While granting enhanced compensation in a case of motor accident, the Karnataka High Court has held that allowances are part of the pay package and in assessing just compensation, amounts that were to be paid to the deceased by his employer, whether as perks or under any other nomenclature, should be added to his monthly income.

The Appeals before the High Court were filed by the claimants and the insurer against the judgment passed by the MACT, Bengaluru City. One appeal was filed by the claimants seeking enhancement of compensation, while another appeal was filed by the insurer disputing liability.

The Division Bench of Justice K. S. Mudagal and Justice K. V. Aravind said, “The allowances are part of the pay package agreed upon between the deceased and the employer. In assessing just compensation, amounts that were to be paid to the deceased by his employer, whether as perks or under any other nomenclature, should be added to his monthly income. Such monthly income forms the basis for computing compensation.”

Advocate R. Venkatesha Naidu represented the Appellants while Advocate D. Vijayakumar represented the Respondents.

Factual Background

The claimants filed a petition under Section 166 of the Motor Vehicles Act, 1988 (M.V. Act), seeking compensation of Rs 3 crore for the death of Santhosh Kumar Singh in a road traffic accident. It was averred in the claim petition that Santhosh was riding on his Honda Activa when the driver of a Water Tanker, coming at high speed and in a rash and negligent manner without adhering to traffic rules, dashed against the Activa. Due to the impact, Santhosh sustained grievous injuries and succumbed to those on the way to the hospital.

It was stated that the deceased was working as a Technical Lead at HCL Technologies Limited and was earning Rs 1,37,350 per month. It was further alleged that the accident occurred due to the rash and negligent driving of the water tanker by its driver, and that the respondent, being the insurer of the offending water tanker, was liable to pay the compensation. The Tribunal determined the total compensation at Rs. 81,89,000 with interest and also directed the respondent insurer to deposit the awarded amount.

Reasoning

Referring to the spot sketch, the Bench noted that the position of the water tanker was 21 feet from South to North, clearly indicating that it was moving on the wrong side of the road, opposite to the two-wheeler. Additionally, a charge sheet was filed against the driver of the water tanker. The insurer failed to rebut the evidence adduced by the claimants in the charge sheet, the spot sketch etc. “In light of these facts, the Tribunal was justified in holding that the accident occurred due to the rash and negligent driving by the driver of the water tanker. As the policy of the offending vehicle was active, the Tribunal rightly directed the insurer to satisfy the award”, it said.

The employment of the deceased with HCL Technologies Limited, Bengaluru, was not in dispute. The claimants had produced salary slips issued by HCL Technologies Limited to substantiate the employment. According to the salary slips, the deceased was drawing a gross salary of Rs 1,37,350, inclusive of allowances.

Reference was made to the judgment in National Insurance Co. Ltd. vs. Pranay Sethi, (2017), wherein it has been held that established and sustainable income is to be considered. The allowances, namely Car Allowance, Holiday Allowance, Fuel and Vehicle Maintenance, Compensatory Allowance, Engagement Performance Bonus, and Food Valet, are paid in addition to the basic salary and HRA. “In view of the consistent payment of allowances from month to month, it must be considered as established and sustainable income. Merely bifurcating the earnings under different heads does not alter the character of the income of the deceased. What is essential to consider is the consistent income of the deceased. Payments made under various heads to the deceased remain part of his income. The allowances cannot be considered speculative, as they were paid consistently on month-to-month basis”, it further added.

As per the Bench, the Tribunal committed an error in holding that the deceased was in the probationary period and that his entire salary paid could not be considered. The Tribunal considered the income of the deceased at Rs 40,000, which had no legal or logical basis. The salary slips for November and December 2018, and January 2019, clearly demonstrated the consistent payment of a salary of Rs 1,37,350 per month. Given the consistency of the payments across these three months, it was reasonable to rely on the slips.

Thus, allowing the appeals of the claimants in part and dismissing the appeal by the insurer, the Bench granted the claimants a total compensation of Rs 2,27,32,608.

Cause Title: Smt. Priti Singh & Ors. v. Reliance General Insurance Co. Ltd. & Ors. (Case No.: MFA No.1567/2024)

Appearance:

Appellants: Advocate R. Venkatesha Naidu

Respondents: Advocate D. Vijayakumar

Click here to read/download Order


Karnataka High CourtJustice K.S. MudagalJustice KV Aravind

Tulip Kanth

Assistant Editor

Tulip Kanth is an Assistant Editor at Verdictum having over 5 years of experience in the field of legal journalism and editing. She extensively covers judgments of the Supreme Court, High Courts as well as Tribunals. She has previously worked with a legal publishing website where she oversaw the work of other editors and has also created updates on notifications of different Government Ministries. She holds an English Honours Degree from SGTB Khalsa College, Delhi University and has completed her LLB course with specialisation in Corporate Law from Amity University.