JUDGMENT : The questions raised in this appeal are :- (i) In a claim petition preferred under Section 166 of the Motor Vehicles Act (for short the Act), what should be the notional income of a child aged 4 years at the time of fatal motor accident ? (ii) Whether any deduction towards personal expenses is required to be made from the notional income, so determined ? 2. Relevant Facts Monika was daughter of the claimants. On 14.05.2004, she was playing with her minor siblings. Her leg was crushed under an imbalanced truck. She was taken to different hospitals. Monika, aged 4 years, succumbed to her injuries. Claimants sought compensation of Rs. 50,000,00/- in the claim petition filed under Section 166 of the Act. Learned Motor Accident Claims Tribunal in its award dated 02.08.2021 held that the accident in which Monika suffered fatal injuries, occurred due to negligence of the driver of the concerned vehicle. For determining the payable compensation, learned Tribunal considered child’s notional income as Rs. 41,000/- per annum. 1/3rd of this amount was deducted towards personal and living expenses of the deceased. Loss of dependency was accordingly worked out as Rs. 27333/- per annum. After applying the multiplier of 15, the claimants were held entitled to Rs. 4,09,995/-. In addition, as per judgment of Hon’ble Apex Court in 2017 (16) SCC 680 , (National Insurance Company Vs. Pranay Sethi), Rs. 40,000/- towards loss of consortium, Rs. 15,000/- towards loss of estate and Rs. 15,000/- towards funeral expenses were also awarded. The claimants, in all, were held entitled to compensation of Rs. 4,79, 995/- alongwith interest @ 7.5% per annum from the date of filing of the petition till realization/deposit of the amount. The insurer was fastened with liability to pay the compensation amount. Not satisfied with assessment of notional income of the deceased minor child, the insurer has come up in this appeal. 3. With the consent of learned counsel for the parties and in view of the pure legal question argued, this appeal has been heard at the admission stage. 4. I have heard learned counsel for the parties on the legal questions raised by them and formulated in the beginning of the judgment. The questions are being deliberated and discussed hereinafter. 5. Question No. 1 5(i) Basis for determining notional income of minor children Claim petition was filed under Section 166 of the Act. 4. I have heard learned counsel for the parties on the legal questions raised by them and formulated in the beginning of the judgment. The questions are being deliberated and discussed hereinafter. 5. Question No. 1 5(i) Basis for determining notional income of minor children Claim petition was filed under Section 166 of the Act. The child was aged 4 years at the time of her death on 14.05.2004. The amount of compensation, therefore, is required to be determined in accordance with Second Schedule of the Act which is applicable to the claims made under Section 163-A of the Act. Reference in this regard can be made to (2009) 14 SCC 1 (R.K. Malik and another Vs. Kiran Pal and others). Relevant paras from the judgment in this regard read as under :- 13. The real problem that arises in the cases of death of children is that they are not earning at the time of the accident. In most of the cases they were still studying and not working. However, under no stretch of imagination it can be said that the parents, who are appellants herein, have not suffered any pecuniary loss. In fact, Loss of dependency by its very nature is awarded for prospective or future loss. In this context, Lord Atkinson aptly observed in Taff Vale Rly. Co. v. Jenkins, (1911-13) All England Reporter 160 as follows: "11. …..In case of the death of an infant, there may have been no actual pecuniary benefit derived by its parents during the child's lifetime. But this will not necessarily bar the parents' claim and prospective loss will found a valid claim provided that the parents establish that they had a reasonable expectation of pecuniary benefit if the child had lived." Then, how does one calculate pecuniary compensation for loss of future earnings and loss of dependency of the parents, grand parents etc. in the case of non-working student? 14. Under the Second Schedule of the Act in case of a non earning person, his income is notionally estimated at Rs. 15,000/- per annum. The Second Schedule is applicable to claim petitions filed under Section 163 A of the Act. The Second Schedule provides for the multiplier to be applied in cases where the age of the victim was less than 15 years and between 15 years but not exceeding 20 years. 15,000/- per annum. The Second Schedule is applicable to claim petitions filed under Section 163 A of the Act. The Second Schedule provides for the multiplier to be applied in cases where the age of the victim was less than 15 years and between 15 years but not exceeding 20 years. Even when compensation is payable under Section 166 read with 168 of the Act, deviation from the structured formula as provided in the Second Schedule is not ordinarily permissible, except in exceptional cases. [see Abati Bezbaruah vs. Dy. Director General, Geological Survey of India, (2003) 3 SCC 148 ); United India Insurance Company Ltd. v. Patricia Jean Mahajan, (2002) 6 SCC 281 and UP State Road Transport Corp. v. Trilok Chandra, (1996) 4 SCC 362 ]”. 5(ii) Notional Income under the Second Schedule Section 163 of the Act contains special provisions as to payment of compensation on the basis of structured formula indicated in the Second Schedule. Note 6 of the Second Schedule provides for compensation to those who had no income prior to the accident, as under :- “Notional income for compensation to those who had no income prior to accident :- (a) Non-earning persons : Rs. 15,000 p.a.” 5(ii) (a) Cost inflation and its effect on Second Schedule :- Sub Section (3) of Section 163-A of the Act provides that “the Central Government may, keeping in view the cost of living by notification in the official gazette, from time to time, amend the Second Schedule”. Section 163-A was inserted in the Act on 14.011.1994. The Second Schedule had not been amended. Time and again, Hon’ble Apex Court has emphasized upon the need for an amendment in the Second Schedule to keep pace with rising cost index over the years. In (2013) 15 SCC 45 (Puttamma and others Vs. K.L. Narayana Reddy and another), Hon’ble Apex Court considered various precedents viz.:- (i) U.P. State Road Transport Corporation and others Vs. Trilok Chandra and others (1996) 4 SCC 362 , wherein it was held that the table in the Second Schedule suffers from several defects and cannot be used as a ready reckoner. (ii) Oriental Insurance Co. Ltd. Vs. K.L. Narayana Reddy and another), Hon’ble Apex Court considered various precedents viz.:- (i) U.P. State Road Transport Corporation and others Vs. Trilok Chandra and others (1996) 4 SCC 362 , wherein it was held that the table in the Second Schedule suffers from several defects and cannot be used as a ready reckoner. (ii) Oriental Insurance Co. Ltd. Vs. Hansrajbhai V. Kodala and others (2001) 5 SCC 175 , wherein it was held that there is a specific provision under Section 163-A (3) of the Act that requires the Central Government to make amendments in the Second Schedule keeping in view the cost of living. (iii) Deepak Girishbhai Soni and others Vs. United India Insurance Co. Ltd., Baroda (2004) 5 SCC 385 , wherein having regard to inflation and fall in the rate of bank interest, it was considered desirable that the Central Government bestows serious thought to amend the Second Schedule. (iv) Discrepancies/errors in the multiplier scale given in the Second Schedule were also noticed in Sarla Verma and others Vs. Delhi Transport Corporation and another 2009 (6) SCC 121 . In view of the findings recorded in the judgment, the Hon’ble Supreme Court in Puttamma’s case (supra), held that “the Second Schedule as was enacted in 1994 has now become redundant, irrational and un-workable due to changed scenario including present cost of living and current rate of inflation and increased life expectancy”. It was also observed that “the Central Government was bestowed with duties to amend the Second Schedule in view of Section 163-A(3), but it failed to do so for 19 years inspite of repeated observations of this Court”. Specific directions were issued to the Central Government through the Secretary, Ministry of Road Transport and Highways “to make proper amendments to the Second Schedule table keeping in view the present cost of living, subject to amendment of the Second Schedule as proposed or may be made by Parliament”. 5(ii) (b) Cost of inflation, assessment of notional income ; precedents :- 5(ii) (b) i) In Puttamma’s case (supra), Hon’ble Apex Court had directed the Central Government to properly amend the table in the Second Schedule keeping in view the present cost of living. 5(ii) (b) Cost of inflation, assessment of notional income ; precedents :- 5(ii) (b) i) In Puttamma’s case (supra), Hon’ble Apex Court had directed the Central Government to properly amend the table in the Second Schedule keeping in view the present cost of living. Till such time, the amendments were so made by the Central Government, the Hon’ble Apex Court held and directed that children upto the age of 5 years shall be entitled for a fixed compensation of Rs. 1,00,000/- and persons more than 5 years of age shall be entitled for a fixed compensation of Rs. 1,50,000/- or the amount as may be determined in terms of Second Schedule, whichever is higher in an application filed under Section 163-A of the Act. 5(ii) (b) ii) In Kishan Gopal and another Vs. Lala and others (2014) 1 SCC 244 , 10 years old child died in a motor accident that took place in the year 1992. His notional income was fixed at Rs. 30,000/- per annum. 5(ii) (b) iii) Kurvan Ansari alias Kurvan Ali and another Vs. Shyam Kishore Murmu and another (2022) 1 SCC 317 was a case where 7 years old child died in an accident on 06.09.2004. The claim was made under Section 163-A of the Act. The Tribunal awarded compensation by taking notional income of the deceased at Rs. 15,000/- per annum. The High Court dismissed the appeal preferred by the Insurance Company against the award. The Apex Court reiterated that fixing notional income at Rs. 15,000/- per annum for non-earning member on the basis of Schedule-II as inserted in the Act on 14.11.1994 is not just and reasonable. That in spite of repeated directions of the Court, Schedule-II had not been amended. The notional income of the minor child was increased taking into account the inflation, devaluation of rupee and cost of living. It was assessed at Rs. 25,000/- per annum. Notional income was multiplied with applicable multiplier ‘15’. The claimants were also held entitled to filial consortium and funeral expenses. The relevant paras from the judgment read as under :- “14. In this case, it is to be noted that the accident was on 06.09.2004. In spite of repeated directions, Schedule-II is not yet amended. Therefore, fixing notional income at Rs.15,000/- per annum for non- earning members is not just and reasonable. 15. The relevant paras from the judgment read as under :- “14. In this case, it is to be noted that the accident was on 06.09.2004. In spite of repeated directions, Schedule-II is not yet amended. Therefore, fixing notional income at Rs.15,000/- per annum for non- earning members is not just and reasonable. 15. In view of the judgments in the cases in Puttamma & Ors., R.K. Malik & Anr. and Kishan Gopal & Anr., we are of the view that it is a fit case to increase the notional income by taking into account the inflation, devaluation of the rupee and cost of living. In view of the same, the judgment in the case of Rajendra Singh & Ors. relied on by the learned counsel for respondent No.2-Insurance Company would not render any assistance to the case of the insurance company. In view of the above, we deem it appropriate to take notional income of the deceased at Rs.25,000/- (Rupees twenty five thousand only) per annum. Accordingly, when the notional income is multiplied with applicable multiplier ‘15’, as prescribed in Schedule-II for the claims under Section 163-A of the Motor Vehicles Act 1988, it comes to Rs.3,75,000/- (Rs.25,000/- x Multiplier 15) towards loss of dependency. The appellants are also entitled to a sum of Rs.40,000/- each towards filial consortium and Rs.15,000/- towards funeral expenses…….” 5(ii) (b) iv) In Chetan Malhotra Vs. Lala Ram [II (2016) ACC 896 (Del.)], the Court observed that notional income specified by the Legislature in November 1994 as incorporated in the Second Schedule cannot continue to hold good after elapse of two decades. The value of money stands eroded on account of inflation. What was the value of Rs. 15,000/- in November 1994, would in comparison be a pittance in the present times. The Legislature and the Executive have not lived upto the assurance held out by Section 163-A (3) of the Act. The amount of compensation cannot remain frozen. The Court cannot remain a helpless spectator indefinitely awaiting initiative by the Legislation. The Tribunals and Courts will have to break free from the outdated and obsolete prescription of the Second Schedule to the Act. It is the obligation of the Court to do so to bring the benchmark in Second Schedule of the Act upto date, for purposes of award of just and reasonable compensation in the case of death of children. The Tribunals and Courts will have to break free from the outdated and obsolete prescription of the Second Schedule to the Act. It is the obligation of the Court to do so to bring the benchmark in Second Schedule of the Act upto date, for purposes of award of just and reasonable compensation in the case of death of children. The Court then considered the cost inflation index (CII) notified by the Ministry of Finance, Government of India under Section 48 of the Income Tax Act 1961 for each financial year. This was considered a better method to offset the effect of inflation on the real value of money. For inflation correction, the financial year of 1997-98 was directed to be treated as the base year and the value of notional income relevant to the date of cause of action was to be computed as under :- Rs. 15,000 x A ÷ 331 “wherein the figure of ‘Rs. 15,000’ represents the notional income specified in the second schedule requiring inflation-correction; ‘A’ represents the CII for the financial year in which the cause of action arose (i.e. the accident/death occurred); and the figure of ‘331’ represents the CII for the base year” 5(ii) (b) v) (2020) 3 ACJ 1654 (The National Insurance Co., Ltd. and others Vs. K.K. Assainar and another) was a case before the Kerala High Court involving computation of compensation in cases involving death of minor children in motor accidents. Two questions were formulated for decision :- (i) “can multiplier method be accepted as the appropriate method of assessment of compensation for loss of dependency in all cases involving death of children and if not, what shall be the method of assessment of compensation under that head?” (ii) “What shall be the multiplier to be applied for computing compensation for loss of dependency in cases involving death of children and what shall be the additions and deductions to be made for determining the multiplicand for the said purpose ?”. The Court took into consideration various precedents including (1994) 2 SCC 176 General Manager Kerala State Road Transport Corporation Vs. Susamma Thomas, (2013) 9 SCC 65 Reshma Kumari Vs. Madan Mohan, (2001) 8 SCC 197 Lata Wadhwa Vs. The Court took into consideration various precedents including (1994) 2 SCC 176 General Manager Kerala State Road Transport Corporation Vs. Susamma Thomas, (2013) 9 SCC 65 Reshma Kumari Vs. Madan Mohan, (2001) 8 SCC 197 Lata Wadhwa Vs. State of Bihar) and held that compensation in respect of school going children above the age of 6 years upto the age of 15 years and who died in motor accidents shall be uniformly computed and granted applying multiplier method. Based upon judgments of Hon’ble Apex Court in Reshma’s case (supra) and Sarla Verma and others Vs. Delhi Transport Corporation and another (2009) 4 SCC 121, it was concluded that multiplier to be applied for arriving at the compensation for dependency payable in cases involving death of children shall be ‘15’ and mode of assessment shall be as provided for in the Second Schedule to the Act, viz. that one third of the notional income shall be deducted while determining the multiplicand subject to the condition the compensation shall not go below the compensation prescribed under Section 163-A of the Act. In cases involving death of children below the age of 6 years, the Court held that children in this age group stand at different footing. Their parents cannot expect services and pecuniary benefits from them. Such parents might not have spent amounts on education and other expenses of children. For children in this age group, multiplier method cannot be applied and only a consolidated amount can be granted by way of compensation. While prescribing mode for arriving at consolidated amount of compensation, the Court considered the fact that the compensation prescribed in terms of Section 163-A of the Act for the claimants in cases involving death of a child is Rs. 2,40,000/-. Section 163-A was introduced in the Act on 14.11.1994 and has been amended w.e.f. 22.05.2018. The compensation prescribed in terms of amended provision is Rs. 5,00,000/-. The Court observed that if a sum of Rs. 12,000/- is added progressively every year after 1995 to the compensation prescribed under the said provision initially i.e. Rs. 2,40,000/-, the same would sync with compensation prescribed under the provision after the amendment as well. The Court reached the conclusion that in cases involving death of children in that age group after 2018 amendment to Section 163-A, compensation can be appropriately fixed on the basis of compensation prescribed under Section 163-A namely Rs. 2,40,000/-, the same would sync with compensation prescribed under the provision after the amendment as well. The Court reached the conclusion that in cases involving death of children in that age group after 2018 amendment to Section 163-A, compensation can be appropriately fixed on the basis of compensation prescribed under Section 163-A namely Rs. 5,00,000/-, after offsetting the effect of inflation of real value of money. If compensation is computed in cases involving death of children below the age of 6 years in the aforesaid manner, the same would not only satisfy the requirement of just compensation, but would also ensure uniformity in the awards passed in similar and identical cases. In Assainar’s case (supra), the Court also observed that Rs. 15, 000/- has been provided as the notional income of a non-earning person under the Second Schedule. Compensation payable under the un-amended Section 163-A is Rs. 2,40,000/-. Notional income in respect of children below the age of 15 years is actually contemplated to be reckoned at Rs. 24,000/- p.a. The Court considered that Section 163-A of the Act was introduced only w.e.f. 14.11.1994. Having regard to the fluctuating trends in consumer price index, the cost inflation index determined and notified by the Ministry of Finance in Government of India under Section 48 of the Income Tax Act 1961, for each financial year was held a better method to offset the effect of inflation on the real value of money. A table showing the cost inflation index notified by the Government of India from time to time, the corresponding value money for Rs. 24,000/- applying the cost inflation index upto the year 2018-2019 and the nearest thousands of the money arrived at, as furnished and relied upon in the judgment is as under :- Sr. No. Financial Year Cost Inflation Index Cost Inflation New Index Value Value to interst thousand 1. 1995-96 281 Rs.24.000 Rs.24.000 2. 1996-97 305 Rs. 26,050 Rs.26,000 3. 1997-98 331 Rs.28,270 Rs.28,000 4. 1998-99 351 Rs. 29, 979 Rs. 30,000 5. 1999-00 389 Rs.33,224 Rs.33,000 6. 2000-01 406 Rs.34,676 Rs.35,000 7. 2001-02 426 100 Rs. 36, 384 Rs. 36, 000 8. 2002-03 105 Rs. 38, 204 Rs. 38, 000 9. 2003-04 109 Rs. 39, 659 Rs. 40, 000 10. 2004-05 113 Rs. 41, 114 Rs. 41, 000 11. 2005-06 117 Rs. 42, 570 Rs. 43, 000 12. 2006-07 122 Rs. 44, 389 Rs. 44, 000 13. 2000-01 406 Rs.34,676 Rs.35,000 7. 2001-02 426 100 Rs. 36, 384 Rs. 36, 000 8. 2002-03 105 Rs. 38, 204 Rs. 38, 000 9. 2003-04 109 Rs. 39, 659 Rs. 40, 000 10. 2004-05 113 Rs. 41, 114 Rs. 41, 000 11. 2005-06 117 Rs. 42, 570 Rs. 43, 000 12. 2006-07 122 Rs. 44, 389 Rs. 44, 000 13. 2007-08 129 Rs. 46, 936 Rs. 47, 000 14. 2008-09 137 Rs. 49, 847 Rs. 50, 000 15. 2009-10 148 Rs. 53, 849 Rs. 54, 000 16. 2010-11 167 Rs. 60, 762 Rs. 61, 000 17. 2011-12 184 Rs. 66, 947 Rs. 67, 000 18. 2012-13 200 Rs. 72, 769 Rs. 73, 000 19. 2013-14 220 Rs. 80,046 Rs. 80, 000 20. 2014-15 240 Rs. 87, 322 Rs. 87, 000 21. 2015-16 254 Rs. 92, 416 Rs. 92, 000 22. 2016-17 264 Rs. 96, 055 Rs. 96, 000 23. 2017-18 272 Rs. 98,965 Rs.99, 000 24. 2018-19 280 Rs. 1, 01, 876 Rs. 1, 02, 000 The principles for determining the compensation for loss of dependency in cases involving death of minor children were summarized as under :- “19. The outcome of the aforesaid discussion as regards compensation payable for loss of dependency in cases involving death of children can be summarized as follows :- (1) Compensation in respect of school-going children who died in motor accidents above the age of 6 and up to the age of 15 shall be computed applying the multiplier method, and the multiplier to be applied shall be 15, subject to the condition that the compensation shall not go below the prescribed amount in terms of the Second Schedule. (2) Except in exceptional cases, where different yardsticks have to be followed for arriving at the notional income having regard to the cogent and irrefutable evidence let in by the parties, the notional income of the deceased children in the age group of 6 to 15 shall be determined as in the Second Schedule, viz., Rs. 24, 000, after making appropriate correction for offsetting the inflation, as indicated in the Table furnished in para 18 above. (3) No amount need be added to the notional income towards future prospects and one-third of the notional income has to be deducted towards personal expenses while computing compensation. 24, 000, after making appropriate correction for offsetting the inflation, as indicated in the Table furnished in para 18 above. (3) No amount need be added to the notional income towards future prospects and one-third of the notional income has to be deducted towards personal expenses while computing compensation. (4) Except in exceptional cases, where the Tribunal finds on cogent and irrefutable evidence let in by the parties that the quantum of compensation arrived at in cases involving death of children below the age of 6 in the manner indicated in this judgment will not satisfy the requirement of just compensation, consolidated amounts can be granted by way of compensation. The consolidated amounts for the said purpose shall be as provided for in section 163-A of the Act as applicable to death cases, namely, Rs. 2, 40, 000/-, subject to a progressive addition to be made from year to year , at the rate of Rs. 12, 000/- for every year after 1995, for cases involving death up to the year 2018. Thereafter, the compensation shall be computed as provided for in the amended section 163-A, viz., Rs. 5, 00, 000/-, after offsetting the effect of inflation on the real value of money, as indicated in clause (2) above.” 5(iii) I am in agreement with the reasoning given in Chetan Malhotra’s and Assainar’s cases (supra) and the principles summarized in Assainar’s case. 6. Question No. 2 For death of children below the age of 6 years, consolidated amount of compensation after offsetting the effect of inflation is to be awarded without applying the multiplier, therefore, neither any addition towards future prospects nor any deduction towards personal and living expenses is required to be made from the assessed notional income. For death of children aged 6 years and upto 15 years, compensation is to be worked out based on multiplier of ‘15’, therefore, 1/3rd deduction towards personal expenses from the assessed notional income is to be made. Point is answered accordingly. 7. In the instant case, the minor child at the age of 4 years met with her untimely death on 14.05.2004. Her notional income in accordance with principle No. 4 would be as under :- Rs. 2,40,000/- (as given in the unamended Second Schedule) + Rs.12,000/-per year (for 9 years i.e. for the years 1996 to 2004) i.e. Rs. 2,40,000 + 1,08,000/- = Rs. 3,48,000/-. Her notional income in accordance with principle No. 4 would be as under :- Rs. 2,40,000/- (as given in the unamended Second Schedule) + Rs.12,000/-per year (for 9 years i.e. for the years 1996 to 2004) i.e. Rs. 2,40,000 + 1,08,000/- = Rs. 3,48,000/-. Compensation for the loss of filial consortium to each of the claimants, compensation towards funeral expenses and loss to estate, are also payable. The total compensation amount comes out as under :- Sr. No. Head Amount 1. Notional income Rs. 2,40,000 + 12,000 x 9 = Rs. 3,48,000/- 2. Loss of estate Rs. 15, 000/- 3. Funeral expenses Rs. 15, 000/- 4. Loss of Consortium Rs. 40, 000 x 2 = Rs. 80, 000 5. Total payable compensation Rs. 4,58, 000/- No other point was urged The award stands modified to the extent indicated above. The remaining terms of the impugned award, including the interest component, shall remain the same. The appeal stands disposed of in the above terms, so also the pending applications, if any.