NATIONAL INSURANCE COMPANY LIMITED v. PRANAY SETHI & Ors.

Judgment per incuriam - A decision or judgment can be per incuriam any provision in a statute, rule or regulation, which was not brought to the notice of the court - A judgment can also be per incuriam if it is not possible to reconcile its ratio with that of a previously pronounced judgment of a co-equal or a larger Bench. Answering the referred issues, the Court HELD : 1.1 In view of the analysis made in *Sar/a Jlerma case which has been reconsidered in ** Reshma Kumari case, so far as the guidance provided for appropriate deduction for personal and living expenses is concerned, the tribunals and courts should be guided by conclusion 43.6 of ** Reshma Kumari case. The method provided therein is approved. [Para 43] [131-D-EJ

1.2 So far as the multiplier is concerned, the claims tribunal and the Courts shall be guided by Step 2 that finds place in paragraph 19 of *Sar/a Jlerma case read with paragraph 42 of the said judgment. In Reshma Kumari case, the aforesaid has been approved. [Paras 44 and 45] [131-E-F; 132-A]

1.3 Insofar as the aforesaid multiplicand/multiplier is concerned, it has to be accepted on the basis of income established by the legal representatives of the deceased. Future prospects are to be added to the sum on the percentage basis and "income" means actual income less than the tax paid. If the same is followed, it shall subserve the cause of justice and the unnecessary contest before the tribunals and the courts would be avoided. [Paras 46 and 47] [132-F-G] B c D E F G H 102 SUPREME COURT REPORTS [2017] 13 S.C.R.

1.4 Section 168 of the Act deals with the concept of "just compensation" and the same has to be determined on the foundation of fairness, reasonableness and equitability on acceptable legal standard because such determination can never be in arithmetical exactitude. It can never be perfect. The aim is to achieve an acceptable degree of proximity to arithmetical precision on tlje basis of materials brought on record in an individual case. The conception of "just compensation" has to be viewed through the prism of fairness, reasonableness and non violation of the principle of equitability. Though the discretion vested in the tribunal is quite wide, yet it is obligatory on the part of the tribunal to be guided by the expression, that is, "just compensation". The determination has to be on the foundation of evidence brought on record as regards the age and income of the deceased and thereafter the apposite multiplier to be applied. The formula relating to multiplier has been clearly stated in *Sar/a Vt!rma case and it has been approved in ** Reshma Kumari case. The age and income, have to be established by adducing evidence. The tribunal and the Courts have to bear in mind that the basic principle lies in pragmatic computation which is in proximity to reality. It is a well accepted norm that money cannot substitute a life lost but an effort has to be made for grant of just compensation having uniformi~ of approach. There has to be a balance between the two extremes, that is, a windfall and the pittance, a bonanza and the modicum. In such an adjudication, the duty of the tribunal and the Courts is difficult and hence, an endeavour has been made by this Court for standardization which in its ambit includes addition of future prospects on the proven income at present. As far as future prospects are concerned, there has been standardization keeping in view the principle of certainty, stability and consistency. The principle of "standardization" is approved so that a specific and certain multiplicand is determined for applying the multiplier on the basis of age. [Para 57] (136-B-H]

1.5 In re~pect of fixation of future prospects in cases of deceased who is self-employed or on a fixed salary, *Sarlu Verma case has carved out an exception permitting the claimants to bring materials on record to get the benefit of addition of future prospects. It has not, per se, allowed any future prospects in A B c D E F G H NATIONAL INSURANCE COMPANY LIMITED v. PRANAY SETHI AND ORS. 103 respect of the said category. When the Court accepts the principle A of standardization, there is really no rationale not to apply the said principle to the self-employed or a person who is on a fixed salary. To follow the doctrine of actual income at the time of death and not to add any amount with regard to future prospects to the income for the purpose of determination of multiplicand would B be unjust. The determination of income while computing compensation has to include future prospects so that the method will come within the ambit and sweep of just compensation as postulated under Section 168 of the Act. [Paras 58 and 59) (137- A-D)

1.6 In case of a deceased who had held a permanent job with inbuilt grant of annual increment, there is an acceptable certainty. But to state that the legal representatives of a deceased who was on a fixed salary would not be entitled to the benefit of future prospects for the purpose of computation of compensation would be inapposite. It is because the criterion of distinction between the two in that event would be certainty on the one hand and staticness on the other. One may perceive that the comparative measure is certainty on the one hand and uncertainty on the other but such a perception is fallacious. It is because the price rise does affect a self-employed person; and that apart there is always an incessant effort to enhance one's income for sustenance. The purchasing capacity of a salaried person on permanent job when increases because of grant of increments and pay revision or for some other change in service conditions, there is always a competing attitude in the private sector to enhance the salary to get better efficiency from the employees.

Similarly, a person who is self-employed is bound to garner his resources and raise his charges/fees so that he can live with same facilities. To have the perception that he is likely to remain static and his income to remain stagnant is contrary to the fundamental concept of human attitude which always intends to live with dynamism and move and ch>inge with the time. Though it may seem appropriate that there cannot be certainty in addition of future prospects to the existing income unlike in the case of a person having a permanent job, yet the said perception does not really deserve acceptance. There can be some degree of difference as regards the percentage that is meant for or applied c D E F G H SUPREME COURT REPORTS (2017] 13 S.C.R. to in respect of the legal representatives who claim on behalf of the deceased who had a permanent job than a person who is self employed or on a fixed salary.

But not to apply the principle of standardization on the foundation of perceived lack of certainty would tantamoulnt to remaining oblivious to the marrows of ground reality. And, therefore, degree-test is imperative. Unless the degree-test is applied and I eft to the parties to adduce evidence to establish, it would be unfair and inequitable. The degree-test has to have th1e inbuilt concept of percentage. Taking into consideration the cumulative factors, namely, passage of time, the changing society, escalation of price, the change in price index, the human attitµde to follow a particular pattern of life, etc., an addition of 40% of the established income of the deceased towards future prospects where the deceased was below 40 years and an addition of 25% where the deceased was between the age of 40 to 50 years would be reasonable. [Para 59] (137-D-H; 138-A-D] I. 7 While determining the income, an addition of 50% of actual salary to the income of the deceased towards future pros pects, where the deceased had a permanent job and was below the age of 40 years, should be made. The addition should be 30%, if the age of the deceased was between 40 to 50 years. In case the deceased was between the age of 50 to 60 years, the addition should be 15%. Actual salary should be read as actual salary less tax. [Para 61] [139-C]

1.8 Where the age of the deceased is more than 50 years, as per *Sar/a Verma case, it is appropriate not to add any amount and the same bas been approved in **Reshma Kumari case. Judicial notice can be taken of the fact that salary does not remain the same. When a person is in a permanent job, there is always an enhancement due to one reason or the other. To lay down as a thumb rule that there will be no addition after 50 years will be an unacceptable concept. There should be an addition of 15% if the deceased is between the age of 50 to 60 years and there should be no addition thereafter. Similarly, in case of self employed or petson on fixed salary, the addition shoulu be 10% between the age of 50 to 60 years. The aforesaid yardstick has been fixed so that there can be consistency in the approach by the tribunals and the courts. [Para 60] [138-E-F] 104 A B c D E F G H NATIONAL INSURANCE COMPANY LIMJTED v. PRANAY SETHI AND ORS. 105

1.9 The conventional sum has been provided in the Second A B c

Schedule of the Act. Para 3 of the Second Schedule also provides for General Damages in case of death. The said Schedule has been found to be defective as stated by the Court in #Trilok Chandra case. The Second Schedule has not been followed starting from the decision in #Trilok Chandra case and there has been no amendment to the same. The conventional damage amount needs to be appositely deteri, nincd. In different cases different amounts have been granted. The Court does not agree with the view expressed in ##Rajesh case. It has granted Rs. 25,000/- towards funeral expenses, Rs. 1,00,000/- loss of consortium and Rs. 1,00,000/- towards loss of care and guidance for minor children. The head relating to loss of care and minor children does not exist. Though ##Rajesh case refers to ###Santosh Devi case, it does not seem to follow the same. The conventional and traditional heads, cannot be determined on percentage basis because that would not be an acceptable criterion. Unlike D determination of income, the said heads have to be quantified. Any quantification must have a reasonable foundation. There can be no dispute over the fact that price index, fall in bank interest, escalation of rates in many a field have to be noticed. The court cannot remain oblivious to the same. There has been a thumb rule in this aspect. Otherwise, there will be extreme difficulty in determination of the same and unless the thumb rule is applied, there will be immense variation lacking any kind of consistency as a consequence of which, the orders passed by the tribunals and courts are likely to be unguided. Therefore, the High Court thinks it seemly to fix reasonable sums. Reasonable figures on conventional heads, namely, loss of estate, loss of consortium and funeral expenses should be Rs. 15,000/-, Rs. 40,000/- and Rs. 15,000/- respectively,. The principle ofrevisiting the said heads is an acceptable principle. But the revisit should not be fact centric or quantum-centric. The amount which the Court has quantified should be enhanced on percentage basis in every three years and the enhancement should be at the rate of 10% in a span of three years. This will bring in consistency in respect of those heads. [Paras 50, 51, 52 and 54] [134-B, D; 135-B-F] F E G 106 A B c D E F G H SUPREME COURT REPORTS [ 2017] 13 S.C.R.