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Reportable   

IN THE SUPREME COURT OF INDIA  CIVIL APPELLATE JURISDICTION  

 Civil Appeal Nos. 9196-97 of  2019  

@SLP (C) Nos. 9630-31 of 2019        

Malarvizhi & Ors.                             …Appellants                                                             Versus        United India Insurance Company Limited & Anr.                   …Respondents  

J U D G M E N T          

Dr Dhananjaya Y Chandrachud, J    

1 The present appeals arise from a judgment of a Division Bench of the  

Madras High Court dated 20 July 2018 in a first appeal and cross-objection from  

the decision of the Motor Accident Claims Tribunal1, Ranipet.  

2 The appellants are the heirs and legal representatives of Aranganathan  

who died as a result of a motor accident on 25 May 2001. He was travelling in an  

 1 Tribunal  

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Ambassador car bearing Registration No TN 23 A 7549 which was being driven  

by another person. At about 12:45 am, a Tata Sierra car bearing Registration No  

TN 20 Z 1613 came from the opposite direction and dashed against the car of the  

deceased. Aranganathan was seriously injured and died during the course of the  

accident. He is survived by his wife and four daughters who are the appellants  

before this Court.   

3 The appellants filed a claim petition under Section 166 of the Motor  

Vehicles Act, 1988 before the Tribunal, seeking compensation in the amount of  

Rs 99,90,000. By its award dated 11 July 2012, the Tribunal allowed the claim in  

the amount of Rs 59,04,000 together with interest at the rate of 7.5% per annum  

from the date of filing the claim petition till the date of realization of the decreed  

amount. The appellants filed a first appeal before the High Court of Madras. The  

High Court, by its impugned judgment partly allowed the appeal of the first  

respondent. The High Court estimated the income of the deceased at a reduced  

figure of  Rs 2,50,000 per annum from Rs 4,48,790.55. The total compensation  

awarded was thus reduced from Rs 59,04,000 to Rs 33,55,000. Aggrieved by the  

judgment of the High Court, the claimants are in appeal before this Court.   

4 The deceased was 49 years old at the time of the accident. The appellants  

contended that the deceased was a businessman who derived income from  

many sources including business and agricultural land admeasuring 36.76 acres.  

It was stated that the deceased was, amongst others, a wholesale dealer of  

cement and also owned wine shops. The land was sold in recovery proceedings  

after the death of the deceased.   

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5 The Tribunal assessed the agricultural income of the deceased at Rs  

3,40,708 per annum and the total income from business at Rs 89,590. The  

Tribunal added to this Rs 30,000 per annum for income through real estate and  

contract business. The annual income of the deceased was assessed at Rs  

4,60,298. 30% was added to this towards future prospects bringing the annual  

income to Rs 5,98,387.40. After a deduction of 1/4th of the total income towards   

living expenses, the Tribunal used a multiplier of 13 to arrive at a compensation  

of Rs.58,34,277. Damages under conventional heads, including funeral  

expenses, loss of consortium and loss of love and affection were computed at Rs  

70,000. A total compensation of Rs 59,04,000 was awarded.  

6 In appeal, the High Court concluded that on an analysis of the income tax  

returns filed by the deceased for the financial years 1995-1996 to 2000-2001, the  

income declared for the financial year 1997-1998 was the highest and must be  

taken as the annual income of the deceased. Hence, Rs 2,09,211 was  

determined to be the annual income of the deceased. Rs 40,000 per annum was  

added towards future prospects. The total income was thus arrived at Rs  

2,50,000 per annum. No deduction was made towards personal expenses.  

Applying a multiplier of 13, the loss of dependency was calculated to be Rs  

32,50,000. To this, funeral expenses, loss of consortium and loss of love and  

affection were added in the amount of Rs 1,05,000. A total compensation of Rs  

33,55,000 was awarded.  

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7 Assailing the reduction of the compensation, Mr Jayanth Muth Raj, learned  

Senior Counsel appearing on behalf of the appellants has contended:  

(i) The High Court has held that income tax returns take precedence over  

other documents in the determination of annual income. Over 52  

documents were marked before the Tribunal demonstrating income  

from various sources, all of which were not disclosed in the income tax  

returns;  

(ii) The High Court erred in not considering other contractual work awarded  

to the deceased and other solvency certificates of the deceased in the  

computation of his annual income;  

(iii) Even assuming that the High Court is justified in taking the income  

reflected in the tax return for the financial year 1997-1998 as the  

determinant, the High Court has erred in not accounting for the  

depreciation costs on fixed assets which have been reflected therein;  

and  

(iv) The High Court ought to have calculated the monthly income of the  

deceased at Rs 50,000 taking into account the turnover from his trade  

and wine business.   

8 On the other hand, learned counsel for the respondents contended:  

(i) The High Court is justified in according precedence to the income tax  

returns of the deceased to determine his annual income;

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(ii) There is no merit in the contention that the appellant has suffered a loss  

on account of the sale of properties for the settling of the debt owed to  

banks;   

(iii) Depreciation on fixed assets cannot be added to the income of the  

deceased; and   

(iv) The award of the High Court is legally sustainable and calls for no  

interference by this Court.    

9 The rival submissions fall for our consideration.   

10 The Tribunal proceeded to determine the agricultural income arising from  

36.76 acres of land on the basis of two judgments of the High Court. The Tribunal  

arrived at two different figures by applying the decisions and proceeded to  

determine the agricultural income on an average of the two amounts. The  

Tribunal superimposed a possible value of income from agricultural land despite  

a clear indication in the income tax returns of the income from agricultural land.  

The method adopted by the Tribunal is not sustainable in law. On the other hand,  

the High Court has proceeded on the basis of the income reflected in the income  

tax returns for the assessment year 1997-1998. The relevant portion of the return  

reads:  

“Income from House property –  Rs. 1,920  

Business profit (other than 14.b) - Rs. 1,21,071  

Net Agricultural income –   Rs. 88,140”  

The tax return indicates an annual income of Rs 2,11,131 in the relevant  

assessment year. Mr Jayanth Muth Raj, learned Senior Counsel appearing on

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behalf of the appellant contended that other documents were marked which  

reflected the income of the deceased. We are in agreement with the High Court  

that the determination must proceed on the basis of the income tax return, where  

available. The income tax return is a statutory document on which reliance may  

be placed to determine the annual income of the deceased. To the benefit of the  

appellants, the High Court has proceeded on the basis of the income tax return  

for the assessment year 1997-1998 and not 1999-2000 and 2000-2001 which  

reflected a reduction in the annual income of the deceased.  

11 Learned Senior Counsel appearing on behalf of the appellants drew the  

attention of this Court to the judgment of this Court in New India Assurance  

Company v Yogesh Devi2 to contend that this Court may reasonably determine  

the income that accrues to the deceased and also compute the expenses  

incurred in the upkeep of agricultural land. In that case, a two judge Bench of this  

Court dealt with a claim where “there was no evidence regarding the amount of  

income derived from the abovementioned properties.” The only evidence  

available in regard to the monthly income of the deceased was the statement of  

the claimant. In the present case, the High Court has relied on the income tax  

return of the deceased. Further, the Court in New India Assurance opined that  

though a court may be required to account for the depletion in the net income  

accruing from the assets of the deceased on account of payments for engaging  

managers, evidence must be adduced to compute the depletion. The Court held:  

“In the normal course the claimants are expected to adduce  

evidence as to what would be the quantum of depletion in the  

 2 (2012) 3 SCC 613

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income from the abovementioned asset on account of the  

abovementioned factors.”  

In the present case, no evidence was adduced by the appellants at any stage of  

the proceedings to assist in the computation of the depletion in the net income  

which accrues to the deceased. The judgment of this Court in New India  

Assurance does not help the case of the appellants.   

12 It was then contended by Mr Jayanth Muth Raj that this Court must add to  

the annual income of the deceased, depreciation costs on capital assets to the  

amounts of Rs 21,642, 74,685 and 7701 as reflected in the tax return for the  

assessment year 1997-1998. We are unable to accede to this contention.  

Depreciation is the deduction allowed for the decline in the real value of tangible  

or intangible assets over its useful life. Its value varies over time and cannot  

amount to tangible income for the purposes of computing annual income in a  

claim before the MACT.  

13 Mr Jayanth Muth Raj has then drawn our attention to the balance sheet  

dated 31 March 1997 of Pavai Wines, Sholinghur for the assessment year 1997-

1998. An annual amount of Rs 1,04,987 is reflected as payment for a prepaid  

license fee to the Tamil Nadu Government. In the peculiar circumstances of the  

case, this amount, having been paid upfront and for a future period is to be added  

to the annual income of the deceased. Thus, the net annual income of the  

deceased is: Rs 2,11,131 + 1,04,987 = Rs 3,16,118.  

14 The determination of the amount payable to the appellants is as follows:  

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(i) The deceased was self-employed and aged 49 at the time of the  

accident. In accordance with the Constitution Bench judgment of this  

Court in National Insurance Company Limited v Pranay Sethi3, 25%  

of the annual income is to be added for future prospects. 25% of Rs  

3,16,118 = 79,029.5. Annual income, accounting for future prospects, is  

Rs 3,16,118 + 79,029.5 = Rs 3,95,147.5; and   

(ii) In accordance with paragraph 30 of the decision of this Court in Sarla  

Verma v Delhi Transport Corporation4, the deduction for personal  

expenses for a married person where the dependents are between four  

to six people is 1/5th or 20%. 20% of Rs 3,95,147.5 = 79,029.5. Net  

annual income is Rs 3,95,147.5 - 79,029.5 = Rs 3,16,118.  

In accordance with the judgment of this Court in Sarla Verma, the multiplier to be  

applied when the deceased is between the age group 46 to 50 is 13. The loss of  

dependency is calculated at Rs 3,16,118 X 13 = Rs 41,09,534. In accordance  

with the judgment of this Court in Pranay Sethi, Rs 15,000, 15,000 and 40,000  

must be added for funeral expenses, loss of estate and loss of consortium  

respectively.   

15 Therefore, the appellants shall be entitled to compensation under the  

following heads:  

Loss of dependency  Rs 41,09,534  

Funeral expenses  Rs 15,000  

 3 (2017) 16 SCC 680  4 (2009) 6 SCC 121

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Loss of estate  Rs 15,000  

Loss of consortium Rs 40,000  

Loss of love and affection Rs 50,000  

Rs 42,29,534  

16 Thus, the total compensation payable to the appellants is Rs 42,29,534  

with interest at 9% per annum from the date of filing of the application till the date  

of payment of the compensation to the appellants.   

17 The appeals are partly allowed to the extent indicated above. There shall  

be no order as to costs.   

18 Pending application(s), if any, shall stands disposed of.     

.……......................................................J  

                   [Dr Dhananjaya Y Chandrachud]          

.……......................................................J  

               [Hrishikesh Roy]  

New Delhi;  December 09, 2019.