TaxTMI Login
Just a moment...
Press 'Enter' to add multiple search terms. Rules for Better Search
When case Id is present, search is done only for this
of 
of 
No Folders have been created
Are you sure you want to delete "My most important" ?
NOTE:
of of 
All Case Laws
of of All Case Laws
Note
Bookmark
Share
Don't have an account? Register Here
of <h1>Supreme Court Sets New Standard for Calculating Future Prospects Under Motor Vehicles Act for Job and Self-Employed Individuals.</h1> <h3>National Insurance Company Limited Versus Pranay Sethi And Others</h3> National Insurance Company Limited Versus Pranay Sethi And Others - (2017) 16 SCC 680 Issues Involved:1. Divergence of opinion between Reshma Kumari and Rajesh cases.2. Methodology for computation of future prospects under Sections 163-A and 166 of the Motor Vehicles Act, 1988.3. Standardization of addition to income for future prospects.4. Determination of multiplicand and multiplier.5. Deduction towards personal and living expenses.6. Conventional heads of compensation: loss of estate, loss of consortium, and funeral expenses.7. Binding precedent and judicial discipline.Issue-wise Detailed Analysis:1. Divergence of Opinion Between Reshma Kumari and Rajesh Cases:The judgment addresses the cleavage of opinion between the decisions in Reshma Kumari and Rajesh, both three-Judge Bench decisions, regarding the computation of future prospects under Sections 163-A and 166 of the Motor Vehicles Act, 1988. The matter was referred to a larger Bench for an authoritative pronouncement.2. Methodology for Computation of Future Prospects:The Court discussed the methodology for computation of future prospects, referencing Sarla Verma, which aimed to simplify the determination of claims by specifying certain parameters. The judgment noted that future prospects should consider factors such as the education of dependants, societal conditions, and inflation.3. Standardization of Addition to Income for Future Prospects:The judgment highlighted the need for standardization in adding future prospects to the income of the deceased. It approved the method of adding 50% of actual salary for those below 40 years with a permanent job, 30% for those aged 40-50, and no addition for those above 50. For self-employed or those on fixed salary, the Court acknowledged the need for a reasonable addition, considering the rise in the cost of living and efforts to generate additional income.4. Determination of Multiplicand and Multiplier:The judgment reiterated the principles laid down in Sarla Verma for determining the multiplicand and multiplier. It emphasized that the multiplier should be selected based on the age of the deceased, as indicated in the Table in Sarla Verma, which was approved for achieving uniformity and consistency.5. Deduction Towards Personal and Living Expenses:The Court approved the deductions for personal and living expenses as specified in Sarla Verma. For married deceased, the deduction should be one-third if there are 2-3 dependants, one-fourth for 4-6 dependants, and one-fifth for more than six dependants. For bachelors, a 50% deduction is standard unless the family is large and dependent, in which case it may be restricted to one-third.6. Conventional Heads of Compensation:The judgment addressed the conventional heads of compensation, such as loss of estate, loss of consortium, and funeral expenses. It found the amounts granted in Rajesh (Rs. 1,00,000 for loss of consortium, Rs. 25,000 for funeral expenses) to be inconsistent. The Court fixed reasonable sums: Rs. 15,000 for loss of estate, Rs. 40,000 for loss of consortium, and Rs. 15,000 for funeral expenses, with a 10% enhancement every three years.7. Binding Precedent and Judicial Discipline:The judgment emphasized the importance of following binding precedents and judicial discipline. It criticized the two-Judge Bench in Santosh Devi for not referring the matter to a larger Bench when taking a different view than Sarla Verma. It also noted that Rajesh, not considering Reshma Kumari, is not a binding precedent. The Court stressed the need for consistency and adherence to established principles to avoid unnecessary contest and ensure just compensation.Conclusions:1. Santosh Devi should have referred the matter to a larger Bench.2. Rajesh is not a binding precedent as it did not consider Reshma Kumari.3. Addition of 50% for future prospects for those below 40 years with a permanent job, 30% for 40-50 years, and 15% for 50-60 years.4. For self-employed or fixed salary, addition of 40% for those below 40 years, 25% for 40-50 years, and 10% for 50-60 years.5. Deduction for personal and living expenses as per Sarla Verma.6. Multiplier selection as per Sarla Verma.7. Age of the deceased as the basis for applying the multiplier.8. Reasonable figures for conventional heads: Rs. 15,000 for loss of estate, Rs. 40,000 for loss of consortium, and Rs. 15,000 for funeral expenses, with a 10% enhancement every three years.The reference was answered accordingly, and the matters were placed before the appropriate Bench.
TaxTMI 