Sarla Verma & Ors. Vs Delhi Transportation Corporation & Anr.

 

Court: Supreme Court of India.

Case Type: Civil Appeal arising out of SLP (C) No.: 8648 of 2007.

Case No.: 3483 of 2008

Date of Judgement: 15/04/2009

Appellant: Sarla Verma & ors.

Respondent: Delhi Transportation Corporation & Anr.

Bench:

• Justice R.V. Raveendran.
• Justice Lokesh Singh Panta.

Statutes Referred:

• Motor Vehicles Act,1998.

Cases Referred:

• General Manager, Kerala State Road Transport Corporation v. Susamma Thomas [1994 (2) SCC 176].
• UP State Road Transport Corporation vs Trilok Chandra [1996 (4) SCC 362].
• Sarla Dixit v. Balwant Yadav [1996 (3) SCC 179].
• Abati Bezbaruah v. Dy. Director-General, Geological Survey of India [2003 (3) SCC 148].
• Fakeerappa vs Karnataka Cement Pipe Factory – 2004 (2) SCC 473.
• New India Assurance Co. Ltd. vs Charlie [2005 (10) SCC 720].

Facts:

• A motor accident occurred on 18/04/1998 involving one Rajinder Prakash and a bus bearing the No. DLP 829 of the Delhi Transportation Corporation.
• Rajinder Prakash succumbed to the injuries he sustained in the accident on 18/04/1998. At the time of his death, Rajinder Prakash was 38 years old. He was employed as a Scientist on the Indian Council of Agricultural Research (ICAR) on a salary of Rs. 3402/- per month plus other benefits.
• He was survived by his widow, three minor children, his parents and grandfather (who was no more at the time of this trial). They filed a claim of Rs. 16,00,000/- before the Motor Accidents Claims Tribunal (MACT), New Delhi.
• An officer (PW-4) of the ICAR provided evidence stating that the retirement age in the service of ICAR was 60 years and the salary of the deceased at the time of his death was Rs. 4,004/- per month.
• On 06/08/1993, the MACT allowed the claim in part. The Tribunal deducted 1/3rd amount towards personal and living expenses of the deceased from the base monthly salary of Rs. 3402/- and reached at the amount of Rs. 2250 per month. Since the retirement age was 60 years and the deceased was 38 years old at the time of his death, the Tribunal applied the multiplier of 22 and reached the figure of Rs. 5,94,000/- as loss of dependency to the family. The said amount was awarded with an interest rate of 9% per annum from the date the petition was first filed to the date of realisation. The Tribunal deducted Rs.15,000/- paid as interim relief and divided the compensation among the claimants as- Rs.3,00,000/- to the wife, Rs.75,000/- to each of the two daughters, Rs.50,000/- to the son, Rs.19,000 to the grandfather and Rs.30,000/- each to the parents.
• Dissatisfied with the compensation awarded, the appellants filed an appeal to the Delhi High Court.
• The Delhi High Court delivered its judgement on 15/02/2007. According to the evidence provided by PW-4, the High Court took the monthly salary of the deceased to be Rs.4,004/-. The High Court also reasoned that the monthly would have at least doubled to Rs.8,008/- when the deceased would have retired at 60. Thus, the average of the original salary and the salary at the time of retirement was taken as the base salary, i.e. Rs.6,006/-. Instead of the standard 1/3rd, the High Court felt that considering the size of the deceased’s family, only 1/4th should be deducted towards the personal and living expenses of the deceased. After the deduction, it arrived at the amount of Rs.54,048/- per annum (Rs.4,054/- per month). Considering the age of the deceased, the High Court chose a multiplier of 13. Thus, the loss of dependency arrived at was Rs.7,02,624/-. After adding Rs.15,000/- as loss of consortium and Rs.2000/- as funeral expenses, the total compensation was calculated to be Rs.7,19,624/-. After increasing the compensation by Rs.1,25,624/- and applying an interest rate of 6% per annum from the date of the claim petition, the appeal was disposed of.
• Still being dissatisfied by the increase provided by the High Court, the appellants moved to the Supreme Court.
• Issue: Whether the future prospects can be taken into account for determining the income of the deceased? If so, whether pay revisions that occurred during the pendency of the claim proceedings or appeals therefrom should be taken into account?
• Whether the deduction towards personal and living expenses of the deceased should be less than one-fourth (1/4th) as contended by the appellants or should be one-third (1/3rd) as contended by the respondents?
• Whether the High Court erred in taking the multiplier as 13?
• What should be the compensation?
• The contention by the Appellant:
• High Court committed a mistake in holding that there was no scope for future prospects.
• Even though there is no error in the method used to calculate the compensation amount, the High Court must have taken a higher amount as the deceased’s income.
• Two applications were filed before the High Court on 02/06/2000 and 05/05/2005 stating that the pay of the deceased would have been Rs.20.890/- per month on 32/12/1999 and Rs.32,678/- per month on 01/10/2005 had he been alive. Along with the applications, the appellants also filed letters of confirmation dated 07/12/1998 and 28/10/2005 issued by the ICAR.
• High Court did not pay heed to those documents filed by the appellants.
• The monthly income of the deceased should be taken as Rs.18,341/-, an average of the supposed income of Rs.32,678/- on 01/10/2005 and the original income of Rs.4,004/- at the time of death.
• Only 1/8th amount should have been deducted as personal expenses and living expenses of the deceased.
• Even if 1/4th was deducted from Rs.18,341 as personal and living expenses of the deceased, the compensation to the family would be Rs.13,756 or Rs.1,65,072/- per annum. The appropriate multiplier for a person dying at the age of 38 would be 16. Therefore, the total loss of dependency would be Rs.26,41,152/-.
• Rs.1,00,000/- should be added towards the suffering and pain undergone by the claimants.
• The total compensation should therefore be Rs.27,47,152/-.

The contention by the Respondent:

• The deduction from the actual salary should be 1/3rd.
• The salary at the time of death should be considered and not the revised pay figures.

Obiter Dicta:

• There used to be a lot of inconsistency in the methods adopted for calculation the compensation as some tribunals adopted the Nance Method [from Nance v. British Columbia Electric Rly. Co. Ltd. (1951 AC 601)] while some tribunals adopted the Davies Method [from Davies v. Powell Duffryn Associated Collieries Ltd., (1942 AC 601)]. However, after exhaustive considerations in Sussama Thomas (supra), the Supreme Court preferred the Davies Method to the Nance Method.
• An awarded compensation does not become ‘just compensation’ merely because the Tribunal deems it to be just.
• The Court favoured adopting a system where 50% was added to the present actual salary (salary minus the tax) as future prospects if the deceased had a permanent job and was below the age of 40. Only 30% should be added if the deceased was between the age of 40-50 years. There would be no additions if the deceased were over the age of 50.
• If the deceased were self-employed or on a fixed salary without any provisions for annual increment, the Courts would only take the actual salary of the deceased. There was no scope for future prospects of such victims. A departure could be made only in rare and exceptional cases with extraordinary circumstances.
• The ratio to be deducted from the actual salary of the deceased is as follows:

1. If the deceased was married, with only 1 person dependent on the deceased – 1/3rd.
2. If 2 or 3 people were dependent on the deceased – 1/4th.
3. If 4 to 6 people were dependent on the deceased – 1/5th .
4. If more than 6 people were dependent on the deceased – 1/6th .

• In the case of bachelors, 50% was to be deducted as personal and living expenses. If the bachelor was due to be married in a short time, then the parents’ and siblings’ contribution is likely to be cut drastically. Fathers and siblings (subject to evidence in the case of siblings) were assumed to have their own sources of income, and only the mother would be considered dependent on the deceased.
• However, if the bachelor has a large family dependent on him/her, like a widowed mother and non-earning siblings, only 1/3rd would be deducted from his/her salary as personal and living expenses.
• There were several discrepancies/incongruities in the Second Schedule, which was inserted by an amendment in 1994 of the Motor Vehicles Act,1998. These inconsistencies can be drawn up to clerical errors.
• Multipliers to be used while calculating the compensation must be as follows (age of the deceased):

1. For age groups 15 to 20 and 21 to 25 – 18.
2. For the age group 26 to 30 – 17.
3. For the age group 31 to 35 – 16.
4. For the age group 36 to 40 – 15.
5. For the age group 41 to 45 – 14.
6. For the age group 46 to 50 – 13.
7. For the age group 51 to 55 – 11.
8. For age groups 56 to 60 – 9.
9. For the age group 61 to 65 – 7.
10. For the age group 66 to 70 – 5.

• The conclusion reached by the High Court conforms with the legal principle that 50% can be added to the actual salary by taking note of future prospects.
• The assumption of the appellants that the actual future pay revisions should be taken into account for the purpose of calculating the income is not sound.

Judgement:

• The revised pay scale at the time of the final hearing was not taken into account. The actual salary at the time of the death was considered.
• 1/5th was deducted as personal and living expenses of the deceased.
• After such deduction, the loss of dependency was Rs.57,658/- and the multiplier was 15 (deceased’s age was 38 years).
• The total loss of dependency was Rs.8,64,870.
• The claimants were entitled to Rs.5,000/- under ‘loss of estate’ and Rs.5,000 towards funeral expenses. The widow was entitled to Rs.10,000/- as ‘loss of consortium’.
• The total compensation was Rs.8,84,870. After deducting Rs.7,19,624/- awarded by the High Court, the enhancement was Rs.1,65,246/-.
• The enhancement will be at the interest rate of 6% per annum from the date of the petition until the realisation date.
• The increase in compensation would be taken by the widow exclusively.

Rationale:

• There must be a standardised method to calculate future prospects to avoid inconsistencies in awarding compensations.
• No claimants would ever admit that the deceased person was a spendthrift. Instead, they would contend that the deceased person lived a very frugal life and spent very little money on himself/herself.
• The Courts, in different cases, have used different multipliers. There must be a common scale for multipliers so that there is consistency in the judgements and compensations awarded by the Courts and Tribunals.
• The pendency of the claim petitions and appeals for nearly two decades worked in favour of the appellants. Had the petition been disposed of by the Tribunal in 1988-89 and by the High Court in 1989-1990, then the compensation would have been decided according to the actual salary at the time of death and not by the revised pay scale of the future.

Conclusion:

• ‘Just compensation’ is adequate compensation that is fair and equitable, on the facts and circumstances of the case, to make good the loss suffered due to the wrong, as far as money can do so, by applying the well-settled principles relating to the award of compensation. It is not intended to be a bonanza, largesse or source of profit. Assessment of compensation though involving specific hypothetical considerations should nevertheless be objective. Justice and justness emanate from equality in treatment, consistency and thoroughness in adjudication, and fairness and uniformity in the decision-making process and the decisions.

Prepared by Mihir Poojary.