2019 (4) TMI 1930 - SC - Indian Laws

Vehicular accident compensation claims - quantum of compensation so awarded - offender claims that while making assessment of pecuniary loss the ex gratia amount received by the claimants from the employer of the deceased deserves to be deducted while on the other hand the claimants have questioned the reduction of the rate of interest by the High Court - whether the amount of compensation as awarded by the High Court is that of just compensation or the same calls for any modification? HELD THAT - The award made by the Tribunal suffered from a few fundamental errors and shortcomings as regards the assessment of multiplicand. The Tribunal instead of taking the last drawn emoluments of the deceased chose to proceed on his enhanced projected emoluments after the expected promotion and pay revision. However thereafter the Tribunal did not provide for any further future prospects. The Tribunal also did not make any deduction towards the tax component. Moreover the Tribunal deducted one-third towards personal expenses of the deceased though he had had five dependents. Then the Tribunal applied the multiplier of 16. Apparently the assessment made by the Tribunal could not have been countenanced for being not in conformity with the principles in Pranay Sethi 2017 (10) TMI 1276 - SUPREME COURT . Ex gratia payment received by the claimants from the employer of the deceased - HELD THAT - An amount of 3, 21, 801/- was paid by the employer to the claimants being one year s gross salary of the deceased - it has not been shown if the ex gratia amount received by the claimants had been under any Rules of service and would be of continuous assistance - no deduction in the amount awarded by the High Court appears necessary. Enhancement towards future prospects - HELD THAT - The High Court has even otherwise provided for enhancement towards future prospects only at 40% though the deceased was in a settled job and was not self-employed or on fixed salary. If at all an assertion is made that the assistance received by the claimants or a part of allowances received by the deceased need to be taken into consideration for making certain deductions the enhancement by way of future prospects at 50% would be effectively setting off any such proposed deduction. In other words in the ultimate analysis the amount of pecuniary loss as assessed by the High Court remains reasonable and cannot be said to be either exorbitant or too low so as to call for any interference. Rate of interest - HELD THAT - The Tribunal had awarded interest at the rate of 12% p.a. but the same had been too high a rate in comparison to what is ordinarily envisaged in these matters. The High Court after making a substantial enhancement in the award amount modified the interest component at a reasonable rate of 7.5% p.a. and there are no reason to allow the interest in this matter at any rate higher than that allowed by High Court. The amount ultimately receivable by the claimants in terms of the judgment of the High Court remains that of just compensation and no case for interference is made out - Appeal dismissed.

Summary

Issues Involved:
1. Substitution of Legal Representatives
2. Enhancement of Compensation
3. Quantum of Compensation
4. Deduction of Ex Gratia Amount
5. Rate of Interest

Comprehensive, Issue-Wise Detailed Analysis:

1. Substitution of Legal Representatives:
- Judgment: The application for substitution of legal representatives in the petition filed on behalf of the claimants is allowed. The named legal representative shall stand substituted in both the petitions. Delay condoned in the petition filed on behalf of the claimants. Leave granted in both the petitions.

2. Enhancement of Compensation:
- High Court's Decision: The High Court of Punjab and Haryana allowed the appeal for enhancement of compensation filed by the claimants and modified the common award dated 27.01.2000 by the Motor Accident Claims Tribunal, Chandigarh.
- Revised Compensation: The High Court increased the compensation from ?37,71,000/- together with interest @ 12% p.a. to ?48,00,000/- together with interest @ 7.5% p.a. from the date of filing of the claim petition till the date of realization.

3. Quantum of Compensation:
- Dispute: The insurer questioned the quantum of compensation, arguing that the ex gratia amount received by the claimants from the employer of the deceased should be deducted. The claimants questioned the reduction of the rate of interest by the High Court.
- Tribunal's Assessment: The Tribunal assessed the income of the deceased at ?3,51,000/- p.a., deducted one-third towards personal expenses, and applied a multiplier of 16, resulting in a pecuniary loss of ?37,44,000/-. Additional amounts were awarded for transportation of the dead body and other expenses, totaling ?37,71,000/-.
- High Court's Assessment: The High Court took the base annual emoluments at ?3,21,801.60, deducted ?20,000/- towards income-tax, rounded off the figure to ?3,00,000/-, provided for a 40% enhancement towards future prospects, deducted one-fourth towards personal expenses, and applied a multiplier of 15, resulting in a pecuniary loss of ?47,25,000/-. Additional amounts were awarded for loss of consortium, funeral expenses, and loss to estate, totaling ?48,00,000/-.

4. Deduction of Ex Gratia Amount:
- Insurer's Argument: The insurer argued that the ex gratia amount of ?3,21,801/- received by the claimants should be deducted based on the principles enunciated in Reliance General Insurance Company Ltd. v. Shashi Sharma & Ors.
- Claimants' Argument: The claimants argued that the ex gratia amount should not be deducted, relying on the decision in Sebastiani Lakra & Ors. v. National Insurance Company Ltd. & Ors.
- Court's Decision: The Court held that the decision in Shashi Sharma would not apply to the facts of the present case and no deduction in the amount awarded by the High Court is necessary. The enhancement towards future prospects at 40% effectively sets off any proposed deduction.

5. Rate of Interest:
- Tribunal's Award: The Tribunal awarded interest at the rate of 12% p.a.
- High Court's Modification: The High Court reduced the interest rate to 7.5% p.a. while making a substantial enhancement in the award amount.
- Court's Decision: The Court found no reason to allow the interest at any rate higher than 7.5% p.a. as allowed by the High Court.

Conclusion:
- Final Judgment: The Supreme Court held that the modified award made by the High Court remains that of just compensation and no case for interference is made out in either of these appeals. Both appeals are dismissed.