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Judgment
In view of the good grounds shown, the marginal delay in preferring the appeal is condoned.
Both the claimant and the insurance company question the propriety of the award dated September 29, 2018 passed on a petition under Section 166 of the Motor Vehicles Act, 1988 pertaining to an accident that took place on June 18, 2011. The victim was aged about 24 years at the time of his death.
According to the claimant, the tribunal erred in disregarding the latest income-tax return of the victim and by basing the award on the income of the victim as evident from the return pertaining to the immediate preceding year. The claimant submits that since the income of the victim had grown substantially in the next financial year, compensation had to be assessed on the basis of the income of the victim at the time of his death and not on the basis of the income for any previous year.
The insurance company defends the award in so far as the compensation has been calculated on the basis of the income-tax return filed for financial year 2009-10, particularly since the last income-tax return of the victim was filed more than a month after his death in July, 2011 and, according to the insurance company, an inflated income was shown with the motive of obtaining undeserving additional compensation. However, the insurance company questions the propriety of the tribunal accepting an amount of about Rs.49,000/- as part of the income of the victim though such income was shown to have come from other sources in the return filed for financial year 2009-10. The insurance company submits that since such income was not indicated in the subsequent year, it is evident that it was a one-off income which could not be taken into account for the purpose of assessing the compensation due.
As far as the claimant is concerned, she wants the compensation to be assessed on the basis of the income-tax return for financial year 2010-11 as filed on behalf of the victim by the victim's father. In any event, the claimant complains that no allowance has been made for future prospects of the victim in the impugned award and interest has been awarded at an abysmally low rate of 6% per annum whereas this court ordinarily grants 8% interest per annum.
In support of the claimant's contention that income from other sources ought to be taken into account and the income reflected in the income-tax return ought to be given credence, a judgment reported at (2018) 7 SCC 715 (United India Insurance Company Limited has been cited for the following passage at paragraph 8 of the report:
"8. We have given our anxious consideration to the contention. There is no doubt that if the salary certificate is taken into account the salary of the deceased should be taken as Rs.1,06,176/- since the gross salary was Rs.8848/- per month. That, however, in our view does not mean that the income of the deceased as stated in the Income Tax return should be totally ignored. It is not possible to agree with the observation of the Tribunal that it was necessary for the claimants to "explain the said contradiction" between two figures of income. The claimants had led reliable evidence that the deceased had returned an income of Rs.2,42,606/-for the assessment year 2004-05. This piece of evidence has not been discredited. Indeed, it was possible that the deceased had income from other sources also. There is nothing in the law which requires the Tribunal to assess the income of the deceased only on the basis of a salary certificate for arriving at a just and fair compensation to be paid to the claimants for the loss of life."
The compensation that has to be awarded, under the relevant provisions of the Motor Vehicles Act, 1988, has to be just and fair. There is always an element of guesswork or approximation when awarding compensation or awarding damages of any kind. The element of subjectivity in the assessment can never be eliminated. However, towards such end, and to make awards more uniform, certain objective criteria have been laid down on different aspects by judgments, particularly judgments of the Supreme Court which are binding under Article 141 of the Constitution. For a start, it must be appreciated that the concept of awarding compensation implies that the attempt would be to make good the loss that is suffered by the family of the victim or relatives of the victim. While the mental suffering and the like cannot be compensated in money, certain objective criteria have been set down in the statute and in judgments interpreting the statute. Thus, if a person has income from various sources, only the income from the principal source or the official source may not be taken as the guide for the monthly or annual income of the person. It is possible that a person does a clerical job in a private firm and gets a certain salary, but such person coaches students in his spare time and has a substantial additional income. While assessing the compensation to be paid to the dependants of such victim or the heirs of such victim upon his death, the total complement of the income or the earning capacity of the victim is taken into account. In other words, income from other sources cannot, in principle, be deleted or disregarded while assessing the quantum of compensation due to the claimant.
Equally, it is possible that there is a one-off income in a particular year which is unusual. If such unusual income is taken into account though the incidence of such income is not evident in other years, the quantum of compensation may not be fair or just.
As to the claimant's submission that the later income-tax return should have been made the basis for assessing the income or earning capacity of the victim, it does not appear that the tribunal erred in arriving at the assessment on the basis of the previous year's income-tax return. For one, the income-tax return for the subsequent financial year was filed more than a month after the death of the victim. It was possible to inflate the income of the victim and offer an additional quantum by way of income-tax than what the income of the victim actually warranted for the purpose of creating evidence as to the income of the victim. Income-tax returns are relevant pieces of evidence, but there is no sanctity in them and there is no law that requires a court or a tribunal to accept the contents thereof without questioning the same. If a person discloses a higher income than what his income actually is, the income-tax authorities may not question the same and accept the return at face value. However, the fact that such income-tax return may have been accepted at face value by the income-tax authorities, would not bind a court or a tribunal while trying to assess the income of the relevant person. The income of the victim was shown to have increased remarkably in the subsequent income-tax return when compared to the previous return. In such circumstances, the exercise of discretion by the tribunal in going by the income as evident from the previous income-tax return cannot be faulted nor does the impugned award call for any interference in such regard.
However, inasmuch as the income-tax return for financial year 2009-10 carried an entry of value of about Rs.40,000/- on account of income from other sources, the insurance company says that since there was no like figure indicated in the income-tax return for the subsequent year, the income from other sources as evident from the return pertaining to financial year 2009-10 ought to have been disregarded by the tribunal while assessing the earning capacity of the victim at the time of his death.
There is some substance in such assertion, but it does not appear that there was much of a challenge pertaining to such income from other sources by the insurance company in course of the proceedings before the tribunal. Further, it must not be forgotten that there was no cogent evidence demonstrating that the income of the victim had been falsely or deliberately inflated in the income-tax return filed a month after the death of the victim. It is equally possible that the income of the victim increased in the subsequent year. After all, the victim died at the age of 24 years.
Though the judgment cited on behalf of the claimant is of no relevance in the present context, it does not appear unreasonable that a figure of about Rs.1.20 lakh was taken to be the notional annual income of the victim based on his income-tax return for the year 2009-10. Accordingly, the cross-objection of the insurance company on such account fails.
There are two other aspects which need to be addressed. The first is the failure by the tribunal to provide for the future prospects of the victim and the other pertains to the rate of interest granted by the tribunal.
The tribunal failed to take the future prospects of the victim into consideration. The award is required to be modified in such regard. Since the victim was 24 years old, 40% of the victim's annual income could be regarded as his future prospects and the notional income of the victim should have been assessed on such basis. Since the annual income of the victim as evident from the income-tax return was Rs.1,25,396/-, on account of future prospects a further sum of Rs.50,158/- had to be added to arrive at the consolidated figure of Rs.1,75,554/-.
Since the victim was a bachelor at the time of his death, half of such notional income had to be deducted on account of personal expenses. It is on the remaining half that the multiplier of 18 would have to be applied to arrive at a compensation component of Rs.15,79,986/-. In view of the judgments in Sarla Verma and Pranay Sethi, general damages on the ground of loss of estate and funeral expenses would also have to be granted to the extent of Rs.15,000/-under either head. Thus, adding a further Rs.30,000/- to the quantum of compensation, the total amount comes to Rs.16,09,986/-. The claimant will be entitled to interest on such amount at the rate of 8% per annum with effect from the date of the lodging of the petition till payment.
It is acknowledged on behalf of the claimant that a sum of Rs.11,58,564/-, together with interest of an amount of Rs.4,09,237/-, have been received by the claimant. However, the calculation of the interest was at the rate of 6% per annum as provided by the tribunal. After giving credit to the amount received by the claimant, the balance amount due in terms of this order should be paid by a cheque favouring the claimant within four weeks from date.
FMA 997 of 2019 with CAN 8071 of 2019 and C0T 77 of 2019 are disposed of as above.
There will be no order as to costs. Urgent certified website copies of this order, if applied for, be made available to the parties upon compliance with the requisite formalities.