Syed Basheer Ahamed & Ors vs Mohd. Jameel & Anr

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.

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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.

5 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 1 (2008) 2 SCC 763 6 "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 176 7 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

8 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 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

1 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

1 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.

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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

1 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

1 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

1 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.

...........................................J. ( R.V. RAVEENDRAN )

...........................................J. ( D.K. JAIN )

NEW DELHI, JANUARY 6, 2009.

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