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Judgment
S. Dasaradharama Reddy, J.—The appellant, who is an employee in Life Insurance Corporation of India, while going to office on a Luna Moped driven by her brother suffered multiple injuries (11) in an accident that occurred on 2-5-1989 at Visakhapatnam due to rash and negligent driving of jeep bearing registration No. 9929 owned by 2nd respondent and insured with the 3rd respondent. She filed O.P. in Motor Accidents Claims Tribunal, Visakhapatnam (for short ''the Tribunal'') claiming compensation of Rs. 3,12,000/- under the following heads:
Rs. 38,000/- towards loss of past earnings
Rs. 500/- towards transport to hospital
Rs. 11,500/- towards damages to clothing and articles
Rs. 2,000/- towards pain and suffering
Rs. 10,000/- towards permanent disability and
Rs. 2,50,000/- towards loss of future earnings.
Later the claim was restricted to Rs. 3,00,000/-. The owner and driver remained ex parte while the Insurance Company contested the petition. The Insurance Company opposed the petition contending that the accident was not caused due to rash and negligent driving of the vehicle by the driver and that the compensation claimed is excessive. The Tribunal found that the accident was caused due to rash and negligent driving of the vehicle by the driver and granted Rs. 54,252/- as the compensation under the following heads:
Rs. 19,252/- for loss of past earnings
Rs. 5,000/- for medical expenses and transport
Rs. 5,000/- for pain and suffering and
Rs. 25,000/- for loss of future earnings.
The Tribunal has also granted interest at the rate of 12 per cent from the date of petition. Aggrieved by this, the claimant has filed this appeal for enhancement of compensation while there is no appeal by the Insurance Company.
The owner who is R-2 has been served and nobody appears for him while R- l, driver, has been given up by the appellant. Though the Insurance Company which insured the Luna Moped is made a party, no relief is sought against it either here or in the Tribunal.
Special Damages:
The appellant has stated that she was in K.G. Hospital, Visakhapatnam from 2-5-1989 to 11-9-1989 and later in a private nursing home for four days when she had operation and was advised to take rest up to 15-2-1990. She could not attend the office till 16-2-1990. She claimed Rs. 38,000/- as loss of past earnings for 12 months, her total monthly emoluments being Rs. 3,200/- per month. Deposing as P.W.I, she says that she was on loss of pay for five months but she has not produced any certificate in proof of the same. Though the appellant has been granted leave with pay for the balance 4 1/2 months, she is justified in claiming loss for this period also on the ground that her leave account has been debited and consequently she is deprived of encashing her surrender leave, which benefit is available to the employees of Life Insurance Corporation of India. Hence, whether it is leave with pay or without pay, she is entitled to claim amount equivalent to salary for 9 1 /2 months which comes to- Rs. 30,400/- under the head ''loss of past earnings''.
Income Tax deduction: Then the next question is whether the income tax payable on this amount has to be deducted or not. It has been held in The Renfrew Town Council v. The Commissioners of Inland Revenue, 19 Tax Cases 13., that damages received on account of temporary disability will be revenue receipt and taxable while damages received on account of loss of earning capacity due to permanent disability will be a capital receipt and not taxable. The special damages claimed for loss of salary will fall under the first category though the disability has ultimately become permanent and will be taxable while general damages claimed for loss of furture earnings will fall under the second category. In the case of first category, the tax cannot be deducted in determining the compensation. This can be illustrated by an example. Tax on this Rs. 30,400/- is Rs. 3,020/-, taking this as net taxable income. If the compensation is awarded at Rs. 27,380/- (Rs. 30,400/- less Rs. 3,020/-), the claimant will again have to pay tax of Rs. 2,114/- on Rs. 27,380/- with the result that the claimant will get net amount of Rs. 25,266 /-. Thus if the compensation is paid without deducting tax, the claimant will be paying tax of Rs. 3,020/- and will be having net income of Rs. 27,380/- after tax whereas if tax is deducted, the net income after tax will be Rs. 25,266/-. In otfier words, the compensation given must cover tax liability, in case the compensation is taxable.
In the case of second category i.e.) where the compensation is not taxable as capital receipt, tax has to be deducted while computing the notional income as will be discussed in detail in the course of this judgment under the head of loss of future earnings. Hence, the claimant will be entitled to Rs. 30,400/- under I the head ''loss of past earnings'' without deduction of tax.
Medical Expenses and Transport:
Towards transport, the appellant claimed Rs. 500/- in the petition but did not claim any amount towards medical expenses for the reason that they would be borne by the department. But the Tribunal surprisingly granted Rs. 5,000/- for both medical expenses and transport. Hence, I disallow the amount of Rs. 4,500/- given towards medical expenses. Though there is no appeal by the Insurance Company, this Court can disallow any amount wrongly given by the Tribunal since the global award is recomputed in the appeal.
Non-Pecuniary Damages:
(a) Pain and Suffering: Under this head, the appellant claimed Rs. 12,000/- (Rs. 2,000/- towards pain and suffering and Rs. 10,000/- for continuing or permenant disability). She suffered 11 injuries, major injuries being to two legs.
In Ex.A-4 - wound certificate - she sustained the following injuries:
Pain and swelling of 4 x 1 cm. on right side forehead,
An abrasion of about 1 x 1 cm. over the centre of injury No. 1.
An abrasion of about 1.5 x 1 cm. over the right side forehead near right eye-brow.
An abrasion of about 3 x 1 cm. over the cantnur of right eye-brow.
An abrasion of about 1 x 1 cm. over the left forehead,
Swelling and deformity of right leg and limitation of movements.
An abrasion of about 4x1 c.m. over the right knee of medical aspect.
An abrasion of about 2 x 1 c.m. over the right knee on the lateral aspect.
A lacerated wound of about 2.x 1 cm. over the left heel region.
Pain and swelling of left knee region, deformity and tenderness.
Loss of right central incisor tooth. Loosing of right lateral incisor and left central and lateral incisor teeth of upper jaw.
Pin traction was done to the left leg and plaster of paris was applied to her right leg. She underwent operation of right leg and a steal rod was fixed. As per the Ex.A-6, disability certificate, issued by the Doctor, the appellant suffers permanent partial disability of 50 per cent. After the accident, she could not attend the duties without the help of maid servant. The Tribunal granted Rs. 5,000/- under the head of ''pain and suffering'' but has not awarded any amount for loss of amenities and expectation of life.
Regarding similar injuries caused in an accident that took place in February 1981, this Court in Islavathnama v. S.A. Raheem, 1987 (2) ALT 378., after reviewing similar awards given by other High Courts fixed non-pecuniary loss at Rb.20,000/-. The consumer price index was 441 in the year 1981 and 475 in the year 1981 taking the base year as 1975 (1975 = 100) as given in P. Satyanarayana v. I.B.R. Prasad, 1987 (2) ALT 328.. So the damages can be correspondingly raised to Rs. 21,600/- in the year 1982 (475/441 x 20,000). As the accident in the present case took place in May 1989, the consumer price index in May, 1989 has tdbe seen. The index is 169 in May 1989 taking the base year as 1982 (1982 = 100) (as per compilation by Director, Labour Bureau, Simla as given in Labour Law Notes 1989-Vol.Il inside cover page). So consequently, the amount has to be again ennanced to Rs. 36,504 (21,600 x 169/100) which can be rounded off to Rs. 36,500/-. It is well settled that while computing damages in the appeal, this Court can grant either less or more amount under any particular head irrespective of the amount claimed in the petition or amount awarded by the Tribunal so long as the total amount computed does not exceed the total amount claimed in the petition. Hence, though the appellant claimed only Rs. 12,000/- under this head, I grant Rs. 36,500/- under this head.
Pecuniary Loss:
Loss of future earnings: According to the medical evidence, as per Ex.A-6, the medical disability is 50 per cent. But, we have to see what is the percentage of disability from the point of view of loss of earning capacity. In this case, the more correct method in my opinion will be to compute the probable loss of emoluments as a result of deprivation of opportunities of promotion to the appellant. Because of her disability, she is not fit for doing jobs in offices situated in multi-storeyed buildings. Even if there is lift, in case of power break down or if the lift goes out of order, she will not be able to attend the office. Further, if her office is situated in a building consisting of two floors, which consequently does not have the facility of lift, it is not possible for her to climb the stairs. As she has got more than 25 years of service, she is likely to get two promotions. In her evidence, she said that as a result of the disability and deprivation of promotion, she would be losing about Rs. 400/- per month. She also stated that the basic salary in the present post of Assistant on the date of trial was Rs. 3,600/- per month. She stated that though her basic salary was Rs. 2,130/- in August 1989, it was enhanced to Rs. 3,600/- in September, 1990. Taking into consideration that the pay scales in Life Insurance Corporation may be revised and enhanced in future and of the fact that she has got 25 years of service, I think it will be reasonable to fix the difference in monthly emoluments at Rs. 1,000/-.
The next question is regarding deduction of income tax. I have already discussed about this while considering damages under the head of loss of past earnings. The compensation received towards damages for loss of earning capacity on account of permanent disability is capital receipt and not liable to be taxed. But while arriving at present annual income for determining loss of future earnings, the tax that would have been payable has to be deducted and the net income available to the claimant has to be determined for computing the loss of income as a result of the accident just like in the case of death, the amount that would have been spent for personal expenses on himself has to be deducted.
Mr. Krishna Murthy, learned Counsel for the appellant has relied on Delhi Transport Corporation and Anr Vs. Pushpa Chopra and Others, , for the proposition that income tax cannot be deducted. With due respect, there is no discussion of the question in that case which is thus not helpful. In British Transport Commission v. Gourley, 1956 AC 185., the House of Lords held as follows:
"To ignore the tax element at the present day would be to act in a manner which is out of touch with reality. Nor can I regard the tax element as so remote that it should be disregarded in assessing damages. The obligation to pay tax - save for those in possession of exiguous incomes - is almost universal in its application. That obligation is ever present in the minds of those who are called upon to pay taxes, and no sensible person any longer regards the net earnings from his trade or profession as the equivalent of his available income. Indeed, save for the fact that in many cases - though by no means in all cases - the tax only becomes payable after the money has been received, there is, I think, no element of remoteness or uncertainty about its incidence.
It would, I think, be unfortunate if, as the result of our decision, the fixation of damages in a running-down case were to involve an elaborate assessment of tax liability. It will no doubt become necessary for the tribunal assessing damages to form an estimate of what the tax would have been if the money had been earned, but such an estimate will be none the worse if it is formed on broad lines, even though it may be described as rough and ready. It is impossible to assess with mathematical accuracy what reduction should be made by reason of the tax position, just as it is impossible to assess with mathematical accuracy the amount of damages which should be awarded for the injury itself and for the pain and suffering endured."
Thus, to arrive at the multiplicand, the net income available to the claimant after paying taxes on the notional yearly income has to be first determined and from that amount, the net income available to the claimant after paying taxes on the actual yearly income receivable as a result of disability has to be deducted. Further, while computing the tax liability of the person who suffers permanent disability, Section 80U of the Income Tax Act has to be borne in mind.
Section 80U of the Income Tax Act as it stood before 1-4-1992 reads as follows:
"80-U. Deduction in the case of totally blind or physically handicapped resident persons. -
(1) In computing the total income of an individual being a resident, who, as at the end of the previous year, -
(i) is totally blind, or
(ii) is subject to or suffers from a permanent physical disability (other than blindness) being a permanent physical disability specified in the rules made in this behalf by the Board, and which has the effect of reducing substantially his capacity to engage in a gainful employment or occupation, or
(iii) is subject to mental retardation to the extent specified in the Yules made in this behalf by the Board, and which has the effect or reducing substantially his capacity to engage in a gainful employment or occupation. there shall be allowed a deduction of a sum of fifteen thousand rupees". If the claimant is entitled to the benefit of Section 80Uof the Income Tax Act, net savings after paying taxes after the accident will be more and consequently the difference in loss of income will be correspondingly less. The question whether the appellnt is entitled to the benefit of Section 80U cannot be decided in this case as the question was not examined from this point of view in the Tribunal and no evidence was let in on this aspect. That question is left open and accordingly the provisions of Section 80U are not applied in the instant case.
Tax on the present salary of Rs. 38,400/- payable by the appellant at the rates applicable for the assessment year 1990-91 will be Rs. 1,820/- after deducting the standard deduction of Rs. 12,000/-. that means, the appellant will get net emoluments of Rs. 36,580/- (Rs. 38,400 less Rs. 1,820) because (of the accident. But for the accident, she would have got Rs. 50,400/- (Rs. 4,200 x 12). The tax on Rs. 50,400/- after deducting the standard deduction at Rs. 12,000/- will be Rs. 5,420/- i.e., she would have got net emoluments of Rs. 44,980/- (Rs.50,400/- less Rs. 5,420/-). Consequently, net loss is Rs. 8,400/- per year (Rs.44,980 less Rs. 36,580).
Regarding the multiplier to be applied, the Supreme Court in Kerala Road Transport Corporation v. sushma Thomas, 1994(1) ALT (SC) 1, held that taking multiplier corresponding to the age of the deceased at the time of death will be more reasonable and scientific method of assessing compensation instead of multiplying by the number of years the deceased would have probably lived and deducting some amount towards uncertainties of life. This principle is applicable to cases of injuries also. But, various multipliers to be taken corresponding to a particular age are not indicated in the judgment. A Division Bench of this Court in Nirmala Narsava and Others Vs. Vilas Ramachandra Shangda and Others , approved the judgment of single Judge (Justice Jagannadha Rao) in Bhagwandas v. Mohd. Arif, 1987 ALT 137 in prescribing Acturial Table for fixing various multipliers depending on the age i.e., multiplier decreasing as the age increases. The age of the appellant was 32 years as on the date of trial. Accordingly, the multiplier to the corresponding age of 32 years is 15.83. But in this case, as she is urban female, it can be marginally increased to 16. Multiplied by 16, the loss of future earnings will be Rs. 1,34,400/-.
Thus, the appellant is entitled to global award of Rs. 2,01,800/- as follows:
Loss of past earnings : Rs. 30,400/- Transport to Hospital : Rs. 500/- Pain and suffering : Rs. 36,500/- Loss of future earnings : Rs. 1,34,400/-
The Appellant is also entitled to interest at the rate of 12 percent per annum as awarded by the Tribunal.
The appeal is partly allowed with proportionate costs.