Motor Vehicles Act, 1988: Claims and legal liabilities crystallise at the time of accident itself – Any changes post thereto, ought not to ordinarily affect pending proceedings – Just like how claimants cannot rely upon subsequent increases in minimum wages, the insurer too cannot seek benefit of the subsequent death of a dependent during the pendency of legal proceedings – Similarly, any concession in law made in this regard by either counsel would not bind the parties.
Concession in law: Permissibility, extent of – Held: Advocates cannot throw away legal rights or enter into arrangements contrary to law – Motor Vehicles Act, 1988.
Motor Vehicles Act, 1988: Assessment of income in the absence of evidence – Held: In the instant case, although it is correct that the claimants were unable to produce any document evidencing victim-husband’s income, nor they established his employment as a teacher; but that would not justify adoption of the lowest-tier of minimum wage while computing his income – From the statement of witnesses, documentary evidence-on-record and circumstances of the accident, it is apparent that victim was comparatively more educationally qualified and skilled – Further, he maintained a reasonable standard of living for his family as evidenced by his use of a motorcycle for commuting – Preserving theexisting standard of living of a deceased’s family is a fundamental endeavour of motor accident compensation law – Thus, the minimum wage of Rs 6197 as applicable to skilled workers applied in his case.
Motor Vehicles Act, 1988: Future prospects – In case the deceased was self-employed 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 – The argument that no future prospects ought to be allowed for those with notional income, is both incorrect in law and without merit considering the constant inflation-induced increase in wages. Motor Vehicles Act, 1988: Calculation of notional income for homemakers and the grant of future prospects with respect to them, for the purposes of grant of compensation – Determining factors, discussed. (Per N.V. Ramana, J – Supplementing) Partly allowing the appeals, the Court
HELD:
Per SURYA KANT, J.:
1. It cannot be disputed that at the time of death, there in fact were four dependents of the deceased and not three. The subsequent death of the deceased’s dependent mother ought not to be a reason for reduction of motor accident compensation. Claims and legal liabilities crystallise at the time of the accident itself, and changes post thereto ought not to ordinarily affect pending proceedings. Just like how appellant-claimants cannot rely upon subsequent increases in minimum wages, the respondent-insurer too cannot seek benefit of the subsequent death of a dependent during the pendency of legal proceedings. Similarly, any concession in law made in this regard by either counsel would not bind the parties, as it is legally settled that advocates cannot throw-away legal rights or enter into arrangements contrary to law. [Para 10][998-G; 999-A-B]
2.1 Any compensation awarded by a Court ought to be just, reasonable and consequently must undoubtedly be guided by principles of fairness, equity, and good conscience. Not only did the family of the deceased consist of septuagenarian parents, but there were also two toddler-girls, aged merely 3 and 4 years; each of whom requires exceptional care and expenditure till they reach the stage of self-dependency. Tragically, in addition to the married couple, the negligence of the driver also extinguished the life of the family’s third child who was a foetus in victim-lady’s womb at the time of the accident. Thus, the appropriate deduction for personal expenses for both victims (couple) ought to be 1/4th only, and not 1/3rd as applied by the Tribunal and the High Court, more so when there were four family members dependent on the deceased. [Para 11][999-C-E]
Director of Elementary Education v. Pramod Kumar Sahoo (2019) 10 SCC 674 Helen C Rebello v.
Maharashtra State Road Transport Corp, (1999) 1 SCC
90 – relied on
2.2 Second, although it is correct that the claimants have been unable to produce any document evidencing victimhusband’s income, nor have they established his employment as a teacher; but that doesn’t justify adoption of the lowest-tier of minimum wage while computing his income. From the statement of witnesses, documentary evidence-on-record and circumstances of the accident, it is apparent that victim was comparatively more educationally qualified and skilled. Further, he maintained a reasonable standard of living for his family as evidenced by his use of a motorcycle for commuting. Preserving theexisting standard of living of a deceased’s family is a fundamental endeavour of motor accident compensation law. Thus, at the very least, the minimum wage of Rs 6197 as applicable to skilled workers during April 2014 in the State of Haryana ought to be applied in his case. [Para 12][999-E-G; 1000-A]
RK Malik v. Kiran Pal (2019) 14 SCC 1 - relied on
2.3 Third and most importantly, it is unfair on part of the respondent-insurer to contest grant of future prospects considering their submission before the High Court that such compensation ought not to be paid pending outcome of the Pranay Sethi reference. Nevertheless, the law on this point is no longer res integra, and stands crystalised, as it was held therein that in case the deceased was self-employed 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. [Para 13][1000-B-D]
National Insurance Co Ltd v. Pranay Sethi (2017) 16 SCC 680 – followed
3. Given how both deceased were below 40 years and how they have not been established to be permanent employees, future prospects to the tune of 40% must be paid. The argument that no such future prospects ought to be allowed for those with notional income, is both incorrect in law and without merit considering the constant inflation-induced increase in wages. It was held in Hem Raj v. Oriental Insurance Co. Ltd. that there cannot be distinction where there is positive evidence of income and where minimum income is determined on guesswork in the facts and circumstances of a case. Both the situations stand at the same footing. Accordingly, in the present case, addition of 40% to the income assessed by the Tribunal is required to be made..” [Para 14][1000-E-G]
Sunita Tokas v. New India Insurance Co Ltd 2019 SCC OnLine SC 1045; Hem Raj v. Oriental Insurance Co. Ltd. (2018) 15 SCC 654 – relied on
Per N.V. RAMANA, J. (Supplementing):
1. There are two distinct categories of situations wherein the Court usually determines notional income of a victim. The first category of cases relates to those wherein the victim was employed, but the claimants are not able to prove her actual income, before the Court. In such a situation, the Court “guesses” the income of the victim on the basis of the evidence on record, like the quality of life being led by the victim and her family, the general earning of an individual employed in that field, the qualifications of the victim, and other considerations. The second category of cases relates to those situations wherein the Court is called upon to determine the income of a non-earning victim, such as a child, a student or a homemaker. Needless to say, compensation in such cases is extremely difficult to quantify. [Paras 2, 3][1002-B-D]
2. The Court often follows different principles for determining the compensation towards a non-earning victim in order to arrive at an amount which would be just in the facts and circumstances of the case. Some of these involve the determination of notional income. One category of non-earning victims that Courts are often called upon to calculate the compensation for are homemakers. A housemaker often prepares food for the entire family, manages the procurement of groceries and other household shopping needs, cleans and manages the house and its surroundings, undertakes decoration, repairs and maintenance work, looks after the needs of the children and any aged member of the household, manages budgets and so much more. In rural households, they often also assist in the sowing, harvesting and transplanting activities in the field, apart from tending cattle. However, despite all the above, the conception that housemakers do not “work” or that they do not add economic value to the household is a problematic idea that has persisted for many years and must be overcome. [Paras 4, 5, 10][1002-D-E, F; 1005-D-F]
3. On considering the growing awareness around this issue, the United Nations Committee on the Elimination of Discrimination against Women adopted General Recommendation No. 17 on the “Measurement and quantification of the unremunerated domestic activities of women and their recognition in the gross national product” in 1991. The General Recommendation affirmed that “the measurement and quantification of the unremunerated domestic activities of women, which contribute to development in each country, will help to reveal the de facto economic role of women”. It is worth noting that the above General Recommendation is passed in furtherance of Article
11 of the Convention on the Elimination of All Forms of Discrimination against Women which relates to ending discrimination against women in the field of employment, a Convention that India has ratified. [Paras 13, 14][1006-F-G; 1007-A]
4. The issue of fixing notional income for a homemaker, therefore, serves extremely important functions. It is a recognition of the multitude of women who are engaged in this activity, whether by choice or as a result of social/cultural norms. It signals to society at large that the law and the Courts of the land believe in the value of the labour, services and sacrifices of homemakers. It is an acceptance of the idea that these activities contribute in a very real way to the economic condition of the family, and the economy of the nation, regardless of the fact that it may have been traditionally excluded from economic analyses. It is a reflection of changing attitudes and mindsets and of our international law obligations. And, most importantly, it is a step towards the constitutional vision of social equality and ensuring dignity of life to all individuals. Returning to the question of how such notional income of a homemaker is to be calculated, there can be no fixed approach. It is to be understood that in such cases the attempt by the Court is to fix an approximate economic value for all the work that a homemaker does, impossible though that task may be. Courts must keep in mind the idea of awarding just compensation in such cases, looking to the facts and circumstances. [Para 15, 16][1007-B-E]
R.K. Malik v. Kiran Pal (2009) 14 SCC 1; M.R. Krishna Murthi v. New India Assurance Co. Ltd. 2019 SCC OnLine SC 315; Lata Wadhwa v. State of Bihar (2001) 8 SCC 197 : [2001] 1 Suppl. SCR 578;
Arun Kumar Agrawal v. National Insurance Co. Ltd. (2010) 9 SCC 218 : [2010] 9 SCR 303; Rajendra Singh v. National Insurance Co. Ltd. 2020 SCC OnLine SC 521; National Insurance Co. Ltd. v. Minor Deepika rep. by guardian and next friend, Ranganathan 2009 SCC OnLine Mad 828; Kajal v. Jagdish Chand (2020) 4 SCC 413; General Manager, Kerala State Road
Transport Corporation, Trivandrum v. Susamma Thomas (Mrs), (1994) 2 SCC 176; Sarla Dixit (Smt)
v. Balwant Yadav (1996) 3 SCC 179 : [1996] 3 SCR 30; Sarla Verma (Smt) v. Delhi Transport Corporation (2009) 6 SCC 121: [2009] 5 SCR 1098 – relied on.
5. The rationale behind the awarding of future prospects is therefore no longer merely about the type of profession, whether permanent or otherwise, although the percentage awarded is still dependent on the same. The awarding of future prospects is now a part of the duty of the Court to grant just compensation, taking into account the realities of life, particularly of inflation, the quest of individuals to better their circumstances and those of their loved ones, rising wage rates and the impact of experience on the quality of work. [Para 23][1010-H; 1011-A-B] National Insurance Company Limited v. Pranay Sethi (2017) 16 SCC 680 : [2017] 13 SCR 100
– followed.
6. Taking the above rationale into account, the situation is quite clear with respect to notional income determined by a Court in the first category of cases outlined earlier, those where the victim is proved to be employed but claimants are unable to prove the income before the Court. Once the victim has been proved to be employed at some venture, the necessary corollary is that they would be earning an income. It is clear that no rational distinction can be drawn with respect to the granting of future prospects merely on the basis that their income was not proved, particularly when the Court has determined their notional income. When it comes to the second category of cases, relating to notional income for non-earning victims, the above principle applies with equal vigor, particularly with respect to homemakers. Once notional income is determined, the effects of inflation would equally apply. Further, no one would ever say that the improvements in skills that come with experience do not take place in the domain of work within the household. [Paras 24, 25][1011-B-E]
Hem Raj v. Oriental Insurance Company Limited (2018)
15 SCC 654; Sunita Tokas v. New India Insurance Co. Ltd. (2019) 20 SCC 688 – relied on.
As published in the Supreme Court Reports, Supreme Court of India. Text from the Indian Supreme Court Judgments open data set (Dattam Labs), CC BY 4.0.
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