ARUN KUMAR AGRAWAL & Anr. v. NATIONAL INSURANCE COMPANY & Ors.

(Supplementing)

Despite the clear constitutional mandate to eschew H 308 SUPREME COURT REPORTS [2010] 9 S.C.R. A discrimination on the grounds of sex, in Article 15(1) of the Constitution, in its implementation, there is a distinct gender bias against women in various social welfare legislations and also in judicial pronouncements. [Para 2] [340-E-F] B

Clause 6 of the Second Schedule to the Motor Vehicles Act, 1988 provides for notional income of those who had no income prior to accident. Clause 6 has been divided into two classes of persons, (a) non-earning persons, and (b) spouse. Insofar as the spouse is C concerned, the income of the injured in fatal and non-fatal accident has been categorized as 1/3rd of the income of the earning and surviving spouse. It is, therefore, assumed if the spouse who does not earn, which is normally the woman in the house and the home-maker, D such a person cannot have an income more than 1/3rd of the income of the person who is earning. This categorization has been made without properly appreciating the value of the services rendered by the home-maker. To value the income of the home-maker as E one-third of the income of the earning spouse is not based on any apparently rational basis. [Para 3] [340-G H; 341-A-C]

In the Census of 2001, it appears that those who F are doing household duties like cooking, cleaning of utensils, looking after children, fetching water, collecting firewood have been categorized as non-workers and equated with beggars, prostitutes and prisoners who, according to census, are not engaged in economically G productive work. As a result of such categorization about 36 crores (367 million) women in India have been classified in the Census of India, 2001 as non-workers and placed in the category of beggars, prostitutes and prisoners. This entire exercise of Census operation is done under an Act of Parliament. The approach of H ARUN KUMAR AGRAWAL v. NATIONAL INSURANCE 309 COMPANY equating women, who are home-makers, with beggars, A prostitutes and prisoners as economicaliy non productive workers by statutory authorities betrays -a totally insensitive and callous approach towards the· dignity of labour so far as women are concerned and is also clearly indicative of a strong gender bias against B women. It is thus clear that in independent India also, the - process of categorizing is dominated by concepts which were prevalent in colonial India and no attempt was made,· to restructure those categories with a gender sensitivity. which is the hallmark in the Constitution of India. [Paras c 4, 7 and 8] [341-D-E; 342-B-D]

Women are generally engaged in home-making, bringing up children and also in production of goods and services which are not sold in the market but are - consumed at the household level. Thus, the work of D women mostly goes unrecognized and they are never valued. Therefore, in the categorization by the Census, what is ignored is the well known fact that women make· significant contribution at various levels including agricultural production by sowing, harvesting;. E transplanting and also tending catties and by cooking/ and delivering the food to those persons who are on the field during the agriculture season. [Paras 10 and 11] [342-E-H; 343-A]

The gender bias has also been reflected in the judgment of the High Court whereby the High Court has accepted the tribunal's reasoning of assessing the income of the victim at Rs.1,250/- per month. Even if one goes by the formula under clause (6) of the Second · G Schedule, income of the victim comes to Rs.5,000/- per month. [Para 13] [343-!3] F National Insurance Co. Ltd. vs. Minor Deepika rep. by her guardian _and next friend, Ranganathan and Ors. (2009) 6 MLJ 1005 - referred to. H 310 SUPREME COURT REPORTS [2010] 9 S.C.R. A

It has to be recognized that the services produced in the home by the women for other members of the household are an important and valuable form of production. It is possible to put monetary value to these services. Alternative to imputing money values is to B measure the time taken to produce these services and compare these with the time that is taken to produce goods and services which are commercially viable. One has to admit that in the long run, the services rendered by women in the household sustain a supply of labour c to the economy and keep human societies going by weaving the social fabric and keeping it in good repair. If these services are taken for granted and no value is attached to this, this may escalate the unforeseen costs in terms of deterioration of both human capabilities and 0 social fabric. [Paras 23 and 25] [346-G-H; 347-E-F] .

The time spent by women in doing household work as home-makers is the time which they can devote to paid work or to their education. This lack of sensitiveness and recognition of their work mainly E contributes to women's high rate of poverty and their consequential oppression in society, as well as various physical, social and psychological problems. The courts factor these considerations F housewives who are victims of road accident and quantifying the amount in the name of fixing 'just compensation'. [Para 26] [347-G-H; 348-A] in assessing compensation tribunals should do well

Parliament is required to have a rethinking for G properly assessing the value of home-makers and householders work and suitably amending provisions of Motor Vehicles Act and other related laws for giving compensation when the victim is a woman and a home-maker. Amendments in matrimonial laws may H ARUN KUM,A.R AGRAWAL v NATIONAL INSURANCE 311 COMPANY also be made in order to give effect to the mandate of A Article 15(1) in the Constitution. [Para 28] [348-D] Case Law Reference: In the Judgment of G.S. Singhvi, J: (2004) 5 sec 385 (2007) 5 sec 428 (1977) 2 sec 441 (1987) 3 sec 234 2009 (6) sec 121 (2009) 13 sec 654 (2009) 13 sec 110 Referred to. Para 15 Referred to. Para 16 Referred to. Para 16 Referred to. Para 16 Referred to. Para 17 Referred to. Para 18 Referred to. Para 18 (1915) 1 K.B. 627 Referred to. Para 20 (1976) 1 W.L.R. 305 Referred to. Para 21 (1977) 2 All ER 52 Referred to. Para 22 2001 (8) sec 197 (2001) 8 sec 151 (2003) 8 sec 731 Referred to. Para 25 Referred to. Para 26 Referred to. Para 26 1989 ACJ 542 Referred to. Para 27 Manu-JK-0180-2002 Referred to. Para 28 (2009) ACJ 1373 Referred to. Para 29 B c D. E F (2003) VII AD (Delhi) 222 Referred to. Para 30 G 96 (2002) DL T 829 Referred to. 112 (2004) DLT 417 Referred to. Para 30 Para 30 112 (2004) DLT 478 Referred to. Para 30 H 312 SUPREME COURT REPORTS (2010] 9 S C.R. A B c 1994 (2) sec 176 1996 (4) sec 362 2009 (6) sec 121 Relied on. Relied on. Relied on. Para 32 Para 32 Para 32 In the Judgment of Asok Kumar Ganguly, J: (2009) 6 MLJ 1005 Referred to. Para 13 CIVIL APPELLATE JURISDICTION : Civil Appeal No. 5843 of 2010. From the Judgment & Order dated 30.4.2004 of the High Court of Judicature at Allahabad in First Appeal from Order number 2408 of 2003. Sanjay Singh, Sharve Singh, Ugra Shankar Prasad for the D Appellant Hetu Arora, Pramod Dayal, Nikunj Dayal Arun Kumar Beriwal, Vishnu Mehra (for B.K. Satija) for the Respondent. The Judgment of the Court was delivered by G.S. SINGHVI, J. 1. Leave granted.

2. What should be the criteria for determination of the compensation payable to the dependents of a woman who dies in a road accident and who does not have regular source of income is the question which arises for determination in this appeal filed against the judgment of the Division Bench of Allahabad High Court which declined to enhance the compensation awarded to the appellants by Motor Accident Claims Tribunal, Shahjahanpur (for short, 'the Tribunal'). E F G

3. Smt. Renu Agrawal (wife of appellant No.1 - Arun Kumar Agrawal and mother of appellant No.2 - Suwarna Agrawal) died in a road accident when the car driven by appellant No.1 was hit by truck bearing No.UGK-489 in village H Pachkora, District Hardoi, U.P. The appellants filed a petition ARUN KUMAR AGRAWAL v. NATIONAL INSURANCE 313 COMPANY [G.S. SINGHVI, J.} under Section 166 of the Motor Vehicles Act, 1988 (for short, · A 'the Act') for award of compensation of Rs.19,20,000/- by asserting that the accident was caused due to rash and negligent driving of the truck which was owned by respondent No.2, Mohd. Farooq and was ,insured with respondent No.1. They pleaded that the deceased was 39 years of age at the 8 time of accident and due to her death, life of appellant No.1 had become miserable inasmuch as being a government servant he was unable to look after his minor child. They further pleaded that the deceased used to look after domestic affairs of the family and both the appellants have been deprived of the C care, love and affection of the deceased and the comfort of her company.

4. The owner of the truck (respondent No.2), its driver (respondent No.4) and the insurance company (respondent No.1) contested the claim. All of them denied that the accident D was caused due to rash and negligent driving of the truck by respondent No.4. According to them, appellant No.1 was responsible for the accident. They disputed the dependency of the appellants and the quantum specified in the claim petition. Respondent No.1 further pleaded that it was not liable to pay E compensation because driving licence of respondentNo.4 was not valid; that the owner had not complied with Section 64 VB of the Insurance Act and that the uwner and the insurer of Tata Sumo UP-65/4559, which was also involved in the accident were not rr.ade parties. F

5. After considering the pleadings and evidence of the parties, the Tribunal held that the accident was caused due to rash and negligent driving of the truck by respondent No.4 and being legal heirs of the deceased, the appellants are entitled to compensation. While dealing with the issue relating to the G quantum of compensation, the Tribunal extensively referred to the statement of appellant No.1, who stated that the deceased was earning Rs.50,000/- by engaging herself in paintings and H 314 SUPREME COURT REPORTS (2010] 9 S.C.R. A handicrafts. The Tribunal held that the deceased was deeply involved in the family affairs and after her death, the entire family was broken and as a result of that, working capacity of appellant No.1 was decreased. The Tribunal noted that at the time of accident monthly income of appellant No.1 was Rs.15,416/- and 8 held that in view of clause 6 of Second Schedule of the Act, the income of the deceased could be assessed at Rs.5,000/ per month (Rs.60,000/- per annum) and after making deduction of Rs.20,000/- towards personal expenses of the deceased and applying the multiplier of 15, the total loss of dependency comes to Rs.6 lacs. However, instead of awarding that amount as compensation, the Tribunal reduced the same to Rs.2,50,000/ - by making the following observations: C "The claimants are entitled to this amount of compensation but keeping in mind that the deceased was actually not an earning member and this is only based on notional income. The amount of compensation is too much and as such a lesser multiplier could be adopted in the present case. In the circumstances of this case, the claimants are entitled to Rs.2,50,000/- as compensation from the insurance company. This issue is accordingly decided with the above observation. "

6. The High Court dismissed the appeal preferred by the appellants by making the following observations: "At the time of accident claimant No.1 Arun Kumar Agrawal was getting monthly salary of Rs.15,416/- and at time of filing the appeal Rs.24,042/- per month. Claimant Arun Kumar Agarwal and his son aged about seven years are the only legal representatives of the deceased. Neither of the claimants were dependents upon the deceased. The services rendered by Renu Agrawal, the deceased as house wife may be estimated at Rs.1250.00 per month and thus the annual contribution by rendering services comes to Rs.15,000/- and applying the multiplier of 15 it comes to Rs.2,25,000/- and adding the amount of D E F G H ARUN KUMAR AGRAWAL v. NATIONAL INSURANCE 315 COMPANY [G.S. SINGHVI, J.] Rs.3000.00 as funeral expenses, Rs.7,000.00 due to loss A of love and affection to the son and Rs.15,000.00 due to loss of comfort consortium, the compensation comes to Rs.2,50,000.00.' Thus, considering all the facts and circumstances, the compensation awarded is just and fair. " ·B

7. Shri Sanjay Singh, learned counsel for the appellant relied upon the judgment of this Court in Lata Wadha and others v. State of Bihar and others (2001) 8 sec 197 and argued that the Tribunal and the High Court committed serious error by not awarding just and fair compensation to the appellants ignoring that the family was not only deprived of the C money which the deceased used to earn from paintings and handicrafts but also of her services as housewife/mother apa·rt from the care, love, affection and comfort of her company. Learned counsel submitted that the award of the Tribunal is liable to be modified because it did not assign any reason for reducing the amount of compensation payable to the appellants in terms of the loss of dependency i.e. Rs.6 lacs. ~earned counsel then argued that both the Tribunal and the High Court erred in refusing to recognize the immense importance of the invaluable services rendered by a housewife/mother to the family throughout her life. Learned counsel finally submitted that even if a housewife/mother doe-; not earn a single penny in material terms, the criteria laid down by the legislature in clause 6 of the Second Schedule appended to the Act should be applied for awarding compensation in petitions filed under ··· F Section 166 of the Act. · E ·D

8. Learned counsel appearing for the respondents supported the award of the Tri~unal and the judgment of the High Court and argued that criteria laid down in Section 163A G of the Act cannot be invoked for awarding higher compensation · to the appellants because they had filed petition under s.ection 166 of the Act. Learned counsel then submitted that no tangible . evidence was produced before the Tribunal to show that the deceased used to earn Rs.50,000/- per annum from paintings ,'H 316 SUPREME COURT REPORTS (2010] 9 S.C.R. A and handicrafts and argued that the said amount was rightly not taken into consideration for the purpose of determination of the compensation payable to the appellants. 8

We have considered the respective submissions. At the outset, we may notice some of the precedents in which guiding principles have been laid down for determination of the compensation payable to the victim(s) of the accident or their legal representatives.

In General Manager Kera/a State Road Transport C Corporation v. Susamma Thomas (Mrs.) and others (1994) 2 SCC 176, this Court considered the legitimacy of multiplier method evolved and applied by the British Courts and approved the same. The relevant paragraphs of that judgment are extracted below: D E F G H "9. The assessment of damages to compensate the dependants is beset with difficulties because from the nature of things, it has to take into account many imponderables, e.g., the life expectancy of the deceased and the dependants, the amount that the deceased would have earned during the remainder of his life, the amount that he would have contributed to the dependants during that period, the chances that the deceased may not have lived or the dependants may not live up to the estimated remaining period of their life expectancy, the chances that the deceased might have got better employment or income or might have lost his employment or income altogether.

10. The manner of arriving at the damages is to ascertain the net income of t~e deceased available for the support of himself and his dependants, and to deduct therefrom such part of his income as the deceased was accustomed to spend upon himself, as regards both self-maintenance and pleasure, and to ascertain what part of his net income the deceased was accustomed to spend for the benefit of the dependants. Then that should be capitalised by ARUN KUMAR AGRAWAL v. NATIONAL INSURANCE 317 COMPANY [G.S. SINGHVI, J.] multiplying it by a figure representing the proper number A of year's purchase.

The multiplier method involves the ascertainment of the loss of dependency or the multiplicand having regard to the circumstances of the case and capitalizing the multiplicand by an appropriate multiplier. The choice of the multiplier is determined by the age of the deceased (or that of the claimants whichever is higher) and by the calculation as to what capital sum, if invested at a rate of interest appropriate to a stable economy, would yield the multiplicand by way of annual interest. In ascertaining this, C regard should also be had to the fact that ultimately the capital sum should also be consumed-up over the period for which the dependency is expected to last. 8

16. It is necessary to reiterate that the multiplier method D is logically sound and legally we/I-established. There are some cases which have proceeded to determine the compensation on the basis of aggregating the entire future earnings for over the period the life expectancy was lost, deducted a percentage therefrom towards E uncertainties of future life and award the resulting sum as compensation. This is clearly unscientific. For instance, if the deceased was, say 25 years of age at the time of death and the life expectancy is 70 years, this method would multiply the loss of dependency for 45 years - virtually adopting a multiplier of 45 - and even if one-third or one-fourth is deducted therefrom towards the uncertainties of future life and for immediate lump sum payment, the effective multiplier would be between 30 and 34. This is wholly impermissible. We are, aware that some G decisions of the High Courts and of this Court as well have arrived at compensation on some such basis. These decisions cannot be said to have laid down a settled principle. They are merely instances of particular awards in individual cases. The proper method of computation is H F 318 SUPREME COURT REPORTS [2010] 9 S.C.R. A B c D the multiplier-method. Any departure, except in exceptional and extraordinary cases, would introduce inconsistency of principle, lack of uniformity and an element of unpredictability for the assessment of compensation. Some judgments of the High Courts have justified a departure from the multiplier method on the ground that Section 11 O B of the Motor Vehicles Act, 1939 insofar as it envisages the compensation to be 'just', the statutory determination of a 'just' compensation would unshackle the exercise from any rigid formula. It must be borne in mind that the multiplier method is the accepted method of ensuring a 'just' compensation which will make for uniformity and certainty of the awards. We disapprove these decisions of the High Courts which have taken a contrary view. We indicate that the multiplier method is the appropriate method, a departure from which can only be justified in rare and extraordinary circumstances and very exceptional cases. " (emphasis supplied)

11. In UP. S. R. T. C. v. Tri/ok Chandra ( 1996) 4 SCC 362, E a three-Judge Bench referred to the principles evolved by British Courts for award of damages and reiterated the multiplier method spelt out in General Manager Kera/a State Road Transport Corporation v. Susamma Thomas (supra). The Court then took note of the stark inconsistencies in the approach F adopted by the motor accident claims tribunals and courts in awarding compensation, referred to the amendment made in the Act in 1994, pointed out the defects in the Second Schedule and observed: G H "15. We thought it necessary to reiterate the method of working out 'just' compensation because, of late, we have noticed from the awards made by tribunals and courts that the principle on which the multiplier method was developed has been lost sight of and once again a hybrid method based on the subjectivity of the Tribunal/Court has surfaced, introducing uncertainty and lack of reasonable uniformity in ARUt'-J KUMAR AGRAWAL v.

NATIONAL INSURANCE 319 COMPANY [GS. SJNGHVI, J.] the matter of determination of compensation. It must be A realised that the Tribunal/Court has to determine a fair . amount of compensation awardable to the victim of an accident which must be proportionate to the injury caused. The two English decisions to which we have referred earlier provide the guidelines for assessing the loss B occasioned to the victims. Under the formula advocated by Lord Wright in Davies, the loss has to be ascertained by first determining the monthly income of the deceased, then deducting therefrom the amount spent on the deceased, and thus assessing the loss to the dependants c of the deceased. The annual dependency assessed in this manner is then to be multiplied by the use of an appropriate multiplier. Let us illustrate: X, male, aged about 35 years, dies in an accident He leaves behind his widow and 3 minor children.

His monthly income was Rs.3500. First, deduct the amount spent on X every month. The rough and ready method hitherto adopted where no definite evidence was forthcoming, was to break up the family into units, taking two units for an adult and one unit for a minor. Thus X and his wife make 2+2=4 units and each minor one unit i.e. 3 units in all, totalling 7 units. Thus the share per unit works out to Rs.3500,7= Rs.500 per month. It can thus be assumed that Rs.1000 was spent on X. Since he was a working member some provision for his transport and out-of-pocket expenses has to be estimated. In the present case we estimate the out-of-pocket expense F at Rs.250. Thus the amount spent on the deceased X works out to Rs.1250 per month leaving a balance of Rs.3500-1250=Rs.2250 per month. This amount can be taken as the monthly loss to X's dependants. The annual dependency comes to Rs.2250x12=Rs.27,000. This G annual dependency has to be multiplied by the use of an appropriate multiplier to assess the compensation under the head of loss to the dependants.

Take .the appropriate multiplier to be 15. The compensation comes to E 0 H 320 SUPREME COURT REPORTS [2010] 9 S.C.R. A B c D E F G H Rs.27,000x15=Rs.4,05,000. To this may be added a conventional amount by way of loss of expectation of life. Earlier this conventional amount was pegged down to Rs.3000 but now having regard to the fall in the value of the rupee, it can be raised to a figure of not more than Rs.10,000. Thus the total comes to Rs.4,05,000+10,000= Rs.4, 15,000.

17. The situation has now undergone a change with the enactment of the Motor Vehicles Act, 1988, as amended by Amendment Act 54 of 1994. The most important change introduced by the amendment insofar as it relates to determination of compensation is the insertion of Sections 163-A and 163-B in Chapter XI entitled "Insurance of Motor Vehicles against Third Party Risks". Section 165-A begins with a non obstante clause and provides for payment of compensation, as indicated in the Second Schedule, to the legal representatives of the deceased or injured, as the case may be. Now if we turn to the Second Schedule, we find a table fixing the mode of calculation of compensation for third party accident injury claims arising out of fatal accidents. The first column gives the age group of the victims of accident, the second column indicates the multiplier and the subsequent horizontal figures indicate the quantum of compensation in thousand payable to the heirs of the deceased victim. According to this table the multiplier varies from 5 to 18 depending on the age group to which the victim belonged. Thus, under this Schedule the maximum multiplier can be up to 18 and not 16 as was held in Susamma Thomas case.

18. We must at once point out that the calculation of compensation and the amount worked out in the Schedule suffer from several defects. For example, in Item 1 for a victim aged 15 years, the multiplier is shown to be 15 years and the multiplicand is shown to be Rs.3000. The total ARUN KUMAR AGRAWAL v. NATIONAL INSURANCE 321 COMPANY [G.S. SINGHVI, J.] should be 3000x15=45,000 but the same is worked out A at Rs.60,000. Similarly, in the second item the multiplier is 16 and the annual income is Rs.9000; the total should have been Rs.1,44,000 but is shown to be Rs.1, 71,000. To put it briefly, the table abounds in such mistakes. Neither the tribunals nor the courts can go by the ready reckoner. B It can only be used as a guide. Besides, the selection of multiplier cannot in all cases be solely dependant on the age of the deceased. For example, if the deceased, a bachelor, dies at the age of 45 and his dependants are his parents, age of the parents would also be relevant in c the choice of the multiplier. But these mistakes are limited to actual calculations only and not in respect of other items. What we propose to emphasise is that the multiplier cannot exceed 18 years' purchase factor. This is the improvement over the earlier position that ordinarily it should not exceed 16. We thought it necessary to state the correct legal position as courts and tribunals are using higher multiplier as in the present case where the Tribunal used the multiplier of 24 which the High Court raised to 34, thereby showing lack of awareness of the background of the E multiplier system in Davies case. " 0 (emphasis supplied)

12. In Sar/a Verma (Smt.) and others v. Delhi Transport Corporation and another (2009) 6 SCC 121, a two-Judge F Bench made threadbare analysis of various issues arising before the tribunals and the courts in cases involving claim for award of compensation under the Act, reiterated the principles laid down in General Manager Kera/a State Road Transport Corporation v Susamma Thomas (supra), referred to the G subsequent judgment in U.P. S.R. T.C. v. Trilok Chandra (supra) and then observed: "16. Compensation awarded does not become "just compensation" merely because the Tribunal considers it to be just. For example, if on the same or similar facts H 322 SUPREME COURT REPORTS [2010] 9 S.C.R. A B c D E F G H (say the deceased aged 40 years having annual income of Rs. 45, 000 leaving his surviving wife and child), one Tribunal awards Rs. 10, 00, 000 another awards Rs. 5, 00, 000, and yet another awards Rs. 1, 00, 000, all believing that the amount is just, it cannot be said that what is awarded in the first case and the last case is just compensation. "Just compensation" is adequate compensation which is fair and equitable, on the facts and circumstances of the case, to make good the loss suffered as a result of the wrong, as far as money can do so, by applying the well-settled principles relating to award of compensation. It is not intended to be a bonanza, largesse or source of profit.

17. Assessment of compensation though involving certain hypothetical considerations, should nevertheless be objective. Justice and justness emanate from equality in treatment, consistency and thoroughness in adjudication, and fairness and uniformity in the decision-making process and the decisions. While it may not be possible to have mathematical precision or identical awards in assessing compensation, same or similar facts should lead to awards in the same range. When the factors/inputs are the same, and the formula/legal principles are the same, consistency and uniformity, and not divergence and freakiness, should be the result of adjudicaticn to arrive at just compensation. In Susamma Thomas, this Court stated: (SCC p.185, para 16) "16 .... The proper method of computation is the multiplier method. Any departure, except in exceptional and extraordinary cases, would introduce inconsistency of principle, lack of uniformity and an element of unpredictability, for the assessment of compensation. "

18. Basically only three facts need to be established by ARUN KUMAR AGRAWAL v. NATIONAL INSURANCE 323 COMPANY [G.S. SINGHVI, J.] the claimants for assessing compensation in the case of death: A (a) age of the deceased; (b) income of the deceased; and (c) the number of dependants. B The issues to be determined by the Tribunal t9 arrive at the loss of dependency are: (i) additions/deductions to be made for arriving at the income; c (ii) the deduction to be made towards the personal living expenses of the deceased; and (iii) the multiplier to be applied with reference to the age of the deceased. 0 If these determinants are standardised, there will be uniformity and consistency in the decisions. There will be lesser need for detailed evidence. It will also be easier for the insurance companies to settle accident claims without E delay. " (emphasis supplied) _In paragraphs 20 to 24, the Court considered the issue of F addition to income for future prospects and observed: "24.

In Susamma Thomas this Court increased the income by nearly 100%, in Sarla Dixit the income was increased only by 50% and in Abati Bezbaruah the income was increased by a mere 7%. In view of the imponderables G 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 H 324 SUPREME COURT REPORTS [2010] 9 S.C.R. A B c 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 bf death. A departure therefrom should be made only in rare and exceptional cases involving special circumstances. " D The Court then considered the nature and extent of deduction for personal and living expenses and laid down the following principles: "30. Though in some cases the deduction to be made towards personal and living expenses is calculated on the basis of units indicated in Trilok Chandra, the general practice is to apply standardised deductions. Having considered several subsequent decisions of this Court, we are of the view that where the deceased was married, the deduction towards personal and living expenses of the deceased, should be one-third (1/3rd) where the number of dependent family mel"1bers is 2 to 3, one-fourth (1 /4th) where the number of dependent family members is 4 to 6, and one-fifth (1 /5th) where the number of dependent family members exceeds six.

31. Where the deceased was a bachelor and the claimants are the parents, the deduction follows a different principle. In regard to bachelors, normally, 50% is deducted as personal and living expenses, because it is assumed that a bachelor would tend to spend more on himself. Even E F G H ARUN KUMAR AGRAWAL v. NATIONAL INSURANCE 325 COMPANY [G.S. SINGHVI, J.] otherwise, there is also the possibility of his getting married A in a short time, in which event the contribution to the parent(s) and siblings is likely to be cut drastically. Further, subject to evidence to the contrary, the father is likely to have his own income and will not be considered as a dependant and the mother alone will be considered as a B dependant. In the absence of evidence to the contrary, brothers and sisters will not be considered as dependants, because they will either be independent and earning, or married, or be dependent on the father.

32. Thus even if the deceased is survived by parents and siblings, only the mother would be considered to be a dependant, and 50% would be treated as the personal and living expenses of the bachelor and 50% as the contribution to the family. However, where the family of the bachelor is large and dependent on the income of the deceased, as in a case where he has a widowed mother and large number of younger non-earning sisters or brother's, his personal and living expenses may be restricted to one-third and contribution to the family will be taken as two-third. " c D E

13. At this stage, it will be useful to notice Section 163A which was inserted by Amendment Act No.54 of 1994. That section and clause (6) of the Second Schedule read as under:- to payment of F " 163A. Special provisions as compensation on structured formula basis.- (1) Notwithstanding anything contained in this Act or in any other law for the time being in force or instrument having the force of law, the owner of the motor vehicle of the authorised insurer shall be liable to pay in the case of death G or permanent disablement due to accident arising out of the use of motor vehicle, compensation, as indicated in the Second Schedule, to the legal heirs or the victim, as the case may be. H 326 SUPREME COURT REPORTS [2010] 9 S.C.R. Explanation.- For the purposes of this sub-section, "permanent disability" shall have the same meaning and extent as in the Workmen's Compensation Act, 1923 (8 of 1923). (2) In any claim for compensation under sub-section (1 ), the claimant shall not be required to plead or establish that the death or permanent disablement in respect of which the claim has been made was due to any wrongful act or neglect or default of the owner of the vehicle or vehicles concerned or of any other person. (3) The Central Government may, keeping in view the cost of living by notification in the Official Gazette, from time to time amend the Second Schedule. Clause 6 of the Second Schedule

6. Notional income for compensation to those who had no income prior to accident:- Fatal and disability in non fatal accidents: (a) Non-earning persons Rs.15,000/- p.a. (b) Spouse Rs.1 !3rd of income of the Earning/ surviving spouse In case of other injuries only "general damage" as applicable. "

Section 163A contains a special provision for payment of compensation on the basis of a structured formula as indicated in the Second Schedule, which contains a table prescribing the compensation to be awarded with reference to the age and income of the deceased. The note appended to column (1) of the Second Schedule makes it clear that from the total amount of compensation, 1/3rd is to be deducted in A B c o E F G H ARUN KUMAR AGRAWAL v. NATIONAL INSURANCE 327 COMPANY [G.S. SINGHVI, J.] consideration of the expenses which the victim would. have A incurred towards maintaining himself had he been alive. Clause (6) of the Second Schedule lays down that in cases of fatal and disability in non fatal accidents, income of non-earning person should be taken as Rs.15,000/- per annum and that of spouse shall be taken as 1 /3rd of the income of the earning/surviving B spouse.

In Dee pal Girishbhai Soni v. United India Insurance Co. Ltd. (2004) 5 SCC 385, a three-Judge Bench interpreted various provisions of the Act including Section 163A and held:- ·C "46. Section 163-A which has an overriding effect provides for special provisions as to payment of compensation on structured-formula basis. Sub-section (1) of Section 163- A contains non obstante clause in terms whereof the owner of the motor vehicle or the authorised insurer is liable to o pay in the case of.death or permanent disablement due to accident arising out of the use of motor vehicle, compensation, as indicated in the Second Schedule, to the legal heirs or the victim, as the case may be. Sub-section (2) of Section 163-A is in pari materia with sub-section (3) E of Section 140 of the Act.

Section 163-A does not contain any provision identical to sub-section (5) of Section 140 which is also indicative of the fact that whereas in terms of the latter, the liability of the owner of the vehicle to give compensation or relief F under any other law for the time being in force continues subject of course to the effect that the amount paid thereunder shall be reduced from the amount of compensation payable under the said section or Section 163-A. G

By reason of Section 163-A, therefore, the compensation is required to be determined on the basis of a structured formula whereas in terms of Section 140 · only a fixed amount is to be given. A provision of law H 328 SUPREME COURT REPORTS [2010] 9 S.C.R. A B c D E providing for compensation is presumed to be final in nature unless a contra-indication therefor is found to be in the statute either expressly or by necessary implication. While granting compensation, the Tribunal is required to adjudicate upon the disputed question as regards age and income of the deceased or the victim, as the case may be. Unlike Section 140 of the Act, adjudication on several issues arising between the parties is necessary in a proceeding under Section 163-A of the Act.

The scheme envisaged under Section 163-A, in our opinion, leaves no manner of doubt that by reason thereof the rights and obligations of the parties are to be determined finally. The amount of compensation payable under the aforementioned provisions is not to be altered or varied in any other proceedings. It does not contain any provision providing for set-off against a higher compensation unlike Section 140. In terms of the said provision, a distinct and specified class of citizens, namely, persons whose income per annum is Rs.40,000 or less is covered thereunder whereas Sections 140 and 166 cater to all sections of society. "