REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO.           10    OF 2009 (Arising out of S.L.P. (C) No.18001 of 2006)

SYED BASHEER AHAMED & ORS. — APPELLANTS

VERSUS

MOHD. JAMEEL & ANR. — RESPONDENT S

J U D G M E N T

D.K. JAIN, J.:

Leave granted.

2. Challenge  in  this  appeal,  by  special  leave,  is  to  the

judgment and order dated 26th June, 2006 passed by the

High  Court  of  Karnataka  at  Bangalore,  holding  that  the

appellants  herein  are  entitled  to  a  compensation  of

Rs.3,56,000/-  along  with  interest  at  the  rate  of  6%  per

annum from the date of filing of the claim petition till the

date of actual deposit of the compensation under the Motor

Vehicles  Act,  1988  (for  short  ‘the  Act’),  as  against  the

compensation of Rs.6,08,000/- with interest at the rate of

6%  per  annum,  awarded  by  the  Motor  Accident  Claims

Tribunal, Mysore (for short ‘the Tribunal’) vide order dated

19th April, 2002.

3. The appellants are the unfortunate parents and the three

sisters of the deceased.  The first respondent is the owner of

the lorry, which was involved in the accident and the second

respondent is the insurance company with which the lorry

was insured.  According to the appellants, on 3rd June, 1999

at about 10.00 a.m., the deceased aged about 20 years, was

riding on a luna moped when the lorry dashed against it

and ran over the deceased, killing him on the spot.  It was

claimed that the deceased was engaged in his own business

under  the  name  and  style  of  Bharath  Packing  Cases

Industry, and was also dealing in cut size timber.    

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4. The appellants filed a petition under Section 166 of the Act

for award of compensation on account of the death of the

deceased.  In the petition, it was pleaded that the deceased

had  lucrative  business  and  was  earning  a  sum  of

Rs.20,000/-  per  month.   A  claim  for  compensation  of

Rs.68,30,000/-  was  made.  Upon  consideration  of  the

evidence adduced by the parties, in particular the Income

Tax Return filed by the deceased for the assessment year

1998-1999,  wherein  the  total  income  from business  was

declared at Rs.43,000/, the Tribunal rejected the stand of

the  appellants/claimants  that  the  earnings  of  deceased

were  Rs.20,000/-  per  month.  The  Tribunal  took  the

monthly income of the deceased at Rs.7,000/- per month.

Deducting  therefrom  half  of  the  said  income  towards

personal and living expenses of the deceased and taking the

age  of  the  younger  of  the  parents  as  the  basis  for

determining  the  multiplier  as  14,  the  Tribunal  quantified

the compensation at loss of dependency as Rs.5,88,000/-.

By adding Rs.10,000/-  towards loss of  expectation of  life

and  Rs.10,000/-  towards  funeral  expenses  etc.,  it

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determined  the  total  compensation as  Rs.6,08,000/-.   As

noted above, interest at the rate of 6% per annum was also

awarded.

5. Being aggrieved, the owner of the vehicle, respondent No.1

in  this  appeal,  preferred  appeal  to  the  High  Court.

Rejecting the plea of the owner of the vehicle that his lorry

was not involved in the accident, the High Court came to

the conclusion that on the basis of the Income Tax Return

the  income  of  the  deceased  could  not  be  more  than

Rs.40,000/-  per  annum.   The  High  Court,  however,

calculated  the  monthly  income  of  the  deceased  as

Rs.4,000/-.  The High Court, however, did not interfere with

the  deduction  towards  the  personal  expenses  and  the

multiplier  applied  by  the  Tribunal  as  also  the  other

amounts awarded to the claimants.  The High Court, thus,

chose to reduce the compensation amount awarded to the

appellants  by  the  Tribunal  from  Rs.6,08,000/-  to

Rs.3,56,000/- on the ground that the monthly earnings of

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the  deceased  had  been  taken  on  the  higher  side  at

Rs.7,000/-.  Feeling aggrieved, the claimants are before us.

6. We have heard learned counsel for the parties.

7. Learned  counsel  appearing  on  behalf  of  the  appellants

submitted  that the  High Court,  while  taking the  monthly

income  of  the  deceased  at  Rs.4,000/-  per  month,  has

ignored other evidence brought on record by the claimants,

namely, the sale figures of his business from M/s Bharath

Packing Cases Industry for the period from 1st April, 1998 to

31st March, 1999 as reflected in the ledger accounts of one

M/s Vasu Agarbathi (Ex.P-23), one of the customers of the

deceased.  It was also contended that the High Court has

also failed to take into account the future prospects of the

deceased,  whose  business  was  bound  to  grow  with  the

passage of time.  In support of the proposition that rise in

income of the deceased by way of promotion or otherwise

should  be  taken  into  consideration  for  determining  his

income  earning  capacity,  reliance  was  placed  on  the

decision of this Court in National Insurance Co. Ltd. Vs.

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Indira  Srivastava  &  Ors.1  It  was  also  pleaded  that

deduction  towards  personal  and  living  expenses  of  the

deceased should have been restricted to only one-third of

his monthly income.

8. Per  contra,  learned  counsel  appearing  for  the  contesting

respondents submitted that in view of the fact that no oral

evidence was adduced by the claimants/appellants to prove

the income earning capacity of the deceased, reliance on the

Return  of  Income,  filed  by  the  deceased  himself,  for

determining his monthly income, could not be faulted and

the compensation determined by the High Court cannot be

said  to  be  arbitrary  and,  therefore,  no  intervention  in

exercise of power under Article 136 of the Constitution is

called for.

9. Section  168  of  the  Act  enjoins  the  Tribunal  to  make  an

award  determining  “the  amount  of  compensation  which

appears to be just.”  However, the objective factors, which

may constitute the basis of compensation appearing as just,

have not been indicated in the Act.  Thus, the expression 1  (2008) 2 SCC 763

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“which appears to the just” vests a wide discretion in the

Tribunal  in the matter  of  determination of  compensation.

Nevertheless,  the wide amplitude of  such power  does  not

empower  the  Tribunal  to  determine  the  compensation

arbitrarily,  or  to  ignore  settled  principles  relating  to

determination of compensation.  Similarly, although the Act

is  a beneficial  legislation, it  can neither be  allowed to be

used as a source of profit, nor as a windfall to the persons

affected nor should it be punitive to the person(s) liable to

pay  compensation.   The  determination  of  compensation

must  be  based  on  certain  data,  establishing  reasonable

nexus between the loss incurred by the dependents of the

deceased and the compensation to be awarded to them.  In

nutshell,  the  amount  of  compensation  determined  to  be

payable to the claimant(s) has to be fair and reasonable by

accepted legal standards.   

10.In  General  Manager,  Kerala  State  Road  Transport

Corporation,  Trivandrum  Vs.  Susamma Thomas (Mrs.)

&  Ors.2,  M.N.  Venkatachaliah,  J.  (as  His  Lordship  then

2  (1994) 2 SCC 176 7

was) had observed that the determination of the quantum

must answer what contemporary society “would deem to be

a fair sum such as would allow the wrongdoer to hold up

his head among his neighbours and say with their approval

that he has done the fair thing”.  The amount awarded must

not be niggardly since the “law values life and limb in a free

society in generous scales”.  At the same time, a misplaced

sympathy,  generosity  and  benevolence  cannot  be  the

guiding  factor  for  determining  the  compensation.   The

object of providing compensation is to place the claimant(s),

to the extent possible, in almost the same financial position,

as  they  were  in  before  the  accident  and  not  to  make  a

fortune out of misfortune that has befallen them.

11.As  noted  earlier,  in  the  matter  of  computation  of

compensation,  there  is  no  uniform  rule  or  formula  for

measuring  the  value  of  a  human  life.   Though  a  special

provision  for  assessment  of  compensation  on  structured

formula  basis  for  the  purpose  of  a  claim  petition  under

Section 163A of the Act has been inserted in the Act with

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effect from 14th November, 1994, but no such formula has

been  laid  down  for  determination  of  compensation  in  a

claim petition under Section 166 of the Act, though there is

no bar in taking the said schedule as a guiding factor while

determining the  just compensation by applying  multiplier

method.  In fact, in  Managing Director, TNSTC Ltd.  Vs.

K.I. Bindu & Ors.3, it has been observed that the second

schedule  to the Act  may serve  as a guide  but cannot be

used  as  an  invariable  ready  reckoner.   In  a  catena  of

decisions of this Court, certain broad principles which could

be  applied  for  assessing  just  compensation  have  been

highlighted.  It has been observed that in a fatal accident

action,  the accepted  measure  of  damages  awarded to the

dependents is the pecuniary loss suffered and likely to be

suffered by them as a result of abrupt termination of life.

The question as to what factors should be kept in view for

calculating  pecuniary  loss  to  a  dependent  came  up  for

consideration before a three-Judge Bench of this Court in

Gobald Motor Service Ltd. & Anr. Vs. R.M.K. Veluswami

3  (2005) 8 SCC 473 9

& Ors.4, with reference to a case under the Fatal Accidents

Act, 1855, wherein, K. Subba Rao, J. (as His Lordship then

was) speaking for the Bench observed thus:

“In  calculating  the  pecuniary  loss  to  the dependants  many  imponderables  enter  into the calculation.  Therefore, the actual extent of the  pecuniary  loss  to  the  dependants  may depend  upon  data  which  cannot  be ascertained  accurately,  but  must  necessarily be  an  estimate,  or  even  partly  a  conjecture. Shortly,  stated,  the  general  principle  is  that the pecuniary loss can be ascertained only by balancing  on  the  one  hand  the  loss  to  the claimants of the future pecuniary benefit and on the other any pecuniary advantage which from  whatever  source  comes  to  them  by reason of the death, that is, the balance of loss and gain to a dependant by the death must be ascertained.”

12.Taking note of the afore-extracted observations in Gobald

Motor Service Ltd. (supra) in Susamma Thomas (supra), it

was  observed  that  the  assessment  of  damages  to

compensate  the  dependents  is  beset  with  difficulties

because  from  the  nature  of  things,  it  has  to  take  into

account many imponderables, e.g. the life expectancy of the

deceased  and  the  dependants,  the  amount  that  the 4  AIR 1962 SC 1

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deceased  would  have  earned  during  the remainder  of  his

life,  the  amount  that  he  would  have  contributed  to  the

dependants  during  that  period,  the  chances  that  the

deceased may not have lived or the dependants may not live

upto the estimated remaining period of their life expectancy,

the  chances  that  the  deceased  might  have  got  better

employment or income or may have lost his employment or

income altogether.

13.Thus, for arriving at just compensation, it is necessary to

ascertain the net income of the deceased available for the

support  of himself  and his dependents at the time of  his

death and the amount, which he was accustomed to spend

upon himself.  This exercise has to be on the basis of the

data,  brought  on  record  by  the  claimant,  which  again

cannot be accurately ascertained and necessarily  involves

an  element  of  estimate  or  it  may  partly  be  even  a

conjecture.  The figure arrived at by deducting from the net

income  of  the  deceased  such  part  of  income  as  he  was

spending upon himself, provides a datum, to convert it into

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a lump sum, by capitalising it by an appropriate multiplier

(when  multiplier  method  is  adopted).   An  appropriate

multiplier is again determined by taking into consideration

several  imponderable  factors.   Since  in  the  present  case

there is no dispute in regard to the multiplier, we deem it

unnecessary to dilate on the issue.

14.In the instant case, the main grievance of the appellant is

that the High Court erred in reducing the monthly income

of the deceased from Rs.7,000/- to Rs.4,000/-.  More so,

when the claim of the appellants was that the deceased was

earning  about  Rs.20,000/-  per  month.   It  needs  little

emphasis that  insofar  as  the  question  of  earnings  of  the

deceased  is  concerned,  the onus lies on the claimants to

prove  this  fact  by  leading  reliable  and  cogent  evidence

before the Tribunal.  A bare assertion in the claim petition

in that behalf is not sufficient to discharge that onus.  In

the  present  case,  as  noticed  earlier,  the  deceased  was

carrying on a business.  The Return of Income filed by him

for the assessment year 1998-1999 (Ex.P-34) was brought

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on  record  along  with  his  monthly  turnover  and  tax  paid

statements submitted to the Commercial Tax Officer (Ex.P-

27).  Copies of the current account (Ex.P-38) showing the

money deposited in the bank maintained by the deceased

have also been brought on record.  The Return of Income

filed on 15th April, 1998 and the accompanying document,

namely, trading and profit and loss account for the period

ending 31st March, 1998 show a net profit of Rs.42,996/-.

Taking into consideration the said documents, the Tribunal

took the monthly income of the deceased at Rs.7,000/- per

month.  However, the High Court felt that in the light of the

Income  Tax  Return,  declaring  income  from  the  business

carried  on  by  the  deceased,  the  yearly  income  of  the

deceased  was  not  more  than Rs.40,000/-  and,  therefore,

the  Tribunal  was  not  justified  in  adopting  the  monthly

income of the deceased at Rs.7,000/- per month to work

out the loss of dependency.  According to the High Court,

the  monthly  income  of  the  deceased  should  have  been

taken at Rs.4,000/- per month.   

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15.In  our  view,  though  the  entries  in  the  current  account

(Ex.P-38)  of  the  deceased  and  his  transactions  with  his

client, namely, Vasu Agarbathi (Ex.P-23) may not per se be

cogent evidence to determine the yearly or monthly income

of the deceased from the business(s) he was carrying on, yet

we  feel  that  these  are  some  indicators  in  support  of  the

appellants’ plea that the business income of the deceased in

the succeeding years could be more than what was declared

for the year ended 31st March, 1998.  But it is again in the

realm of speculation, particularly when, unlike income from

salaries,  earnings  in  a  business  may  increase  with  the

buoyancy in business and at the same time may diminish

with a recession in trade.   

16.As regards the future prospects of the deceased, as noted

above, except for copies of account of the deceased in the

books  of  account  of  his  client,  after  the  death,  no  other

reliable evidence has been brought on record to show the

future  plans  of  the  deceased  regarding  expansion  or

diversification  of  his  business.   In  our  view,  a  bare

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argument  by  learned  counsel  for  the  appellants  that  the

deceased had a potential of expanding his business, cannot

be accepted as sufficient material to determine the future

prospects  of  the  deceased.   The  decisions  of  this  Court

relied upon by learned counsel for the appellants do not lay

down any abstract proposition of law in this regard, which

are otherwise distinguishable on facts.

17.In  the  circumstances,  having  regard  to  the  material  on

record, in our opinion, ends of justice would be met if the

income of the deceased is taken at Rs.5,500/- per month or

Rs.66,000/- per annum.

18.On  the  question  of  deduction  on  account  of  personal

expenses  by the deceased,  there  is  no set  formula which

could  be  applied  in  every  case  to  determine  as  to  what

should be the deduction on this account.   The contention

that deduction on that count cannot exceed one-third on

the ground that there is some statutory recognition in the

Second  Schedule  to  the  Act  for  such  deduction,  is

untenable.   The  said  deduction  would  depend  upon  the

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facts and circumstances of each case.  In the present case,

no evidence was led on this point as well.  In the absence of

any  evidence  to  the  contrary,  the  practice  is  to  deduct

towards personal and living expenses of the deceased, one-

third of  the income in case he was married and one-half

(50%) if he was a bachelor.  Thus, there is no material on

record warranting interference with the consistent view of

both the courts below on the point.

19.In view of the above discussion, the loss of dependency is

determined as Rs.33,000/- per annum and by applying a

multiplier of 14, the total loss of dependency is arrived at

Rs.4,62,000/-.   Adding Rs.20,000/- awarded  under  other

heads,  the  quantum  of  compensation  is  determined  at

Rs.4,82,000/-.  The amount shall also carry an interest at

the rate of 6% per annum, as awarded by the Tribunal, from

the date  of  the filing of  the claim petition till  the date  of

actual payment.  If  any amount has already been paid or

deposited  in  terms  of  order  passed  by  the  Tribunal,  the

same  shall  be  adjusted  from  the  amount  now  being

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awarded.   The  interest  element  shall  also  be  worked  out

after the said adjustment.

20.In the result, the appeal succeeds in part and the judgment

of the High Court stands modified to the extent indicated

above.  No order as to costs.

………………………………….…J.        ( R.V. RAVEENDRAN )  

…………………………………….J.        ( D.K. JAIN )

 NEW DELHI, JANUARY 6, 2009.

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