The Divisional Manager vs Radha Saiprasad on 7 February, 2012

[Cites 11, Cited by 1]

Madras High Court

The Divisional Manager vs Radha Saiprasad on 7 February, 2012

Challenging the award dated 26.10.2010 passed in M.C.O.P.No.258 of 2009 on the file of Motor Accident Claims Tribunal (III Additional District Court), Pondicherry awarding a compensation of Rs.60,40,000/- for the death of R.Saiprasad, the Appellant Insurance Company has preferred this appeal disputing the quantum of compensation.

2. The deceased R.Saiprasad was working as Accounts Officer BSNL, Civil Division, Pondicherry. On 23.12.2008 1.30 p.m, Saiprasad was returning to his house for lunch from the office and parked his vehicle Hero Honda Dawn bearing Registration No.TN-07-AA-8917 in front of his house and while he was looking on either side of the road to come to his house in the opposite direction by proceeding from south to north direction, a Scorpio car bearing Regn.No.PY-01-AN-6666 owned by the 5th respondent was driven in a rash and negligent manner without horn proceeding from west to east direction, hit against Saiprasad. Due to the accident, Saidprasad sustained multiple injuries and was immediately taken to JIPMER Hospital, where he was declared "dead". A Criminal case in Crime No.1096 of 2008 of Traffic Police Station, Pondicherry was registered against driver of Scorpio Car. Alleging that the accident was due to rash and negligent driving of the car driver and also due to death of Saiprasad and the family has lost the support, the claimants have filed the Claim Petition claiming compensation of Rs.80,20,000/-.

3. Before the Tribunal, the 5th respondent owner remained exparte. Insurance Company has resisted the claim petition contending that while crossing the road, the deceased should have taken due care and caution and the accident was solely due to the negligence on the part of the deceased and not due to the negligence of the car driver. The Insurance Company has also raised objection regarding the age, avocation and also the salary of the deceased Saiprasad.

4. Before the Tribunal, on behalf of the claimants, the 1st respondent/1st claimant examined herself as P.W.1, S.N.Pillai, Accounts Officer from BSNL, Civil Division, Pondicherry was examined as P.W.2 and Ex.A.1 to Ex.A.29 were marked. No oral and documentary evidence was adduced by the appellant Insurance Company.

5. Even though the claimants have claimed compensation of Rs.80,20,000/-, in his written arguments, the claimants' counsel restricted their claim to a sum of Rs.68,81,290/- instead of Rs.80,20,000/-.

6. Upon consideration of oral and documentary evidence, Tribunal held that the accident was due to rash and negligent driving of 5th respondent's car driver and insured 5th respondent and insurer appellant Insurance Company are jointly and severally liable to pay the compensation.

7. On the basis of Ex.A.29, taking the salary of the deceased at Rs.43,858/- per month and giving 25% for future prospects, and adopting multiplier 15, the Tribunal has awarded Rs.60,00,000/- as compensation for loss of dependency. Adding conventional damages, the Tribunal has awarded total compensation of Rs.60,40,000/-.

8. It is not necessary for us to refer to the manner of accident and as to who was responsible for the accident and fastening of liability upon the owner of the car and the appellant Insurance Company. It is for the reasons that on those aspects Tribunal has recorded findings in favour of the claimants and in this appeal those findings are not under challenge. Only the quantum of compensation is under challenge.

9. Mr.N.Vijayaraghavan, learned counsel appearing for appellant has contended that the Tribunal had erred in taking into consideration the revised pay of Rs.43,858/- and it is impermissible in law to take into consideration the effect of revision in the scale of pay in the subsequent dates and the Tribunal erred in adopting 25% for future prospects based on future revision of the salary i.e., Rs.43,858/-. The learned counsel would further contend that the Tribunal ought to have taken the actual salary drawn by the deceased at Rs.38,934/-.

10. The learned counsel for respondents/claimants would contend that even though there was revision of pay subsequently, the revision of pay was given retrospective effect from 1.1.2007 and therefore it must be deemed that the actual salary drawn by the deceased Saiprasad was only Rs.43,858/- as per Ex.A.29 pay details and Tribunal has rightly taken the same as the actual salary drawn by the deceased. The learned counsel would further contend that as per the judgment of the Supreme Court in SARLA VERMA (SMT) AND OTHERS VS. DELHI TRANSPORT CORPORATION AND ANOTHER, ((2009) 6 SCC 121), the Tribunal ought to have given an addition of 30 percent for future prospects and the quantum of compensation awarded by the Tribunal at Rs.60,40,000/- warrants no interference.

11. SALARY:- Deceased Saiprasad was working as Accounts Officer, (Civil) in BSNL Civil Division in Pondicherry and his actual gross salary in December 2008 is Rs.38,934/-. Ex.A.24 is the Pay Certificate, wherein the pay particulars of Saiprasad were stated as follows:

Salary Deductions Particulars Rs.

Particulars Rs.

Pay 15100 GPF Subs.

4500

DA 9196 GSLI 315 HRA 1699 Welfare 15 PP 300 Income Tax 2000 Tr.Allow 800 HBA INT. (DOT) 2500 Diet 295 Pro.Up.Gr.AI.

295


DP
7550


CCA
120


MRS
3579


Gross Pay              Rs.38,934
Deductions                  Rs.9,330

After deductions, his take home salary was Rs.29,604/-. S.N.Pillai, the Accounts Officer, BSNL Civil Division, Pondicherry was examined as P.W.2. In his evidence, P.W.2 has stated that subsequently pay received by the deceased was revised and as per the revised scale of pay, the salary of the deceased was revised as Rs.43,858/-. Based upon Ex.A.29 Pay Details, the Tribunal has taken the salary of the deceased at Rs.43,858/- and thereafter added 25% for future prospects. Contention of appellant is that it is impermissible in law to take into consideration the revision in scale of pay and thereafter adding 25 percent for future prospects. Placing reliance upon an unreported decision of Division Bench of this Court in C.M.A.No.2385 of 2010 (THE ORIENTAL INSURANCE CO.LTD. VS. P.PRIYA PRASAD AND OTHERS) (dated 24.11.2011), the learned counsel for appellant has contended that even though the pay Commission Recommendation was implemented subsequently with retrospective effect, the Tribunal ought not to have taken it as basis for fixing the monthly income and thereafter added 25 percent for future prospects. The contention of appellant Insurance Company is that as per the ratio of the decision in Sarla Verma's case ((2009) 6 SCC 121), the actual salary of the deceased has to be taken giving addition for future prospects or the revision of pay has to be taken into account and there cannot be any addition to the revised pay for future prospects.

12. Referring to the decisions of the Supreme Court in ORIENTAL INSURANCE CO.LTD. VS JASHUBEN AND OTHERS, (2008 ACJ 1097) and SARLA VERMA AND OTHERS VS. DELHI TRANSPORT CORPORATION AND ANOTHER, ((2009) 6 SCC 121), in CMA 2385 of 2010 (dated 24.11.2011), the Division Bench has held as under:

"17. In 2008 ACJ 1097 (Oriental Insurance Co. Ltd. vs. Jashuben and Others), the Apex Court held as follows:

'25. We, therefore, are of the opinion that what would have been the income of the deceased on the date of retirement was not a relevant factor in the light of peculiar facts of this case and thus, the approach of the Tribunal and the High Court must be held to be incorrect. It is impermissible in law to take into consideration the effect of revision in scale of pay w.e.f. 1.1.1997 or what would have been the scale of pay in 2002.

........

19. In 2009 ACJ 1298 (Sarla Verma and Others vs. Delhi Transport Corporation and another), the Apex Court has clearly laid down that any future revision in the salary should not be taken into consideration for fixing the monthly income of the deceased but the actual salary that was being received by the deceased on the date of the death should be taken into consideration."

There is no quarrel over the proposition that the actual salary that was being received by the deceased should be taken into consideration.

13. As pointed out earlier, as per Ex.A.24, even though the actual gross pay of the deceased was Rs.38,934/-, the same was revised with retrospective effect. By perusal of Ex.A.27 Office Order of BSNL in No.1-50/2008-PAT (BSNL) dated 5.3.2009, revision in pay was given effect from 1.1.2007. The date of accident was on 23.12.2008. Had the deceased been alive, he would have received the actual salary at Rs.43,858/-. Of course, it is impermissible in law to take into consideration the subsequent revision in scale of pay. But when revision in the scale of pay has been given with retrospective effect, the same has to be taken into account fixing the actual salary as per the revised scale. In our considered view, the Tribunal has rightly fixed the income of the deceased at Rs.43,858/-.

14. As per Ex.A.29, after implementation of the Pay Revision, the pay details of deceased Saiprasad are as follows:

Salary Particulars Rs.

PAY 33530 DA 4330 HRA 2515 Travelling Allowance 1400 Personal Pay 300 DIET 295 PROF.ALLOW 295 MRS 1193 TOTAL 43858

15. TRAVELLING ALLOWANCE AND DIET:- It is fairly well settled that the compensation awarded by the Tribunals must be just compensation to mitigate hardship that has been caused due to death of bread winner of the family, legal representatives are entitled to receive just compensation. Section 168 of the Act uses the word just compensation which should be ascertained in determining the income. Court cannot lose sight of various allowances/perks paid by private sector companies for the benefit of the entire family.

16. In our considered view, the Travelling allowance and diet allowance are exclusively meant for the deceased. The diet allowance was meant for the deceased to take his diet in the work place. Likewise, travelling allowance was intended for the deceased to meet the travelling expenses in the course of his official duty. Such travelling allowance and dietary allowance were meant only for the deceased employee and cannot be said to be meant for the benefit of the family. In such circumstances, travelling allowance and diet allowance intended for the benefit of the deceased Saiprasad are to be deducted from the salary.

17. MEDICAL REIMBURSEMENT SCHEME:- Learned counsel for the appellant has contended that as per the Revised Pay, deceased Saiprasad was entitled to medical reimbursement of Rs.1,193/-. The learned counsel for appellant Insurance Company submitted that the medical reimbursement is only for reimbursement of medical expenses only to the extent of the amount spent and therefore the amount of entitlement towards medical reimbursement cannot be taken as the income of the deceased.

18. Contending that the medical allowance and other amounts paid to the deceased by way of perks should be included for computation of his monthly income, the learned counsel for claimants placed reliance upon a decision of Supreme Court in the case of SUNIL SHARMA VS. BACHITAR SINGH ((2011) 11 SCC 425). Referring to the decision of NATIONAL INSURANCE CO.LTD. VS. INDIRA SRIVASTAVA, ((2008) 2 SCC 763) and observing that the Dearness allowance, House Rent Allowance and Medical Allowance should be included for computation of income of the deceased, the Supreme Court held as under:

"6. In National Insurance Co. Ltd. v. Indira Srivastava ((2008) 2 SCC 763), S.B. Sinha, J. has observed that:

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.

7. His Lordship also stated that if some facilities were being provided whereby the entire family stood to benefit, the same must be held to be relevant for the purpose of computation of total income on the basis of which the amount of compensation payable for the death of the kith and kin of the applicants was required to be determined. This Court held that: (Indira Srivastava case ((2008) 2 SCC 763), SCC p.768, para 12) 12. superannuation benefits, contributions towards gratuity, insurance of medical policy for self and family and education scholarship were beneficial to the members of the family.

8. This Court clarified that by opining that: (Indira Srivastava case, ((2008) 2 SCC 763), SCC p.771, para 17) just compensation must be determined having regard to the facts and circumstances of each case. The basis for considering the entire pay-packet is what the dependents have lost [in view of] death of the deceased. It is in the nature of compensation for future loss towards the family income. and that: (Indira Srivastava case ((2008) 2 SCC 763), SCC p.772, para 19)

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 family as contradistinguished 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.

9. In Raghuvir Singh Matolya v. Hari Singh Malviya ((2009) 15 SCC 363) this Court has observed that dearness allowance and house rent allowance should be included for computation of income of the deceased."

19. Of course, the amount of medical reimbursement was paid only in case of amount spent for medical expenses. Even though the medical reimbursement/medical expenses was mainly for the benefit of the employee, it would also include the medical reimbursement of the dependents. Following the ratio of the above judgment, we are of the view that the medical allowance should be taken into consideration in calculation of the income of the deceased.

20. As discussed earlier, Travelling Expenses (Rs.1,400/-) and Diet Allowance (Rs.295), totalling Rs.1,695/- cannot be taken into consideration in calculation of the income of the deceased. But the amount paid towards medical reimbursement has to be taken into consideration in computation of the income of the deceased. The income of the deceased per month is thus fixed at Rs.42,163/- as under:

Revised Salary : Rs.43,858.00 Traveling Expenses ) and diet ) - : Rs. 1,695.00

------------------

		Income per month:	   Rs.42,163.00 
						-----------------

The annual income of deceased Saiprasad is thus calculated at Rs.5,05,956/- (Rs.42,163/- x 12).

21. FUTURE PROSPECTS:- In BIJOY KUMAR DURGA VS. BIDYA DHAR DUTTA AND OTHERS, ((2006) 3 SCC 242), while arriving at loss of income, it was held by the Supreme Court that the future prospects has to be considered. In the case of R.K.MALLIK AND ANOTHER VS. KIRAN PAL AND ANOTHER (2009 (8) Scale 451), the Supreme Court while awarding compensation to the parents of the death of school children, held that:

''It is well settled legal principles that in addition to awarding the compensation for pecuniary losses, the compensation must also be granted with regard to the future prospects of the children. It is incumbent upon the Court to consider the said aspect while awarding the compensation''.

22. Observing that the future prospects of the deceased is one of the vital aspects to be considered by the Tribunal, in Sarla Verma's case ((2009) 6 SCC 121), the Supreme Court held that though the evidence may indicate a different percentage of increase, it is necessary to standardise the addition to avoid different yardsticks being applied or different methods of calculation being adopted and observed as under:

"24. In Kerala SRTC v. Susamma Thomas, (1994) 2 SCC 176, this Court increased the income by nearly 100%, in Sarla Dixit v. Balwant Yadav, (1996) 3 SCC 179 the income was increased only by 50% and in Abati Bezbaruah v. Geological Survey of India, (2003) 2 SCC 148, the income was increased by a mere 7%. In view of the imponderables and uncertainties, we are in favour of adopting as a rule of thumb, an addition of 50% of actual salary to the actual salary income of the deceased towards future prospects, where the deceased had a permanent job and was below 40 years. (Where the annual income is in the taxable range, the words actual salary should be read as actual salary less tax). The addition should be only 30% if the age of the deceased was 40 to 50 years. There should be no addition, where the age of the deceased is more than 50 years. Though the evidence may indicate a different percentage of increase, it is necessary to standardise the addition to avoid different yardsticks being applied or different methods of calculation being adopted. Where the deceased was self-employed or was on a fixed salary (without provision for annual increments, etc.), the courts will usually take only the actual income at the time of death. A departure therefrom should be made only in rare and exceptional cases involving special circumstances."

23. Though the deceased is in the age group of 40-50 years, pointing out that the Pay has been fixed in the revised scale, the Tribunal has allowed addition of 25% towards future prospects instead of considering addition of 30% towards future prospects. As seen from Ex.A.14 -SSLC certificate of the deceased and Ex.A.8 driving licence, the date of birth of deceased was 03.06.1965 and at the time of accident the deceased was aged 43 years. As per the Sarla Verma's case ((2009) 6 SCC 121), it is permissible to add 30% for future prospects. Adding 30% for future prospects, per annum, the increase is fixed at Rs.1,51,786 (Rs.42163 x 30/100 x 12). Thus, the total annual income of the deceased is calculated at Rs.6,57,742/-.

24. INCOME-TAX:- In the case of SHYAMWATI SHARMA AND OTHERS VS. KARAM SHARMA AND OTHERS, (2010 ACJ 1968), the Supreme Court has laid down that proper deduction should be made towards income tax. In Ex.A.4, it is stated that the deceased was paying Rs.2,000/- per month towards income-tax on Rs.38,934/-. The Tribunal has held for the revised pay of Rs.43,858/- the deceased would have paid Rs.3,858/- towards income-tax. It is not known as to how the Tribunal has arrived at Rs.3,858/- as the amount of income-tax per month. Be that as it may, in NATIONAL INSURANCE CO.LTD. VS. INDIRA SRIVASTAVA, ((2008) 2 SCC 763), the Supreme Court has held that the tax payable has to be deducted from the compensation. Now the question to be considered is as to what is the deduction to be made towards income-tax. As per the rates then prevailing, standard deduction to be given is Rs.1 lakh. From Ex.A.24, it is seen that the deceased was paying Rs.4,500/- per month towards G.P.F.subscription i.e., Rs.54,000/- per annum was paid towards G.P.F.contribution. Both the standard deduction of Rs.1,00,000/- and G.P.F.contribution of Rs.54,000/- per annum, totalling Rs.1,54,000/- have to be deducted from the the total income. Thus, the taxable income is Rs.5,03,742/-. (Rs.6,57,742 Rs.1,54,000). Income-tax payable on the above is deducted on 20 percent of Rs.5,03,742 i.e., Rs.1,00,748.The net annual income of the deceased is calculated at Rs.5,56,994/- (Rs.6,57,742- Rs.1,00,748).

25. DEDUCTION FOR PERSONAL EXPENSES:- Taking the income of the deceased at Rs.40,000/-, adding 25% for future prospects, and fixing the monthly income of the deceased at Rs.50,000/- per month, the annual income of the deceased was arrived by the Tribunal at Rs.6,00,000/- and the Tribunal has deducted one third for personal expenses. The learned counsel for claimants contended that as per the decision of the Sarla Verma's case ((2009) 6 SCC 121), when the deceased was married having wife and children, deduction towards personal and living expenses should have been one fourth and the Tribunal was not right in deducting one third for personal expenses.

26. In number of decisions, the Supreme Court has taken a consistent view that one fourth deduction has to be made for personal expenses. In BILKISH vs. UNITED INDIA INSURANCE COMPANY LTD. = (2008)4 SCC 259 = (2008 (1) TN MAC 307 (S)), the Supreme Court has taken the view that the deceased would have spent 1/3rd towards personal expenses and would have contributed 2/3rd of his income to his family.

27. In Oriental Insurance Company Ltd., -Vs- Deo Patodi and others reported in 2009 (8) Scale 194, it has been held by the Hon'ble Supreme Court that deduction of 1/3rd towards personal expenses is the ordinary rule in India. In Fakeerappa and another -Vs- Karnataka Cement Pipe Factory and others,((2004) 2 SCC 473), the Hon'ble Supreme Court deducted only 1/3rd towards personal expenses from the income of the bachelor. Similar is the view taken by the Hon'ble Supreme Court in Bangalore Metropolitan Transport Corporation -Vs- Sarojamma and another ((2008) 5 SCC 142). The said ratio adopted by the Hon'ble Supreme Court in a number of cases would demonstrate the normal rule in India is deduction of 1/3rd amount from monthly income towards personal expenses.

28. Deduction of 1/3rd for personal expenses in the net annual income of deceased comes to Rs.1,85,664/-. Annual dependency is thus calculated at Rs.3,71,330/- (Rs.5,56,994 Rs.1,85,664/-).

29. MULTIPLIER:- At the time of accident, the deceased was aged 43 years. As per the Second Schedule, the multiplier to be adopted is 15 years. The learned counsel for respondents/claimants contended that the deceased would have continued in service for another 15 years and as per Second Schedule, the Tribunal has rightly adopted multiplier 15.

30. As per the decision in Sarla Verma's case ((2009) 6 SCC 121), the proper multiplier to be adopted is 14. Following the judgment of Sarla Verma's case ((2009) 6 SCC 121), when we have allowed 30% addition for future prospects, it would be appropriate to follow the ratio of the said decision in adopting the multiplier also. By applying the ratio of the judgment in Sarla Verma's case ((2009) 6 SCC 121), it is appropriate to adopt multiplier 14 instead of 15. The total compensation for loss of dependency is accordingly calculated at Rs.51,98,620 (Rs.3,71,330 x 14).

31. CONVENTIONAL DAMAGES:- The Tribunal has awarded Rs.10,000/- for "loss of consortium". The 1st respondent/1st claimant has lost her husband at the age of 38 years. Hence the compensation for "loss of consortium" is enhanced to Rs.25,000/-. The Tribunal has awarded Rs.20,000/- for "loss of love and affection" for four persons (Rs.5,000/- to each) and the same is enhanced to Rs.30,000/-. For "funeral expenses", the Tribunal has awarded Rs.10,000/- and the same is maintained. Under the head of "loss of estate", the Tribunal has not awarded any amount. Therefore, under the head of "loss of estate", a sum of Rs.20,000/- is awarded. Accordingly, conventional damages of Rs.85,000/- is awarded.

32. Thus, the total compensation awarded to claimants is reduced to Rs.52,83,620/- as under:

Sl.No. Particulars Amount

1.

Revised Monthly Income of deceased Rs.42,163.00

2. Annual Income Rs.5,05,956.00

3. Future Prospectus Rs.1,51,786.00

4. Total Annual Income Rs.6,57,742.00

5. Income Tax exemption (Standard Deduction -Rs.1,00,000/- and G.P.F.Contribution Rs.54,000/ (Rs.4,500 x 12) Rs.1,54,000.00

6. Taxable Income (Item No. 2 3) Rs.5,03,742.00

7. Income Tax 20% of the above Rs.1,00,748.00

8. Net Annual Income (Rs.6,57,742 Rs.1,00,748) Rs.5,56,994.00

9. Deduction 1/3rd for Personal expenses Rs.1,85,664.00

10. Loss of Annual Dependency Rs.3,71,330.00

11. As per Sarla Verma case multiplier 14 (Rs.3,71,330 x 14) Rs.51,98,620

12. Consortium Rs.25,000.00

13. Loss of Love and Affection Rs.30,000.00

14. Funeral Expenses Rs.10,000.00

15. Loss of Estate Rs.20,000.00 Total:

Rs.52,83,620.00 The reduced compensation of Rs.52,83,620/- shall be apportioned amongst the claimants in the same proportion as ordered by the Tribunal. The Tribunal has awarded compensation with interest at the rate of 7.5% per annum and the same is maintained.

33. In the result, the Civil Miscellaneous Appeal is allowed in part and the compensation amount awarded by the Motor Accident Claims Tribunal -cum- III Additional District Court, Pondicherry in M.C.O.P.No.258 of 2009 is reduced to Rs.52,83,620/- together with interest at 7.5% per annum from the date of claim petition. The reduced compensation of Rs.52,83,620/- shall be apportioned amongst the claimants in the same proportion as ordered by the Tribunal.

34. As per the order dated 2.2.2011, the appellant - Insurance Company has deposited 50 percent of the compensation amount along with proportionate interest. As per the order dated 21.4.2011, the 1st and 4th claimants (wife and mother of the deceased) have withdrawn the proportionate compensation amount ordered to them along with the proportionate interest accrued thereon representing 50% of the total compensation amount. The 1st and 4th claimants were also permitted to withdraw entire cost deposited by the appellant -Insurance Company. The Appellant Insurance Company is directed to deposit the balance compensation of the reduced compensation along with proportionate accrued interest within a period of eight weeks from the date of receipt of copy of the order. On such deposit, claimants 1 and 4 (wife and mother of deceased Saiprasad) are permitted to withdraw their respective apportioned share in the reduced compensation along with the proportionate accrued interest. In so far as the apportioned shares of minors in the reduced compensation of the minor claimants, the same shall be invested in a nationalised Bank till the minors attain majority. The 1st claimant - mother of the minor claimants is permitted to withdraw the accrued interest of the minors share once in three months directly from the Bank. However, there is no order as to costs. Consequently, the connected miscellaneous petition is closed.

(R.B.I.,J.) (S.V.,J.) 07.02.2012 Index:Yes Internet:Yes usk Copy to:

Motor Accidents Claims Tribunal, III Additional District Court, Pondicherry R.BANUMATHI,J.

AND S.VIMALA,J.

usk PRE-DELIVERY JUDGMENT IN C.M.A.NO.292 OF 2011 07.02.2012

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