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Saturday, May 4, 2013

MOTOR ACCIDENT CLAIM = i) No amount can be deducted towards Provident Fund, Pension and Insurance amount from the actual salary of the victim for calculating compensation. (ii) In the absence of any evidence, the Court suo motu cannot deduct any amount towards income tax from the actual salary of the victim. (iii) On the facts of the present case, the Tribunal and the High Court should have doubled the salary by allowing 100% increase towards the future prospects and (iv) The Tribunal and the High Court failed to ensure payment of just and fair compensation. Reliance was also placed on decisions of this Court which will be discussed later in this judgment.= “whether the salary receivable by the claimant on compassionate appointment comes within the periphery of the Motor Vehicles Act to be termed as “Pecuniary Advantage” liable for deduction.” “Compassionate appointment” can be one of the conditions of service of an employee, if a scheme to that effect is framed by the employer. In case, the employee dies in harness i.e. while in service leaving behind the dependents, one of the dependents may request for compassionate appointment to maintain the family of the deceased employee dies in harness. This cannot be stated to be an advantage receivable by the heirs on account of one’s death and have no correlation with the amount receivable under a statute occasioned on account of accidental death. Compassionate appointment may have nexus with the death of an employee while in service but it is not necessary that it should have a correlation with the accidental death. An employee dies in harness even in normal course, due to illness and to maintain the family of the deceased one of the dependents may be entitled for compassionate appointment but that cannot be termed as “Pecuniary Advantage” that comes under the periphery of Motor Vehicles Act and any amount received on such appointment is not liable for deduction for determination of compensation under the Motor Vehicles Act. ; “whether the income tax is liable to be deducted for determination of compensation under the Motor Vehicles Act” In the case of Sarla Verma & Anr.(Supra), this Court held “generally the actual income of the deceased less income tax should be the starting point for calculating the compensation.” This Court further observed that “where the annual income is in taxable range, the word “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.; He was only 28 years 7 ½ month old at the time of death. In normal course, he would have served the State Government minimum for about 30 years. Even if we do not take into consideration the future prospect of promotion which the deceased was otherwise entitled and the actual pay revisions taken effect from 1st January, 1996 and 1st January, 2006, it cannot be denied that the pay of the deceased would have doubled if he would continued in services of the State till the date of retirement. Hence, this was a fit case in which 100% increase in the future income of the deceased should have been allowed by the Tribunal and the High Court, which they failed to do. = the monthly income of the deceased Sajjan Singh at Rs.9,000 x 2 = Rs.18,000/­ per month. From this his personal living expenses, which should be 1/3rd, there being three dependents has to be deducted. Thereby, the ‘actual salary’ will come to Rs.18,000 – Rs.6,000/­ = Rs.12,000/­ per month or Rs.12,000 x 12 =1,44,000/­ per annum. As the deceased was 28 ½ years old at the time of death the multiplier of 17 is applied, which is appropriate to the age of the deceased. The normal compensation would then work out to be Rs.1,44,000/­ x 17 =Rs.24,48,000/­ to which we add the usual award for loss of consortium and loss of the estate by providing a conventional sum of Rs. 1,00,000/­; loss of love and affection for the daughter Rs.2,00,000/­, loss of love and affection for the widow and the mother at Rs.1,00,000/­ each i.e. Rs.2,00,000/­ and funeral expenses of Rs.25,000/­. 31. Thus, according to us, in all a sum of Rs.29,73,000/­ would be a fair, just and reasonable award in the circumstances of this case. 32. The rate of interest of 12% is allowed from the date of the petition filed before the Tribunal till payment is made. 33. Respondent No.3 is directed to pay the total award with interest minus the amount (if already paid) within three months. The appellant No.2­daughter who was aged about 2 years at the time of accident of the deceased has already attained majority; money may be required for her education and marriage. In the circumstances, we direct respondent No.3 to deposit 25% of the due amount in the account of appellant no.1­the wife. Out of the rest 75% of the due amount, 35% of the amount be invested in a Nationalized Bank by fixed deposit for a period of one year in the name of the daughter­appellant No.2. Out of the rest 40% of the due amount, 20% each be invested in a Nationalized Bank by fixed deposit for a period of one year in the name of the appellant Nos. 1 and 3, the wife and the mother respectively. 34. The award passed by the Tribunal dated 21st June, 2003 and the judgment dated 29th July, 2011 of the Rajasthan High Court stand modified to the extent above. The appeal is allowed with the aforesaid observation and direction. No separate order as to costs.


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REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO.5513 OF 2012
(arising out of SLP(C)No.6367 of 2012)
VIMAL KANWAR & ORS. …. APPELLANT
VERSUS
KISHORE DAN & ORS.           ….RESPONDENTS
J U D G M E N T
SUDHANSU JYOTI MUKHOPADHAYA, J.
The present appeal is filed against the judgment of
the   Rajasthan High Court,   Jaipur Bench in S.B. Civil
Misc.   Appeal   No.   1831   and   2071   of   2003.       By   the
impugned   judgment   dated   29th  July,   2011,   the   Rajasthan
High Court  upheld the compensation awarded by the Motor
Accident   Claims   Tribunal,   Jaipur   (hereinafter   referred
to as the ‘Tribunal’)  and observed as  follows:
“13. In   the   situation,   in   the   light   of   the
above   detail   and   analysis   it   appears   that   the
learned tribunal’s basis of calculating amount of
compensation  might be erroneous  but  in totality
determined, assessed and awarded total amount of
compensation   Rs.14,93,700/­   is   proper   and
justified,   and   there   is   no   adequate   basis   for
increasing   or   reducing   it.   Therefore,   judgment
dated   21.06.2003   by   Motor   Accident   Claims
Tribunal, Jaipur is affirmed and appeals by the
appellants and Insurance Company are dismissed.”
1Page 2
2.   The   factual   matrix   of   the   case   is   that   on   14th
September,   1996   one   Mr.   Sajjan   Singh   Shekhawat   was
sitting on his scooter which was parked on the side of
the   road   and   was   waiting   for   one   Junior   Engineer,   N.
Hari Babu and another whom he had called for discussion.
At that time, the non­applicant No.1, driver of the Jeep
No.RJ­10C­0833   came   driving   from   the   Railway   Station
side with high speed, recklessly and negligently and hit
the   scooter.   Sajjan   Singh   along   with   his  scooter   came
under the Jeep and was dragged with the vehicle.  Due to
this accident fatal injuries was caused to him and on
reaching the Hospital he expired.  The scooter was also
damaged completely.
3.  Appellant no. 1, the wife of the deceased was aged
about 24 years;  appellant no. 2, the  daughter was aged
about 2 years and appellant no. 3,   the   mother   was
aged   about   55   years   at   the   time   of     death   of   the
deceased.   They jointly  filed an application to the Tribunal alleging that
negligent and rash driving by non-applicant no. 1 caused the death of Sajjan Singh and
claimed compensation of Rs.80,40,160/­.   It was brought
to the notice of the Tribunal that non­applicant no. 1,
the   jeep   driver   was   in   the   employment   of   the   non­
2Page 3
applicant no. 2 and the non­applicant no. 3, the United
India Insurance Co. Ltd. was the insurer of the vehicle.
4. The   non­applicant   No.3,   Insurance   Company   on
appearance filed written statement and alleged that the
vehicle   owner   has   violated   the   conditions   of   the
Insurance   Policy   by   not   informing   them   about   the
accident.  Further,  according to the Insurance Company
the vehicle owner should prove the fact that at the time
of   accident,   the   Jeep   driver,   non­applicant   No.1   was
holding a valid and effective driving licence.
5. Altogether five issues were framed by the Tribunal:
 “1. Whether due to the vehicle in question Jeep
No. RJ 10C 0833 being driven by driver, non­
applicant   No.1   on   14.09.1996,   in   front   of
Assistant   Engineer   Office,   PWD,   within   the
jurisdiction   of   Police   Station   Churu,
negligently   and   recklessness   and   caused
accident   and   injuries   due   to   which   Sajjan
Singh Shekhawat S/o Bhanwar Singh expired.
2. Whether above said vehicle driver at the time
accident   was   in   employment   of   non­applicant
No.2   and   was   working   for   his   benefit   and
profit.
3. Whether   the   non­applicant   No.3,   Insurance
Company in view of the preliminary objections
and preliminary statement in their reply, are
relieved of their liability and if not what
is the effect thereon.
4 Whether the applicant are entitled to get the
claim   amount   or   any   other   justified   amount,
and if yes which applicant is entitled to how
much   compensation   and   from   which   non­
applicant.
5. Relief.”.
3Page 4
6. The first issue was answered by the Tribunal in an
affirmative manner.  It was  held that the reckless and
negligent driving of the driver of  Jeep No.RJ 10C 0833
caused   the   accident   which   resulted   in   the   death   of
Sajjan Singh Shekhawat.   Issue Nos. 2 and 3 were also
decided in favour of the applicants.
7. Issue Nos. 4 and 5 were related to the entitlement
of appellants towards the claims and the relief to be
granted.     The Tribunal determined the compensation to
be granted in favour of the appellants at Rs.14,93,700/­
jointly.
8. The   actual   salary   of   the   deceased   was   reduced   by
the   Tribunal   by   deducting   certain   amounts   towards
Provident   Fund,   Pension   and   Insurance.     Without   any
reason,   the   Tribunal   also   reduced   the   salary   at   Rs.
8,000/­ per month though actual salary of the deceased
as per Last Pay Certificate (for short ‘LPC’) was Rs.
8,920/­. Out of such reduced salary of Rs. 8,000/­,  the
Tribunal further deducted a sum of Rs.1,000/­ per  month
towards   Provident   Fund,   Pension   and   Insurance   and
thereby   considered   the   actual salary of deceased to
be   Rs.7,000/­ per month.  An amount of Rs. 4500/­ was
added to it towards future income and, thereby the net
4Page 5
income   of  deceased   was  assessed   at  11,500/­   per  month
(Rs.7,000/­ + Rs.4,500/­).
9. Admittedly,   Sajjan   Singh   died   at   the   age   of   28
years and 7 ½  months .  He was in the services of the
State  Government   posted   as  an  Assistant  Engineer.     In
the   normal   course,     he   would   have   continued   in   the
services   of   the   State   Government   upto   February,   2026,
until   attaining   58   years   or     upto     February,   2028,
until attaining 60 years. As per the decision of this
Court   in   the   case   of  Sarla   Verma   &   Ors.     v.   Delhi
Transport Corporation & Anr. (2009) 6 SCC 121,   Sajjan
Singh having died at the age of   28 years 7 ½ months,
the   multiplier   of  17   is  applicable   in  calculating   the
compensation.     But   the   Tribunal   applied   the   lower
multiplier of 15 on the ground   that the wife would be
getting   family   pension   and   would   get   job   on   the
compassionate   ground   and   the   daughter,   aged   about   2
years would get married in future.
10. Though the High Court noticed the aforesaid mistake
it upheld the compensation.       A notional deduction of
income tax was made by the High Court from the salary of
the deceased apart from the deduction of  annual pension
and came to the conclusion that the award passed by the
5Page 6
Tribunal was just and proper as  apparent from paragraph
11 of the judgment which reads as under:
“11. If   calculate   according   to   the   rate   of
tax   in   the   year   1996,   we   find   that   in   the
assessment year 1996­97 on Rs.40,000/­ no tax was
payable.   On further income of Rs.20,000/­, 20%
was   payable,   on   further   income   of   Rs.60,000/­,
30% of income was taxed.   1/3rd  of the salary or
Rs.15,000/­   which   ever   was   less   was   standard
deduction.   Accordingly deducting Rs.15,000/­ as
standard   deduction   taking   into   account   the
savings   and   on   applying   rebate   of   Rs.12,000/­
under   Section   80C   of   the   Income   Tax   Act,   the
amount   which   remains,   on   that   Rs.5812/­   is
payable   as   tax.   Thus,   deducting   taxable   amount
out   of   income   is   Rs.1,01,228/­.   The   appellant
Vimal Kanwar has herself stated that after death
of her husband she receives Rs.1460/­ per month
as   pension.     The   pension   received   on   death   of
husband   should   also   be   deducted.     Thus,   on
deducting   annual   pension   of   Rs.17,520/­   the
income  is Rs.1,83,708/­  per  annum.  According  to
Sarla Verma judgment increasing 50%   for future
prospects   the   amount   becomes   Rs.1,25,562/­   per
annum,   out   of   this   deducting   1/3rd  for   personal
expenses of the deceased and applying multiplier
of   17   according   to   age   of   the   deceased   this
amount is Rs.14,23,036/­. The tribunal on account
of   being   deprived   of   income   the   deceased   has
granted Rs.14,78,700/­ to the deceased.”
11. The   High   Court   noticed   that   the   Tribunal   wrongly
applied   the  multiplier   of  15  but   refused   to  interfere
with the award on the following grounds:
“12.   IT is correct, that despite the revise
LPC being on record and showing salary to be
Rs.8920/­ the tribunal has accepted salary to
be Rs.8000/­ only out of this on account of
GPF   and   State   Insurance   Rs.1000/­   has   been
deducted   and   monthly   income   is   assessed   as
Rs.7,000/­.   Thereafter,   taking   into   account
increasing   income   in   future   etc.   Rs.4500/­
has been added and monthly income is assessed
6Page 7
to be Rs.11500/­ this assessment according to
evidence on record and established law, does
not   appear   to   be   proper.   It   is   also   worth
mentioning   that   the   tribunal   for   granting
compensation to the appellants has taken unit
method   has   basis   but   while   doing   so   the
amount that the deceased would have spent on
his personal expenses which is deductable as
per judgment of the Hon’ble Supreme Court in
the Sarla Verma case and other cases has not
been   deducted,   because   of   which   the
dependency   is   not   properly   assessed.
Thereafter,  the  multiplier  of  15  applied   by
the   tribunal   also   does   not   seen   to   be   in
accordance   to   law.   It   is   also   worth
mentioning that assessing amount in the said
manner   the   tribunal   had   not   deducted   the
payable income tax and the amount of pension
received by Smt. Vimal Kanwar due to death of
deceased.   Similarly,   while   assessing
dependency   deduction   for   GPF   and   State
Insurance, addition of Rs.4,500/­ in monthly
income   and   multiplier   of   15   etc.   is   not   in
accordance   with   law.     But   it   is   worth
mentioning that taking income of the deceased
at   the   time   of   the   accident   is   Rs.8,920/­,
deducting   payable   income   tax   and   amount   of
pension received by the wife of the deceased,
the amount on account of loss of income to be
given   to   the   appellant   comes   to
Rs.14,23,036/­. It appears that the tribunal
on   account   of   loss   of   income   has   granted
Rs.14,78,700/­   and   for   all   the   remaining
heads a total of Rs.15,000/­ only, which is
definitely too less. All the three appellants
should   be   granted   proper   compensation   under
heads of cooperation from the deceased, loss
of   love   and   affection   and   service,
protection, last rites, lost of estate and on
doing   this   the   situation   that   emerges   is
that,   the   total   amount   of   Rs.14,93,700/­
awarded   by   tribunal   as   compensation   is
justified and therefore, any interference in
the   amount   of   awarded   compensation   is   not
proper desirable or necessary.”
7Page 8
12. Two   appeals,   one   preferred   by   the   appellants­
claimants   and   another   by   the   Insurance   Company,   were
dismissed by the High Court by common impugned judgment
dated 29th July, 2011.
13. From the facts and circumstances of the case,  the
grievance   of   the   appellants   can   be   summarized   as
follows:­
(i)     No   amount   can   be   deducted   towards   Provident
Fund,   Pension   and   Insurance   amount   from   the   actual
salary of the victim for calculating compensation.
(ii)     In   the   absence   of   any   evidence,   the   Court
suo motu   cannot deduct any amount towards income tax
from the actual salary of the victim.
(iii)   On   the   facts   of   the   present   case,   the
Tribunal   and   the   High   Court   should   have   doubled   the
salary   by   allowing   100%   increase   towards   the   future
prospects and 
(iv)   The   Tribunal   and   the   High   Court   failed   to
ensure payment of just and fair compensation.
Reliance was also placed on decisions of this Court
which will be discussed later in this judgment.
14. The   respondents   have   appeared   but   no   counter
affidavit has been filed by them.   Learned counsel for
8Page 9
the respondents merely justified the award passed by the
Tribunal and affirmed by the High Court.
15. The issues involved in this case are:
(i) Whether   Provident   Fund,   Pension   and   Insurance
receivable by the claimants come within the periphery of
the   Motor   Vehicles   Act   to   be   termed   as   “Pecuniary
Advantage” liable for deduction.
(ii) Whether   the   salary   receivable   by   claimant   on
compassionate appointment comes within the periphery of
the   Motor   Vehicles   Act   to   be   termed   as   “Pecuniary
Advantage” liable for deduction.
(iii) Whether   the   income   tax   is   liable   to   be
deducted   for   determination   of   compensation   under   the
Motor Vehicles Act and
(iv)  Whether   the   compensation   awarded   to   the
appellants is just and proper.
16. For   determination   of   the   aforesaid   issues,   it   is
necessary   to   notice   the   relevant   facts   as   mentioned
hereunder.
17. Smt.   Vimal   Kanwar,   PW­3   (appellant   no.1   herein),
who   is   the   wife   of   the   deceased   has   stated   in   her
examination in chief that her husband obtained BE Degree
from   Jodhpur   University   in   First   Class   and   he   was
directly appointed to the post of Assistant Engineer in
9Page 10
the year 1994. At the time of accident he was 28 years
old and was getting salary of Rs.9,000/­ per month.  If
he had been alive he would have got promoted upto the
rank of Chief Engineer.
18. Ram   Avtar   Parikh,   PW­2   is   an   employee   of   Public
Works  Department,   where   the  deceased   was   working.     He
stated   that   Sajjan   Singh   was   working   on   the   post   of
Assistant Engineer and at that time his monthly salary
was   Rs.8,920/­.     In   support   of   his     statement   he
produced the Last Pay Certificate and the Service Book
(Exh. 1.) of the deceased.
19. The first issue is “whether Provident Fund, Pension
and   Insurance   receivable   by   claimants   come   within   the
periphery   of   the   Motor   Vehicles   Act   to   be   termed   as
“Pecuniary Advantage” liable for deduction.”
The   aforesaid   issue   fell   for   consideration   before
this   Court   in    Helen   C.   Rebello   (Mrs)   and   others  vs.
Maharashtra   State   Road   Transport   Corporation   &   Anr.
reported in   (1999) 1 SCC 90.    In the said case, this
Court held that  Provident   Fund,   Pension,   Insurance
and   similarly   any   cash,   bank   balance,   shares,   fixed
deposits,   etc.   are   all   a   “pecuniary   advantage”
receivable by the heirs on account of one’s death but
all these have no correlation with the amount receivable
1Page 11
under a statute occasioned only on account of accidental
death.     Such   an   amount   will   not   come   within   the
periphery   of   the   Motor   Vehicles   Act   to   be   termed   as
“pecuniary   advantage”   liable   for   deduction.     The
following was the observation and finding of this Court:
  “35.  Broadly,   we   may   examine   the   receipt   of   the
provident  fund which is a deferred  payment  out of
the   contribution   made   by   an   employee   during   the
tenure  of his service.  Such employee or his heirs
are entitled to receive this amount irrespective of
the   accidental   death.   This   amount   is   secured,   is
certain to be received, while the amount under the
Motor   Vehicles   Act   is   uncertain   and   is   receivable
only on the happening of the event, viz., accident,
which may not take place at all. Similarly, family
pension   is   also   earned   by   an   employee   for   the
benefit   of   his   family   in   the   form   of   his
contribution in the service in terms of the service
conditions receivable by the heirs after his death.
The   heirs   receive   family   pension   even   otherwise
than   the   accidental   death.   No   correlation   between
the   two.   Similarly,   life   insurance   policy   is
received either by the insured or the heirs of the
insured   on   account   of   the   contract   with   the
insurer,   for   which   the   insured   contributes   in   the
form   of   premium.   It   is   receivable   even   by   the
insured if he lives till maturity after paying all
the   premiums.   In   the   case   of   death,   the   insurer
indemnifies to pay the sum to the heirs, again in
terms of the contract for the premium paid. Again,
this   amount   is   receivable   by   the   claimant   not   on
account   of   any   accidental   death   but   otherwise   on
the   insured's   death.   Death   is   only   a   step   or
contingency   in   terms   of   the   contract,   to   receive
the   amount.   Similarly   any   cash,   bank   balance,
shares,   fixed   deposits,   etc.   though   are   all   a
pecuniary   advantage   receivable   by   the   heirs   on
account   of   one's   death   but   all   these   have   no
correlation   with   the   amount   receivable   under   a
statute   occasioned   only   on   account   of   accidental
death.   How   could   such   an   amount   come   within   the
periphery of the Motor Vehicles Act to be termed as
“pecuniary advantage” liable for deduction. When we
seek the principle of loss and gain, it has to be
on a similar and same plane having nexus, inter se,
1Page 12
between them and not to which there is no semblance
of   any   correlation.   The   insured   (deceased)
contributes his own money for which he receives the
amount which has no correlation to the compensation
computed   as   against   the   tortfeasor   for   his
negligence   on   account   of   the   accident.   As
aforesaid,   the   amount   receivable   as   compensation
under the Act is on account of the injury or death
without   making   any   contribution   towards   it,   then
how   can   the   fruits   of   an   amount   received   through
contributions of the insured be deducted out of the
amount receivable under the Motor Vehicles Act. The
amount   under   this   Act   he   receives   without   any
contribution.   As   we   have   said,   the   compensation
payable   under   the   Motor   Vehicles   Act   is   statutory
while   the   amount   receivable   under   the   life
insurance policy is contractual.”
20. The second issue is
  “whether the salary receivable
by   the   claimant   on   compassionate   appointment   comes
within   the   periphery   of   the   Motor   Vehicles   Act   to   be
termed as “Pecuniary Advantage” liable for deduction.”
  “Compassionate   appointment”   can   be   one   of   the
conditions   of   service   of   an   employee,   if   a   scheme   to
that   effect   is   framed   by   the   employer.     In   case,   the
employee dies in harness i.e. while in service leaving
behind the dependents, one of the dependents may request
for compassionate appointment to maintain the family of
the deceased employee dies in harness.   This cannot be
stated   to   be   an   advantage   receivable   by   the   heirs   on
account of one’s death and have no correlation with the
amount receivable under a statute occasioned on account
of accidental death.  Compassionate appointment may have
1Page 13
nexus with the death of an employee while in service but
it is not necessary that it should have a correlation
with the accidental death.  An  employee dies in harness
even in normal course, due to illness and to maintain
the family of the deceased one of the dependents may be
entitled for compassionate  appointment but that cannot
be termed as “Pecuniary Advantage” that comes under the
periphery of Motor Vehicles Act and any amount received
on   such   appointment   is   not   liable   for   deduction   for
determination  of compensation  under  the Motor Vehicles
Act.  
21. The   third   issue   is
“whether   the   income   tax   is
liable to be deducted for determination of compensation
under the Motor Vehicles Act”
In the case of   Sarla Verma & Anr.(Supra),    this
Court held “generally the actual income of the deceased
less   income   tax   should   be   the   starting   point   for
calculating the compensation.”
This Court further observed that “where the annual
income is in taxable range,   the word “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
1Page 14
income­tax   from  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   Income­tax   Act,   1961   any   person   responsible   for
paying any income chargeable under the head “salaries”
shall   at   the   time   of   payment,   deduct   income­tax   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
employee salary, as it is his duty to deduct the TDS,
then the penalty for non­deduction of TDS is prescribed
under Section 201(1A) of the Income­tax 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  Income­tax   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.  
1Page 15
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.
22. In   the   present   case,   none   of   the   respondents
brought to the notice of the Court that the income­tax
payable by the deceased Sajjan Singh was not deducted at
source   by   the   employer­   State   Government.       No   such
statement was made by Ram Avtar Parikh, PW­2 an employee
of Public Works Department of the State Government who
placed   on   record   the   Last   Pay   Certificate   and   the
Service Book of the deceased.  The Tribunal or the High
Court on perusal of the Last Pay Certificate, have not
noticed that the income­tax on the estimated income of
the   employee   was   not   deducted   from   the   salary   of   the
employee during the said month or Financial Year.     In
absence of such evidence, it is presumed that the salary
paid   to   the   deceased   Sajjan   Singh   as   per   Last   Pay
Certificate   was   paid   in   accordance   with   law   i.e.   by
deducting the income­tax on the estimated income of the
deceased   Sajjan   Singh   for   that   month   or   the   Financial
1Page 16
Year.     The   appellants   have   specifically   stated   that
Assessment Year applicable in the instant case is 1997­
98 and not 1996­97 as   held by the High Court.   They
have   also   taken   specific   plea   that   for   the   Assessment
Year   1997­98   the   rate   of   tax   on   income   more   than
40,000/­   and   upto   Rs.60,000/­   was   15%   and   not   20%   as
held by the High Court.  The aforesaid fact has not been
disputed by the respondents.
23. In   view   of   the   finding   as   recorded   above   and   the
provisions of the Income­tax Act, 1961, as discussed, we
hold that the High Court was wrong in deducting 20% from
the   salary   of   the   deceased   towards   income­tax,   for
calculating   the   compensation.     As   per   law,   the
presumption   will   be   that   employer­State   Government   at
the time of payment of salary deducted income­tax on the
estimated   income   of   the   deceased   employee   from   the
salary and in absence of any evidence, we hold that the
salary   as   shown   in   the   Last   Pay   Certificate   at
Rs.8,920/­ should be accepted which if rounded off comes
to   Rs.9,000/­   for   calculating   the   compensation   payable
to the dependent(s).
24. The   fourth   issue   is   “whether   the   compensation
awarded to the appellants is just and proper.”
1Page 17
For determination of this issue, it is required to
determine   the   percentage   of   increase   in   income   to   be
made towards prospects of advancement in future career
and revision of pay.   In  General Manager, Kerala State
Road Transport Corporation, Trivandrum v. Susamma Thomas
(1994) 2 SCC 176  this Court noticed the age and income
of the deceased for determination of future prospects of
advancement   in   life   and   career.     The   Court   held   as
follows:
“19. In the present case the deceased was 39 years
of age. His income was Rs 1032 per month. Of course,
the   future   prospects   of   advancement   in   life   and
career should also be sounded in terms of money to
augment   the   multiplicand.   While   the   chance   of   the
multiplier is determined by two factors, namely, the
rate of interest appropriate to a stable economy and
the age of the deceased or of the claimant whichever
is higher, the ascertainment of the multiplicand is
a more difficult exercise. Indeed, many factors have
to   be   put   into   the   scales   to   evaluate   the
contingencies   of   the   future.   All   contingencies   of
the   future   need   not   necessarily   be   baneful.   The
deceased   person   in   this   case   had   a   more   or   less
stable job. It will not be inappropriate to take a
reasonably   liberal   view   of   the   prospects   of   the
future and in estimating the gross income it will be
unreasonable to estimate the loss of dependency on
the present actual income of Rs 1032 per month. We
think, having regard to the prospects of advancement
in   the   future   career,   respecting   which   there   is
evidence   on   record,   we   will   not   be   in   error   in
making   a   higher   estimate   of   monthly   income   at   Rs
2000 as the gross income.”
25. In   New India Assurance Co.Ltd. v. Gopali & ors.
reported in AIR 2012 SC 3381 this Court noticed that the
1Page 18
High Court determined the compensation by granting 100%
increase   in   the   income   of   the   deceased.     Taking   into
consideration  the fact that in the normal  course, the
deceased would have served for 22 years and during that
period   his   salary   would   have   certainly   doubled,   this
Court, upheld the judgment of the High Court.
26. In  K.R.   Madhusudhan   v.   Administrative   Officer
(2011)   4   SCC  this   Court   observed   that   there   can   be
departure from the rule of thumb and held as under:­
“10.  The   present   case   stands   on   different   factual
basis   where   there   is   clear   and   incontrovertible
evidence   on   record   that   the   deceased   was   entitled
and in fact bound to get a raise in income in the
future, a fact which was corroborated by evidence on
record.  Thus,  we  are  of the  view   that  the  present
case   comes   within   the   “exceptional   circumstances”
and not within the purview of the rule of thumb laid
down   by   Sarla   Verma1   judgment.   Hence,   even   though
the deceased was above 50 years of age, he shall be
entitled   to   increase   in   income   due   to   future
prospects.”
27. Recently   in  Santosh   Devi   v.   National   Insurance
Company   Ltd.  reported   in  (2012)   6   SCC   421  this   Court
found   it   difficult   to   find   any   rationale   for   the
observation   made   in   paragraph   24   of   the   judgment   in
Sarla Verma’s case and observed as follows:
“14.  We   find   it   extremely   difficult   to   fathom   any
rationale for the observation made in para 24 of the
judgment   in   Sarla   Verma   case2   that   where   the
deceased was self­employed or was on a fixed salary
without   provision   for   annual   increment,   etc.,   the
1Page 19
courts will usually take only the actual income at
the   time   of   death   and   a   departure   from   this   rule
should   be   made   only   in   rare   and   exceptional   cases
involving   special   circumstances.   In   our   view,   it
will   be   naïve   to   say   that   the   wages   or   total
emoluments/income   of   a   person   who   is   self­employed
or   who   is   employed   on   a   fixed   salary   without
provision   for   annual   increment,   etc.,   would   remain
the same throughout his life.
15. The rise in the cost of living affects everyone
across the board. It does not make any distinction
between   rich   and   poor.   As   a   matter   of   fact,   the
effect of rise in prices which directly impacts the
cost of living is minimal on the rich and maximum on
those   who   are   self­employed   or   who   get   fixed
income/emoluments.   They   are   the   worst   affected
people.   Therefore,   they   put   in   extra   efforts   to
generate additional income necessary for sustaining
their families.
18. Therefore, we do not think that while making the
observations in the last three lines of para 24 of
Sarla   Verma’s   judgment,   the   Court   had   intended   to
lay   down   an   absolute   rule   that   there   will   be   no
addition   in   the   income   of   a   person   who   is   self­
employed   or   who   is   paid   fixed   wages.   Rather,   it
would   be   reasonable   to   say   that   a   person   who   is
self­employed or is engaged on fixed wages will also
get 30% increase in his total income over a period
of   time   and   if   he/she   becomes   the   victim   of   an
accident   then   the   same   formula   deserves   to   be
applied for calculating the amount of compensation.”
28. In the case of  New India Assurance Co.Ltd.(Supra),
this   Court   noticed   that  the   High   Court   determined   the
compensation by granting 100% increase in the income of
the deceased.   Taking into consideration the fact that
in the normal course, the deceased would have served for
22 years and during that period his salary would have
1Page 20
certainly doubled, upheld the judgment of the High Court
with following observation:
“20.We are also of the view that the High Court
was  justified  in      determining the amount
of   compensation   by   granting     100%     increase
in             the income of the deceased. In the
normal   course,   the     deceased     would       have
served for 22 years and during that period his
salary would  have   certainly doubled because
the employer was paying 20% of his salary as
bonus per year.”
29. Admittedly,   the   date   of   birth   of   deceased   Sajjan
Singh being 1st  February, 1968;   the submission that he
would have continued in service upto 1st February, 2026,
if   58  years   is  the   age  of  retirement   or  1st  February,
2028, if 60 years is the age of retirement is accepted.
He was only 28 years 7 ½ month old at the time of death.
In   normal   course,   he   would   have   served   the   State
Government minimum for about 30 years.   Even if we do
not   take   into   consideration   the   future   prospect   of
promotion which the deceased was otherwise entitled and
the actual pay revisions taken effect from 1st  January,
1996 and 1st January, 2006, it cannot be denied that the
pay   of   the   deceased   would   have   doubled   if   he   would
continued   in   services   of   the   State   till   the   date   of
retirement.   Hence, this was a fit case in which 100%
increase   in   the   future   income   of   the   deceased   should
2Page 21
have been allowed by the Tribunal and the High Court,
which they failed to do.  
30. Having regard to the facts and evidence on record,
we estimate
 the monthly  income  of the deceased Sajjan
Singh  at   Rs.9,000  x  2  =  Rs.18,000/­   per  month.    
From
this his personal living expenses, which should be 1/3rd,
there   being   three   dependents   has   to   be   deducted.
Thereby, the ‘actual salary’  will come to Rs.18,000  –
Rs.6,000/­   =   Rs.12,000/­   per   month   or   Rs.12,000   x   12
=1,44,000/­ per annum.   
As the deceased was 28 ½ years
old   at   the   time   of   death   the   multiplier   of   17   is
applied,   which   is   appropriate   to   the   age   of   the
deceased.   
The normal compensation would then work out
to be Rs.1,44,000/­ x 17 =Rs.24,48,000/­ to which 
we add
the usual award for loss of consortium and loss of the
estate   by   providing   a   conventional   sum   of   Rs.
1,00,000/­; 
loss of love and affection for the daughter
Rs.2,00,000/­, 
loss of love and affection for the widow
and the mother at Rs.1,00,000/­ each i.e. Rs.2,00,000/­
and funeral expenses of Rs.25,000/­.  
31. Thus,   according   to   us,   in   all   a   sum   of
Rs.29,73,000/­  would   be   a   fair,   just   and   reasonable
award in the circumstances of this case.  
2Page 22
32. The   rate   of   interest   of   12%   is   allowed   from   the
date   of   the   petition   filed   before   the   Tribunal   till
payment is made.  
33. Respondent No.3 is directed to pay the total award
with interest minus the amount (if already paid) within
three months.  
The appellant No.2­daughter who was aged
about 2 years at the time of accident of the deceased
has already attained majority; money may be required for
her education and marriage.   
 In the circumstances, we
direct respondent No.3 to deposit 25% of the due amount
in the account of appellant no.1­the wife.   Out of the
rest   75%     of   the   due   amount,   35%   of   the   amount   be
invested in a Nationalized Bank by fixed deposit for a
period of one year in the name of the daughter­appellant
No.2.  
Out of the rest 40% of the due amount, 20% each
be invested in a Nationalized Bank by fixed deposit for
a period of one year in the name of the appellant Nos. 1
and 3, the wife and the mother respectively. 
34. The  award   passed   by  the  Tribunal   dated   21st  June,
2003   and   the   judgment   dated   29th  July,   2011   of   the
Rajasthan High Court stand modified to the extent above.
The appeal is allowed with the aforesaid observation and
direction.  No separate order as to costs.
2Page 23
………..………………………………………..J.
 (G.S. SINGHVI)
………………………………………………….J.
    (SUDHANSU JYOTI MUKHOPADHAYA)
NEW DELHI,
MAY 03, 2013.
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