REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 009014 OF 2022

(arising out of Special Leave Petition (Civil) No. 18808 of 2019)

SMT. ANJALI & ORS. … APPELLANT(S)

VS.

LOKENDRA RATHOD & ORS. … RESPONDENT(S)

JUDGMENT

KRISHNA MURARI, J.

Leave Granted

2.The present appeal arises from a judgment of the Madhya Pradesh

High Court dated 16

th

August, 2018 in a First Appeal from the decision of

the Motor Accident Claims Tribunal, Indore.

3.The Appellants are the heirs and legal representatives of Rajesh

(deceased) who died as a result of a motor accident on 15

th

August 2010.

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He was traveling in a Maruti Alto Car bearing Registration No. MP-09-

HE-3322, on reaching Badwah Road, a bus bearing Registration No. MP-

09-FA-3169 being driven by Respondent No.2 in a rash and negligent

manner crashed into the Rajesh’s car, resulting in Rajesh (deceased)

receiving grievous injuries on various body parts, he later succumbed to

the injuries during treatment. He is survived by his two wives, three

children and his parents, who are the appellants before this Court.

4.The claimants/appellants filed a Claim Petition under Section 166

of the Motor Vehicles Act, 1988 before the Tribunal, seeking

compensation in the amount of Rs.20 Lakhs. By its award dated 12

th

July,

2013, the Tribunal estimated the deceased’s income at Rs.4000/- per

month and allowed the claim in the amount of Rs.6,24,000/- together

with interest at the rate of 6% per annum from the date of filing the Claim

Petition till the date of full realization of the decreed amount. The

appellants filed a First Appeal before the High Court of Madhya Pradesh,

Indore Bench, wherein vide impugned judgment dated 16

th

August, 2018

the High Court increased the deceased’s estimated income to Rs. 5000/-

per month and awarded a compensation of Rs. 11,41,000/- with interest at

the rate of 6% per annum from the date of filing the Claim Petition till the

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date of full realization of the decreed amount. Aggrieved by the

judgment of the High Court, the claimants are in appeal before this Court.

5.There is no dispute as to the occurrence of the accident and the

liability of the respondent- insurer to pay the compensation. In view of

this admitted position, it is unnecessary to narrate the factual aspects of

the accident.

6.The deceased was aged 28 years at the time of the accident, and he

used to run a business of scrap and earned Rs. 15,000/- per month as

claimed by the appellants, in support the appellants had filed the

deceased’s Income Tax Return for financial year 2009-2010 before the

Tribunal which showed the total income of deceased to be Rs.1,18,261/-,

approx. Rs.9855/- per month. The MACT disregarded the deceased’s

Income Tax Return on the ground that neither any ITR prior to 2009-2010

nor any other document with regard to the deceased’s income was filed

before the Tribunal. The MACT while relying on this Court’s judgment

in Laxmi Devi & Ors. Vs. Mohammad Tabbar & Anr.

1

, held the

deceased to be a skilled labour and fixed his income at Rs.4000/- per

month i.e., Rs.48,000/- per annum. The Tribunal applied a multiplier of

‘17’ and deducted one-fourth (1/4th) of the income towards his personal

1 (2008) 12 SCC 165

3

expenses for the purpose of calculation of the compensation under the

head of loss of dependency. A total sum of Rs.6,12,000/- was awarded

towards loss of dependency, to this Rs.10,000/- was added for loss of pain

& suffering and Rs.2,000/- for funeral expenses. The MACT awarded a

total sum of Rs.6,24,000/- (Rupees Six Lakh Twenty-Four Thousand

only) towards compensation with interest @ 6% per annum from the date

of the Claim Petition till date of realization.

7.However, the High Court held that the Tribunal was unjustified in

estimating the deceased’s income as Rs.4,000/- per month, considering

that the deceased was the sole bread earner of the family, the High Court

estimated the deceased’s income as Rs.5,000/- per month. Furthermore,

the High Court observed that the Tribunal failed to pass any award under

the head of ‘future prospects’, hence the High Court held that since the

deceased was 28 years of age and self-employed, he was entitled to future

prospects of 40%. The High Court fixed the monthly income of the

deceased to Rs.5,000/- per month, added 40% (Rs.2,000/-) of the

deceased’s income towards future prospects and deducted one-fourth

(1/4th) of the income towards personal expenses, which totaled to

Rs.63,000/-. It applied a multiplier ‘17’ for calculating the dependency

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and awarded Rs.70,000/- under conventional head. Accordingly, the High

Court awarded a compensation of Rs.11,41,000/- (Rupees Eleven Lakh

Forty-One Thousand Only) with interest @ 6% per annum from the date

of the claim petition till date of realization.

8.Assailing the High Court’s impugned order dated 16

th

August,

2018, the learned Counsel appearing on behalf of the Appellants has

contended:-

a.The High Court and the Tribunal failed to consider the

deceased’s Income Tax Return filed on 28.05.2010 for the year

2009-2010, the HC rejected the ITR on the ground that earlier

returns were not filed while the Income Tax Inspector was

examined.

b.The High Court and Tribunal failed to observe that since the

number of dependents exceeded 6 members, the deduction

made towards personal expenses ought to be one-fifth (1/5

th

).

In the present case there are 7 dependents of the deceased.

c.The Tribunal failed to award any amount under the

Conventional Heads and the High Court awarded a sum of

Rs.70,000/- in lumpsum under the Conventional Heads,

whereas the same ought to have been Rs.1,20,000/- as per the

5

Supreme Court’s judgment in Malarvizhi & Ors. Vs. United

India Insurance CO. Ltd. & Ors.

2

d.Both the Tribunal and High Court awarded interest at the rate

of 6% per annum from the date of application while it ought to

have been 9% as held in Malarvizhi & Ors. Vs. United India

Insurance Co. Ltd. & Ors.(Supra).

9.The Tribunal and the High Court both committed grave error while

estimating the deceased’s income by disregarding the Income Tax Return

of the Deceased. The appellants had filed the Income Tax Return (2009-

2010) of the deceased, which reflects the deceased’s annual income to be

Rs.1,18,261/-, approx. Rs.9,855/- per month. This Court in Malarvizhi &

Ors. (Supra) has reaffirmed that the Income Tax Return is a statutory

document on which reliance be placed, where available, for computation

of annual income. In Malarvizhi (Supra), this Court has laid as under:

“10. …We are in agreement with the High Court that 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.”

2 (2020) 4 SCC 228

6

Hence, this Court is of the opinion that the deceased’s annual income be

fixed at Rs.1,18,261/-, approx. Rs.9,855/- per month keeping in mind the

deceased’s Income Tax Return for the year 2009-2010.

10.The provisions of the Motor Vehicles Act, 1988 (for short, “MV

Act”) gives paramount importance to the concept of ‘just and fair’

compensation. It is a beneficial legislation which has been framed with

the object of providing relief to the victims or their families. Section 168

of the MV Act deals with the concept of ‘just compensation’ which ought

to be determined on the foundation of fairness, reasonableness and

equitability. Although such determination can never be arithmetically

exact or perfect, an endeavor should be made by the Court to award just

and fair compensation irrespective of the amount claimed by the

applicant/s. In Sarla Verma & Ors. Vs. Delhi Transport Corporation &

Anr.

3

, this Court has laid down as under:

“16. ...“Just compensation” is adequate compensation

which is fair and equitable, on the facts and circumstances

of the case, to make good the loss suffered as a result of the

wrong, as far as money can do so, by applying the well

settled principles relating to award of compensation. It is

not intended to be a bonanza, largesse or source of profit.”

3 (2009) 6 SCC 121

7

11.In Sarla Verma (Supra), it was further held that where the

deceased was married, the deduction towards personal and living

expenses of the deceased should be one-third (1/3rd) where the number of

dependent family members is between 2 and 3, one-fourth (1/4th) where

the number of dependent family members is between 4 and 6, and one-

fifth (1/5th) where the number of dependent family members exceeds six.

The same has been affirmed by the Constitution Bench of this Court in

National Insurance Co. Ltd. Vs. Pranay Sethi & Ors.

4

12.In the instant case the deceased is survived by seven (7)

dependents, hence in view of the Sarla Verma (Supra) judgment and the

Constitution bench judgment of this Court in Pranay Sethi (Supra) the

appropriate deduction for personal expenses for deceased ought to be 1/5

th

only and not 1/4

th

as applied by the Tribunal and High Court.

13.Regarding the additions to be made for future prospects of the

deceased, in Sarla Verma (Supra), this Court has held that while

calculating the compensation, the courts should take into consideration

not only the actual income at the time of the death but should also make

additions by taking note of future prospects. It was further held that

4 (2017) 16 SCC 680

8

though the evidence may indicate a different percentage of increase, it is

necessary to standardize the addition to avoid disparate yardsticks being

applied or disparate methods of calculation being adopted.

14.In Pranay Sethi (Supra), this Court has not only approved the

aforesaid observations made in Sarla Verma (Supra), but also held as

under:

“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.

59.4. In case the deceased was self-employed or on a fixed

salary, an addition of 40% of the established income should

be the warrant where the deceased was below the age of 40

years. An addition of 25% where the deceased was between

the age of 40 to 50 years and 10% where the deceased was

between the age of 50 to 60 years should be regarded as the

necessary method of computation. The established income

means the income minus the tax component.”

15.The Tribunal erred by not making any additions to future prospects

of the deceased, whereas the High Court by placing reliance on Sarla

Verma (Supra) and Pranay Sethi (Supra) held that since the deceased

was under 40 years of age and was self-employed, he be entitled to

9

addition of future prospects of 40% of his established income. We find

no error in the High Court’s reasoning for adding 40% of the deceased’s

income towards future prospects.

16. The Tribunal awarded meagre sums of Rs.10,000/- and Rs.2,000/-

towards conventional heads and funeral expenses, respectively, whereas

the High Court while placing reliance on Pranay Sethi (Supra) awarded

Rs.70,000/- under conventional heads and Rs.10,000/- towards funeral

expenses of the deceased. Although the High Court was correct in placing

reliance on Pranay Sethi (Supra), the High Court erred by not granting

an increment of 10% on the conventional heads in every three years as

directed in the Pranay Sethi (Supra), it may be relevant to extract the

following observations :-

‘52…..The conventional and traditional heads, needless to

say, cannot be determined on percentage basis because that

would not be an acceptable criterion. Unlike determination

of income, the said heads have to be quantified. Any

quantification must have a reasonable foundation. There can

be no dispute over the fact that price index, fall in bank

interest, escalation of rates in many a field have to be

noticed. The court cannot remain oblivious to the same.

There has been a thumb rule in this aspect. Otherwise, there

will be extreme difficulty in determination of the same and

unless the thumb rule is applied, there will be immense

variation lacking any kind of consistency as a consequence

of which, the orders passed by the tribunals and courts are

likely to be unguided. Therefore, we think it seemly to fix

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reasonable sums. It seems to us that reasonable figures on

conventional heads, namely, loss of estate, loss of

consortium and funeral expenses should be Rs 15,000,

Rs.40,000 and Rs.15,000 respectively. The principle of

revisiting the said heads is an acceptable principle. But the

revisit should not be fact-centric or quantum-centric. We

think that it would be condign that the amount that we have

quantified should be enhanced on percentage basis in every

three years and the enhancement should be at the rate of

10% in a span of three years. We are disposed to hold so

because that will bring in consistency in respect of those

heads.”

Hence, we are of the opinion that the High Court ought to have added the

increment of 10% to the conventional heads as per the dictum in Pranay

Sethi (Supra).

17.A three-Judge Bench of this Court in United India Insurance Co.

Ltd. vs. Satinder Kaur @ Satwinder Kaur and Ors.

5

after considering

Pranay Sethi (Supra), has awarded spousal consortium at the rate of

Rs.40,000/ (Rupees forty thousand only) and towards loss of parental

consortium to each child at the rate of Rs.40,000/ (Rupees forty thousand

only). The compensation under these heads also needs to be increased by

10%. Thus, the spousal consortium is awarded at Rs.44,000/ (Forty-four

thousand only), and towards parental consortium at the rate of

Rs.44,000/ each (Total Rs.1,32,000/) is awarded to the three children.

5 (2021) 11 SCC 780

11

18.In light of the above mentioned discussion, the Appellants are

entitled to the following amounts:

Sl.

No.

Head Compensation Awarded

1.Income Rs. 9,855/- per month

2.Future Prospects Rs.3,942/- (i.e. 40% of

the income)

3.Deduction Towards personal

expenses

Rs.2,300/- (i.e. 1/6

th

of

Rs.9,855 + Rs.3,942)

4.Total Annual Income Rs.1,37,964/- [(i.e. 5/6

th

of Rs.9,855 + Rs.3,942)

x 12]

5.Multiplier 17

6.Loss of Dependency Rs.23,45,388/- (i.e.

Rs.1,37,964 x 17)

7.Funeral Expenses Rs. 50,000/-

8.Loss of Estate Rs. 20,000/-

9.Loss of Spousal ConsortiumRs. 44,000/-

10. Loss of Parental Consortium to

each of the three children.

Rs. 44,000/- each

11.Total Compensation to be PaidRs.25,91,388/-.

Thus the total compensation payable to the Appellants is Rs.25,91,388/-

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.

19.The appeal is allowed to the extent indicated above.

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…………………..………..,J.

(KRISHNA MURARI)

…………………..………..,J.

(BELA M. TRIVEDI)

NEW DELHI;

06

TH

DECEMBER, 2022

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