Reportable  IN THE SUPREME COURT OF INDIA

CIVIL APPELALTE JURISDICTION

CIVIL APPEAL NO. 6110 OF 2011 [Arising out of SLP (C) No.2057 /2011]

Ranjana Prakash & Ors. … Appellants

Vs.

Divisional Manager & Anr. … Respondents

O R D E R  

R. V. Raveendran, J.

Leave granted. Heard.  

2. The  claimants  are  the  widow,  two  sons  and  mother  of  one  Arun  

Prakash, aged 46 years, who died in a motor accident on 3.11.2003. At the  

time of his death he was working as a Bank Manager, State Bank of India  

and  his  monthly  salary  was  Rs.23,134/-.  The  Motor  Accident  Claims  

Tribunal,  Muzaffarnagar  by  its  award  dated  28.8.2006  awarded  a  

compensation of Rs.24,12,936/- with interest at 9% per annum. On appeal  

by the insurer, the High Court, by the impugned Judgment dated 9.9.2010,  

while  upholding  the  findings  in  regard  to  income  and  calculation  of  

compensation,  held that  the Tribunal  ought to have deducted 30% of the

annual income towards income tax. Consequently, the High Court deducted  

30% and reduced the compensation to Rs.16,89,055/- with interest at 9% per  

annum.  The  said  order  is  challenged  by  the  claimants  in  this  appeal  by  

special leave. The appellants contend that the High Court committed an error  

in  reducing  compensation  from  Rs.24,12,936  to  Rs.16,89,055  and  seek  

restoration of the compensation as awarded by the Tribunal.  

3. Before the High Court, the insurer, relying upon the decisions of this  

Court in Sarla Verma vs. Delhi Transport Corporation – 2009 (6) SCC 121  

and Shyamwati Sharma vs. Karam Singh – 2010 (12) SCC 378, contended  

that  where  the  annual  income of  the  deceased  was in  taxable  range,  the  

annual income for the purpose of computation of compensation should be  

the annual income less income tax; and that in the absence of any evidence  

as to the actual income tax paid, the Tribunal ought to have deducted 30%  

from the income towards income tax and calculated the loss of dependency  

with reference to the ‘net’ income.  

4. The claimants, on the other hand, contended before the High Court  

that as the deceased was holding a permanent job under a statutory body,  

with assured increments and career progression and was aged between 40 to  

50 years, as per the decision in  Sarla Verma (supra), the income ought to  

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have been increased by 30% keeping the  future prospects  in view.  They  

further contended that if the income had been increased by 30% by taking  

note of the future prospects and if 30% had been deducted towards income  

tax,  that  would  virtually  leave  the  income  assessed  by  the  Tribunal  

undisturbed and therefore, computation of compensation by the Tribunal by  

taking the monthly income as Rs.23,134/- without any deductions, did not  

call for any interference.  

5. The High Court noticed both the contentions. It held that 30% of the  

annual income should be deducted towards income tax as the income of the  

deceased was in the taxable bracket, in the absence of any evidence about  

the actual amount paid as income tax. It however did not take cognizance of  

the  contention of  the  claimants  (respondents  before  the  High Court)  that  

30%  should  have  been  added  to  the  income  towards  future  prospects,  

apparently on the ground that the claimants had not challenged the award of  

the Tribunal on that ground, and therefore they cannot find fault with it. As a  

consequence, the High Court ignored the error in the award of the tribunal  

pointed out by the claimants but only took note of the error pointed out by  

the insurer and reduced the compensation by 30%.  

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6. We are of the view that High Court committed an error in ignoring the  

contention of the claimants. It is true that the claimants had not challenged  

the award of the Tribunal on the ground that the Tribunal had failed to take  

note of future prospects and add 30% to the annual income of the deceased.  

But  the  claimants  were  not  aggrieved  by Rs.23,134/-  being taken  as  the  

monthly  income.  There  was therefore  no need for  them to  challenge the  

award of the Tribunal. But where in an appeal filed by the owner/insurer, if  

the  High  Court  proposes  to  reduce  the  compensation  awarded  by  the  

Tribunal, the claimants can certainly defend the quantum of compensation  

awarded by the Tribunal, by pointing out other errors or omissions in the  

award, which if taken note of, would show that there was no need to reduce  

the  amount  awarded  as  compensation.  Therefore,  in  an  appeal  by  the  

owner/insurer, the appellant can certainly put forth a contention that if 30%  

is to be deducted from the income for whatsoever reason, 30% should also  

be added towards future prospects, so that the compensation awarded is not  

reduced. The fact that claimants did not independently challenge the award  

will  not  therefore  come in  the  way  of  their  defending  the  compensation  

awarded,  on other  grounds.  It  would only mean that in an appeal  by the  

owner/insurer, the claimants will not be entitled to seek enhancement of the  

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compensation by urging any new ground, in the absence of any cross-appeal  

or cross-objections.

7. This principle also flows from Order 41 Rule 33 of the Code of Civil  

Procedure which enables an appellate court to pass any order which ought to  

have been passed by the trial court and to make such further or other order as  

the case may require,  even if the respondent had not filed any appeal or  

cross-objections. This power is entrusted to the appellate court to enable it to  

do complete justice between the parties. Order 41 Rule 33 of the Code can  

however  be  pressed  into  service  to  make  the  award  more  effective  or  

maintain the award on other grounds or to make the other parties to litigation  

to share the benefits or the liability, but cannot be invoked to get a larger or  

higher relief. For example, where the claimants seeks compensation against  

the owner and the insurer of the vehicle and the Tribunal makes the award  

only against the owner, on an appeal by the owner challenging the quantum,  

the appellate court can make the insurer jointly and severally liable to pay  

the compensation, along with the owner, even though the claimants had not  

challenged the non-grant of relief against the insurer. Be that as it may.  

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8. Where an appeal is filed challenging the quantum of compensation,  

irrespective  of  who files  the  appeal,  the  appropriate  course  for  the  High  

Court  is  to  examine  the  facts  and  by  applying  the  relevant  principles,  

determine the just  compensation.  If the compensation determined by it  is  

higher than the compensation awarded by the Tribunal, the High Court will  

allow the appeal, if it is by the claimants and dismiss the appeal, if it is by  

the owner/insurer.  Similarly,  if the compensation determined by the High  

Court is lesser than the compensation awarded by the Tribunal,  the High  

Court will dismiss any appeal by the claimants for enhancement, but allow  

any appeal by owner/insurer for reduction. The High Court cannot obviously  

increase the compensation in an appeal by owner/insurer for reducing the  

compensation,  nor  can  it  reduce  the  compensation  in  an  appeal  by  the  

claimants seeking enhancement of compensation.  

9. In  Sarla  Verma,  this  Court  held  that  where  the  deceased  had  a  

permanent job with a regular salary with provisions for periodic increases,  

30% of the current income could be added towards future prospects if the  

deceased was aged between 40 to 50 years. In Sarla Verma, this Court also  

stated that income tax paid should be deducted from the annual income to  

arrive  at  the  ‘income’  which  will  form  the  basis  for  calculating  the  

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compensation. The Tribunal did neither of these two things. If both are done,  

the result would be that there would be no change in the income arrived by  

the Tribunal for calculating the compensation. The 30% increase on account  

of future prospects and the 30% deduction on account of income tax would  

cancel  each  other,  resulting  in  the  ‘income’  remaining  unchanged.  As  a  

result,  the  compensation  awarded  by  the  Tribunal  also  would  remain  

unaltered.  

10. In view of the above, we allow this appeal, set aside the order of the  

High Court and restore the award of the Tribunal, though for other reasons.  

Parties to bear their respective costs.  

…………………………..J [R. V. Raveendran]

………………………….J [A. K. Patnaik]

New Delhi; July 29, 2011.  

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