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Saturday, February 10, 2018

Insurance laws - accident claims - future prospects - (iii) While determining the income, an addition of 50% of actual salary to the income of the deceased towards future prospects, 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 48 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. (iv) In case the deceased was self­employed or on a fixed salary, an addition of 40% of the established income should be the warrant where the deceased was below the age of 40 years. An addition of 25% where the deceased was between the age of 40 to 50 years and 10% where the deceased was between the age of 50 to 60 years should be regarded as the necessary method of computation. The established income means the income minus the tax component.” = whether the appellants seek further enhancement of compensation amount on the ground that the High Court has not provided for future prospects, while computing the compensation amount. = The compensation awarded by the High Court is enhanced from Rs.5,01,500/­ to Rs.6,74,300/­ [Rupees six lakh seventy four thousand three hundred only]. The respondent Transport Corporation is directed to deposit the entire award amount as indicated above with interest at 9% (nine percent) per annum less the amount already deposited if any, within a period of eight weeks from the date of receipt of a copy of this judgment and the appellants shall be entitled to the compensation in the proportion specified by the Tribunal.

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REPORTABLE
       
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO.1754 OF 2018
(Arising out of SLP (Civil) No.12416 of 2016)
Munusamy & Ors. ….   Appellants
                       
Versus
The Managing Director, Tamil Nadu State  ….Respondent
Transport Corporation (Villupuram) Ltd.
J U D G M E N T
A.M. Khanwilkar, J.
1. This   appeal   emanates   from   the   judgment   and   order
passed   by   the   High   Court   of   Judicature   at   Madras   dated
16.04.2013   in   C.M.A.   No.2819   of   2012.   The   High   Court
allowed   the   prayer   for   grant   of   enhanced   compensation
amount   in   favour   of   the   appellants.   The   appellants   seek
further enhancement of compensation amount on the ground
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that the High Court has not provided for future prospects,
while computing the compensation amount. The appellants
rely upon the recent decision of the Constitution Bench of this
Court in the case of National Insurance Company Ltd. Vs.
Pranay Sethi and Ors.1
, to buttress their submission.
2. Before we deal with the grievance of the appellants, it is
apposite to reproduce the relevant extract of the impugned
judgment which reads thus:
“7. We have heard the learned counsel for the respondent
on the above submission.
8. In the absence of specific proof of employment, the
Tribunal rightly has taken the earning of the deceased at
Rs.4,000/­ per month and deducted 50% towards personal
expenses since the deceased were bachelors. However, the
proper multiplier to be adopted in the case must be 18, since
the deceased were 21 and 20 years respectively. A sum of
Rs.20,000/­ to each of the claimants towards loss of love
and   affection   and   a   further   sum   of   Rs.5,000/­   towards
transport expenses were granted.
9. Accordingly, in C.M.A. No.2819 of 2012 compensation
payable would be as follows:
(a) Loss of Dependency  Rs.4,32,000/­
(Rs.4,000/­×12×18)
(b) Loss of love and affection  Rs.   60,000/­
(c) Transport Rs.  5,000/­
(d) Funeral Rs.  2,000/­
1 AIR 2017 SC 5157
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(e) Loss of estate Rs.  2,500/­
Total = Rs.5,01,500/­”
3. On perusal of the judgment under appeal, it is evident
that the High Court has not provided for future prospects
while computing the compensation amount under the head
‘loss of dependency’. The necessity to provide future prospects
has been expounded by the Constitution Bench of this Court
in  National   Insurance   Company   Ltd.  (supra).   It   will   be
useful to reproduce paragraph No.59 of the said judgment,
which reads thus: 
“59. Having bestowed our anxious consideration, we are
disposed   to   think   when   we   accept   the   principle   of
standardization, there is really no rationale not to apply
the said principle to the self­employed or a person who is
on a fixed 44 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   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.
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
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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 selfemployed
  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   45   competing
attitude in the private sector to enhance the salary to get
better efficiency from the employees. Similarly, a person
who is self­employed 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   change   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. We are
inclined   to   think   that   there   can   be   some   degree   of
difference as regards the percentage that is meant for or
applied  to in respect  of  the legal representatives  who
claim on behalf of the deceased who had a permanent
job than a person who is self­employed or on a fixed
salary. But not to apply the principle of standardization
on the foundation of perceived lack of certainty would
tantamount   to   remaining   oblivious   to   the   marrows   of
ground reality. And, therefore, degree­test is imperative.
Unless the degree­test is applied and left to the parties to
adduce   evidence   to   establish,   it   would   be   unfair   and
inequitable.   The   degree­test   has   to   have   the   inbuilt
concept of 46 percentage. Taking into consideration the
cumulative   factors,   namely,   passage   of   time,   the
changing society, escalation of price, the change in price
index, the human attitude to follow a particular pattern of
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life, etc., an addition of 40% of the established income of
the deceased towards future prospects and where the
deceased was below 40 years an addition of 25% where
the deceased was between the age of 40 to 50 years
would be reasonable.”
Again, in the concluding paragraph No.61 the Court observed
thus:
“61. In view of the aforesaid analysis, we proceed to
record our conclusions:­
* * *
(iii) While determining the income, an addition of 50% of
actual   salary   to   the   income   of   the   deceased   towards
future prospects, 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 48 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. 
(iv) In case the deceased was self­employed or on a fixed
salary,   an  addition   of   40%   of   the   established   income
should be the warrant where the deceased was below
the   age   of   40   years.   An   addition   of   25%   where   the
deceased was between the age of 40 to 50 years and
10% where the deceased was between the age of 50 to
60 years should be regarded as the necessary method of
computation. The established income means the income
minus the tax component.” 
4. On   03.03.2007,   the   deceased   (Palani),   who   was   only
around 21 years of age at the time, was riding a motorcycle
bearing Registration No. TN­22 AP 5092 along with his friend,
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one   Haridass   as   a   pillion   rider,   from   Tambaram   to
Chengalpattu   on   GST   Road,   Maraimalai   Nagar,   opposite
Vikram   Hotel,   when   they   collided   with   a   bus   bearing
Registration No. TN­21 N 0943 belonging to the respondent
Transport   Corporation,   which   was   driven   in   a   rash   and
negligent manner. The deceased was unmarried and working
as   a   contract   worker   in   Hyundai   Car   Company,
Sriperumbudur.   Applying   the   dictum   of   the   Constitution
Bench   referred   to   above,   the   appellants   are   justified   in
insisting for grant of future prospects at the rate of 40% of the
established income. The High Court has held that the earning
of   the   deceased   at   the   relevant   time   can   be   taken   as
Rs.4,000/­ per month. The High Court did not provide 40%
towards future prospects on the established income of the
deceased. Thus, the monthly loss of dependency, in the facts
of the present case would be Rs.4,000 + 1,600 = Rs.5,600/­.
5. In other words, instead of amount awarded by the High
Court towards loss of dependency in the sum of Rs.4,32,000/­,
the same will stand modified to Rs.6,04,800/­ (Rupees six
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lakh four thousand eight hundred only) along with interest at
the   rate   of   9%   (nine   percent)   per   annum.   We   are   not
disturbing the other directions given by the High Court in
respect of other heads.
6. Accordingly, the respondent Transport Corporation must
deposit   the   additional   amount   of   compensation   of
Rs.1,72,800/­  (Rupees one lakh seventy two thousand eight
hundred only) along with interest, as awarded in the preceding
paragraph, within a period of eight weeks from the date of
receipt of the copy of this judgment in the Court of Additional
District   &   Sessions   Judge,   Fast   Track   Court­IV,   Chennai
(Motor Accident Claims Tribunal, Chennai).
7. In   other   words,   the   compensation   payable   to   the
appellants would be as follows:
(a) Loss of Dependency  Rs.6,04,800/­
[Rs.5,600 – 50% of 5600)×12×18]
(b) Loss of love and affection  Rs.   60,000/­
(c) Transport Rs.   5,000/­
(d) Funeral Rs.   2,000/­
(e) Loss of estate Rs.   2,500/­
Total = Rs.6,74,300/­
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8. As a result, the Appeal stands allowed. The compensation
awarded by the High Court is enhanced from Rs.5,01,500/­ to
Rs.6,74,300/­ [Rupees six lakh seventy four thousand three
hundred   only].   The   respondent   Transport   Corporation   is
directed to deposit the entire award amount as indicated above
with interest at 9% (nine percent) per annum less the amount
already deposited if any, within a period of eight weeks from
the   date   of   receipt   of   a   copy   of   this   judgment   and   the
appellants   shall   be   entitled   to   the   compensation   in   the
proportion   specified  by   the   Tribunal.   The   first   and   second
appellants   are   entitled   to   withdraw   the   amount   deposited
upon verification of due application and the share of the third
appellant (minor) shall be deposited in any of the nationalised
banks   till   she   attains   majority   and   the   second
claimant/mother is entitled to withdraw interest thereon once
in three months towards meeting the needs of the minor. Upon
turning 18, the minor appellant is entitled to withdraw her
respective share. 
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9.      Accordingly,   the   appeal   is   allowed   in   the
aforementioned terms with no order as to costs. 
.………………………….CJI.
        (Dipak Misra)
…………………………..….J.
               (A.M. Khanwilkar)
…………………………..….J.
       (Dr. D.Y. Chandrachud)
New Delhi;
February 09, 2018.

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