RELIANCE GENERAL INSURANCE COMPANY LTD. versus SHALU SHARMA & ORS. on 2 February 2018

[2018] 1 S.C.R. 403

RELIANCE GENERAL INSURANCE COMPANY LTD.

v.

SHALU SHARMA & ORS.

(Civil Appeal No. 767 of 2018)

FEBRUARY 02, 2018

[DIPAK MISRA, CJI, A. M. KHANWILKAR AND

DR. D. Y. CHANDRACHUD, JJ.]

Motor Accidents Act, 1988 – Compensation – Award of –Death of self-employed (businessman) aged 42 years in a motoraccident – Award of future prospects to the extent of 30% – In appeal,before the High Court, plea of the insurer-appellant that increasein the gross total income of the deceased as shown in income taxreturn would not justify award of future prospects – High Courtheld that having due regard to the progressive increase in the incomeof the deceased, the award of future prospects by the tribunal couldnot be faulted – On appeal, held: Future prospects cannot be deniedin case the deceased was self-employed – Deceased being of 42years of age at the time of the accident, an addition of 25% on theground of future prospects would be warranted instead of 30%computed by the tribunal.

A self employed (businessman) aged 42 years died in anaccident caused due to the negligence of the driver of theoffending vehicle, insured by the appellant. The tribunal awarded30 per cent towards the loss of future prospects in assessingcompensation and awarded compensation of Rs. 30,26,810/-. Inappeal, the insurer-appellant contended that the increase in thegross total income of the deceased as shown in income tax returnwould not justify award of future prospects. The High Court heldthat having due regard to the progressive increase in the incomeof the deceased, the award of future prospects by the tribunalcould not be faulted. Hence, the instant appeal.

Disposing of the appeal, the Court

HELD: 1. Since the deceased was 42 years of age, anaddition of 25% on the ground of future prospects would bewarranted instead of 30% computed by the tribunal. The tribunalheld that the annual income of the deceased (on the basis of the

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Aincome tax returns for 2010-11, 2011-12 and 2012-13) would beRs 1,81,500. Adding a component of 25% for future prospects,the income would stand at Rs 2,26,875. Deducting an amount ofone fourth towards personal expenses, the loss of dependencyper annum works out to Rs 1,70,156. Applying a multiplier of 14,the total loss of dependency would work out to Rs 23,82,187.BThe tribunal awarded a sum of Rs 3,14,335 towards medicalexpenses. An addition of Rs 70,000 would be required to be madein terms of the decision in *Pranay Sethi case on account of theconventional heads of loss of estate (Rs 15,000), loss ofconsortium (Rs 40,000) and funeral expenses (Rs 15,000). Hence,Cthe total compensation is quantified at Rs 27,66,522 on whichthe claimants would be entitled to interest @ 9% p.a. from thedate of the filing of the claim petition. The apportionment shallbe carried out in terms of the award of the tribunal. [Paras 4-5][405-G-H; 406-A-B]D*National Insurance Company Limited v. Pranay Sethi(2017) 13 SCALE 12 - relied on.

Case Law Reference

(2017) 13 SCALE 12relied on

Paras 4, 5

ECIVIL APPELLATE JURISDICTION: Civil Appeal No. 767 of2018.

From the Judgment and Order dated 24.05.2016 of the High Courtof Delhi at New Delhi in MAC Appeal No. 343 of 2016.

Ms. Prerna Mehta, Adv. for the Appellant.

FSyed Mehdi Imam, Bhopal Singh, Tabrez Ahmed, Javed Muzaffar,

D. K. Sharma, Advs. for the Respondents.

The Judgment of the Court was delivered by DR. D. Y. CHANDRACHUD, J. 1. The present appeal arisesGfrom the judgment of a Single Judge of the Delhi High Court in an appealagainst an award of the Motor Accident Claims Tribunal (MACT).

2. Narinder Sharma died in an accident which occurred on 14September 2013. The accident involved a motor vehicle which was insuredagainst third party risks by the appellant. The dependents filed a claimHfor compensation before the MACT. The Tribunal held that the accident

was caused due to the negligence of the driver of the offending vehicle.Compensation of Rs 30,26,810 was awarded together with interest at 9per cent per annum. The Tribunal factored in a component of 30 percent towards the loss of future prospects in assessing the compensation.

3. The High Court has observed that the only issue which wasraised by the insurer was in regard to the award of future prospects tothe extent of 30 per cent. The deceased was conducting his own businessin the name and style of M/s Mahak Cable Networks at East PunjabiBagh, New Delhi. He was 42 years old on the date of theaccident.According to the appellant, the increase in his gross total incomeas shown in the income tax returns for 2010-11, 2011-12 and 2012-13would not justify the award of future prospects, or at least to that extent.The High Court negatived the submission of the insurer and held thathaving due regard to the progressive increase in the income of thedeceased, the award of future prospects by the Tribunal could not befaulted.

4. The judgment of a Constitution Bench of this Court in NationalInsurance Company Limited v Pranay Sethi[1 ]settles the issue. Thedeceased was self-employed. In such a case, future prospects cannotbe denied.The grant must be in accordance with the following principleset down in the judgment:

“(iv) In case the deceased was self-employed or on a fixed salary,an addition of 40% of the established income should be the warrantwhere the deceased was below the age of 40 years. An additionof 25% where the deceased was between the age of 40 to 50years and 10% where the deceased was between the age of 50to 60 years should be regarded as the necessary method ofcomputation. The established income means the income minusthe tax component.”

Since the deceased was 42 years of age, an addition of 25% onthe ground of future prospects would be warranted instead of 30%computed by the Tribunal.

5. The Tribunal has held that the annual income of the deceased(on the basis of the income tax returns for 2010-11, 2011-12 and 2012-13) would be Rs 1,81,500. Adding a component of 25% for futureprospects, the income would stand at Rs 2,26,875. Deducting an amount 1 (2017) 13 SCALE 12

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Aof one fourth towards personal expenses, the loss of dependency perannum works out to Rs 1,70,156. Applying a multiplier of 14, the totalloss of dependency would work out to Rs 23,82,187. The Tribunal hasawarded a sum of Rs 3,14,335 towards medical expenses. An additionof Rs 70,000 would be required to be made in terms of the decision inPranay Sethi (supra) on account of the conventional heads of loss ofBestate (Rs 15,000), loss of consortium (Rs 40,000) and funeral expenses(Rs 15,000). Hence, the total compensation is quantified at Rs 27,66,522on which the claimants would be entitled to interest @ 9% p.a. from thedate of the filing of the claim petition. The apportionment shall be carriedout in terms of the award of the Tribunal. We order accordingly.

C6. When the Special Leave Petition was entertained by this Court,the following order was passed on 12 August 2016:

“Issue notice.

Since the objection in this special leave petition is mainly toDenhancement of the income of the deceased by 30% as prospectiveearning capacity, the petitioner shall deposit 75% of the awardedamount along with interest accrued thereupon before the Tribunal,within six weeks.

If such deposit is made within the stipulated time, executionEproceedings against the petitioner shall remain stayed.The amount so deposited, shall be released to the respondentforthwith.”

The appellant shall deposit the balance computed in terms of thepresent judgment within a period of eight weeks before the TribunalFwhich shall be disbursed to the claimants upon due verification. If theamount withdrawn by the claimants in terms of the order of this Courtdated 12 August 2016 exceeds the amount to which they are entitledunder the present judgment, no recoveries shall be made. The appeal isaccordingly disposed of. There shall be no order as to costs.

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Nidhi Jain

Appeal disposed of.

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