REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO.   2050       OF 2009 [Arising out of SLP (Civil) No. 24394 of 2007]

Raghuvir Singh Matolya & Ors. …Appellants

Versus

Hari Singh Malviya & Ors. …Respondents

J U D G M E N T  

S.B. SINHA, J :

1. Leave granted.

2. Whether dearness allowance and house rent allowance payable to a

deceased should be taken into consideration for the purpose of computing

the amount of compensation payable in terms of the provisions of Section

166 of the Motor Vehicles Act, 1988 (for short “the Act”) is the question

involved  in  this  appeal  which  arises  out  of  a  judgment  and  order  dated

14.02.2007 passed by the High Court of Madhya Pradesh in M.A. No. 2177

of 2005.

3. The basic fact of the matter is not in dispute.

The deceased Puspa Matolya was travelling in a Tata Sumo on the

fateful day, viz., 30.11.2002 at about 11.00 a.m.  It dashed against a mango

tree.  She died on the spot.   

Indisputably,  the  deceased  was  an  Assistant  teacher  in  a  primary

school.  The said school was a State-run one.  She was to superannuate on

28.02.2011.  She at the time of her death was aged about 52 years and 9

months.   The  salary  certificate  produced  on  behalf  of  the  claimants  –

appellants  showed  that  she  was  drawing  a  monthly  salary  of  Rs.8611/-

(Rs.6050/- basic pay, Rs.2481/- dearness allowance and Rs.80/- house rent)

per mensum.

The Tribunal, however, taking into consideration only the basic pay

passed an award awarding compensation for a sum of Rs. 3,38,000/-.  For

the said purpose, the Tribunal applied the multiplier of 7.   

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An appeal in terms of Section 173(1) of the Act was preferred by the

appellants.  The High Court, by reason of the impugned judgment, enhanced

the amount of compensation to Rs. 5,28,000/- by applying the multiplier of

11.

Still not satisfied with the quantum of compensation awarded in their

favour, the appellants are before us.

4. Ms.  Pragati  Neekhra,  learned  counsel  appearing  on  behalf  of  the

appellants  would  contend  that  the  Tribunal  as  also  the  High  Court

committed a serious error as they failed to take into consideration that in

computing the net income of the deceased, dearness allowance as also the

house rent allowance should be taken into consideration.

5. Mr.  Atul  Nanda,  learned  counsel  appearing  on  behalf  of  the

respondents, on the other hand, would support the impugned judgment.

6. Before the learned Tribunal, salary as also a pension certificate was

produced.

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7. Dearness  allowance,  in  our  opinion,  should  form  part  of  income.

House rent allowance is paid for the benefit of the family members and not

for  the  employee  alone.   What  would  constitute  an  income,  albeit  in  a

different  fact  situation,  came  up  for  consideration  before  this  Court  in

National Insurance Co. Ltd. v. Indira Srivastava and Others [(2008) 2 SCC

763] wherein it was held:

“19. 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.

20.  The term “income” in P.  Ramanatha Aiyar’s Advanced  Law  Lexicon  (3rd  Edn.)  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.”

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It has also been stated:

“  ‘Income’  signifies  ‘what  comes  in’  (per Selborne, C., Jones v. Ogle). ‘It is as large a word as can be used’ to denote a person’s receipts (per Jessel, M.R., Re Huggins). Income is not confined to  receipts  from  business  only  and  means periodical  receipts  from  one’s  work,  lands, investments,  etc.  Secy. to the Board of Revenue, Income Tax v. Al. Ar. Rm. Arunachalam Chettiar &  Brothers.  Ref.  Vulcun  Insurance  Co.  Ltd.  v. Corpn. of Madras.”

21.  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  professional  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.”

To the same effect is the decision of this Court in Oriental Insurance

Co. Ltd. v. Ram Prasad Varma & Ors. [2009 (1) SCALE 598].

8. We,  therefore,  are  of  the  opinion  that  ‘Dearness  Allowance’  and

‘House Rent Allowance’ payable to the deceased should have been included

for determining the income of the deceased and consequently the amount of

compensation.

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9. For  the  reasons  aforementioned,  we  direct  that  in  calculating  the

amount  of  compensation,  the  dearness  allowance  as  also  the  house  rent

allowance should also be taken into consideration.

10. The matter is remitted to the trial  court.   An award may be passed

accordingly.   The  appeal  is  allowed  with  the  aforementioned  directions.

There shall, however, be no order as to costs.

………………………….J. [S.B. Sinha]

..…………………………J.     [Dr. Mukundakam Sharma]

New Delhi; March 31, 2009

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