Motor Accident Claim - Pecuniary Loss Suffered Cannot Be Computed Based On What Victim Earned Three Years Ago - SC
While dealing with a case relating to compensation under the Motor Vehicles Act, the Supreme Court has held that the pecuniary loss that occurred due to the death of the victim cannot be computed based on the last drawn income which the victim had earned three years back.
The Bench of Justice Dinesh Maheshwari and Justice Aniruddha Bose observed "Here the deceased remained without employment for a period of approximately three years and what she earned prior to that ought not to have been treated to be her monthly income to arrive at just and proper compensation under the head of pecuniary loss, as has been held by the High Court."
In this case, one Bala Babitha, a 37-year-old lady, had lost her life in an accident that also caused injuries to her husband and her minor daughter. The claim was lodged by the appellants-husband, children, and mother of the deceased under Section 166 of the 1988 Act before the Motor Accident Claims Tribunal, Chennai (the Tribunal).
The Tribunal awarded compensation in favor of the husband of the deceased for a sum of Rs.4,77,100/. The minor daughter of the deceased and the husband of the deceased was awarded compensation of Rs.2,06,000/. The quantum of compensation on account of the death of said Bala Babitha was computed by the Tribunal to be Rs.36,92,350/.
The monthly income of the deceased was calculated as onethird of her husband's income.
The insurance company covering the offending vehicle and the appellants preferred separate appeals in respect of sums awarded as compensation in relation to the deceased and the injured victims.
The High Court reduced the sum awarded as compensation in respect of the husband of the deceased to Rs.3,41,000/. As regards the minor child, an award of Rs.2,06,000/ as compensation was retained. Compensation awarded to the family of the deceased victim was modified and reduced to Rs.32,82,090/ by the High Court.
Feeling aggrieved by the decision of the High Court, the husband of the deceased moved Supreme Court.
Notably, the Tribunal had quantified compensation for the surviving members of the family of the deceased on her notional income calculated on the basis of her husband's income, following a judgment of the Supreme Court delivered in the case of Arun Kumar Agrawal and Another vs. National Insurance Company Ltd. and Others.
However, the High Court considered her salary in a job she was engaged in three years back to be the basis for quantifying the pecuniary loss to be awarded to the surviving members of her family.
Both the Tribunal and the High Court had applied the multiplier principle to arrive at the figure of pecuniary loss.
Advocate Vipin Nair appeared for the appellants-husband of the deceased whereas Advocate Amit Kumar Singh represented the insurance company.
The Court observed that the judgment of the High Court on this point suffered from an error on two counts.
"At the time of her death, the deceased was not in employment. She was a homemaker. It was not a case where the deceased at the time of accident had just left her job. If that was the case, her last drawn salary might have had given reliable guidance for computing her monthly income at that point of time. Here the deceased remained without employment for a period of approximately three years and what she earned prior to that ought not to have been treated to be her monthly income to arrive at just and proper compensation under the head of pecuniary loss, as has been held by the High Court.", the Court opined.
The Court held that her monthly salary which she had drawn approximately three years back was an unreliable guide for fixing her notional income when she succumbed to her injuries caused by the accident.
Further, a plea was made on behalf of the insurance company that the appellants could not take a stand for computing the income of the deceased in the manner held in the case of Arun Kumar Agrawal (supra), since before the High Court, they had run a case that the pecuniary loss ought to be computed on the basis of her last drawn salary.
To this the Court held "Just because the appellants urged their claim based on the last drawn salary of the deceased before the High Court, this Court ought not to anchor its decision on that argument alone. It remains open to this Court to examine the nature of the claim and compute the compensation on a different criterion applying a different parameter."
On the deduction on account of personal expenses of the deceased, the Tribunal directed deduction of 1/3rd of the earning of the deceased, the latter being determined on the income of her spouse. The Court observed it to be the proper course.
"We hold so because, even if we leave out the husband of the deceased from being treated as a dependent, there were two minor children at the material point of time who ought to have been treated as dependent family members. At that point of time the second appellant was twelve years old and the age of injured daughter was three years. In the case of Sarla Verma (supra) the deduction has been held to be valid in a case where there were dependent family members. We should not restrict the expression "dependent" to mean those financially dependent only. Minor children are emotionally dependent on the mother.", the Court opined.
The Court also noted that neither the Tribunal nor the High Court had considered loss of future prospects to arrive at the quantum of pecuniary loss. The Court held that there ought to be an addition of 40% to the notional income of the deceased towards future prospects as she was below 40 years of age.
Accordingly, the Court set aside the judgment of the High Court to the extent of computation made of pecuniary loss on account of the death of said Bala Babitha for a sum of Rs.30,94,740/. The Court quantified the said sum to be Rs.44,10,000/.
The Court further noted that the High Court had committed an error in law while providing for compensation under the heads of loss of love and affection and also loss of consortium.
"Instead, in our opinion, compensation provided under the head of loss of consortium would be Rs. 40,000/ for each appellant, comprehending the loss of love and affection within it. Hence, the total compensation provided under this head would amount to Rs 1,60,000/.", the Court held while modifying the High Court order.
The Court did not interfere with the concurrent views of the High Court and the Tribunal on the rate of interest.
Thus, the Court computed the total amount payable to the appellants to be Rs.46,17,350/