Reliance General Insurance Company Ltd vs Shalu Sharma

REPORTABLE

IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO 000767 OF 2018 (Arising out of SLP (C) No.23086 of 2016)

RELIANCE GENERAL INSURANCE COMPANY LTD ..Appellant

VERSUS

SHALU SHARMA AND ORS ..Respondents

JUDGMENT

Dr D Y CHANDRACHUD, J

1 The present appeal arises from the judgment of a Single Judge of the

Delhi High Court in an appeal against an award of the Motor Accident Claims

Tribunal (MACT).

2 Narinder Sharma died in an accident which occurred on 14 September

2013. The accident involved a motor vehicle which was insured against third

party risks by the appellant. The dependents filed a claim for compensation Signature Not Verified

before the MACT. The Tribunal held that the accident was caused due to the Digitally signed by DEEPAK GUGLANI Date: 2018.02.02 21:31:50 IST Reason:

negligence of the driver of the offending vehicle. Compensation of Rs 30,26,810 2

was awarded together with interest at 9 per cent per annum. The Tribunal

factored in a component of 30 per cent towards the loss of future prospects in

assessing the compensation.

3 The High Court has observed that the only issue which was raised by the

insurer was in regard to the award of future prospects to the extent of 30 per

cent. The deceased was conducting his own business in the name and style of

M/s Mahak Cable Networks at East Punjabi Bagh, New Delhi. He was 42 years

old on the date of the accident. According to the appellant, the increase in his

gross total income as shown in the income tax returns for 2010-11, 2011-12

and 2012-13 would not justify the award of future prospects, or at least to that

extent. The High Court negatived the submission of the insurer and held that

having due regard to the progressive increase in the income of the deceased,

the award of future prospects by the Tribunal could not be faulted.

4 The judgment of a Constitution Bench of this Court in National

Insurance Company Limited v Pranay Sethi1 settles the issue. The deceased

was self-employed. In such a case, future prospects cannot be denied. The

grant must be in accordance with the following principle set 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 warrant where the deceased was below the age of 40 years. An addition of

1 (2017) 13 SCALE 12 3

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.”

Since the deceased was 42 years of age, an addition of 25% on the 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 future prospects, the income

would stand at Rs 2,26,875. Deducting an amount of one fourth towards

personal expenses, the loss of dependency per 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. The Tribunal has awarded a sum of Rs 3,14,335 towards

medical expenses. An addition of Rs 70,000 would be required to be made in

terms of the decision in Pranay Sethi (supra) on account of the conventional

heads of loss of estate (Rs 15,000), loss of consortium (Rs 40,000) and funeral

expenses (Rs 15,000). Hence, the total compensation is quantified at

Rs 27,66,522 on which the claimants would be entitled to interest @ 9% p.a.

from the date of the filing of the claim petition. The apportionment shall be

carried out in terms of the award of the Tribunal. We order accordingly. 4

6 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 to enhancement of the income of the deceased by 30% as prospective earning capacity, the petitioner shall deposit 75% of the awarded amount along with interest accrued thereupon before the Tribunal, within six weeks.

If such deposit is made within the stipulated time, execution proceedings against the petitioner shall remain stayed.

The amount so deposited, shall be released to the respondent forthwith.”

The appellant shall deposit the balance computed in terms of the present

judgment within a period of eight weeks before the Tribunal which shall be

disbursed to the claimants upon due verification. If the amount withdrawn by the

claimants in terms of the order of this Court dated 12 August 2016 exceeds the

amount to which they are entitled under the present judgment, no recoveries shall

be made. The appeal is accordingly disposed of. There shall be no order as to

costs.

...........................................CJI [DIPAK MISRA]

...........................................J [A M KHANWILKAR]

...........................................J [Dr D Y CHANDRACHUD]

New Delhi;

February 02, 2018