MALARVIZHI & ORS. versus UNITED INDIA INSURANCE COMPANY LIMITED & ANR. on 9 December 2019

SUPREME COURT REPORTS

[2019] 16 S.C.R.

A

MALARVIZHI & ORS.

v.

UNITED INDIA INSURANCE COMPANY LIMITED & ANR.

(Civil Appeal Nos. 9196-97 of 2019)

BDECEMBER 09, 2019

[DR. DHANANJAYA Y. CHANDRACHUDAND HRISHIKESH ROY, JJ.]

Motor Vehicles Act, 1988 – s.166 – Person died in motoraccident – Survived by the appellants (his wife and fourCdaughters) – Appellants contended that the deceased derivedincome from many sources including business, agricultural landadmeasuring 36.76 acres (sold in recovery proceedings after hisdeath) and was also wholesale dealer of cement and owned wineshops – Sought compensation in the amount of Rs.99,90,000/- –DTribunal allowed the claim in the amount of Rs.59,04,000/- withinterest @ 7.5% p.a. – High Court reduced the compensation toRs.33,55,000/- – Held: Tribunal proceeded to determine theagricultural income arising from 36.76 acres of land on the basisof two judgments of the High Court, arrived at two different figuresand determined the agricultural income on an average of the twoEamounts – It superimposed a possible value of income fromagricultural land despite clear indication in the income tax returnsof the income from agricultural land – Such method not sustainablein law – Determination must proceed on the basis of the incometax return, where available, a statutory document on which relianceFmay be placed to determine the annual income of the deceased –To the benefit of the appellants, the High Court proceeded on thebasis of the income tax return for the assessment year 1997-98 andnot 1999-2000 & 2000-01 which reflected reduction in the annualincome of the deceased – Tax return indicates annual income ofRs.2,11,131/- in the relevant assessment year – In the peculiarGcircumstances of the case, Rs. 1,04,987/-, payment for prepaidlicense fee to the Tamil Nadu Government having been paidupfront and for a future period is added to the annual income ofthe deceased – Thus, the net annual income of the deceased isRs.3,16,118/- – In accordance with Sarla Verma case, the multiplierHapplied is 13, appellant being 49 at the time of accident– Loss of dependency is at Rs.3,16,118 X 13= Rs.41,09,534/- – Inaccordance with Pranay Sethi case, Rs.15,000, 15,000 and 40,000added for funeral expenses, loss of estate and loss of consortiumrespectively – Rs.50,000/- for loss of love and affection – Thus,total compensation payable to the appellants is Rs.42,29,534/- withinterest @ 9% p.a. from the date of filing of the application tillthe date of its payment of the appellants.

Partly allowing the appeals, the Court

HELD: 1.1 The method adopted by the Tribunal is notsustainable in law. The tax return indicates an annual income ofRs 2,11,131 in the relevant assessment year. The determinationmust proceed on the basis of the income tax return, whereavailable. The income tax return is a statutory document onwhich reliance may be placed to determine the annual incomeof the deceased. To the benefit of the appellants, the High Courthas proceeded on the basis of the income tax return for theassessment year 1997-1998 and not 1999-2000 and 2000-2001which reflected a reduction in the annual income of the deceased.Depreciation is the deduction allowed for the decline in the realvalue of tangible or intangible assets over its useful life. Its valuevaries over time and cannot amount to tangible income for thepurposes of computing annual income in a claim before theMACT. An annual amount of Rs.1,04,987 is reflected as paymentfor a prepaid license fee to the Tamil Nadu Government. In thepeculiar circumstances of the case, this amount, having been paidupfront and for a future period is to be added to the annualincome of the deceased. Thus, the net annual income of thedeceased is: Rs 2,11,131 + 1,04,987 = Rs 3,16,118. [Paras 10,12 and 13] [1091-G; 1092-A-C; 1093-B-D]

1.2 The determination of the amount payable to theappellants is as follows: (i) The deceased was self-employed andaged 49 at the time of the accident. In accordance with theConstitution Bench judgment of this Court in National InsuranceCompany Limited v Pranay Sethi, 25% of the annual income isto be added for future prospects. 25% of Rs 3,16,118 = 79,029.5.Annual income, accounting for future prospects, is Rs 3,16,118+ 79,029.5 = Rs 3,95,147.5; and (ii) In accordance withparagraph 30 of the decision of this Court in Sarla Verma v Delhi AB

CD

EF

GH

ATransport Corporation4, the deduction for personal expenses fora married person where the dependents are between four to sixpeople is 1/5th or 20%. 20% of Rs 3,95,147.5 = 79,029.5. Netannual income is Rs 3,95,147.5 - 79,029.5 = Rs 3,16,118. Inaccordance with the judgment of this Court in Sarla Verma, themultiplier to be applied when the deceased is between the ageBgroup 46 to 50 is 13. The loss of dependency is calculated atRs 3,16,118 x 13 = Rs 41,09,534. In accordance with thejudgment of this Court in Pranay Sethi, Rs 15,000, 15,000 and40,000 must be added for funeral expenses, loss of estate andloss of consortium respectively. The total compensation payableCto the appellants is Rs 42,29,534 with interest at 9% per annumfrom the date of filing of the application till the date of paymentof the compensation to the appellants. [Paras 14, 16] [1093-D-G; 1094-A-E]

Sarla Verma v. Delhi Transport Corporation (2009) 6DSCC 121 : [2009] 5 SCR 1098 – followed.National Insurance Company Limited v. Pranay Sethi(2017) 16 SCC 680 – relied on.

New India Assurance Company v. Yogesh Devi (2012)3 SCC 613 – referred to.E

Case Law Reference

CIVIL APPELLATE JURISDICTION : Civil Appeal Nos. 9196-9197 of 2019.

From the Judgment and Order dated 20.07.2018 of the HighCourt of Judicature at Madras in Civil Miscellaneous Appeal No. 1635Gof 2013 and Cross Objection No. 1 of 2018

Jayanth Muth Raj, Sr. Adv., Mrs. Malavika Jayanth, Advs. forthe Appellants.

Ravi Bakshi, Sudhir Mathur, Ms. Sayma Feroz, Shashank Kumar,HC.S. Ashri, Advs. for the Respondents.

MALARVIZHI v. UNITED INDIA INSURANCE COMPANYLIMITED

The Judgment of the Court was delivered by DR. DHANANJAYA Y. CHANDRACHUD, J.

1. The present appeals arise from a judgment of a Division Benchof the Madras High Court dated 20 July 2018 in a first appeal and cross-objection from the decision of the Motor Accident Claims Tribunal[1],Ranipet.

2. The appellants are the heirs and legal representatives ofAranganathan who died as a result of a motor accident on 25 May2001. He was travelling in an Ambassador car bearing Registration NoTN 23 A 7549 which was being driven by another person. At about12:45 am, a Tata Sierra car bearing Registration No TN 20 Z 1613came from the opposite direction and dashed against the car of thedeceased. Aranganathan was seriously injured and died during thecourse of the accident. He is survived by his wife and four daughterswho are the appellants before this Court.

3. The appellants filed a claim petition under Section 166 of theMotor Vehicles Act, 1988 before the Tribunal, seeking compensationin the amount of Rs 99,90,000. By its award dated 11 July 2012, theTribunal allowed the claim in the amount of Rs 59,04,000 together withinterest at the rate of 7.5% per annum from the date of filing the claimpetition till the date of realization of the decreed amount. The appellantsfiled a first appeal before the High Court of Madras. The High Court,by its impugned judgment partly allowed the appeal of the firstrespondent. The High Court estimated the income of the deceased ata reduced figure of Rs 2,50,000 per annum from Rs 4,48,790.55. Thetotal compensation awarded was thus reduced from Rs 59,04,000 toRs 33,55,000. Aggrieved by the judgment of the High Court, theclaimants are in appeal before this Court.

4. The deceased was 49 years old at the time of the accident.The appellants contended that the deceased was a businessman whoderived income from many sources including business and agriculturalland admeasuring 36.76 acres. It was stated that the deceased was,amongst others, a wholesale dealer of cement and also owned wineshops. The land was sold in recovery proceedings after the death ofthe deceased.

1 Tribunal

A

B

C

D

EF

G

H

A5. The Tribunal assessed the agricultural income of the deceasedat Rs 3,40,708 per annum and the total income from business at Rs89,590. The Tribunal added to this Rs 30,000 per annum for incomethrough real estate and contract business. The annual income of thedeceased was assessed at Rs 4,60,298. 30% was added to this towardsBfuture prospects bringing the annual income to Rs 5,98,387.40. After adeduction of 1/4th of the total income towards living expenses, theTribunal used a multiplier of 13 to arrive at a compensation ofRs.58,34,277. Damages under conventional heads, including funeralexpenses, loss of consortium and loss of love and affection werecomputed at Rs 70,000. A total compensation of Rs 59,04,000 wasCawarded.

6. In appeal, the High Court concluded that on an analysis ofthe income tax returns filed by the deceased for the financial years1995-1996 to 2000-2001, the income declared for the financial year1997-1998 was the highest and must be taken as the annual income ofDthe deceased. Hence, Rs 2,09,211 was determined to be the annualincome of the deceased. Rs 40,000 per annum was added towards futureprospects. The total income was thus arrived at Rs 2,50,000 per annum.No deduction was made towards personal expenses. Applying amultiplier of 13, the loss of dependency was calculated to be RsE32,50,000. To this, funeral expenses, loss of consortium and loss of loveand affection were added in the amount of Rs 1,05,000. A totalcompensation of Rs 33,55,000 was awarded.

7. Assailing the reduction of the compensation, Mr Jayanth MuthRaj, learned Senior Counsel appearing on behalf of the appellants hasFcontended:

(i) The High Court has held that income tax returns takeprecedence over other documents in the determinationof annual income. Over 52 documents were markedbefore the Tribunal demonstrating income from variousGsources, all of which were not disclosed in the incometax returns;

(ii) The High Court erred in not considering othercontractual work awarded to the deceased and othersolvency certificates of the deceased in the computationHof his annual income; MALARVIZHI v. UNITED INDIA INSURANCE COMPANYLIMITED [DR. DHANANJAYA Y. CHANDRACHUD, J.]

(iii) Even assuming that the High Court is justified in takingthe income reflected in the tax return for the financialyear 1997-1998 as the determinant, the High Court haserred in not accounting for the depreciation costs onfixed assets which have been reflected therein; and A

(iv) The High Court ought to have calculated the monthlyincome of the deceased at Rs 50,000 taking into accountthe turnover from his trade and wine business.

B

8. On the other hand, learned counsel for the respondentscontended:

C

(i) The High Court is justified in according precedence tothe income tax returns of the deceased to determine hisannual income;

(ii) There is no merit in the contention that the appellant hassuffered a loss on account of the sale of properties forthe settling of the debt owed to banks;D

(iii) Depreciation on fixed assets cannot be added to theincome of the deceased; and

(iv) The award of the High Court is legally sustainable andcalls for no interference by this Court.

E

9. The rival submissions fall for our consideration.

10. The Tribunal proceeded to determine the agricultural incomearising from 36.76 acres of land on the basis of two judgments of theHigh Court. The Tribunal arrived at two different figures by applyingthe decisions and proceeded to determine the agricultural income onan average of the two amounts. The Tribunal superimposed a possiblevalue of income from agricultural land despite a clear indication in theincome tax returns of the income from agricultural land. The methodadopted by the Tribunal is not sustainable in law. On the other hand,the High Court has proceeded on the basis of the income reflected inthe income tax returns for the assessment year 1997-1998. The relevantportion of the return reads:

F

G

H

AThe tax return indicates an annual income of Rs 2,11,131 in therelevant assessment year. Mr Jayanth Muth Raj, learned Senior Counselappearing on behalf of the appellant contended that other documentswere marked which reflected the income of the deceased. We are inagreement with the High Court that the determination must proceedon the basis of the income tax return, where available. The income taxBreturn is a statutory document on which reliance may be placed todetermine the annual income of the deceased. To the benefit of theappellants, the High Court has proceeded on the basis of the incometax return for the assessment year 1997-1998 and not 1999-2000 and2000-2001 which reflected a reduction in the annual income of theCdeceased.

11. Learned Senior Counsel appearing on behalf of the appellantsdrew the attention of this Court to the judgment of this Court in NewIndia Assurance Company v Yogesh Devi[2] to contend that this Courtmay reasonably determine the income that accrues to the deceased andDalso compute the expenses incurred in the upkeep of agricultural land.In that case, a two judge Bench of this Court dealt with a claim where“there was no evidence regarding the amount of income derived fromthe abovementioned properties.” The only evidence available in regardto the monthly income of the deceased was the statement of theclaimant. In the present case, the High Court has relied on the incomeEtax return of the deceased. Further, the Court in New India Assuranceopined that though a court may be required to account for the depletionin the net income accruing from the assets of the deceased on accountof payments for engaging managers, evidence must be adduced tocompute the depletion. The Court held:F

“In the normal course the claimants are expected to adduceevidence as to what would be the quantum of depletion in theincome from the abovementioned asset on account of theabovementioned factors.”

In the present case, no evidence was adduced by the appellantsGat any stage of the proceedings to assist in the computation of thedepletion in the net income which accrues to the deceased. Thejudgment of this Court in New India Assurance does not help the caseof the appellants.

H2 (2012) 3 SCC 613

A

12. It was then contended by Mr Jayanth Muth Raj that thisCourt must add to the annual income of the deceased, depreciation costson capital assets to the amounts of Rs 21,642, 74,685 and 7701 asreflected in the tax return for the assessment year 1997-1998. We areunable to accede to this contention. Depreciation is the deductionallowed for the decline in the real value of tangible or intangible assetsover its useful life. Its value varies over time and cannot amount totangible income for the purposes of computing annual income in a claimbefore the MACT.

B

B

13. Mr Jayanth Muth Raj has then drawn our attention to thebalance sheet dated 31 March 1997 of Pavai Wines, Sholinghur for theassessment year 1997- 1998. An annual amount of Rs 1,04,987 isreflected as payment for a prepaid license fee to the Tamil NaduGovernment. In the peculiar circumstances of the case, this amount,having been paid upfront and for a future period is to be added to theannual income of the deceased. Thus, the net annual income of thedeceased is: Rs 2,11,131 + 1,04,987 = Rs 3,16,118.

C

D

14. The determination of the amount payable to the appellants isas follows:

(i) The deceased was self-employed and aged 49 at thetime of the accident. In accordance with the ConstitutionEBench judgment of this Court in National InsuranceCompany Limited v Pranay Sethi[3], 25% of theannual income is to be added for future prospects. 25%of Rs 3,16,118 = 79,029.5. Annual income, accountingfor future prospects, is Rs 3,16,118 + 79,029.5 = RsF3,95,147.5; and E

(ii) In accordance with paragraph 30 of the decision of thisCourt in Sarla Verma v Delhi TransportCorporation[4], the deduction for personal expenses fora married person where the dependents are betweenfour to six people is 1/5[th] or 20%. 20% of Rs 3,95,147.5= 79,029.5. Net annual income is Rs 3,95,147.5 -79,029.5 = Rs 3,16,118.

G

3 (2017) 16 SCC 680

4 (2009) 6 SCC 121

H

A

In accordance with the judgment of this Court in Sarla Verma,the multiplier to be applied when the deceased is between the age group46 to 50 is 13. The loss of dependency is calculated at Rs 3,16,118 X13 = Rs 41,09,534. In accordance with the judgment of this Court inPranay Sethi, Rs 15,000, 15,000 and 40,000 must be added for funeralexpenses, loss of estate and loss of consortium respectively.

B

15. Therefore, the appellants shall be entitled to compensationunder the following heads:

Loss of dependencyRs 41,09,534CFuneral expensesRs 15,000Loss of estateRs 15,000Loss of consortiumRs 40,000Loss of love and affectionRs 50,000DRs 42,29,534

16. Thus, the total compensation payable to the appellants is Rs42,29,534 with interest at 9% per annum from the date of filing of theapplication till the date of payment of the compensation to the appellants.

E17. The appeals are partly allowed to the extent indicated above.There shall be no order as to costs.

18. Pending application(s), if any, shall stands disposed of.

F

Divya Pandey

Appeals partly allowed.

G

H