CASE TITLE:
Smt. Anjali & Ors. Vs. Lokendra Rathod & Ors.
DATE OF ORDER:
6 December 2022
JUDGE(S):
Justice Krishna Murari
Justice Bela M. Trivedi
PARTIES:
Petitioner- Smt. Anjali & Ors.
Respondent- Lokendra Rathod& Ors.
SUBJECT
The Apex Court held that Income Tax Return shall be taken into account in determining the income of the deceased for the purpose of computing the compensation to be payable to his heirs by the guilty party. The Court reiterated “the income tax return is a statutory document on which reliance may be placed to determine the annual income of the deceased.” The court made the following observations while hearing an appeal challenging the decision of the High Court which refused to take into consideration that Income TaX Return filed by the deceased in the year preceding his death for determining his annual income. The Apex Court also highlighted the importance of the concept of ‘just and fair’ compensation as envisaged by the provisions of Motor Vehicles Act, 1988.
BRIEF FACTS OF THE CASE
- Rajesh(deceased) was killed in an accident due to rash and negligent driving of the respondent no. 2.
- The Appellant in the present case are his heirs and legal representatives. They filed a Claim Petition u/s 166 of the Motor Vehicles Act, 1988 and sought for a compensation of Rs. 20 Lakhs.
- The Tribunal however estimated the deceased’s income at Rs. 4000/month and computed a total claim of Rs. 6,24,000 along with an interest of 6% per annum that they were entitled to.
- On an appeal against the order of the Tribunal on the ground that the compensation was insufficient before the High Court, a total compensation of 11,41,000 was awarded with interest at the rate of 6 % per annum by it.
- The appellants were aggrieved by this judgement of the High Court and thus have appealed before the present court.
ARGUMENTS RAISED BY THE APPELLANT
- It was contended by the learned counsel for the appellant that both the High Court and the Tribunal has failed to take into account the Income Tac Return of the deceased filed in the year preceding his death for determining his income.
- That the number of dependents exceeded 6 members and thus the deduction made towards personal expenses should be 1/5th and not 1/4thas deducted by both the previous courts.
- Both the courts have highly undervalued the amount to be awarded under Conventional Heads as well as the interest.
ANALYSIS BY THE COURT
- There is no dispute as to the occurrence of the accident and the liability of the respondent to pay the compensation.
- Both the Courts committed grave error by not taking into account the Income Tax Return of the deceased for determining his income.
- The Court referred to the judgement of Malarvizhi& Ors. V. United India Insurance Co. Ltd. & Ors[(2020) 4 SCC 228] wherein it was held that reliance can be placed on Income Tax Return for determining the annual income.
- The Court observed that the annual income of the deceased as per his Tax Return was Rs. 1,18,261 which gives a monthly income of approx. Rs. 9,855. It was held that it is this amount that should be taken into consideration while determining the compensation payable.
- The Court, while pressing upon the need to award ‘just and fair’ compensation as was observed in SarlaVerma& Ors. V. Delhi Transport Corporation &Anr. .[(2009) 6 SCC 121], also upheld the contention of the appellants that since the number of dependents in the present case were 7 so a deduction of 1/5th shall be made towards personal expenses.
- Further, as was also observed in SarlaVerma’s case, the court held that while computing the compensation it is not only the actual income at the time of the death that should be taken into account but also the future prospects.
- While upholding the same view the Apex Court observed the following in National Insurance Co. Ltd. V. PranaySethi& Ors.[(2017) 16 SCC 680]-
- “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.”
- The Court also observed that both the previous Courts further highly undervalued the amount to be charged to funeral expenses and conventional heads. Further a 10% increment on conventional heads in every three years must be provided for.
- A parental consortium at the rate of Rs. 40,000 and spousal consortium at the rate of Rs. 40,000, with a further increment of 10% was held by the court to be added while computing the compensation.
CONCLUSION
In view of the above observation, the learned Court finally computed the total compensation to be awarded at Rs. 25,91,388/- with interest @ 9% p.a. from the date of filing of the application till the date if payment of the compensation to the Appellants.
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