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2020 DIGILAW 481 (ALL)

Poonam Agarwal v. United India Insurance Co. Ltd.

2020-02-12

AJIT KUMAR, RAMESH SINHA

body2020
JUDGMENT : Authored By : Ramesh Sinha, Ajit Kumar Ramesh Sinha and Ajit Kumar, JJ. 1. Heard Sri Sudeep Agarwal, learned Counsel for the appellants, Sri Vibhuti Narain, learned Counsel for respondent No. 1, Sri Hemant Kumar, Advocate holding brief of Sri V.K. Gupta, learned Counsel for respondent No. 2 and perused the record. 2. This first appeal from order is directed against the award dated 29th September, 2012 passed by the Claim Tribunal/District Judge, Azamgarh allowing the claim petition of the claimants bearing No. 840 of 2009 for a compensation of Rs. 6,89,336/- @ 7% simple interest per annum, for the purposes of enhancement. 3. Assailing the award on the issue of computation of compensation, it has been argued that while making the assessment of income of the deceased son of the claimants, the Tribunal has manifestly erred in taking into consideration only the basic pay and the dearness allowance and then deducting the tax from that. He submits that in view of the authority pronounced by the Supreme Court in the case of Sunil Sharma v. Bachinder : 2011 LAWS SC 273 the house rent allowance, city compensatory allowance and the medical allowance are also to be added towards the computation of the income. He has also placed reliance upon another authority of the Supreme Court in the case of National Insurance Company Limited v. Indira Srivastava, 2008 (70) ALR 323 (SC) : 2008 (62) AIC 129 (SC) 4. On the question of multiplier, it has been argued that multiplier of 12 has wrongly been applied whereas the multiplier of 17 should have been applied as per the IInd Schedule of the The Motor Vehicles Act, 1989 and the Rules. It is also argued that on count of future prospects nothing has been added nor, any amount has been paid towards the loss of consortium even towards the funeral expenses only a meager amount has been directed to be paid. He has also placed reliance upon the judgment of the Apex Court in the case of Laxmi Devi and others v. Mohammad Tabbar and another; (2008) 12 SCC 165 and Sarla Verma and others v. Delhi Transport Corporation and another; 2009 (75) ALR 638 (SC) : 2009 (78) AIC 153 . He has also placed reliance upon the judgment of the Apex Court in the case of Laxmi Devi and others v. Mohammad Tabbar and another; (2008) 12 SCC 165 and Sarla Verma and others v. Delhi Transport Corporation and another; 2009 (75) ALR 638 (SC) : 2009 (78) AIC 153 . and also finally in the case of National Insurance Company Limited, v. Pranay Sethi and others, 2017 (125) ALR 856 (SC) and this is how it has been claimed that the amount of compensation awarded by the Tribunal needed to be enhanced. 5. Learned Counsel appearing for the respondent-Insurance Company though has sought to defend the order of the Tribunal for the reasons assigned therein and has thus defended the compensation awarded. 6. Having heard learned Counsel for the parties and their arguments across the bar, we now proceed to examine the correctness of assessment of income of the deceased by the Tribunal and consequential determination of compensation. In the matter of assessment of income of salaried or non-salaried person, the legal position has now come to be settled by the decisions of the Apex Court of this country in a series of its judgment and, therefore, it is proper to examine the award in question, in the light of the authorities on this aspect of the Apex Court. 7. The Apex Court in the case of Sunil Sharma v. Bachitar Singh, 2011 LAWS (SC) 273 vide paragraphs No. 8 and 9 has held thus: "8 In the case of National Insurance Co. Ltd. v. Indira Srivastava and others, 2008 (70) ALR 323 (SC) : 2008 (62) AIC 129 (SC) S.B. Sinha, J. has observed that "The term 'income' has different connotations for different purposes. A Court of law, having regard to the change in societal conditions must consider the question not only having regard to pay packet the employee carries home at the end of the month but also other perks which are beneficial to the members of the entire family. A Court of law, having regard to the change in societal conditions must consider the question not only having regard to pay packet the employee carries home at the end of the month but also other perks which are beneficial to the members of the entire family. Loss cause to the family on a death of a near and dear one can hardly be compensated on monitory terms." His Lordship also stated that if some facilities were being provided whereby the entire family stood to benefit, the same must be held to be relevant for the purpose of computation of total income on the basis of which the amount of compensation payable for the death of the kith and kin of the applicants was required to be determined. This Court held that superannuation benefits, contributions towards gratuity, insurance of medical policy for self and family and education scholarship were beneficial to the members of the family. This Court clarified that by opining that 'just compensation' must be determined having regard to the facts and circumstances of each case. The basis for considering the entire pay packet is what the dependents have lost in view of death of the deceased. It is in the nature of compensation for future loss towards the family income and that the amounts therefore, which were required to be paid to the deceased by his employer by way of perks, should be included for computation of his monthly income as that would have been added to his monthly income by way of contribution to the family as contra-distinguished to the ones which were for his benefit. We may, however, hasten to add that from the said amount of income, the statutory amount of tax payable thereupon must deducted." 9. In Raghuvir Singh Matolys and others v. Hari Singh Malviya and others, JT 2009 (7) SC 597 : 2009 (15) SCC 363 . this Court has observed that dearness allowance and house rent allowance should be included for computation of income of the deceased." 8. In National Insurance Company Ltd. v. Indira (supra) the Apex Court vide paragraphs No. 17 to 20 has held thus: "17. this Court has observed that dearness allowance and house rent allowance should be included for computation of income of the deceased." 8. In National Insurance Company Ltd. v. Indira (supra) the Apex Court vide paragraphs No. 17 to 20 has held thus: "17. The amounts, therefore, which were required to be paid to the deceased by his employer by way of perks, should be included for computation of his monthly income as that would have been added to his monthly income by way of contribution to the family as contradistinguished to the ones which were for his benefit. We may, however, hasten to add that from the said amount of income, the statutory amount of tax payable thereupon must be deducted. 18. The term 'income' in P. Ramanatha Aiyar's Advanced Law Lexicon (3rd Ed.) has been defined as under: "The value of any benefit or perquisite whether convertible into money or not, obtained from a company either by a director or a person who has substantial interest in the company and any sum paid by such company in respect of any obligation, which but for such payment would have been payable by the director or other person aforesaid, occurring or arising to a person within the State from any profession, trade or calling other than agriculture." It has also been stated: 'INCOME' signifies 'what comes in' (per Selborne, C., Jones v. Ogle) 42 LJ Ch. 336. 'It is as large a word as can be used' to denote a person's receipts (per Jessel, M.R. Re Huggins, 51 LJ Ch. 938) income is not confined to receipts from business only and means periodical receipts from one's work, lands, investments, etc. AIR 1921 Mad 427 (SB). Ref. 124 IC 511 : 1930 MWN 29 : 31 MLW 438 AIR 1930 Mad 626 : 58 MLJ 337." 19. If the dictionary meaning of the word 'income' is taken to its logical conclusion, it should include those benefits, either in terms of money or otherwise, which are taken into consideration for the purpose of payment of income-tax or profession tax although some elements thereof may or may not be taxable or would have been otherwise taxable but for the exemption conferred thereupon under the statute. 20. 20. In N. Sivammal and others v. Managing Director, Pandian Roadways Corporation and others, (1985) 1 SCC 18 : 1987 (13) ALR 28 (Sum.) this Court took into consideration the pay packet of the deceased." (Emphasis added) 9. This above issue has come to be discussed in Pranay Sethi's case (supra) vide paras-30, 31, 32 and 33 thus: "30. While adverting to the addition of income for future prospects, it stated thus: "24. In Susamma Thomas this Court increased the income by nearly 100%, in Sarla Dixit the income was increased only by 50% and in Abati Bezbaruah the income was increased by a mere 7%. In view of the imponderables and uncertainties, we are in favour of adopting as a rule of thumb, an addition of 50% of actual salary to the actual salary income of the deceased towards future prospects, where the deceased had a permanent job and was below 40 years. (Where the annual income is in the taxable range, the words "actual salary" should be read as "actual salary less tax"). The addition should be only 30% if the age of the deceased was 40 to 50 years. There should be no addition, where the age of the deceased is more than 50 years. Though the evidence may indicate a different percentage of increase, it is necessary to standardise the addition to avoid different yardsticks being applied or different methods of calculation being adopted. Where the deceased was self-employed or was on a fixed salary (without provision for annual increments, etc.), the Courts will usually take only the actual income at the time of death. A departure therefrom should be made only in rare and exceptional cases involving special circumstances." 31. Though we have devoted some space in analyzing the precedential value of the judgments, that is not the thrust of the controversy. We are required to keenly dwell upon the heart of the issue that emerges for consideration. The seminal controversy before us relates to the issue where the deceased was self-employed or was a person on fixed salary without provision for annual increment, etc., what should be the addition as regards the future prospects. We are required to keenly dwell upon the heart of the issue that emerges for consideration. The seminal controversy before us relates to the issue where the deceased was self-employed or was a person on fixed salary without provision for annual increment, etc., what should be the addition as regards the future prospects. In Sarla Verma, the Court has made it as a rule that 50% of actual salary could be added if the deceased had a permanent job and if the age of the deceased is between 40-50 years and no addition to be made if the deceased was more than 50 years. It is further ruled that where deceased was self-employed or had a fixed salary (without provision for annual increment, etc.) the Courts will usually take only the actual income at the time of death and the departure is permissible only in rare and exceptional cases involving special circumstances. 32. First, we shall deal with the reasoning of straitjacket demarcation between the permanent employed persons within the taxable range and the other category where deceased was self-employed or employed on fixed salary sans annual increments, etc. 33. The submission, as has been advanced on behalf of the insurers, is that the distinction between the stable jobs at one end of the spectrum and self-employed at the other end of the spectrum with the benefit of future prospects being extended to the legal representatives of the deceased having a permanent job is not difficult to visualize, for a comparison between the two categories is a necessary ground reality. It is contended that guaranteed/definite income every month has to be treated with a different parameter than the person who is self-employed inasmuch as the income does not remain constant and is likely to oscillate from time to time. Emphasis has been laid on the date of expected superannuation and certainty in permanent job in contradistinction to the uncertainty on the part of a self-employed person. Additionally, it is contended that the permanent jobs are generally stable and for an assessment the entity or the establishment where the deceased worked is identifiable since they do not suffer from the inconsistencies and vagaries of self-employed persons. Additionally, it is contended that the permanent jobs are generally stable and for an assessment the entity or the establishment where the deceased worked is identifiable since they do not suffer from the inconsistencies and vagaries of self-employed persons. It is canvassed that it may not be possible to introduce an element of standardization as submitted by the claimants because there are many a category in which a person can be self-employed and it is extremely difficult to assimilate entire range of self-employed categories or professionals in one compartment. It is also asserted that in certain professions addition of future prospects to the income as a part of multiplicand would be totally an unacceptable concept. Examples are cited in respect of categories of professionals who are surgeons, sports persons, masons and carpenters, etc. It is also highlighted that the range of self-employed persons can include unskilled labourer to a skilled person and hence, they cannot be put in a holistic whole. That apart, it is propounded that experience of certain professionals brings in disparity in income and, therefore, the view expressed in Sarla Verma (supra) that has been concurred with Reshma Kumari (supra) should not be disturbed." (Emphasis added) Learned Counsel appearing for the respondent-Insurance Company could not give any explanation as to why in computing the income of the deceased, who was a salaried person, only basic pay and the dearness allowance have been considered. 10. In the light of the aforesaid authorities which could not be disputed by learned Counsel for the respondents, we are of the considered opinion that the computation of income of the deceased for the purposes of determination of compensation shall include the basic pay, dearness allowance, medical allowance, transport allowance and annual bonus and the deduction could be only of professional tax as well as the income tax. However, it is to be borne in mind that there may be several allowances awarded in a salary of a particular month which might have been awarded due but all such allowances may not constitute monthly salary otherwise. However, it is to be borne in mind that there may be several allowances awarded in a salary of a particular month which might have been awarded due but all such allowances may not constitute monthly salary otherwise. In the case in hand, we find following salary details that were provided by the claimant vide salary slip of the period 1.4.2009 to 30.4.2009: Earning Deductions Basic salary 7,140.00 PF 989.00 Dearness Allowance 1,100,00 Professional Tax 200.00 House Rent Allowance 4.196.00 Income Tax 723.00 Medical allowance 2,623.00 Infosys walfare Trust 100.00 Transport Allowance 1,048.00 GYM facilities 300.00 Leave Travel allowance 2,623.00 Hostel Rent Recovery 2,750.00 Annual Bonus/Ex-gratia 353.00 Membership 150.00 TPI Incentive Bonus Ex-graria Advance Pmt. 2,720.00 1,566.00 Salary Arrears 11,496.00 Total 34,865.00 Total 5,212.00 In the above details leave travel allowance, TPI incentive and Bonus ex-gratia advance payment cannot be treated as part of regular monthly salary. Training Period Incentive (TPI) is normally given by the companies in the very first month of after training especially in case of Infosys Solution Pvt. Ltd. Further salary arrears are given annually for fixation of dearness allowance/increments and so that will not form part of regular monthly salary. The increment will automatically enhance the basic salary and arrears only indicate dating it back to the date and time with effect from which such increment has been awarded and so the arrears got accumulated. With the increment/award of Dearness Allowance the basic salary and/or plus Dearness Allowance stands mentioned in the salary slip and that should be taken into account. The hostel rent is charged for the period when the trainee is under training and for that he has to compulsorily stay in the hostel and, therefore, deduction is shown in regular monthly salary but once the training period is over and the Training Period Incentive (TPI) is finally paid, there can be no further deductions towards hostel rent. And so also Infosys Welfare Trust amount and Gym facilities charges and membership fee are all not liable to be deducted as the employee, in the case in hand had passed away. 11. Thus, considering the admitted position of salary as discussed above following will be the actual income to be taken into account for computation of compensation: Earnings Deductions Basic Pay 7,140 Professional Tax 200.00 D.A. 1,100 Income Tax 723.00 H.R.A. 4,196 Medical allowance 2,623 Transport allowance 1,048 Total 16,107 Total 923 Rs. 11. Thus, considering the admitted position of salary as discussed above following will be the actual income to be taken into account for computation of compensation: Earnings Deductions Basic Pay 7,140 Professional Tax 200.00 D.A. 1,100 Income Tax 723.00 H.R.A. 4,196 Medical allowance 2,623 Transport allowance 1,048 Total 16,107 Total 923 Rs. 15,184/- 12. Coming to the question of multiplier now we refer to paragraphs No. 42 and 44 of Pranay Sethi's judgment (supra) that run as under: "42. As far as the multiplier is concerned, the Claims Tribunal and the Courts shall be guided by Step 2 that finds place in paragraph No. 19 of Sarla Verma read with paragraph 42 of the said judgment. For the sake of completeness, paragraph No. 42 is extracted below: "42. We therefore hold that the multiplier to be used should be as mentioned in Column (4) of the table above (prepared by applying Susamma Thomas, Trilok Chandra and Charlie), which starts with an operative multiplier of 18 (for the age groups of 15 to 20 and 21 to 25 years), reduced by one unit for every five years, that is M-17 for 26 to 30 years, M-16 for 31 to 35 years, M-15 for 36 to 40 years, M-14 for 41 to 45 years and M-13 for 46 to 50 years, then reduced by two units for every five years, that is, M-11 for 51 to 55 years, M-9 for 56 to 60 years, M-7 for 61 to 65 years and M-5 for 66 to 70 years." 44. At this stage, we must immediately say that insofar as the aforesaid multiplicand/multiplier is concerned, it has to be accepted on the basis of income established by the legal representatives of the deceased. Future prospects are to be added to the sum on the percentage basis and "income" means actual income less than the tax paid. The multiplier has already been fixed in Sarla Verma which has been approved in Reshma Kumari with which we concur." (Emphasis added) 13. Learned Counsel appearing for the Insurance Company could also not give any satisfactory reply to the arguments advanced by learned Counsel for the appellants that the two judgments of the Supreme Court in Lalita Devi and Sarla Verma (supra) still hold the field as these judgments have not been overruled. Learned Counsel appearing for the Insurance Company could also not give any satisfactory reply to the arguments advanced by learned Counsel for the appellants that the two judgments of the Supreme Court in Lalita Devi and Sarla Verma (supra) still hold the field as these judgments have not been overruled. These judgments have found approval of the Constitution Bench in Pranay Sethi's case (supra) as well. 14. In view of the above and by applying the rule laid down in Sarla Verma's case, in our considered opinion, the multiplier of 18 would be applicable as the deceased was 24 years' of age at the time of accident. 15. The legal position towards conventional head of future prospects has been summarized in the case of Pranay Sethi (supra) vide paragraph-59.3 thus: "59.3. 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 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." (Emphasis added) 16. So now, so far as future prospects are concerned, the claimants are entitled to 50% of the income assessed on the basis of the principles laid down in Pranay Shetty's case (supra). Again for loss of state, we determine the amount as Rs. 15,000 and also Rs. 10,000 towards funeral expenses. 17. In view of the above, we direct that the appellants shall be entitled to the compensation as per the following computation. Income from salary 18,184/- p.m. Rs. 1,82,208/- p.a. Future Prospects 50% of Rs. 1,82,208/- p.a. Rs. 91,104/- Total income Rs. 2,73,312/- Deduction towards personal expenses 1/2th of total income Rs.1,36,656/- Dependency 2,73,312-,36,656 Rs. 1,36,656/- Multiplier 18 Compensation Funeral Expense Loss of Estate 1,36,656/-*18 Rs. 24,59,808/- 10,000/- Rs.15,000/- Total Compensation 24,84,808 18. Now coming to the question of interest, we are of the opinion that in normal circumstances 6 to 7% only is admissible in motor accident claim's cases. However, no straightjacket formula can be applied and the interest shall be determined and payable on the facts and circumstances of each case. 24,59,808/- 10,000/- Rs.15,000/- Total Compensation 24,84,808 18. Now coming to the question of interest, we are of the opinion that in normal circumstances 6 to 7% only is admissible in motor accident claim's cases. However, no straightjacket formula can be applied and the interest shall be determined and payable on the facts and circumstances of each case. The deceased was the only issue of his parents and was, thus only bread earner of the family and it is unfortunate that he met with fatal accident and the poor parents had to wait for 3-4 years for the award of compensation and then more than 7 years before the High Court for enhancement on account of wrong assessment of income at the end of the Tribunal in spite of settled legal position in the matter. In such circumstances, therefore, we find it proper to award interest @ 7% from the date of application till date of actual payment made under the award of the Tribunal and @ 9% interest on the enhanced compensation from the date of payment till enhanced payment is made under this order and also over and above the amount if has remained unpaid till date under the award of the Tribunal. 19. Thus the compensation enhanced from Rs. 6,89,366/- to Rs. 24,84,808/-, i.e., by Rs. 17,95,442/- as above shall be paid @ 9% interest from the date of this judgment till actual payment is made of the enhanced compensation including the past any amount if has remained unpaid, by the respondents-Insurance Company till the actual enhanced compensation coupled with unpaid amount, is paid. 20. In view of the above, this appeal stands allowed in above terms modifying the award of the Motor Accidents Claims Tribunal.