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2021 DIGILAW 1564 (ALL)

United India Insurance Co. Ltd. v. Sanwala Devi

2021-12-15

VIVEK VARMA

body2021
JUDGMENT : VIVEK VARMA, J. 1. Heard Sri. Nagendra Kumar Srivastava, learned counsel for the appellant, Sri. Ramesh Chandra Pathak, learned counsel for the respondent nos. 1 to 5 and Sri. Neeraj Chandra Srivastava, learned counsel for respondent nos. 6 to 10. 2. The present first appeal from order arises out of the judgment and award dated 18.05.2017 passed by the Motor Accident Claims Tribunal/District Judge, Basti (hereinafter referred to as the ‘Tribunal’) in M.A.C.P. No. 18 of 2015 (Smt. Sanwala Devi and Others vs. Ram Sumarin and Others) awarding Rs. 30,46,622/- as compensation from the appellant with simple interest at the rate of 6 percent from the date of filing of petition till the date of its actual payment. 3. The respondent nos. 1 to 5, the claimants, filed a Claim Petition under Section 166 of the Motor Vehicles Act, 1988 before the Tribunal, seeking compensation amounting to Rs. 64,99,476/- along with 15 percent interest per annum from the date of filing of petition till its payment. 4. The claimants are the heirs and legal representatives of late Ramraj S/o Jagmohan, who died as a result of an accident on 14.12.2014. The deceased Ramraj along with his son Dilip Kumar (Respondent no. 3) was going to the house of his relative on a Scooty bearing registration no. UP-51X-4621. He was pillion rider of the Scooty, which was driven by his son. When they reached near Sukrauli village, a tractor bearing registration no. UP-51Q-5794 took a sudden turn and collided with the Scooty. Ramraj was seriously injured in the mishap. He was brought to the district hospital where he was declared dead by the doctor. He is survived by his wife Smt. Sanwala Devi, respondent no. 1 aged about 50 years and four sons namely, Rajesh Kumar aged about 30 years, Dilip Kumar aged about 20 years, Ajay Kumar aged about 18 years and Sangram Kumar aged about 15 years. 5. It was asserted in the claim petition that the deceased died due to negligent and rash driving of respondent no. 10-Ashwani Kumar (tractor driver). It was brought to the notice of the Tribunal that the respondent no. 10-Ashwani Kumar was under the employment of respondent nos. 6 to 9. The appellant i.e. United India Insurance Co. Ltd. is the insurer of the offending vehicle. The Tribunal allowed the claim petition by the impugned judgment and award. 6. 10-Ashwani Kumar (tractor driver). It was brought to the notice of the Tribunal that the respondent no. 10-Ashwani Kumar was under the employment of respondent nos. 6 to 9. The appellant i.e. United India Insurance Co. Ltd. is the insurer of the offending vehicle. The Tribunal allowed the claim petition by the impugned judgment and award. 6. In the instant appeal the learned counsel for the appellant has raised two issues: (i) The Tribunal has considered the income of the deceased as Rs. 3,11,280/- per annum and the slab of income tax was nil up to Rs. 2,50,000/- hence the taxable amount be deducted towards income tax. (ii) The Tribunal has provided 20% of the income for future prospect, which is not sustainable as the age of the deceased was 51 years at the time of incident and the Hon’ble Supreme Court in Sarla Verma vs. DTC, (2009) 6 SCC 121 held that there is no provision for future prospect after the age of 50 years. 7. On the other hand, learned counsel for the respondents-claimants has submitted that the award passed by the learned Tribunal is legally sustainable and calls for no interference. 8. Rival submissions fall for consideration. The accident is not in dispute. The appellant has not challenged the liability imposed on it. Hence, only the aforesaid issues are to be dealt with. Issue No. 1: 9. The deceased was a peon in the office of Rajkiya Ayurvedik Evam Unani Officer, Basti and the only source of income was his salary. The Tribunal on the basis of the last pay certificate of the month of November 2014 issued on 18.03.2017 as well as on the basis of the statement of PW-3 Mahmood Jafar dated 06.04.2017, a Junior Clerk in Rajkiya Ayurvedik Evam Unani Karyalaya, assessed the income of the deceased as Rs. 3,11,280/- per annum. 10. It becomes pertinent to note here that neither the appellant-insurance company nor any of the respondents in the claim petition brought to the notice of the Tribunal that the income tax payable by the deceased Ramraj was not deducted at source by the employer i.e. Rajkiya Ayurvedik Evam Unani Karyalaya. No such statement was also made by PW-3, who placed on record the last pay certificate of the deceased. No such statement was also made by PW-3, who placed on record the last pay certificate of the deceased. The Tribunal on the perusal of the last pay certificate did not find that the income tax on the estimated income of the employee was not deducted from the salary of the employee. In the absence of evidence to the contrary, the presumption will be that the employer-Rajkiya Ayurvedik Evam Unani Karyalaya at the time of payment of salary deducted the income tax on the estimated income of the deceased employee. 11. The Hon’ble Supreme Court in the Case of Vimal Kanwar and Others vs. Kishore Dan and Others, (2013) 7 SCC 476 , has held as under: “22. The third issue is “whether the income tax is liable to be deducted for determination of compensation under the Motor Vehicles Act.” 23. In Sarla Verma vs. DTC, (2009) 6 SCC 121 : (2009) 2 SCC (Civ) 770 : (2009) 2 SCC (Cri) 1002 this Court held: (SCC p. 133, Para 20) “20. Generally the actual income of the deceased less income tax should be the starting point for calculating the compensation.” This Court further observed that: “24.....Where the annual income is in taxable range, the words ‘actual salary’ should be read as actual salary less tax.” Therefore, it is clear that if the annual income comes within the taxable range, income tax is required to be deducted for determination of the actual salary. But while deducting income tax from the salary, it is necessary to notice the nature of the income of the victim. If the victim is receiving income chargeable under the head “salaries” one should keep in mind that under Section 192(1) of the Income Tax Act, 1961 any person responsible for paying any income chargeable under the head “salaries” shall at the time of payment, deduct income tax on estimated income of the employee from “salaries” for that financial year. Such deduction is commonly known as tax deducted at source (“TDS” for short). When the employer fails in default to deduct the TDS from the employee's salary, as it is his duty to deduct the TDS, then the penalty for non-deduction of TDS is prescribed under Section 201(1-A) of the Income Tax Act, 1961. Such deduction is commonly known as tax deducted at source (“TDS” for short). When the employer fails in default to deduct the TDS from the employee's salary, as it is his duty to deduct the TDS, then the penalty for non-deduction of TDS is prescribed under Section 201(1-A) of the Income Tax Act, 1961. Therefore, in case the income of the victim is only from “salary” the presumption would be that the employer under Section 192(1) of the Income Tax Act, 1961 has deducted the tax at source from the employee's salary. In case if an objection is raised by any party, the objector is required to prove by producing evidence such as LPC to suggest that the employer failed to deduct the TDS from the salary of the employee. However, there can be cases where the victim is not a salaried person i.e. his income is from sources other than salary and the annual income falls within taxable range, in such cases, if any objection as to deduction of tax is made by a party then the claimant is required to prove that the victim has already paid income tax and no further tax has to be deducted from the income. 24. In the present case, none of the respondents brought to the notice of the Court that the income tax payable by the deceased Sajjan Singh was not deducted at source by the employer State Government. No such statement was made by Ram Avtar Parikh, PW-2, an employee of the Public Works Department of the State Government who placed on record the last pay certificate and the service book of the deceased. The Tribunal or the High Court on perusal of the last pay certificate, have not noticed that the income tax on the estimated income of the employee was not deducted from the salary of the employee during the said month or financial year. In absence of such evidence, it is presumed that the salary paid to the deceased Sajjan Singh as per last pay certificate was paid in accordance with law i.e. by deducting the income tax on the estimated income of the deceased Sajjan Singh for that month or the financial year. The appellants have specifically stated that the assessment year applicable in the instant case is 1997-1998 and not 1996-1997 as held by the High Court. The appellants have specifically stated that the assessment year applicable in the instant case is 1997-1998 and not 1996-1997 as held by the High Court. They have also taken specific plea that for Assessment Year 1997-1998 the rate of tax on income more than Rs. 40,000 and up to Rs. 60,000 was 15% and not 20% as held by the High Court. The aforesaid fact has not been disputed by the respondents. 25. In view of the finding as recorded above and the provisions of the Income Tax Act, 1961, as discussed, we hold that the High Court was wrong in deducting 20% from the salary of the deceased towards income tax, for calculating the compensation. As per law, the presumption will be that employer State Government at the time of payment of salary deducted income tax on the estimated income of the deceased employee from the salary and in absence of any evidence, we hold that the salary as shown in the last pay certificate as Rs. 8920 should be accepted which if rounded off comes to Rs. 9000 for calculating the compensation payable to the dependants.” 12. The reason given in the judgment of the Apex Court in Vimal Kanwar (Supra) squarely applies to the facts of the present case. Hence, following the said judgment the first issue is decided in negative and against the appellant. Issue No. 2: 13. In the case of Sarla Verma (supra) the Hon’ble Supreme Court did not provide any scope of compensation for a person who is above 50 years of age. 14. The aforesaid issue was further considered by the Hon’ble Supreme Court in the case of National Insurance Company Ltd. vs. Pranay Sethi and Others, (2017) 16 SCC 680 . The Hon’ble Supreme Court observed in paragraphs-31 and 55 to 58 of the judgment and has held as under: “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 vs. DTC, (2009) 6 SCC 121 , 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. *** *** *** 55. Section 168 of the Act deals with the concept of “just compensation” and the same has to be determined on the foundation of fairness, reasonableness and equitability on acceptable legal standard because such determination can never be in arithmetical exactitude. It can never be perfect. The aim is to achieve an acceptable degree of proximity to arithmetical precision on the basis of materials brought on record in an individual case. The conception of “just compensation” has to be viewed through the prism of fairness, reasonableness and non-violation of the principle of equitability. In a case of death, the legal heirs of the claimants cannot expect a windfall. Simultaneously, the compensation granted cannot be an apology for compensation. It cannot be a pittance. Though the discretion vested in the tribunal is quite wide, yet it is obligatory on the part of the tribunal to be guided by the expression, that is, “just compensation.” The determination has to be on the foundation of evidence brought on record as regards the age and income of the deceased and thereafter the apposite multiplier to be applied. The formula relating to multiplier has been clearly stated in Sarla Verma vs. DTC, (2009) 6 SCC 121 and it has been approved in Reshma Kumari vs. Madan Mohan, (2013) 9 SCC 65 : (2013) 4 CC (Civ) 191 : (2013) 3 CC (Cri) 826. The formula relating to multiplier has been clearly stated in Sarla Verma vs. DTC, (2009) 6 SCC 121 and it has been approved in Reshma Kumari vs. Madan Mohan, (2013) 9 SCC 65 : (2013) 4 CC (Civ) 191 : (2013) 3 CC (Cri) 826. The age and income, as stated earlier, have to be established by adducing evidence. The tribunal and the courts have to bear in mind that the basic principle lies in pragmatic computation which is in proximity to reality. It is a well-accepted norm that money cannot substitute a life lost but an effort has to be made for grant of just compensation having uniformity of approach. There has to be a balance between the two extremes, that is, a windfall and the pittance, a bonanza and the modicum. In such an adjudication, the duty of the tribunal and the courts is difficult and hence, an endeavour has been made by this Court for standardisation which in its ambit includes addition of future prospects on the proven income at present. As far as future prospects are concerned, there has been standardisation keeping in view the principle of certainty, stability and consistency. We approve the principle of “standardisation” so that a specific and certain multiplicand is determined for applying the multiplier on the basis of age. 56. The seminal issue is the fixation of future prospects in cases of deceased who are self-employed or on a fixed salary. Sarla Verma vs. DTC, (2009) 6 SCC 121 has carved out an exception permitting the claimants to bring materials on record to get the benefit of addition of future prospects. It has not, per se, allowed any future prospects in respect of the said category. 57. Having bestowed our anxious consideration, we are disposed to think when we accept the principle of standardisation, there is really no rationale not to apply the said principle to the self-employed or a person who is on a fixed salary. To follow the doctrine of actual income at the time of death and not to add any amount with regard to future prospects to the income for the purpose of determination of multiplicand would be unjust. The determination of income while computing compensation has to include future prospects so that the method will come within the ambit and sweep of just compensation as postulated under Section 168 of the Act. The determination of income while computing compensation has to include future prospects so that the method will come within the ambit and sweep of just compensation as postulated under Section 168 of the Act. In case of a deceased who had held a permanent job with inbuilt grant of annual increment, there is an acceptable certainty. But to state that the legal representatives of a deceased who was on a fixed salary would not be entitled to the benefit of future prospects for the purpose of computation of compensation would be inapposite. It is because the criterion of distinction between the two in that event would be certainty on the one hand and staticness on the other. One may perceive that the comparative measure is certainty on the one hand and uncertainty on the other but such a perception is fallacious. It is because the price rise does affect a self-employed person; and that apart there is always an incessant effort to enhance one's income for sustenance. The purchasing capacity of a salaried person on permanent job when increases because of grant of increments and pay revision or for some other change in service conditions, there is always a competing attitude in the private sector to enhance the salary to get better efficiency from the employees. Similarly, a person who is self-employed is bound to garner his resources and raise his charges/fees so that he can live with same facilities. To have the perception that he is likely to remain static and his income to remain stagnant is contrary to the fundamental concept of human attitude which always intends to live with dynamism and move and change with the time. Though it may seem appropriate that there cannot be certainty in addition of future prospects to the existing income unlike in the case of a person having a permanent job, yet the said perception does not really deserve acceptance. We are inclined to think that there can be some degree of difference as regards the percentage that is meant for or applied to in respect of the legal representatives who claim on behalf of the deceased who had a permanent job than a person who is self-employed or on a fixed salary. But not to apply the principle of standardisation on the foundation of perceived lack of certainty would tantamount to remaining oblivious to the marrows of ground reality. But not to apply the principle of standardisation on the foundation of perceived lack of certainty would tantamount to remaining oblivious to the marrows of ground reality. And, therefore, degree-test is imperative. Unless the degree-test is applied and left to the parties to adduce evidence to establish, it would be unfair and inequitable. The degree-test has to have the inbuilt concept of percentage. Taking into consideration the cumulative factors, namely, passage of time, the changing society, escalation of price, the change in price index, the human attitude to follow a particular pattern of life, etc. an addition of 40% of the established income of the deceased towards future prospects and where the deceased was below 40 years an addition of 25% where the deceased was between the age of 40 to 50 years would be reasonable. 58. The controversy does not end here. The question still remains whether there should be no addition where the age of the deceased is more than 50 years. Sarla Verma vs. DTC, (2009) 6 SCC 121 : (2009) 2 SCC (Civ) 770 : (2009) 2 SCC (Cri) 1002 thinks it appropriate not to add any amount and the same has been approved in Reshma Kumari vs. Madan Mohan, (2013) 9 SCC 65 . Judicial notice can be taken of the fact that salary does not remain the same. When a person is in a permanent job, there is always an enhancement due to one reason or the other. To lay down as a thumb rule that there will be no addition after 50 years will be an unacceptable concept. We are disposed to think, there should be an addition of 15% if the deceased is between the age of 50 to 60 years and there should be no addition thereafter. Similarly, in case of self-employed or person on fixed salary, the addition should be 10% between the age of 50 to 60 years. The aforesaid yardstick has been fixed so that there can be consistency in the approach by the tribunals and the courts.” 15. Similarly, in case of self-employed or person on fixed salary, the addition should be 10% between the age of 50 to 60 years. The aforesaid yardstick has been fixed so that there can be consistency in the approach by the tribunals and the courts.” 15. However, it is pertinent to mention here that in a recent judgment the Hon’ble Supreme Court in the case of New India Insurance Company vs. Urmila Shukla, Civil Appeal No. 4634 of 2021, decided on 6th August 2021, considered the issue by placing reliance upon Rule 220A of U.P. Motor Vehicles Rules 1998 specially Rule 3(iii), which is to the following effect: “(3) The future prospects of a deceased, shall be added in the actual salary or minimum wages of the deceased as under: (iii) More than 50 years of age: 20% of the salary.” 16. In Urmila Shukla (supra) the Supreme Court, after considering the holding in Pranay Sethi (supra), has held as under: “8. It is submitted by Mr. Rao that the judgment in Pranay Sethi does not show that the attention of the Court was invited to the specific rules such as Rule 3(iii) which contemplates addition of 20% of the salary as against 15% which was stated as a measure in Pranay Sethi. In his submission, since the statutory instrument has been put in place which affords more advantageous treatment, the decision in Pranay Sethi ought not to be considered to limit the application of such statutory Rule. 9. It is to be noted that the validity of the Rules was not, in any way, questioned in the instant matter and thus the only question that we are called upon to consider is whether in its application, Sub-Rule 3(iii) of Rule 220A of the Rules must be given restricted scope or it must be allowed to operate fully. 10. The discussion on the point in Pranay Sethi was from the standpoint of arriving at “just compensation” in terms of Section 168 of the Motor Vehicles Act, 1988. 11. If an indicia is made available in the form of a statutory instrument which affords a favourable treatment, the decision in Pranay Sethi cannot be taken to have limited the operation of such statutory provision specially when the validity of the Rules was not put under any challenge. 11. If an indicia is made available in the form of a statutory instrument which affords a favourable treatment, the decision in Pranay Sethi cannot be taken to have limited the operation of such statutory provision specially when the validity of the Rules was not put under any challenge. The prescription of 15% in cases where the deceased was in the age bracket of 50-60 years as stated in Pranay Sethi cannot be taken as maxima. In the absence of any governing principle available in the statutory regime, it was only in the form of an indication. If a statutory instrument has devised a formula which affords better or greater benefit, such statutory instrument must be allowed to operate unless the statutory instrument is otherwise found to be invalid. 12. We, therefore, reject the submission advanced on behalf of the appellant and affirm the view taken by the Tribunal as well as the High Court and dismiss this appeal without any order as to costs.” 17. Therefore, applying the said principles as enunciated by the Hon’ble Apex Court in Urmila Shukla (Supra) this Court is of the opinion that since the deceased was 51 years of age at the time of death, as such the addition of 20% for future prospect has rightly been awarded by the Tribunal placing reliance upon the U.P. Motor Vehicle Rules, 1998. Thus, the second issue is also decided in negative and against the appellant. 18. No other ground was pressed at the time of arguments. 19. For the reasons as stated in the preceding paragraphs, the instant appeal fails and is, accordingly, dismissed. 20. Let the lower Court record and proceedings be sent to the Tribunal.