9911796707
TMI Blog2022 (9) TMI 1654X X X X Extracts X X X X X X X X Extracts X X X X ..... Reliability on income tax returns and sudit reports to determine 'loss of income' - HELD THAT:- It would be pertinent to divide the income as mentioned in the audit reports into two parts - (a) Income from Business Ventures and other Investments and (b) Income from House Property and Agricultural Land. It should be emphasized that these audit reports only showcase amounts which specifically stem from the shares and interest held by the Deceased in the businesses and it is not a case wherein the entire turnover of businesses are depicted as Deceased's income. Moreover, it deserves to be clarified that the income under the abovementioned two parts have been computed at gross value as per the audit reports and includes the deductions such as interest paid on loans and expenses incurred by the deceased. Treatment of Income from Business Ventures and other Investments - HELD THAT:- The mere fact that the Deceased's share of ownership in these businesses ventures was transferred to the Deceased's minor children just before his death or to the dependents after his death is not a sufficient justification to conclude that the benefits of these businesses continue to a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ph Aristotle S., AOR, Nupur Sharma, Shobhit Dwivedi and Sanjeev Kr. Mahara, Advs. For the Respondent : Hetu Arora Sethi, AOR, Rahul Jain, Adv. and Sakshi Kakkar, AOR JUDGMENT SURYA KANT, J. 1. Leave Granted. 2. The present appeal is directed against the judgment dated 30.06.2017 passed by the High Court of Judicature at Madras, Madurai Bench whereby the appeal preferred by the National Insurance Co. Ltd. (Respondent No. 1; hereinafter, "Insurance Company") against the award dated 06.10.2012 passed by Motor Vehicle Accident Claims Tribunal, Tiruchirappalli (hereinafter, "Tribunal") was allowed and the compensation granted to Appellants was reduced from Rs. 4,29,37,700/- to Rs. 57,90,000/- along with requisite interest. The factual matrix is succinctly discussed below before delving into the issue of law regarding determination of quantum of compensation which requires adjudication before us. A. FACTS 3. S. Kumareshan (hereinafter, "Deceased") was a resident of Tiruchirappalli, Tamil Nadu. On the fateful day, at about 4 PM in the evening, he was travelling alone in a Lancer Car bearing Registration No. TN 45 S 9199 and met with an unfortunate acci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... through the impugned judgment dated 30.06.2017. The High Court although being in total agreement with the Tribunal's reasoning in finding that the Ambassador Car driver was solely liable for the accident, disagreed with the approach of the Tribunal in respect to the computation of compensation, primarily under the head of 'loss of income'. It emphasized that the Deceased before his death had transferred his interest in some of the partnership firms in favour of his minor children. Furthermore, it highlighted that almost all of the Deceased's income consisted of returns he received on his capital assets. Even after his death, the same assets were transferred to his legal heirs who continued to enjoy the benefits derived from them. The impugned judgment's reasoning was hinged on the premise that income derived from capital assets cannot be said to be income earned out of the Deceased's personal skills as there was no real contribution by him. Consequently, the High Court concluded that the Deceased's dependants suffered no loss of income and instead computed the compensation by fixing his salary at Rs. 25,000/- per month on a notional basis as per his edu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Deceased's dependents. It was argued that loss of income must be equivalent to only that portion which corresponds to the skill of the deceased, as a consequence of which there has been no loss of income to the Appellants in the present case. High Court has rightly taken notional income as the basis of determination of compensation under the head of 'loss of income'. The learned Counsel has placed substantial reliance on the decision of this Court in Rani Gupta v. United India Insurance Limited Rani Gupta v. United India Insurance Limited (2009) 13 SCC 498, para 24. to advance the argument that in the case of accidental death of people in business, the genuine determination for loss of income depends on ascertaining the Deceased's contribution in running the business and the same is a factual enquiry which varies on the facts and circumstances of each case. C. ANALYSIS C. 1 DETERMINATION OF 'JUST' COMPENSATION UNDER A SOCIAL WELFARE STATUTE 11. At the outset, it is pertinent to reiterate the concept of 'just' compensation Under Section 168 of the Act. It is a settled proposition, now through a catena of decisions Helen C. Rebello v. Maharashtra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the loss of income attributable on account of his sudden demise. The Tribunal relied on the same and computed the income by taking an average of the income recorded in three prior financial years (FY 2000-2001, FY 2001-2002 and FY 2002-2003) to determine the compensation under the head of 'loss of income'. 14. In contrast, the High Court set aside the same on the ground that the income earned was out of capital assets and cannot be said to have been earned out of personal skills of the deceased. It consequently went on to determine the income of the Deceased on a notional basis as per his educational qualification. Unfortunately, such an approach, in our opinion, is erroneous in view of the decisions of this Court in Amrit Bhanu Shali v. National Insurance Co. Ltd. Amrit Bhanu Shali v. National Insurance Co. Ltd. (2012) 11 SCC 738, para 17. and Kalpanaraj v. Tamil Nadu State Transport Corpn. Kalpanaraj v. Tamil Nadu State Transport Corpn. (2015) 2 SCC 764, para 8. wherein this Court has held that documents such as income tax returns and audit reports are reliable evidence to determine the income of the deceased. Hence, we are obliged to modify the compensation, especially ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ialized training to administer his business and that the audit reports neatly delineate Deceased's share of income from the businesses. These facts necessitate that the entire amount from the business ventures is treated as income. Similarly, the amount earned from the bank interests and remaining investments must also be included as income. 18. The Appellants have produced audit reports for the last four financial years which highlight the amounts under 'Income from Business Ventures and other Investments' which is as per follows - (i) for FY 2000-2001 is Rs. 8,95,812/- (ii) for FY 2001-2002 is Rs. 10,31,091/- (iii) for FY 2002-2003 is Rs. 14,65,060/- and (iv) for FY 2003-2004 is Rs. 9,79,099/-. The average of these amounts comes up to Rs. 10,92,765.50/-, which is rounded off to Rs. 10,93,000/- and the same is awarded to the Appellants as loss of income derived under 'Income from Business Ventures and other Investments'. C. 2.2 - Treatment of Income from House Property and Agricultural Land 19. As per the audit reports, the Deceased used to draw all his rental income from the share he held in a commercial building known as 'Lakshmi Complex' and the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s a Rule of prudence, computation of any individual's managerial skills should lie between 10 to 15 per cent of the total rental income but the acceptable range can be increased in light of specific circumstances. The appropriate approach, therefore, is to determine the value of managerial skills along with any other factual considerations. 22. In the instant case, documents produced on record indicate two salient aspects with respect to 'Lakshmi Complex', which was the sole source of rental income for the deceased. The partition deed related to the land on which the commercial building is situated, highlights that the building was constructed on account of the joint investment made by the Deceased and his partners. Furthermore, as per the rental records, 'Lakshmi Complex' was leased out to more than ten different commercial entities. Hence, keeping in mind that - first, the rental amount which is sought to be deducted partakes the character of investment; and second, that the managerial skills required for supervising the said building would require sophisticated contract management skills and goodwill among the business community, it is necessary that we dete ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
