2013 (5) TMI 1012 - SC - Indian Laws

Supreme Court Increases Compensation for Reckless Driving Victim

The Supreme Court modified the compensation award in a case involving reckless driving causing death, employment status of the driver, and insurance ... Pecuniary advantage - deduction of provident fund, pension and insurance for computation of compensation - compassionate appointment not a deductible pecuniary advantage - deduction of income-tax (TDS) from actual salary as starting point for compensation - presumption of tax deduction at source by employer - future prospects and multiplicand - 100% increase in appropriate cases - multiplier applicable to young deceased (multiplier 17) - award modification and interestPecuniary advantage - deduction of provident fund, pension and insurance for computation of compensation - Provident Fund, pension, insurance and similar post-death receipts are not deductible as 'pecuniary advantage' for computing compensation under the Motor Vehicles Act. - HELD THAT: - Following Helen C. Rebello (Mrs.) v. MSRTC, amounts such as provident fund, family pension, life insurance and other sums receivable by heirs arise from contributions, contracts or service conditions and are not causally connected with compensation payable under the Motor Vehicles Act for accidental death. Such receipts do not fall within the statutory concept of 'pecuniary advantage' liable for deduction from compensation because they are not correlatable to the loss caused by the tortfeasor. The Court applied this principle to the facts and held that deductions towards these heads for computing dependency were not permissible. [Paras 19, 20]Deductions towards provident fund, pension and insurance for the purpose of computing compensation are not permissible.Compassionate appointment not a deductible pecuniary advantage - Salary receivable by a claimant on compassionate appointment is not a 'pecuniary advantage' deductible while computing compensation under the Motor Vehicles Act. - HELD THAT: - A compassionate appointment, even if contingent upon the death of an employee in service, is a service condition applicable under an employer's scheme and does not have the requisite correlation with statutory compensation for accidental death. It is not properly characterised as a pecuniary advantage that can be deducted from the compensation awarded under the Motor Vehicles Act. [Paras 20]Compassionate appointment benefits cannot be deducted as pecuniary advantage in computing compensation.Deduction of income-tax (TDS) from actual salary as starting point for compensation - presumption of tax deduction at source by employer - Income-tax is deductible from the 'actual salary' when the annual income falls in the taxable range; where the victim is a salaried employee, there is a presumption that tax was deducted at source by the employer and absence of evidence to the contrary precludes a different conclusion. - HELD THAT: - The Court reiterated that Sarla Verma requires that actual income less income-tax is the starting point for compensation. For salaried persons, Section 192 presumes deduction of tax at source by the employer; therefore, unless it is specifically shown that employer did not deduct TDS (by producing LPC or other evidence), the salary shown in LPC must be treated as having been paid after due statutory processes. On the facts, no respondent proved non-deduction of tax by the State employer; the High Court's deduction of 20% as tax was held to be incorrect. The Court accepted the Last Pay Certificate showing Rs. 8,920/- and rounded it to Rs. 9,000/- for computation. [Paras 21, 22, 23]Income-tax may be deducted where applicable, but in the absence of evidence that TDS was not effected by the employer, the LPC salary must be accepted and the High Court's ad hoc tax deduction was reversed.Future prospects and multiplicand - 100% increase in appropriate cases - multiplier applicable to young deceased (multiplier 17) - award modification and interest - The Tribunal and High Court erred in not granting 100% increase for future prospects; on the facts a 100% increase in the deceased's salary and multiplier 17 are appropriate, and the award is to be enhanced accordingly with interest and directions for disbursement. - HELD THAT: - Having regard to the deceased's age (about 281/2 years), length of prospective service and evidence of promotional prospects and pay revisions, the Court found that a 100% increase in future income was warranted. Applying monthly income Rs. 9,000 doubled to Rs. 18,000, deducting one-third for personal expenses yielded Rs. 12,000 per month (Rs. 1,44,000 per annum). Applying multiplier 17 produced Rs. 24,48,000 as conventional loss of dependency; the Court added conventional amounts for loss of consortium, love and affection, loss of estate and funeral expenses and fixed the total award at Rs. 29,73,000. Interest at 12% from date of petition was allowed and detailed directions for deposit and investment of the awarded sum were issued. [Paras 30, 31, 32, 33, 34]Award modified and enhanced to Rs. 29,73,000 with 12% interest; detailed payment and deposit directions issued.Final Conclusion: The appeals are allowed in part: (i) amounts such as provident fund, pension, insurance and compassionate appointment benefits cannot be deducted as 'pecuniary advantage' when calculating compensation under the Motor Vehicles Act; (ii) income-tax deduction follows Sarla Verma and, for salaried persons, there is a presumption of TDS by the employer-the High Court's ad hoc tax deduction is set aside and the Last Pay Certificate salary of Rs. 8,920 (rounded to Rs. 9,000) accepted; (iii) on facts a 100% increase for future prospects and multiplier 17 are applied, and the total compensation is enhanced to Rs. 29,73,000 with interest at 12% and specified directions for deposit and payment. Issues Involved:1. Reckless and negligent driving causing death.2. Employment status of the driver at the time of the accident.3. Insurance Company's liability.4. Entitlement and calculation of compensation.5. Deductions from compensation.Summary:The present appeal challenges the judgment of the Rajasthan High Court, Jaipur Bench, which upheld the compensation awarded by the Motor Accident Claims Tribunal, Jaipur.Issue 1: Reckless and Negligent DrivingThe Tribunal affirmed that the reckless and negligent driving of Jeep No. RJ 10C 0833 caused the accident resulting in the death of Sajjan Singh Shekhawat. This finding was upheld by the High Court.Issue 2: Employment Status of the DriverThe Tribunal confirmed that the driver was employed by the non-applicant No. 2 at the time of the accident, a finding that was also upheld by the High Court.Issue 3: Insurance Company's LiabilityThe Insurance Company claimed that the vehicle owner violated the conditions of the Insurance Policy. However, the Tribunal found the Insurance Company liable, and this was upheld by the High Court.Issue 4: Entitlement and Calculation of CompensationThe Tribunal awarded a total compensation of Rs. 14,93,700/-. The High Court, despite noticing errors in the calculation, upheld this amount. The Supreme Court, however, found that the Tribunal and High Court failed to ensure just and fair compensation. It ruled that Provident Fund, Pension, and Insurance should not be deducted from the actual salary of the victim for calculating compensation. It also held that income tax should not be deducted in the absence of evidence that the employer failed to deduct TDS. The Supreme Court determined the fair compensation to be Rs. 29,73,000/-.Issue 5: Deductions from CompensationThe Supreme Court held that Provident Fund, Pension, and Insurance do not come within the periphery of the Motor Vehicles Act to be termed as 'Pecuniary Advantage' liable for deduction. It also ruled that the salary receivable by the claimant on compassionate appointment is not a 'Pecuniary Advantage' liable for deduction. Regarding income tax, the Court presumed that the employer had deducted TDS from the salary unless proven otherwise.Conclusion:The Supreme Court modified the award to Rs. 29,73,000/- with a 12% interest rate from the date of the petition until payment. The Insurance Company was directed to pay the total award with interest minus any amount already paid within three months. The compensation was to be distributed among the appellants with specific directions for investment in fixed deposits for the daughter's education and marriage.