2024 (7) TMI 177 - HC - Indian Laws

Determination of the compensation on death of the deceased in a motor vehicular accident - determination of the monthly income/annual income of the deceased - as argued Tribunal instead of taking average of previous three years of Income Tax Return (ITR) considered four years as it was available on record and hence, a wrong approach was adopted - HELD THAT - It is not in dispute that in normal course, preceding three years ITRs are considered while assessing the annual income but in the instant case, one more assessment year of 2011-2012 was included. Adopting the normal course for the previous three consecutive financial years before the death, the Court is of the view that the annual income with such tax deduction should be accepted at Rs. 1,76,496/-. The Court is inclined to accept the plea of Mr. Mohanty, learned counsel for the claimants and fix the annual income of the deceased at Rs. 1,76,496/- allowing the tax deductions for the years 2012-13, 2013-14 and 2014-15. With respect to the income towards the heavy goods vehicles, an amount of Rs. 60,000/- has been added to the annual income - When a presumptive income is assessed at, for the purpose of tax as per Section 44-AE of the Income Tax Act, it may not be incorrect to demand a sum of Rs. 7,500/- a month in respect of the hypothecated goods vehicles, the said amount being the presumptive monthly income previous year whereupon tax was payable but the irony is that both the vehicles were purchased barely few months before the death of the deceased. As regards the periodical increment at the rate of 10% vis- -vis general damages in every three years, there is no quarrel over the legal position as held by the Apex Court in Pranay Sethi (supra), however, it shall be in respect of an amount of Rs. 70,000/- instead of Rs. 1,20,000/- which has been allowed by the learned Tribunal on the heads of consortium @ Rs. 40,000/- for each for the claimants. As regards the plea of Insurance Company that there was violation of policy conditions , as pleaded that the tanker was involved in transporting hazardous substance, which was not in terms of the DL of the driver, who had no such authorization to ply the alleged vehicle. In fact, there has been no specific evidence brought on record from the side of the Insurance Company challenging the DL of the driver of the offending tanker to claim that any such policy condition is violated -absence of any such endorsement in the DL, without any specific evidence on record, the plea as to violation of policy condition is not to be accepted. In any case, Exts. D and E proved such claim to be incorrect. Hence, it is held that the contention of Mr. Dasmohapatra with such a plea is liable to be rejected. But, as already held, the plea that the amount on conventional heads for an amount of Rs. 1,20,000/- should be Rs. 70,000/- is acceptable and to which, the Court is in complete agreement. The annual income of the deceased is to be reassessed at Rs. 1,76,496/- taking into account average income of previous three years, such as, 2012-13, 2013-14 and 2014-15. Over and above, the said amount, assuming the income from the heavy goods vehicles of the deceased, the Court is inclined to add an amount of Rs. 22,500/- only (not counting for the entire year) since the hypothecated TATA ACE and JCB had been purchased shortly before the accident. No evidence is on record either to ascertain, if both the vehicles are still with the claimants or in the meantime, disposed of after the death of the deceased. Anyways, the income with an additional sum of Rs. 22,500/- becomes Rs. 1,99,996/-. Since the deceased died living behind the dependants, deduction towards personal and living expenses should be 1/3rd and hence, loss of dependency is calculated at Rs. 1,33,330/- and with a multiplier of 16 (as the deceased was aged about 31 years) applicable in view of the decision of Smt. Sarla Verma and others Vrs. Delhi Transport Corporation and Another 2009 (4) TMI 1030 - SUPREME COURT the amount is arrived at Rs. 21,33,280/-. Besides the above, the claimants are also entitled to 40% on the said sum towards loss of future prospects as the deceased was below 40 years at the time of death, hence, the amount becomes Rs. 29,86,592/-. With the addition of Rs. 77,000/- on general damages inclusive of periodical increment every three years and other additional expenses allowed by learned Tribunal on the heads of transportation of dead body for Rs. 5,000/-, funeral and obsequies expenses at the rate of Rs. 20,000/-, the amount of compensation is reached at Rs. 30,88,592/- (instead of Rs. 33,58,657/-) which is payable along with interest @ 7% per annum usually being the lending rate. Hence, the Court is not in favour of enhancing the interest to 9% per annum so claimed by the appellants.The Court is also not in favour of any penal interest @ 9% per annum allowed by the learned Tribunal as the same is unwarranted. As a logical sequitur, the impugned award passed in M.A.C Case is hereby modified to the extent as aforesaid with a direction to the Insurance Company to deposit a sum of Rs. 30,88,592/- along with interest at the rate of 7% per annum from the date of claim application filed till its realization within eight weeks from today, whereafter, it shall immediately be disbursed in favour of the claimants.

Summary

Issues Involved:
1. Determination of the compensation amount.
2. Liability of the Insurance Company.
3. Computation of the deceased's annual income.
4. Consideration of presumptive income under Section 44-AE of the Income Tax Act.
5. Application of periodical increment on general damages.
6. Alleged violation of policy conditions by the driver of the offending vehicle.
7. Rate of interest on the compensation amount.

Issue-wise Detailed Analysis:

1. Determination of the compensation amount:
The appeals under Section 173 of the Motor Vehicles Act, 1988, arose from a common cause of action concerning the award in M.A.C. Case No. 63 of 2017. The claimants sought enhancement of the compensation amount, while the Insurance Company disputed the liability and the compensation amount of Rs. 33,58,657/- with interest at 7% per annum. The High Court modified the compensation to Rs. 30,88,592/- with the same interest rate.

2. Liability of the Insurance Company:
The Tribunal concluded that the offending vehicle (Truck) bearing registration No. OR-06G-8473 was involved in the accident and was validly insured on the date of the incident. Thus, the Insurance Company was held liable to indemnify the owner and pay the compensation. The Insurance Company's plea that the accident involved an unknown vehicle was rejected due to lack of evidence.

3. Computation of the deceased's annual income:
The Tribunal initially calculated the annual income of the deceased at Rs. 1,53,861/- by considering the ITRs of four years. The High Court, however, accepted the claimants' plea to consider only the last three financial years, thereby fixing the annual income at Rs. 1,76,496/-.

4. Consideration of presumptive income under Section 44-AE of the Income Tax Act:
The Tribunal added Rs. 60,000/- to the annual income for heavy goods vehicles owned by the deceased. The High Court, considering Section 44-AE of the Income Tax Act, inclined to add Rs. 22,500/- (not counting for the entire year) since the vehicles were purchased shortly before the accident. Thus, the total income was reassessed at Rs. 1,99,996/-.

5. Application of periodical increment on general damages:
The High Court acknowledged the Supreme Court's dictum in National Insurance Co. Ltd. Vrs. Pranay Sethi, allowing a periodical increment of 10% every three years on general damages. However, it revised the amount on conventional heads from Rs. 1,20,000/- to Rs. 70,000/-.

6. Alleged violation of policy conditions by the driver of the offending vehicle:
The Insurance Company alleged that the driver lacked authorization to transport hazardous substances, violating policy conditions. The High Court found no specific evidence supporting this claim and upheld the Tribunal's decision, which rejected the plea of policy violation based on Exts. D and E (permit and fitness certificate of the tanker).

7. Rate of interest on the compensation amount:
The High Court maintained the interest rate at 7% per annum, rejecting the claimants' plea for a higher rate of 9%. It also disallowed any penal interest, finding no justifiable reason for such an enhancement.

Conclusion:
The High Court modified the award, directing the Insurance Company to deposit Rs. 30,88,592/- with interest at 7% per annum within eight weeks. Upon deposit, the statutory deposit along with accrued interest would be refunded to the Insurance Company.