Motor Vehicles Act, 1988 – s.166 – Person died in motor accident – Survived by the appellants (his wife and four daughters) – Appellants contended that the deceased derived income from many sources including business, agricultural land admeasuring 36.76 acres (sold in recovery proceedings after his death) and was also wholesale dealer of cement and owned wine shops – Sought compensation in the amount of Rs.99,90,000/- – Tribunal allowed the claim in the amount of Rs.59,04,000/- with interest @ 7.5% p.a. – High Court reduced the compensation to Rs.33,55,000/- – Held: Tribunal proceeded to determine the agricultural income arising from 36.76 acres of land on the basis of two judgments of the High Court, arrived at two different figures and determined the agricultural income on an average of the two amounts – It superimposed a possible value of income from agricultural land despite clear indication in the income tax returns of the income from agricultural land – Such method not sustainable in law – Determination must proceed on the basis of the income tax return, where available, a statutory document on which reliance may be placed to determine the annual income of the deceased – To the benefit of the appellants, the High Court proceeded on the basis of the income tax return for the assessment year 1997-98 and not 1999-2000 & 2000-01 which reflected reduction in the annual income of the deceased – Tax return indicates annual income of Rs.2,11,131/- in the relevant assessment year – In the peculiar circumstances of the case, Rs. 1,04,987/-, payment for prepaid license fee to the Tamil Nadu Government having been paid upfront and for a future period is added to the annual income of the deceased – Thus, the net annual income of the deceased is Rs.3,16,118/- – In accordance with Sarla Verma case, the multiplier applied is 13, appellant being 49 at the time of accident– Loss of dependency is at Rs.3,16,118 X 13= Rs.41,09,534/- – In accordance with Pranay Sethi case, Rs.15,000, 15,000 and 40,000 added for funeral expenses, loss of estate and loss of consortium respectively – Rs.50,000/- for loss of love and affection – Thus, total compensation payable to the appellants is Rs.42,29,534/- with interest @ 9% p.a. from the date of filing of the application till the date of its payment of the appellants.
Partly allowing the appeals, the Court
HELD: 1.1 The method adopted by the Tribunal is not sustainable in law. The tax return indicates an annual income of Rs 2,11,131 in the relevant assessment year. The determination must proceed on the basis of the income tax return, where available. The income tax return is a statutory document on which reliance may be placed to determine the annual income of the deceased. To the benefit of the appellants, the High Court has proceeded on the basis of the income tax return for the assessment year 1997-1998 and not 1999-2000 and 2000-2001 which reflected a reduction in the annual income of the deceased. Depreciation is the deduction allowed for the decline in the real value of tangible or intangible assets over its useful life. Its value varies over time and cannot amount to tangible income for the purposes of computing annual income in a claim before the MACT. An annual amount of Rs.1,04,987 is reflected as payment for a prepaid license fee to the Tamil Nadu Government. In the peculiar circumstances of the case, this amount, having been paid upfront and for a future period is to be added to the annual income of the deceased. Thus, the net annual income of the deceased is: Rs 2,11,131 + 1,04,987 = Rs 3,16,118. [Paras 10,
12 and 13] [1091-G; 1092-A-C; 1093-B-D]
1.2 The determination of the amount payable to the appellants is as follows: (i) The deceased was self-employed and aged 49 at the time of the accident. In accordance with the Constitution Bench judgment of this Court in National Insurance Company Limited v Pranay Sethi, 25% of the annual income is to be added for future prospects. 25% of Rs 3,16,118 = 79,029.5. Annual income, accounting for future prospects, is Rs 3,16,118 + 79,029.5 = Rs 3,95,147.5; and (ii) In accordance with paragraph 30 of the decision of this Court in Sarla Verma v Delhi Transport Corporation4, the deduction for personal expenses for a married person where the dependents are between four to six people is 1/5th or 20%. 20% of Rs 3,95,147.5 = 79,029.5. Net annual income is Rs 3,95,147.5 - 79,029.5 = Rs 3,16,118. In accordance with the judgment of this Court in Sarla Verma, the multiplier to be applied when the deceased is between the age group 46 to 50 is 13. The loss of dependency is calculated at Rs 3,16,118 x 13 = Rs 41,09,534. In accordance with the judgment of this Court in Pranay Sethi, Rs 15,000, 15,000 and 40,000 must be added for funeral expenses, loss of estate and loss of consortium respectively. The total compensation payable to the appellants is Rs 42,29,534 with interest at 9% per annum from the date of filing of the application till the date of payment of the compensation to the appellants. [Paras 14, 16] [1093-DG; 1094-A-E] Sarla Verma v. Delhi Transport Corporation (2009) 6 SCC 121 : [2009] 5 SCR 1098 – followed.
National Insurance Company Limited v. Pranay Sethi (2017) 16 SCC 680 – relied on.
New India Assurance Company v. Yogesh Devi (2012)
3 SCC 613 – referred to.
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.
This page is for informational and research purposes only and does not constitute legal advice. Consult a qualified advocate for advice specific to your situation.