Motor Vehicles Act, 1988 – Offending vehicle, an oil tanker rammed into the car driven by one ‘RSJ’, with his wife and children also in it, while coming from the opposite direction – ‘RSJ’ died – Claims filed by the parents of the deceased and wife and minor children of the deceased stating that the he was 38 yrs of age, working as General Manager (Marketing) with a Company, was drawing gross annual salary of Rs. 3,21,801.60 with perks just prior to the accident; and was due to be promoted as the Associate Vice President – Tribunal awarded Rs.37,71,000/- as compensation to the claimants inter alia with interest @ 12% p.a. – High Court enhanced the compensation to Rs.47,95,000/- and rounded it up to Rs. 48,00,000/- with interest @7.5% p.a. – On appeal, held: Award made by the Tribunal suffered from few fundamental errors and shortcomings as regards the assessment of multiplicand – Tribunal, instead of taking the last drawn emoluments of the deceased, chose to proceed on his enhanced projected emoluments after the expected promotion and pay revision but, did not provide for further future prospects – Assessment made by the Tribunal not in conformity with the principles in Pranay Sethi case – Assessment made by the High Court stands more or less in conformity with the principles enunciated in Pranay Sethi case – Only doubtful area is that the High Court enhanced future prospects only at 40% on the last drawn emoluments of the deceased and not at 50% though he was shown to be in a settled employment with future chances of promotion as also pay revision – However, on facts no modification made in the amount awarded by the High Court – Pecuniary loss assessed by the High Court is reasonable and does not call for any interference – High Court modified the interest component at reasonable rate of 7.5% p.a. – No reason to allow the interest at any rate higher than that – Amount ultimately receivable by the claimants in terms of the judgment of the High Court remains that of just compensation – No case for interference made out.
Compensation – Ex-gratia amount received by the claimants from employer of the deceased – If to be deducted from the compensation received by claimants – Plea of insurer relying on Shashi Sharma case that the said ex-gratia amount so received by the claimants be deducted from the compensation granted by the High Court – Held: Decision in Shashi Sharma would not apply to the facts of the present case – No deduction in the amount awarded by the High Court.
Compensation – Vehicular accident – Assessment of compensation – Factors for – Discussed.
Dismissing the appeals, the Court
HELD: 1.1 The modified award made by the High Court in this case remains that of just compensation and no case for interference is made out in either of these appeals. While dealing with the question of quantification in a claim for compensation under the Motor Vehicles Act, 1988, the endeavor has to be to ensure awarding of just compensation to the claimant/s. [Paras 7, 8][692-C-D]
1.2 In a case like the present one, relating to the death of the vehicular accident victim, any process of awarding “just” compensation involves assessment of such amount of pecuniary loss which could be reasonably taken as the loss of dependency suffered by the claimants due to the demise of the victim. In other words, such a process, by its very nature, involves the assessment of monetary contribution that the claimants were likely to receive from the deceased had he not met with the untimely end due to the accident. For the purpose of such an assessment, while some of the basic facts, like the age, job and income of the deceased and the number of dependents with extent of their dependency, could be reasonably ascertained from the evidence on record, yet, several uncertain factors also, per force, come into play, like the future prospects of the deceased coupled with various imponderables related with a human life. As the process, by its very nature, involves a substantial deal of guess-work, this Court, over the years, has evolved and applied several principles so as to ensure that as far as possible, the methods for assessment remain uniform, curbing against disparity in the amount of compensation to be awarded in similarly circumstanced cases. [Para 9][693-B-E]
1.3 The award made by the Tribunal suffered from a few fundamental errors and shortcomings as regards the assessment of multiplicand. The Tribunal, instead of taking the last drawn emoluments of the deceased, chose to proceed on his enhanced projected emoluments after the expected promotion and pay revision. However, thereafter, the Tribunal did not provide for any further future prospects. The Tribunal also did not make any deduction towards the tax component. Moreover, the Tribunal deducted one-third towards personal expenses of the deceased though he had had five dependents. Then, the Tribunal applied the multiplier of 16. Apparently, the assessment made by the Tribunal could not have been countenanced, for being not in conformity with the principles in Pranay Sethi case. The High Court, on the other hand, took the figure of the last drawn emoluments of the deceased and made the deduction towards income-tax. Thereafter, the High Court provided for future prospects at 40% and made the deduction of one-fourth towards personal expenses. In this manner, the High Court arrived at the figure of multiplicand at Rs. 3,15,000/-. On this multiplicand, the High Court applied the multiplier of 15 in view of the age of deceased at 38 years and hence, worked out the pecuniary loss at Rs. 47,25,000/-. The High Court further awarded Rs. 40,000/towards loss of consortium, Rs. 15,000/- towards funeral expenses, and Rs. 15,000/- towards loss to estate; and finally assessed the total compensation at Rs, 47,95,000/-, rounded up to Rs. 48,00,000/-. [Paras 10, 11][695-H; 696-A-E]
1.4 The assessment so made by the High Court stands more or less in conformity with the principles enunciated in Pranay Sethi. The only doubtful area is that the High Court provided for enhancement towards future prospects only at 40% on the last drawn emoluments of the deceased and not at 50% though he was shown to be in a settled employment with future chances of promotion as also pay revision. However, on the facts and in the circumstances of the present case, any modification in the amount awarded by the High Court is not considered for a variety of factors. [Para 11.1][696-F-G]
1.5 An amount of Rs.3,21,801/- was paid by the employer to the claimants, being one year’s gross salary of the deceased. In Shashi Sharma’s case, a three-Judge Bench of Supreme Court was dealing with the payment received by the legal heirs of the deceased in terms of Rule 5 of the Haryana Compassionate Assistance to the Dependents of Deceased Government Employees Rules, 2006 (‘Rules of 2006’) whereunder, 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 deceased employee for periods specified in the Rules and after the said period, the family would be entitled to receive family pension. The family would also be entitled to retain the government accommodation for a period of one year in addition to payment of Rs. 25,000/- as ex gratia. Decision in Shashi Sharma has been explained and distinguished by another three-Judge Bench of Supreme Court in Sebastiani Lakra. [Paras 12, 12.1][696-G-H; 697-A-D]
1.6 In the present case too, it has not been shown if the ex gratia amount received by the claimants had been under any Rules of service and would be of continuous assistance,as had been the case in Shashi Sharma. No deduction in the amount awarded by the High Court appears necessary. The Tribunal had awarded interest at the rate of 12% p.a. but the same had been too high a rate in comparison to what is ordinarily envisaged in these matters. The High Court, after making a substantial enhancement in the award amount, modified the interest component at a reasonable rate of 7.5% p.a. and no reason is found to allow the interest in this matter at any rate higher than that allowed by High Court. The amount ultimately receivable by the claimants in terms of the judgment of the High Court remains that of just compensation and no case for interference is made out. [Paras 12.2, 13 &14] [699-C-D; F-H; 700-A]
National Insurance Company Ltd. v. Pranay Sethi & Ors. 2017 ACJ 2700 (SC) - followed.
Reliance General Insurance Company Ltd. v. Shashi Sharma & Ors. 2016 ACJ 2723 (SC) – held inapplicable. Sarla Verma and Ors. v. Delhi Transport Corporation and Anr. 2009 ACJ 1298 (SC) ; Sebastiani Lakra & Ors. v. National Insurance Company Ltd. & Ors. 2019 ACJ 34 (SC) – 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.
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