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REPORTABLE

IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO.  2836    OF 2015 (Arising out of S.L.P. (Civil) No. 6016/2014)

SHASHIKALA & ORS.                   … Appellants

Versus

GANGALAKSHMAMMA & ANR.           ..Respondents

J U D G M E N T

R. BANUMATHI, J  .   

Leave granted.

2. This appeal arises out of judgment in M.F.A. No.136/2009  

(MV) dated 15.7.2013 passed by the High Court of Karnataka, in and  

by which, the High Court modified the award  passed by the Motor  

Accident  Claims Tribunal,   Bangalore  (for  short  ‘the tribunal’)  by  

enhancing the compensation to Rs.14,69,372/- from Rs.7,85,000/-  

awarded by the tribunal.   

3. Appellant  No.1  is  the  wife,  appellants  No.2  to  4  are  

children and appellants No.5 to 6 are the parents of the deceased

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Late Shri H.S. Ravi.  The appellants have filed a claim petition under  

the Motor Vehicles Act on account of death of deceased Sri H.S. Ravi  

who had met with an accident on 14.12.2006.  On the fateful day,  

the deceased Ravi was proceeding in a motor cycle as a pillion rider.  

The rider of the motor cycle applied sudden brake due to which  

both rider and pillion rider fell  down and both sustained grievous  

injuries.   The rider of the motor cycle died on the spot.   Ravi who  

was a pillion rider sustained grievous injuries and was immediately  

rushed to the hospital.  However, after six days i.e. on 20.12.2006,  

deceased–Ravi succumbed to the injuries.  Deceased–Ravi was aged  

45 years and he was engaged in a transport business of supplying  

newspapers from the Head Office destination to other places.  The  

deceased was paying income-tax and was an income-tax assessee.  

Stating  that  the  deceased  was  the  only  earning  member  of  the  

family and that they have lost the support of the bread winner of  

the  family,  the  claimants  filed  a  claim  petition  claiming  

compensation of  Rs.33,90,000/-.

4. The tribunal has taken the income of the deceased–Ravi  

at Rs.75,000/- per annum and deducting 1/3rd towards the  personal  

expenses  of   the  deceased,  the  tribunal  calculated  the   loss  of  

dependncy   at  Rs.50,000/-  per  annum.   Taking  the  age  of  the

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deceased  as  46  years,  the  tribunal  adopted  multiplier  13  and  

awarded compensation of Rs.6,50,000/-(Rs.50,000/- x 13) towards  

loss  of  dependency.   In  addition  to  this,  the  tribunal  awarded  

conventional  damages  of  Rs.35,000/-(Rs.10,000/-  towards  loss  of  

consortium,  Rs.10,000/-  towards  loss  of  love  and  affection,  

Rs.10,000/- towards loss of estate and Rs.5,000/- towards funeral  

expenses) and Rs.1,00,000/- towards medical expenses as against  

the claim of Rs.1,82,150/-.   Thus,  the tribunal  has awarded total  

compensation of Rs.7,85,000/-.   

5. Aggrieved  by  the  said  award  of  the  tribunal,  the  

appellants filed appeal before the High Court seeking enhancement  

of  compensation.  The  High  Court  modified  the  award  by  

recalculating the income of the deceased.  Taking the income tax  

returns  of  the  deceased  for  the  assessment  years  2005-06  and  

2006-07,  the High Court calculated average of the same  and taken  

the income at Rs. 1,55,812/- per annum.   After making deductions  

towards  income-tax,  professional  tax  and  income  from  house  

property,  the High Court calculated the net income of deceased at  

Rs.1,17,831/- per annum.  The High Court deducted 1/4th towards  

personal  expenses  and  to  the  remaining  amount  of  Rs.88,373/-  

applied multiplier of 14 and accordingly re-determined the loss of

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dependency at Rs.12,37,222/- as against Rs.6,50,000/- awarded by  

the tribunal.   Awarding conventional damages at Rs. 45,000/- and  

medical  expenses at  Rs.1,87,150/-,  the High Court enhanced the  

compensation to Rs.14,69,372/-.   Still aggrieved by the quantum of  

compensation, appellants have filed this appeal.       

6. Learned counsel for the appellants–claimants contended  

that the compensation awarded by the High Court was neither just  

nor  reasonable.   It  was  submitted  that  the  High  Court  erred  in  

calculating  the  average  of  the  income  from  the  income  of  the  

assessment years 2005-06 and 2006-07.  It was further submitted  

that as per the decision in the case of  Rajesh and Ors. vs.  Rajbir  

Singh  & Ors1., the High Court ought to have made an addition of  

30% of the net income of the deceased in computation  of  future  

prospects as in the  instant case deceased–Ravi was being in the  

age group of 40-50 years.  It was also submitted that the courts  

below  ought  to  have  awarded  Rs.1,00,000/-  towards  loss  of  

consortium  and  substantial   amount  of  compensation  to  the  1

(2013) 9 SCC 54

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children-appellants No. 2 to 4 towards loss of love and affection.    

7. Learned counsel  for  the respondent–insurance company  

submitted that in Reshma Kumari & Ors. vs. Madan Mohan & Anr2.,   

this Court has held that where the deceased was self-employed,  it  

would be appropriate not to make any addition to income for  future  

prospects  and  the  High  Court  rightly  declined  to  make  addition  

towards future prospects.  It was submitted that the deceased  was  

engaged in the business  and was  not earning  fixed income and  

has filed returns for different years showing different income viz.,  

gross income of Rs.1,08,713/- for the assessment year 2005-06 and  

Rs.2,02,911/- for the assessment year 2006-07 which only indicates  

the disparity in income of the deceased.  To strike a balance, High  

Court  has  rightly  taken  the  average  and  rightly  deducted  10%  

towards income tax and other deductions.   It was submitted that  

the compensation awarded by the High Court is just and reasonable  

and  no  grounds  have  been  made  out  by  the  claimants  for  

enhancement of the compensation whatsoever.   

8. I  have  carefully  considered  the  rival  contentions  and  

perused  the  impugned  judgment  as  also  the  award  and  the  

materials on record.        

9. The deceased was doing transport business of supplying  

2 (2013) 9 SCC 65

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newspapers from the Head Office to the other destinations as per  

the agreement entered into between the group of newspapers and  

himself.   It is also not in dispute that the deceased was an income  

tax  assessee  and  he  has  filed  income  tax  returns  for  the  

assessment years 2005-06 and 2006-07.  The claimants had filed  

income  tax returns of the deceased for the assessment years 2005-

06  and  2006-07  with  gross  total  income  of  Rs.1,08,713/-  and  

Rs.2,02,911/-  respectively   including  the  income from the  house  

property.   Total income of both the years comes to Rs.3,11,624/-  

and the High Court  has taken the average of  it  which comes to  

Rs.1,55,812/-. High Court deducted 10% of the said amount towards  

income-tax and taken the balance amount to  Rs.1,40,231/-.  The  

High Court had further deducted Rs.2,400/- towards professional tax  

and income from the house property shown as Rs.20,000/- and the  

net income was calculated at Rs.1,17,831/-.   Since the claimants  

are six in numbers as per the decision in  Sarla Verma & Ors. vs.  

Delhi  Transport  Corporation & Anr3.,   one-fourth(1/4th  )  deduction  

was made towards personal expenses.  The loss of dependency was  

thus calculated at Rs.88,373/-.  Taking  the age of  deceased at 45  

years, the  High Court adopted multiplier 14 and calculated the total  

loss of dependency at Rs.12,37,222/-.   

3 (2009) 6 SCC 121

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10. The deceased was aged 45 years and was doing transport  

business.  Though the claimants have filed income tax returns for  

two assessment  years 2005-06 and 2006-07, as per the income tax  

returns  for  the  year  2006-07,  the  income  of  the  assessee  was  

Rs.2,02,911/-.  Tribunal did not take the income of the deceased for  

the assessment year 2006-07 on the ground that only xerox copy  

was filed and the claimants  have failed to  examine  income-tax  

authorities to prove the same.  Instead of taking the income of the  

deceased as per the assessment year 2006-07, the High Court has  

chosen to calculate the average of the income for two assessment  

years 2005-06 and 2006-07.  Considering the age of the deceased  

and the nature of business he was doing,  in my considered view,  

the High Court was not justified in so taking the average of income  

of the two assessment years.  The deceased was aged 45 years and  

doing business.  Admittedly, he was also owning  agricultural lands.  

Even though agricultural income was not shown in the income tax  

return, it emerges from the evidence that the deceased was also  

doing  agricultural work.

11. Onbehalf  of  the  claimants,  reliance   was  placed  upon  

Rajesh’s  case (supra)  to  contend that   even in  the case of  self-

employed persons or persons  with  fixed wages, there  must be  an

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addition to the income of the deceased towards future prospects.  In  

Sarla Verma’s case (supra), this Court held that in case of salaried  

persons additions have to be made depending upon the age of the  

deceased to the actual  income of the deceased while computing  

future prospects.  In Santosh Devi  vs. National Insurance  Company  

Ltd. & Ors4.,  Sarla Verma  was explained and it was held  that the  

benefit of making addition to total income of persons who are self-

employed or  getting fixed wages was permissible.   

12. The principles laid down in  Santosh Devi’s case (supra)  

were  reiterated  in Rajesh and Ors. vs. Rajbir Singh  & Ors. (supra),  

wherein this Court held that  the case of self-employed persons or  

persons with fixed wages, the actual income of the deceased must  

be enhanced for purpose of computation viz.(i) by 50% where his  

age was below 40 years;  (ii)  by 30% where he belonged to age  

group of  40 to 50 years, and  (iii) by 15% where he was between  

age group  of 50 to 60 years.  However, it was observed that no  

such  addition/enhancement  was  permissible  where  deceased  

exceeded the age of 60 years.  Further, in Rajesh (supra), this Court  

while reiterating the meaning of “just compensation” with reference  

to  settled  principles  observed  that,  at  the  time  of  fixing  such  

compensation,  the  court  should  not  succumb  to  the  niceties  or  

4  (2012) 6 SCC 421

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technicalities  to grant just compensation in favour of the claimant.  

It is the duty of the court to equate, as far as possible, the misery  

on  account  of  the  accident  with  the  compensation  so  that  the  

injured or the dependants should not face the vagaries of life on  

account of discontinuance of the income earned by the victim, and  

the  court’s  duty  is  to  award  just,  equitable,  fair  and  reasonable  

compensation, irrespective of claim made.         

13. Considering  the  question  of  making  addition  to  the  

income of the deceased towards the future prospects in cases of  

salaried persons  vis-à-vis in  cases where the deceased was self-

employed or on a fixed wage/salary,   in Reshma Kumari and Ors.   

vs. Madan Mohan and Anr5.,  this Court held as under :-   

“39.   The  standardization  of  addition  to  income for  future  prospects  shall  help  in  achieving  certainty  in  arriving  at  appropriate compensation.  We approve the method that an  addition of 50% of actual salary be made to the actual salary  income of the deceased towards future prospects where the  deceased had a permanent job and was below 40 years and  the addition should be only 30% if the age of the deceased  was 40 to 50 years and no addition should be made where  the age of the deceased is more than 50 years.  Where the  annual income is in the taxable range, the actual salary shall  mean  actual  salary  less  tax.   In  the  cases  where  the  deceased was self-employed or was on a fixed salary without  provision  for  annual  increments,  the  actual  income at  the  time  of  death  without  any  addition  to  income  for  future  prospects will  be appropriate.  A departure from the above  principle can only be justified in extraordinary circumstances  and very exceptional cases.”

5 (2013) 9 SCC 65

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14. The decision in  Reshma Kumari’s case was rendered at  

earlier point of time (2.04.2013) and Rajesh’s case was pronounced  

subsequently  (12.04.2013).   Pointing  out  the  divergent  opinion  

expressed  in  the  above  cases  and  expressing  the  view  that  

regarding the manner of addition of income for future prospects in  

case  of  self-employed  or  on  fixed  wages  there  should  be  an  

authoritative pronouncement, in  National Insurance Company  vs.  

Pushpa {S.L.P (C) No.16735/2014}, the matter has been referred to  

a larger Bench by the order dated 2.07.2014, in which one of us  

(Hon’ble  Mr.  Justice  V.  Gopala  Gowda)  was  a  member,  which  is  

pending consideration.     

15. Section  168  of  the  Motor  Vehicles  Act  enjoins  the  

courts/tribunals  to  make  award  determining  the  amount  of  

compensation which appears to be just and reasonable.  The wide  

amplitude  of  such  power  does  not  empower  the  tribunal  to  

determine  the  compensation  arbitrarily,   although  the  Act  is  a  

beneficial legislation, it can neither be allowed as a source of profit  

nor  as  a  windfall  to  the  persons   affected.   Determination  of  

compensation has to be fair and reasonable and acceptable by the  

legal standards.  In Nagappa vs. Gurudayal Singh & Ors6., this Court  

held as under:-

6 (2003) 2 SCC 274

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”10. Thereafter, Section 168 empowers the Claims Tribunal to  “make an award determining the amount of  compensation  which  appears  to  it  to  be  just”.  Therefore,  the  only  requirement for determining the compensation is that it must  be  “just”.  There  is  no  other  limitation  or  restriction  on  its  power for awarding just compensation”.  

The  same  principle  was  reiterated  in  the  decisions  of  Oriental  

Insurance Company Ltd. vs. Mohd. Nasir7 and Anr., and  Ningamma  

and Anr. vs. United India Insurance Company Ltd8.    

16.     Without adverting to the issue whether additions are  

to be made towards future prospects or not, as it is obligatory on  

the part of the Court to award just compensation, considering the  

age of the deceased and the nature of business he was doing, in my  

view,  the income of  the deceased  as  stated in  the income tax  

return  for the year 2006-07 i.e. Rs. 2,02,911/- may be taken as the  

income of  the  deceased.  Ten per cent of the said amount i.e.  

Rs.20,290/-  is  to  be  deducted  towards  income   tax  and  the  

remaining comes to Rs.1,82,620/-.  The amount to be deducted for  

professional tax is Rs.2,400/- and after deducting the same,  the  

balance comes out to Rs. 1,80,220/-.  The income from the house  

property for the year 2006-07 is shown to be Rs.20,000/- and  after  

deducting  the  same,  the  net  amount  comes  to  Rs.1,60,220/-.  

Deducting  1/4th (one/fourth)  towards  personal  expenses  which  

7 (2009) 6 SCC 280 8 (2009) 13 SCC 710

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comes  out  to  Rs.40,055/-,   the  loss  of  dependency/loss  of  

contribution is arrived at Rs.1,20,165/- per annum.

17. Insofar as appropriate multiplier, the date of birth of the  

deceased as per  driving licence was 16.6.1961.   On the date of  

accident  i.e.  14.12.2006,  the  deceased  was  aged  45  years,   5  

months and 28 days and the tribunal has taken the age as 46 years.  

Since the deceased  has completed only 45 years, the High Court  

has rightly taken the age of the deceased as 45 years and adopted  

multiplier 14 which is the appropriate multiplier and the same is  

maintained.   Total  loss  of  dependency  is  calculated  at  

Rs.16,82,310/- (Rs.1,20,165/- x  14).  

18. With  respect  to  the  award  of  compensation  towards  

conventional  heads,  the  tribunal   has  awarded  only  Rs.10,000/-  

towards  loss  of   consortium  and  Rs.10,000/-  towards  love  and  

affection, Rs.10,000/- towards loss of estate and Rs.5,000/- towards  

funeral  charges.  The  High  Court  totally  awarded  Rs.45,000/-  

towards  conventional  heads  such as loss of estate, loss of love  

and affection, loss of consortium, transportation of dead body and  

funeral  expenses.   In  various  decisions,  this  Court  has  held  that  

substantial  compensation is  to  be awarded towards conventional  

damages like loss of  consortium, loss of love and  affection and

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funeral  expenses.  In  Rajesh  And  Ors. vs.   Rajbir  Singh  &  Ors.,  

(supra)  and  Jiju Kuruvila & Ors.  vs.  Kunjujamma Mohan & Ors9.,  

this Court has awarded substantial amount of Rs.1,00,000/- towards  

loss  of  consortium  and  Rs.1,00,000/-  towards   loss  of  love  and  

affection and Rs.25,000/- towards funeral expenses.  Following  the  

same,  Rs.1,00,000/-  is  awarded  towards  loss  of  consortium  and  

Rs.1,00,000/-  towards  loss  of  love  and  affection  to  the  minor  

children and Rs.25,000/- towards funeral expenses and Rs.25,000/-  

towards  loss  of  estate  totalling  to  Rs.2,50,000/-.    Thus,  the  

compensation  awarded  to  the  claimants  is  enhanced  to  

Rs.19,32,310/-.   

19. In the result, the compensation awarded to the claimants  

is  enhanced and the compensation is awarded at Rs.19,32,310/-.  

The  enhanced  compensation  of  Rs.4,62,938/-  is  payable  with  

interest at the rate of 9% per annum from the date of the claim  

petition till the date of realisation.  Out of enhanced compensation  

of Rs.4,62,938/-, Rs.3,12,938/- alongwith accrued interest shall be  

paid  to  the  first  appellant-wife  of  the  deceased,  balance  

Rs.1,50,000/-  alongwith  accrued  interest  shall  be  apportioned  

amongst  the  claimants  2  to  4.  If  the  appellants  2  to  4  are  still  

minors claimants, their share of the enhanced compensation shall  

9 (2013) 9 SCC 166

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be invested in a nationalized bank on the same terms as directed by  

the High Court.   In case, the appellants No. 2 to 4 have already  

attained majority, they are permitted to withdraw their entire share  

of apportioned compensation.

20. The impugned judgment of the High Court is modified and  

the appeal is allowed.  In the facts and circumstances of the case,  

no order as to costs.   

...……………………J.                                           (R. BANUMATHI)   

New Delhi; March 13, 2015         

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REPORTABLE   IN THE SUPREME COURT OF INDIA

         CIVIL APPELLATE JURISDICTION CIVIL APPEAL NO. 2836 OF 2015  

(Arising Out of SLP (C) No. 6016 of 2014)

SHASHIKALA & ORS.                    ….APPELLANTS          VERSUS

 GANGALAKSHMAMMA & ANR.               ……RESPONDENTS

J U D G M E N T

V. Gopala Gowda, J.

I have perused the judgment written by my  

learned Sister Mrs.Justice R. Banumathi in the  

above-mentioned  matter.  I  am  in  respectful  

agreement with all the points which are answered  

in  favour  of  the  appellants-claimants,  except  

for  the  non-consideration  on  the  question  of  

making addition to the income of the deceased  

towards  the  future  prospects  in  the  case  of  

salaried  persons  vis-à-vis  where  the  deceased  

was  self  employed  or  on  fixed  wages  after  

adverting  to  the  judgments  of  this  Court  in  

Reshma Kumari & Ors.  v. Madan Mohan & Anr.1,  

1

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Rajesh  &  Ors.  v.  Rajbir  Singh  &  Ors.2,  the  relevant  paragraphs  of  which  are  extracted  

hereinafter.

2.  After considering the legal principles laid  

down by this Court in the case of (1) General  

Manager,  Kerala  State  Road  Transport  

Corporation,  Trivandrum  &  Ors.  v. Susamma  

Thomas  &  Ors.3 ; (2)  Sarla Dixit & Anr.  v.  

Balwant Yadav & Ors.4  and (3) Abati Bezbaruah  

v.  Dy. Director General, Geological Survey of  

India & Anr.5,  this Court, on the question of  

future prospects in the case of Sarla Verma &  

Ors. v. Delhi Transport Corporation & Anr.6 has  

held as follows:-

“24. In  Susamma Thomas, this Court  increased the income by nearly 100%,  in  Sarla  Dixit the  income  was  increased only by 50% and in Abati  Bezbaruah the income was increased by  a  mere  7%.  In  view  of  the  

(2013) 9 SCC 65 2  (2013) 9 SCC 54 3  (1994) 2 SCC 176  4  (1996) 3 SCC 179 5  (2003) 3SCC 148 6  (2009) 6 SCC 121

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imponderables  and  uncertainties,  we  are in favour of adopting as a rule  of  thumb,  an  addition  of  50%  of  actual salary to the actual salary  income of the deceased towards future  prospects, where the deceased had a  permanent job and was below 40 years.  (Where the annual income is in the  taxable  range,  the  words  “actual  salary”  should  be  read  as  “actual  salary  less  tax”).  The  addition  should be only 30% if the age of the  deceased was 40 to 50 years. There  should be no addition, where the age  of  the  deceased  is  more  than  50  years.  Though  the  evidence  may  indicate  a  different  percentage  of  increase,  it  is  necessary  to  standardise  the  addition  to  avoid  different yardsticks being applied or  different  methods  of  calculation  being adopted. Where the deceased was  self-employed  or  was  on  a  fixed  salary (without provision for annual  increments,  etc.),  the  courts  will  usually take only the actual income  at  the  time  of  death.  A  departure  therefrom should be made only in rare  and  exceptional  cases  involving  special circumstances.”

3.   Interestingly,  in  Reshma  Kumari  &  Ors.  

(supra),  which  was  ultimately  decided  in  

2.4.2013 by a three judge Bench, which arose  

out of the matter referred by the order of two  

judge  Bench  dated  23.7.2009.  That  order  had  

referred two questions:-

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“(1)  Whether  multiplier  specified in the Second Schedule  appended  to  the  Motor  Vehicles  Act, 1988 (for short “the 1988  Act”)  should  be  scrupulously  applied in all cases? And  

(2) Whether for determination of  the  multiplicand,  the  1988  Act  provides  for  any  criterion,  particularly  as  regards  determination  of  future  prospect.”

4.  The referring Bench (in  Reshma Kumari &  

Ors.-supra) had in fact, envisioned a situation  

where  future  prospects  in  private  employment  

too,  were  to  be  taken  into  consideration  

(although  in  a  slightly  different  context).  

The relevant paragraph of the referring Bench  

of this Court in the case of  Reshma Kumari &  

Ors. is extracted hereunder:-  

“46. In  the  Indian  context  several other factors should be  taken  into  consideration  including  education  of  the  dependants  and  the  nature  of  job.  In  the  wake  of  changed  societal  conditions  and  global  scenario,  future  prospects  may  have  to  be  taken  into  consideration  not  only  having  regard  to  the  status  of  the

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employee,  his  educational  qualification;  his  past  performance  but  also  other  relevant  factors,  namely,  the  higher salaries and perks which  are being offered by the private  companies these days…”  

Ultimately,  the  question  of  future  prospects  

was decided in the Larger Bench judgment of  

this  Court  in  Reshma  Kumari’s  case.   The  

relevant paragraph is extracted hereunder:

“39. The  standardisation  of  addition  to  income  for  future  prospects shall help in achieving  certainty  in  arriving  at  appropriate  compensation.  We  approve  the  method  that  an  addition of 50% of actual salary  be  made  to  the  actual  salary  income  of  the  deceased  towards  future  prospects  where  the  deceased had a permanent job and  was  below  40  years  and  the  addition  should  be  only  30%  if  the age of the deceased was 40 to  50 years and no addition should  be  made  where  the  age  of  the  deceased is more than 50 years.  Where the annual income is in the  taxable range, the actual salary  shall  mean  actual  salary  less  tax.  In  the  cases  where  the  deceased was self-employed or was  on  a  fixed  salary  without  provision for annual increments,  the actual income at the time of  death  without  any  addition  to

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income for future  prospects will  be appropriate. A departure from  the above principle can only be  justified  in  extraordinary  circumstances  and  very  exceptional cases.”

 5.  In  Santosh Devi  v. National Insurance  

Co. Ltd. & Ors.7, a two judge Bench of this  

Court had earlier doubted the decision with  

respect to future prospects in  Sarla Verma  

(supra) and interpreted the limiting of grant  

of compensation amount to a  person who is  

self-employed,  privately  employed  or  is  

engaged on fixed wages if he /she becomes  

victim  of  an  accident.  The  relevant  

paragraphs  as  discussed  by  this  Court  in  

Santosh Devi’s case is extracted hereunder:-

“14. We  find  it  extremely  difficult to fathom any rationale  for the observation made in para  24 of the judgment in Sarla Verma  case that where the deceased was  self-employed  or  was  on  a  fixed  salary  without  provision  for  annual increment, etc., the courts  will usually take only the actual  income at the time of death and a  departure from this rule should be  made only in rare and exceptional  

7   (2012) 6 SCC 421

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cases  involving  special  circumstances.  In  our  view,  it  will  be  naïve  to  say  that  the  wages  or  total  emoluments/income  of a person who is self-employed  or  who  is  employed  on  a  fixed  salary  without  provision  for  annual  increment,  etc.,  would  remain  the  same  throughout  his  life.

15. The rise in the cost of living  affects everyone across the board.  It does not make any distinction  between rich and poor. As a matter  of  fact,  the  effect  of  rise  in  prices which directly impacts the  cost of living is minimal on the  rich and maximum on those who are  self-employed  or  who  get  fixed  income/emoluments.  They  are  the  worst  affected  people.  Therefore,  they  put  in  extra  efforts  to  generate  additional  income  necessary  for  sustaining  their  families.

16. The salaries of those employed  under  the  Central  and  State  Governments  and  their  agencies/instrumentalities  have  been revised from time to time to  provide  a  cushion  against  the  rising prices and provisions have  been  made  for  providing  security  to  the  families  of  the  deceased  employees.  The  salaries  of  those  employed  in  private  sectors  have  also  increased  manifold.  Till  about  two  decades  ago,  nobody  could have imagined that salary of  Class  IV  employee  of  the  Government  would  be  in  five

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figures  and  total  emoluments  of  those  in  higher  echelons  of  service will cross the figure of  rupees one lakh.

17. Although  the  wages/income  of  those  employed  in  unorganised  sectors  has  not  registered  a  corresponding increase and has not  kept pace with the increase in the  salaries  of  the  government  employees  and  those  employed  in  private sectors, but it cannot be  denied  that  there  has  been  incremental  enhancement  in  the  income  of  those  who  are  self- employed and even those engaged on  daily basis, monthly basis or even  seasonal  basis.  We  can  take  judicial notice of the fact that  with a view to meet the challenges  posed by high cost of living, the  persons  falling  in  the  latter  category periodically increase the  cost  of  their  labour.  In  this  context, it may be useful to give  an example of a tailor who earns  his  livelihood  by  stitching  clothes.  If  the  cost  of  living  increases  and  the  prices  of  essentials  go  up,  it  is  but  natural  for  him  to  increase  the  cost of his labour. So will be the  cases  of  ordinary  skilled  and  unskilled  labour,  like,  barber,  blacksmith, cobbler, mason, etc.

18. Therefore,  we  do  not  think  that while making the observations  in the last three lines of para 24  of Sarla Verma judgment, the Court  had  intended  to  lay  down  an  absolute rule that there will be

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no  addition  in  the  income  of  a  person who is self-employed or who  is  paid  fixed  wages.  Rather,  it  would be reasonable to say that a  person who is self-employed or is  engaged on fixed wages will also  get  30%  increase  in  his  total  income over a period of time and  if he/she becomes the victim of an  accident  then  the  same  formula  deserves  to  be  applied  for  calculating  the  amount  of  compensation.”

6.  In  Rajesh & Ors.  (supra), a three judge  

Bench decision of this Court, which took into  

consideration the decisions of this Court in  

the cases of  Sarla Verma & Ors.  and Santosh  

Devi (supra) held thus:

“8. Since, the Court in  Santosh  Devi case actually  intended  to  follow the principle in the case  of salaried persons as laid down  in  Sarla Verma  case and to make  it applicable also to the self- employed  and  persons  on  fixed  wages, it is clarified that the  increase  in  the  case  of  those  groups is not 30% always; it will  also have a reference to the age.  In  other  words,  in  the  case  of  self-employed  or  persons  with  fixed  wages,  in  case,  the  deceased  victim  was  below  40  years, there must be an addition  of  50%  to  the  actual  income  of  the  deceased  while  computing

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future prospects. Needless to say  that the actual income should be  income after paying the tax, if  any.  Addition  should  be  30%  in  case the deceased was in the age  group of 40 to 50 years.”

7.  Further, in National Insurance Company Ltd.  

v. Pushpa, this Court in SLP No. 16735 of 2014  

(arising out of CC No. 8058 of 2014) vide order  

dated 2.7.2014 made a reference to a larger  

Bench in view of the seeming conflict between  

the  legal  principles  with  respect  to  future  

prospects laid down by this Court in the cases  

of  Reshma  Kumari  &  Ors.  and Rajesh  &  Ors.  

(supra). The relevant para from the  National  

Insurance  Company  case  (supra)  is  extracted  

hereunder:-

“Be it noted, though the decision  in  Reshma  (supra) was rendered at  earlier of time, as is clear, the  same has not been noticed in Rajesh  (supra) and that is why divergent  opinions  have  been  expressed.  We  are of the considered opinion that  as regards the manner of addition  of income of future prospects there  should  be  an  authoritative  pronouncement. Therefore, we think  it appropriate to refer the matter  to a larger Bench.”

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Though, I am a party to the above reference, at  

the same time, it is worth mentioning that the  

reference  even  in  the  case  of  a  perceived  

conflict or disagreement with the views of a  

two judge (or even a three judge) Bench does  

not permit a lower Bench formation to refer the  

matter straightway to a five Judge Bench. This  

principle  was  stated  in  Bharat  Petroleum  

Corporation  Ltd.  v. Mumbai  Shramik  Sangha  &  

Ors.8. In that judgment, the Constitution Bench  

held that a decision of a Constitution Bench  

binds Benches of two and three learned Judges  

of  this  Court  and  that  judicial  discipline  

obliges them to follow it, regardless of their  

doubts about its correctness. At the most, they  

can direct that the matter to be heard by a  

Bench  of  three  learned  Judges.  In  Pradip  

Chandra Parija & Ors. v. Pramod Chandra Patnaik  

&  Ors.9,  a  Bench  of  two  learned  judges  

expressed reservations with the judgment  of a  

three judge Bench and directed the matter to be  8  (2001) 4 SCC 448 9  (2002) 1 SCC 1

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placed before a larger Bench of five judges.  

The Constitution Bench held that the rule of  

‘judicial discipline and propriety’  as well as  

the theory of precedents permitted only a Bench  

of the same quorum to question the correctness  

of the decision by another Bench of co-ordinate  

strength upon which the matter can be placed  

for consideration by a Bench of larger quorum.  

A Bench of lesser quorum cannot thus, express  

disagreement with, or question the correctness  

of, the view of a Bench of a larger quorum.  

Central Board of Dawoodi Bohra Community & Anr.  

v. State of Maharashtra & Anr.10  summarized,  

for future guidance, the correct approach in  

such matters. The relevant para of the said  

case is extracted hereunder:-

“12. Having  carefully  considered  the submissions made by the learned  Senior Counsel for the parties and  having examined the law laid down  by the Constitution Benches in the  abovesaid decisions, we would like  to sum up the legal position in the  following terms:

10 (2005) 2 SCC 673

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(1) The law laid down by this  Court in a decision delivered  by a Bench of larger strength  is  binding  on  any  subsequent  Bench  of  lesser  or  coequal  strength.

(2) A Bench of lesser quorum  cannot  disagree  or  dissent  from the view of the law taken  by a Bench of larger quorum.  In case of doubt all that the  Bench of lesser quorum can do  is to invite the attention of  the Chief Justice and request  for  the  matter  being  placed  for hearing before a Bench of  larger  quorum  than  the  Bench  whose decision has come up for  consideration. It will be open  only  for  a  Bench  of  coequal  strength to express an opinion  doubting  the  correctness  of  the view taken by the earlier  Bench  of  coequal  strength,  whereupon  the  matter  may  be  placed  for  hearing  before  a  Bench  consisting  of  a  quorum  larger  than  the  one  which  pronounced the decision laying  down  the  law  the  correctness  of which is doubted.

(3)  The  above  rules  are  subject to two exceptions:

(i)  the  abovesaid  rules  do  not  bind  the  discretion  of  the  Chief  Justice in whom vests the  power  of  framing  the  roster and who can direct  any particular matter to  be  placed  for  hearing

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before  any  particular  Bench  of  any  strength;  and  

(ii)  in  spite  of  the  rules  laid  down  hereinabove,  if  the  matter  has  already  come  up for hearing before a  Bench  of  larger  quorum  and  that  Bench  itself  feels  that  the  view  of  the law taken by a Bench  of  lesser  quorum,  which  view is in doubt, needs  correction  or  reconsideration  then  by  way of exception (and not  as  a  rule)  and  for  reasons given by it, it  may proceed to hear the  case  and  examine  the  correctness  of  the  previous  decision  in  question  dispensing with  the  need  of  a  specific  reference or the order of  the  Chief  Justice  constituting  the  Bench  and  such  listing.  Such  was  the  situation  in  Raghubir  Singh and  Hansoli Devi.”

8.  Hence, I am of the opinion that the Rajesh  

& Ors. (supra) itself applied the Santosh Devi  (supra) case, even while clarifying that for  

self  employed  individuals,  age  is  also  a  

determining  factor,  as  is  seen  in  the

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observation  in  the  case  of  Rajesh  &  Ors.  

(supra) that in the case of self-employed or  

persons with fixed wages, in case, the deceased  

victim was below 40 years, there must be an  

addition of 50% to the actual income of the  

deceased while computing future prospects.

In fact, this gives shape to the view that  

future prospects are to be taken into account  

even in case of self employment and also that  

there cannot be a set formula for determining  

such compensation. The best application of this  

view may be seen in  Sanjay Verma  v. Haryana  

Roadways11 where  the  facts  were  noticed  as  

follows :

“12. The  appellant  was  a  self- employed  person.  Though  he  had  claimed  a  monthly  income  of  Rs.5000/-, the income tax returns  filed by him demonstrate that he  had paid income tax on an annual  income  of  Rs.41,300/-.  No  fault,  therefore,  can  be  found  in  the  order  of  the  High  Court  which  proceeds  on  the  basis  that  the  annual income of the claimant at  the  time  of  the  accident  was  Rs  

11  ((2014) 3 SCC 210

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41,300/-...”

Then,  this  Court  after  noticing  the  

decisions  of this Court in the cases of Sarla  

Verma & Ors., Santosh Devi, and the three Judge  

Bench of this Court in Reshma Kumari & Ors. and  

Rajesh & Ors.  (supra) applied the law in the  

following  manner  in  Sanjay  Verma’s  case  

(supra):-

“16. Undoubtedly,  the  same  principle  will  apply  for  determination of loss of income  on  account  of  an  accident  resulting in the total disability  of the victim as in the present  case.  Therefore,  taking  into  account the age of the claimant  (25 years) and the fact that he  had a steady income, as evidenced  by the income tax returns, we are  of the view that an addition of  50%  to  the  income  that  the  claimant was earning at the time  of  the  accident  would  be  justified.

17. Insofar as the multiplier is  concerned, as held in Sarla Verma  or as prescribed under the Second  Schedule to the Act, the correct  multiplier  in  the  present  case  cannot be 15 as held by the High  Court. We are of the view that  the adoption of the multiplier of  17  would  be  appropriate.

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Accordingly, taking into account  the  addition  to  the  income  and  the higher multiplier the total  amount of compensation payable to  the claimant under the head “loss  of  income”  is  Rs.10,53,150/-  (Rs.41,300/-  +  Rs.20,650/-  =  Rs.61,950/- × 17).”

The clarification of the position, by a three  

judge Bench, in Rajesh & Ors., ipso facto could  

not have led to the conclusion that there was a  

conflict between the views of various Benches,  

since  Santosh  Devi  itself  had  noticed  Sarla  

Verma,  the  logic  of  which  in  respect  of  

limiting  compensation  for  non-permanent  

employment was clarified.

9.  The  above  facts  recount  the  position  as  

emerging  from  a  combined  reading  of  various  

orders and judgments. What is clear is that a  

two judge Bench as was the formation in the  

case  of  National  Insurance  Company  Ltd.  v.  

Pushpa (supra) could not, having regard to the  

settled  legal  principle  outlined  in  the  

decision  of  this  Court  in  Central  Board  of  

Dawoodi Bohar Community  (supra) have referred

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the matter to a larger Bench. The correct view  

would have been to place the matter before a  

Bench  of  co-ordinate  strength  which  decided  

Reshma Kumari & Ors. and Rajesh & Ors. (supra),  

i.e. three judges.

10.  However,  I  agree  that  the  matter  in  

relation to future prospects to be added to the  

annual  income  to  determine  the  compensation  

towards loss of dependency cannot be finally  

decided by us and has to be ultimately referred  

to a larger Bench - because I was a party to  the reference in National Insurance Co. Ltd. v.  

Pushpa (supra) and more importantly, cannot in  

propriety recall that reference while I am part  

of  another  Bench  presently. In  view  of  the  observations,  the  matter  has  to  be  placed  

before the Hon’ble Chief Justice of India for  

appropriate orders towards the constitution of  

a suitable larger Bench in accordance with law.

                      …………………………………………………J.             (V. GOPALA GOWDA)   

March 13, 2015, New Delhi.

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IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO(s). 2836 OF 2015   (Arising out of S.L.P.(C) No. 6016 of 2014

SHASHIKALA & ORS.          ... APPELLANT(S)      VERSUS

GANGALAKSHMAMMA & ANR                 ...RESPONDENT(S)

O R D E R

Since  we  have  disagreed  only  insofar  as  the  

addition towards the future prospects in case of self-

employed or fixed wages to be added to the compensation  

towards the dependency, the matter may be placed before  

the Hon'ble the Chief Justice of India for appropriate  

orders towards the constitution of a suitable larger  

Bench to decide the said issue.

Pendente  lite the  said  issue,  the  enhanced  

compensation of Rs. 4,62,938/- along with interest at  

the rate of 9% p.a. from the date of the claim petition  

till the date of realisation shall be paid within four  

weeks  from  today  by  way  of  a  demand  draft  or  be  

deposited before the Motor Accident Claims Tribunal,  

Bangalore, to enable the appellants herein to withdraw  

the same.  

...........................J.                 (V. GOPALA GOWDA)

..........................J.              (R. BANUMATHI)

NEW DELHI, MARCH 13, 2015