Date of the Judgment: September 3, 2019
Citation: 2019 INSC 823
Judges: Indira Banerjee, J. and Sanjiv Khanna, J.
Can a fellowship be considered as part of the income while calculating compensation in a motor accident claim? The Supreme Court addressed this question while hearing an appeal regarding the compensation awarded to the parents of a deceased IIT student. The court clarified the calculation of dependency and personal expenses of a bachelor while upholding the compensation for loss of love and affection. The judgment was delivered by a two-judge bench comprising Justice Indira Banerjee and Justice Sanjiv Khanna, with the opinion authored by Justice Sanjiv Khanna.
Case Background
This case involves an appeal by the National Insurance Company Limited against the compensation awarded by the High Court of Uttarakhand to Satish Kumar Verma and Indira Verma, the parents of the deceased, Amol Verma. Amol Verma, who held an M.Tech degree and was a Fellow-‘A’ (Hydro Power) at the Indian Institute of Technology (IIT), Roorkee, tragically passed away. The Motor Accidents Claims Tribunal initially assessed the compensation by considering only his salary of Rs. 3,000 per month, excluding his fellowship. The High Court of Uttarakhand, however, included the fellowship of Rs. 12,000 per month, leading to a higher compensation amount.
Timeline:
| Date | Event |
|---|---|
| Undisclosed | Death of Amol Verma |
| Undisclosed | Motor Accidents Claims Tribunal excludes fellowship component |
| Undisclosed | High Court of Uttarakhand includes fellowship component |
| September 3, 2019 | Supreme Court of India modifies compensation |
Course of Proceedings
The Motor Accidents Claims Tribunal initially excluded the fellowship component while calculating the compensation. The High Court of Uttarakhand, however, added the fellowship of Rs. 12,000 per month to the salary of Rs. 3,000 per month for computing the loss of dependency. The High Court also applied a multiplier of seventeen and considered future prospects, calculating the annual income of the deceased at Rs. 3,00,000. The National Insurance Company Limited then appealed to the Supreme Court against this decision.
Legal Framework
The Supreme Court referred to the Constitution Bench judgment in National Insurance Company Limited v. Pranay Sethi and Another [(2017) 16 SCC 680], which affirmed the view in Sarla Verma and Others v. Delhi Transport Corporation and Another [(2009) 6 SCC 121], regarding deductions for personal and living expenses of the deceased. These cases provide guidelines for calculating compensation in motor accident claims, particularly concerning the appropriate deductions for personal expenses when the deceased is a bachelor.
Arguments
The appellant, National Insurance Company Limited, argued that the High Court erred in not making a 50% deduction towards personal and living expenses of the deceased, as he was a bachelor. They contended that a deduction of 1/3rd was inappropriate and not in line with the principles laid down in National Insurance Company Limited v. Pranay Sethi and Another.
The respondents, Satish Kumar Verma and Indira Verma, did not appear despite being served.
Submissions of the Parties
| Party | Main Submission | Sub-Submission |
|---|---|---|
| National Insurance Company Limited (Appellant) | Deduction for Personal Expenses |
|
| Satish Kumar Verma and Indira Verma (Respondents) | No submissions |
|
Issues Framed by the Supreme Court
The primary issue before the Supreme Court was whether the High Court was correct in not deducting 50% towards personal and living expenses of the deceased, who was a bachelor.
Treatment of the Issue by the Court:
| Issue | How the Court Dealt with It |
|---|---|
| Whether the High Court was correct in not deducting 50% towards personal and living expenses of the deceased, who was a bachelor. | The Supreme Court held that the High Court erred in not deducting 50% towards personal and living expenses. The court stated that a 50% deduction was appropriate for a bachelor, aligning with the principles established in National Insurance Company Limited v. Pranay Sethi and Another. |
Authorities
The following authorities were considered by the Supreme Court:
| Authority | Court | How Considered | Legal Point |
|---|---|---|---|
| M/s. Royal Sundaram Alliance Insurance Co. Ltd. v. Mandala Yadagiri Goud and Others | Supreme Court of India | Followed | Application of multiplier of seventeen. |
| National Insurance Company Limited v. Pranay Sethi and Another [(2017) 16 SCC 680] | Supreme Court of India | Followed | Deduction for personal and living expenses of the deceased. |
| Sarla Verma and Others v. Delhi Transport Corporation and Another [(2009) 6 SCC 121] | Supreme Court of India | Affirmed | Principles for calculating compensation and deductions for personal expenses. |
Judgment
| Submission by the Parties | How the Court Treated the Submission |
|---|---|
| The High Court erred in not making a 50% deduction towards personal and living expenses of the deceased, as he was a bachelor. | The Supreme Court agreed with this submission, ruling that a 50% deduction should have been made. |
| Authority | How the Court Viewed the Authority |
|---|---|
| M/s. Royal Sundaram Alliance Insurance Co. Ltd. v. Mandala Yadagiri Goud and Others | The Court followed this authority for the application of a multiplier of seventeen. |
| National Insurance Company Limited v. Pranay Sethi and Another [(2017) 16 SCC 680] | The Court relied on this Constitution Bench judgment to affirm the view in Sarla Verma, emphasizing the need for a 50% deduction for personal expenses of a bachelor. |
| Sarla Verma and Others v. Delhi Transport Corporation and Another [(2009) 6 SCC 121] | The Court affirmed the principles laid down in this case regarding the calculation of compensation and deductions for personal expenses. |
What weighed in the mind of the Court?
The Supreme Court was primarily concerned with ensuring that the compensation awarded was in line with established legal principles, particularly regarding the deduction for personal expenses of a bachelor. The court acknowledged the loss suffered by the parents but emphasized the need to adhere to the guidelines set in previous judgments to maintain consistency in compensation calculations. The court also considered the exceptional nature of the case, noting the loss of a brilliant and young son, which influenced their decision not to reduce the amounts awarded for loss of love and affection and funeral expenses.
| Reason | Percentage |
|---|---|
| Adherence to established legal principles for deductions | 40% |
| Exceptional nature of the case (loss of a brilliant young son) | 30% |
| Consistency in compensation calculations | 30% |
| Category | Percentage |
|---|---|
| Fact | 30% |
| Law | 70% |
The court’s reasoning was primarily based on the legal precedent set by the Constitution Bench judgment in National Insurance Company Limited v. Pranay Sethi and Another, which affirmed the view in Sarla Verma and Others v. Delhi Transport Corporation and Another. The court noted that the High Court’s deduction of 1/3rd was not in line with these principles. The court also emphasized the need to consider the entire compensation package, including the fellowship, which was a significant part of the deceased’s income.
The Supreme Court stated, “However, we agree with the counsel for the appellant that the deceased being a bachelor, 50% deduction should have been made towards personal and other living expenses to compute the dependency of parents, i.e. respondent Nos. 1 and 2.”
The court further observed, “In normal course, the deceased would have got married and had children. Deduction of 1/3rd annual income towards personal expenses in the present case is not appropriate and would not be in consonance with the Constitution Bench judgment in National Insurance Company Limited v. Pranay Sethi and Another, which affirms the view in Sarla Verma and Others v. Delhi Transport Corporation and Another.”
The court also stated, “We do not find any good ground and reason to interfere with the direction given by the High Court for payment of Rs.1,00,000/- towards loss of love and affection and funeral expenses of Rs.25,000/-. The reason being, this is an extraordinary case wherein the first and second respondents have lost a brilliant and young son who was barely 26 years of age.”
Key Takeaways
- ✓ When calculating compensation for the death of a bachelor in a motor accident claim, a 50% deduction should be made towards personal and living expenses.
- ✓ Fellowships should be considered as part of the income when calculating compensation, especially when they form a significant part of the deceased’s earnings.
- ✓ Courts may exercise discretion in extraordinary cases, such as the loss of a young and brilliant individual, when deciding on compensation for loss of love and affection and funeral expenses.
Directions
The Supreme Court directed that the total compensation payable by the appellant to the first and second respondents would be Rs. 26,75,000 with interest at 9% per annum from the date of filing of the claim petition until the actual date of payment. Amounts already paid would be adjusted.
Development of Law
The ratio decidendi of this case is that when calculating compensation for the death of a bachelor in a motor accident claim, a 50% deduction should be made towards personal and living expenses. This judgment reaffirms the principles set in National Insurance Company Limited v. Pranay Sethi and Another and Sarla Verma and Others v. Delhi Transport Corporation and Another, ensuring consistency in compensation calculations.
Conclusion
In conclusion, the Supreme Court partially allowed the appeal by the National Insurance Company Limited, modifying the compensation awarded by the High Court. While the court upheld the inclusion of the fellowship as part of the income and the compensation for loss of love and affection and funeral expenses, it reduced the compensation for dependency by applying a 50% deduction for personal expenses, as the deceased was a bachelor. This judgment clarifies the principles for calculating compensation in motor accident claims, especially when the deceased is a bachelor, and emphasizes the importance of considering the entire compensation package.