(Per : HONOURABLE MR.JUSTICE JAYANT PATEL) 1. The short facts are that on 2.6.1996 the deceased Dilip Chimanlal Thakkar, at about 11 O'Clock when was going on his scooter bearing RTO No.GJ-1-Q- 6170 with his daughter Meghna, who was sitting as pillion rider, near Prakruti Udhyan, took a turn and at at that time one matador bearing RTO No.GJ-18-T-6031 dashed with the scooter and the deceased Dilip sustained injuries and thereafter he succumb to the injuries. The aforesaid incident gives rise to the claim petition being M.A.C.P. No.1232 of 1996 before the Tribunal for the compensation of Rs.35,00,000/- after the amendment, which was so granted.
2. The Tribunal at the conclusion of the proceedings passed the judgement and award dated 20.8.2006, whereby the Tribunal awarded compensation of Rs.25,38,000/- with the interest at the rate of 7.5% p.a. Under these circumstances, the present appeal before this Court.
3. We have heard Mr.Rajni Mehta, learned Counsel appearing for the appellant Insurance Company and Mr.M.B. Gandhi, learned Counsel for the respondent – original claimants. We have also heard Mr.Gandhi as well as Mr.Mehta in the Cross Objection preferred by the original claimants.
4. The first contention raised by Mr.Mehta, learned Counsel for the Insurance Company was that the Tribunal ought not to have doubled the income for the purpose of compensation. It was submitted that in normal circumstance for the purpose of compensation under the Act, income is to be considered as 1.5 times, even if the prospective income is taken into consideration. As against the same, the Tribunal has doubled the income to the extent of Rs.18,000/- per month for economic loss and, therefore, there is an error committed by the Tribunal.
5. Whereas, Mr.Gandhi, learned Counsel for the original claimants submitted that keeping in view the facts and evidence on record the Tribunal has rightly assessed the income at Rs.18,000/- per month for the purpose of compensation and, therefore, no error has been committed by the Tribunal.
6. We may record that in the matter of awarding compensation by the Tribunal the compensation has to be just compensation and just compensation normally is to be decided by the monetary loss caused to the claimants towards dependency benefits of the deceased concerned. If the evidence is considered of the witness, who was examined on behalf of the claimants at Exh.37, Shri Jayantilal Mulchand Shah, the Officer of the Bank, it had come on record that the deceased was working as shop-cum-godown keeper with the Bank and on the date of the accident in May 1996 his salary was Rs.8,798.38 per month. The age of retirement was 60 years and as per the said witness the deceased would retire in the year 2014 had he continued in service. It further came on record in the evidence of the said witness that if the deceased would have continued in service in March 2002, the salary could have been Rs.16,121/- per month and in April 2005, the pay would have been Rs.18,000/- per month and at the age of retirement, his salary would have been Rs.20,000/- per month. In the cross-examination of the said witness, nothing has come out to the contrary leading the Tribunal to disbelieve the statement made by the witness, who was the officer of the bank and who deposed based on the record of the Bank.
7. It is true that in normal circumstances if the prospective income is to be taken into consideration and thereafter the compensation is to be considered, it may be 1.5 times the last salary drawn. However, in view of the aforesaid clear evidence coming on record the same was required to be taken into consideration by the Tribunal for meeting with the test of 'just compensation'. If the aforesaid evidence is taken into consideration the salary of the deceased in the year 1996 was Rs.8,798/- and hence, yearly it would be Rs.1,05,576/- and from 1996 to 2002, the salary remained the same and, therefore, for such period of six years it would Rs.6,34,456/-. It has also come on record that such salary was revised in the year 2002 to Rs.16,121/- per month and, therefore, yearly it would be Rs.1,93,452/- and the year of retirement of the deceased was 2014 and, therefore, there was span of 12 years more. So, total of such amount would come to Rs.23,21424/-. Accordingly, if the actual salary is counted based on the said revision of 2002, such amount, after taking into consideration all the salary from 1996 to 2002, would come to Rs.29,54,880/-. It has also come on evidence that the deceased would have drawn the salary of Rs.18,000/- per month in the year 2005, Rs.20,000/- p.m. in the year 2014. Under these circumstances, the salary from 2002 to 2005 can be considered at Rs.16,121/- and after 2005 onwards, the salary can be considered at Rs.18,000/- per month. Accordingly, from 2002 to 2005, the yearly salary would be Rs.1,93,453/- (Rs.16,121/- x 12) and for three years i.e. up to 2005, it would come to Rs.5,80,356/-. However, 2005 onwards, if the amount is calculated at the rate of Rs.18,000/- per month, the salary would be Rs.2,16,000/- and for a period of 9 years i.e. up to 2014, such figure would come to Rs.19,44,000/-. Further, there is a difference of Rs.2,000/- between the salary of the year 2005 to 2014 since, as per the said witness, in the year 2014, the salary would Rs.20,000/- per month. Under these circumstances, if the aforesaid period of 9 years is averaged out by 50%, such amount would come to Rs.24,000/- x 4.5, total Rs.1,08,000/-. Accordingly, if the aforesaid figures are considered as that of Rs.6,33,456/- + Rs.5,80,356/- + Rs.19,44,000/- + Rs.1,08,000/-, the total would come to Rs.32,65,812/- towards the actual loss of salary, out of which for the purpose of compensation, 1/3rd amount is to be deducted. Hence, 2/3rds of the aforesaid amount would come to Rs.21,77,208/-. If the aforesaid is taken into consideration, keeping in view the actual compensation awarded by the Tribunal, such amount is of Rs.21,60,000/-. Under these circumstances, we find that if the amount for the purpose of considering the compensation at the rate of Rs.18,000/- per month more or less is equivalent to the actual loss of salary of Rs.21,77,208/-, the same would meet with the just compensation and hence, we are not inclined to interfere with the method adopted by the Tribunal for assessment of the compensation, since in the ultimate amount of compensation, there is no substantial difference and no useful purpose would be served.
8. The learned Counsel for the appellant next contended that the Tribunal has committed error in awarding compensation towards Provident Fund amount and gratuity. It was submitted by the learned Counsel for the Insurance Company that such amounts are never granted or to be considered for the purpose of awarding compensation.
9. As against the same, Mr.Gandhi, learned Counsel for the original claimants relied upon the decision of the Division Bench of this Court in the case of New India Assurance Company Limited, reported in 1997 ACJ 646 and submitted that such benefits are to be taken into consideration and were awarded by the Division Bench of this Court in the above referred decision.
10. We find that Mr.Gandhi is right in his submission for considering the amount of loss of provident fund contribution to be made by the employer and the gratuity benefits. Therefore, we find that in view of the decision of the Coordinate Bench of this Court in the case of New India Assurance Company Limited (supra), such benefits are to be considered and the Tribunal has considered the same. Hence, we cannot accept the contention of the learned Counsel for the Insurance Company that such benefits are not at all required to be taken into consideration for the purpose of awarding compensation under the Act.
11. The learned Counsel for the appellant next contended that as per the decision of the Apex Court in the case of Sarla Verma (Smt) and Ors. v Delhi Transport Corporation and Anr., reported in (2009) 6 SCC 121, the prospective income was required to be considered at the rate of 1.5 times the actual and he also submitted that nothing is considered by the Tribunal towards deduction of income tax and, therefore, it was submitted that the compensation, in any case, deserves to be reduced.
12. Whereas Mr.Gandhi, learned Counsel for the original claimants submitted that the claimants have also preferred Cross Objection contending that the multiplier should have been of 18, whereas the Tribunal has awarded multiplier of only 15 and, therefore, the compensation deserves to be enhanced. He also submitted that as per the claimant towards personal expenses, the Tribunal could not have deducted 1/3rd of the amount, but the appropriate deduction could be 1/4th and if 1/4th of the amount is excluded towards personal expenses, then also the claimants would be entitled for the higher amount of compensation than granted by the Tribunal.
13. We may state that the decision of the Apex Court in the case of Sarla Verma (Smt) and Ors. v Delhi Transport Corporation and Anr. (supra) once again came up for consideration before the Apex Court in the case of K.R. Madhusudhan and Others v. Administrative Officer and another, reported at (2011) 4 SCC 689 and the Apex Court at paragraphs 8 and 9 observed, thus:-
“8. In the Sarla Verma judgment the Court has held that there should be no addition to income for future prospects where the age of the deceased is more than 50 years. The learned Bench called it a rule of thumb and it was developed so as to avoid uncertainties in the outcomes of litigation. However, the Bench held that a departure can be made in rare and exceptional cases involving special circumstances.
9. We are of the opinion that the rule of thumb evolved in Sarla Verma is to be applied to those cases where there was no concrete evidence on record of definite rise in income due to future prospects. Obviously, the said rule was based on assumption and to avoid uncertainties and inconsistencies in the interpretation of different courts, and to overcome the same.”
14. The aforesaid shows that the observations made by the Apex Court in the case of Sarla Verma (supra) is to be applied to those cases where there is no concrete evidence on record of the definite rise in the income due to future prospects. As against the same, as observed herein above, there is concrete and clear evidence available on record about definite rise in the income of the deceased. Under these circumstances, we find that the normal principles to be applied for consideration of the prospective income and thereafter to arrive at 1.5 times of the actual income would not be applicable. Hence, to that extent it can be said that the contention of the learned Counsel for the Insurance Company based on the decision of the Apex Court in the case of Sarla Verma (supra) is ill-founded.
15. However, there is a considerable force in the submission of the learned Counsel for the Insurance Company for no deduction considered by the Tribunal towards income tax as was also observed by the Apex Court in the case of Sarla Verma (supra) and more particularly at paragraph 20, which reads as under:-
“20. Generally the actual income of the deceased less income tax should be the starting point for calculating the compensation. The question is whether actual income at the time of death should be taken as the income or whether any addition should be made by taking note of future prospects.”
16. Therefore, it can be said that the Tribunal has committed error in not considering the deduction towards income tax or the income tax liability of the deceased from the income, which he would have earned, had he survived and continued in service. It is hardly required to be recorded that the case on hand is of the year 1996 when the deceased expired. Therefore, the taxation limit at the relevant point of time was different and it is revised from time to time namely that in such financial period of 1996-97 etc., standard deduction was permissible to the salaried employee, which has been not continued in the last few years, but the exemption limit has been enhanced and the permissible investment for exemption from tax has also been revised from time to time. We find that the actual income tax liability of the deceased also cannot be finalized and the matter may be in the arena of uncertainty, inasmuch as the liability could be avoided had the investment been made by the deceased up to the permissible limit. Keeping in view the aforesaid overall facts and circumstances that span of service was from 1996 to 2014, wherein various exemption limits have been provided and also there has been revision in the investment for tax exemption by way of deduction or otherwise, it would be appropriate to consider the flat deduction towards income tax at the rate of 10%, but such has to be considered, keeping in view that no income tax was and is payable up to a particular limit. The yearly compensation, as assessed by the Tribunal, is approximately Rs.1,44,000/- and if the exemption at the minimum level of Rs.50,000/- for the income exceeding Rs.50,000/-, we find it appropriate for deduction towards income tax at the rate of 10% flat. Accordingly, out of the amount of Rs.21,60,000/- as assessed by the Tribunal, Rs.7,50,000/- towards exemption limit is considered (Rs.50,000/- x 15), the remaining amount would come to Rs.14,10,000/- and 10% of the said amount would come to Rs.1,41,000/-. Under these circumstances, we find it appropriate to deduct the amount of Rs.1,41,000/- towards income tax and accordingly the net amount of compensation towards dependency benefits would come to Rs.20,20,000/- as against the amount of Rs.21,60,000/- as awarded by the Tribunal.
17. The contention raised by the learned Counsel for the claimants towards 1/4th deduction towards personal expenses, in our view, need not detain us further, since the issue is already covered by the decision of the Apex Court in the case of Sarla Verma (supra) and more particularly the observations made by the Apex Court at paragraph 30 of the said decision, which reads as under:-
“30. Though in some cases the deduction to be made towards personal and living expenses is calculated on the basis of units indicated in Trilok Chandra, the general practice is to apply standardised deductions. Having considered several subsequent decisions of this Court, we are of the view that where the deceased was married, the deduction towards personal and living expenses of the deceased, should be one- third (1/3rd) where the number of dependent family members is 2 to 3, one-fourth (1/4th) where the number of dependent family members exceeds six.”
Hence, the said contention raised by the learned Counsel for the claimant cannot be accepted.
18. In the same manner, the contention raised for applying multiplier of 18, in our view, also cannot be accepted for the simple reason that as per the schedule the multiplier has been provided and such schedule under the Act has a guiding effect. The schedule does provide for multiplier of 15 as has been so awarded by the Tribunal. If the matter is considered so as to meet with the test of 'just compensation', then also as observed by us herein above, the actual compensation so awarded meets with the loss of salary to the members of the family of the deceased to the extent of 2/3rds. Under these circumstances, we find that the contention raised on behalf of the original claimants for claiming multiplier of 18 does not deserve to be accepted.
19. Mr.Gandhi, learned Counsel appearing for the original claimants lastly contended that the interest awarded by the Tribunal at the rate of 7.5% per annum is on a much lower side, inasmuch as in his submission, at the relevant point of time, the Bank interest prevailing was about 15% p.a., and, therefore, it was submitted that this Court may enhance the interest awarded by the Tribunal in the Cross Objection preferred by the claimants.
20. Whereas Mr.Mehta, learned Counsel for the appellant has submitted that the interest awarded is just and proper.
21. We find that the awarding of the interest by the Tribunal is a discretion of the Tribunal and unless it is so demonstrated to the satisfaction of the Court that such discretion has been perversely exercised it would not be a case for interference with the exercise of the discretion by the Tribunal. Considering the facts and circumstances, we find that there is a long span, inasmuch as the claim petition was of 1996 and the award has been passed in the year 2006, roughly about 10 years if the Tribunal has awarded interest at the rate of 7.5%, such cannot be said to be a perverse exercise of the discretion by the Tribunal. Under the circumstances, we are not inclined to accept the contention of Mr.Gandhi, learned Counsel for the original claimants.
22. In view of the aforesaid observations and discussion, First Appeal No.2449 of 2006 preferred by the Insurance Company is partly allowed to the extent that the amount of compensation shall be less by Rs.1,40,000/- and accordingly the net amount of compensation shall be Rs.23,98,000/- as against the amount of Rs.25,38,000/- with interest as awarded by the Tribunal. The Cross Objection preferred by the original claimants shall stand dismissed. Considering the facts and circumstances, there shall be no order as to costs.
23. The balance amount, if any, shall be deposited by the Insurance Company with the Tribunal within eight weeks from today. Out of the total amount available with the Tribunal i.e. the amount already invested pursuant to the interim order of this Court and the amount, which may be deposited further by way of compliance of the present judgement, 30% withdrawal shall be permitted to the original claimants and the remaining amount of 70% shall be invested by the Tribunal in FDR with a nationalized Bank proportionately in the name of each of the claimants for a period of five years with the further clause that the interest, as may be accrued from time to time, shall be made admissible and withdrawable by the claimants.
24. Appeal as well as cross objection are disposed of accordingly.
(Jayant Patel, J.) (C. L. Soni, J.) vinod