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CASE NO.: Appeal (civil)  5830 of 2007

PETITIONER: National Insurance Company Ltd

RESPONDENT: Indira Srivastava & Ors

DATE OF JUDGMENT: 12/12/2007

BENCH: S.B. Sinha & Harjit Singh Bedi

JUDGMENT: J U D G M E N T

CIVIL APPEAL NO.  5830  OF 2007 (Arising out of SLP (C) No.14452 of 2007)

S.B. Sinha, J.

1.      Leave granted. 2.      Connotation of the term ’income’ for the purpose of determination of  ’just compensation’ envisaged under Section 168 of the Motor Vehicles Act,  1988 (the Act) calls for question in this appeal which arises out of a  judgment and order dated 6.4.2007 passed by the High Court of Judicature at  Allahabad, Lucknow Bench at Lucknow in FAFO No.171 of 2001.   Respondent’s husband R.K. Srivastava was employed in a company named  Gabriel India Ltd.  While he was travelling in an auto rickshaw from  Charbagh Railway Station, Lucknow to his residence situated at Ashok  Marg, the same met with an accident with a ’Mahindra Commander Jeep’  driven rashly and negligently.  He sustained injuries and ultimately  succumbed thereto.  Respondents herein filed a claim petition before the  learned Tribunal.  A salary certificate was produced in the said proceedings  which is in the following terms :

Earnings Amount Deductions Amount Basic 3420.00 CPF(S) 488.00 Special Pay 70.00 CPF (Add)

FDA 350.00 GIS 3.75 VDA 1040.00 LIC/GIS 509.10 CCA 100.00 HRR

HRA

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1047.00 MSPI 60.00 Washing All. 75.00 Society 576.00 Conv. 225.00 Union 3.00 Cant.sub. 265.00 HBA 340.00 C.E.A. 2040.00 B.Fund 10.00 Total 8632.00 Total 1989.85

3.      The learned Tribunal opined that in computing his income, the  element of conveyance allowance only would fall outside the purview of  income.  On the aforementioned basis, the monthly income of the deceased  was assessed at Rs.20364/-.  Applying the multiplier of 13, as the age of the  deceased was 45 years, it was held : "As such, on using multiple of 13 to the annual  income of deceased at Rs.2,32,372/-, the amount  works out to Rs.30,20,836/-.  The deceased would  have spent 1/3rd of this amount on himself, hence  on deducting 1/3rd from this amount, 2/3rd  compensation amount comes to Rs.20,13,890/-."

       It was concluded:

"Considering all these facts, I reach to this finding  that the petitioners are entitled to get 2/3rd of the  total income of deceased worked out by using  multiple of 13 i.e. about Rs.20,00,000/-. Issue No.5  is decided accordingly.  It is the liability of  opposite party No.3 Insurance Company.  On  behalf of opposite party No.3, the ruling of  Hon’ble High Court Smt. Lalta Devi Vs. Suresh &  Ors., T.A.C. 8, 1999 (1) page 847 has been filed  before me, but this ruling does not extend any  specific benefit to opposite party No.3.  Hence,  while deciding this issue No.5, I come to this  conclusion that the petitioners are entitled to get  Rs.20,00,000/- (Rs. Twenty Lakhs) as  compensation."

4.      The High Court, on an appeal having been preferred both by the  appellant as also the respondents, partly allowed the same by a common  judgment holding that claimants were entitled to compensation calculated in  case of the deceased at Rs.19,53,224/- along with interest @ 9% from the  date of presentation of the claim petition till its realization, holding that  travelling reimbursement could not be taken into consideration for  computation of net income of the deceased. 5.      Appellant is, thus, before us.         Keeping in view the importance of the question involved and

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furthermore in view of the fact that the first respondent was appearing-in-  person, we had requested Mr. L.N. Rao, learned senior counsel, to assist us  in the matter. 6.      Submission of Mr. Satija, learned counsel appearing on behalf of the  appellant, is that for the purpose of computation of the amount of  compensation what was material is the basic pay and not other allowances  and, in that view of the matter, the High Court has committed a serious error  in opining otherwise.  The learned counsel contended that emphasis by this  Court are being laid on computation of damages based on net income and  not gross income.  It was also contended that in any event the amount of  compensation awarded by the High Court is on higher side. 7.      Mr. Rao, however, submitted that apart from the basic salary,  contributions made by the employee should also be taken into consideration  for calculation of the amount of compensation, inter alia, on the premise that  the same would have become payable to him at a future date as, for example,  voluntary retirement, superannuation etc. which would be beneficial to the  entire family.  It was pointed out that the contributions towards Provident  Fund, Life Insurance Corporation, gratuity etc. are includable in the  definition of income.   8.      The term ’income’ has different connotations for different purposes.   A court of law, having regard to the change in societal conditions must  consider the question not only having regard to pay packet the employee  carries home at the end of the month but also other perks which are  beneficial to the members of the entire family.  Loss caused to the family on  a death of a near and dear one can hardly be compensated on monetory  terms.   9.      Section 168 of the Act uses the word ’just compensation’ which, in  our opinion, should be assigned a broad meaning.  We cannot, in  determining the issue involved in the matter, lose sight of the fact that the  private sector companies in place of introducing a pension scheme takes  recourse to payment of contributory Provident Fund, Gratuity and other  perks to attract the people who are efficient and hard working.  Different  offers made to an officer by the employer, same may be either for the benefit  of the employee himself or for the benefit of the entire family.  If some  facilities are being provided whereby the entire family stands to benefit, the  same, in our opinion, must be held to be relevant for the purpose of  computation of total income on the basis whereof the amount of  compensation payable for the death of the kith and kin of the applicants is  required to be determined.  For the aforementioned purpose, we may notice  the elements of pay, paid to the deceased : "BASIC                  :       63,400.00 CONVEYANCE ALLOWANCE               :       12,000.00 RENT CO LEASE           :       49,200.00 BONUS (35% OF BASIC) :          21,840.00                         TOTAL :  1,45,440.00

In addition to above, his other entitlements were :

Con. to PF 10% Basic    Rs.  6,240/- (p.a.)      LTA reimbursement       Rs.  7,000/- (p.a.) Medical reimbursement   Rs.  6,000/- (p.a.) Superannuation 15% of Basic     Rs.  9,360/- (p.a.) Gratuity Cont.5.34% of Basic    Rs.  3,332/- (p.a.) Medical Policy-self & Family @  Rs.55,000/- (p.a.) Education Scholarship @ Rs.500  Rs.12,000/- (p.a.) Payable to his two children Directly"

10.     There are three basic features in the aforementioned statement which  require our consideration : 1.      Reimbursement of rent would be equivalent to HRA; 2.      Bonus is payable as a part of salary; and 3.      Contribution to the Provident Fund.

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11.     We may furthermore notice that apart therefrom, superannuation  benefits, contributions towards gratuity, insurance of medical policy for self  and family and education scholarship were beneficial to the members of the  family.   12.     We have, however, no doubt in mind that medical reimbursement  which provides for a slab and which keeping in view the terminology used,  would mean reimbursement for medical expenses on production of medical  bills and, thus, the same would not come within the purview of the  aforementioned category.   13.     The question came for consideration before a learned Single Judge of  the Madras High Court in The Manager, National Insurance Co. Ltd. v.  Padmavathy & Ors. [CMA No.114 of 2006 decided on 29.1.2007], wherein  it was held : "Income tax, Professional tax which are deducted  from the salaried person goes to the coffers of the  government under specific head and there is no  return. Whereas, the General Provident Fund,  Special Provident Fund, L.I.C., Contribution are  amounts paid specific heads and the contribution is  always repayable to an employee at the time of  voluntary retirement, death or for any other reason.  Such contribution made by the salaried person are  deferred payments and they are savings. The  Supreme Court as well as various High Courts  have held that the compensation payable under the  Motor Vehicles Act is statutory and that the  deferred payments made to the employee are  contractual. Courts have held that there cannot be  any deductions in the statutory compensation, if  the Legal Representatives are entitled to lumpsum  payment under the contractual liability. If the  contributions made by the employee which are  otherwise savings from the salary are deducted  from the gross income and only the net income is  taken for computing the dependancy  compensation, then the Legal Representatives of  the victim would lose considerable portion of the  income. In view of the settled proposition of law, I  am of the view, the Tribunal can make only  statutory deductions such as Income tax and  professional tax and any other contribution, which  is not repayable by the employer, from the salary  of the deceased person while determining the  monthly income for computing the dependancy  compensation. Any contribution made by the  employee during his life time, form part of the  salary and they should be included in the monthly  income, while computing the dependency  compensation."

14.     Similar view was expressed by a learned Single Judge of Andhra  Pradesh High Court in S. Narayanamma & Ors. V. Secretary to Government  of India, Ministry of Telecommunications and Ors. [2002 ACC 582],  holding : "In this background, now we will examine the  present deductions made by the tribunal from the  salary of the deceased in fixing the monthly  contribution of the deceased to his family. The  tribunal has not even taken proper care while  deducting the amounts from the salary of the  deceased, at least the very nature of deductions  from the salary of the deceased. My view is that  the deductions made by the tribunal from the  salary such as recovery of housing loan, vehicle

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loan, festival advance and other deductions, if any,  to the benefit of the estate of the deceased cannot  be deducted while computing the net monthly  earnings of the deceased. These advances or loans  are part of his salary. So far as House Rent  Allowance is concerned, it is beneficial to the  entire family of the deceased during his tenure, but  for his untimely death the claimants are deprived  of such benefit which they would have enjoyed if  the deceased is alive. On the other hand,  allowances, like Travelling Allowance, allowance  for newspapers/periodicals, telephone, servant,  club-fee, car maintenance etc., by virtue of his  vocation need not be included in the salary while  computing the net earnings of the deceased. The  finding of the tribunal that the deceased was  getting Rs.1,401/- as net income every month is  unsustainable as the deductions made towards  vehicle loan and other deductions were also taken  into consideration while fixing the monthly income  of the deceased. The above finding of the tribunal  is contrary to the principle of ’just compensation’  enunciated by the Supreme Court in the judgment  in Helen’s case (1 supra). The Supreme Court in  Concord of India Insurance Co. v. Nirmaladevi  and Ors., 1980 ACJ 55 (SC) held that  determination of quantum must be liberal and not  niggardly since law values life and limb in a free  country ’in generous scales’."

15.     We may, however, notice that a Division Bench of this Court in Asha  & Ors. v. United Indian Insurance Co. Ltd. & Anr. [2004 ACC 533],  whereupon reliance has been placed by Mr. Satija, was considering a case  where, like the present one, several perks were included in salary.  We may  reproduce the salary certificate hereto below : "This is to certify that Shri A.M. Raikar was  working as AG 111 in this organisation has been  paid the following Pay & Allowances for the  month of May, 1995:

Earnings        Amount        Deductions     Amount

Basic   3420.00     CPF (S)              488.00 Special Pay     70.00   CPF (Add)  FDA               350.00     GIS                            3.75 VDA     1040.00         LIC/GIS          509.10 CCA       100.00     HRA HRA     1047.00     MSPI                   60.00 Washing All.   75.00            Society                  576.00 Conv.             225.00    Union                    3.00 Cant.Sub.       265.00    HBA                   340.00 C.E.A.          2040.00    B.Fund                  10.00

Total   8632.00    Total                  1989.85

Net Payable Rs. 6642.00   (Rupees six thousand  six hundred forty two only)."

       In that case, this Court held :

"Lastly it was submitted that the salary certificate  shows that the salary of the deceased was

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Rs.8,632/-. It was submitted that the High Court  was wrong in taking the salary to be Rs.6,642/-. It  was submitted that the High Court was wrong in  deducting the allowances and amounts paid  towards LIC, Society charges and HBA etc. We  are unable to accept this submission also. The  claimants are entitled to be compensated for the  loss suffered by them. The loss suffered by them is  the amount which they would have been receiving  at the time when the deceased was alive. There can  be no doubt that the dependents would only be  receiving the net amount less l/3rd for his personal  expenses. The High Court was therefore right in so  holding."

       This Court in Asha (supra) did not address itself the questions raised  before us.  It does not appear that any precedent was noticed nor the term  ’just compensation’ was considered in the light of the changing societal  condition as also the perks which are paid to the employee which may or  may not attract income tax or any other tax.   What would be ’just compensation’ must be determined having regard  to the facts and circumstances of each case.  The basis for considering the  entire pay packet is what the dependents have lost due to death of the  deceased.  It is in the nature of compensation for future loss towards the  family income.   16.     In Rathi Menon v. Union of India [(2001) 3 SCC 714], this Court,  upon considering the dictionary meaning of compensation held : "In this context a reference to Section 129 of the  Act appears useful. The Central Government is  empowered by the said provision to make rules by  notification "to carry out the purposes of this  Chapter". It is evident that one of the purposes of  this chapter is that the injured victims in railway  accidents and untoward incidents must get  compensation. Though the word "compensation" is  not defined in the Act or in the Rules it is the  giving of an equivalent or substitute of equivalent  value. In Black’s Law Dictionary , "compensation"  is shown as  "equivalent in money for a loss sustained; or  giving back an equivalent in either money  which is but the measure of value, or in  actual value otherwise conferred; or  recompense in value for some loss, injury or  service especially when it is given by  statute."  It means when you pay the compensation in terms  of money it must represent, on the date of ordering  such payment, the equivalent value.  25. In this context we may look at Section 128(1)  also. It says that the right of any person to claim  compensation before the Claims Tribunal as  indicated in Section 124 or 124-A shall not affect  the right of any such person to recover  compensation payable under any other law for the  time being in force. But there is an interdict that no  person shall be entitled to claim compensation for  more than once in respect of the same accident.  This means that the party has two alternatives, one  is to avail himself of his civil remedy to claim  compensation based on common law or any other  statutory provision, and the other is to apply before  the Claims Tribunal under Section 124 or 124-A of  the Act. As he cannot avail himself of both the

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remedies he has to choose one between the two.  The provisions in Chapter XIII of the Act are  intended to provide a speedier remedy to the  victims of accidents and untoward incidents. If he  were to choose the latter that does not mean that he  should be prepared to get a lesser amount. He is  given the assurance by the legislature that the  Central Government is saddled with the task of  prescribing fair and just compensation in the Rules  from time to time. The provisions are not intended  to give a gain to the Railway Administration but  they are meant to afford just and reasonable  compensation to the victims as a speedier measure.  If a person files a suit the amount of compensation  will depend upon what the court considers just and  reasonable on the date of determination. Hence  when he goes before the Claims Tribunal claiming  compensation the determination of the amount  should be as on the date of such determination."

17.     The amounts, therefore, which were required to be paid to the  deceased by his employer by way of perks, should be included for  computation of his monthly income as that would have been added to his  monthly income by way of contribution to the family as contradistinguished  to the ones which were for his benefit.  We may, however, hasten to add that  from the said amount of income, the statutory amount of tax payable  thereupon must be deducted.   18.     The term ’income’ in P. Ramanatha Aiyar’s Advanced Law Lexicon  (3rd Ed.) has been defined as under : "The value of any benefit or perquisite whether  convertible into money or not, obtained from a  company either by a director or a person who has  substantial interest in the company, and any sum  paid by such company in respect of any obligation,  which but for such payment would have been  payable by the director or other person aforesaid,  occurring or arising to a person within the State  from any profession, trade or calling other than  agriculture."

It has also been stated :

’INCOME’ signifies ’what comes in’ (per  Selborne, C., Jones v. Ogle, 42 LJ Ch.336).  ’It is  as large a word as can be used’ to denote a  person’s receipts ’(per Jessel, M.R. Re Huggins, 51  LJ Ch.938.) income is not confined to receipts  from business only and means periodical receipts  from one’s work, lands, investments, etc. AIR  1921 Mad 427 (SB). Ref. 124 IC 511 : 1930 MWN  29 : 31 MLW 438 AIR 1930 Mad 626 : 58 MLJ  337."

19.     If the dictionary meaning of the word ’income’ is taken to its logical  conclusion, it should include those benefits, either in terms of money or  otherwise, which are taken into consideration for the purpose of payment of  income-tax or profession tax although some elements thereof may or may  not be taxable or would have been otherwise taxable but for the exemption  conferred thereupon under the statute.   20.     In N. Sivammal & Ors. v. Managing Director, Pandian Roadways  Corporation & Ors. [(1985) 1 SCC 18], this Court took into consideration  the pay packet of the deceased. 21.     We may notice that in T.N. State Transport Corporation Ltd. v. S.  Rajapriya & Ors. [(2005) 6 SCC 236], this Court held : "8. The assessment of damages to compensate the

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dependants 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  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 up to the estimated  remaining period of their life expectancy, the  chances that the deceased might have got better  employment or income or might have lost his  employment or income together.   9. The manner 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 capitalised  by multiplying it by a figure representing the  proper number of years’ purchase.    10. Much of the calculation necessarily remains in  the realm of hypothesis "and in that region  arithmetic is a good servant but a bad master"  since there are so often many imponderables. In  every case "it is the overall picture that matters",  and the court must try to assess as best as it can the  loss suffered."

22.     Yet again in New India Assurance Co. Ltd. v. Charlie & Anr [(2005)  10 SCC 720], the same view was reiterated.  However, therein although the  words ’net income’ has been used but the same itself would ordinarily mean  gross income minus the statutory deductions.  We must also notice that the  said decision has been followed in New India Assurance Co. Ltd. v. Kalpana  (Smt.) & Ors. [(2007) 3 SCC 538].   23.     The expression ’just’ must also be given its logical meaning.  Whereas  it cannot be a bonanza or a source of profit but in considering as to what  would be just and equitable, all facts and circumstances must be taken into  consideration.   24.     In view of our finding abovementioned, the appeal is to be allowed in  part in so far as the High Court had directed deduction of medical  reimbursement and tax elements on the entire sum which according to the  statute constitute income.  But we decline to do so for two reasons.  Firstly,  the accident had taken place as far back as on 1st September, 1997 and  secondly the Tribunal as also the High Court failed to take into consideration  rise in income of the deceased by way of promotion or otherwise.   27.     For the aforementioned reasons, we are not inclined to interfere with  the impugned judgment.  This appeal is, therefore, dismissed.  In the facts  and circumstances of the case, there shall be no order as to costs.