TaxTMI 
TaxTMI 
2009 (4) TMI 1030
X X X X Extracts X X X X
X X X X Extracts X X X X
....age of retirement in the service of ICAR was 60 years and the salary received by the deceased at the time of his death was Rs. 4004/- per month. 3. The Tribunal by its judgment and award dated 6.8.1993 allowed the claim in part. The Tribunal calculated the compensation by taking the monthly salary of the deceased as Rs. 3402. It deducted one-third towards the personal and living expenses of the deceased, and arrived at the contribution to the family as Rs. 2250 per month (or Rs. 27,000/- per annum). In view of the evidence that the age of retirement was 60 years, it held that the period of service lost on account of the untimely death was 22 years. Therefore it applied the multiplier of 22 and arrived at the loss of dependency to the family as Rs. 5,94,000/-. It awarded the said amount with interest at the rate of 9% per annum from the date of petition till the date of realization. After deducting Rs. 15000/- paid as interim compensation, it apportioned the balance compensation among the claimants, that is, Rs. 3,00,000/- to the widow, Rs. 75000/- to each of the two daughters, Rs. 50000/- to the son, Rs. 19000/- to the grandfather and Rs. 30000/- to each of the parents. 4. Di....
X X X X Extracts X X X X
X X X X Extracts X X X X
....pellants produced letters of confirmation dated 7.12.1998 and 28.10.2005 issued by the employer (ICAR). Their grievance is that the High Court did not take note of those indisputable documents to calculate the income and the loss of dependency. They contend that the monthly income of the deceased should be taken as Rs. 18341/- being the average of Rs. 32,678/- (income shown as on 1.10.2005) and Rs. 4,004/- (income at the time of death). They submit that only one-eighth should have been deducted towards personal and living expenses of the deceased. They point out that even if only one fourth (Rs. 4585/-) was deducted therefrom towards personal and living expenses of the deceased, the contribution to the family would have been Rs. 13,756/- per month or Rs. 1,65,072/- per annum. They submit that having regard to the Second Schedule to the Motor Vehicles Act, 1988 (`Act' for short), the appropriate multiplier for a person dying at the age of 38 years would be 16 and therefore the total loss of dependency would be Rs. 26,41,152/-. They also contend that Rs. 1,00,000/- should be added towards pain and suffering undergone by the claimants. They therefore submit that Rs. 27,47,152/- sh....
X X X X Extracts X X X X
X X X X Extracts X X X X
....or might have lost his employment or income altogether." "The matter of arriving at the damages is to ascertain the net income of the deceased available for the support of himself and his dependants, and to deduct therefrom such part of his income as the deceased was accustomed to spend upon himself, as regards both self-maintenance and pleasure, and to ascertain what part of his net income the deceased was accustomed to spend for the benefit of the dependants. Then that should be capitalized by multiplying it by a figure representing the proper number of year's purchase." "The multiplier method involves the ascertainment of the loss of dependency or the multiplicand having regard to the circumstances of the case and capitalizing the multiplicand by an appropriate multiplier. The choice of the multiplier is determined by the age of the deceased (or that of the claimants whichever is higher) and by the calculation as to what capital sum, if invested at a rate of interest appropriate to a stable economy, would yield the multiplicand by way of annual interest. In ascertaining this, regard should also be had to the fact that ultimately the capital sum should also ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ight in Davies, the loss has to be ascertained by first determining the monthly income of the deceased, then deducting therefrom the amount spent on the deceased, and thus assessing the loss to the dependents of the deceased. The annual dependency assessed in this manner is then to be multiplied by the use of an appropriate multiplier." [emphasis supplied] 8. The lack of uniformity and consistency in awarding compensation has been a matter of grave concern. Every district has one or more Motor Accident Claims Tribunal/s. If different Tribunals calculate compensation differently on the same facts, the claimant, the litigant, the common man will be confused, perplexed and bewildered. If there is significant divergence among Tribunals in determining the quantum of compensation on similar facts, it will lead to dissatisfaction and distrust in the system. We may refer to the following observations in Trilok Chandra : "We thought it necessary to reiterate the method of working out `just' compensation because, of late, we have noticed from the awards made by Tribunals and Courts that the principle on which the multiplier method was developed has been lost sight of and o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he number of dependents. The issues to be determined by the Tribunal to arrive at the loss of dependency are (i) additions/deductions to be made for arriving at the income; (ii) the deduction to be made towards the personal living expenses of the deceased; and (iii) the multiplier to be applied with reference of the age of the deceased. If these determinants are standardized, there will be uniformity and consistency in the decisions. There will lesser need for detailed evidence. It will also be easier for the insurance companies to settle accident claims without delay. To have uniformity and consistency, Tribunals should determine compensation in cases of death, by the following well settled steps: Step 1 (Ascertaining the multiplicand) The income of the deceased per annum should be determined. Out of the said income a deduction should be made in regard to the amount which the deceased would have spent on himself by way of personal and living expenses. The balance, which is considered to be the contribution to the dependant family, constitutes the multiplicand. Step 2 (Ascertaining the multiplier) Having regard to the age of the deceased and peri....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ed was getting a gross salary of Rs. 1543/- per month. Having regard to the future prospects of promotions and increases, this Court assumed that by the time he retired, his earning would have nearly doubled, say Rs. 3000/-. This court took the average of the actual income at the time of death and the projected income if he had lived a normal life period, and determined the monthly income as Rs. 2200/- per month. In Abati Bezbaruah v. Dy. Director General, Geological Survey of India [2003 (3) SCC 148], as against the actual salary income of Rs. 42,000/- per annum, (Rs. 3500/- per month) at the time of accident, this court assumed the income as Rs. 45,000/- per annum, having regard to the future prospects and career advancement of the deceased who was 40 years of age. 11. In Susamma Thomas, this Court increased the income by nearly 100%, in Sarla Dixit, the income was increased only by 50% and in Abati Bezbaruah the income was increased by a mere 7%. In view of imponderables and uncertainties, we are in favour of adopting as a rule of thumb, an addition of 50% of actual salary to the actual salary income of the deceased towards future prospects, where the deceased had a permanent....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e rule and offers merely a guideline. In Susamma Thomas, it was observed that in the absence of evidence, it is not unusual to deduct one-third of the gross income towards the personal living expenses of the deceased and treat the balance as the amount likely to have been spent on the members of the family/dependants. In UPSRTC v. Trilok Chandra [1996 (4) SCC 362], this Court held that if the number of dependents in the family of the deceased was large, in the absence of specific evidence in regard to contribution to the family, the Court may adopt the unit method for arriving at the contribution of the deceased to his family. By this method, two units is allotted to each adult and one unit is allotted to each minor, and total number of units are determined. Then the income is divided by the total number of units. The quotient is multiplied by two to arrive at the personal living expenses of the deceased. This Court gave the following illustration: "X, male, aged about 35 years, dies in an accident. He leaves behind his widow and 3 minor children. His monthly income was Rs. 3500. First, deduct the amount spent on X every month. The rough and ready method hitherto adopted w....
X X X X Extracts X X X X
X X X X Extracts X X X X
....and living expenses, because it is assumed that a bachelor would tend to spend more on himself. Even otherwise, there is also the possibility of his getting married in a short time, in which event the contribution to the parent/s and siblings is likely to be cut drastically. Further, subject to evidence to the contrary, the father is likely to have his own income and will not be considered as a dependant and the mother alone will be considered as a dependent. In the absence of evidence to the contrary, brothers and sisters will not be considered as dependents, because they will either be independent and earning, or married, or be dependant on the father. Thus even if the deceased is survived by parents and siblings, only the mother would be considered to be a dependant, and 50% would be treated as the personal and living expenses of the bachelor and 50% as the contribution to the family. However, where family of the bachelor is large and dependant on the income of the deceased, as in a case where he has a widowed mother and large number of younger non-earning sisters or brothers, his personal and living expenses may be restricted to one-third and contribution to the family will be ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... structured formula basis, even where compensation is not specified with reference to the annual income of the deceased, or is more than Rs. 40,000/-, by applying the formula : (2/3 x AI x M), that is two-thirds of the annual income multiplied by the multiplier applicable to the age of the deceased would be the compensation. Several principles of tortious liability are excluded when the claim is under section 163A of MV Act. There are however discrepancies/errors in the multiplier scale given in the Second Schedule Table. It prescribes a lesser compensation for cases where a higher multiplier of 18 is applicable and a larger compensation with reference to cases where a lesser multiplier of 15, 16, or 17 is applicable. From the quantum of compensation specified in the table, it is possible to infer that a clerical error has crept in the Schedule and the `multiplier' figures got wrongly typed as 15, 16, 17, 18, 17, 16, 15, 13, 11, 8, 5 & 5 instead of 20, 19, 18, 17, 16, 15, 14, 12, 10, 8, 6 and 5. Another noticeable incongruity is, having prescribed the notional minimum income of non-earning persons as Rs. 15,000/- per annum, the table prescribes the compensation payable even in ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....vement over the earlier position that ordinarily it should not exceed 16..." 19. In New India Assurance Co. Ltd. vs. Charlie [2005 (10) SCC 720], this Court noticed that in respect of claims under section 166 of the MV Act, the highest multiplier applicable was 18 and that the said multiplier should be applied to the age group of 21 to 25 years (commencement of normal productive years) and the lowest multiplier would be in respect of persons in the age group of 60 to 70 years (normal retiring age). This was reiterated in TN State Road Transport Corporation Ltd. vs. Rajapriya [2005 (6) SCC 236] and UP State Road Transport Corporation vs. Krishna Bala [2006 (6) SCC 249]. The multipliers indicated in Susamma Thomas, Trilok Chandra and Charlie (for claims under section 166 of MV Act) is given below in juxtaposition with the multiplier mentioned in the Second Schedule for claims under section 163A of MV Act (with appropriate deceleration after 50 years) : Age of the deceased Multiplier Scale as envisaged in Susamma Thomas Multiplier scale as adopted by Trilok Chandra Multiplier scale in Trilok Chandra as clarified in Charlie Multiplier specified in second column in the....
X X X X Extracts X X X X
X X X X Extracts X X X X
....for the age groups of 15 to 20 and 21 to 25 years), reduced by one unit for every five years, that is M-17 for 26 to 30 years, M-16 for 31 to 35 years, M-15 for 36 to 40 years, M-14 for 41 to 45 years, and M-13 for 46 to 50 years, then reduced by two units for every five years, that is, M-11 for 51 to 55 years, M-9 for 56 to 60 years, M-7 for 61 to 65 years and M-5 for 66 to 70 years. Question (iv) - Computation of compensation 22. In this case as noticed above the salary of the deceased at the time of death was Rs. 4,004. By applying the principles enunciated by this Court to the evidence, the High Court concluded that the salary would have at least doubled (Rs. 8008/-) by the time of his retirement and consequently, determined the monthly income as an average of Rs. 4004/- and Rs. 8008/- that is Rs. 6006/- per month or Rs. 72072/- per annum. We find that the said conclusion is in conformity with the legal principle that about 50% can be added to the actual salary, by taking note of future prospects. 23. Learned counsel for the appellants contended that when actual figures as to what would be the income in future, are available it is not proper to take a nominal hypotheti....
X X X X Extracts X X X X
X X X X Extracts X X X X
..... We therefore reject the contention that the revisions in pay scale subsequent to the death and before the final hearing should be taken note of for the purpose of determining the income for calculating the compensation. 25. The appellants next contended that having regard to the fact that the family of deceased consisted of 8 members including himself and as the entire family was dependent on him, the deduction on account of personal and living expenses of the deceased should be neither the standard one- third, nor one-fourth as assessed by the High Court, but one-eighth. We agree with the contention that the deduction on account of personal living expenses cannot be at a fixed one-third in all cases (unless the calculation is under section 163A read with Second Schedule to the MV Act). The percentage of deduction on account personal and living expenses can certainly vary with reference to the number of dependant members in the family. But as noticed earlier, the personal living expenses of the deceased need not exactly correspond to the number of dependants. As an earning member, the deceased would have spent more on himself than the other members of the family apart from the....