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Judgment:
(Arising out of S.L.P. (C) No.18001 of 2006)
D.K. Jain, J.-
Leave granted
Challenge in this appeal, by
special leave, is to thejudgment and order dated 26th June, 2006 passed by the
High Court of Karnataka at Bangalore, holding that the
appellants herein are entitled to a compensation of Rs.3,56,000/- along with interest at the rate of 6% per
annum from the date of filing of the claim petition till the
date of actual deposit of the compensation under the Motor
Vehicles Act, 1988 (for short `the Act'), as against the
compensation of Rs.6,08,000/- with interest at the rate of
6% per annum, awarded by the Motor Accident Claims Tribunal, Mysore (for short `the Tribunal') vide order dated
19th April, 2002.
3. The appellants are the unfortunate parents and the three
sisters of the deceased. The first respondent is the owner of
the lorry, which was involved in the accident and the second
respondent is the insurance company with which the lorry
was insured. According to the appellants, on 3rd June, 1999
at about 10.00 a.m., the deceased aged about 20 years, was riding on a luna moped when the lorry dashed against it
and ran over the deceased, killing him on the spot. It was
claimed that the deceased was engaged in his own business
under the name and style of Bharath Packing Cases
Industry, and was also dealing in cut size timber.
4. The appellants filed a petition under Section 166 of the Act
for award of compensation on account of the death of the
deceased. In the petition, it was pleaded that the deceased
had lucrative business and was earning a sum of
Rs.20,000/- per month. A claim for compensation of
Rs.68,30,000/- was made. Upon consideration of the
evidence adduced by the parties, in particular the Income
Tax Return filed by the deceased for the assessment year
1998-1999, wherein the total income from business was
declared at Rs.43,000/, the Tribunal rejected the stand of
the appellants/claimants that the earnings of deceased
were Rs.20,000/- per month. The Tribunal took the
monthly income of the deceased at Rs.7,000/- per month.Deducting therefrom half of the said income towards
personal and living expenses of the deceased and taking the
age of the younger of the parents as the basis for
determining the multiplier as 14, the Tribunal quantified
the compensation at loss of dependency as Rs.5,88,000/-.By adding Rs.10,000/- towards loss of expectation of life
and Rs.10,000/- towards funeral expenses etc., it
3
determined the total compensation as Rs.6,08,000/-. As
noted above, interest at the rate of 6% per annum was also
awarded.
5. Being aggrieved, the owner of the vehicle, respondent No.1
in this appeal, preferred appeal to the High Court.
Rejecting the plea of the owner of the vehicle that his lorry
was not involved in the accident, the High Court came to
the conclusion that on the basis of the Income Tax Return
the income of the deceased could not be more than
Rs.40,000/- per annum. The High Court, however,
calculated the monthly income of the deceased as Rs.4,000/-. The High Court, however, did not interfere with
the deduction towards the personal expenses and the
multiplier applied by the Tribunal as also the other
amounts awarded to the claimants. The High Court, thus,
chose to reduce the compensation amount awarded to the
appellants by the Tribunal from Rs.6,08,000/- to
Rs.3,56,000/- on the ground that the monthly earnings of 4 the deceased had been taken on the higher side at
Rs.7,000/-. Feeling aggrieved, the claimants are before us.
6. We have heard learned counsel for the parties.
7. Learned counsel appearing on behalf of the appellants
submitted that the High Court, while taking the monthly
income of the deceased at Rs.4,000/- per month, has
ignored other evidence brought on record by the claimants,
namely, the sale figures of his business from M/s Bharath
Packing Cases Industry for the period from 1st April, 1998 to
31st March, 1999 as reflected in the ledger accounts of one
M/s Vasu Agarbathi (Ex.P-23), one of the customers of the
deceased. It was also contended that the High Court has
also failed to take into account the future prospects of the
deceased, whose business was bound to grow with the
passage of time. In support of the proposition that rise in
income of the deceased by way of promotion or otherwise
should be taken into consideration for determining his
income earning capacity, reliance was placed on the
decision of this Court in National Insurance Co. Ltd. Vs.
Indira Srivastava & Ors.1 It was also pleaded that
deduction towards personal and living expenses of the
deceased should have been restricted to only one-third of
his monthly income.
8. Per contra, learned counsel appearing for the contesting
respondents submitted that in view of the fact that no oral
evidence was adduced by the claimants/appellants to prove
the income earning capacity of the deceased, reliance on the
Return of Income, filed by the deceased himself, for
determining his monthly income, could not be faulted and
the compensation determined by the High Court cannot be
said to be arbitrary and, therefore, no intervention in
exercise of power under Article 136 of the Constitution is called for
9. Section 168 of the Act enjoins the Tribunal to make an
award determining "the amount of compensation which
appears to be just." However, the objective factors, which
may constitute the basis of compensation appearing as just,
have not been indicated in the Act. Thus, the expression
(2008) 2 SCC 7636
"which appears to the just" vests a wide discretion in the
Tribunal in the matter of determination of compensation.
Nevertheless, the wide amplitude of such power does not
empower the Tribunal to determine the compensation
arbitrarily, or to ignore settled principles relating to
determination of compensation. Similarly, although the Act
is a beneficial legislation, it can neither be allowed to be
used as a source of profit, nor as a windfall to the persons affected nor should it be punitive to the person(s) liable to
pay compensation. The determination of compensation
must be based on certain data, establishing reasonable
nexus between the loss incurred by the dependents of the deceased and the compensation to be awarded to them. In
nutshell, the amount of compensation determined to be
payable to the claimant(s) has to be fair and reasonable by
accepted legal standards.
10.In General Manager, Kerala State Road Transport
Corporation, Trivandrum Vs. Susamma Thomas (Mrs.)
& Ors.2, M.N. Venkatachaliah, J. (as His Lordship then 2 (1994) 2 SCC 1767
was) had observed that the determination of the quantum
must answer what contemporary society "would deem to be
a fair sum such as would allow the wrongdoer to hold up
his head among his neighbours and say with their approval
that he has done the fair thing". The amount awarded must
not be niggardly since the "law values life and limb in a free
society in generous scales". At the same time, a misplaced
sympathy, generosity and benevolence cannot be the
guiding factor for determining the compensation. The
object of providing compensation is to place the claimant(s),
to the extent possible, in almost the same financial position,
as they were in before the accident and not to make a
fortune out of misfortune that has befallen them.
11.As noted earlier, in the matter of computation of compensation, there
is no uniform rule or formula for measuring the value of a human life.
Though a special provision for assessment of compensation on structured
formula basis for the purpose of a claim petition under Section 163A of
the Act has been inserted in the Act with effect from 14th
November, 1994, but no such formula has been laid down for determination
of compensation in a claim petition under Section 166 of the Act, though
there is no bar in taking the said schedule as a guiding factor while
determining the just compensation by applying multiplier method. In
fact, in Managing Director, TNSTC Ltd. Vs. K.I.
Bindu & Ors.3, it has been observed that the second schedule
to the Act may serve as a guide but cannot be used as an invariable
ready reckoner. In a catena of decisions of this Court, certain broad
principles which could be applied for assessing just compensation have
been highlighted. It has been observed that in a fatal accident action,
the accepted measure of damages awarded to the dependents is the
pecuniary loss suffered and likely to be suffered by them as a result of
abrupt termination of life. The question as to what factors should be
kept in view for calculating pecuniary loss to a dependent came up for
consideration before a three-Judge Bench of this Court in
Gobald Motor Service Ltd. & Anr. Vs. R.M.K.
Veluswami 3 (2005) 8 SCC 473 9 & Ors.4, with reference to a
case under the Fatal Accidents Act, 1855, wherein, K. Subba Rao, J. (as
His Lordship then was) speaking for the Bench observed thus: "In
calculating the pecuniary loss to the dependants many imponderables
enter into the calculation. Therefore, the actual extent of the
pecuniary loss to the dependants may depend upon data which cannot be
ascertained accurately, but must necessarily be an estimate, or even
partly a conjecture. Shortly, stated, the general principle is that the
pecuniary loss can be ascertained only by balancing on the one hand the
loss to the claimants of the future pecuniary benefit and on the other
any pecuniary advantage which from whatever source comes to them by
reason of the death, that is, the balance of loss and gain to a
dependant by the death must be ascertained."
12.Taking note of the
afore-extracted observations in Gobald Motor Service Ltd. (supra) in
Susamma Thomas (supra), it
was observed that the assessment of damages to compensate the dependents
is beset with difficulties because from the nature of things, it has to
take into account many imponderables, e.g. the life expectancy of the
deceased and the dependants, the amount that the 4 AIR 1962 SC 1
deceased would have earned during
the remainder of his life, the amount that he would have contributed to
the dependants during that period, the chances that the deceased may not
have lived or the dependants may not live upto the estimated remaining
period of their life expectancy, the chances that the deceased might
have got better employment or income or may have lost his employment or
income altogether.
13.Thus, for arriving at just
compensation, it is necessary to ascertain the net income of the
deceased available for the support of himself and his dependents at the
time of his death and the amount, which he was accustomed to spend upon
himself. This exercise has to be on the basis of the data, brought on
record by the claimant, which again cannot be accurately ascertained and
necessarily involves an element of estimate or it may partly be even a
conjecture. The figure arrived at by deducting from the net income of
the deceased such part of income as he was spending upon himself,
provides a datum, to convert it into a lump sum, by capitalising it by
an appropriate multiplier (when multiplier method is adopted). An
appropriate multiplier is again determined by taking into consideration
several imponderable factors. Since in the present case there is no
dispute in regard to the multiplier, we deem it unnecessary to dilate on
the issue.
14.In the instant case, the main
grievance of the appellant is that the High Court erred in reducing the
monthly income of the deceased from Rs.7,000/- to Rs.4,000/-. More so,
when the claim of the appellants was that the deceased was earning about
Rs.20,000/- per month. It needs little emphasis that insofar as the
question of earnings of the deceased is concerned, the onus lies on the
claimants to prove this fact by leading reliable and cogent evidence
before the Tribunal. A bare assertion in the claim petition in that
behalf is not sufficient to discharge that onus. In the present case, as
noticed earlier, the deceased was carrying on a business. The Return of
Income filed by him for the assessment year 1998-1999 (Ex.P-34) was
brought
on record along with his monthly
turnover and tax paid statements submitted to the Commercial Tax Officer
(Ex.P- 27). Copies of the current account (Ex.P-38) showing the money
deposited in the bank maintained by the deceased have also been brought
on record. The Return of Income filed on 15th April, 1998 and the
accompanying document, namely, trading and profit and loss account for
the period ending 31st March, 1998 show a net profit of Rs.42,996/-.
Taking into consideration the said documents, the Tribunal took the
monthly income of the deceased at Rs.7,000/- per month. However, the
High Court felt that in the light of the Income Tax Return, declaring
income from the business carried on by the deceased, the yearly income
of the deceased was not more than Rs.40,000/- and, therefore, the
Tribunal was not justified in adopting the monthly income of the
deceased at Rs.7,000/- per month to work out the loss of dependency.
According to the High Court, the monthly income of the deceased should
have been taken at Rs.4,000/- per month.
15.In our view, though the entries
in the current account (Ex.P-38) of the deceased and his transactions
with his client, namely, Vasu Agarbathi (Ex.P-23) may not per se be
cogent evidence to determine the yearly or monthly income of the
deceased from the business(s) he was carrying on, yet we feel that these
are some indicators in support of the appellants' plea that the business
income of the deceased in the succeeding years could be more than what
was declared for the year ended 31st March, 1998. But it is again in the
realm of speculation, particularly when, unlike income from salaries,
earnings in a business may increase with the buoyancy in business and at
the same time may diminish with a recession in trade.
16.As regards the future prospects
of the deceased, as noted above, except for copies of account of the
deceased in the books of account of his client, after the death, no
other reliable evidence has been brought on record to show the future
plans of the deceased regarding expansion or diversification of his
business. In our view, a bare
# argument by learned counsel for
the appellants that the deceased had a potential of expanding his
business, cannot be accepted as sufficient material to determine the
future prospects of the deceased. The decisions of this Court relied
upon by learned counsel for the appellants do not lay down any abstract
proposition of law in this regard, which are otherwise distinguishable
on facts.
17.In the circumstances, having
regard to the material on record, in our opinion, ends of justice would
be met if the income of the deceased is taken at Rs.5,500/- per month or
Rs.66,000/- per annum.
18.On the question of deduction on
account of personal expenses by the deceased, there is no set formula
which could be applied in every case to determine as to what should be
the deduction on this account. The contention that deduction on that
count cannot exceed one-third on the ground that there is some statutory
recognition in the Second Schedule to the Act for such deduction, is
untenable. The said deduction would depend upon the
# facts and circumstances of each
case. In the present case, no evidence was led on this point as well. In
the absence of any evidence to the contrary, the practice is to deduct
towards personal and living expenses of the deceased, one- third of the
income in case he was married and one-half (50%) if he was a bachelor.
Thus, there is no material on
record warranting interference with the consistent view of both the
courts below on the point.
19.In view of the above discussion,
the loss of dependency is determined as Rs.33,000/- per annum and by
applying a
multiplier of 14, the total loss of dependency is arrived at
Rs.4,62,000/-. Adding Rs.20,000/- awarded under other heads, the quantum
of compensation is determined at Rs.4,82,000/-. The amount shall also
carry an interest at the rate of 6% per annum, as awarded by the
Tribunal, from the date of the filing of the claim petition till the
date of actual payment. If any amount has already been paid or deposited
in terms of order passed by the Tribunal, the same shall be adjusted
from the amount now being
# awarded. The interest element shall also be worked out after the said
adjustment.
20.In the result, the appeal
succeeds in part and the judgment of the High Court stands modified to
the extent indicated above. No order as to costs.
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