Nos.549 and 347 of 2019 ''22.The third issue is “whether the income tax is liable to be deducted for determination of compensation under the Motor Vehicles Act”.

23.In Sarla Verma [Sarla Verma v. DTC, (2009) 6 SCC 121 : (2009) 2 SCC (Civ) 770 : (2009) 2 SCC (Cri) 1002] this Court held: (SCC p. 133, para 20) ''20.Generally the actual income of the deceased less income tax should be the starting point for calculating the compensation.” This Court further observed that: (SCC p. 134, para

24) “24.… Where the annual income is in taxable range, the words ‘actual salary’ should be read as ‘actual salary less tax'.'' Therefore, it is clear that if the annual income comes within the taxable range, income tax is required to be deducted for determination of the actual salary. But while deducting income tax from the salary, it is necessary to notice the nature of the income of the victim. If the victim is receiving income chargeable under the head “salaries” one should keep in mind that under Section 192(1) of the Income Tax Act, 1961 any person responsible for paying any income chargeable under the head “salaries” shall at the time of payment, deduct income tax on estimated income of the employee from “salaries” for that financial year. Such deduction is commonly known as tax deducted at source (“TDS”, for short). When the employer fails in default to deduct the TDS from the employee's salary, as it is his duty to deduct the TDS, then the penalty for non-deduction of TDS is prescribed under Section 201(1-A) of the Income Tax https://www.mhc.tn.gov.in/judis 8/11 C.M.A.(MD)Nos.549 and 347 of 2019 Act, 1961. Therefore, in case the income of the victim is only from “salary”, the presumption would be that the employer under Section 192(1) of the Income Tax Act, 1961 has deducted the tax at source from the employee's salary. In case if an objection is raised by any party, the objector is required to prove by producing evidence such as LPC to suggest that the employer failed to deduct the TDS from the salary of the employee. However, there can be cases where the victim is not a salaried person i.e. his income is from sources other than salary, and the annual income falls within taxable range, in such cases, if any objection as to deduction of tax is made by a party then the claimant is required to prove that the victim has already paid income tax and no further tax has to be deducted from the income.''

13. Therefore, this Court partly modified the award as below:-

            Sl.                       Heads                 Amount            Amount              Award
            No.                                          awarded by the     Awarded by          confirmed/
                                                           Tribunal          this Court          reduced
            1       Loss of Income                             77,00,000       61,60,000     Reduced by
                                                                             [77,00,000 – Rs.15,40,000/-
                                                                                    20%]
            2       Loss of consortium                            40,000              40,000       Confirmed
            3       Funeral expenses                              15,000              15,000       Confirmed
            4       Loss of Articles                              15,000              15,000       Confirmed
                                       Total                   77,70,000        62,30,000         Reduced by
                                                                                               Rs.15,40,000/-




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                                                                        C.M.A.(MD)Nos.549 and 347 of 2019

                            14. In the result,

(i) C.M.A.(MD)No.347 of 2019 filed by the Insurance Company is partly allowed and the award and decree insofar as compensation is reduced to Rs.62,30,000/- with interest at 7.5% p.a. from the date of petition till the date of realisation. The Insurance Company is granted eight weeks time to deposit the compensation amount, less the amount already deposited, if any, and on such deposit, the claimants are entitled to withdraw the compensation amount as under:-

(i) first claimant – Rs.50,00,000/- along with accrued interest; and

(ii) second claimant – Rs.12,30,000/- along with accrued interest, less the amount if any, already withdrawn. No costs. Consequently, connected Miscellaneous Petition is closed.

(ii) C.M.A.(MD)No.549 of 2019 filed by the claimants stands dismissed.

No costs.

            NCC      : Yes / No                                            [G.J., J.] [S.M., J.]
            Index    : Yes / No                                                   02.02.2023
            Internet : Yes / No
            SMN2
            To

            1.The Judge,
              Motor Accident Claims Tribunal,
              Kulithalai, Karur.

            2.The Section Officer,
              Vernacular Records,
              Madurai Bench of Madras High Court,
              Madurai.
https://www.mhc.tn.gov.in/judis


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                                                     C.M.A.(MD)Nos.549 and 347 of 2019

                                                       DR.G.JAYACHANDRAN, J.
                                                                       and
                                                            SUNDER MOHAN, J.

                                                                               SMN2




                                  PRE-DELIVERY COMMON JUDGMENT MADE IN
                                              C.M.A.(MD)Nos.549 and 347 of 2019




                                                               DATED : 02.02.2023
https://www.mhc.tn.gov.in/judis


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