1
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO(S). 1058889 OF 2018
(@ SLP (C) NO(S).1235912360 OF 2018)
SEBASTIANI LAKRA & ORS. …. APPELLANT(S)
VERSUS
NATIONAL INSURANCE COMPANY
LTD. & ANR. … RESPONDENT(S)
J U D G M E N T
Deepak Gupta J.
Leave granted.
2. These appeals filed by the claimantsappellants are
directed against the judgment dated 21.12.2017 delivered by
the High Court of Orissa at Cuttack whereby compensation of
2
Rs.40,90,000/ awarded by the IInd Addl. District JudgecumVth
Motor Accidents Claim Tribunal, Rourkela
(hereinafter referred to as ‘the MACT’) has been reduced to
Rs.36,00,000/.
3. The MACT found that the revised basic pay of the
deceased was Rs.51,328/ and he was entitled to DA of
Rs.7,237/ at the time of his death i.e. he was getting a total
salary of Rs.58,565/. However, the MACT, for the purposes
of compensation, assessed the monthly income of deceased at
Rs.50,000/ per month and deducted 1/3 for his personal
expenses leaving a datum figure of Rs.33,333/ per month.
Since the deceased was 52 years old, the MACT following the
judgment of this Court in Sarla Verma v. DTC1
, applied a
multiplier of 11 and assessed compensation at
Rs.40,00,000/ for loss of income, Rs.25,000/ was added for
funeral expenses, Rs.5,000/ for the loss of estate,
Rs.50,000/ towards loss of consortium and Rs.10,000/ for
1
(2009) 6 SCC 121
3
loss of affection i.e. total compensation of Rs.40,90,000/ was
awarded to the claimants. The claimants and the insurance
company filed appeals challenging the quantum of
compensation. The main ground raised by the insurance
company was that the claimants were being paid a sum of
Rs.50,082/ per month under the Employees Family Benefit
Scheme (for short ‘the EFB Scheme’). The High Court,
without giving any reasons, has reduced the compensation by
almost Rs.5,00,000/, to Rs.36,00,000/. Reasons are the
heart and soul of any judicial pronouncement. No judicial
order is complete without reasons and it is expected that
every court which passes an order, should give reasons for
the same.
4. We have heard learned counsel for the parties and it is
not disputed before us that the last drawn income of the
deceased including DA was Rs.58,565/ per month.
According to the insurance company, since the claimants are
getting a sum of Rs.50,082/ under the EFB Scheme, this
4
amount should be deducted in terms of the judgment of this
Court in Reliance General Insurance Co. Ltd. v. Shashi
Sharma2
. On the other hand, the claimants/appellants
submit that no deduction should be made in view of the
judgments rendered by this Court in the case of Helen C.
Rebello v. Maharashtra SRTC3
and United India
Insurance Co. Ltd. v. Patricia Jean Mahajan4
. The
appellants further contend that, in fact, as per the judgment
rendered in National Insurance Co. Ltd. v. Pranay Sethi5
,
15% should be added towards future prospects.
5. Section 168 of the Motor Vehicles Act, 1988 (for short
‘the Act’) mandates that “just compensation” should be paid
to the claimants. Any method of calculation of compensation
which does not result in the award of ‘just compensation’
would not be in accordance with the Act. The word “just” is of
2
(2016) 9 SCC 627
3
(1999) 1 SCC 90
4
(2002) 6 SCC 281
5
(2017) 16 SCC 680
5
a very wide amplitude. The Courts must interpret the word in
a manner which meets the object of the Act, which is to give
adequate and just compensation to the dependents of the
deceased. One must also remember that compensation can
be paid only once and not time and again.
6. The traditional view was that while assessing
compensation, the Court should assess the loss of income
caused to the claimants by the death of the deceased and
balance it with the benefits which may have accrued on
account of the death of the deceased. However, even when
this traditional view was being followed, it was a well settled
position of law that the tortfeasor cannot not take benefit of
the munificence or gratuity of others.
7. In Helen C. Rebello case (supra), the issue was whether
the amounts received by the deceased by way of provident
fund, pension, life insurance policies and similarly, in cash,
6
bank balance, shares, fixed deposits etc., are ‘pecuniary
advantages’ received by the heirs on account of death of the
deceased and liable to be deducted from the compensation.
This Court held that these amounts have no corelation with
the compensation receivable by the dependents under the
Motor Vehicle Act. The following observations were made by
the 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
corelation 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 corelation
7
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, between
them and not to which there is no semblance of any
corelation. The insured (deceased) contributes his own
money for which he receives the amount which has no
corelation 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.”
8. In Patricia Jean Mahajan case (supra), the deceased
was a doctor practicing in the United States of America. He
died on a visit to India. His wife had received an amount of $
2,50,000/ on account of life insurance policies of the
deceased. She had also received unemployment allowance for
8 or 9 months and it was urged that these amounts should be
deducted from the compensation assessed. After referring to
the entire law on the subject including the decision in Helen
C. Rebello case (supra) this Court held as follows:
8
“36. We are in full agreement with the observations made in
the case of Helen Rebello that principle of balancing between
losses and gains, by reason of death, to arrive at the amount
of compensation is a general rule, but what is more
important is that such receipts by the claimants must have
some correlation with the accidental death by reason of
which alone the claimants have received the amounts. We do
not think it would be necessary for us to go into the question
of distinction made between the provisions of the Fatal
Accidents Act and the Motor Vehicles Act. According to the
decisions referred to in the earlier part of this judgment, it is
clear that the amount on account of social security as may
have been received must have a nexus or relation with the
accidental injury or death, so far to be deductible from the
amount of compensation. There must be some correlation
between the amount received and the accidental death or it
may be in the same sphere, absence (sic) the amount
received shall not be deducted from the amount of
compensation. Thus, the amount received on account of
insurance policy of the deceased cannot be deducted from
the amount of compensation though no doubt the receipt of
the insurance amount is accelerated due to premature death
of the insured. So far as other items in respect of which
learned counsel for the Insurance Company has vehemently
urged, for example some allowance paid to the children, and
Mrs Patricia Mahajan under the social security system, no
correlation of those receipts with the accidental death has
been shown much less established. Apart from the fact that
contribution comes from different sources for constituting
the fund out of which payment on account of social security
system is made, one of the constituents of the fund is tax
which is deducted from income for the purpose. We feel that
the High Court has rightly disallowed any deduction on
account of receipts under the insurance policy and other
receipts under the social security system which the claimant
would have also otherwise been entitled to receive
irrespective of accidental death of Dr Mahajan. If the
proposition “receipts from whatever source” is interpreted so
widely that it may cover all the receipts, which may come
into the hands of the claimants, in view of the mere death of
the victim, it would only defeat the purpose of the Act
providing for just compensation on account of accidental
death. Such gains, maybe on account of savings or other
9
investment etc. made by the deceased, would not go to the
benefit of the wrongdoer and the claimant should not be left
worse off, if he had never taken an insurance policy or had
not made investments for future returns.”
9. Thereafter, similar matter came up for consideration in
Vimal Kanwar v. Kishore Dan6
. This Court, following
Helen C. Rebello case (supra) held that the amounts received
by the heirs by way of provident fund, pension and insurance
cannot be termed as ‘pecuniary advantage’ liable for
deduction. This Court also held that the salary received on
compassionate appointment cannot be deducted.
10. In Shashi Sharma case (supra) this Court was dealing
with the payments made to the legal heirs of the deceased in
terms of Rule 5 (1) of the Haryana Compassionate Assistance
to the Dependants of Deceased Government Employees Rules,
2006 (for short ‘the said Rules’). Under Rule 5 of the said
Rules on the death of a Government employee, the family
would continue to receive as financial assistance a sum equal
to the pay and other allowances that was last drawn by the
6
(2013) 7 SCC 476
10
deceased employee for periods set out in the Rules and after
the said period the family was entitled to receive family
pension. The family was also entitled to retain the
Government accommodation for a period of one year in
addition to payment of Rs.25,000/ as ex gratia. In this case,
the threeJudge Bench adverted to the principles laid down in
Helen C. Rebello case (supra), followed in Patricia Jean
Mahajan case (supra), and came to the conclusion that the
decision in Vimal Kanwar case (supra) did not take a view
contrary to Helen C. Rebello or Patricia Jean Mahajan case
(supra). The following observations are relevant:
“15. The principle expounded in this decision in Helen C.
Rebello case that the application of general principles under
the common law to estimate damages cannot be invoked for
computing compensation under the Motor Vehicles Act.
Further, the “pecuniary advantage” from whatever source
must correlate to the injury or death caused on account of
motor accident. The view so taken is the correct analysis and
interpretation of the relevant provisions of the Motor Vehicles
Act of 1939, and must apply proprio vigore to the
corresponding provisions of the Motor Vehicles Act, 1988.
This principle has been restated in the subsequent decision
of the twoJudge Bench in Patricia Jean Mahajan case, to
reject the argument of the Insurance Company to deduct the
amount receivable by the dependants of the deceased by way
of “social security compensation” and “life insurance policy.”
11
However, while dealing with the scheme the Court held that
applying a harmonious approach and to determine a just
compensation payable under the Motor Vehicles Act it would
be appropriate to exclude the amount received under the said
Rules under the Head of ‘Pay and Other Allowances’ last
drawn by the employee. We may note that on principle this
Court has not disagreed with the proposition laid down in
Helen C. Rebello or in Patricia Jean Mahajan case (supra),
but while arriving at a just compensation, it had ordered the
deduction of the salary, received under the statutory rules.
11. The Indian courts have consistently followed the
multiplier system while assessing compensation and the
judgment of this Court in Sarla Verma (supra) has been
reiterated by a Constitution Bench of this Court in Pranay
Sethi (supra) in so far as choice of multiplier is concerned.
12
12. The law is well settled that deductions cannot be allowed
from the amount of compensation either on account of
insurance, or on account of pensionary benefits or gratuity or
grant of employment to a kin of the deceased. The main
reason is that all these amounts are earned by the deceased
on account of contractual relations entered into by him with
others. It cannot be said that these amounts accrued to the
dependents or the legal heirs of the deceased on account of
his death in a motor vehicle accident. The
claimants/dependents are entitled to ‘just compensation’
under the Motor Vehicles Act as a result of the death of the
deceased in a motor vehicle accident. Therefore, the natural
corollary is that the advantage which accrues to the estate of
the deceased or to his dependents as a result of some
contract or act which the deceased performed in his life time
cannot be said to be the outcome or result of the death of the
deceased even though these amounts may go into the hands
of the dependents only after his death.
13
13. As far as any amount paid under any insurance policy is
concerned whatever is added to the estate of the deceased or
his dependents is not because of the death of the deceased
but because of the contract entered into between the
deceased and the insurance company from where he took out
the policy. The deceased paid premium on such life
insurance and this amount would have accrued to the estate
of the deceased either on maturity of the policy or on his
death, whatever be the manner of his death. These amounts
are paid because the deceased has wisely invested his
savings. Similar would be the position in case of other
investments like bank deposits, share, debentures etc.. The
tortfeasor cannot take advantage of the foresight and wise
financial investments made by the deceased.
14. As far as the amounts of pension and gratuity are
concerned, these are paid on account of the service rendered
by the deceased to his employer. It is now an established
principle of service jurisprudence that pension and gratuity
14
are the property of the deceased. They are more in the nature
of deferred wages. The deceased employee works throughout
his life expecting that on his retirement he will get substantial
amount as pension and gratuity. These amounts are also
payable on death, whatever be the cause of death. Therefore,
applying the same principles, the said amount cannot be
deducted.
15. As held by the House of Lords in Perry v. Cleaver7
the
insurance amount is the fruit of premium paid in the past,
pension is the fruit of services already rendered and the
wrong doer should not be given benefit of the same by
deducting it from the damages assessed.
16. Deduction can be ordered only where the tortfeasor
satisfies the court that the amount has accrued to the
7 1969 ACJ 363
15
claimants only on account of death of the deceased in a motor
vehicle accident.
17. The issue before us is whether we should deduct the
amount being received by the family members under the EFB
Scheme while calculating the loss of income.
18. The EFB Scheme is totally different from the rules which
were under consideration of this Court in Shashi Sharma
case (supra). Under this Scheme, the nominee or legal heir(s)
of the deceased employee have to deposit the entire amount of
gratuity and all other benefits payable to them on the death of
the employee.
19. In the present case, it stands proved that the claimants
have deposited a sum of Rs.27,43,991/ received by them on
the death of the deceased with the employer and are now
getting about Rs.50,082/ per month. This amount of
16
Rs.50,082/ is to be paid to the legal heirs under the EFB
Scheme only till date of retirement of the deceased. Even if
an interest @ of 12% per annum is calculated on the amount
of Rs.27,43,991/, that would amount to Rs.3,30,000/ per
year or Rs.27,500/ per month. The appellantsclaimants are
getting about Rs.50,000/ per month i.e. about Rs.22,500/
per month more, but this is only to be paid for a period of
about 7 years till 30.04.2021. This payment will cease
thereafter.
20. The aforesaid payment is totally different to the payment
made by the employer in Shashi Sharma case (supra) which
was statutory in nature. Therefore, we hold that this amount
cannot be deducted.
21. However, since the claimants are getting quite an
advantage, we feel that the MACT was right in not taking into
consideration the future prospects in the peculiar facts and
17
circumstances of the case. Therefore, though we are not
inclined to deduct the amount payable to the claimants, we
feel that in the peculiar facts and circumstances of the case,
they are not entitled to claim another amount @ of 15% by
way of future prospects. The payment of the amount under
the EFB Scheme more than offsets the loss of future
prospects. This, in our opinion, would be ‘just’ compensation.
22. It is not disputed that the last drawn income of the
deceased including DA was Rs.58,565/. On this amount, the
deceased would definitely have been paying some income tax.
Since exact calculations of the same has not been given, we
deduct about Rs.2,565/ per month for this purpose and for
purposes of calculation of loss of income, assess the income
as Rs.56,000/ per month. Out of this amount 1/3 is
deducted i.e. Rs.18,667/, for personal expenses leaving a
balance of Rs. 37,333/ per month as loss of dependency to
the family, which works out to Rs.4,47,996/ per annum.
Applying a multiplier of 11, the compensation works out to
Rs.49,27,956/. In addition thereto, according to the
18
judgment of this Court in Pranay Sethi case (supra), the
claimants are entitled to Rs.15,000/ for loss of estate,
Rs.40,000/ loss of consortium, Rs.15,000/ for funeral
expenses i.e. a total amount of Rs.49,97,956/ which is
rounded off to Rs.50,00,000/. On this amount, the
claimants shall be entitled to interest @ of 9% per annum
from the date of filing of the petition till the payment of the
amount. Obviously, the insurance company shall be entitled
to deduct/adjust the amounts already paid by it.
23. The appeals are allowed in the aforesaid terms. Pending
application(s), if any, stands disposed of.
……………………………J.
(Madan B. Lokur)
……………………………J.
(S. Abdul Nazeer)
……………………………J.
(Deepak Gupta)
New Delhi
October 12, 2018
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO(S). 1058889 OF 2018
(@ SLP (C) NO(S).1235912360 OF 2018)
SEBASTIANI LAKRA & ORS. …. APPELLANT(S)
VERSUS
NATIONAL INSURANCE COMPANY
LTD. & ANR. … RESPONDENT(S)
J U D G M E N T
Deepak Gupta J.
Leave granted.
2. These appeals filed by the claimantsappellants are
directed against the judgment dated 21.12.2017 delivered by
the High Court of Orissa at Cuttack whereby compensation of
2
Rs.40,90,000/ awarded by the IInd Addl. District JudgecumVth
Motor Accidents Claim Tribunal, Rourkela
(hereinafter referred to as ‘the MACT’) has been reduced to
Rs.36,00,000/.
3. The MACT found that the revised basic pay of the
deceased was Rs.51,328/ and he was entitled to DA of
Rs.7,237/ at the time of his death i.e. he was getting a total
salary of Rs.58,565/. However, the MACT, for the purposes
of compensation, assessed the monthly income of deceased at
Rs.50,000/ per month and deducted 1/3 for his personal
expenses leaving a datum figure of Rs.33,333/ per month.
Since the deceased was 52 years old, the MACT following the
judgment of this Court in Sarla Verma v. DTC1
, applied a
multiplier of 11 and assessed compensation at
Rs.40,00,000/ for loss of income, Rs.25,000/ was added for
funeral expenses, Rs.5,000/ for the loss of estate,
Rs.50,000/ towards loss of consortium and Rs.10,000/ for
1
(2009) 6 SCC 121
3
loss of affection i.e. total compensation of Rs.40,90,000/ was
awarded to the claimants. The claimants and the insurance
company filed appeals challenging the quantum of
compensation. The main ground raised by the insurance
company was that the claimants were being paid a sum of
Rs.50,082/ per month under the Employees Family Benefit
Scheme (for short ‘the EFB Scheme’). The High Court,
without giving any reasons, has reduced the compensation by
almost Rs.5,00,000/, to Rs.36,00,000/. Reasons are the
heart and soul of any judicial pronouncement. No judicial
order is complete without reasons and it is expected that
every court which passes an order, should give reasons for
the same.
4. We have heard learned counsel for the parties and it is
not disputed before us that the last drawn income of the
deceased including DA was Rs.58,565/ per month.
According to the insurance company, since the claimants are
getting a sum of Rs.50,082/ under the EFB Scheme, this
4
amount should be deducted in terms of the judgment of this
Court in Reliance General Insurance Co. Ltd. v. Shashi
Sharma2
. On the other hand, the claimants/appellants
submit that no deduction should be made in view of the
judgments rendered by this Court in the case of Helen C.
Rebello v. Maharashtra SRTC3
and United India
Insurance Co. Ltd. v. Patricia Jean Mahajan4
. The
appellants further contend that, in fact, as per the judgment
rendered in National Insurance Co. Ltd. v. Pranay Sethi5
,
15% should be added towards future prospects.
5. Section 168 of the Motor Vehicles Act, 1988 (for short
‘the Act’) mandates that “just compensation” should be paid
to the claimants. Any method of calculation of compensation
which does not result in the award of ‘just compensation’
would not be in accordance with the Act. The word “just” is of
2
(2016) 9 SCC 627
3
(1999) 1 SCC 90
4
(2002) 6 SCC 281
5
(2017) 16 SCC 680
5
a very wide amplitude. The Courts must interpret the word in
a manner which meets the object of the Act, which is to give
adequate and just compensation to the dependents of the
deceased. One must also remember that compensation can
be paid only once and not time and again.
6. The traditional view was that while assessing
compensation, the Court should assess the loss of income
caused to the claimants by the death of the deceased and
balance it with the benefits which may have accrued on
account of the death of the deceased. However, even when
this traditional view was being followed, it was a well settled
position of law that the tortfeasor cannot not take benefit of
the munificence or gratuity of others.
7. In Helen C. Rebello case (supra), the issue was whether
the amounts received by the deceased by way of provident
fund, pension, life insurance policies and similarly, in cash,
6
bank balance, shares, fixed deposits etc., are ‘pecuniary
advantages’ received by the heirs on account of death of the
deceased and liable to be deducted from the compensation.
This Court held that these amounts have no corelation with
the compensation receivable by the dependents under the
Motor Vehicle Act. The following observations were made by
the 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
corelation 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 corelation
7
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, between
them and not to which there is no semblance of any
corelation. The insured (deceased) contributes his own
money for which he receives the amount which has no
corelation 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.”
8. In Patricia Jean Mahajan case (supra), the deceased
was a doctor practicing in the United States of America. He
died on a visit to India. His wife had received an amount of $
2,50,000/ on account of life insurance policies of the
deceased. She had also received unemployment allowance for
8 or 9 months and it was urged that these amounts should be
deducted from the compensation assessed. After referring to
the entire law on the subject including the decision in Helen
C. Rebello case (supra) this Court held as follows:
8
“36. We are in full agreement with the observations made in
the case of Helen Rebello that principle of balancing between
losses and gains, by reason of death, to arrive at the amount
of compensation is a general rule, but what is more
important is that such receipts by the claimants must have
some correlation with the accidental death by reason of
which alone the claimants have received the amounts. We do
not think it would be necessary for us to go into the question
of distinction made between the provisions of the Fatal
Accidents Act and the Motor Vehicles Act. According to the
decisions referred to in the earlier part of this judgment, it is
clear that the amount on account of social security as may
have been received must have a nexus or relation with the
accidental injury or death, so far to be deductible from the
amount of compensation. There must be some correlation
between the amount received and the accidental death or it
may be in the same sphere, absence (sic) the amount
received shall not be deducted from the amount of
compensation. Thus, the amount received on account of
insurance policy of the deceased cannot be deducted from
the amount of compensation though no doubt the receipt of
the insurance amount is accelerated due to premature death
of the insured. So far as other items in respect of which
learned counsel for the Insurance Company has vehemently
urged, for example some allowance paid to the children, and
Mrs Patricia Mahajan under the social security system, no
correlation of those receipts with the accidental death has
been shown much less established. Apart from the fact that
contribution comes from different sources for constituting
the fund out of which payment on account of social security
system is made, one of the constituents of the fund is tax
which is deducted from income for the purpose. We feel that
the High Court has rightly disallowed any deduction on
account of receipts under the insurance policy and other
receipts under the social security system which the claimant
would have also otherwise been entitled to receive
irrespective of accidental death of Dr Mahajan. If the
proposition “receipts from whatever source” is interpreted so
widely that it may cover all the receipts, which may come
into the hands of the claimants, in view of the mere death of
the victim, it would only defeat the purpose of the Act
providing for just compensation on account of accidental
death. Such gains, maybe on account of savings or other
9
investment etc. made by the deceased, would not go to the
benefit of the wrongdoer and the claimant should not be left
worse off, if he had never taken an insurance policy or had
not made investments for future returns.”
9. Thereafter, similar matter came up for consideration in
Vimal Kanwar v. Kishore Dan6
. This Court, following
Helen C. Rebello case (supra) held that the amounts received
by the heirs by way of provident fund, pension and insurance
cannot be termed as ‘pecuniary advantage’ liable for
deduction. This Court also held that the salary received on
compassionate appointment cannot be deducted.
10. In Shashi Sharma case (supra) this Court was dealing
with the payments made to the legal heirs of the deceased in
terms of Rule 5 (1) of the Haryana Compassionate Assistance
to the Dependants of Deceased Government Employees Rules,
2006 (for short ‘the said Rules’). Under Rule 5 of the said
Rules on the death of a Government employee, the family
would continue to receive as financial assistance a sum equal
to the pay and other allowances that was last drawn by the
6
(2013) 7 SCC 476
10
deceased employee for periods set out in the Rules and after
the said period the family was entitled to receive family
pension. The family was also entitled to retain the
Government accommodation for a period of one year in
addition to payment of Rs.25,000/ as ex gratia. In this case,
the threeJudge Bench adverted to the principles laid down in
Helen C. Rebello case (supra), followed in Patricia Jean
Mahajan case (supra), and came to the conclusion that the
decision in Vimal Kanwar case (supra) did not take a view
contrary to Helen C. Rebello or Patricia Jean Mahajan case
(supra). The following observations are relevant:
“15. The principle expounded in this decision in Helen C.
Rebello case that the application of general principles under
the common law to estimate damages cannot be invoked for
computing compensation under the Motor Vehicles Act.
Further, the “pecuniary advantage” from whatever source
must correlate to the injury or death caused on account of
motor accident. The view so taken is the correct analysis and
interpretation of the relevant provisions of the Motor Vehicles
Act of 1939, and must apply proprio vigore to the
corresponding provisions of the Motor Vehicles Act, 1988.
This principle has been restated in the subsequent decision
of the twoJudge Bench in Patricia Jean Mahajan case, to
reject the argument of the Insurance Company to deduct the
amount receivable by the dependants of the deceased by way
of “social security compensation” and “life insurance policy.”
11
However, while dealing with the scheme the Court held that
applying a harmonious approach and to determine a just
compensation payable under the Motor Vehicles Act it would
be appropriate to exclude the amount received under the said
Rules under the Head of ‘Pay and Other Allowances’ last
drawn by the employee. We may note that on principle this
Court has not disagreed with the proposition laid down in
Helen C. Rebello or in Patricia Jean Mahajan case (supra),
but while arriving at a just compensation, it had ordered the
deduction of the salary, received under the statutory rules.
11. The Indian courts have consistently followed the
multiplier system while assessing compensation and the
judgment of this Court in Sarla Verma (supra) has been
reiterated by a Constitution Bench of this Court in Pranay
Sethi (supra) in so far as choice of multiplier is concerned.
12
12. The law is well settled that deductions cannot be allowed
from the amount of compensation either on account of
insurance, or on account of pensionary benefits or gratuity or
grant of employment to a kin of the deceased. The main
reason is that all these amounts are earned by the deceased
on account of contractual relations entered into by him with
others. It cannot be said that these amounts accrued to the
dependents or the legal heirs of the deceased on account of
his death in a motor vehicle accident. The
claimants/dependents are entitled to ‘just compensation’
under the Motor Vehicles Act as a result of the death of the
deceased in a motor vehicle accident. Therefore, the natural
corollary is that the advantage which accrues to the estate of
the deceased or to his dependents as a result of some
contract or act which the deceased performed in his life time
cannot be said to be the outcome or result of the death of the
deceased even though these amounts may go into the hands
of the dependents only after his death.
13
13. As far as any amount paid under any insurance policy is
concerned whatever is added to the estate of the deceased or
his dependents is not because of the death of the deceased
but because of the contract entered into between the
deceased and the insurance company from where he took out
the policy. The deceased paid premium on such life
insurance and this amount would have accrued to the estate
of the deceased either on maturity of the policy or on his
death, whatever be the manner of his death. These amounts
are paid because the deceased has wisely invested his
savings. Similar would be the position in case of other
investments like bank deposits, share, debentures etc.. The
tortfeasor cannot take advantage of the foresight and wise
financial investments made by the deceased.
14. As far as the amounts of pension and gratuity are
concerned, these are paid on account of the service rendered
by the deceased to his employer. It is now an established
principle of service jurisprudence that pension and gratuity
14
are the property of the deceased. They are more in the nature
of deferred wages. The deceased employee works throughout
his life expecting that on his retirement he will get substantial
amount as pension and gratuity. These amounts are also
payable on death, whatever be the cause of death. Therefore,
applying the same principles, the said amount cannot be
deducted.
15. As held by the House of Lords in Perry v. Cleaver7
the
insurance amount is the fruit of premium paid in the past,
pension is the fruit of services already rendered and the
wrong doer should not be given benefit of the same by
deducting it from the damages assessed.
16. Deduction can be ordered only where the tortfeasor
satisfies the court that the amount has accrued to the
7 1969 ACJ 363
15
claimants only on account of death of the deceased in a motor
vehicle accident.
17. The issue before us is whether we should deduct the
amount being received by the family members under the EFB
Scheme while calculating the loss of income.
18. The EFB Scheme is totally different from the rules which
were under consideration of this Court in Shashi Sharma
case (supra). Under this Scheme, the nominee or legal heir(s)
of the deceased employee have to deposit the entire amount of
gratuity and all other benefits payable to them on the death of
the employee.
19. In the present case, it stands proved that the claimants
have deposited a sum of Rs.27,43,991/ received by them on
the death of the deceased with the employer and are now
getting about Rs.50,082/ per month. This amount of
16
Rs.50,082/ is to be paid to the legal heirs under the EFB
Scheme only till date of retirement of the deceased. Even if
an interest @ of 12% per annum is calculated on the amount
of Rs.27,43,991/, that would amount to Rs.3,30,000/ per
year or Rs.27,500/ per month. The appellantsclaimants are
getting about Rs.50,000/ per month i.e. about Rs.22,500/
per month more, but this is only to be paid for a period of
about 7 years till 30.04.2021. This payment will cease
thereafter.
20. The aforesaid payment is totally different to the payment
made by the employer in Shashi Sharma case (supra) which
was statutory in nature. Therefore, we hold that this amount
cannot be deducted.
21. However, since the claimants are getting quite an
advantage, we feel that the MACT was right in not taking into
consideration the future prospects in the peculiar facts and
17
circumstances of the case. Therefore, though we are not
inclined to deduct the amount payable to the claimants, we
feel that in the peculiar facts and circumstances of the case,
they are not entitled to claim another amount @ of 15% by
way of future prospects. The payment of the amount under
the EFB Scheme more than offsets the loss of future
prospects. This, in our opinion, would be ‘just’ compensation.
22. It is not disputed that the last drawn income of the
deceased including DA was Rs.58,565/. On this amount, the
deceased would definitely have been paying some income tax.
Since exact calculations of the same has not been given, we
deduct about Rs.2,565/ per month for this purpose and for
purposes of calculation of loss of income, assess the income
as Rs.56,000/ per month. Out of this amount 1/3 is
deducted i.e. Rs.18,667/, for personal expenses leaving a
balance of Rs. 37,333/ per month as loss of dependency to
the family, which works out to Rs.4,47,996/ per annum.
Applying a multiplier of 11, the compensation works out to
Rs.49,27,956/. In addition thereto, according to the
18
judgment of this Court in Pranay Sethi case (supra), the
claimants are entitled to Rs.15,000/ for loss of estate,
Rs.40,000/ loss of consortium, Rs.15,000/ for funeral
expenses i.e. a total amount of Rs.49,97,956/ which is
rounded off to Rs.50,00,000/. On this amount, the
claimants shall be entitled to interest @ of 9% per annum
from the date of filing of the petition till the payment of the
amount. Obviously, the insurance company shall be entitled
to deduct/adjust the amounts already paid by it.
23. The appeals are allowed in the aforesaid terms. Pending
application(s), if any, stands disposed of.
……………………………J.
(Madan B. Lokur)
……………………………J.
(S. Abdul Nazeer)
……………………………J.
(Deepak Gupta)
New Delhi
October 12, 2018
