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REPORTABLE           

IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO.1754 OF 2018 (Arising out of SLP (Civil) No.12416 of 2016)

Munusamy & Ors. …. Appellants                          

Versus

The Managing Director, Tamil Nadu State  ….Respondent Transport Corporation (Villupuram) Ltd.   

J U D G M E N T

A.M. Khanwilkar, J.

1. This appeal emanates from the judgment and order

passed by the  High Court of Judicature at  Madras dated

16.04.2013 in C.M.A. No.2819 of 2012. The High Court

allowed the prayer for grant of enhanced compensation

amount in favour of the appellants. The appellants seek

further enhancement of compensation amount on the ground

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that the  High Court  has  not  provided for future  prospects,

while computing the compensation  amount.  The  appellants

rely upon the recent decision of the Constitution Bench of this

Court in the case of  National Insurance Company Ltd. Vs.

Pranay Sethi and Ors.1, to buttress their submission.  

2. Before we deal with the grievance of the appellants, it is

apposite to reproduce the relevant  extract  of the impugned

judgment which reads thus:

“7. We have heard the learned counsel for the respondent on the above submission.  

8. In the  absence  of  specific  proof  of  employment, the Tribunal rightly has taken the earning of the deceased at Rs.4,000/­ per month and deducted 50% towards personal expenses since the deceased were bachelors. However, the proper multiplier to be adopted in the case must be 18, since the deceased were 21 and 20 years respectively. A sum of Rs.20,000/­ to each of the claimants towards loss of love and affection and a further sum of Rs.5,000/­ towards transport expenses were granted.  

9. Accordingly, in C.M.A. No.2819 of 2012 compensation payable would be as follows:

(a) Loss of Dependency  Rs.4,32,000/­ (Rs.4,000/­×12×18)

(b) Loss of love and affection  Rs.   60,000/­ (c) Transport Rs.  5,000/­ (d) Funeral Rs.  2,000/­

1 AIR 2017 SC 5157

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(e) Loss of estate Rs.  2,500/­

Total = Rs.5,01,500/­”

3. On perusal of the judgment under appeal, it  is evident

that the  High  Court  has  not  provided for future  prospects

while  computing the  compensation  amount  under the  head

‘loss of dependency’. The necessity to provide future prospects

has been expounded by the Constitution Bench of this Court

in  National Insurance Company Ltd.  (supra). It will be

useful to  reproduce paragraph No.59 of the  said judgment,

which reads thus:  

“59. Having bestowed our anxious consideration, we are disposed to think when we accept the principle of standardization, there is really no rationale not to apply the said principle to the self­employed or a person who is on  a fixed  44  salary.  To follow  the  doctrine  of  actual income at the time of death and not to add any amount with regard to future prospects to the income for the purpose of determination of multiplicand would be unjust. The determination of income  while computing compensation has to include future prospects so that the method will come within the  ambit  and sweep  of just compensation as postulated under Section 168 of the Act. In case of  a deceased who had held a permanent  job with inbuilt grant of annual increment, there is an acceptable certainty. But to state that the legal representatives of a deceased who was on a fixed salary would not be entitled to the benefit of future prospects for the  purpose  of computation  of compensation  would  be inapposite. It is because the criterion of distinction

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between the two in that event would be certainty on the one hand and staticness on the other. One may perceive that the comparative  measure is certainty on the one hand and uncertainty on the other but such a perception is fallacious. It is because the price rise does affect a self­ employed person; and that apart there is always an incessant effort to enhance one’s income for sustenance. The purchasing capacity of a salaried person on permanent job when increases because of grant of increments and pay revision or for some other change in service conditions, there is always a 45 competing attitude in the private sector to enhance the salary to get better efficiency from the employees. Similarly, a person who is  self­employed is  bound to garner his resources and raise his charges/fees so that he can live with same facilities. To have the perception that he is likely to remain static and his income to remain stagnant is contrary to the fundamental concept of  human attitude which always intends to live with dynamism and move and change with the time. Though it may seem appropriate that there cannot be certainty in addition of future prospects to the existing income unlike in the case of a person having a permanent job, yet the said perception does not  really  deserve acceptance.  We are inclined to think that there can be some degree of difference as regards the percentage that is meant for or applied to in respect of the legal representatives  who claim on behalf of the deceased who had a permanent job than a  person  who  is  self­employed  or  on  a fixed salary. But not to apply the principle of standardization on  the  foundation of  perceived  lack of  certainty would tantamount to remaining oblivious to the  marrows of ground reality. And, therefore, degree­test is imperative. Unless the degree­test is applied and left to the parties to adduce evidence to establish, it  would be  unfair and inequitable. The degree­test has to have the inbuilt concept of 46 percentage. Taking into consideration the cumulative factors, namely, passage of time, the changing society, escalation of price, the change in price index, the human attitude to follow a particular pattern of

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life, etc., an addition of 40% of the established income of the deceased  towards  future  prospects  and where  the deceased was below 40 years an addition of 25% where the deceased was between the age of 40 to 50 years would be reasonable.”

Again, in the concluding paragraph No.61 the Court observed

thus:

“61. In  view of the  aforesaid  analysis,  we proceed to record our conclusions:­  

* * *

(iii) While determining the income, an addition of 50% of actual salary to the income of the deceased towards future prospects, where the deceased had a permanent job and was below the age of 40 years, should be made. The addition should be 30%, if the age of the deceased was 48 between 40 to 50 years. In case the deceased was between  the  age  of  50  to  60  years, the addition should be 15%. Actual salary should be read as actual salary less tax.  

(iv) In case the deceased was self­employed or on a fixed salary, an  addition of 40%  of the established income should be the warrant where the deceased was below the age of 40 years. An addition of 25%  where the deceased was between the age of 40 to 50 years and 10% where the deceased was between the age of 50 to 60 years should be regarded as the necessary method of computation. The established income means the income minus the tax component.”  

4. On 03.03.2007, the deceased (Palani), who was only

around 21 years of age at the time, was riding a motorcycle

bearing Registration No. TN­22 AP 5092 along with his friend,

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one Haridass as a pillion rider, from Tambaram to

Chengalpattu on GST Road, Maraimalai Nagar, opposite

Vikram Hotel, when they collided with a bus bearing

Registration No. TN­21 N 0943 belonging to the respondent

Transport Corporation, which was driven in a rash and

negligent manner. The deceased was unmarried and working

as a contract worker in Hyundai Car Company,

Sriperumbudur. Applying the dictum of the Constitution

Bench referred to above, the appellants are justified in

insisting for grant of future prospects at the rate of 40% of the

established income. The High Court has held that the earning

of the deceased at the relevant time can be taken as

Rs.4,000/­ per month. The High Court did not provide 40%

towards future  prospects on the established income of the

deceased. Thus, the monthly loss of dependency, in the facts

of the present case would be Rs.4,000 + 1,600 = Rs.5,600/­.  

5. In other words, instead of amount awarded by the High

Court towards loss of dependency in the sum of Rs.4,32,000/­,

the same  will stand  modified to  Rs.6,04,800/­ (Rupees six

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lakh four thousand eight hundred only) along with interest at

the rate of 9% (nine percent) per annum. We are not

disturbing the other  directions given  by the  High  Court in

respect of other heads.  

6. Accordingly, the respondent Transport Corporation must

deposit the additional amount of compensation of

Rs.1,72,800/­  (Rupees one lakh seventy two thousand eight

hundred only) along with interest, as awarded in the preceding

paragraph,  within  a  period of  eight  weeks  from the  date  of

receipt of the copy of this judgment in the Court of Additional

District & Sessions Judge, Fast Track Court­IV, Chennai

(Motor Accident Claims Tribunal, Chennai).  

7. In other words, the compensation payable to the

appellants would be as follows:

(a) Loss of Dependency  Rs.6,04,800/­ [Rs.5,600 – 50% of 5600)×12×18]

(b) Loss of love and affection  Rs.   60,000/­ (c) Transport Rs.   5,000/­ (d) Funeral Rs.   2,000/­ (e) Loss of estate Rs.   2,500/­

Total = Rs.6,74,300/­

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8. As a result, the Appeal stands allowed. The compensation

awarded by the High Court is enhanced from Rs.5,01,500/­ to

Rs.6,74,300/­  [Rupees six lakh seventy four thousand three

hundred only]. The respondent Transport Corporation is

directed to deposit the entire award amount as indicated above

with interest at 9% (nine percent) per annum less the amount

already deposited if any, within a period of eight weeks from

the date of receipt of a copy of this judgment and the

appellants shall be entitled to the compensation in the

proportion specified by the Tribunal. The first and second

appellants are entitled to withdraw the amount deposited

upon verification of due application and the share of the third

appellant (minor) shall be deposited in any of the nationalised

banks till she attains majority and the second

claimant/mother is entitled to withdraw interest thereon once

in three months towards meeting the needs of the minor. Upon

turning 18, the minor appellant is  entitled to withdraw her

respective share.

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9.    Accordingly, the appeal is allowed in the

aforementioned terms with no order as to costs.    

.………………………….CJI.         (Dipak Misra)

…………………………..….J.                  (A.M. Khanwilkar)

…………………………..….J.        (Dr. D.Y. Chandrachud)

New Delhi; February 09, 2018.