Bench v. G. Siva Kumar & Ors.

Judgment

(per Hon’ble Sri Justice Challa Gunaranjan) *** Present appeal is preferred under Section 173 of the Motor Vehicles Act, 1988 (for short, “the Act”), assailing the award, dated

28.06.2017, in M.V.O.P.No.463 of 2011, passed by the Chairman, Motor Vehicles Accidents Claims Tribunal-cum-I Additional District Judge, Nellore (for short, “the Tribunal”), by which compensation of Rs.43,88,162/- was awarded, as against claim of Rs.1,00,00,000/-. Dissatisfied with the quantum of compensation awarded, present appeal 2 HCJ & CGR, J. M.A.C.M.A. No.3023 of 2017 is preferred. There is no cross-appeal by the insurer. Hence, liability to pay compensation is not an issue.

For the sake of convenience, the parties hereinafter are referred to as they were arrayed in the M.V.O.P. before the Tribunal.

3. Deceased was aged 30 years and working as Software Engineer at Accenture Private Limited, Bangalore. On 10.11.2010, while deceased proceeding on motorcycle, was hit by a container lorry bearing registration No. TN 28K 4097, due to rash and negligent driving of the driver of the said lorry. Deceased sustained injuries and succumbed. Wife and parents of deceased preferred the claim seeking compensation. Deceased, as a software engineer, claimed to be earning ₹6,89,218/- per annum, thus, compensation was claimed accordingly.

5. Owner of offending container remained ex parte. The insurer filed written statement denying that the accident occurred on account of rash and negligent driving of driver of container lorry, and further, that driver of container lorry did not possess valid and effective driving licence, besides pleading that the compensation claimed was excessive, exorbitant, and imaginary.

6. Based on the aforesaid pleadings, the Tribunal has framed the following issues: 3 HCJ & CGR, J. M.A.C.M.A. No.3023 of 2017 “1. Whether the pleaded accident occurred on account of rash and negligent driving of the lorry bearing Reg.No.TN-28K-4097 by its driver and whether it resulted death of the deceased?

2. Whether the driver of the lorry bearing Reg.No.TN-28K- 4097 was not having valid and effective driving licence on the material date of accident?

3. Whether the claimants are entitled for compensation? If so, to what amount?

4. To what relief?”

7. Claimants examined PW.1 to PW.3 and marked Exs. A1 to A6 and C1 to C4 in support of their claim. None were examined on behalf of respondents, however, Ex.B1 was marked.

8. The Tribunal, on appreciation of evidence on record, answered issues 1 and 2 in favour of claimants, holding that the driver of container lorry was responsible for the accident, and further, that the insurer failed to prove the driver of container lorry did not possess valid and effective driving licence. Therefore, the insurer was held liable for compensation to be determined. Eventually, the Tribunal, the process of determination of compensation, considered age of deceased as 30 years and applied multiplier of 17. The income of deceased has been arrived at ₹29,784/- per month based on salary slip marked as Ex.C3. It further added 50% of income towards future prospects and after deducting one third of the same towards personal expenses, loss of dependency was arrived at ₹42,53,162/-. The Tribunal has awarded 4 HCJ & CGR, J. M.A.C.M.A. No.3023 of 2017 ₹25,000/- towards funeral expenses; ₹50,000/- towards loss of estate and ₹50,000/- towards transportation charges, and thus, in total awarded compensation of ₹43,88,162/-, payable along with interest at the rate of 6% per annum from the date of petition till the date of realization. The Tribunal further apportioned the amount in the manner as specified in the Award inter se among claimants. Dissatisfied by the quantum of compensation, present appeal is filed.

9. Heard Mr.Sivaprasad Reddy Venati, learned counsel claimants and Mr.Gudi Srinivasu, learned counsel for 2nd respondent insurer.

10. Learned counsel for appellants/claimants would contend that the Tribunal erred in not including all the allowances, in particular, special allowance, conveyance allowance, payable for computing compensation, and also erred in deducting 30% of the income towards income tax, even though under Ex.C2 and Ex.C3, pay slips, already the income tax suffered deduction. In support of the same, reliance has been placed on the judgment of the Hon'ble Apex Court in Manorma Sinha v. Divisional Manager, Oriental Insurance Co. Ltd. 1

11. Opposing the same, learned counsel for 2nd respondent insurer submitted that the Tribunal has taken into consideration House Rent 1 2025 SCC OnLine SC 2241 5 HCJ & CGR, J. M.A.C.M.A. No.3023 of 2017 Allowance apart from basic pay for computing monthly earnings, and rightly refused to consider special allowance, conveyance allowance, which are not permanent in nature. Further, insofar as deduction towards income tax, it is submitted that as deceased’s income was falling within the taxable income, rightly, the Tribunal applied appropriate deduction, albeit salary slips indicate meagre deductions towards income tax. To support his contention, reliance has been placed on the judgment of the Hon'ble Apex Court in Shyamwati Sharma v. Karam 2 Singh . Further, it is also submitted that the Tribunal has awarded future prospects at the rate of 50%, which is improper, and that as the deceased was a private employee and considering his age of 30 years, would be entitled for future prospects of 40%.

12. We have considered the submissions made by both learned counsels appearing for the parties and perused the record.

13. As liability to pay compensation is not an issue, the question that arises for our consideration is, as to whether the Tribunal was justified in excluding special allowance and conveyance allowance, for the purpose of assessing the income of deceased? and further deduction of income tax thereon, at the rate of 30%, was justified? 2 (2010) 12 SCC 378 6 HCJ & CGR, J. M.A.C.M.A. No.3023 of 2017

14. The claimants, in order to prove the income of deceased, marked Exs.C2, C3 and C4, which are pay slips for the months of September and October, 2010, and offer and appointment letter, respectively. To prove the said documents, they also examined PW.3, Manager (H.R.) of Accenture Services Pvt. Ltd. PW.3 deposed that deceased was issued offer letter on 04.06.2010, and thereafter, accepting the same, deceased joined the company on 30.08.2010. The deceased was offered annual fixed compensation of Rs.6,89,218/- and Hot Skill bonus of Rs.60,000/- as set out in the offer letter. Further, the pay slips for the months of September and October, 2010 indicated the breakup of components of salary. Thus, the evidence of PW.3 is very categorical of the annual compensation package and the components consisting of the same. As per Exs.C2 and C3, pay slips, for the months of September and October, 2010, the following components would be significant for assessing the income of deceased. Basic ₹19,855.00 House Rent Allowance ₹ 9,929.00 ₹18,233.00 Special Allowance ₹ 800.00 Conveyance ₹ 5,323.00 Hot Skill Bonus ₹ 700.00 Stat Bonus The pay slip also reflects that deductions were made towards provident fund, professional tax and income tax and accordingly, net pay was arrived at Rs.52,527/-. The Tribunal has considered basic salary and 7 HCJ & CGR, J. M.A.C.M.A. No.3023 of 2017 H.R.A. alone to be the income of deceased. The Tribunal, however, disallowed special allowance, conveyance, hot skill bonus and Stat bonus.

15. The question whether allowances are to be added to salary for determining the multiplicand fell for consideration in various judgments. While reiterating various judgments on the subject, the Hon'ble Apex Court in Manorma Sinha1, relied on by learned counsel for claimants, held that emoluments and benefits accruing to the deceased under various heads for the purposes of computation of loss of income, ought to be included irrespective of whether they are taxable or not, therefore, exclusion of allowances from the computation to arrive at the multiplicand was held to be improper and unjustified. Therefore, we are of the view that the Tribunal erred in excluding special allowance from computation to arrive at the income. Insofar as the earnings towards conveyance, hot skill bonus and stat bonus, even learned counsel for claimants fairly conceded that the same would not come within the ambit of loss of income.

16. Further, learned counsel for claimants contended that even the amount reflected in pay slips towards provident fund should not have been deducted. But, on perusal of the award, the Tribunal has merely added the basic salary and H.R.A. to arrive at loss of income and in the 8 HCJ & CGR, J. M.A.C.M.A. No.3023 of 2017 process, rightly, has not deducted the amount shown towards provident fund, therefore, question of once again adding of provident fund to the income does not arise.

17. As regards the deduction towards income tax is concerned, the Tribunal deducted income tax @ 30% of the income. The income of deceased as considered by Tribunal or for that purpose, by us peg monthly earnings substantially falling within the tax ambit. Though the pay slip factored deduction of income tax, the same clearly is not commensurate with the actual tax deductible. In the very same judgment, which has been relied on by learned counsel for claimants, dealing with the issue of deduction towards income tax, the Hon'ble Apex Court sustained the deduction of income tax based on the slab rates. Thus, annual income of deceased from salary would be as under: ₹19,855/- Basic ₹18,233/- Special Allowance House Rent Allowance ₹9,929/- ------------ ₹48,017/- x 12 =₹5,76,204/- ------------- 18. The tax payable in the relevant year, i.e., with reference to date Total of death of deceased has to be taken into consideration. Income Tax Slabs in India — Financial Year 2010–2011 Assessment Year 2004–05 | Individual Taxpayer Sl. No. 1 Taxable Income Up to ₹1,60,000 Income Tax Rate Nil Income tax deduction -- 9 10% 20% HCJ & CGR, J. M.A.C.M.A. No.3023 of 2017 ₹34,000/- ₹15,241/- 2 3 ₹1,60,001 – ₹5,00,000 ₹5,00,001/- – ₹5,76,204/- Thus, net annual income of deceased from salary after deducting income tax with the allowances would be ₹5,76,204/- minus ₹49,241/- = ₹5,26,963/-.

19. Insofar as addition for future prospects is concerned, the Tribunal granted at the rate of 50% of the income instead of 40%. With regard to various components falling within conventional heads, the amounts awarded by the Tribunal in our opinion are not in consonance with the dicta laid down by the Hon'ble Apex Court in Pranay Sethi1 and the same, therefore, are required to be modified. We, therefore, modify the award by awarding just and fair compensation, in following terms:

20. The compensation is hereby modified and revised as follows. Amount Awarded ₹5,26,963/- In Accordance with: Compensation Heads Net annual income (after deducting income tax as per applicable slabs) Future Prospects (Age being 30 years) Deduction (1/3) 40% of ₹5,26,963/- = ₹2,10,785/- ₹7,37,748/- – ₹2,45,916/- = ₹4,91,832/- National Insurance Co. Ltd. v. Pranay Sethi (2017) 16 SCC 680 Para 37, 39, 41, 42 and 59.4 Multiplier (17) ₹4,91,832/- x 17 = 10 HCJ & CGR, J. M.A.C.M.A. No.3023 of 2017 ₹83,61,144/- ₹83,61,144/- Loss of Income of the deceased Loss of Estate Funeral expenses ₹18,150/- (with 10% increase every 3 years from 2017) ₹18,150/- (with 10% increase every 3 years from 2017) Loss of Consortium ₹48,400 x 3 = ₹1,45,200/- (with 10% increase every 3 years from 2017) National Insurance Co. Ltd. v. Pranay Sethi (2017) 16 SCC 680 Para 37, 39, 41, 42 and 59.4 United India Insurance Co. Ltd. v. Satinder Kaur, (2021) 11 SCC 780 Para 37.12 Rajwati alias Rajjo v. United India Insurance Co. Ltd. 2022 SCC OnLine SC 1699 Para 34 Sadhana Tomar v. Ashok Khushwaha 2025 SCC OnLine SC 554 Para 17 Total ₹85,42,644/--

21. Accordingly, both the appeals are disposed of and the impugned judgment, dated 16.05.2016, shall stand modified, by revising the compensation amount to Rs.85,42,644/- as just and fair compensation, along with interest at the rate of 7.5% p.a. thereon from the date of claim 11 HCJ & CGR, J. M.A.C.M.A. No.3023 of 2017 petition till date of realisation. Out of which, 1st claimant/wife is entitled to ₹60,11,644/-; 2nd claimant is entitled to ₹19,47,000/- and 3rd claimant is entitled to ₹5,84,000/-. The Insurer to deposit the amount as aforesaid, adjusting the amount already deposited/paid if any, before the Tribunal within one month. On such deposit being made, the claimants shall be entitled to withdraw the same as apportioned above, failing which, the amount shall be recovered as per law. No order as to costs. As a sequel, miscellaneous petitions pending, if any, shall stand closed. LISA GILL, CJ CHALLA GUNARANJAN, J